Toll Brothers Delivers Record-Breaking Fiscal Year 2024 Performance, Beating Guidance in Q4
The luxury homebuilder Toll Brothers has concluded its fiscal year 2024 on a high note, reporting a series of record-breaking results that exceeded expectations. During the fourth quarter, the company achieved 3,431 home deliveries and generated $3.3 billion in home sales revenues, representing a 25% increase in units and 10% growth in dollars compared to the same period in 2023.
Chief Executive Officer Douglas Yearley expressed pride in the company's performance, stating that the strong fourth quarter capped off an exceptional full-year outcome. The fiscal year saw Toll Brothers deliver 10,813 homes at an average price of approximately $977,000, with an adjusted gross margin of 28.4%. The company also grew contracts by 27% in both units and dollars, while increasing its community count to 408 communities at year-end.
Yearley highlighted the significance of these achievements, emphasizing that they demonstrate the power of Toll Brothers' luxury brand and the financial strength of its affluent buyers. He attributed the success to the company's strategies of increasing spec production, widening its geographical reach, price points, and product lines, as well as focusing on operational and capital efficiency.
The CEO also pointed out that the company finished the year strong despite facing uncertainty in elections and an increase in mortgage rates by nearly 100 basis points from mid-September to mid-November. However, with the election uncertainty behind them and mortgage rates trending in the right direction, Toll Brothers is optimistic about the start of the spring selling season in mid-January.
Yearley attributed the company's positive outlook to favorable demographics that continue to support the market for new homes generally and Toll Brothers specifically. He cited data from the National Association of Realtors indicating an all-time high median age of first-time homebuyers at 38 years old and a median age of all buyers in the market at 56 years old, with first-time buyers comprising only 24% of the market over the past year.
Toll Brothers' business model caters to older, more affluent first-time buyers (approximately 28% of its business), as well as move-up and move-down buyers who are financially secure and have significant equity in their existing homes. According to Federal Reserve data, a staggering 73% of the value of existing homes today is equity.
The company's strong performance has earned it a return on beginning equity of 23.1%, marking the third consecutive year it has achieved returns above 20%. Toll Brothers' adjusted gross margin beat guidance by 40 basis points in Q4, and SG&A was 8.3% of home sales revenues or 30 basis points better than forecast.
The CEO concluded that these results demonstrate the company's financial strength and its ability to deliver exceptional performance despite market uncertainty. As Toll Brothers looks ahead to fiscal year 2025, it remains optimistic about its prospects for continued growth and success.
