Toll Brothers Gains 3% Following Q2 Beat, New Share Buyback Announcement

Shares of Toll Brothers Inc (NYSE: TOL) were trading higher by more than 3 percent early Tuesday morning after the company reported its second-quarter results.

Strong Q2

Toll Brothers said it earned $0.51 per share in the second quarter on revenue of $1.115 billion. Wall Street analysts were expecting the company to earn $0.46 per share on revenue of $1.04 billion.

Net income for the quarter rose to $89.1 million from $67.9 million in the same quarter a year ago, as home building delivers rose 31 percent in dollars and 9 percent in units over the same period.

Related Link: MKM Previews Toll Q2 Earnings: "The Selloff Has Been Overdone"

Average price of homes delivered in the quarter also rose to $855,500 from $713,500 a year ago. Net signed contracts of $1.65 billion and 1,993 units rose 3 percent in dollars and 3 percent in units.

Toll Brothers ended the quarter with a backlog of $4.19 billion and 4,940 units, marking an increase of 20 percent in dollars and 13 percent in units from a year ago.

Company Comments

Douglas C. Yearley, Jr., Toll Brothers' chief executive officer, stated, "Our revenues this quarter were up 31 percent, compared to last year while pre-tax income rose 62 percent and net income rose 31 percent. Improvements in gross margin, SG&A leverage and pre-tax margin contributed to a significant earnings jump this quarter.

He added, "Our contracts this quarter rose 3 percent in both dollars and units compared to one year ago. This modest growth was achieved despite a decline of 93 units in California contracts compared to one year ago. We believe the California market is still strong. Both Southern and Northern California were among our top five regions in contracts per community this quarter. Our drop in California contracts reflects a temporary lack of inventory for sale; strategic price increases we have implemented to meter out sales in communities with large backlogs; and the lingering impact on our Porter Ranch community of a leak from a nearby natural gas storage facility, which appears to be heading toward a positive resolution."

Toll Brothers also said that its board of directors approved the repurchase of 20 million shares of its common stock, which will replace the prior share repurchase program.

Toll Brothers was trading up 4.43 percent in Tuesday's pre-market session.