Toll Bros.: We’re emerging from the tunnel

With many of its core markets improving, luxury-home builder Toll Bros. more than halved its losses in the second quarter from the same period in 2009, the Horsham-based company reported Wednesday.

Toll sustained a net loss of $40.4 million, or 24 cents a share, compared with $83.2 million (52 cents a share) in the second quarter of 2009. Results included pretax write-downs totaling $42.3 million, compared with $119.6 million in the year-ago period.

Excluding write-downs, the second-quarter pretax loss was $9.5 million, compared with $2.3 million in the 2009 period.

Although second-quarter revenue dropped 22 percent from the 2009 quarter, to $311.3 million, the value of net signed contracts for the period rose 56 percent, to $464.6 million.

Deliveries fell 16 percent, to 543 units, in the second quarter, while net signed contracts rose 41 percent, to 820 units. The cancellation rate fell to 5.3 percent, from 21.7 percent a year earlier.

Although not anticipating a complete recovery anytime soon, Toll Bros. CEO Robert I. Toll said, "It appears our business has finally emerged from the tunnel and into a bit of daylight.

"We believe many markets are turning the corner, and housing in general is beginning its recovery," said Toll, who is stepping down as CEO on June 16 after 43 years in the job. While remaining as executive chairman of the board, Toll is being replaced by Douglas C. Yearley Jr., who was the company's executive vice president and joined the home-builder in 1990.

Yearley said Toll's "urban metro New York City market and most of the suburban corridor from metro Washington, D.C., to metro Boston are doing better."

"We have also seen notable improvement in parts of California and North Carolina," he said.

Robert Toll said in an interview last week that these clear signs of recovery had been the impetus for handing over the reins of the company to Yearley.

Toll said the company has seen activity increase markedly since May 1.

"May's activity suggests that for us the tax credit wasn't the determinative factor; rather, we believe, the past few months' activity has been driven by an increase in confidence among our buyers in their job security, their ability to sell their existing homes, and general trends in home prices," he said.

As of April 30, Toll's backlog rose to $993.5 million as of April 30 from $944.3 million a year earlier.

Toll anticipates delivering from 2,200 to 2,750 homes in its fiscal 2010, with an average price per-home of $540,000 to $560,000 in the last six months of the year.