Luxury homebuilder Toll Brothers, Inc. (TOL: Quote) said Wednesday higher home deliveries and increased prices together with lower impairments helped it report a quarterly profit.
CEO Douglas Yearley, Jr. said, "It appears that the housing market has moved into a new and stronger phase of recovery -- The spring selling season has been the most robust and sustained since the downturn began."
For the second quarter, Toll Brothers reported a net profit of $16.87 million or $0.10 per share, compared to a net loss of $20.77 million or $0.12 per share last year. Write-downs and joint venture impairments were much lesser compared to a year ago.
On average, 21 analysts polled by Thomson Reuters expected the company to earn $0.04 per share. Analysts' estimates typically exclude special items.
Revenues rose 17 percent to $373.68 million, but missed Wall Street analysts' consensus estimate of $381.69 million. Home building deliveries climbed 14 percent to 671 units.
The company noted that its net signed contracts rose 51 percent in dollars to $754.7 million and 47 percent in units to 1,290. Cancellation rate was much lower at 2.4 percent, compared to 7.9 percent a year ago.
The average price of net signed contracts increased 2.6 percent to $585 thousand, positively impacted by contracts signed at The Touraine, which is under construction on Manhattan's Upper East Side.
The company's second-quarter end backlog was $1.50 billion or 2,403 units, a growth of 49 percent in dollars and 37 percent in units.
Non-binding reservation deposits, a leading indicator of future contracts, are running 39 percent ahead on a gross basis for the first three weeks of May, it noted.
Looking ahead, Toll Brothers anticipates delivering approximately 10 percent more homes in the fourth quarter than in the third quarter and that the average delivered price for the next two quarters will be between $560,000 and $580,000 per home.
Executive Chairman Robert Toll said, "We would like to say 'We're back', but we need a little more confirmation: Nonetheless, it sure feels good, compared to the desert we've just crossed."
For the full year, the company expects to deliver between 2,700 and 3,200 homes. Selling communities for the year are now expected to be between 230 and 245, a slight decrease from its previous range of guidance due to the faster sell-out of certain communities than previously projected due to stronger demand.
"While domestic and global "headline risk" remains a concern in potentially undermining buyer confidence, with mortgage rates at historic lows and inventory supplies dropping in many markets, we are feeling better than we have at any time in the past five years," Yearley added.
Toll Brothers' shares closed Tuesday's trading at $27.03, up $0.47 or 1.77 percent.
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by RTT Staff Writer
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