Toll Bros. Profit Increases by 135%

Toll Bros. Inc., a leading builder of luxury homes in the U.S., said Thursday that its fiscal second-quarter earnings rose sharply, and it raised its forecast for the year.

Net income soared 135% to $170.1 million, or $2.01 a share, in the three months ended April 30, from $72.4 million, or 89 cents, in the same period a year earlier. That quarter included a charge of 6 cents a share related to early retirement of debt.

Revenue increased 52% to $1.25 billion from $819.5 million.

Analysts surveyed by Thomson First Call had expected a profit of $1.79 a share on revenue of $1.26 billion.

The earnings came on the heels of indications that the housing market remains strong.

Housing starts surged 11% in April, the Commerce Department said, after dropping in March. Sales of new homes, already at a record level in March, inched even higher last month, rising 0.2% to a record annual rate of 1.316 million units. The median price of a new home jumped 6.1% to an all-time high of $230,800.

The National Assn. of Realtors reported Tuesday that existing single-family homes and condominiums were sold at a seasonally adjusted rate of 7.18 million units in April, a gain of 4.5% from a revised pace in March of 6.87 million units.

Toll Bros. signed contracts for 3,181 homes worth $2.2 billion in the second quarter, up from 2,595 homes worth $1.6 billion a year earlier. The company ended the quarter with a backlog of 8,561 homes worth $5.87 billion, the highest in the company’s history, compared with a backlog of 6,211 homes worth $3.73 billion a year earlier.

The homes on backlog represent future revenue for the company. Joel Rassman, chief financial officer at Toll Bros., said all homes on backlog have been sold and that typically 95% of the sales close.

Toll Bros. said it expected income for fiscal 2005 to grow by 70%, up from a previous forecast of 60% growth. The new forecast suggests income of $695.5 million for the year. For the year ended Oct. 31, 2004, Toll Bros. earned $409.1 million, or $5.04 a share, on revenue of $3.89 billion.

The company’s shares rose $5.92, or 6.9%, to $91.65.