Toll Brothers Reports Increase in Contracts, Profit Decline
February 22 2017 - 7:51AM
Dow Jones News
By Austen Hufford
Toll Brothers Inc. reported that quarterly revenue and profit
declined as contracts in its city-focused apartment unit fell.
Still, contracts rose in its five other markets and despite
rising interest rates, which can make mortgages more expensive, the
company said there was an acceleration in contracts from November
to December to January. The Federal Reserve raised its benchmark
interest rate in December, the second increase after years of
near-zero rates.
Toll Brothers shares rose 3.1% in premarket trading.
New home building reached its highest level since 2007 but
remains below historical averages.
"The pent-up demand of the past seven years may be starting to
release, bringing more buyers into the market," Executive Chairman
Robert Toll said.
With rising home prices, a growing stock market and low
unemployment, Mr. Toll said the housing outlook for 2017 is
favorable and could lead to higher home prices.
Financial chief Martin Connor said earnings, revenue and gross
margin came in better than anticipated.
As a luxury home builder, Toll Brothers has faced concerns about
exposure to high-end markets that are softening, including New York
City.
Revenue in its City Living segment decreased sharply to $17.9
million from $137 million in the year-ago period with the average
price per unit increasing to $4.5 million from $3 million.
In all for the quarter ending Jan. 31, Toll posted a profit of
$70.4 million, or 42 cents a share, down from $73.2 million, or 40
cents a share, a year prior.
Revenue fell 0.8% to $920.7 million.
New contracts rose 14% to $1.24 billion. The company delivered
1,190 units in the quarter, an increase of 12% over the
year-earlier period, as the price of the homes fell 11% due to
changes in product mix. Toll Brothers ended the year with a backlog
of $4.35 billion, up 19% from a year ago.
On Tuesday the company separately said it would start paying a
quarterly dividend, with the first one being paid out on April 28
for 8 cents a share.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
February 22, 2017 07:36 ET (12:36 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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