Toll Brothers returned to profitability in the second quarter as a growing confidence in the beleaguered housing market drove up home deliveries and the company reported a backlog.
The Horsham, Pa., homebuilder was also had lower write-downs and a tax benefit as well.
"In some locations, it is no longer a buyer's market; in a few locations it's even a seller's market," said Executive Chairman Robert Toll. "We would like to say ?We're back', but we need a little more confirmation: Nonetheless, it sure feels good, compared to the desert we've just crossed."
The Commerce Department is reporting new home sales Wednesday and economists expect to see further indications of a turnaround in the market. That would jibe with the numbers posted Tuesday by Toll Brothers, which has operations in 20 states, including Arizona, California and Florida, which were devastated by the housing downturn.
Home deliveries at Toll Brothers climbed to 671 units from 591 units, while net signed contracts increased to 1,290 units from 879 units. Backlog rose to 2,403 units from 1,760 units.
The homebuilder earned $16.9 million, or 10 cents per share, for the three months ended April 30. A year earlier it lost $20.8 million, or 12 cents per share.
It also beat the 3 cents per share in earnings that analysts surveyed by FactSet had expected.
Toll Brothers said that the current quarter included $2 million in inventory write-downs and a $1.6 million recovery of previous joint venture impairments, plus a $1.2 million tax benefit.
In the prior-year period the company incurred $32.5 million in write-downs and joint venture impairments.
Toll Brothers caters to the luxury sector, which has withstood the economic downturn better than others. Its target market includes high-income earners who typically make more than $100,000 a year, can afford to make a down payment of as much as 30 percent on a home, have great credit and have an unemployment rate about half that of everyone else.
Revenue rose 17 percent to $373.7 million, but that was short of Wall Street's $381 million estimate.
Toll Brothers said it now expects to end the year with between 230 and 245 communities. That is slightly lower than its prior forecasts, but only because some are selling out faster than expected.
CEO Douglas Yearley said. the company is benefiting from five years of pent-up demand and reduced competition in the luxury sector.
"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. The spring selling season has been the most robust and sustained since the downturn began," Yearley said.
Toll Brothers Inc. also has operations in Colorado, Connecticut, Delaware, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Texas, Virginia and Washington.
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