Luxury homebuilder Toll Brothers Inc. (TOL) Thursday reported a loss for the third quarter, hurt by write-downs related to joint ventures. Excluding items, the company's earnings more than halved from last year, as revenues fell 34%. The company, which operates in 21 states, projects a sequential decline in revenues for the fourth quarter.
For the third quarter, the Horsham, Pennsylvania-based company's net loss was $29.3 million, or $0.18 per share, compared to a profit of $26.49 million, or $0.16 per share, in the same quarter last year.
Net loss for the latest quarter included after-tax write-downs of $84.3 million, or $0.53 per share, attributable to joint ventures. Included in the prior-year quarter results were after-tax write-downs of $88.5 million or $0.54 per share.
Excluding write-downs, the company posted a net income of $55 million, or $0.35 per share, down 52% from $115 million, or $0.70 per share, in the year-ago quarter. Analysts expected a loss of $0.36 per share for the quarter.
Quarterly total revenues declined 34% to $797.67 million from $1.21 billion last year, above analysts' consensus revenue estimate of $771.70 million. Revenues from land sales totaled $1.0 million, down from last year's $4.5 million.
Gross contracts totaled $588.1 million and 1,007 homes, a decline of 40% and 31%, respectively, from the year-ago totals of $972.2 million and 1,457 homes. The company said it cancelled 195 contracts in the quarter, the lowest quarterly total in over two years. Net contracts after cancellations were 812 homes, or $469.9 million, lower than 1,110 homes, or $727 million, in the prior-year quarter.
The company's third-quarter-end backlog was about $1.75 billion, a 52% decline from the prior year's backlog of $3.67 billion.
Commenting on the results, Robert Toll, chairman and chief executive officer, said, "We are now completing the third year of the worst housing market since we started in 1967. Weak consumer confidence has kept many potential buyers from taking advantage of the current buyers' market. Tightened mortgage lending standards have sidelined others. Single-family housing starts have decreased by approximately 65% from their peak in January 2006. Starts now stand at their lowest level since January 1991."
Looking ahead, the company said it expects fourth-quarter revenues to be lower than the third quarter. The company also projects that it will deliver between 850 and 1,050 homes in the fourth quarter with an average price of between $640,000 and $650,000 per home.
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