Photo: Flickr / andrewasmith
Homebuilder Toll Brothers beat earnings estimates this morning, but the real story is the commentary in the press release.Just read the commentary from CEO Douglas C. Yearley:
“We are enjoying the most sustained demand we’ve experienced in over five years. In the past three quarters, the values of our signed contracts were up 45%, 51% and now 66% compared to FY 2011. Three weeks into our fourth quarter, our non-binding reservation deposits (a precursor to future contracts) are up 59% compared to the same period in FY 2011.
“The pace of our contract growth has far exceeded the national housing data as we are gaining market share. We attribute this to the strength of our brand, our excellent land positions, our proven reputation for reliability and quality, our strong balance sheet and our seasoned management team. Additionally, as the only national home building company focused on the luxury market, we are facing limited competition from the capital-constrained small and mid-sized private builders who are our primary competitors.
“We believe the housing recovery is being driven by pent-up demand, very low interest rates and attractively priced homes. Customers who have postponed buying for a number of years are moving into the market. With an industry-wide shortage of inventory in many markets, we are enjoying some pricing power.
“With operations in 20 states and 50 markets, we see the recovery occurring across most of our regions. With over 39,000 lots owned or controlled, a wide range of product lines and $1.7 billion of cash, marketable securities and available credit, we are positioned for growth.”
Now granted, he does say in there that he thinks Toll Brothers is beating the competition. But the commentary about customers coming back in the market, the lack of industry-wide inventory, and the widespread pace of growth is pretty notable.