Toll Brothers Q1 Profit Misses Estimates; Updates 2016 Guidance For Deliveries

(RTTNews) - Toll Brothers, Inc. (TOL) reported first-quarter net income of $73.2 million, or $0.40 per share, compared to $81.3 million, or $0.44 per share, last year. Pre-tax income was $116.8 million, compared to $124.0 million, a year ago. On average, 18 analysts polled by Thomson Reuters expected the company to report profit per share of $0.41 for the quarter. Analysts' estimates typically exclude special items.

First-quarter total revenues of $928.6 million and 1,063 units increased 9% in dollars and declined 3% in units, compared to total revenues of $853.5 million and 1,091 units, prior year. Analysts expected revenue of $916.30 million for the quarter. The average price of homes delivered was $873,500, compared to $782,300, prior year.

Excluding write-downs and interest, first-quarter gross margin was 26.9%, compared to 27.3%, previous year. Gross margin, including write-downs and interest, was 23.3% versus 23.8%.

The company now estimates it will deliver between 5,700 and 6,400 homes in fiscal 2016, compared to previous guidance of 5,600 to 6,600 units. It now believes the average delivered price for 2016 will be between $810 thousand and $850 thousand per home, which translates to projected revenues of between $4.6 billion and $5.4 billion.

Martin Connor, Toll Brothers' CFO, stated: "We are experiencing modest lengthening of our production timelines associated with increasing complexity in our homes and a tighter labor market. As a result we are narrowing the full fiscal 2016 range of guidance for deliveries."

The company projects full 2016 gross margins, excluding interest and write-downs, of approximately 25.8% to 26.2%. For fiscal 2016, the company narrowed its guidance for Other income and Income from unconsolidated entities to a range of $105 to $130 million.

Douglas Yearley, Jr., Toll Brothers' CEO, said: "First quarter contracts and backlog were up 24% and 34%, respectively, in dollars, compared to one year ago. Deposits and contracts signed in the first three weeks of February, the start of our second quarter, were basically flat compared to the prior year. This is understandable given the recent stock market decline and global economic uncertainty. Positively, traffic was up 13% over the same three weeks and appears to be improving in quality."

Separately, Toll Brothers announced that Bruce Toll, Vice Chairman of the Board, has chosen to retire from its Board of Directors, effective on the date of the company's annual meeting of stockholders, March 8, 2016.