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Toll Brothers profit beats on robust spring sales
(Reuters) - Toll Brothers Inc (TOL.N), the largest luxury homebuilder in the United States, reported a better-than-expected quarterly profit and a strong jump in new orders, helped by a robust spring selling season.
Deliveries jumped 14 percent to 671 units for the February-April period. New orders - an indication of future revenue - rose 47 percent to 1,290 units.
"It appears that the housing market has moved into a new and stronger phase of recovery as we have experienced broad-based improvement across most of our regions over the past six months," Chief Executive Douglas Yearley said in a statement.
"The spring selling season has been the most robust and sustained since the downturn began," the CEO said. The spring season is to homebuilders what Christmas is to retailers.
Analyst Megan McGrath of MKM Partners said the market for high-end homes is improving as customers are finally making a move, encouraged by improvements in the housing and the credit markets.
"Order growth was well above expectations," she said. "There is a pent-up demand in luxury market even in a relatively weak economy."
Toll targets affluent customers who typically make at least $100,000 a year and have spotless credit records. It is the only publicly-traded luxury homebuilder.
Toll's earnings report follows strong results from other U.S. homebuilders, including D.R. Horton (DHI.N) and Lennar (LEN.N).
Recovery in the U.S. housing industry has gained momentum in recent months.
Housing starts last month rose across the board, while residential construction in the first quarter grew at its fastest pace in nearly two years and is expected to contribute to economic growth this year, for the first time since 2005.
STRONG TRENDS IN MAY
Horsham, Pennsylvania-based Toll said non-binding reservation deposits for the first three weeks of May were up 39 percent. Typically, half of deposits translate into actual house closings.
The company expects to deliver 2,700 to 3,200 homes for the full year 2012. It delivered 2,611 units in 2011.
Toll posted a second-quarter profit of $16.9 million, or 10 cents a share, compared with a loss of $20.8 million, or 12 cents a share a year ago.
Revenue rose 17 percent to $373.7 million.
Analysts had expected earnings of 4 cents per share on revenue of $382 million, according to Thomson Reuters I/B/E/S.
The company also expects to deliver 10 percent more homes in the fourth quarter compared to the third.
Toll shares rose 4 percent to $28.06 - their highest in nearly 5 years - on Wednesday on the New York Stock Exchange. They have nearly doubled in value since October 2011.
(Reporting by A. Ananthalakshmi and Bijoy Koyitty in Bangalore; Editing by Maju Samuel, Sreejiraj Eluvangal)
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