Toll Brothers Q2 Profit Tops Estimates; Narrows FY16 Guidance

(RTTNews) - Toll Brothers, Inc. (TOL), the nation's leading builder of luxury homes, reported second-quarter net income of $89.1 million, or $0.51 per share, compared to $67.9 million, or $0.37 per share, prior year. Pre-tax income increased to $140.4 million from $86.5 million. On average, 18 analysts polled by Thomson Reuters expected the company to report profit per share of $0.46 for the quarter. Analysts' estimates typically exclude special items.

Revenues of $1.12 billion and home building deliveries of 1,304 units increased 31% in dollars and 9% in units, compared to prior year. The average price of homes delivered was $855,500, compared to $713,500, last year. Analysts expected revenue of $1.04 billion for the quarter.

Net signed contracts were $1.65 billion and 1,993 units rose 3% in dollars and 3% in units, compared to a year ago. Gross margin, excluding interest and write-downs, was 25.7%, compared to 25.3%.

Douglas Yearley, Jr., Toll Brothers' CEO, said: "Our revenues this quarter were up 31%, compared to last year while pre-tax income rose 62% and net income rose 31%. Improvements in gross margin, SG&A leverage and pre-tax margin contributed to a significant earnings jump this quarter."

Toll Brothers now expects to deliver between 5,800 and 6,300 homes in fiscal 2016 at an average price range of $820 thousand to $850 thousand. This translates to projected revenues of between $4.76 billion and $5.36 billion in fiscal 2016. In February, the company estimated to deliver between 5,700 and 6,400 homes, at average price of between $810 thousand and $850 thousand per home, which translated to projected revenues of between $4.6 billion and $5.4 billion. Analysts expect revenue of $5.01 billion for the fiscal year.

The company continues to project a full fiscal 2016 gross margin, excluding interest and write-downs, of between 25.8% and 26.2%.

Effective May 23, 2016, the Board of Toll Brothers authorized the repurchase of 20 million shares of common stock for general corporate purposes and for the purpose of providing shares for the company's equity award and other employee benefit plans, and terminated the prior share repurchase program.

During the second quarter of 2016, the company repurchased approximately 2.9 million shares of its common stock at an average price of $27.27 for a total purchase price of $80.1 million. In third quarter to-date, the company has repurchased approximately 1.8 million shares of its common stock at an average price of $26.50 for a total purchase price of $47.3 million.