Toll Brothers Inc., the largest U.S. luxury homebuilder, reported fiscal second-quarter profit that more than doubled as the company increased prices and delivered more properties.
Net income climbed to $65.2 million, or 35 cents a share, in the three months through April from $24.7 million, or 14 cents, a year earlier, the Horsham, Pa.-based company said today in a statement. Revenue advanced 67% to $860 million.
Toll Brothers continued raising prices and boosting sales in the costlier New York and California markets even as inclement weather and falling affordability slowed delivery of new homes nationwide in the first four months of the year. New homes in the U.S. sold at an annual pace of 433,000 in April, down 4.2% from a year earlier, the Commerce Department reported on May 23.
"Current demographics seem to suggest that new home sales should pick up," Chairman Robert Toll said in the statement. "If the tight supply bumps into increasing demand, prices could rapidly rise."
"Toll essentially raised its revenue guidance for the full year via higher average sales-price estimates," Megan McGrath and Ross Sparenblek, analysts with MKM Holdings LLC in Stamford, Conn., said in a note today.
The average price of Toll's homes delivered during the second quarter rose to $706,000 from $577,000 a year earlier. The company forecast that the average price for deliveries during the whole of fiscal 2014 will be $690,000 to $720,000. Toll previously said the average price could be as low as $675,000, according to today’s statement.
Signed contracts were little changed at 1,749 units with a total value of $1.27 billion, up from $1.19 billion a year earlier. The average price of the newly ordered homes was $729,000, compared with $678,000 a year earlier.
In February, Toll completed its $1.6 billion acquisition of California builder Shapell Homes, adding to costs and narrowing its profit margin for the quarter.