Toll Bros. Lowers Forecast of 2006 Home Deliveries

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HORSHAM, PA-Although locally based home builder Toll Brothers Inc. saw revenues rise 39% to just over $2 billion in the most recent quarter, it adjusted its earlier forecast of 2006 deliveries downward by as many as 700 homes. “The 400- to 700-home reduction in our full-year 2006 delivery guidance should reduce our earnings growth projections,” said Joel H. Rassman, CFO, during a conference call.

“It appears we may be entering a period of more moderate home price increases, more typical of the past decade than the past two years,” said Robert I. Toll, chairman and CEO. “Since Hurricane Katrina in early September, we have observed buyers taking longer to make their purchasing decision. We attribute this change to the significant decline in consumer confidence in the last two months that was precipitated by the hurricanes and their aftermath, and to record gas prices.” He also acknowledged, “some softening of demand in a number of markets.”

At the same time, Toll noted that the $2 billion in quarterly revenues “exceeded our entire year’s production just five years ago.” The company now projects deliveries of between 9,500 and 10,200 for 2006, compared with an earlier projection of between 10,200 and 10,600.

On this news, shares of TOL on the NYSE ended trading on Nov. 9, the day the earnings were released, down $5.50 a share, or nearly 14% to $33.91 per share. The 52-week high of $58.67 a share was reached on July 20 this year. The 52-week low of $24.87 a share occurred on Nov. 10, 2004.