Toll Brothers, Inc. has recently reported its financial results for the third quarter ending on July 31, 2023. With net income and earnings per share at $414.8 million and $3.73 per diluted share, respectively, this quarter has shown significant growth compared to the same period in the previous year. Home sales revenues have risen by 19% to reach $2.7 billion, while the net signed contract value has increased by 30% to $2.2 billion. Although the backlog value has witnessed a decline of 30%, standing at $7.9 billion, Toll Brothers, Inc. has announced that it raised its full-year guidance for deliveries, adjusted gross margin, and SG&A leverage. Flaunting approximately $1.0 billion in cash along with $1.8 billion available under its revolving credit facility, the company expects to deliver 2,650 to 2,750 units in the fourth quarter and aims to achieve 9,500 to 9,600 units for the fiscal year 2023.

Financial Results for Q3 2023

Toll Brothers, Inc. has released its financial results for the third quarter ended July 31, 2023. The company achieved strong performance during this period, with notable increases in net income, earnings per share, home sales revenues, and net signed contract value. However, the backlog value decreased compared to the previous year’s third quarter. Toll Brothers also conducted share repurchases, providing additional value to its shareholders. The company has raised its full-year guidance for deliveries, adjusted gross margin, and SG&A leverage. Additionally, Toll Brothers maintains a healthy cash position and a sizeable amount available under its revolving credit facility. Looking ahead, the company has provided expectations for deliveries in the fourth quarter and for the full fiscal year 2023. Let’s delve into the details of these financial results.

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Net Income and Earnings per Share

In the third quarter of FY 2023, Toll Brothers reported a net income of $414.8 million, showcasing a significant increase compared to the same quarter in FY 2022. This growth in net income reflects the company’s successful execution of its operations and the strength of the housing market. Earnings per share diluted also saw a notable increase, reaching $3.73 per share. This improvement in earnings per share demonstrates Toll Brothers’ ability to generate strong returns for its shareholders.

Home Sales Revenues

Toll Brothers experienced a robust performance in terms of home sales revenues during the third quarter of FY 2023. The company generated $2.7 billion in home sales revenues, marking a 19% increase compared to the same period in FY 2022. This growth in revenues can be attributed to various factors, including increased demand for housing, favorable market conditions, and Toll Brothers’ commitment to delivering high-quality homes to its customers.

Net Signed Contract Value

The net signed contract value, which represents the total value of contracts signed for home sales during a specific period, reached $2.2 billion in the third quarter of FY 2023. This signifies a substantial increase of 30% compared to the same quarter in FY 2022. The significant growth in net signed contract value reflects the strong demand for Toll Brothers’ homes and the ability of the company to attract prospective buyers.

Backlog Value

While Toll Brothers experienced growth in various aspects of its financial results, the backlog value decreased in the third quarter of FY 2023. At the end of the quarter, the backlog value stood at $7.9 billion, representing a decline of 30% compared to FY 2022’s third quarter. The decrease in backlog value can be attributed to a variety of factors, including the completion of homes from the backlog and the timing of new contracts signed during the period. Despite this decrease, Toll Brothers continues to maintain a healthy backlog and actively works towards replenishing it with new contracts.

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Share Repurchases

Toll Brothers conducted share repurchases during the third quarter of FY 2023, demonstrating its commitment to creating value for its shareholders. The company repurchased approximately 1.9 million shares at an average price of $76.26 per share. Share repurchases can enhance shareholder value by reducing the number of outstanding shares, thereby increasing the ownership stake of existing shareholders. Toll Brothers’ share repurchases indicate the company’s confidence in its financial position and its commitment to delivering returns to its shareholders.

Full-Year Guidance

Toll Brothers has raised its full-year guidance for various financial metrics, including deliveries, adjusted gross margin, and SG&A leverage. The company expects to deliver 2,650 to 2,750 units in the fourth quarter of FY 2023. For the full fiscal year 2023, Toll Brothers anticipates delivering 9,500 to 9,600 units. This increased guidance reflects the company’s confidence in its ability to meet the strong demand for its homes and capitalize on favorable market conditions. Toll Brothers also aims to maintain and improve its adjusted gross margin, which represents the percentage of revenue remaining after deducting the cost of goods sold. Additionally, the company seeks to achieve improved SG&A leverage, indicating its efforts to manage and optimize its selling, general, and administrative expenses.

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Cash and Cash Equivalents

Toll Brothers ended the third quarter of FY 2023 with approximately $1.0 billion in cash and cash equivalents. This strong cash position provides the company with a solid foundation to support its operations, invest in growth opportunities, and navigate through any challenging market conditions. The availability of cash and cash equivalents is an essential resource for Toll Brothers to fund its ongoing activities, maintain financial flexibility, and potentially pursue strategic initiatives.

Revolving Credit Facility

In addition to its cash reserves, Toll Brothers has a revolving credit facility that provides it with additional financial flexibility. At the end of the third quarter of FY 2023, Toll Brothers had $1.8 billion available under its revolving credit facility. This credit facility gives the company access to additional funds if needed and serves as a backup source of liquidity. Having a sizeable amount available under the revolving credit facility strengthens Toll Brothers’ financial position and ensures it has enough resources to support its activities.

Fourth Quarter Delivery Expectations

Looking ahead to the fourth quarter of FY 2023, Toll Brothers expects to deliver 2,650 to 2,750 units. This delivery expectation reflects the company’s commitment to meeting the demand for its homes and fulfilling its contractual obligations to customers. Toll Brothers’ ability to consistently deliver a significant number of units demonstrates its operational efficiency and its position as a leading player in the housing market.

Full Fiscal Year 2023 Delivery Expectations

For the full fiscal year 2023, Toll Brothers has provided delivery expectations of 9,500 to 9,600 units. This demonstrates the company’s goal of delivering a substantial number of homes throughout the year and meeting the needs of its customers. Toll Brothers’ ability to consistently deliver a high volume of homes contributes to its revenue growth and market reputation.

In conclusion, Toll Brothers has achieved strong financial results for the third quarter of FY 2023. The company has experienced growth in net income, earnings per share, home sales revenues, and net signed contract value. While the backlog value decreased during this period, Toll Brothers continues to actively work towards replenishing it. The company’s share repurchases and increased full-year guidance further demonstrate its commitment to delivering value to its shareholders. Toll Brothers also maintains a healthy cash position and has a sizeable amount available under its revolving credit facility, providing it with financial flexibility. Looking ahead, Toll Brothers has provided delivery expectations for the fourth quarter and the full fiscal year 2023, highlighting its ability to meet demand and deliver a substantial number of homes. With its strong financial performance and strategic focus, Toll Brothers is well-positioned for continued success in the housing market.