Toll Brothers, Inc. (NYSE:TOL) Q1 2024 Earnings Conference Call February 21, 2024 8:30 AM ET

Company Participants

Douglas Yearley - Chief Executive Officer

Marty Connor - Chief Financial Officer

Conference Call Participants

Ivy Zelman - Zelman & Associates

Sam Reid - Wells Fargo

Stephen Kim - Evercore ISI

Mike Dahl - RBC Capital Markets

Rafe Jadrosich - Bank of America

John Lovallo - UBS

Michael Rehaut - JPMorgan

Buck Horne - Raymond James

Operator

Good morning, everyone and welcome to the Toll Brothers First Quarter Fiscal Year 2024 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] The company is planning to end the call at 9:30 when the market opens. During the Q&A, please limit yourself to one question and one follow-up. Please also note today’s event is being recorded.

And at this time I’d like to turn the floor over to Douglas Yearley, CEO. Please go ahead, sir.

Douglas Yearley

Thank you, Jamie. Good morning. Welcome and thank you all for joining us. Before I begin, I ask you to read our statement on forward-looking information in our earnings release of last night and on our website.

I caution you that many statements on this call are forward-looking based on assumptions about the economy, world events, housing and financial markets, interest rates, the availability of labor and materials, inflation, and many other factors beyond our control that could significantly affect future results.

With me today are Marty Connor, Chief Financial Officer; Rob Parahus, President and Chief Operating Officer; Fred Cooper, Senior VP of Finance and Investor Relations; Wendy Marlett, Chief Marketing Officer; and Gregg Ziegler, Senior VP and Treasurer.

I'm very pleased with our strong first quarter results. We beat our guidance across the board and saw another quarter of solid sales with contracts, up 40% in units and 42% in dollars compared to last year. In addition, since the start of the spring selling season in mid-January, we have seen a meaningful uptick in demand that has continued through this past weekend. In our first quarter, we delivered 1,927 homes at an average price of approximately $1 million, generating record first quarter home sales of $1.93 billion, up 10.4% in dollars, compared to the first quarter of fiscal 2023.

Our adjusted gross margin was 28.9%, 90 basis points better than guidance and 140 basis points better than last year's first quarter. The outperformance versus our guidance was due to mix, driven by earlier than expected deliveries in certain of our higher margin Pacific and Mid-Atlantic communities and fewer than expected deliveries in lower margin mountain communities.