Toll Brothers Inc. (NYSE: TOL) reported third-quarter fiscal 2016 results before markets opened Tuesday. The luxury homebuilder reported diluted earnings per share (EPS) of $0.61 on revenues of $1.27 billion. In the same period a year ago, Toll Brothers reported EPS of $0.36 on revenue of $1.03 billion. Third-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.61 and $1.25 billion in revenue.

The company has been able to bolster its average price for a delivered home from $724,000 in the third quarter a year ago to $843,000. The average price of net signed contracts slipped slightly year-over-year from $834,000 to $831,000. Toll Brothers delivered 1,507 units in the quarter and reported 5,181 units in its backlog with an average price per home of $844,000.

The average price for a delivered home in the second quarter was $855,500 and the average price of net signed contracts was $825,500. Deliveries and backlog rose sequentially.

Gross margin improved from 19.8% in the year-ago quarter to 21.9%.

CEO Douglas Yearley said:

Our net income rose 58% this quarter versus one year ago, driven by a 24% increase in revenue, a 210 basis point improvement in gross margin and a 70 basis point decline in SG&A, as a percentage of revenue, compared to the third quarter of  FY 2015. … In our third quarter, every region showed growth in contracts of anywhere from 9% to 29% in dollars and 7% to 36% in units. Each region contributed significantly. Of the $1.45 billion in contracts signed this quarter, the North contributed 17%, the Mid-Atlantic 17%, the South 17%, the West 19%, California 25% and City Living 5%.

Toll Brothers narrowed its guidance and now says the company expects to deliver between 5,900 and 6,200 new homes during its 2016 fiscal year at an average delivered price between $815,000 and $835,000. The average price has dipped by $5,000 on the low end and $15,000 at the high end.

The company’s chief financial officer also said Toll Brothers expects adjusted gross margin for the year to fall in a range of 25.6% to 25.8%. At the end of the prior quarter the company had forecast gross margin of 25.8% to 26.2%.

Shares were down about 2.2% in premarket trading Tuesday to $28.70, in a 52-week range of $23.75 to $38.55. The consensus 12-month price target on the stock is $36.38

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