Toll Brothers Inc. on Tuesday reported double digit profit and revenue growth in the second quarter as the housing market continues its recovery.

The company said that homeowners have been building up home equity since the financial crisis and could soon move to new digs, either into bigger homes as children are born or downsizing as children move out.

"The solid economy and employment picture are also benefiting our target customers," said Executive Chairman Robert I. Toll.

The company narrowed its annual revenue guidance to a range of $4.96 billion to $5.27 billion. It had previously projected between $4.76 billion to $5.36 billion. Analysts polled by Thomson Reuters predicted $5.04 billion in revenue for the year.

For the quarter ended July 31, Toll posted a profit of $105.5 million, or 61 cents a share, up from $66.8 million, or 36 cents a share, a year prior.

Revenue rose 24% to $1.27 billion. Analysts had expected revenue of $1.25 billion and earnings per share of 61 cents.

Results in the second quarter were broad-based across the country, with every region showing contract growth.

Backlog jumped 19% during the period as contracts rose 13%.

Revenue from Toll's City Living division, which builds urban apartments, decreased 13% to $52.5 million as the average price per unit jumped to $3.8 million from $756,400 as the number of units slumped. The segment, much smaller than Toll's other regions, is a play on the growth of cities as the U.S. continues to urbanize.

Robert and Bruce Toll started Toll Brothers in 1967 in Pennsylvania. The company has focused on building more-customized and higher-end homes than competitors. The brothers took the company public in July 1986.

The homes in their first community in Chester County sold for an average of $20,000. The company said the average price of a home delivered in its second quarter was $842,700, up from $724,500 a year ago.

Shares of Toll Brothers, which have given 4.7% over the past three months, rose 0.6% to $29.50 in premarket trading.

Write to Austen Hufford at austen.hufford@wsj.com

 

(END) Dow Jones Newswires

August 23, 2016 07:35 ET (11:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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