Toll Brothers Inc., Horsham, Pa. (NYSE:TOL) on Wednesday reported a net loss of $20.8 million, ($0.12) per share, for its fiscal second quater ended April 30. The results compared with a loss of $40.4 million, ($0.24) per share, in the prior-year quarter.

The results included pre-tax write-downs and joint venture impairments of $32.5 million, down from $42.3 million in last year's quarter but well above analyst estimates of impairments in the $5 million to $10 million range. The results also included a tax refund of $10.7 million compared to $11.4 million in last year's second quarter.

Wall Street was expecting a loss of four cents a share, but the early read on the results from analysts was postive. The stock was up more than 1% in pre-market trading on the news.

Revenues for the quarter totalted $319.7 million, up from $311 million in last year's quarter. Closings rose 9% to 591, but the average closing price fell to $541,000 from $586,000 in last year's quarter, primarily due to changes in product and geographic mix, the company said.

New orders rose 8% to 879 with an aggregate value of $500.9 million. Teh cancellation rate fell to 3.9% from 5.3% a year earlier; as a percentage of beginning quarter backlog, the cancellation rate was 2.4%.

The average new-order price also rose, to $570,000, an increase of 1% from last year's second quarter. This metric led Robert I. Toll, executive chairman, to declare in the earnings release, "We question the recent media headlines announcing that home prices continue to fall. Many studies quoted in the media combine distressed sales data, including foreclosures and short sales, with new and/or non-distressed existing-home sales data. We believe that averaging distressed and non-distressed sales data provides a misleading picture to the public regarding home-price direction."

Net new orders were 4.35 units per community, flat with 4.32 in last year's quarter when the federal home-buyer tax credit boosted sales, and well above 2.33 units in the comparable quarter of fiscal 2009. The rate remained below the company's historical second-quarter average of 7.88.

Backlog at quarter's end was up 1% in both dollars and units to $1.01 billion and 1,760 units compared with the same period a year earlier.

Toll Bothers ended the quarter with 203 selling communities, up from 190 at the close of the prior-year quarter. It said it expects to end its fiscal year with between 215 and 225 communities. At the close of the quarter, Toll controlled approximately 35,900 lots, up from 35,700 in the previous quarter and 33,600 a year earlier.

Gross margin, excluding interest and impairments, rose to 23% from 20.3% in last year's second quarter and 22.6% in this year's first quarter. SG&A rose 12.6% to $67 million.

Gibraltar Capital and Asset Management, LLC, the company's distressed asset acquisition arm, completed its second portfolio purchase during the quarter via a joint venture, the company said. Since last June, Gibralter and its JV partners have acquired portfolios of development loans and properties with unpaid principal balances and/or book values of approximately $2 billion.

Toll Brothers ended the quarter with $1.25 billion in cash and marketable securities, up from $1.1 billion a the close of the prior quarter but down from $1.55 billion at the same time last year. The increase in cash from first to second quarter was attributed to a tax refund of $154.3 million, offset, in part, but $37 million in land purchases. Toll had $784 million available under its $885 million, 12-bank credit facility, which matures in October 2014.

The company listed $1.545 billion in long-term debt on its balance sheet at quarter's end, roughly flat with last year's quarter end, and a net debt-to-capital ratio of 13.6% compared to 16.2% last April.

Said Douglas C. Yearley, Jr., Toll's CEO, stated, "We continue to see stability, and, in some cases, improvement, across our various luxury product lines. Out target customers generally have remained employed during this downturn, and, with their solid credit profiles, been able to secure mortgages at good rates. However, many have deferred their home buying decisions because of concerns over the direction of the economy and media headlines suggesting that home prices continue to decline. We believe that some of our clients, after waiting so long, are starting to move off the fence and into the market."

He continued, "We believe we are gaining market share thanks, in part, to a flight to quality in the luxury market and a reduction in competition in some markets."

Executive Chairman Toll added, "We are experiencing flat to slightly increasing pricing in most markets. As consumers better understand that prices are firming, we believe they will gain confidence, which will help release some of the pent-up demand that must be building in the market."

Analysts were, by and large, upbeat. David Goldberg at UBS titled his research note, "Impressive Results Given Macro Backdrop" and said "we were impressed with F2Q results as: liquidity remains robust, community count is growing (which will drive share gains), orders trends are stable, and pricing is flat/improving in many areas."

Michael Rehaut at J.P. Morgan wrote, "Perhaps most importantly, [Toll] is experiencing flat to slightly increasing pricing in most markets. As a result, we view these results positively, as the positive order and pricing commentary more than offset the larger-than-expected impairment charges."

Adam Rudiger at Wells Fargo wrote, "We view the quarter overall as slightly positive. While it is not a 100% comparable quarter given TOL's April quarter-end, orders significantly outperformed peers recently reporting March orders (-19% yr/yr on average). We believe the relative outperformance is likely the result of TOL's product and geographic positioning. As a luxury builder, we believe order comparisons are easier than for most other large public builders who generally compete more in the entry-level market, and geographically, we believe the Northeast corridor (from which more than half of TOL's closings come) is outperforming other areas of the country."