Toll Brothers (TOL) Tops Q3 EPS by 18c, Revenues Beat; Provides FY19 Outlook

Toll Brothers (NYSE: TOL) reported Q3 EPS of $1.00, $0.18 better than the analyst estimate of $0.82. Revenue for the quarter came in at $1.77 billion versus the consensus estimate of $1.7 billion.

FY 2019’s Third Quarter Financial Highlights (Compared to FY 2018’s Third Quarter):

• Net income and earnings per share were $146.3 million and $1.00 per share diluted, compared to net income of $193.3 million and $1.26 per share diluted in FY 2018’s third quarter.
• Pre-tax income was $186.9 million, compared to $253.1 million in FY 2018’s third quarter.
• Impairments were $4.7 million, compared to $11.1 million in FY 2018’s third quarter.
• Home sales revenues were $1.76 billion, down 8%; home building deliveries were 1,994, down 11%.
• Net signed contract value was $1.87 billion, down 8%; contract units were 2,241, down 3%.
• Backlog value at third-quarter end was $5.84 billion, down 10%; units in backlog totaled 6,839, down 4%.
• Home sales gross margin was 20.2%; Adjusted Home Sales Gross Margin, which excludes interest and inventory write-downs (“Adjusted Home Sales Gross Margin”), was 23.1%.
• SG&A, as a percentage of home sales revenues, was 10.6%.
• Income from operations was 9.7% of total revenues.
• Other income, Income from unconsolidated entities, and Land sales gross profit was $18.4 million.
• The Company repurchased approximately 3.98 million shares of its common stock during the quarter at an average price of $35.74 per share for an aggregate purchase price of approximately $142.2 million.

Douglas C. Yearley, Jr., Toll Brothers’ chairman and chief executive officer, stated: “In our third quarter, we had strong revenues, gross margin, and earnings. While our third quarter contracts were down modestly, we are off to a good start in our fourth quarter. Low mortgage rates, a limited supply of new and existing homes, and a strong employment picture are providing tailwinds.

“We are focused on measured growth through geographic, product and price point diversification, and capital-efficient land acquisitions. We continue to expand the buyer segments that we serve with homes now ranging in price from $275,000 to over $3 million. Our balance sheet remains strong and our book value continues to grow. With ample liquidity, moderate leverage, and limited near-term debt maturities, we have the flexibility to execute on our balanced capital allocation strategy.”

FY19 Outlook

• FY 2019 deliveries of between 7,800 and 8,100 units with an average price of between $860,000 and $880,000.
• FY 2019 Adjusted Home Sales Gross Margin of approximately 23.0%.
• FY 2019 SG&A, as a percentage of home sales revenues, of approximately 10.4%.
• FY 2019 Other income, Income from unconsolidated entities, and Land sales gross profit of approximately $105 million.
• FY 2019 tax rate of approximately 25.6%.

For earnings history and earnings-related data on Toll Brothers (TOL) click here.

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