DOW JONES NEWSWIRES
Toll Brothers Inc. (TOL) said Wednesday fiscal third-quarter
home building revenue fell 42% from a year earlier as the housing
market continued to sag.
In a statement, the builder of luxury homes said home building
revenue for the three months ended July 31 fell to $461.3 million
from $796.7 million a year earlier.
"Although our industry continues to face significant challenges,
we are encouraged by the increase in the number of net contracts
signed this quarter," Chairman and Chief Executive Robert Toll said
in a statement.
"Although some of our markets are still stuck in the mud, many
are improving. While we have to work very hard for our sales, it
does feel as if the fence sitters are looking for reasons to jump
in on the side of buying. Price is no longer the overwhelmingly
dominant factor."
The company said net signed contracts during the three months
ended July 31 rose to 837 units from 812 units a year earlier. In
dollar terms however, net signed contracts fell to $447.7 million
from $469.9 million a year earlier.
Home builders have been slammed the past few years, and lower
consumer confidence for big-ticket items and rising unemployment
has further hurt the industry and led to a surge in loan
delinquencies and defaults. Still, Toll Brothers has held up better
than many of its peers.
The company had said in June that cancellations appeared to be
leveling off, adding the increased availability of mortgages for
larger homes and improving stock market gave the company reason to
be cautiously optimistic about the future.
Analysts surveyed by Thomson Reuters expected revenue of $377
million.
The company's backlog at the end of the third quarter was about
1,626 units, down 37% from a year earlier. In dollar terms it fell
47% to $930.7 million.
Chief Financial Officer Joel Rassman said the company retired
$295 million of public debt in the third quarter and it currently
has no public debt maturing through its fiscal year 2011. It
expects to have under $50 million maturing in its fiscal 2012.
It ended the third quarter with about $1.65 billion in cash,
compared with $1.96 billion at the end of the second quarter.
The company also said it estimates pre-tax write-downs related
to operating communities, land and land options and joint ventures
in the third quarter to be between $90 million and $160 million.
Included in the impairments are "significant" write-downs on
certain land parcels targeted for disposition, it said.
Toll Brothers said it expects to record a deferred tax asset
valuation allowance against a substantial majority of its deferred
tax asset in the third quarter of its fiscal 2009.
The company plans to detail its full third-quarter results on
Aug. 27.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com