Toll Brothers Sees Strong 2017, Powered by Millennial Buyers
December 06 2016 - 8:00AM
Dow Jones News
Toll Brothers Inc. on Tuesday again reported double-digit
revenue growth in its latest quarter and projected continuing
strong performance in 2017 as the home builder lures millennial
buyers.
Chief Executive Douglas Yearley Jr. said in prepared remarks
that about 22% of the company's settlements included one primary
buyer who is 35 or younger. Many are snatching up urban condos and
rental apartment properties, as well as Toll Brother's core
suburban homes.
"With the millennial generation now entering their thirties and
forming families, we are starting to benefit from the desire for
home ownership from the affluent leading edge of this huge
demographic wave," Mr. Yearley said.
Results in the fourth quarter were broad-based across the
country, with every region showing contract growth for its
traditional home building business.
However, the company reported fewer contracts for its City
Living division, which builds urban apartments. Revenue in the
segment decreased sharply to $13.9 million from $131.1 million in
the year-ago period. The average price per unit jumped to $2.3
million from $1.7 million.
As a luxury home builder, Toll Brothers has faced concerns about
exposure to high-end markets that are softening, including New York
City. The company on Tuesday gave a rosy outlook for performance in
its current year, with Mr. Yearley noting "positive demand trends
in many regions."
Over all for the October quarter, Toll posted a profit of $114.4
million, or 67 cents a share, down from $147.2 million, or 80 cents
a share, a year prior.
The results included a $121.2 million warranty charge primarily
related to older stucco homes in the Mid-Atlantic region.
Revenue rose 29% to $1.86 billion.
The company delivered 2,224 units in the quarter, an increase of
22% over the year-earlier period. Toll Brothers ended the year with
a backlog of $3.98 billion, up 14% from a year ago.
National home prices reached a record high in September,
according to the latest reading by the S&P CoreLogic
Case-Shiller index. But home building remains far below historical
levels typically associated with recovering markets.
Shares of Toll Brothers, which have declined 1.6% over the past
three months, were inactive premarket.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
December 06, 2016 07:45 ET (12:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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