FORT WASHINGTON, Pa. - Toll Brothers , Inc. (NYSE:TOL), a prominent builder of luxury homes, reported a robust second quarter, surpassing analyst expectations for both earnings per share (EPS) and revenue. The company's EPS for the quarter was $4.55, outperforming the consensus estimate of $4.14. Revenue also exceeded forecasts, coming in at $2.84 billion against an anticipated $2.58 billion.
The company's financial success in the second quarter, ending April 30, 2024, was highlighted by a net income of $481.6 million, a significant increase from $320.2 million in the same quarter the previous year. This performance was partly due to a one-time gain of $124.1 million from the sale of a parcel of land. Excluding this gain, the adjusted net income was $357.5 million, with an adjusted EPS of $3.38.
Home sales revenues grew by 6% year-over-year (YoY) to $2.65 billion, with the number of homes delivered also up by 6%. The net signed contract value saw a remarkable 29% YoY increase, while the contracted homes rose by 30%. However, the backlog value decreased by 12% compared to the previous year, and homes in backlog were down by 6%.
Toll Brothers' Chairman and CEO, Douglas C. Yearley, Jr., expressed satisfaction with the results, citing strong home building performance, strategic land sales, and effective cost management as key contributors to the quarter's success. Yearley also noted the company's increased full-year revenue and earnings guidance, expecting to earn approximately $14.00 per diluted share for fiscal 2024.
The company's stock responded positively to the earnings release, with a modest increase of 1.5%. This movement, while below the 2% threshold for significant market response, still indicates investor approval of the company's performance.
Looking ahead, Toll Brothers provided guidance for the third quarter and full fiscal year 2024, projecting deliveries between 2,750 to 2,850 units and an average delivered price per home of $950,000 to $960,000.
The adjusted home sales gross margin is expected to be 27.7%, with SG&A expenses at 9.2% of home sales revenues. Other income, income from unconsolidated entities, and gross margin from land sales and other are projected to be around $260 million, with a tax rate of 26.0%.
Toll Brothers' financial position remains strong, with approximately $1.03 billion in cash and cash equivalents and $1.7 billion available under its revolving credit facility. The company also continues to return value to shareholders, having repurchased $181 million of common stock and increased its quarterly dividend by 10%.
In conclusion, Toll Brothers' second-quarter results have set a positive tone for the company's outlook, with management's strategic initiatives and robust demand for luxury homes driving growth and profitability.
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