Toll Brothers Inc. said Wednesday that its fiscal third-quarter net income rose 54 percent, partly helped by a higher tax benefit. But the nation's biggest luxury homebuilder narrowed its full-year home delivery outlook, as market conditions remain unstable.
Toll Brothers earned $42.1 million, or 25 cents a share, for the three months ended July 31. That compares with net income of $27.3 million, or 16 cents a share, in the prior-year period.
This easily beat the 4 cents a share analysts polled by FactSet expected.
The quarter included a $38.2 million tax benefit compared with a $26.5 million benefit a year ago.
"This past quarter's results indicated some continued stabilization in the upscale housing market, albeit at a level dramatically below historical levels," CEO Douglas C. Yearley Jr. said in a statement.
Revenue dropped 13 percent to $394.3 million from $454.2 million, missing Wall Street's $409.2 million estimate.
Home deliveries fell 14 percent to 693 houses, while net signed contracts rose 2 percent to $406.7 million. The average price of net signed contracts was basically flat at $570,000.
Toll Brothers' cancellation rate rose to 7.4 percent from 6.2 percent, but the Horsham, Pa. company said that it was consistent with pre-downturn historical averages.
Backlog at the end of the quarter was $1.02 billion, up 8 percent.
While buyers are concerned about recent stock market volatility, the downgrade of U.S. debt and shaky consumer confidence, Toll Brothers said that they typically have strong financial profiles that allow them the secure financing for homes. Yearley said the company also has a strong position in some of the more promising U.S. markets, which includes the metro-D.C.-to-Boston corridor and its high-rise business in metro New York City.
"Our sales are gaining some traction, but consumer confidence is still weak and the housing sector remains in a fragile state," Executive Chairman Robert Toll said in a statement.
Toll Brothers, which has operations in 19 states, now expects to deliver between 2,475 and 2,675 homes during the year. Its prior forecast called for deliveries of 2,300 to 2,800 homes.
In morning trading, shares of the company added 59 cents, or 4 percent, to $15.33.