Luxury home builder Toll Brothers (TOL 40.53, -3.10, -7.11%)
is trading lower following mixed second quarter results this morning.
Revenues grew 17% to $1.60 bln, the highest second quarter ever with growth in every region. Home building deliveries were up 15% to 1,886 units versus 1,825-1,925 guidance. The average selling price came in at $848K vs. $825-850K guidance.
Net signed contracts growth slowed quarter/quarter; orders grew 18% to $2.38 bln, the highest quarter ever; contract units grew 6% to 2,666.
Adjusted gross margin fell 180 basis points year/year to 22.5% vs. 22.8% guidance. Record lumber prices are the likely culprit.
Toll Brother reported GAAP EPS of $0.72 but excluding inventory impairments, EPS of $0.80 was $0.04 better than expected.
The company raised/narrowed fiscal 2018 delivery guidance to 8.0-8.5K from 7.8-8.6K and ASP guidance to $830-860K from 820-860K. The company reaffirmed gross margin and SG&A expense guidance.
Backlog value at second-quarter end rose 27% to $6.36 bln, the highest second quarter ever; units totaled 7,030 - up 17%.
Chief Executive Douglas Yearley: "Our double-digit dollar growth in revenues, contracts and backlog reflects the health of the luxury new home market. We had another solid spring selling season. The value of signed contracts, the highest quarter in our history, rose 18% in dollars on a 6% increase in units. On a same-store-basis, signed contracts of 9.04 per community were up 16% from last year and the highest for a second quarter since FY 2005. This was our eighth consecutive quarter of year/year same-store contract growth... Based on this projected increase in community count, our record second-quarter backlog, the quality of our brand and land portfolio, the financial strength of the affluent home buyer and the breadth of demographic segments we serve, we believe FY 2019 will be another year of growth as well."
Toll Brothers continues to buy back its stock as the stock trades at 10x EPS estimates and 1.5x book value.
Management will host a call at 11:00 a.m.(EDT). Analysts will be focused on order growth and the cost outlook.
- OUR VIEW
- LEARNING CENTER