Cancellations rise at Toll Brothers
The CEO of the nation’s largest builder of luxury homes called on the federal government this week to shift its rescue efforts to the housing market, calling it “the root of the current financial crisis.” Robert Toll, chairman and CEO of Toll Brothers, also warned that “hundreds of billions of dollars to reset mortgages, help people who are in foreclosure and protect those who have been the victims of rapacious lending practices … will have been wasted” if Congress doesn’t act soon to stimulate home buyer demand with tax credits and other incentives.
The chief executive’s comments were part of Toll Brothers’s preliminary fourth-quarter and year-end results, released on Nov. 11. The Horsham, Pa., production builder reported net contracts for 539 units for the fourth quarter, down 27 percent from the same quarter in 2007. Backlog at the end of the quarter, which closed on Oct. 31, was approximately 2,046 homes. This compares to a fourth-quarter backlog of 3,950 homes in 2007.
Cancellations in the fourth quarter of 2008 totaled 233, about 30 percent of the quarter’s contracts. According to Toll, the economic turmoil on Wall Street and its ripple effect -- consumer fears over job losses, plummeting stock market values and credit market disruptions -- contributed to the cancellations.
The company’s preliminary year-end figures indicate revenues of $3.15 billion, producing 4,743 units, a 32 percent decrease from fiscal 2007, when Toll Brothers reported revenues of $4.64 billion, delivering 6,687 units.
Slower sales have resulted in a reduction in the number of communities in which Toll Brothers operates. The company ended fiscal 2008 with 273 selling communities, down from 315 communities the previous fiscal year. Toll Brothers said it expects to end fiscal 2009 with 255 or fewer communities.
The company will announce final fourth-quarter and full-year results on Dec. 4, 2008.