Toll Brothers 4Q Profits Dive 77%, Top Views

Toll Brothers (NYSE:TOL) disclosed a 77% plunge in fiscal fourth-quarter earnings on Tuesday amid fewer tax adjustments and “leveling” demand, but the luxury home builder still managed to beat profit forecasts.

Shares of Toll Brothers advanced more than 2% in premarket action on the stronger-than-expected results.

The company said it earned $94.9 million, or 54 cents a share, last quarter, compared with a profit of $411.4 million, or $2.35 a share, a year earlier. Deferred tax asset valuation allowance reversals fell to $4.6 million last quarter, compared with $394.7 million the year before.

Analysts had been calling for EPS of 43 cents.

As was previously reported, revenue soared 65% to $1.04 billion, compared with the Street’s view of $1 billion. Deliveries increased 36% to 1,485 units. The average price of homes delivered increased to $703,000 last quarter, up from $651,000 in the third quarter and $582,000 in the fourth quarter of 2012.

Toll Brothers said net signed contracts, a closely-watched metric, jumped 23% to $839 million, or 6% in units to 1,163. The company’s backlog soared 57% to $2.63 billion, or 43% to 3,679 units.

Gross margins, excluding interest and writedowns, expanded to 25.4% from 24.6% the year before.

Toll Brothers CEO Douglas Yearley, Jr., said the company saw “a leveling of demand” last quarter due to the impact of price increases and uncertainty stemming from political gridlock in Washington and “a sudden rise in interest rates.”

“We believe this leveling of demand will prove temporary based on still-significant pent-up demand, the gradual strengthening of the economy and the improving prospects of our affluent customers,” Yearley said.

Shares of Horsham, Pa.-based Toll Brothers advanced 2.59% to $34.45 ahead of Tuesday’s opening bell. The rally puts them on track to extend their disappointing 2013 gain of about 4%.