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Apr 30, 2023
Toll Brothers Q2 2023 Earnings Report
Toll Brothers reported strong Q2 2023 results, exceeding guidance due to improved demand and operational efficiency.
Key Takeaways
Toll Brothers reported record second quarter net income of $320.2 million, driven by increased demand, strategic spec home supply, and operational efficiency. The company is raising its full year guidance for almost every metric.
Net income reached $320.2 million, or $2.85 per share diluted, up 46% and 54%, respectively, compared to Q2 2022.
Home sales revenues increased by 14% to $2.5 billion with 2,492 homes delivered, a 4% increase.
Adjusted home sales gross margin exceeded guidance by 130 basis points, and SG&A expenses were 9.1% of home sales revenues, 200 basis points lower than last year.
The company retired $400 million of senior notes, extended credit facilities, repurchased $84 million of common stock, and paid $23 million in dividends.
Toll Brothers
Toll Brothers
Toll Brothers Revenue by Segment
Revenue by Segment
North Revenue
CapyFin.comMid-Atlantic Revenue
CapyFin.comSouth Revenue
CapyFin.comMountain Revenue
CapyFin.comPacific Revenue
CapyFin.com Forward Guidance
Toll Brothers provided financial guidance for the third quarter and full fiscal year 2023, including projections for deliveries, average delivered price per home, adjusted home sales gross margin, SG&A expenses, other income, and tax rate.
Positive Outlook
- Deliveries for Q3 are expected to be between 2,350 and 2,450 units.
- Deliveries for the full fiscal year are projected to be between 8,900 and 9,500 units.
- The average delivered price per home is anticipated to be between $1,005,000 and $1,025,000 for Q3.
- The average delivered price per home for the full fiscal year is expected to be between $975,000 and $995,000.
- Adjusted home sales gross margin is projected to be 27.7% for Q3 and 27.8% for the full fiscal year.
Challenges Ahead
- SG&A, as a percentage of home sales revenues, is expected to be 9.7% for Q3 and 10.0% for the full fiscal year.
- Other income, income from unconsolidated entities, and gross margin from land sales and other is projected at $25 million for Q3.
- Other income, income from unconsolidated entities, and gross margin from land sales and other is projected at $125 million for the full fiscal year.
- The tax rate is expected to be 26.0% for Q3 and 25.7% for the full fiscal year.
- Period-end community count is expected to be 360 for Q3 and 385 for the full fiscal year.
Revenue & Expenses
Visualization of income flow from segment revenue to net income