Toll Brothers 3Q Home Building Revenue Down 42% To $461.3M

   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; [e-mail]