Sunday, September 7, 2008
Toll Brothers Swings to Loss
Toll Brothers Inc. swung to a fiscal-third-quarter net loss as the U.S. housing-market declines led to more write-downs for the builder and sales continued to fall.
Home builders have written off billions of dollars of land and land options bought before the housing market cracked. Toll Brothers recorded $139.4 million in write-downs during the quarter ended July 31.
But the luxury-home builder based in Horsham, Pa., also indicated that conditions were showing signs of stabilization and that the number of cancellations was at it lowest point in two years. "We may be just down near the bottom," Chief Executive Robert I. Toll told analysts during a conference call Thursday.
Mr. Toll acknowledged that most of the U.S. market remains in the doldrums and "we currently have to contend with foreclosures as the new low-priced competition."
The company reported a net loss of $29.3 million, or 18 cents a share, in the quarter compared with a year-earlier profit of $26.5 million, or 16 cents a share. Excluding write-offs, earnings would have fallen to 35 cents a share from 70 cents a share.
The company had released its quarterly sales numbers in August, posting an overall 34% drop to $797.7 million, above analyst expectations of $746 million.
Mr. Toll declined to provide analysts with his quarterly assessment of local market conditions, which had come to be known as the "F-report," because the CEO assigned low marks to so many places. Two rare exceptions were Connecticut and New Jersey, where sales activity had picked up recently.
Mr. Toll also said the Manhattan condo market remained relatively strong, though he expressed concern about job losses in the financial sector. "Are we scared?" Mr. Toll asked. "You bet."
In 4 p.m. composite trading on the New York Stock Exchange, Toll shares gained 27 cents to $25.07.
Write to David Benoit at david.benoit@dowjones.com and Michael Corkery at michael.corkery@wsj.com
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