Toll Brothers Announces Fiscal Year 2024 Third Quarter Results

Introduction to Toll Brothers' Q3 FY 2024 Financial Results

Toll Brothers, Inc. (NYSE:TOL), the nation’s leading builder of luxury homes, has announced its financial results for the third quarter of Fiscal Year 2024, which ended on July 31, 2024.

Financial Highlights for Q3 FY 2024

Compared to the third quarter of FY 2023, Toll Brothers reported the following key financial metrics:

• Net Income and Earnings Per Share: The company achieved a net income of $374.6 million, translating to $3.60 per diluted share. This compares to $414.8 million and $3.73 per diluted share in the same quarter of FY 2023.
• Pre-Tax Income: Pre-tax income for the quarter was $503.6 million, down from $553.0 million in Q3 FY 2023.
• Home Sales Revenue: Revenue from home sales increased by 2% to $2.72 billion. The company delivered 2,814 homes, an 11% increase year-over-year.
• Net Signed Contracts: The value of net signed contracts rose by 11% to $2.41 billion, with 2,490 homes contracted, marking another 11% increase.
• Backlog Value: At the end of the third quarter, the backlog value was $7.07 billion, a 10% decline from the previous year. The backlog included 6,769 homes, down 7%.
• Gross Margins: The home sales gross margin stood at 27.4%, slightly lower than the 27.8% recorded in Q3 FY 2023. The adjusted home sales gross margin, excluding interest and inventory write-downs, was 28.8%, compared to 29.3% last year.
• SG&A: Selling, general, and administrative expenses accounted for 9.0% of home sales revenue, up from 8.6% in Q3 FY 2023.
• Share Repurchases: The company repurchased approximately 2.1 million shares at an average price of $118.57 per share, totaling $245.9 million. The full-year repurchase target has been increased to approximately $600 million.

CEO’s Statement on Q3 Performance

Douglas C. Yearley, Jr., chairman and CEO, expressed satisfaction with the company’s performance:

"We are very pleased to report another quarter of strong results. In Q3, we delivered 2,814 homes at an average price of $968,000, setting a new record with $2.72 billion in home sales revenue. Our adjusted gross margin of 28.8% exceeded guidance, and our SG&A margin of 9.0% beat expectations by 20 basis points. These factors combined to drive earnings of $3.60 per diluted share for the quarter."

Yearley also noted the strong performance in net signed contracts, which increased by 11% in both units and dollars, with July being the strongest month of the quarter. He highlighted favorable market conditions, including lower mortgage rates and a continued imbalance in the supply and demand for homes, which are expected to sustain demand through the end of FY 2024 and into 2025.

Updated Full Year Guidance

Based on the strong third-quarter performance and positive outlook for the fourth quarter, Toll Brothers has raised its full-year guidance across all key homebuilding metrics. The company now expects an adjusted gross margin of approximately 28.3% for the full year and earnings per diluted share between $14.50 and $14.75. The return on beginning equity is projected to be around 22.5%.

Strategic Growth and Financial Position

Toll Brothers is on track to meet its goal of operating from 410 communities by the end of the fiscal year, representing an 11% increase in community count. The company ended Q3 with 72,700 lots owned or controlled, providing ample land to support growth in FY 2025 and beyond.

The company maintains a strong balance sheet, with $893.4 million in cash and cash equivalents as of the end of Q3 FY 2024, compared to $1.30 billion at the end of FY 2023. Toll Brothers also had $1.77 billion available under its revolving credit facility, which matures in February 2028.

Upcoming Investor Relations Event

Toll Brothers will host a live conference call on Wednesday, August 21, 2024, at 8:30 a.m. (ET) to discuss the Q3 results and provide an outlook for Q4 and FY 2024. The call will be broadcast live via the Investor Relations section of the company’s website.

About Toll Brothers

Toll Brothers, Inc., a Fortune 500 company, is the nation’s leading builder of luxury homes. Founded in 1967, the company serves a wide range of homebuyers and operates in over 60 markets across 24 states. Toll Brothers has been recognized as one of the World’s Most Admired Companies by Fortune for 10 consecutive years and has received multiple industry accolades, including being named Builder of the Year by both Builder and Professional Builder magazines.

Frequently Asked Questions

1. What were the key financial highlights for Toll Brothers in Q3 FY 2024?

Toll Brothers reported a net income of $374.6 million, or $3.60 per diluted share. Home sales revenue reached $2.72 billion, with an 11% increase in delivered homes. The company also saw an 11% rise in net signed contracts, totaling $2.41 billion.

2. How did Toll Brothers perform compared to the same quarter last year?

Compared to Q3 FY 2023, Toll Brothers saw a slight decrease in net income and pre-tax income but achieved a 2% increase in home sales revenue. The company also reported a decline in backlog value but maintained strong growth in contracted homes and gross margins.

3. What is Toll Brothers' outlook for the rest of FY 2024?

Toll Brothers has raised its full-year guidance based on strong third-quarter performance. The company now expects an adjusted gross margin of approximately 28.3% and earnings per diluted share between $14.50 and $14.75. They are optimistic about continued solid demand through the end of FY 2024 and into 2025.

4. How is Toll Brothers managing its growth and financial health?

Toll Brothers is on track to operate from 410 communities by the end of FY 2024, representing an 11% growth in community count. The company ended Q3 with $893.4 million in cash and has a strong balance sheet with low net debt and ample liquidity.

5. Where can I access the Toll Brothers' Q3 FY 2024 conference call?

The Q3 FY 2024 results and outlook conference call will be available live on the Investor Relations section of Toll Brothers' website. An online replay will also be accessible after the event.

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