(Disclosure: Rose Law Group represents Toll Brothers.)
By Vincent Salandro | Builder
A combination of strong demand and a focused spec home strategy contributed to fiscal second quarter results that “well exceeded” expectations for Toll Brothers, the 10th largest company on the 2023 BUILDER 100 list.
“There continues to be a substantial shortage of homes for sale in the U.S., as housing starts have not kept up with population growth for at least the past 15 years,” said chairman and CEO Douglas Yearley. “We believe the resulting supply-demand imbalance will continue well into the future, adding to the long-term tailwinds that have supported the housing industry in recent years. These include favorable demographics, migration trends, and more flexible work arrangements.”
Yearley said mortgage rate stabilization, improved buyer confidence, and a tight resale market contributed to favorable demand conditions that began in January and have continued through the spring. He said the profile of the typical Toll Brothers home buyer—one that is affluent with significant equity built up in their existing home that insulates them from affordability concerns—is “well suited for the current market.” Twenty-three percent of the company’s buyers in the second quarter made all-cash purchases.
The strong headwinds contributed to quarterly revenue of $2.5 billion and profits per share of $2.85, both of which significantly outperformed analyst projections. According to Zacks Investment Research, the home builder has outperformed profits per share projections in each of the past four quarters.