HORSHAM, Pa. (AP) — Toll Brothers' net income rose 46 percent in the third quarter as it delivered more homes at higher prices. The Horsham, Pa. company also had lower write-downs during the period.
While many in the industry have said that they are beginning to see a recovery of the housing market, Toll Brothers also has the advantage of catering to the luxury sector, which has withstood the economic downturn better than others. Its target market includes households that typically make more than $100,000 a year, can afford to make a down payment of as much as 30 percent, have great credit and have an unemployment rate about half that of everyone else.
"We are enjoying the most sustained demand we've experienced in over five years," CEO Douglas Yearley said.
The Commerce Department reported last week that applications for building permits rose to their highest level since August 2008, which signals that construction companies are growing more confident about the housing landscape. Applications for building permits rose 6.8 percent to a seasonally adjusted annual rate of 812,000.
Homebuilder confidence also grew this month to a five-year high, according to the National Association of Home Builders/Wells Fargo sentiment index. The index rose to 37 from 35 in July. And many builders reported seeing their best sales since February 2007.
But there is still a ways to go in the recovery. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't been in positive territory since April 2006, the peak of the housing boom.
For the three months ended July 31, Toll Brothers Inc. earned $61.6 million, or 36 cents per share. That compares with $42.1 million, or 25 cents per share, a year ago.
Analysts polled by FactSet expected earnings of 18 cents per share.
Shares of Toll Brothers added 44 cents to $32.25 in premarket trading.
The current quarter included $3.1 million in inventory write-downs. It recorded write-downs more than five times that large last year.
Revenue increased to $554.3 million from $394.3 million, up 41 percent. That beat Wall Street's estimate of $515.2 million.
Toll Brothers said Wednesday that home deliveries climbed 39 percent to 963 units, with the average price of those homes rising to $576,000 from $569,000.
Backlog increased 44 percent to 2,559 homes, while net signed contracts climbed 57 percent to 1,119 units.
Yearley said the housing recovery is being driven by low interest rates, attractive home prices and pent-up demand.
Toll Brothers anticipates fourth-quarter home deliveries of 800 to 1,000 units at an average price of $570,000 to $590,000 per home. If the company accomplishes that goal, it would have 2012 home sale revenue of $1.71 billion to $1.84 billion and total home deliveries of 3,000 to 3,200 units. In 2011 Toll Brothers has operations in Arizona, California, Colorado, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Texas, Virginia, and Washington.