More sales, higher prices lift Toll Bros.' 2Q profits

A Toll Bros. Inc. development under construction in Lake Forest, Calif.
A Toll Bros. Inc. development under construction in Lake Forest, Calif. (PATRICK T. FALLON / Bloomberg News)
Posted: May 30, 2014

More sales and increased prices boosted Toll Bros. Inc.'s second-quarter profits more than 21/2 times higher than in the same period in 2013, the Horsham luxury-home builder reported Wednesday.

Net income for the three months ended April 30 rose to $65.2 million, or $0.35 per share, compared with $24.7 million, or $0.14 per share, in the 2013 second quarter, the company said.

The builder delivered 1,218 houses in the quarter, compared with 894 in the 2013 period.

Revenue of $860.4 million this year was 67 percent higher than second-quarter 2013's $516 million, reflecting not only more sales completed but higher sale prices - $706,000 versus $577,000.

Contracts signed during the just-ended quarter almost equaled those of the 2013 period (1,749 vs. 1,753), with an average price of $729,000 compared with $678,000 last year.

Toll said it was selling 7.14 units per community per quarter, compared with 7.79 last year, as the number of its communities has risen from 225 to 252.

Thirty of those communities are in the Philadelphia region, with home prices ranging from $200,000 to more than $1 million.

During a conference call Wednesday, chief executive officer Douglas C. Yearley Jr. said demand remained solid but flat, in stark contrast to the strong growth the real estate market underwent after it reached bottom in 2011.

As he noted at the Wells Fargo Securities Industrial and Construction Conference in New York this month, "relatively flat is not such a bad thing."

Yearley compared the current recovery to that of the 1990s - "rapid acceleration followed by leveling before further upward momentum" - and said he expected 2014 and beyond to follow that pattern.

Toll Bros. is still growing in Texas, especially in Houston, and already is reaping benefits in coastal California from its acquisition of the home-building arm of Shapell Industries, completed in its first quarter for $1.6 billion.

The day after closing that sale, Toll raised Shapell house prices by $50,000, with no problem.

The company's City Living division is building condos and townhouses at 2400 South and condos at 410 at Society Hill in Center City, as well as in New York City and North Jersey. The builder also is taking advantage of the boom in luxury rentals.

At the Wells Fargo session, Yearley said Toll's Apartment Living division was building 1,500 rental units in the Mid-Atlantic and Northeast Corridor.

On Wednesday, he said Toll Bros. owned or controlled "sites for another 3,800 rental units in the same corridor and have additional expansion plans on the horizon."

215-854-2472 @alheavens

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