Toll Brothers Announces First Quarter Results for Fiscal Year 2024

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On February 20, 2024, Toll Brothers, the premier builder of luxury homes in the United States, unveiled its first quarter results, covering the period ending on January 31, 2024.

Net income and earnings per share reached $239.6 million and $2.25 per diluted share, respectively, marking an increase from $191.5 million and $1.70 per diluted share in the same quarter of FY 2023.
Pre-tax income amounted to $311.2 million, up from $253.8 million in FY 2023’s first quarter.
Home sales revenues surged to $1.93 billion, reflecting a 10% rise compared to FY 2023’s first quarter, with 1,927 homes delivered, indicating a 6% increase.
Net signed contract value escalated to $2.06 billion, a substantial 42% increase from FY 2023’s first quarter, with 2,042 contracted homes, up by 40%.
Backlog value stood at $7.08 billion by the end of the first quarter, showing a decrease of 18% from FY 2023’s first quarter, with 6,693 homes in backlog, down by 13%.
Home sales gross margin improved to 27.6%, compared to 25.6% in FY 2023’s first quarter.
Adjusted home sales gross margin, excluding interest and inventory write-downs, rose to 28.9%, up from 27.5% in FY 2023’s first quarter.
Selling, general, and administrative expenses (SG&A), as a percentage of home sales revenues, decreased to 11.9%, down from 12.1% in FY 2023’s first quarter.
Income from operations totaled $308.4 million.
Other income, income from unconsolidated entities, and gross margin from land sales and other activities amounted to $8.6 million.
Following the quarter-end, the Company sold a land parcel to a commercial developer, yielding net cash proceeds of $180.7 million, expected to generate a pre-tax land sale gain of approximately $175 million in the second quarter of FY 2024.

Douglas C. Yearley, Jr., Chairman and Chief Executive Officer, expressed satisfaction with the robust first-quarter results, highlighting the delivery of 1,927 homes at an average price of approximately $1.0 million, generating home sales revenues of $1.93 billion. Yearley noted a 140-basis point increase in adjusted gross margin compared to Q1 2023 and a 20-basis point improvement in SG&A expense as a percentage of home sales revenues. He attributed these improvements to a combination of top-line growth and greater operating efficiency, resulting in earnings of $2.25 per diluted share, a 32% increase from last year’s first quarter.

Yearley emphasized solid demand, with 2,042 net contracts signed for $2.06 billion, marking a 40% increase in units and a 42% increase in dollars compared to FY 2023’s first quarter. He noted a significant uptick in demand coinciding with the start of the spring selling season, driven by a healthy job market, improving consumer sentiment, and low levels of resale inventory. Consequently, Yearley expressed optimism regarding the continued strong demand for new homes in 2024.

Based on the first-quarter results and a strong start to the spring selling season, Toll Brothers raised its full-year guidance across all key metrics. Additionally, the company sold a land parcel to a commercial developer, resulting in net cash proceeds of $180.7 million and an anticipated pre-tax land sale gain of approximately $175 million in the second quarter of FY 2024. As a result, Toll Brothers now expects to earn between $13.25 and $13.75 per diluted share in fiscal 2024, with a return on beginning equity of approximately 21%.

At the end of the first quarter, Toll Brothers owned or controlled approximately 70,400 lots, providing ample land for increasing community counts over the next several years. With a solid balance sheet, ample liquidity, no significant near-term debt maturities, and expectations of generating significant cash flow from operations in fiscal 2024, Toll Brothers is well-positioned to continue investing in its business while returning cash to stockholders throughout the year.