Toll Brothers reports Q1 EPS $1.70, consensus $1.41

Reports Q1 revenue $1.78B, consensus $1.73B. Q1 adjusted home sales gross margin, which excludes interest and inventory write-downs, was 27.5% vs. 25.6% y/y. CEO Douglas C. Yearley stated: "We are very pleased with our strong first quarter results, as we exceeded the midpoint of our guidance on all key metrics. We delivered 1,826 homes and generated $1.75 billion in home building revenue, increased our adjusted gross margin by 190 basis points year-over-year to 27.5%, and decreased our SG&A expense, as a percentage of revenue, by 130 basis points compared to last year’s first quarter. As a result, we grew pre-tax income by 26% year-over-year and earnings per share by 37%. With a quarter-end backlog of $8.6 billion and 7,733 homes, we continue to project solid results in FY 2023. We are therefore reaffirming our full FY 2023 guidance of an adjusted gross margin of 27.0% and $8.00 to $9.00 of earnings per share. Since the start of the calendar year, we have seen a marked increase in demand beyond normal seasonality as buyer confidence appears to be improving. We believe the recent pick-up in demand is a sign that the long-term fundamentals underpinning the housing market remain intact. These include favorable demographic and migration trends, a very tight resale market, and growing pent-up demand resulting from over a decade of underproduction. Notwithstanding near-term uncertainty in the economy, we expect these factors will continue to support the housing market well into the future. Importantly, we continue to have sufficient land under control to increase community count in FY 2023 and beyond. Our balance sheet is solid, we have ample liquidity, and we expect to generate significant cash flow from operations in FY 2023. This should enable us to continue reducing debt and returning cash to stockholders throughout the year."