Earnings: Toll Brothers
HORSHAM, Pa. - (AP) - Luxury home builder Toll Brothers Inc. (TOL) said Tuesday its fiscal third-quarter profit fell 19 percent as a downturn in the housing market resulted in a dip in revenue and caused the company to reduce the number of lots it controls.
Toll Brothers also lowered its guidance for the full year. But its latest results and guidance were still above Wall Street expectations and its shares gained about 3 percent to $25.50 in pre-market trading.
For the quarter ended July 31, net income was $174.6 million, or $1.07 per share, compared with $215.5 million, or $1.27 per share, in the previous third quarter.
The company reduced the number of lots it now controls to about 82,900, down from 91,200 at the end of the second quarter. Toll Brothers said it will continue to reevaluate the lots it controls and may drop options to buy land it no longer considers attractive.
The latest quarter includes $23.9 million in pretax write-downs, which amounts to 9 cents per share, while the year-ago quarter was reduced by $1.2 million in pretax write-downs. Most of the write-downs in the latest quarter were for lots under option, predominantly in California and Florida
Revenue during the quarter was $1.53 billion versus $1.55 billion a year ago, a decline of 1 percent.
On average, analysts surveyed by Thomson Financial forecast earnings per share of $1.04 and sales of $1.54 billion.
Looking ahead, the Horsham-based company now expects to post a full-year profit of $4.41 to $4.63 per share, below its previous guidance of $4.69 to $5.16 per share. Analysts surveyed by Thomson are predicting a full-year profit of $4.40 per share. Toll Brothers expects to earns $1.33 to $1.53 per share in the fourth quarter, assuming deliveries of between 2,500 and 2,800 homes. Analysts expect a fourth-quarter profit of $1.31 per share.
Robert I. Toll, Toll Bros' chairman and chief executive officer, said the company believes the housing market's "continuing malaise" is due to an oversupply of houses and a drop in confidence. He said speculative buyers from recent years are now selling and builders are offering large incentives and discounts on speculative homes.
"This overhang in supply and the aggressive discounting of many builders is undermining consumer confidence and keeping buyers on the sidelines as they continue to worry about the direction of home prices," Toll said in a prepared statement.