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Toll Brothers Q2 Earnings & Revenues Beat Estimates, Home Sales Up Y/Y
TOLToll Brothers(TOL) ZACKS·2025-05-21 17:11

Core Viewpoint - Toll Brothers, Inc. reported second-quarter fiscal 2025 results with adjusted earnings and total revenues exceeding the Zacks Consensus Estimate, although the top line experienced a year-over-year decline [1][5]. Financial Performance - Adjusted earnings per share (EPS) were 3.50,surpassingtheZacksConsensusEstimateof3.50, surpassing the Zacks Consensus Estimate of 2.86 by 22.4% and reflecting a 3.6% increase from the previous year [5]. - Total revenues amounted to 2.74billion,exceedingtheconsensusmarkof2.74 billion, exceeding the consensus mark of 2.5 billion by 9.5%, but decreased 3.5% year over year [5]. - Home sales revenues increased by 2% year over year to 2.71billion,contrarytoexpectationsofa52.71 billion, contrary to expectations of a 5% decline [5]. - Homes delivered rose by 10% to 2,899 units, surpassing the projected growth of 0.1% [5]. - The average selling price (ASP) of homes delivered was 933,600, down 6.9% from 1,002,300ayearago[5].MarketConditions−Thequarterlyperformancewasimpactedbyweakcontributionsfromlandsalesandothersegments,whilehomesalesrevenuesshowedgrowth[2].−Ongoinguncertaintiesinthehousingmarketareanticipatedtoincrease,particularlywiththepotentialimplementationofanewtaxregimeaffectinghomebuildingcosts[2].StrategicOutlook−Thecompanyremainsoptimisticaboutlong−termgrowth,supportedbyahousingshortageandfavorabledemographics[2].−TollBrothers′diversifiedluxuryproductofferingsandbalancedportfolioofbuild−to−orderandspechomesareexpectedtohelpnavigatechallengingmarketconditions[3].ShareholderReturns−Followingtheearningsrelease,sharesroseby5.11,002,300 a year ago [5]. Market Conditions - The quarterly performance was impacted by weak contributions from land sales and other segments, while home sales revenues showed growth [2]. - Ongoing uncertainties in the housing market are anticipated to increase, particularly with the potential implementation of a new tax regime affecting homebuilding costs [2]. Strategic Outlook - The company remains optimistic about long-term growth, supported by a housing shortage and favorable demographics [2]. - Toll Brothers' diversified luxury product offerings and balanced portfolio of build-to-order and spec homes are expected to help navigate challenging market conditions [3]. Shareholder Returns - Following the earnings release, shares rose by 5.1% in after-hours trading, likely driven by a 9% increase in the quarterly dividend to 25 cents per share (1 annually) [4]. Backlog and Contracts - At the end of the fiscal second quarter, the backlog consisted of 6,063 homes, down 14.5% year over year, with potential revenues from backlog declining 7.3% to 6.84billion[7].−Net−signedcontractstotaled2,650units,adecreasefrom3,041unitsyearoveryear,withacontractvalueof6.84 billion [7]. - Net-signed contracts totaled 2,650 units, a decrease from 3,041 units year over year, with a contract value of 2.6 billion, reflecting an 11.6% decline [6]. Cost Structure - The adjusted home sales gross margin was 27.5%, contracting by 70 basis points [8]. - Selling, general and administrative (SG&A) expenses as a percentage of home sales revenues increased to 9.5%, up 50 basis points from the previous year [8]. Balance Sheet - Cash and cash equivalents stood at 686.5million,downfrom686.5 million, down from 1.3 billion at the end of fiscal 2024 [9]. - The debt-to-capital ratio improved to 26.1% from 27% at the end of fiscal 2024 [9]. Future Guidance - For fiscal Q3, home deliveries are expected to be between 2,800 and 3,000 units, with an average price of 965,000to965,000 to 985,000 [11]. - For fiscal 2025, home deliveries are anticipated to range from 11,200 to 11,600 units, with an average price of delivered homes expected to be 945,000to945,000 to 965,000 [13].