Toll Bros. Sales Off, Beat Estimates

Horsham, PA, August 8, 2007--Toll Brothers said it expects to report a decline in quarterly home-building revenue as the housing crisis deepens, and the company's CEO said sales might have further to fall. But the luxury builder's sales were higher than forecast.

Based on preliminary results, Toll Brothers said its home-building revenue fell 21% to about $1.21 billion in the third quarter.

Analysts had expected $1.11 billion. In May, Toll had forecast $990 million to $1.28 billion.

The company said the net number of signed contracts for the third quarter ended July 31 was down 31% from a year earlier to $727.1 million, and cancellation rates rose.

"We are now in the 23rd month of a down housing market," Chief Executive Robert Toll said. "With the uncertainties roiling the mortgage markets right now, the pace of home sales could slow further until the credit markets settle down."

Toll said that under current market conditions, it was not comfortable giving an earnings outlook.

The company plans to report its third-quarter results on Aug. 22. Because of its fiscal calendar, Toll is the first major home builder to report a quarter that will contain July. Investors use it as an indicator of the performance of other home builders.

Pending completion of an impairment analysis, Toll estimates its pretax write-down for operating communities, land and land options for the quarter at $125 million to $175 million.

The company's third-quarter backlog of homes on order fell 34% from a year earlier to about $3.67 billion.

The third-quarter cancellation rate was 23.8%, compared with 18.9% in the previous quarter.