Toll Brothers loses $111 million in fourth quarter, but expects fewer sales in fiscal 2010

Toll Bros. loses $111 million in Q4

Toll Brothers Inc.’s stock tumbled Thursday after the luxury homebuilder reported a disappointing year-end loss and said it expects its sales in fiscal 2010 to decline at least 7 percent.

Toll’s stock fell more than 7 percent, or $1.47 a share, to $18.02.

CEO Robert Toll said homebuyer demand was strong from March through August, but has been “choppy” since then. He also said he expects to see the usual holiday slowdown in prospective shoppers, and little help from the expanded federal tax credit for homebuyers.

“You just have to bite the finger, be patient, and wait until you see what comes out in the latter part of January, all of February and in the early part of March,” he said.

The cautious outlook from Toll, which builds in 21 states, runs counter to wider industry trends. Sales of new homes have increased six out of the past seven months, according to government data. They dipped in September, but surged in October to the highest level in more than a year.

The industry has been buoyed by an $8,000 federal tax credit for first-time homebuyers, which was extended last month and expanded to include $6,500 for existing homeowners.

But Toll said he didn’t expect to see much of a boost in business from that.

The builder did have some good news, however. The company posted a 42 percent jump in new sales contracts and a healthy cancellation rate of just 7 percent.

Toll said the company has been able to trim incentives and even raise prices slightly in several Northeast markets, including Massachusetts, New Jersey, Maryland, Connecticut, and parts of New York City.

“We’ve had some pretty good action recently in Florida, but we’re still a little slow to pull that gun from the holster,” Toll said.

Incentives have helped the builder drum up sales in the San Francisco Bay area, but business remains sluggish elsewhere in California and other markets such as Las Vegas, Phoenix and Chicago, Toll said.

And that ate into profits. The Horsham, Pa.-based builder’s lost $111.4 million, or 68 cents a share, between August and October, largely due to continued write downs on the value of its land holdings and staff reductions. Excluding those charges, the builder almost broke even. In the year-ago quarter, which included a larger amount of write downs, Toll lost $78.8 million, or 49 cents a share.

Revenue for the quarter fell 30 percent to $486.6 million.

Analysts polled by Thomson Reuters were expecting a loss of 46 cents a share on revenue of about $450.1 million.

For Toll Brothers’ full fiscal year, the net loss was $755.8 million, or $4.68 per share, which included write downs of $848.9 million. For fiscal 2008, the builder lost $297.8 million, or $1.88 per share.

Total revenue dropped to $1.76 billion from $3.15 billion.

On the Net: Toll Brothers: www.tollbrothers.com