Reuters

(Reuters)

Toll Bros. 3Q Net Climbs 54%; New Orders, Revenue Disappoint

By Industrials FOXBusiness

Battling the anemic housing market, home builder Toll Brothers (TOL) revealed a 54% leap in fiscal third-quarter profits on Wednesday, but also tepid new orders and steeper-than-expected revenue declines.

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The Horsham, Pa.-based luxury home builder said it earned $42.1 million, or 25 cents a share, last quarter, compared with a profit of $27.3 million, or 16 cents a share, a year earlier. Excluding items, it posted pretax income of $24.1 million.

Revenue slid 13% to $394.3 million, trailing the Streets view of $404 million. Gross margins fell to 13.8% from 14.2%.

This past quarter's results indicated some continued stabilization in the upscale housing market, albeit at a level dramatically below historical levels, CEO Douglas Yearley, Jr., said in a statement.

Toll Brothers said its net signed contracts rose just 2% to $406.7 million, or 713 units. The average price of net signed contracts was $570,000, flat from a year earlier.

Yearley said it is too soon to know how the recent turbulence in the financial markets and broader economy may impact the housing market.

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We believe that historic low interest rates and the growing imbalance between housing production and demographics-driven demand bode well for the industry sooner or later: the key question, of course, is when, Yearley said.

Shares of Toll gained 4.7% to $15.45 ahead of Wednesdays open, putting them on track to trim their 2011 tumble of 22%.

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