Toll's early Q4 report: Revenue down 30%

Luxury home builder Toll Bros. Inc. reported a 30 percent drop in revenue in its fourth quarter, which ended Oct. 31, but Chairman Robert I. Toll said he believed the new-home market should continue to improve, albeit "slowly and through choppy waters."

Preliminary fourth-quarter numbers showed that the Horsham builder had 42 percent more signed net contracts - 765 units - than in the same period a year earlier (539), and a 6.9 percent cancellation rate (57), the lowest since the boom year of 2005.

There were 233 cancellations or 30.2 percent of gross sales in that quarter.

The net signed contracts were worth $430.8 million, a 62 percent increase from $266.7 million in the same period a year ealier.

Revenue of $486.6 million in the quarter was 30 percent below the $691.1 million of a year earlier. A total of 860 homes were delivered to customers in the quarter, 20 percent fewer than the 1,079 in the same period in 2008.

The average price of a Toll home rose to $535,000, from $495,000 a year earlier.

Toll was selling in 215 developments nationwide during the quarter, compared with 290 in the 2008 fiscal fourth quarter.

The builder ended the quarter with a backlog of 1,531 units, 25 percent fewer than the 2,046 units in the 2008 quarter. In dollar terms, it represented a decline of 34 percent to $874.8 million from $1.33 billion.

"We have definitely progressed from one year ago," Toll said. "The shock to the financial system in mid-September 2008 that shut down the capital markets appears to be mostly behind us."

Toll said home buyers "began to emerge from their bunkers" in late March, and the market continued to gain momentum up to Labor Day.

"Since then, demand has been volatile," he said. "This may be due in part to typical seasonality, but the more likely cause is concern about unemployment and the overall economy."

Toll also applauded the federal government's decision to extend the home buyers' tax credit.

Chief financial officer Joel H. Rassman said Toll Bros. continued "to focus on maintaining significant liquidity" and "to strengthen our balance sheet." He also estimated that pretax write-downs related to operating communities, land and land options, and joint ventures would range from $50 million to $125 million. That figure was $172.7 million a year earlier.

The builder's stock price closed at $21.41. yesterday, up $3.02.

Toll will announce final fourth-quarter and fiscal year results, including earnings, Dec. 3.