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Toll Brothers profit misses on lower-than-estimated home prices


By Arunima Banerjee

(Reuters) - U.S. luxury homebuilder Inc's quarterly profit and missed analysts' expectations on Tuesday as it sold homes at prices lower than its own estimates, sending the company's down 8 percent in morning trading.

The company said it also expects a decline in its full-year adjusted gross margin.

A robust job market has supported demand for housing in the United States, but homebuilders are not fully able to take advantage of the rise in demand due to supply constraints such as higher labor and raw material costs.

The company, which mainly builds single-family homes, expects fiscal 2018 adjusted gross margin of between 23.75 percent and 24.25 percent, compared with 24.80 percent this year.

The homebuilder, which typically sells luxury homes that can cost upwards of $1 million, earlier this year introduced a new line of homes with lower prices and quicker delivery times to cater to millennials who are starting families.

The move has boosted demand but has also weighed on the company's average prices, that rose marginally in the fourth quarter following declines for three straight quarters.

Brothers, which has been building homes for half a century, forecast full-year of between $6.24 billion and $7.48 billion, compared with $5.81 billion this year.

Orders, a key metric of future for homebuilders, rose 14.5 percent to 1,979 homes in the three months ended Oct. 31, its slowest pace in six quarters.

Brothers' average price of homes sold increased to $836,600 in the quarter from a year earlier, missing its own forecast, while the number of homes sold rose 9 percent to 2,424.

Homebuilders have reported largely positive quarterly and remained upbeat on the housing market even as the hurricanes weighed on some operations.

has not given any details yet, but MKM Partners analyst Megan McGrath expects the hurricanes to weigh on the homebuilder.

The company's net income rose to $191.9 million, or $1.17 per share, in the quarter, from $114.4 million, or 67 cents per share, a year earlier. The year-ago quarter was hit by a $121.2 million warranty charge.

rose 9.3 percent to $2.03 billion.

Analysts on average had expected a profit of $1.19 per share and of $2.08 billion, according to Thomson I/B/E/S.

Up to Monday's close, the company's had risen 63.4 percent this year.

(Reporting by Arunima Banerjee in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, December 05 2017. 22:54 IST