Horsham, PA, August 22, 2006--Toll Brothers reported fiscal third-quarter earnings that were off 19 percent as a downturn in the housing market resulted in a dip in revenue and caused the company to reduce the number of lots it controls.
For the quarter the company reported net earnings of $174.6 million, or $1.07 per share, compared with $215.5 million, or $1.27 per share, in the previous third quarter.
The company reduced the number of lots it now controls to about 82,900, down from 91,200 at the end of the second quarter. Toll Brothers said it will continue to reevaluate the lots it controls and may drop options to buy land it no longer considers attractive.
The latest quarter includes $23.9 million in pretax write-downs, which amounts to 9 cents per share, while the year-ago quarter was reduced by $1.2 million in pretax write-downs. Most of the write-downs in the latest quarter were for lots under option, predominantly in California and Florida
Revenue during the quarter was $1.53 billion versus $1.55 billion a year ago, a decline of 1 percent.
Analysts were looking fo earnings per share of $1.04 and sales of $1.54 billion.
The company said it expects to earn $1.33 to $1.53 per share in the fourth quarter, assuming deliveries of between 2,500 and 2,800 homes. Analysts had forecast earnings of $1.31 per share.
For fiscal 2006 the company forecast earnings of $4.41 to $4.63 per share. That's down from a previously lowered forecast of forecast of $4.69 to $5.16 per share and below the $4.40 analysts on average expected.
Robert I. Toll, Toll Bros' chairman and chief executive officer, said the company believes the housing market's "continuing malaise" is due to an oversupply of houses and a drop in confidence. He said speculative buyers from recent years are now selling and builders are offering large incentives and discounts on speculative homes.
"This overhang in supply and the aggressive discounting of many builders is undermining consumer confidence and keeping buyers on the sidelines as they continue to worry about the direction of home prices," Toll said in a prepared statement.
