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Toll Brothers (TOL) Q1 Earnings & Revenues Beat, Guidance Up
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Toll Brothers, Inc. (TOL - Free Report) reported solid results for first-quarter fiscal 2024 (ended Jan 31, 2024), wherein its top and bottom lines surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
Shares of this leading luxury homebuilder gained 1.3% during the trading session and 2.1% in the after-hours trading session on Feb 20.
Since mid-January, TOL has experienced a notable surge in demand coinciding with the onset of the spring selling season. Buoyed by a robust job market, improving consumer confidence, and sustained low levels of resale inventory, the company maintained an optimistic outlook for strong demand in the new homes market throughout 2024.
Following encouraging fiscal first-quarter performance and a robust start to the spring sales season, the company has revised upward its full-year guidance across all key metrics. Additionally, in February, the company completed the sale of a land parcel to a commercial developer, generating net cash proceeds of $180.7 million. This transaction is expected to yield a pre-tax land sale gain of approximately $175 million in the fiscal second quarter. Accounting for both the enhanced homebuilding guidance and the impact of the land sale, Toll Brothers now anticipates earnings per share (EPS) between $13.25 and $13.75 for fiscal 2024, alongside a return on beginning equity of around 21%.
Toll Brothers Inc. Price, Consensus and EPS Surprise
This Fort Washington, PA-based homebuilder delivered EPS of $2.25, which beat the Zacks Consensus Estimate of $1.77 by 27.1% and increased 32.4% from the year-ago period profit level of $1.70. The increase was due to higher revenues along with greater operating efficiency.
Total revenues (including Home sales and Land sales and others) came in at $1.95 billion, which beat the consensus mark of $1.87 billion by 4.1% and grew 9.4% year over year. The growth was attributable to higher deliveries and prices.
Inside the Headlines
The company’s total home sales revenues improved 10.4% from the prior-year quarter to $1.93 billion. Homes delivered were up 6% year over year to 1,927 units. Deliveries increased across the company’s geographic regions served by the company barring North, Mountain and Pacific. The average price of homes delivered was $1,002,600 for the quarter, up from the year-ago level of $958,300.
Moreover, net-signed contracts for the reported quarter were 2,042 units, up 40% year over year. The value of net signed contracts was $2.06 billion, reflecting a rise of 42%.
At the fiscal first-quarter end, Toll Brothers had a backlog of 6,693 homes, representing a year-over-year decrease of 13%. Potential revenues from backlog declined 18% year over year to $7.08 billion. The average price of homes in the backlog totaled $1,058,000, down from $1,110,200 a year ago.
The cancelation rate (as a percentage of signed contracts) for the reported quarter was 8.6% compared with 14.3% in the prior-year period.
Margins
The company’s adjusted home sales gross margin was 28.9%, expanding 140 basis points (bps) for the quarter. SG&A expenses, as a percentage of home sales revenues, were 11.9%, which decreased 20 bps from the year-ago quarter.
Financials
TOL had cash and cash equivalents of $754.8 million at the end of the fiscal first quarter compared with $1.3 billion at the fiscal 2023-end. At January 2024-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 2023-end was $2.72 billion, down from $2.86 billion at the fiscal 2023-end. Debt to capital was 28% at the fiscal first-quarter end, down from 29.6% at the fiscal 2023-end.
Fiscal Second-Quarter Guidance
Toll Brothers expect home deliveries of 2,400-2,500 units (versus 2,492 units delivered in the prior-year quarter) at an average price of $1,000,000-$1,010,000 (suggesting a rise from $999,300 a year ago). It expects period-end community count to be 385.
Adjusted home sales gross margin is expected to be 27.6%, implying a decrease from 28.3% in the year-ago period. SG&A expenses are estimated to be 9.7% of home sales revenues, indicating a rise from 9.1% in the year-ago period. The company expects the effective tax rate to be 25.8%.
Fiscal 2024 Guidance Raised
For fiscal 2024, home deliveries are now anticipated to be in the range of 10,000-10,500 units. The estimated range reflects growth from 9,597 units in fiscal 2023. It expects period-end community count to be 410.
The average price of delivered homes is still expected to be $940,000-$960,000. The estimated range reflects a decrease from $1,027,900 reported in fiscal 2023.
Toll Brothers now expects an adjusted home sales gross margin of 28% compared with 28.7% reported in fiscal 2023. SG&A expenses, as a percentage of home sales revenues, are now projected to be 9.8% for fiscal 2024. In the year-ago period, the metric was 9.2%. The company now expects the effective tax rate to be 25.5%.
Owens Corning (OC - Free Report) reported better-than-expected results for fourth-quarter 2023. Both earnings and net sales surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
Chair and chief executive officer of OC, Brian Chambers, said, “Looking ahead, we will continue to focus on delivering outstanding results in the near-term as we execute the strategic moves announced last week which will further strengthen our leadership in building and construction materials and position the company for long-term success.”
Martin Marietta Materials, Inc. (MLM - Free Report) reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis. Revenues missed the consensus mark but rose year over year.
Going forward, MLM anticipates strong demand for infrastructure, large-scale energy and domestic manufacturing projects. This will largely offset weaker residential demand and the anticipated softening in light non-residential activity. With mortgage rates stabilizing and affordability headwinds receding, MLM fully expects single-family residential construction to recover as demand still exceeds supply, particularly in its key markets.
Louisiana-Pacific Corporation (LPX - Free Report) , or LP, reported impressive fourth-quarter 2023 results. Earnings and net sales beat their respective Zacks Consensus Estimate.
On a year-over-year basis, LPX’s earnings increased on reduced costs and inflationary pressure despite lower net sales.
