Toll Brothers Says Co-Founder To Resign, Tightens Sales View

Luxury home builder Toll Brothers Inc. on Tuesday said its eponymous vice chairman Bruce Toll would retire next month from the company he co-founded with his brother.

News of the retirement came as the home builder also reported better-than-expected revenue for the January quarter but narrowed its sales forecast for the year.

Robert and Bruce Toll started Toll Brothers in 1967 in Pennsylvania. The company has focused on building more-customized and higher-end homes than competitors, and the brothers took the company public on July 8, 1986. Bruce Toll was the company's chief operating officer until May 1998 and its president until November 1998.

"I am so proud of what Toll Brothers has accomplished," Bruce Toll said.

The homes in their first community in Chester County sold for an average of $20,000. In its latest quarterly earnings, the company said the average price of a home delivered in its first quarter was $873,500, up from $782,300 a year ago.

Toll said a tighter labor market and increased home complexity has led to a lengthening in the time it takes to build a home. The company narrowed its annual revenue guidance, saying it now expects revenue between $4.6 billion and $5.4 billion. Previously, Toll had projected revenue between $4.5 billion and $5.6 billion.

Analysts polled by Thomson Reuters had predicted $5.11 billion, on average, in revenue for the year.

Shares of Toll Brothers, which have fallen 30% to $26.03 over the past three months, were inactive in premarket trading.

For the quarter ended Jan. 31, Toll's profit fell to $73.18 million, or 40 cents a share, from $81.33 million, or 44 cents a share, a year earlier. Analysts surveyed by Thomson Reuters were expecting earnings of 40 cents a share.

Revenue rose 8.8% to $928.6 million, above the average analyst estimate of $916.3 million.

Results in the first quarter were driven by growth in the company's north and mid-Atlantic regions, both areas which the company said have been slower to recover from the financial crisis. In the north region, contracts increased 56% in dollars and 38% in units compared with a year prior, boosted by New Jersey growth. The mid-Atlantic region saw contract growth of 34%.

California was a weak spot for the quarter, with a decrease of 28% in units and flat change in dollars.

Toll's City Living division, which builds urban apartments, increased 145% in dollars and 179% in units. While small, the division represents a new segment for the company as the U.S. continues to urbanize. In Southern California, one of its developments was hobbled by a long-lasting gas leak that was resolved Thursday.

Backlog jumped 17% during the period to 4,129 units, with California and the West driving the growth.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

February 23, 2016 08:25 ET (13:25 GMT)

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