Toll Brothers Reports Mixed Q4, Sees Strong Luxury Home Market In 2017

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December 6, 2016 6:59am NYSE:TOL


Luxury home builder Toll Brothers Inc (NYSE:TOL) early Tuesday posted mixed fourth quarter earnings results but offered an upbeat outlook for 2017.

The Horsham, PA-based company reported Q4 EPS of $0.67, which may not company to the average Wall Street estimate for $0.99. Revenues surged 29.1% from last year to $1.86 billion, beating out analysts’ view of $1.79 billion.

One-time charges piled up in the latest quarter, with Toll Brothers noting $2.5 million of inventory impairments and a massive $121.2 million warranty charge, which was tied to repairs needed for older stucco homes. In contrast, Q4 of 2015 saw $4.4 million of inventory impairments and a $14.7 million warranty charge.

TOL’s backlog of homes reached 4,685 units, or $3.98 billion, up 15% and 14%, respectively. Adjusted gross margin fell to 24.9% from last year’s 27.0% in Q4.

Looking ahead, Toll Brothers forecast 2017 first quarter home deliveries of between 1,000 and 1,250 units, with an average price ranging from $750,000 to $780,000. For the full year, it expects deliveries of 6,500 and 7,500 units with an average price of $775,000 to $825,000.

The company commented via press release:

“As the only national home building company focused on the luxury market, we continue to benefit from healthy demand, limited competition in many markets, superior land positions, a financially strong buyer base and a highly recognizable brand. These strategic advantages and a solid financial foundation have propelled us to more than triple our revenues and increase net income nine-fold in the past five years. Based on these initiatives, we believe we are well-positioned to continue to grow in a vibrant luxury new home market.”

Toll Brothers shares were inactive in premarket trading Tuesday. Prior to today’s report, TOL had fallen 8.5% year-to-date.


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