Toll Brothers Inc. (TOL) Q3 FY 2024 Earnings: EPS of $3.60 Beats Estimates, Revenue Hits $2.72 Billion

Luxury Homebuilder Reports Strong Performance Despite Challenges

Summary
  • Net Income: $374.6 million, or $3.60 per diluted share, compared to $414.8 million, or $3.73 per diluted share, in the same quarter last year.
  • Revenue: $2.72 billion, up 2% year-over-year, met estimates of $2.71 billion.
  • Home Sales Gross Margin: 27.4%, slightly down from 27.8% in the same quarter last year.
  • Net Signed Contracts: $2.41 billion, up 11% year-over-year, with contracted homes also up 11% to 2,490 units.
  • Backlog Value: $7.07 billion, down 10% year-over-year, with homes in backlog down 7% to 6,769 units.
  • Share Repurchases: Approximately 2.1 million shares repurchased at an average price of $118.57 per share, totaling $245.9 million, with full-year repurchases expected to reach $600 million.
  • SG&A Expenses: 9.0% of home sales revenues, compared to 8.6% in the same quarter last year.
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On August 20, 2024, Toll Brothers Inc (TOL, Financial) released its 8-K filing for the third quarter of fiscal year 2024, ending July 31, 2024. Toll Brothers, the leading luxury homebuilder in the United States, operates in over 60 markets across 24 states, catering to move-up, active-adult, and second-home buyers. The company is headquartered in Horsham, Pennsylvania.

Performance Overview

Toll Brothers Inc (TOL, Financial) reported net income of $374.6 million, or $3.60 per diluted share, for the third quarter of FY 2024. This compares to net income of $414.8 million, or $3.73 per diluted share, in the same quarter of FY 2023. The reported earnings per share (EPS) exceeded the analyst estimate of $3.33. Home sales revenues were $2.72 billion, up 2% from $2.67 billion in the third quarter of FY 2023, aligning closely with the estimated revenue of $2.71 billion.

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Key Financial Metrics

Here are some of the key financial highlights from the earnings report:

Metric Q3 FY 2024 Q3 FY 2023
Net Income $374.6 million $414.8 million
Earnings Per Share (EPS) $3.60 $3.73
Home Sales Revenues $2.72 billion $2.67 billion
Net Signed Contracts $2.41 billion $2.16 billion
Backlog Value $7.07 billion $7.87 billion

Operational Highlights

Toll Brothers delivered 2,814 homes in the third quarter, an 11% increase from the 2,524 homes delivered in the same period last year. The average price per delivered home was $968,000. The company's net signed contract value also saw an 11% increase, reaching $2.41 billion. However, the backlog value decreased by 10% to $7.07 billion, with 6,769 homes in backlog, down 7% from the previous year.

Financial Achievements and Challenges

Despite a slight decline in net income and EPS compared to the previous year, Toll Brothers achieved a record third-quarter home sales revenue of $2.72 billion. The adjusted home sales gross margin was 28.8%, slightly down from 29.3% in the third quarter of FY 2023. The SG&A expenses as a percentage of home sales revenues increased to 9.0% from 8.6% in the previous year.

"We are very pleased to report another quarter of strong results. In our third quarter, we delivered 2,814 homes at an average price of $968,000, generating record third quarter home sales revenue of $2.72 billion," said Douglas C. Yearley, Jr., chairman and chief executive officer.

Balance Sheet and Cash Flow

As of July 31, 2024, Toll Brothers had $893.4 million in cash and cash equivalents, compared to $1.30 billion at the end of FY 2023. The company repurchased approximately 2.1 million shares at an average price of $118.57 per share, totaling $245.9 million. The total stockholders' equity stood at $7.41 billion, up from $6.80 billion at the end of FY 2023.

Future Outlook

Toll Brothers has raised its full-year guidance across all key homebuilding metrics. The company now expects to earn between $14.50 and $14.75 per diluted share for the full fiscal year 2024, with an adjusted home sales gross margin of approximately 28.3%. The company remains optimistic about the demand for luxury homes, driven by favorable demographics and a continued imbalance in the supply and demand of homes for sale.

For more detailed information, please refer to the full 8-K filing.

Explore the complete 8-K earnings release (here) from Toll Brothers Inc for further details.