Earnings Review and Free Research Report: Toll Brothers Revenue Jumped 18%; EPS Soared 43%
Research Desk Line-up: Hovnanian Enterprises Post Earnings Coverage
LONDON, UK / ACCESSWIRE / September 11, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Toll Brothers, Inc. (NYSE: TOL), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=TOL, following the Company's reporting of its third quarter fiscal 2017 financial results on August 22, 2017. The US luxury home builder recorded its twelfth consecutive quarter of growth in contract dollars and units and also updated its outlook for the fiscal year. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Get more of our free earnings reports coverage from other constituents of the Residential Construction industry. Pro-TD has currently selected Hovnanian Enterprises, Inc. (NYSE: HOV) for due-diligence and potential coverage as the Company reported on September 7, 2017 its financial results for Q3 FY17, which ended on July 31, 2017. Register for a free membership today, and be among the early birds that get access to our report on Hovnanian Enterprises when we publish it.
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Earnings Reviewed
During Q3 FY17, Toll Brothers' total revenues of $1.50 billion and 1,899 units rose 18% in dollars and 26% in units, compared to total revenues of $1.27 billion and 1,507 units in Q3 FY16. The Company's revenue number fell short of analysts' estimates of $1.51 billion in revenue.
For Q3 FY17, Toll Brothers' average price of homes delivered was $791,400, compared to $842,700 in FY16's third quarter. The drop in average price was due to a change in mix.
During Q3 FY17, Toll Brothers' gross margin was 21.7% of revenues, compared to 21.9% in Q3 FY16. The Company's adjusted gross margin, which excludes interest and inventory write-downs, was 25.0% of revenues in the reported quarter, compared to 25.3% in the year ago same period.
For Q3 FY17, Toll Brothers' pre-tax income was $203.6 million, compared to pre-tax income of $163.7 million in Q3 FY16. The Company's reported quarter income included inventory write-downs of $2.4 million versus $3.7 million in the year ago comparable period.
Toll Brothers' net income was $148.6 million, or $0.87 per share diluted, in Q3 FY17, compared to net income of $105.5 million, or $0.61 per share diluted, in Q3 FY16. The Company's earnings exceeded Wall Street's expectations of $.69 per share.
Key Metrics
During Q3 FY17, Toll Brothers' net signed contracts of $1.81 billion and 2,163 units rose by 25% in dollars and 24% in units, compared to Q3 FY16 net signed contracts of $1.45 billion and 1,748 units. The average price of net signed contracts was $837,300 in the reported quarter, compared to $830,800 in the prior year's corresponding quarter. Toll Brothers notched its twelfth consecutive quarter of y-o-y growth in contract dollars and units, including 20% or higher y-o-y unit growth each of the past four quarters.
On a per-community basis, Toll Brothers' net signed contracts were 6.89 units in Q3 FY17, compared to totals of 5.85 units in FY16, 5.50 in FY15, 5.25 in FY14, and 6.24 in FY13. This was the 11th consecutive quarter of improved contracts per community compared to the prior year's same quarter.
Toll Brothers ended Q3 FY17 with approximately 47,800 lots owned and optioned, compared to 46,600 a quarter earlier and 48,700 a year earlier. At the end of the reported quarter, approximately 32,400 of these lots were owned, of which approximately 17,600 lots, including those in backlog, were substantially improved.
For Q3 FY17, Toll Brothers' cancellation rate was 5.8%, compared to 4.8% in Q3 FY16. As a percentage of the beginning-quarter backlog, the reported quarter cancellation rate was 2.2%, compared to 1.8% in the year ago same period.
Cash Matters
Toll Brothers ended Q3 FY16 with $946.2 million of cash and cash equivalents, compared to $691.3 million at the end of Q2 FY17 and $351.9 million at the end of Q3 FY16. At the end of the reported quarter, the Company had $1.15 billion available under its $1.295 billion 20-bank credit facility, which is scheduled to mature in May 2021.
During Q3 FY17, Toll Brothers repurchased approximately 1.9 million shares of its common stock at an average price of $39.02 per share for a total purchase price of approximately $75.3 million.
Outlook
Toll Brothers is forecasting that it will deliver between 7,000 and 7,300 homes in FY17, compared to previous guidance of 6,950 to 7,450 units, at an average delivered price for full year FY17 of between $800,000 and $825,000 per home. This translates to projected revenues in the range of $5.6 billion and $6.0 billion in FY17, compared to $5.17 billion in FY16.
Toll Brothers is forecasting Q4 FY17 deliveries of between 2,275 and 2,575 units with an average price of between $840,000 and $860,000.
Toll Brothers updated its previous guidance for full FY17 adjusted gross margin to be in the range of 24.8% and 25.0% of revenues, for selling, general, and administrative expenses (SG&A) to be 10.4% of revenues, for other income and Income from unconsolidated entities to be between $160 million and $180 million.
Toll Brothers stated that due to the strong pace of sales at many of its current communities, the Company is selling through some communities more quickly than anticipated and now expects to end FY17 with between 300 and 310 selling communities.
Stock Performance
On Friday, September 8, 2017, the stock closed the trading session at $39.46, rising 1.36% from its previous closing price of $38.93. A total volume of 2.28 million shares have exchanged hands, which was higher than the 3-month average volume of 1.69 million shares. Toll Brothers' stock price rallied 4.28% in the last three months, 8.74% in the past six months, and 29.12% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have surged 27.29%. The stock is trading at a PE ratio of 14.73 and has a dividend yield of 0.81%. At Friday's closing price, the stock's net capitalization stands at $6.33 billion.
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