A Toll Brothers luxury home and Doug Yearley (Credit: Toll Brothers and iStock)
Toll Brothers is poised to end the year on a high note.
The luxury builder’s profit climbed in the third quarter, as the company also raised its outlook for 2018. The optimism is thanks to strong new home sales amid housing supply constraints, Toll Brothers said in a statement Tuesday.
Net income was $193.3 million, up 30 percent from $148.6 million a year earlier. Revenues climbed 27 percent to $1.91 billion, and home deliveries rose 18 percent to 2,246 units.
“We have buyers that will only shop new,” CEO Douglas Yearly said on the company’s earnings call. “We are positioned really well and have a huge advantage over the used market.”
For the full fiscal year, Toll Brothers expects deliveries between 8,100 and 8,400 units with an average price between $835,000 and $860,000. That’s down from the previous expectation of between 8,000 and 8,500 units. The resulting revenues — between $6.76 billion and $7.22 billion — would be the highest annual revenues in the company’s history, the statement said.
The value of contracts in the West, South and Mid-Atlantic regions, and the City Living division, were all up at least double digits, the company said. The North region was essentially flat. Net contract value was $2.03 billion, up 12 percent.
The City Living division, which primarily focuses on the New York City metro area, sold 29 units for a total of $50.6 million during the quarter ($1.75 million a unit). That’s down from $98.7 million across 78 units a year earlier. However, the value of contracts signed increased to $80.7 million from $40.4 million.
Executives on the earnings call reiterated previous remarks that City Living is focused on working through inventory this year. In July, the division was part of Toll Brothers’ nationwide sales event, which offered buyer incentives. The builder said the City Living market hasn’t changed, but that its encouraged by contracts at its projects in Hoboken and Jersey City.
Meanwhile, California continues to be strong spot for Toll Brothers. The market saw 367 units sell for $610.7 million during the third quarter, up from $335.2 million across 218 units 12 months earlier. The dollar volume of contracts signed was relatively flat.
After an unusually strong quarter a year ago, Yearley said the region has returned to more typical seasonality.
“There are no submarkets I’m worried about,” he said.
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