Toll Brothers Reports Q3 FY 2024 Financial Results
Toll Brothers, Inc. (NYSE:TOL), the leading builder of luxury homes in the United States, has released its financial results for the third quarter of Fiscal Year 2024, which concluded on July 31, 2024.
Key Financial Highlights for Q3 FY 2024
In comparison to the third quarter of FY 2023, Toll Brothers has reported several important financial metrics:
- Net Income and Earnings Per Share: The company achieved a net income of $374.6 million, equating to $3.60 per diluted share. This is a decrease from $414.8 million and $3.73 per diluted share during the same quarter last year.
- Pre-Tax Income: The pre-tax income for this quarter was $503.6 million, down from $553.0 million in Q3 FY 2023.
- Home Sales Revenue: Revenue from home sales rose by 2% to $2.72 billion, with the delivery of 2,814 homes, marking an 11% increase year-over-year.
- Net Signed Contracts: The value of net signed contracts increased by 11% to $2.41 billion, with 2,490 homes contracted, also reflecting an 11% rise.
- Backlog Value: By the end of the third quarter, the backlog value stood at $7.07 billion, a 10% decline from the previous year, with 6,769 homes in backlog, down 7%.
- Gross Margins: The gross margin for home sales was 27.4%, slightly lower than the 27.8% reported in Q3 FY 2023. The adjusted gross margin, excluding interest and inventory write-downs, was 28.8%, compared to 29.3% last year.
- SG&A: Selling, general, and administrative expenses made up 9.0% of home sales revenue, up from 8.6% in Q3 FY 2023.
- Share Repurchases: The company repurchased about 2.1 million shares at an average price of $118.57 per share, totaling $245.9 million. The full-year repurchase target has now been raised to approximately $600 million.
CEO’s Comments on Q3 Performance
Douglas C. Yearley, Jr., the chairman and CEO, expressed his contentment with the company’s results:
"We are delighted to share another quarter of robust performance. In Q3, we delivered 2,814 homes at an average price of $968,000, achieving a record $2.72 billion in home sales revenue. Our adjusted gross margin of 28.8% surpassed our guidance, and our SG&A margin of 9.0% exceeded expectations by 20 basis points. These elements contributed to earnings of $3.60 per diluted share for the quarter."
Yearley also highlighted the impressive growth in net signed contracts, which rose by 11% in both units and dollars, with July being the strongest month of the quarter. He pointed out favorable market conditions, including lower mortgage rates and a persistent supply-demand imbalance in the housing market, which are anticipated to sustain demand through the end of FY 2024 and into 2025.
Revised Full Year Guidance
Following the strong performance in the third quarter and a positive outlook for the fourth quarter, Toll Brothers has updated its full-year guidance for all key homebuilding metrics. The company now anticipates an adjusted gross margin of approximately 28.3% for the full year and expects earnings per diluted share to fall between $14.50 and $14.75. The return on beginning equity is projected to be around 22.5%.
Strategic Growth and Financial Stability
Toll Brothers is on track to achieve its goal of operating from 410 communities by the end of the fiscal year, representing an 11% increase in community count. As of the end of Q3, the company had 72,700 lots owned or controlled, providing sufficient land to support growth in FY 2025 and beyond.
The company boasts a solid balance sheet, with $893.4 million in cash and cash equivalents at the end of Q3 FY 2024, down from $1.30 billion at the end of FY 2023. Toll Brothers also has $1.77 billion available under its revolving credit facility, which is set to mature in February 2028.
Upcoming Investor Relations Event
Toll Brothers will hold a live conference call on Wednesday, August 21, 2024, at 8:30 a.m. (ET) to discuss the Q3 results and share an outlook for Q4 and FY 2024. This call will be streamed live via the Investor Relations section of the company’s website.
About Toll Brothers
Toll Brothers, Inc., a Fortune 500 company, is recognized as the leading builder of luxury homes in the nation. Established in 1967, the company caters to a diverse range of homebuyers and operates in over 60 markets across 24 states. Toll Brothers has been honored as one of the World’s Most Admired Companies by Fortune for 10 consecutive years and has received numerous industry awards, 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 experienced a slight decline in net income and pre-tax income but achieved a 2% increase in home sales revenue. The company reported a decrease in backlog value while maintaining 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 its 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 remain 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, indicating an 11% growth in community count. The company concluded Q3 with $893.4 million in cash and maintains 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.
