Toll Brothers (NYSE:TOL) on Wednesday morning reported a loss of $88.9 million ($-0.55 per share) for its fiscal first quarter of 2009, down from a loss of $96 million ($-0.61 per share) in the same period last year. Analysts were expecting a loss of 52 cents-per-share.
The loss included pre-tax write-downs of $156.6 million ($-0.60 per share),$143.3 million in impairments on operating communities and owned land, $6.0 million on unconsolidated joint ventures, and $7.3 million on optioned land.Pre-tax write-downs totaled $245.5 million in the prior year quarter.
Revenues from home building fell 51.4% to $409 million as closings dropped 44.9% to 665. Net contracts fell 59% to 266 with an aggregate value of$127.8 million, down 66%. The average price per unit of $481,000, down from $580,000 in the prior year fiscal first quarter. The cancellation rate was 37.1%, up from 28.4% in the prior year first quarter and 30.2% in last year's fiscal fourth quarter.
Backlog at quarter's end was approximately $1.04 billion (1,647 units), down 56% from $2.40 billion (3,341 units) a year earlier. Unconsolidated joint venture backlog was approximately $10.8 million.
During the quarter, Toll cut its lot count to approximately 38,000 lots owned and optioned, compared to approximately 55,000 a year earlier and approximately 91,200 at peak in at the end of second quarter, 2006.Approximately 32,300 of these lots were owned, of which approximately 13,300 lots, including those in backlog, were substantially improved.
Toll also cut its community count to 258 from 273 at the end of fiscal 2008.It expects to end the current fiscal year with approximately 240 selling communities, down approximately 26% from its peak of 325 communities at the end of second quarter, 2007.
SG&A was down 29% to $85.8 million for the quarter, but Toll said that while it expected SG&A to continue to decline through the fiscal year, it will likely be higher in percentage terms due to lower revenues. The company said it expected to deliver between 2,000 and 3,000 new homes in fiscal 2009 at an average delivered price between $600,000 and $625,000 per home.
The company ended the quarter with $1.5 billion in cash plus more than $1.3 billion available under its bank credit facility, which matures in March 2011. It said its net-debt-to-capital ratio of 14.5%, its lowest level ever at first-quarter-end, compared to 26.8% at 2008's first-quarter-end.
"We believe weak buyer confidence still impedes the market," said Robert I.Toll, chairman and CEO. "We have not yet seen a pick-up in activity at our communities other than ordinary seasonal increases for this time of year."
Noting the company's strong cash position, Toll said "We are beginning to see some properties come to market at reasonable prices. We have not bought any yet, but we are getting closer."
Toll also called for further government measures to stimulate the housing market. "We advocate a buyer tax credit of $15,000 to be made available to all buyers of homes, not just first-time buyers," he said. "We must motivate the entire food chain of home buyers to stop the decline of home prices."
He continued, "The new home industry, combined with the related service, building products and home furnishings industries, are together, perhaps, the largest employer in the United States. If Congress and the Administration can effectively call the bottom and thereby put a floor under home prices, we believe the housing market will recover sooner, jobs will be created, bank balance sheets will improve, and millions of people will be able to return to the workforce."
Shares of Toll were up nearly 5% to $15.10 in morning trading on the New York Stock Exchange as most of the builder group was posting lesser gains.