Toll Brothers Inc. posted stronger-than-expected profit growth
in its April quarter, boosted by a lower tax provision and strength
in the luxury home builder's California business.
Revenue came in below Wall Street expectations.
Toll Brothers, with its higher-end offerings, has expected to
benefit from recent improvements to job and wage growth, which it
says drive stronger housing demand. Home prices have picked up in
recent months, reflecting a mix of thin supply and strong demand
that points to heated competition for home buyers.
"It appears the housing market is on firm footing and heading in
the right direction," said Executive Chairman Robert Toll in a news
release Wednesday. "As pent-up demand is released, we envision a
gradual and elongated recovery for housing."
Toll has said its customers benefit from higher home prices, as
many of its customers are selling their homes and upgrading.
In the latest quarter, signed contracts rose 25% in value from a
year earlier to $1.6 billion, with an average price of $826,000, up
13% from a year earlier.
The company said its California communities accounted for about
30% of the total value of signed contracts in the quarter.
Overall, for the fiscal second quarter ended April 30, the
company posted a profit of $67.9 million, or 37 cents a share,
compared with $65.2 million, or 35 cents a share, a year
earlier.
The quarter's results included an $18.6 million income tax
provision, down from $28.3 million a year earlier.
Revenue inched down about 1% to $852.6 million.
Analysts polled by Thomson Reuters had expected a per-share
profit of 35 cents on revenue of $861.2 million.
The company's gross margin widened to 25.3% from 23.7% a year
earlier, excluding interest and write-downs.
The company said it delivered 1,195 units in the period, down 2%
from the year-ago quarter. The average price of homes delivered was
$713,000, compared with $706,000 a year ago.
For its fiscal year ending in October, the company narrowed its
delivery guidance to between 5,300 and 5,900 homes, compared with
its previous guidance of 5,200 to 6,000 homes. The company also
lifted the lower end of its average price forecast by $5,000, now
calling for $730,000 to $760,000.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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