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Toll Brothers, Inc. (TOL - Free Report) reported an impressive third-quarter fiscal 2023 (ended Jul 31, 2023). Its top and bottom lines surpassed the Zacks Consensus Estimate and increased impressively on a year-over-year basis. The company outpaced its previously provided guidance for all the metrics amid ongoing challenges in the industry.
The company’s quarterly results reflected improved market demand on the back of historically low levels of resale inventory, favorable long-term demographic trends and the persistent underproduction of homes for more than a decade. This, combined with its policy of boosting its supply of spec homes and focus on operational efficiency, has helped TOL deliver solid fiscal third-quarter results.
Shares of this leading luxury homebuilder gained 0.45% in the after-hours trading session on Aug 22, following the release. Investors’ sentiment might have gotten a boost from solid net signed contracts for the quarter and an increased fiscal 2023 guidance.
Earnings & Revenue Discussion
This Fort Washington, PA-based homebuilder delivered adjusted earnings of $3.73 per share, which beat the Zacks Consensus Estimate of $2.86 by 30.4% and increased by 58.7% from the year-ago period.
Toll Brothers Inc. Price, Consensus and EPS Surprise
Total revenues (including Home sales and Land sales and others) came in at $2.69 billion, which beat the consensus mark of $2.47 billion by 8.8% and increased by 7.7% year over year.
Inside the Headlines
The company’s total home sales revenues grew 19% from the prior-year quarter to $2.67 billion. Homes delivered were up 4.6% year over year to 2,524 units. Deliveries increased across the South and Pacific geographic regions served by the company. The average price of homes delivered was $1,059,700 for the quarter, up from the year-ago level of $934,700.
Net-signed contracts for the reported quarter was 2,245 units, up 77.3% year over year. The value of net signed contracts was $2.16 billion, reflecting a rise of 30.1%.
At the fiscal third-quarter end, Toll Brothers had a backlog of 7,295 homes, representing a year-over-year decrease of 32%. Potential revenues from backlog declined by 29.7% year over year to $7.87 billion. The average price of homes in the backlog totaled $1,079,500, up from $1,042,900 a year ago.
The cancelation rate (as a percentage of signed contracts) for the reported quarter was 9.8% compared with 13% in the prior-year period.
Margins
The company’s adjusted home sales gross margin was 29.3%, expanding 140 basis points (bps) for the quarter. SG&A expenses, as a percentage of home sales revenues, were 8.6%, which decreased 170 bps from the year-ago quarter.
Financials
TOL had cash and cash equivalents of $1,033.4 million at the end of third-quarter fiscal 2023 compared with $1,346.8 million at the fiscal 2022-end. At July 2023-end, it had $1.8 billion available under the $1.9 billion bank revolving credit facility, scheduled to mature in February 2028.
Total debt at the fiscal third-quarter end was $2.83 billion, down from $3.33 billion at the fiscal 2022-end. Debt to capital was 29.7% at the fiscal third-quarter end, down from 35.7% at the fiscal 2022-end.
During the quarter, the company repurchased 1.9 million shares of its common stock at an average price of $76.26 per share, for approximately $147.3 million.
Fiscal Fourth-Quarter Guidance
Toll Brothers expect home deliveries of 2,650-2,750 units (indicating a decrease from 3,765 units delivered in the prior-year quarter) at an average price of $1,005,000-$1,025,000 (suggesting a rise from $951,100 a year ago).
Adjusted home sales gross margin is expected to be 28.5%, implying a decline from 29% in the year-ago period. SG&A expenses are estimated to be 8.8% of home sales revenues, indicating a rise from 7.7% in the year-ago period. The company expects the effective tax rate to be 26%.
Fiscal 2023 Guidance Raised
For fiscal 2023, home deliveries are now anticipated to be in the range of 9,500-9,600 units versus 8,900-9,500 units expected earlier. The estimated range reflects a decline from 10,515 units in fiscal 2022.
The average price is expected to be $1,005,000-$1,015,000 versus an earlier projection of $975,000-$995,000. The estimated range reflects an increase from $923,600 reported in fiscal 2022.
Toll Brothers expects an adjusted home sales gross margin of 28.5% (versus 27.8% expected earlier) compared with 27.5% reported in fiscal 2022. SG&A expenses, as a percentage of home sales revenues, are projected to be 9.4% for fiscal 2023 versus an earlier expectation of 10%. In the year-ago period, the metric was 10.1%. The company expects the effective tax rate to be 25.4%.
Quanta Services Inc. (PWR - Free Report) reported mixed results for second-quarter 2023, where adjusted earnings missed the Zacks Consensus Estimate but revenues surpassed the same. Both metrics were up on a year-over-year basis.
The company continues to experience high demand for its infrastructure solutions that support energy transition initiatives and increase reliability, safety and efficiency. Project activity associated with renewable generation has been going strong and is expected to continue throughout the year.
Jacobs Engineering Group Inc. (J - Free Report) reported mixed results for third-quarter fiscal 2023 (ended Jun 30, 2023), with earnings missing the Zacks Consensus Estimate but revenues surpassing the same.
Earnings declined year over year, but revenues increased on the back of solid performance across the portfolio. It also reported a near-record backlog thanks to a robust opportunity set, led by People and Places Solutions’ operating profit growth of 13% year-over-year.
Fluor Corporation (FLR - Free Report) reported stellar results for second-quarter 2023, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate and increased from the previous year, given solid demand for its engineering and construction solutions.
Given the strong underlying performance of the company’s non-legacy portfolio and large Energy Solutions projects, Fluor lifted its expectations for 2023.
