Toll Brothers Inc. (NYSE: TOL) reported on Wednesday that its fiscal second-quarter profit climbed 46% as vastly improving U.S. housing market allowed the luxury homebuilder to sell more homes at higher average prices.
Shares rallied after the results were announced.
The Horsham Pa. based Company has been benefitting due to record low interest rates, improving macroeconomic environment and soaring rents.
However, increasing costs for land, higher prices for building materials and labor have weighed on homebuilders’ sentiment, lately. In the preceding quarter, Toll Brothers missed analysts’ estimation as higher costs including lumber prices put pressure on the bottom line.
Still, Toll exceeded Street’s expectation in the fiscal second quarter as tighter inventory management of existing homes helped offsetting rising costs.
Besides, the recently concluded quarter was particularly strong in term of new orders. The Company said that it received record number of orders in the second quarter in last seven years. New Orders, a key metric on homebuilder’s performance as revenue is only recognized once it closes on a home, soared 36% to 1,753 homes.
Average prices of home delivered during the quarter increased 3.6% to $577,000 from same quarter of last fiscal while net signed contracts (total value of contracts) jumped 57% to $1.19 billion.
Commenting over the results, Toll Brothers Chief Executive Douglas Yearley said in a statement, “Buyers who have been on the sidelines for six years are jumping in”
For the fiscal fourth quarter ended April 30, the homebuilder reported net income of $24.7 million or 14 cents a share compared to a profit of $16.9 million or 10 cents a share, in the same quarter of last year. In the recently concluded quarter, the Toll Brothers recorded $16.3 million for income tax expenses while in the same quarter of last year it recorded a income tax benefit of $1.2 million.
Revenue soared 38% to $516 million.
Excluding onetime, the company earned 9 cents a share.
Analysts’ consensus estimate was for earnings of 7 cents a share on revenue of of $512.4 million, according to a data compiled by Thomson Reuters.
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