- February contracts flat because of market turmoil, CEO says
- Builder is `optimistic' for spring sales, with traffic up 13%
Toll Brothers Inc., the largest U.S. luxury-home builder, reported an 18 percent increase in orders for its fiscal first quarter, while labor shortages led to fewer completed sales.
Contracts were signed for 1,250 homes in the three months through January, up from 1,063 a year earlier, Toll said in a statement Tuesday. The value of those contracts rose 24 percent to $1.09 billion. The Horsham, Pennsylvania-based builder delivered 1,063 homes in the quarter, down 3 percent from a year earlier. The average selling price climbed almost 12 percent to $873,500.
Toll has expanded in areas such as New York and California that are seeing some of the country’s highest home prices as well as continued job growth that’s supporting demand for the luxury homes it builds. Global economic turmoil and the slide in equity markets have led to a slowdown in deals for the beginning of Toll’s second quarter, according to Chief Executive Officer Douglas Yearley.
While deposits and contracts signed this month were little changed from a year earlier, traffic was up 13 percent, Yearley said in a conference call with investors Tuesday. “This gives us reason for optimism for the balance of the spring selling season.”
Toll shares rose 3.8 percent to close at $27.02. They have fallen 19 percent this year, compared with a 14 percent drop for the Standard & Poor’s Supercomposite Homebuilding Index.
Toll said it expects to deliver 5,700 to 6,400 homes in the fiscal year at an average price of $810,000 to $850,000. That compares to December’s projection of 5,600 to 6,600 homes at an average price of $800,000 and $850,000.
Net income for the three months through January was $73.2 million, or 40 cents a share, compared with $81.3 million, or 44 cents, a year earlier, the company said. The average of 14 estimates was for 40 cents a share, according to data compiled by Bloomberg. The gross margin contracted to 26.9 percent from 27.3 percent a year earlier.
Toll Brothers also announced the retirement of Vice Chairman Bruce Toll from the board of directors effective March 8, the date of the company’s annual stockholder meeting. Bruce Toll co-founded the company in 1967 with his brother Bob.