The company has been able to bolster its average price for a delivered home from $706,000 in the second quarter a year ago to $713,000. The average price of net signed contracts increased year-over-year from $729,000 to $826,000. Toll Brothers delivered 1,195 units in the second quarter and reported 4,387 units in its backlog with an average price per home of $794,000.
Gross margin improved from 23.7% in the year-ago quarter to 25.3% in the second quarter.
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The company’s CEO said:
With strong growth in the value of contracts signed and quarterly year-over-year gross margin improvement we are pleased with the way FY 2015 is unfolding. Second-quarter contracts were up 25% in dollars compared to one year ago. … As we look to FY 2016, we currently expect gross margin and net income growth based on an increase in the average price of our homes, our growing and profitable presence in California, increased revenues projected from our City Living division, and overall solid current demand in most of our markets.
Toll Brothers narrowed its guidance and now says the company expects to deliver between 5,300 and 5,900 new homes during its 2015 fiscal year at an average delivered price between $730,000 and $760,000 each. The prior estimates called for deliveries in a range of 5,200 to 6,000 in a price range of $720,000 and $740,000 per house.
The company’s chief financial officer also said Toll Brothers expects gross margin for the year to come in at 26% and that the company expects improved margins and net income in fiscal year 2016.
The company’s executive chairman also noted:
The economy and housing continue on parallel paths of recovery. It appears the housing market is on firm footing and heading in the right direction. As pent-up demand is released, we envision a gradual and elongated recovery for housing.
Shares were up about 1.2% in premarket trading Wednesday morning to $37.45, in a 52-week range of $28.92 to $40.33 Thomson Reuters had a consensus analyst price target of $39.75 before the results were announced. The highest price target is $52.00.
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