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Toll Brothers reported a successful third quarter in fiscal 2024, delivering 2,814 homes with record home sale revenues of $2.72 billion, and an EPS of $3.60. The company exceeded its guidance with an adjusted gross margin of 28.8%, driven by greater efficiencies in home building operations. It also saw a 54% representation of spec homes in its orders and expects demand for new homes to remain robust, supported by the lowest mortgage rates in a year. The company continues to raise its outlook, increasing its guidance for home deliveries to between 10,650 and 10,750 for the fiscal year, with full-year revenue expectations now set between $10.4 and $10.5 billion. They have raised their buyback expectations from $500 million to $600 million for the full year, riding on the back of strong financial performance. During the Q&A, analysts were particularly interested in the sustainability of the company's 17.5% operating margin. Management assured that the margin is sustainable, supported by their strategic focus on a wide range of price points and increasing the supply of spec homes. The firm remains bullish, with optimism about gaining pricing power and sustaining strong margins in the near future.
Toll Brothers delivered 2,814 homes in Q3, achieving record home sale revenues of $2.72 billion. EPS was $3.60, facilitated by strong margins.
With mortgage rates at their lowest point in a year, Toll Brothers remains optimistic about demand through fiscal 2024.
Our spec homes represented approximately 54% of orders and 49% of deliveries in Q3, targeting about 50% business as spec homes.
We've repurchased $246 million of our common stock this quarter, raising full-year buyback expectations to $600 million.
Analyst questions Toll Brothers' sustainability of 17.5% operating margin; management confirms it's sustainable long-term with new business model.
In August, improved traffic and the lowest mortgage rates in a year have uplifted Toll Brothers' pricing power heading into the fall.
Revenue
$2.72 billion
Record third quarter
Adjusted Gross Margin
28.8%
Exceeded guidance by 110 basis points
Earnings Per Share (EPS)
$3.60
On track for a great year
Net Contracts
2,490
+11% YoY
Backlog
$7.1 billion
Consistent with long-term average
Return on Beginning Equity
22.5%
Third year over 20%
Operating Income
$504 million before taxes
Strong performance