The largest U.S. luxury homebuilder Toll Brothers Inc. (TOL) is slated to issue financial results for its fourth quarter before the market opens Thursday, with analysts forecasting a loss of $0.46 per share on revenues of $450.10 million. In the year-ago period, the company reported a net loss, excluding write-downs, of $38.5 million or $0.23 per share, on revenues of $698.9 million.
The housing sector is one of the worst-affected by the subprime collapse and the credit crunch. The industry has been facing challenges characterized by worsening trend in foreclosures, high inventory levels of both new and existing homes, growing job losses, tight credit for homebuyers, rise in delinquencies and a hobbled economy.
However, declining home prices, historically low interest rates and government stimulus programs, such as the $8,000 federal tax credit and the $10,000 California state tax credit have created unique purchasing opportunities and made it more compelling for homebuyers to enter the market.
The federal government has now extended the federal tax credit to run through July 1, 2010, and expanded the scheme to include people with higher incomes and some who want to trade up into new homes. This could help Toll Brothers to report a narrower loss in the fourth quarter.
For the fiscal year 2009, net signed contracts advanced 16% in unit terms to 2,450 units and increased 19% in dollar terms to $1.30 billion.
The Horsham, Pennsylvania-based company recently reported preliminary fourth-quarter revenues of $486.6 million, a decline of 30%, compared to $691.1 million a year ago. Home building deliveries fell 20% to 860 units from 1,079 units in the previous year.
However, Toll Brothers' chairman and chief executive officer Robert Toll, said, "We have definitely progressed from one year ago. The shock to the financial system in mid-September 2008 that shut down the capital markets appears to be mostly behind us."
Toll added, "The improvement in consumer confidence over the past year, the increasing stabilization of home prices, the decline in unsold home inventories and the reduction in buyer cancellation rates suggest that the new home market should be improving; we sense that it is, though slowly and through choppy waters."
For the preceding third quarter, Toll Brothers incurred a net loss of $472.33 million or $2.93 per share, wider than the previous year's $29.3 million or $0.18 per share, reflecting a significant fall in revenues, inventory and joint-venture-related write-downs as well as a federal and state deferred tax asset valuation allowance. Revenues for the quarter significantly dropped to $461.38 million or 792 units from $796.71 million or 1,244 units in the prior-year period.
Among other homebuilders, DR Horton Inc. (DHI) reported a narrower loss for the fourth quarter, totaling $231.9 million or $0.73 per share, compared to $799.9 million or $2.53 per share in the year-ago quarter. Homebuilding revenue for the quarter fell 42% to $1.01 billion from $1.75 billion in the same quarter of the prior year.
Toll Brothers shares, which have been trading between $13.72 and $24.30 in the past 52 weeks, closed Wednesday's trading session at $19.49, up 4 cents or 0.21%, on a volume of 3.19 million shares.
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