Toll Brothers Inc. (NYSE:TOL) Q2 2019 Earnings Conference Call Transcript
May 22, 2019 • 11:00 am ET
Good morning and welcome to the Toll Brothers Second Quarter Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Doug Yearley, Chairman and Chief Executive Officer. Please go ahead.
Douglas C. Yearley
Thank you, Chad. Welcome and thank you for joining us. I'm Doug Yearley , Chairman and CEO. With me today are Bob Toll, Chairman Emeritus; Rick Hartman, President and COO; Marty Connor, Chief Financial Officer; Fred Cooper, Senior VP of Finance and Investor Relations; Kira Sterling, Chief Marketing Officer; Gregg Ziegler, Senior VP and Treasurer and Don Salmon, President of TBI Mortgage Company.
Before I begin, I'd ask you to read the statement on forward-looking information in yesterday's release 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 and many other factors beyond our control that could significantly affect our future results. Those listening on the web can email questions to Investor Relations at tollbrothers.com. Fiscal year 2019 second quarter results were strong with earnings per share of $0.87, up 21%. Pre-tax earnings up 16% and home sales revenue up 7% and adjusted home sales gross margin improving 100 basis points compared to one year ago. Fiscal year 2019 second quarter net income and earnings per share were the highest second quarter in over a decade.
Our second quarter contracts were down 16% in dollars and 9% in units. We attribute this decline in part to the industry-wide slowdown that began in the second half of 2018 and to a challenging year-over-year comparisons. We are encouraged that demand improved, as our second quarter progressed. April contracts were better than March which were better than February, while February and March contracts were down versus 2018 same months, 2019 April contracts surpassed last year's April on both a growth and a per community basis.
Although the spring selling season bloomed late, it builds momentum. In fact it was the best April on a gross and a per community basis for contracts since 2006. Traffic and deposits this May have also been encouraging. We view this as a positive sign for the overall health of the housing market. According to recent reports, builder sentiment in May rose to a seven month high and single-family housing starts in April were up 6.2% versus March. The industry is being bullied by low interest rates, a strong employment picture and continued aging of the existing housing stock and a still limited supply of new homes in many markets.
Last week, we learned that we moved up 52 spots on the Fortune 500 to number 428. We continue to look for opportunities to grow and leverage our industry-leading brand as we expand our geographic footprint, product lines and the price points. On Monday, we announced our entry into