Toll Brothers Inc., the largest U.S. luxury-home builder, said fiscal third-quarter earnings more than doubled as rising prices fueled a 53 percent increase in revenue.
Net income for the three months through July rose to $97.7 million, or 53 cents a share, from $46.6 million, or 26 cents, a year earlier, the Horsham, Pennsylvania-based company said Wednesday in a statement.
Buyer demand has remained strong at the upper end of the U.S. housing market, especially in areas such as California and New York, where Toll Brothers offers some of its most expensive houses and condominiums. The average price of new U.S. homes sold in July rose to $339,100, an all-time high, even as sales fell to the slowest pace in four months, the U.S. Commerce Department reported last week.
"We are driven by bottom-line growth and are pleased with our continued margin expansion through what we still believe is a recovering, albeit bumpy, housing cycle," Toll chief executive Douglas Yearley Jr. said in the statement.
Under Yearley, Toll has expanded its California and urban high-rise divisions while diversifying into apartment construction as demand for rentals grows. Signed contracts fell to 1,324 homes worth $949.1 million from 1,405 homes worth $992.6 million.
Revenue rose to $1.06 billion from $689.2 million a year earlier. The average price of its homes sold in the quarter climbed to $732,000 compared with $651,000.
Toll's gross margin excluding interest and writedowns widened to 26.8 percent in the fiscal third quarter from 25.1 percent a year earlier, the company said today. The full-year gross margin will improve by 185 to 200 basis points compared with fiscal 2013. Toll previously predicted an increase of as little as 175 basis points.
Toll shares were down $1.16, about 3.3 percent, at $34.47 in midmorning trading Wednesday. The shares are down 3.7 percent this year, compared with a 3.4 percent decline in the 11-company Standard & Poor's Supercomposite Homebuilding Index.