Home builder Toll Brothers Inc. reported today that first-quarter net income increased 49 percent to $163.9 million compared to first-quarter 2005.
Signed contracts, at $1.14 billion, declined 21 percent in the first quarter compared to record first-quarter-2005 signed contracts. First-quarter revenues rose 35 percent to $1.34 billion, and the first-quarter backlog rose 22 percent to $5.95 billion, the company also reported.
The earnings, revenue and backlog totals were first-quarter records, while contracts were the second-highest first-quarter total in the company’s history.
The company also reported:
First-quarter earnings of 98 cents per share diluted grew 48 percent versus first-quarter-2005 earnings of 66 cents per share diluted, the previous first-quarter record.
Revenues from land sales totaled $4.7 million in first-quarter 2006, compared with $1.2 million in first-quarter 2005.
In addition, in the company’s first-quarter 2006, unconsolidated entities in which the company had an interest delivered $52.1 million of homes compared with $26.4 million during the same period in first-quarter 2005. The company’s share of profits from the delivery of these homes is included in “Equity Earnings from Unconsolidated Entities” on the company’s Income Statement.
In first-quarter 2006, the company’s first-quarter-end backlog of $5.95 billion increased 22 percent over first-quarter 2005’s backlog of $4.89 billion, the previous first-quarter record. First-quarter 2006’s total included $128.3 million of beginning backlog from the company’s Hoboken, N.J., tower complex, Maxwell Place, which previously had been included in unconsolidated entities. In addition, at the end of first-quarter 2006, unconsolidated entities in which the company had an interest had a backlog of $20.8 million, the company reported.
In first-quarter 2006, unconsolidated entities in which the company had an interest signed contracts of $16.8 million.
Robert I. Toll, chairman and chief executive officer, said in a statement, “Based on strong demographics, restrictive land approval regulations and our supply of 87,000 lots, we believe Toll Brothers is well-positioned for growth. Over the next couple of quarters, however, we will continue to face tough comparisons with last year.
“In 2005, demand for new homes in many markets was propelled to unsustainable levels by speculative buying. We are now on the other side of that slope. Speculative demand has ceased and speculators are now putting their homes back on the market. The result has been more supply than demand in some regions. Markets such as metro Washington, D.C., … will need to work through their excess supply before the imbalance once again tips in our favor. When that happens, we believe builders such as Toll Brothers, who control the largest share of well-located approved sites, should prosper.
“Although we ended the quarter with a record 258 selling communities, sales remain constrained at the many communities we have with backlogs of 12 months or more. We are optimistic that as these backlogs are reduced and new communities are opened, sales should improve.
Toll also stated, that first-quarter 2006’s financial results “should either be the best or second-best year in our history, with net income of between $790 million and $870 million, earnings per share of between $4.77 and $5.26, and return on beginning equity of approximately 30 percent.
“Our primary goal is to grow our earnings and revenues, as we have for the past 15 years, by finding great land deals, broadening our product lines, expanding geographically, and building our brand, but we remain open to share repurchases and other opportunities to increase shareholder value. Since Feb. 1, 2006, the start of our second quarter, we have repurchased about 1 million shares in addition to the 2.6 million shares we acquired during the previous two quarters.”
At 2 p.m. EST today, Toll Brothers will broadcast a conference call hosted by chairman and CEO Robert I. Toll to discuss these results and the company’s outlook for the remainder of the fiscal year.
Prior to this conference call, the company intends to file a Form 8-K with the Securities and Exchange Commission containing its guidance for expected results of operations for Fiscal 2006, which will be discussed on the call.
To access the call, enter the Toll Brothers Web site, click on the “Investor Relations” page, and select “Conference Calls.” Participants are encouraged to access the site at least 15 minutes prior to the start of the presentation to register and download any necessary software. The call can be heard live, and an online replay will be available through May 1.
Toll Brothers Inc. is listed on the New York Stock Exchange and the Pacific Exchange under the symbol “TOL.” The company serves move-up, empty-nester, active-adult and second-home buyers and operates in 21 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Illinois, Massachusetts, Maryland, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia and West Virginia.
Toll Brothers builds luxury single-family detached and attached home communities, master-planned luxury residential resort-style golf communities and urban low-, mid- and high-rise communities, principally on land it develops and improves. The company operates its own architectural, engineering, mortgage, title, land development and land sale, golf course development and management, home security, landscape, cable television and broadband Internet delivery subsidiaries. The company also operates its own lumber distribution, and house component assembly and manufacturing operations, according to the announcement.
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