Toll Brothers (NYSE: TOL) reported Q1 EPS of $0.42, $0.06 better than the analyst estimate of $0.36. Revenue for the quarter came in at $920.7 million versus the consensus estimate of $902.49 million.

FY 2017 First Quarter Financial Highlights:

• FY 2017’s first quarter net income was $70.4 million and earnings per share were $0.42 per share diluted, compared to net income of $73.2 million and $0.40 per share diluted in FY 2016’s first quarter.
• Pre-tax income was $109.8 million, compared to pre-tax income of $116.8 million in FY 2016’s first quarter. FY 2017’s first quarter results included pre-tax inventory write-downs totaling $4.7 million, compared to $1.3 million in FY 2016’s first quarter.
• Revenues of $920.7 million and home building deliveries of 1,190 units were approximately flat in dollars and increased 12% in units, compared to FY 2016’s first-quarter total of $928.6 million and 1,063 units. The average price of homes delivered declined to $773,700, due to changes in product mix, compared to $873,500 in FY 2016’s first quarter.
• Net signed contracts of $1.24 billion and 1,522 units rose 14% in dollars and 22% in units, compared to FY 2016’s first quarter totals of $1.09 billion and 1,250 units. The average price of net signed contracts was $816,700, compared to $869,600 in FY 2016’s first quarter. The decline in average price was primarily due to: (1) the Company’s FY 2017 first quarter acquisition of Boise-based Coleman Homes (“Coleman”), (2) a decline in the number of contracts signed in the Company’s City Living division compared to one year ago and (3) an increase in townhome contracts in the North and Mid-Atlantic regions.
• On a per-community basis, FY 2017’s first-quarter net signed contracts was 4.73 units per community, compared to first quarter totals of 4.34 in FY 2016, 4.09 in FY 2015, 3.95 in FY 2014, and 4.34 in FY 2013.
• For the first three weeks of FY 2017’s second quarter, beginning February 1, 2017, non-binding reservations deposits were up 16% in units, compared to the same period in FY 2016.
• Backlog of $4.35 billion and 5,145 units rose 19% in dollars and 21% in units, compared to FY 2016’s first-quarter-end backlog of $3.66 billion and 4,251 units. The average price of homes in backlog was $844,500, compared to $861,600 at FY 2016’s first-quarter end.
• Gross margin, as a percentage of revenues, was 20.4% in FY 2017’s first quarter, compared to 23.3% in FY 2016’s first quarter. Adjusted Gross Margin, which excludes interest and inventory write-downs (“Adjusted Gross Margin”), was 23.9%, compared to 26.9% in FY 2016’s first quarter.
• Other income and Income from unconsolidated entities totaled $59.1 million, compared to $22.4 million in FY 2016’s first quarter.
• The Company ended its first quarter with 321 selling communities, compared to 310 at FYE 2016, and 291 at FY 2016’s first-quarter end.
• On February 21, 2017, the Company announced that its Board of Directors approved the initiation of a cash dividend to shareholders. The first quarterly dividend of $0.08 per share, equivalent to approximately 1% annualized of the Company’s current share price, will be paid on April 28, 2017 to shareholders of record on the close of business on April 14, 2017.
• During the first quarter of FY 2017, the Company repurchased approximately 557,000 shares of its common stock at an average price of $27.33, for a total purchase price of $15.2 million.
• The Company is increasing the mid-point of its delivery guidance for full FY 2017 by 100 units and now expects FY 2017 deliveries of between 6,700 and 7,500 units with an average price of between $775,000 and $825,000.
• The Company reaffirms its previous guidance for full FY 2017 Adjusted Gross Margin, SG&A as a percentage of revenues, Other income and Income from unconsolidated entities and effective tax rate.
• The Company expects FY 2017 second-quarter deliveries of between 1,350 and 1,650 units with an average price of between $810,000 and $835,000.
• The Company expects its second-quarter FY 2017 Adjusted Gross Margin to be between 23.8% and 24.2% of revenues.
• FY 2017 second-quarter SG&A is expected to be approximately 11.4% of second quarter revenues.
• The Company’s second-quarter FY 2017 Other income and Income from unconsolidated entities is expected to be between $40 million and $60 million.
• The FY 2017 second quarter effective tax rate is projected to be approximately 37.5%.

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