Toll Bros. profit jumps 46 pct. for quarter

The Horsham-based luxury-home builder Toll Bros. on Wednesday reported a 46 percent jump in earnings in its second quarter from the same period in 2012.

The announcement sent Toll's stock price up more than 7 percent in morning trading. The shares closed at $37.07, up $1.06 or 2.9 percent.

Toll chief executive Douglas Yearley said an improving economy and continued low interest rates were pushing buyers who had spent six years "on the sidelines" into the market.

"One year ago we were somewhat reluctant to raise home prices for fear of crimping demand," Yearley said.

"Now we are finding that in many markets as prices increase, a sense of urgency takes hold and demand continues to rise," he said.

In response, Toll has raised prices this quarter about $26,000 per home on average, he said.

With Toll's backlog up 69 percent in dollars ($2.53 billion) and 52 percent (3,655) in units, and "with our community count increasing throughout fiscal year 2014, we expect continued growth over the next few years," he said.

The average price of homes in the backlog is $693,000, compared with $624,000 in 2012's second quarter.

Toll is building in 225 communities in 19 states.

The average price of homes delivered climbed 3.6 percent in the quarter to $577,000 from $557,000 in 2012's second quarter.

Net signed contracts rose 57 percent, to $1.19 billion, from the 2012 quarter, Toll reported. Revenue climbed 38 percent to $516 million.

Toll earned $24.7 million, or 14 cents per share, in the three months ended April 30, compared with net income of $16.9 million, or 10 cents per share, in the 2012 quarter.

Analysts surveyed by Bloomberg had expected the company to earn just seven cents a share.

Earnings in this year's quarter were reduced by a $16.3 million income-tax expense. Last year's second-quarter earnings were boosted by a $1.2 million income-tax benefit, the company said.

Executive chairman Robert I. Toll said, "For those builders who have the capital to buy land and build homes it is a very good time.

"While up significantly from the bottom, April 2013 industrywide total annualized housing starts were approximately 853,000, just 55 percent of the 1.5 million houses started annually, on average, between 1987 and 2006," he said.

"With new home production still well below the volumes required to meet projected demand based on history, population growth and the pace of current household formations, we believe we and the industry have lots of room to grow," he said.