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Toll Brothers (TOL) Q3 Earnings Beat, FY23 Guidance Raised
Toll Brothers, Inc. (TOL - Free Report) reported an impressive third-quarter fiscal 2023 (ended Jul 31, 2023). Its top and bottom lines surpassed the Zacks Consensus Estimate and increased impressively on a year-over-year basis. The company outpaced its previously provided guidance for all the metrics amid ongoing challenges in the industry.
The company’s quarterly results reflected improved market demand on the back of historically low levels of resale inventory, favorable long-term demographic trends and the persistent underproduction of homes for more than a decade. This, combined with its policy of boosting its supply of spec homes and focus on operational efficiency, has helped TOL deliver solid fiscal third-quarter results.
Shares of this leading luxury homebuilder gained 0.45% in the after-hours trading session on Aug 22, following the release. Investors’ sentiment might have gotten a boost from solid net signed contracts for the quarter and an increased fiscal 2023 guidance.
Earnings & Revenue Discussion
This Fort Washington, PA-based homebuilder delivered adjusted earnings of $3.73 per share, which beat the Zacks Consensus Estimate of $2.86 by 30.4% and increased by 58.7% from the year-ago period.
Toll Brothers Inc. Price, Consensus and EPS Surprise
Toll Brothers Inc. price-consensus-eps-surprise-chart | Toll Brothers Inc. Quote
Total revenues (including Home sales and Land sales and others) came in at $2.69 billion, which beat the consensus mark of $2.47 billion by 8.8% and increased by 7.7% year over year.
Inside the Headlines
The company’s total home sales revenues grew 19% from the prior-year quarter to $2.67 billion. Homes delivered were up 4.6% year over year to 2,524 units. Deliveries increased across the South and Pacific geographic regions served by the company. The average price of homes delivered was $1,059,700 for the quarter, up from the year-ago level of $934,700.
Net-signed contracts for the reported quarter was 2,245 units, up 77.3% year over year. The value of net signed contracts was $2.16 billion, reflecting a rise of 30.1%.
At the fiscal third-quarter end, Toll Brothers had a backlog of 7,295 homes, representing a year-over-year decrease of 32%. Potential revenues from backlog declined by 29.7% year over year to $7.87 billion. The average price of homes in the backlog totaled $1,079,500, up from $1,042,900 a year ago.
The cancelation rate (as a percentage of signed contracts) for the reported quarter was 9.8% compared with 13% in the prior-year period.
Margins
The company’s adjusted home sales gross margin was 29.3%, expanding 140 basis points (bps) for the quarter. SG&A expenses, as a percentage of home sales revenues, were 8.6%, which decreased 170 bps from the year-ago quarter.
Financials
TOL had cash and cash equivalents of $1,033.4 million at the end of third-quarter fiscal 2023 compared with $1,346.8 million at the fiscal 2022-end. At July 2023-end, it had $1.8 billion available under the $1.9 billion bank revolving credit facility, scheduled to mature in February 2028.
Total debt at the fiscal third-quarter end was $2.83 billion, down from $3.33 billion at the fiscal 2022-end. Debt to capital was 29.7% at the fiscal third-quarter end, down from 35.7% at the fiscal 2022-end.
During the quarter, the company repurchased 1.9 million shares of its common stock at an average price of $76.26 per share, for approximately $147.3 million.
Fiscal Fourth-Quarter Guidance
Toll Brothers expect home deliveries of 2,650-2,750 units (indicating a decrease from 3,765 units delivered in the prior-year quarter) at an average price of $1,005,000-$1,025,000 (suggesting a rise from $951,100 a year ago).
Adjusted home sales gross margin is expected to be 28.5%, implying a decline from 29% in the year-ago period. SG&A expenses are estimated to be 8.8% of home sales revenues, indicating a rise from 7.7% in the year-ago period. The company expects the effective tax rate to be 26%.
Fiscal 2023 Guidance Raised
For fiscal 2023, home deliveries are now anticipated to be in the range of 9,500-9,600 units versus 8,900-9,500 units expected earlier. The estimated range reflects a decline from 10,515 units in fiscal 2022.
The average price is expected to be $1,005,000-$1,015,000 versus an earlier projection of $975,000-$995,000. The estimated range reflects an increase from $923,600 reported in fiscal 2022.
Toll Brothers expects an adjusted home sales gross margin of 28.5% (versus 27.8% expected earlier) compared with 27.5% reported in fiscal 2022. SG&A expenses, as a percentage of home sales revenues, are projected to be 9.4% for fiscal 2023 versus an earlier expectation of 10%. In the year-ago period, the metric was 10.1%. The company expects the effective tax rate to be 25.4%.
Zacks Rank & Recent Releases
Toll Brothers currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quanta Services Inc. (PWR - Free Report) reported mixed results for second-quarter 2023, where adjusted earnings missed the Zacks Consensus Estimate but revenues surpassed the same. Both metrics were up on a year-over-year basis.
The company continues to experience high demand for its infrastructure solutions that support energy transition initiatives and increase reliability, safety and efficiency. Project activity associated with renewable generation has been going strong and is expected to continue throughout the year.
Jacobs Engineering Group Inc. (J - Free Report) reported mixed results for third-quarter fiscal 2023 (ended Jun 30, 2023), with earnings missing the Zacks Consensus Estimate but revenues surpassing the same.
Earnings declined year over year, but revenues increased on the back of solid performance across the portfolio. It also reported a near-record backlog thanks to a robust opportunity set, led by People and Places Solutions’ operating profit growth of 13% year-over-year.
Fluor Corporation (FLR - Free Report) reported stellar results for second-quarter 2023, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate and increased from the previous year, given solid demand for its engineering and construction solutions.
Given the strong underlying performance of the company’s non-legacy portfolio and large Energy Solutions projects, Fluor lifted its expectations for 2023.