Luxury homebuilder Toll Brothers, Inc. (TOL) reported Wednesday a loss for the first quarter as it delivered lesser units than it did last year. However, the company's Executive Chairman Robert Toll said housing starts are improving, almost echoing the views of David Crowe, chief economist of the National Association of Home Builders, who told RTTNews last week that green shoots are finally emerging out of the housing sector.
Toll said, "Since the new home industry is coming off several years of historic low levels of production, we are encouraged by the recent improvement in housing starts. As announced last week, nationally, January 2012 housing starts (seasonably adjusted) were up 10 percent compared to January 2011."
In the RTTNews interview, Crowe had observed, "consistency and length of time is the signal that" the market has turned around. That turnaround is widespread.
The builder delivered 564 units in the quarter, down 1 percent from last year. Cancellation rate was higher at 6.2 percent, compared to 5.7 percent last year, and were consistent with its pre-downturn historical averages, the company noted.
Net signed contracts increased 45 percent in dollars and 19 percent in units, reflecting higher average price per unit, positively impacted by The Touraine on Manhattan's Upper East Side.
Chief Executive Officer Douglas Yearley, Jr. stated, "Our total and per-community contracts were the highest for a first quarter in five years. Although historically, our first quarter is the most challenging time to gauge sentiment among home buyers, in general the market feels healthier than it did one year ago."
First-quarter-end backlog increased 35 percent in dollars and 21 percent in units to $1.12 billion and 1,784 units, respectively.
A report released by the Commerce Department on February 16 showed that U.S. housing starts came in higher than expected in the month of January, with the growth largely due to strength in the volatile multi-family home sector. The report also showed that building permits, an indicator of future housing demand, edged up 0.7 percent in January on a monthly basis.
The National Association of Home Builders released a report on Wednesday showing that homebuilder confidence increased for the fifth consecutive month in February, with the index of homebuilder confidence jumping to its highest level in more than four years.
The company's net loss for the quarter was $2.79 million or $0.02 per share, compared with last year's profit of $3.42 million or $0.02 per share. The results included a net tax benefit of $3.6 million primarily due to the reversal of previously accrued taxes and interest, versus a tax benefit of $20.5 million in 2011.
On average, 19 analysts polled by Thomson Reuters expected earnings per share of $0.02 for the quarter. Analysts' estimates typically exclude one-time items.
On a pre-tax basis, quarterly loss narrowed to $6.41 million from $17.05 million. Excluding inventory and joint venture write-downs, pre-tax income plunged to $1.7 million from $8.1 million a year ago.
Revenues fell 4 percent to $321.96 million from $334.12 million in the prior year, missing analysts' estimate revenues of $360.84 million.
Looking ahead, the company currently estimates that it will deliver between 2,600 and 3,200 homes in fiscal 2012. The company expects to end 2012 with 235 to 255 selling communities.
TOL shares closed Tuesday's regular trading at $23.70, down $0.26 or 1.09 percent.
by RTT Staff Writer
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