Toll Brothers (NYSE:TOL), Horsham, Pa., on Wednesday morning reported preliminary results for its fiscal first quarter ended Jan. 31, 2009: Revenues were down 51% to $409.3 million, closings were down 44.9% to 665 units and new contracts were down 58.9% to 266.
"The past five months have been among the most difficult in U.S. economic history," said Robert I. Toll, chairman and CEO, in a statement. "Many potential buyers are now concerned about their job security and the economy's financial stability, in addition to their ability to sell their current homes. Our first-quarter results reflect the impact of this turmoil."
On a brighter note, Toll said, "January was somewhat better than November and December, perhaps influenced by our 3.99%, 0-point, 30-year fixed-rate mortgage promotion, which complemented the typical post-holiday seasonal bounce. Traffic from January 19th through February 8th was up about 34% from the prior several weeks, but was still quite low, on a per-community basis, compared to the corresponding weeks at any other time in our history."
At quarter's end, backlog dollar value was approximately $1.04 billion, down 51% from the prior year's quarter to 1,647 units, down 45% in units.
Community count was down to 258 from 273 at the end of the 2008 fiscal year.Lot count was down to 38,000 owned and optioned, compared to approximately 55,000 one year earlier and approximately 91,200 at its peak at FY 2006's second-quarter-end.
Toll reported 157 cancellations totaling approximately $115.0 million for the quarter, compared to 257 totaling $198.0 million in last year's first quarter and 233 cancellations totaling $183.0 million in the fourth quarter.
Price per unit of gross contracts signed, cancellations and net contracts signed were $575,000, $732,000 and $482,000, respectively, compared to $583,000, $785,000 and $495,000, respectively, in 2008's fiscal fourth quarter and $634,000, $770,000 and $580,000, respectively, in 2008's fiscal first quarter. The decrease in average price per unit of gross contracts on a year-over-year basis was partially due to greater incentives and partially due to differences in product mix.
The company ended the quarter with approximately $1.53 billion in cash, compared to $956.6 million at FY 2008's first-quarter-end, and $1.32 billion available under its 31-bank credit facility, which matures in March 2011. Cash was down from $1.63 billion at the end of the 2008 fiscal year due to a tax payment in the first quarter retirement of purchase money mortgages and other debt. The company has no other public debt maturing before 2011.
"If the President and Congress, in effect, take action to 'call the bottom'on home prices by approving a significant program to spur demand, home prices might stabilize," said Toll. "This could also stem foreclosures, reduce inventories, and shore up existing difficult-to-value mortgage-backed securities so they can be traded."
Toll is scheduled to report full earnings on March 4.