Doug Yearley, New York City and Los Angeles
Toll Brothers got off to a solid start in fiscal year 2018, with net income, revenues and contract value all up significantly year-over-year in the first quarter, company executives said Tuesday in an earnings call.
Net income rose to $132.1 million in the first quarter of fiscal year 2018 from $70.4 million in the first quarter of fiscal year 2017, while revenue rose 28 percent to $1.18 billion, and net value of contracts went up 36 percent to $1.69 billion, according to the company. Revenue was still not as high as it had been during the fourth quarter, when it reached $2.03 billion. Net income was lower as well, as it had reached $191.9 million during the fourth quarter.
The luxury homebuilder’s City Living division, which focuses primarily on the New York City metro area, saw a fair share of the first quarter growth, as the value of contracts in its projects fully owned by Toll Brothers went up by 25 percent year-over-year, according to CEO Doug Yearley. The value of City Living contracts in Toll Brothers’ joint venture projects rose as well.
In all, Toll Brothers’ City Living division inked 47 contracts valued at $61.8 million in the first quarter of FY 2018, compared to 22 contracts signed in the first quarter of 2017, with a value of $49.3 million. The average contract price in the first quarter of this year was $1.31 million, down from $2.24 million a year prior, a sign that Toll Brothers is backing away from the ultra-luxury segment as expected.
Still, the uptick in the New York City metro area paled in comparison to California, which saw a 93 percent growth in the value of contracts signed. Toll Brothers in the first quarter of this year signed 388 deals worth $646 million in the California, up from the 226 deals valued at $335 million a year prior.
The value of contracts in the western region overall rose 36 percent in the first quarter of 2018. Growth in the southern and northern regions of the country was at 17 and 15 percent, respectively.
The company saw an annualized pace of 24 sales per community, which was higher than the 19 sales per community from the first quarter of fiscal year 2017. However, Yearley acknowledged that this was still lower than the company was accustomed to seeing.
“We have yet to reach historical norms of annualized sales paces in the high 20s,” he said.
Throughout fiscal year 2018, the company expects to deliver between 7,800 and 8,600 housing units priced at an average of $820,000 to $860,000, and it will focus more on millennial housing moving forward as the older members of that generation start buying homes.
Toll Brothers recently raised $400 million through a public offering. In November, the company landed a $144 million loan from UnionBank for its condominium project at 91 Leonard Street and received $73 million from Shanghai Municipal Investment for a majority stake in its condo project at 351-355 Broadway.
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