Toll Brothers Q2 Profit Rises Amid Lower Taxes

(RTTNews) - Luxury home builder Toll Brothers Inc. (TOL) Wednesday said its second-quarter profit increased from the previous year, helped by lower taxes. Revenues fell from the prior year and missed estimates. Further, the company tightened its expectation of home deliveries for the year.

Net income grew to $67.9 million or $0.37 per share from $65.2 million or $0.35 per share in the previous year.

On average, 20 analysts polled by Thomson Reuters expected the company to report profit per share of $0.35 for the quarter. Analysts' estimates typically exclude special items.

Income before income taxes fell to $86.53 million from $93.48 million. The latest results included write-downs of $12.2 million, compared to $1.9 million last year.

Excluding write-downs, second-quarter pre-tax income was $98.7 million, compared to $95.4 million in the previous year.

Total revenues slipped 1 percent to $852.6 million from $860.4 million. Analysts expected revenues of $861.15 million for the quarter.

Home building deliveries slid 2 percent to 1,195 units, while the average price of homes delivered rose to $713 thousand from $706 thousand a year ago.

Net signed contracts climbed 10 percent to 1,931 units, and 25 percent to $1.60 billion.

The effective tax rate fell to 21.5 percent from 30.2 percent, due to the positive resolution of a state tax matter.

Further, the company said contracts for the first four weeks of the third quarter were flat due to a lackluster first week. However, the home builder has seen robust improvement in the past three weeks with contracts in units up 29 percent and deposits increasing 33 percent.

The company also said that its rental apartment business continues to grow, and it is currently leasing up two new communities totaling 685 units at faster paces and higher rents than projected.

Toll Brothers now expects to deliver between 5,300 and 5,900 homes in fiscal 2015. The company now believes the average delivered price will be between $730 thousand and $760 thousand per home. The firm still expects to end fiscal 2015 with between 270 and 310 selling communities.

In February, the company projected delivery of between 5,200 and 6,000 homes in fiscal 2015 at an average price of $725 thousand to $760 thousand.

Douglas Yearley, Jr., Toll Brothers' CEO, said: "As we look to fiscal 2016, we currently expect gross margin and net income growth based on an increase in the average price of our homes, our growing and profitable presence in California, increased revenues projected from our City Living division, and overall solid current demand in most of our markets."

TOLL closed down 1.9 percent on Tuesday at $36.99.