Toll Brothers Inc., a leading luxury home builder in the United States, has released its financial results for the second quarter of fiscal year 2024, ending April 30. The report showcases remarkable growth in revenue and net income, reflecting the company’s resilience and strategic positioning in a competitive housing market.

1. Financial Highlights

In the three months ending April 30, 2024, Toll Brothers reported revenue of $2.84 billion, a 13% increase over the $2.51 billion recorded during the same period last year. This growth is primarily attributed to a robust increase in net contracts signed and a higher average price per home.

Net Income: The company’s net income surged to $481.6 million, marking a significant 50% increase from $320.2 million in Q2 of the previous year.

Backlog: Despite the positive revenue and income growth, the company's backlog decreased to $7.38 billion, down 12% from $8.38 billion a year earlier.

Net Contracts Signed: Toll Brothers signed 3,041 homes, reflecting an impressive 30% increase from 2,333 homes in Q2 2023.

Income Statement of Toll Brothers Inc

	Jun 2023	May 2024
Net Income	1.42B	1.58B
Profit	1.43B	1.52B
Net Income Continuing	1.43B	1.52B
Income Tax Expense	465.8M	537.4M
Pretax Income	1.90B	2.06B
Non-operating Income	199.5M	56.70M
Operating Income	1.70B	2.00B
Revenue	10.49B	10.49B
Costs and Expenses	8.79B	8.48B
Cost of Revenue	7.84B	7.54B
Operating Expenses	946.2M	938.1M
Selling, General & Administrative	946.2M	938.1M

2. Segment Performance

Homebuilding

The homebuilding segment generated $2.65 billion in revenue, a 13% increase driven by a 30% rise in net contracts signed and a 6% increase in the average home price. This segment remains the backbone of Toll Brothers' operations.

Land Sales and Other

Revenue from land sales and other sources soared by 44% to $190.5 million, largely due to a single land sale that accounted for $180.7 million of this revenue.

3. Geographic Insights

Toll Brothers operates across 24 states and the District of Columbia, with strategic presence in key regions including the Northeast, Mid-Atlantic, Midwest, South, and West Coast. The company’s diversified geographic footprint enables it to leverage various market dynamics effectively.

4. Cash and Liquidity Position

As of April 30, 2024, Toll Brothers maintained a solid liquidity position with $1.03 billion in cash and cash equivalents. Additionally, the company has approximately $1.74 billion available for borrowing under its revolving credit facility, providing a strong buffer for future investments and operations.

Debt and Capital Structure

Toll Brothers holds a committed borrowing capacity of $1.905 billion under its revolving credit facility, set to mature on February 14, 2028. It also has a $650 million unsecured term loan facility maturing in various tranches from 2025 to 2028. The company’s careful management of its debt supports its operational flexibility and growth strategy.

Balance Sheet of Toll Brothers Inc

	Jun 2023	May 2024
Total Assets	11.98B	13.25B
Total Current Assets	761.9M	1.03B
Cash and Equivalents	761.9M	1.03B
Total Non-current Assets	11.22B	12.21B
Long-term Investments	1.00B	1.13B
Net PP&E	298.1M	321.1M
Other Non-current Assets	9.92B	10.75B
Total Liabilities and Equity	11.98B	13.25B
Total Liabilities	5.55B	5.92B
Total Current Liabilities	102.4M	127.5M
Current Debt	102.4M	127.5M
Total Non-current Liabilities	4.11B	4.16B
Long-term Debt	2.73B	2.70B
Non-current Accounts Payable and Accrued Liabilities	722.5M	909.2M
Non-current Deferred Revenue	662.6M	542.9M
Total Equity and Non-controlling Interests	6.43B	7.32B
Total Equity	6.42B	7.30B
Non-controlling Interests	15.50M	16.22M

5. Operating Results and Challenges

The company’s operating results for the fiscal 2024 period indicate mixed performance across regions:

North: Reported decreases in homes delivered and average price, but increases in net contracts signed.

Mid-Atlantic and South: Both regions experienced increases in homes delivered, average price, and net contracts signed.

Mountain: Faced decreases in homes delivered and average price, yet increases in net contracts signed.

Pacific: Showed positive trends with increases across all key performance indicators.

Despite facing challenges such as rising costs and competitive pressures, Toll Brothers reported an increase in income before income taxes, mainly due to higher revenues and reduced land impairment charges.

6. Cash Flow Performance

The company reported a net change in cash of $287.5 million for the quarter, a notable rebound from the $29.22 million decrease in cash recorded during Q2 2023. This improvement is attributed to strong operating cash flows of $459 million, offset by investments and financing activities.

Cash Flow Statement of Toll Brothers Inc

	Jun 2023	May 2024
Net Change in Cash	221.7M	277.7M
Net Cash from Operating Activities	1.33B	1.27B
Operating Profit	1.42B	1.58B
Adjustment to Operating Profit	-88.39M	-308.5M
Net Cash from Investing Activities	-180.4M	-152.1M
Business & Interest in Affiliates	222.6M	198.7M
Productive Assets	34.78M	46.11M
Other Investing Activities	76.96M	92.76M
Net Cash from Financing Activities	-935.1M	-842.9M
Debt	-517.2M	-119.0M
Dividends	90.95M	91.84M
Equity Issuance/Repurchase	-321.6M	-632.1M
Other Financing Activities	-5.26M	78K

7. Conclusion

Toll Brothers Inc. has demonstrated robust growth in Q2 2024, with significant increases in revenue and net income. While the backlog has declined, the surge in net contracts signed indicates strong future demand. The company’s solid liquidity position and disciplined capital management further underscore its resilience in a fluctuating market landscape. As Toll Brothers continues to navigate challenges and capitalize on opportunities, its strategic focus on luxury homebuilding remains a key driver of its long-term success.

Original filing: sec.gov