The company hasn’t figured out some amazing new way to build houses more efficiently and get more money out of every house built; instead, it is just building more. A lot more. Compared with a year ago, revenues were up 48 percent, and the number of homes built rose 44 percent to 1,088. Toll Brothers’ gross margin—which measures revenue from sales—was 24.6 percent in this quarter compared with 24.2 percent in the fourth quarter of 2011.
The full year was successful for the company as well. Its net income was $478.1 million compared with $39.8 million last year. Pre-tax net income shows a more stark story of decline and recovery: for this year it came in at $112.9 million versus a pre-tax loss of $29.4 million in 2011.
One figure that most directly shows this significant increase in building activity is the company’s “net contracts per community,” which is comparable to what retailers report as “same-store sales.” This measure shows how much Toll Brothers is building in the areas in which it already operates. As such, it directly reflects the increasing demand for homes, as opposed to the company’s expansion into new markets. Net contracts per community were up 33 percent from the fourth quarter of last year and 60 percent from this fiscal year to last, the highest yearly gain for the company since 2006 and the highest quarterly increase since 2005.
The housing market may still be lagging but this Toll Brothers data suggests the demand for larger homes has increased in the last year. See more of the financial details here.