Toll Brothers reported a robust QQ1 2024 performance, delivering 1,927 homes and generating homebuilding revenues of approximately $1.93 billion. Reported GAAP net income was $239.6 million, or $2.25 per diluted share, with adjusted gross margin of 28.9% (vs. 27.5% in the year-ago quarter), and SG&A margin of 11.9% of homebuilding revenue. The quarter benefited from favorable mix—particularly higher-margin Pacific and Mid-Atlantic deliveries—while lower-margin Mountain region activity was lighter. Management exceeded initial guidance, lifting full-year deliveries to roughly 10,250 homes, full-year adjusted gross margin to 28.0%, and SG&A margin to 9.8%. A one-off land sale added a material cash inflow and pre-tax gain (land sale gain ~ $175 million; net cash proceeds ~ $180.7 million in Q2), underpinning an elevated capital allocation stance including increased share repurchases to up to $500 million for 2024. Toll also raised its joint venture and other income guidance to $260 million for the year. The company ended QQ1 with solid liquidity (> $2.5 billion), a strong balance sheet (net debt to capitalization ~21.4%), and a substantial land/lot position (≈70,400 lots; ~49% optioned) supporting a planned 410 communities by year-end. Management stressed a long-term strategy around increased spec construction, geographic expansion, and capital returns, while acknowledging sensitivity to housing demand and mortgage-rate dynamics.
Key takeaways for investors include: (1) revenue and earnings outperformed driven by mix and efficiencies; (2) margin trajectory remains favorable with a longer-term plan to sustain ~27–28% gross margins and sub-10% SG&A, aided by fixed-cost leverage and cost controls; (3) capital allocation remains a priority, with a large land sale contributing to enhanced buyback capacity and a higher 2024 guidance cadence; (4) ongoing execution risk from rate moves and market cycles, though Toll’s land bank, spec strategy, and multi-market footprint provide a differentiating growth runway.