Toll Brothers Inc., the largest U.S. luxury homebuilder, reported an increase in quarterly earnings as lower tax provisions made up for a decline in revenue.
Net income for the three months through April was $67.9 million, or 37 cents a share, compared with $65.2 million, or 35 cents, a year earlier, the Horsham, Pa.-based builder said in a statement Wednesday.
"The economy and housing continue on parallel paths of recovery," Chairman Robert Toll said in the statement. "It appears the housing market is on firm footing and heading in the right direction."
Home purchases are accelerating in the key U.S. spring selling season, bolstering builders and housing-related companies. The Commerce Department reported Tuesday that new-home sales rose 6.8% in April, more than economists estimated, to an annual pace of 517,000.
Toll Brothers has diversified into apartment and high-rise condominium construction while expanding beyond its base in the middle Atlantic states to high-cost markets in coastal California, Texas and Florida.
Pretax profit fell 7.4% to $86.5 million as revenue declined by 1%. The company had a tax provision of $18.6 million in the quarter, down from $28.3 million a year earlier.
Gross margin, excluding interest and writedowns, was 25.3%, compared with 23.7% a year earlier. The company said in February that it expected a 26% margin for the entire fiscal year.
Net signed contracts for new homes rose 25% to $1.6 billion by value and 10% by number to 1,931. The average price of new orders climbed to $826,000 from $729,000.
The results were released before U.S. markets opened. Toll Brothers fell 1.9% Tuesday to $36.99. The shares have climbed 7.9% this year, compared with a 4.2% gain for the 22-company Bloomberg homebuilder index.
