Big builder Toll Brothers, which was one of the few public builders to make money in 2007, had a rough start to its fiscal first-quarter, reporting a $96 million net loss.
"The selling season, which we believe starts in mid-January, has been weak for the third year in a row," CEO Bob Toll told financial analysts Wednesday afternoon.
"We have seen a few glimmers of hope in the Naples, Fla., area and the suburban Washington, D.C., market," he continued, adding that the turnaround in Naples was extraordinary because "from March 2006 through late 2007 we couldn't give away a home there."
Overall, Toll Brothers' first-quarter fiscal revenues were $842.9 million, 23 percent lower than 2007's fiscal first-quarter revenues of $1.09 billion. The company's first-quarter backlog was $2.40 billion, 42 percent lower than fiscal 2007's first quarter backlog of $4.15 billion.
Toll's prices continued to decline, as the average price per unit of gross contracts signed in fiscal first-quarter 2008 was $634,000, compared to $646,000 in fiscal 2007's fourth-quarter and $730,000 in fiscal 2007's first quarter.
"Ceaseless talk of a recession continues to dampen the mood of consumers in general, whether or not a recession actually occurs," said Toll. "For home buyers, we believe this drumbeat, coupled with concerns over mortgages, the direction of home prices, and foreclosures, has kept pent-up demand on the sidelines," Toll concluded.
On a more positive note, Toll said the big builder continues to trim its land position and is focused on maintaining a strong balance sheet and liquidity. The company has more than $950 million in cash and more than $1.2 billion available under its bank's credit facility.
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