Toll Brothers, a premier luxury homebuilder, showcased impressive financial results for the first quarter of fiscal year 2024, with earnings per share (EPS) reaching $2.25, surpassing the predicted $1.78. The company's revenue saw a 9.4% increase from the previous year, hitting $1.95 billion and exceeding the anticipated $1.88 billion. Notably, home sales revenue climbed to $1.93 billion, marking a 10% rise from the first quarter of fiscal 2023, with 1,927 homes delivered, a 6% increase.
A significant boost was observed in the net signed contract value, which surged by 42% to $2.06 billion, and the number of contracted homes rose by 40% to 2,042. Despite a decrease in backlog value by 18% to $7.08 billion and a 13% drop in homes in backlog to 6,693, the company's home sales gross margin improved to
27.6% from 25.6% the previous year. Additionally, the adjusted gross margin for the quarter was 28.9%, a notable increase of 140 basis points over the first quarter of fiscal 2023. The company also reported an improvement in selling, general, and administrative expenses, which now represent 11.9% of home sales revenues, down from the previous year.
Douglas C. Yearley, Jr., Toll Brothers' CEO, expressed satisfaction with the quarter's results, highlighting the delivery of 1,927 homes at an average price of around $1.0 million, leading to significant revenue and margin improvements. The company's operational efficiency contributed to a 32% increase in earnings per diluted share over the same quarter last year.
For the upcoming second quarter of fiscal 2024, Toll Brothers anticipates delivering between 2,400 and 2,500 units, with an expectation to reach 10,000 to 10,500 units for the entire fiscal year. Additionally, the company profited from a land sale to a commercial developer, expecting a pre-tax gain of approximately $175 million, which will positively impact the second quarter's financials. This has led to an increase in the share repurchase budget for fiscal 2024 to $500 million.
Toll Brothers' financial success and optimistic guidance are largely due to its affluent customer base, which is less impacted by rising mortgage rates, with about 25% of customers paying in cash. This customer profile has enabled the company to maintain higher margins compared to competitors without relying on sales incentives. The company has also focused on expanding its community count to drive growth, with recent demand upticks supporting a revised upward guidance for fiscal 2024.
In essence, Toll Brothers' remarkable earnings and optimistic outlook underscore its resilience in a challenging market, bolstered by a wealthy customer base and strategic growth initiatives. The company's ability to sustain higher margins and its proactive approach to market conditions position it favorably in the thriving new home market, amidst the ongoing shortage of existing homes for sale.