Toll Brothers Earnings Up, More Houses Sold

If Toll Brothers' double-digit profit increases and even pricier homes are any indication, the luxury homebuilding market appears to have bounced back. 

On a second quarter earnings call this week, Horsham-based Toll Brothers executives shared that the company's fiscal year second quarter, which ended on April 30, produced a net income of $24.7 million or 14 cents per share compared to net income of $16.9 million or 10 cents per share in last year's second quarter, according to a transcript of the call. 

data that Bloomberg compiled showed 7 cents a share based on the average of 14 analyst projections.

Besides beating those estimates, Second quarter revenues jumped 38 percent in dollars and 33 percent in units, Toll Brothers CEO Douglas C. Yearley Jr. said during the call. 

On a per community basis, the second quarter's net signed contracts were the highest for any second quarter since fiscal year 2006, Yearley said.

"Buyers who have been on the sidelines for six years are jumping in," Yearley said. "Low interest rates, improved customer confidence, a strong stock market, rising home prices, and a reawakening economy are stoking demand in our luxury market."

During the second quarter, Toll spent about $165 million on land and put under option another $381 million on land totaling 2,833 lots, Yearley said. 

"One year ago, we were somewhat reluctant to raise home prices for fear of crimping demand," he said. "Now we are finding that in many markets as prices increase, a sense of urgency takes hold and demand continues to rise."

The company has raised prices in the second quarter by about $26,000 per home on average to a total of $577,000. Looking ahead, Toll CFO and Treasurer Martin Connor said he expects the home price for the full year to be between $610,000 and $630,000. 

Robert I. Toll, the company's executive chairman said he believes the housing market "is still in the early stages of a recovery."

"Even so, this quarter our pace of contracts per community was consistent with second quarter paces we produced in the decade from '93 to 2003, as the industry normalized after the previous downturn," Toll said.