America’s luxury home builder, as Toll Brothers of Horsham, Pa., calls itself, posted a 34 percent decline in revenues in its fiscal third quarter, the company announced Wednesday morning.
Toll, which saw the value of its backlog drop 52 percent, reported third quarter (ended July 31) revenue of $796.5 million. Though reports were preliminary and have not been audited, the company also reported taking between $100 million and $200 million in impairments in the third quarter.
Toll saw the value of its net signed contracts fall 35 percent to $469.7 million during the third quarter. For the last nine months, Toll saw a decrease of 29 percent to $2.46 billion in home building revenue.
There was a slight glimmer of hope in Toll’s numbers. Cancellations, while still 19.4 percent of signed contracts, decreased to just 195, their lowest level since 2006. Toll saw 308 cancellations last quarter, 257 in the first quarter of 2008, and a whopping 417 in the fourth quarter of 2007.
While acknowledging that cancellation rates were still far above the company’s historical norms, CEO Bob Toll called the decrease in cancellations a positive sign. "The consumer’s confidence in the housing market is the key to its recovery,” Toll said in a statement announcing the company’s third-quarter results.
Toll said further hope lies in the passage of the Housing and Economic Recovery Act of 2008, which he called a lifeline from the federal government to homeowners facing foreclosure.
“They have provided an incentive to new customers to move off the fence and become first-time buyers in a market that is very much in their favor,” Toll added. “This may help to restore confidence in the market.”
During the downturn Toll Brothers has trimmed both its land holdings and its community count. With its holdings peaking at 91,200 lots in the second quarter of 2006, the company now has 48,500 lots, 68 percent of which are owned, Toll said in the statement.
The company’s community count, which peaked in the second quarter of 2007 at 325, is now 290, and is expected to fall to 275 by the end of 2008, Toll said.
Toll will host a conference call at 2 p.m. today to further discuss its earnings report.