Luxury home builder Toll Brothers Inc. (TOL) Wednesday reported a higher second-quarter profit, as deliveries grew benefited by demand in its luxury market. Higher pricing also boosted its results. Earnings per share and revenues topped analysts' expectations. Backed by a strong backlog, the firm expects continued growth over the next few years.
Douglas Yearley, Jr., chief executive officer said, "Demand accelerated significantly this quarter. Increased pricing power and stronger sales drove our agreements up 57% in dollars and 36% in units - the highest for any quarter in seven years."
Homebuilding deliveries during the quarter were 894 units, up 33 percent from a year earlier. Average price of homes delivered was $577,000, higher than $557,000 in the same quarter last year.
Backlog at the end of the quarter rose 69 percent to $2.53 billion, while units increased 52 percent to 3,655 units from the second quarter of fiscal 2012. Average price of homes in backlog was $693,000, compared to $624,000 a year earlier.
Based on its second-quarter-end backlog and pace of activity at its communities, the company currently estimates to deliver between 3,850 and 4,200 homes in fiscal 2013. Average delivered price for the year is estimated to be in the range of $610,000 to $630,000 per home.
In the second quarter, the company's net income increased to $24.67 million or $0.14 per share from $16.87 million or $0.10 per share reported last year.
On average, 20 analysts polled by Thomson Reuters expected the company to earn $0.07 per share for the quarter. Analysts' estimates typically exclude special items.
Pre-tax income was $41 million, up from $15.6 million in the year-ago quarter. The recent-quarter result included a pre-tax gain of $13.2 million in other income associated with settlement of derivative litigation, the company said.
Revenues for the quarter climbed 38 percent to $516 million from $373.68 million in the preceding year, which also came slightly above analysts' estimate of $511.06 million.
Gross margin, excluding interest and write-downs, improved to 23.3 percent from 23.2 percent in the prior year. The firm believes the improvement in gross margin will continue in the second half of the year.
TOL closed Tuesday's regular trading at $36.01 on the NYSE. In the pre-market activity, the shares are currently up 3.72 percent.
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