Horsham, PA, December 5, 2006--Luxury home builder Toll Brothers said next year's annual earnings may fall up to 62%, but the company also raised hopes that it's seen a turn in the housing market.
The company said net income in the fourth-quarter ending fell to $174 million, or $1.07 a share, from $310 million, or $1.84 a share, in the same period last year, with revenue falling to $1.81 billion from $2.02 billion.
Excluding 42 cents in writedowns, the company said it would've earned $1.49 a share.
The company said it's suffered through 15 months of a home building slowdown, and has seen a higher than normal 585 cancellations.
But the company also raised hopes that the tide may be turning.
The Washington D.C. suburbs of Northern Virginia--the first market that Toll Brothers saw slowing growth--seems to have stabilized, although at levels much lower than it enjoyed a few years back.
Across the river on the Maryland side of Washington D.C., the market also appears to be stabilizing, according to Robert I. Toll, chairman and chief executive.
Still, the next fiscal year's net is forecast to fall to between $260 million and $340 million, or $1.58 to $2.08 a share, hurt by estimates of a $60 million pre-tax land-related writedown and by a change in accounting treatment that will shift 22 cents to 29 cents a share in earnings to subsequent years.
In fiscal 2006, it earned $687 million, or $4.17 a share.
The accounting change is to reflect the probability that "percentage of completion" accounting be used, Toll Brothers said.
Analysts polled by Thomson First Call expected fourth-quarter earnings of $1.06 a share and fiscal 2007 earnings of $2.30 a share.
Home building revenue is seen between $4.34 billion and $5.1 billion, down from $5.95 billion in fiscal 2006. It expects to deliver between 6,300 and 7,300 homes
