Monday
October 20, 2014

Luxury Builder Sees 32% Revenue Increase

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Luxury Builder Sees 32% Revenue Increase

Toll Brothers — a company building luxury homes in 19 states across the U.S. — announced Wednesday that 2013 has been a good financially for the company so far. During the first quarter of the company's financial year, Nov. 1 to Jan. 31, Toll Brothers had $424.6 million in revenues and 746 units sold. In both cases, that represented an increase of 32 percent over results from the same period last year.

“It appears that momentum is building,” said CEO Douglas Yearly, noting that conditions vary across the country. “In most locations the backlogs are building, which means we are increasing prices.”

Toll Brothers is raising prices in about 60 percent of the communities in which they work, Yearly said.

“After seven years of trepidation, buyers are re-entering the housing market,” Robert Toll, executive chairman of the company, said in the press conference. He characterized buyers as “more willing and able to make the move” than in the past few years.

Donald Salmon, president and CEO of Toll Brothers subsidiary TBI Mortgage, said that the financial shape of the buyers encountered by the company has not changed much, but that the company is watching regulatory developments in Washington closely.

“I think, overall, the quality of our buyers has stayed relatively constant,” Salmon said in response to a conference call question. “The one outlier is going to be what’s going to happen with [Qualified Residential Mortgage rules] ... but I don’t expect it to have a major impact.”

The company downplayed labor shortages and price increases for building materials that have plagued the industry’s rebound from recession. In the press call, several company executives said they had anticipated what they characterized as a typical pattern of workers leaving the industry and that they were seeing workers slowly returning to it now.

Yearly said that while Toll Brothers has exited the futures game, their contracts for wood, concrete, and drywall remained stable well into the first half of the year — and beyond, in some cases. Still, costs were up by $3,000 per house in the first quarter.

— Meg White, REALTOR® Magazine

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