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Toll Brothers (TOL) Q1 Earnings & Revenues Beat, Guidance Up
Toll Brothers, Inc. (TOL - Free Report) reported solid results for first-quarter fiscal 2024 (ended Jan 31, 2024), wherein its top and bottom lines surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
Shares of this leading luxury homebuilder gained 1.3% during the trading session and 2.1% in the after-hours trading session on Feb 20.
Since mid-January, TOL has experienced a notable surge in demand coinciding with the onset of the spring selling season. Buoyed by a robust job market, improving consumer confidence, and sustained low levels of resale inventory, the company maintained an optimistic outlook for strong demand in the new homes market throughout 2024.
Following encouraging fiscal first-quarter performance and a robust start to the spring sales season, the company has revised upward its full-year guidance across all key metrics. Additionally, in February, the company completed the sale of a land parcel to a commercial developer, generating net cash proceeds of $180.7 million. This transaction is expected to yield a pre-tax land sale gain of approximately $175 million in the fiscal second quarter. Accounting for both the enhanced homebuilding guidance and the impact of the land sale, Toll Brothers now anticipates earnings per share (EPS) between $13.25 and $13.75 for fiscal 2024, alongside a return on beginning equity of around 21%.
Toll Brothers Inc. Price, Consensus and EPS Surprise
Toll Brothers Inc. price-consensus-eps-surprise-chart | Toll Brothers Inc. Quote
Earnings & Revenue Discussion
This Fort Washington, PA-based homebuilder delivered EPS of $2.25, which beat the Zacks Consensus Estimate of $1.77 by 27.1% and increased 32.4% from the year-ago period profit level of $1.70. The increase was due to higher revenues along with greater operating efficiency.
Total revenues (including Home sales and Land sales and others) came in at $1.95 billion, which beat the consensus mark of $1.87 billion by 4.1% and grew 9.4% year over year. The growth was attributable to higher deliveries and prices.
Inside the Headlines
The company’s total home sales revenues improved 10.4% from the prior-year quarter to $1.93 billion. Homes delivered were up 6% year over year to 1,927 units. Deliveries increased across the company’s geographic regions served by the company barring North, Mountain and Pacific. The average price of homes delivered was $1,002,600 for the quarter, up from the year-ago level of $958,300.
Moreover, net-signed contracts for the reported quarter were 2,042 units, up 40% year over year. The value of net signed contracts was $2.06 billion, reflecting a rise of 42%.
At the fiscal first-quarter end, Toll Brothers had a backlog of 6,693 homes, representing a year-over-year decrease of 13%. Potential revenues from backlog declined 18% year over year to $7.08 billion. The average price of homes in the backlog totaled $1,058,000, down from $1,110,200 a year ago.
The cancelation rate (as a percentage of signed contracts) for the reported quarter was 8.6% compared with 14.3% in the prior-year period.
Margins
The company’s adjusted home sales gross margin was 28.9%, expanding 140 basis points (bps) for the quarter. SG&A expenses, as a percentage of home sales revenues, were 11.9%, which decreased 20 bps from the year-ago quarter.
Financials
TOL had cash and cash equivalents of $754.8 million at the end of the fiscal first quarter compared with $1.3 billion at the fiscal 2023-end. At January 2024-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 2023-end was $2.72 billion, down from $2.86 billion at the fiscal 2023-end. Debt to capital was 28% at the fiscal first-quarter end, down from 29.6% at the fiscal 2023-end.
Fiscal Second-Quarter Guidance
Toll Brothers expect home deliveries of 2,400-2,500 units (versus 2,492 units delivered in the prior-year quarter) at an average price of $1,000,000-$1,010,000 (suggesting a rise from $999,300 a year ago). It expects period-end community count to be 385.
Adjusted home sales gross margin is expected to be 27.6%, implying a decrease from 28.3% in the year-ago period. SG&A expenses are estimated to be 9.7% of home sales revenues, indicating a rise from 9.1% in the year-ago period. The company expects the effective tax rate to be 25.8%.
Fiscal 2024 Guidance Raised
For fiscal 2024, home deliveries are now anticipated to be in the range of 10,000-10,500 units. The estimated range reflects growth from 9,597 units in fiscal 2023. It expects period-end community count to be 410.
The average price of delivered homes is still expected to be $940,000-$960,000. The estimated range reflects a decrease from $1,027,900 reported in fiscal 2023.
Toll Brothers now expects an adjusted home sales gross margin of 28% compared with 28.7% reported in fiscal 2023. SG&A expenses, as a percentage of home sales revenues, are now projected to be 9.8% for fiscal 2024. In the year-ago period, the metric was 9.2%. The company now expects the effective tax rate to be 25.5%.
Zacks Rank
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.
Peer Releases
Owens Corning (OC - Free Report) reported better-than-expected results for fourth-quarter 2023. Both earnings and net sales surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
Chair and chief executive officer of OC, Brian Chambers, said, “Looking ahead, we will continue to focus on delivering outstanding results in the near-term as we execute the strategic moves announced last week which will further strengthen our leadership in building and construction materials and position the company for long-term success.”
Martin Marietta Materials, Inc. (MLM - Free Report) reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis. Revenues missed the consensus mark but rose year over year.
Going forward, MLM anticipates strong demand for infrastructure, large-scale energy and domestic manufacturing projects. This will largely offset weaker residential demand and the anticipated softening in light non-residential activity. With mortgage rates stabilizing and affordability headwinds receding, MLM fully expects single-family residential construction to recover as demand still exceeds supply, particularly in its key markets.
Louisiana-Pacific Corporation (LPX - Free Report) , or LP, reported impressive fourth-quarter 2023 results. Earnings and net sales beat their respective Zacks Consensus Estimate.
On a year-over-year basis, LPX’s earnings increased on reduced costs and inflationary pressure despite lower net sales.