Rising home prices might have depressed sales of previously-owned homes in January, but for luxury home builder
Toll Brothers reported $835.5 million in first quarter fiscal 2015 revenue, a 33% increase over the year-ago quarter that easily beat Wall Street's $773.5 million forecast. Net income for the quarter came in at $81.3 million, a whopping 78% surge that resulted in 44 cents of earnings per share, a figure that beat the 30-cent per-share analyst consensus.
The company benefited from an increase in signed contracts and home prices: signed contracts for the quarter rose 24% in dollars and 16% in units to $873.2 million and 1,063 units, respectively. The average price of net signed contracts was $821,500, up from $766,100 in the year-ago period. The 1,091 units delivered during the quarter were delivered at an average price of $782,300, up 13% from $693,600 during the same time in 2014.
"We continue to benefit from our ongoing geographic diversification strategy. While we remain the dominant luxury builder in the suburban Washington, DC to Boston corridor, our growth in the West and South and in urban centers has expanded our brand into more locations and product lines," Toll Brothers CEO Douglas Yearley said in a statement Tuesday morning. Yearley went on to specifically praise the company's California operations, noting that California produced 29% of the value of Toll Brothers' signed contracts at an average price of $1.1 million.
Toll Brothers' first quarter results offer a contrast to January's existing home sales figures, which the National Association of Realtors revealed fell 4.9%, hitting their lowest levels in nine months. "The lack of new and affordable listings is leading some to delay decisions," NAR chief economist Lawrence Yun said in Monday's release. But Toll Brothers executive chairman Robert Toll is choosing to look at the brighter side of the price increases.
"With the latest release from the National Association of Realtors citing home price appreciation, our buyers, who often are selling a home to move up, will have more money to invest in their new home and more potential customers to buy their existing home," Toll said in a statement Tuesday morning. He went on to list the other reasons he feels confident about the future of the housing market, including jobs data from the Labor Department and a recent consumer confidence report from the Conference Board that showed consumer confidence in January reached its highest level since August of 2007.
"More jobs and better jobs should boost household formations and provide a basis for stronger housing demand," he said. "We believe these positive macroeconomic trends, coupled with recent Federal initiatives to increase mortgage availability, should support housing's recovery."
Due to the strength of its first fiscal quarter, Toll Brothers said Tuesday that it is raising its full-year delivery and pricing guidance: the company is now projecting to deliver 5,200 to 6,000 homes at an average price of $725,000 to $760,000, a forecast that is up from its prior projection of 5,000 to 6,000 homes delivered at an average price of $710,000 to $760,000.
Following the release of the earnings results, shares of Toll Brothers rose in Tuesday's pre-market trading session and continued to climb after the opening bell. The stock is currently up 4.3%; year-over-year, the stock is down 0.5%.
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