Toll Brothers, Inc. reported its first-quarter earnings, falling short of expectations--despite a rise in new contracts.
Quarterly earnings came in at $1.75 a share but analysts had expected $2.04 a share.
Net income fell by 26% to $177.7 million from $239.6 million a year earlier.
Despite the earnings miss, Toll Brothers saw a 12% rise in net signed contract value to $2.31 billion, with the average price per contract totaling roughly $1 million.
"While our net income and earnings per share came in below expectations, this was due primarily to impairments and a delay in the sale of a stabilized apartment property in one of our joint ventures," the chairman and CEO Douglas C. Yearley said. "Our core homebuilding operations met expectations in the quarter."
Total consolidated revenue was $1.86 billion, a 4.5% decline from $1.95 billion in Q1 of last year.
The luxury homebuilder's pre-tax income dropped roughly by 29% year-over-year to $221.4 million, influenced by a delayed joint venture sale.
Home sales revenue declined 5% to $1.84 billion, despite a 3% increase in home deliveries to 1,991 units.
Toll Brothers, home sales gross margin fell from 27.6% to 25%, which the earnings report attributed to higher costs.
The average price per unit dropped from $1,002,500 last year to $924,600 in Q1 of this year, which the earnings report said may be due to a shift towards lower-priced homes.
The company's backlog value dropped 2% to $6.94 billion from $7.08 billion.
Despite the missed earnings estimate, Yearley is optimistic about the future.
"We believe the long-term outlook for the new home market remains very positive and continues to be supported by strong fundamentals," Yearley said.
Toll Brothers earnings came a day after the National Association of Home Builders released a pessimistic report showing builder confidence dropped in January.
