X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

(Read more on the debt and equity markets.)

HORSHAM, PA-Homebuilding revenue, backlog and signed contracts registered double-digit declines for Toll Brothers Inc., according to its preliminary, unaudited fiscal third-quarter report. Revenues have dropped 21% from a year ago.

Additional housing inventory, caused by mortgage defaults, could join the already existing excess supply in some markets, Robert Toll, chairman and CEO, warned during a conference call. Revenues were about $1.2 billion for the fiscal quarter ending July 31 or 21% lower than a year ago. The company’s backlog was nearly $3.7 billion, down 34%, and net signed contracts declined 31% to $727.1 million.

“We are now in the 23rd month of a down housing market,” Toll said. “Although some markets have remained strong and some appear to be stabilizing, albeit at much lower activity levels, most markets remain weak.”

Toll says the stronger markets are urban, singling out New York City, Jersey City and Philadelphia as examples. These are among the company’s 19 condominium and attached townhouse locations in which prices are generally lower than Toll’s average single-family home price.

The company’s average delivered price for the fiscal quarter was $658,000, below the range of guidance, which was $665,000 to $675,000. The drop “was a result of the mix sold, not due to incentives,” said CFO Joel Rassman.

Markets that worsened during the quarter include Massachusetts, suburban New Jersey, the Poconos and Raleigh, NC. “Vegas and Reno have worsened considerably,” Toll said, citing Colorado too. In ranking areas of Florida, which worsened earlier, he gave the Orlando area an “F for flunk; Florida East a flunk minus” and ranked Jacksonville D+ with an F- for Tampa and the state’s West Coast.

Toll reiterated his belief in growing pent-up demand, based on demographics, the economy and employment data, but said “hesitant customers remain on the sidelines, unsure of whether home prices have bottomed. Traffic was the lowest ever” during the opening weeks of the most recent quarter, he said.

“With the uncertainties roiling in the mortgage market right now, the pace of home sales could slow even further until the credit markets settle down,” Toll cautioned. Of Toll’s buyers, 9.3% pay cash, 73% use fixed-rate loans and just 1% of mortgages are categorized as subprime.

As of July 31, Rassman said the company has more than $700 million in cash and more than $1.1 billion available in its bank credit facility. “No major debt is due before 2011,” he added. “We believe we are well-positioned to weather the current lowdown and take advantage of opportunities that may arise.”

Toll Brothers’ shares have experienced a big swing on the NYSE over the past 52 weeks with a high of $35.64 per share Feb. 2 and a low of $18.85 a share Aug. 1. Yesterday, company shares closed at $24.33 per share, up 6% for the day.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.