Toll Brothers Q2 loss narrows as revenues grow
Luxury home builder Toll Brothers reported a net loss of $20.8 million for its second fiscal quarter, which ended April 30, compared with losses of $40.4 million in the same quarter in 2010.
Fiscal year 2011's second-quarter results included pre-tax write-downs and joint venture impairments totaling $32.5 million, compared with fiscal year 2010's second-quarter pre-tax write-downs totaling $42.3 million. Excluding write-downs and joint venture impairments, fiscal year 2011's second-quarter pre-tax income was $1.0 million compared with a pre-tax loss of $9.5 million in fiscal year 2010's second quarter.
Revenues for the Horsham, Pa.-based company were $319.7 million, a 3% rise compared with the previous year. Home-building deliveries rose 9% to 591 units.
Net signed contracts for the second quarter totaled $500.9 million and 879 units, an 8% rise in dollars and 7% increase in units compared with fiscal year 2010's results. The average price of second-quarter net signed contracts was $570,000, an increase of 1% from fiscal year 2010's second quarter.
Toll Brothers ended the second quarter with 203 selling communities compared with 190 in the year-ago period. The company expects to end fiscal year 2011 with 215 to 225 selling communities. Toll Brothers ended the second quarter with approximately 35,900 lots owned and optioned compared with approximately 35,700 in the previous quarter and 33,600 one year ago.
In a prepared statement, Robert Toll, executive chairman, stated: "Last year's second-quarter results across the industry were catalyzed by a tax credit that pulled demand forward at the bottom rungs of the homeownership ladder and may have energized activity in higher price points as well. This year's second-quarter demand obviously was not accelerated by any tax incentives.
"We question the recent media headlines announcing that home prices continue to fall,” he continued. “Many studies quoted in the media combine distressed sales data, including foreclosures and short sales, with new and/or non-distressed existing-home sales data. We believe that averaging distressed and non-distressed sales data provides a misleading picture to the public regarding home price direction.
"In contrast to these reports, we are experiencing flat to slightly increasing pricing in most markets. As consumers better understand that prices are firming, we believe they will gain confidence, which will help release some of the pent-up demand that must be building in the market."