Luxury home builder Toll Brothers today reported a $96 million net loss in the first quarter of the 2008 fiscal year, or 61 cents per share, with the company’s CEO blaming “ceaseless talk of a recession” for sapping consumers’ will to buy.
The quarterly loss was larger than Wall Street expectations — Thomson Financial reported that analysts had expected a quarterly loss of 50 cents per share.
Toll Brothers had first-quarter revenues of $842.9 million, down 23 percent compared to first-quarter 2007. Gross signed contracts in the first quarter totaled 904 homes worth $573.1 million. The volume of homes dropped 38 percent and the dollar amount fell 46 percent compared to the first quarter of the 2007 fiscal year, the company reported.
After cancellations, first-quarter net signed contracts totaled 647 homes valued at $375.1 million in the first quarter, a 37 percent drop in units and 50 percent decline in dollars compared to first-quarter 2007 results. Toll Brothers had 257 cancellations valued at $198 million in the first quarter, compared with 436 cancellations totaling $318.9 million in first-quarter 2007.
The average price per unit of gross contracts signed in the 2008 fiscal year’s first quarter was $634,000, down 13.2 percent compared to an average unit price of $730,000 in first-quarter 2007. Toll Brothers had a $2.4 billion backlog at the close of the first quarter, down 42 percent from a $4.15 billion backlog at the end of first-quarter 2007.
“The selling season, which we believe starts in mid-January, has been weak for the third year in a row,” said Robert I. Toll, company chairman and CEO, in a statement.
“Ceaseless talk of a recession continues to dampen the mood of consumers in general, whether or not a recession actually occurs. 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 stated.
The company has continued to trim its land position, he also stated, and noted that the company has about $950 million in cash and $1.2 billion available under the company’s bank credit facility, which matures in March 2011.
“We believe that revived buyer confidence is paramount to getting the market moving again. Only when customers believe we are done with housing deflation will the excess supply clear and the market return to equilibrium,” Toll stated.
Other builders have also reported major losses in recent weeks. MDC Holdings, the builder that operates the Richmond American Homes brand, reported a $636.9 million net loss, or $13.94 per share, for the full year in 2007, and a net loss of $281.1 million, or $6.14 per share, for the fourth quarter.
Standard Pacific Corp. announcing a $767.3 million net loss for the full year in 2007 and a $449.9 million fourth-quarter net loss; D.R. Horton announcing a $128.8 million net loss; and Centex Corp. reported a $720.7 million loss in the quarter ended Dec. 31, and a $1.94 billion loss for the nine-month period ended Dec. 31.