HORSHAM, Pa., May 9, 2007 (PRIME NEWSWIRE) -- Toll Brothers, Inc. (NYSE:TOL) (www.tollbrothers.com), the nation's leading builder of luxury homes, today reported that for the period ended April 30, 2007, second-quarter home building revenues were approximately $1.17 billion, second-quarter-end backlog was approximately $4.15 billion and second-quarter net signed contracts were approximately $1.17 billion. These totals were down 19%, 32% and 25%, respectively, compared to FY 2006's second quarter results.
For the six-month period ended April 30, 2007, home building revenues were approximately $2.26 billion and net signed contracts were approximately $1.92 billion, a decline of 19% and 29%, respectively, versus FY 2006's six-month results.
These results are preliminary and unaudited. The Company will announce final totals when it releases second-quarter and six-month earnings results on May 24, 2007.
Robert I. Toll, chairman and chief executive officer, stated: "Twenty months into this housing downturn, we continue to face difficult conditions in most of our markets. Although there is variation among markets, our traffic this quarter, on average, has been flat on a gross basis, and down approximately 20% on a per community (same store) basis compared to last year's second quarter. While we have not yet finalized our analysis, we estimate that write-downs (pre-tax) in the second quarter will be between $90 million and $130 million. Given the current state of the market, we no longer expect to achieve the most recent quarterly and annual guidance we provided on February 22, 2007. However, even at the upper end of our range of second-quarter write-downs, we expect to report a profit for our second quarter.
"Our second-quarter cancellation rate, calculated as a percentage of this quarter's gross signed contracts, declined to 19% (384 total cancellations) compared to 30% (436 total cancellations) in FY 2007's first quarter and 37% (585 total cancellations) in the fourth quarter of FY 2006. This quarter, about 70% of our cancellations were from contracts signed more than nine months ago.
"We believe that fewer than 2% of our buyers use sub-prime loans. However, the impact of stricter lending standards arising from problems in the sub-prime market is negatively affecting affordability at lower price points. This, in turn, can impact the entire 'housing food chain', including some of our potential customers' ability to sell their existing homes. This, coupled with a lack of buyer confidence, may have served to impede the glimmers of a rebound we had started to see in early February.
"There are some bright spots, including New York City, Hoboken and Jersey City; Dutchess County, New York and southeastern Connecticut; metro Philadelphia; Raleigh; Dallas and Austin; and portions of Northern California. We continue to feel confident about the longer-term fundamentals of our industry based on strong demographics and increased affluence. However the industry's current challenges are to reduce spec homes, restore buyer confidence and make customers feel comfortable that, with interest rates low and sellers motivated, now is an excellent time to buy a new home."
Toll Brothers' preliminary financial highlights for the three-month and six-month periods ended April 30, 2007 (unaudited):
* The Company's FY 2007 second-quarter net contracts of
approximately $1.17 billion declined by 25% from FY 2006's
second-quarter contracts of $1.56 billion. In addition, in
FY 2007's second quarter, unconsolidated entities in which
the Company had an interest signed contracts of
approximately $34.6 million.
* FY 2007's six-month net contracts of approximately $1.92
billion declined by 29% from FY 2006's six-month total of
$2.70 billion. In addition, in FY 2007's six-month period,
unconsolidated entities in which the Company had an
interest signed contracts of approximately $63.8 million.
* The Company signed 2,031 gross contracts in FY 2007's second
quarter, a 14% decrease from the 2,372 signed in FY 2006's
second quarter. FY 2007's second-quarter cancellation rate
(cancellations divided by second-quarter gross contracts)
was 19% compared to a rate of 9% in FY 2006. However, the
cancellation rate improved from 30% in the first quarter
of FY 2007 and 37% in the fourth quarter of FY 2006.
* In FY 2007, second-quarter-end backlog of approximately
$4.15 billion decreased 32% from FY 2006's second-quarter-end
backlog of $6.07 billion, the second-quarter record. In
addition, at April 30, 2007, unconsolidated entities in
which the Company had an interest had a backlog of
approximately $46.4 million.
* FY 2007's second-quarter home building revenues of
approximately $1.17 billion decreased 19% from FY 2006's
second-quarter home building revenues of $1.44 billion, the
second quarter record. Revenues from land sales totaled
approximately $2.0 million for FY 2007's second quarter,
compared to $2.1 million in FY 2006's second quarter.
* FY 2007's six-month home building revenues of approximately
$2.26 billion decreased 19% from FY 2006's six-month home
building revenues of $2.78 billion, the six-month record.
FY 2007 revenues from land sales for the six-month period
totaled approximately $5.4 million, compared to $6.8 million
in the same period in FY 2006.
* In addition, in the Company's fiscal 2007 second-quarter and
six-month periods, unconsolidated entities in which the
Company had an interest delivered approximately $14.8 million
and $35.4 million, respectively, compared to $29.0 million
and $81.0 million, respectively, in the same periods of FY
2006. The Company's share of the profits from the delivery
of these homes is included in 'Equity Earnings in
Unconsolidated Entities' on the Company's Income Statement.
Toll Brothers will be broadcasting live via the Investor Relations section of its website, www.tollbrothers.com, a conference call hosted by chairman and chief executive officer Robert I. Toll at 2:00 p.m. (EDT) today, May 9, 2007, to discuss these results. To access the call, enter the Toll Brothers website, then click on the Investor Relations page, and select "Conference Calls". Participants are encouraged to log on at least fifteen minutes prior to the start of the presentation to register and download any necessary software. The call can be heard live with an on-line replay which will follow and continue through May 23, 2007.
Toll Brothers, Inc. is the nation's leading builder of luxury homes. The Company began business in 1967 and became a public company in 1986. Its common stock is listed on the New York Stock Exchange under the symbol "TOL". The Company serves move-up, empty-nester, active-adult and second-home home buyers and operates in 21 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia and West Virginia.
Toll Brothers builds luxury single-family detached and attached home communities, master planned luxury residential resort-style golf communities and urban low-, mid- and high-rise communities, principally on land it develops and improves. The Company operates its own architectural, engineering, mortgage, title, land development and land sale, golf course development and management, home security and landscape subsidiaries. The Company also operates its own lumber distribution, and house component assembly and manufacturing operations.
Toll Brothers, a FORTUNE 500 Company, is the only publicly traded national home building company to have won all three of the industry's highest honors: America's Best Builder from the National Association of Home Builders, the National Housing Quality Award, and Builder of the Year. Toll Brothers proudly supports the communities in which it builds; among other philanthropic pursuits, the Company sponsors the Toll Brothers - Metropolitan Opera International Radio Network, bringing opera to neighborhoods throughout the world. For more information, visit tollbrothers.com.
Certain information included herein and in other Company reports, SEC filings, verbal or written statements and presentations is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, information related to anticipated operating results, financial resources, changes in revenues, changes in profitability, changes in margins, changes in accounting treatment, interest expense, land-related write-downs, effects of home buyer cancellations, growth and expansion, anticipated income to be realized from our investments in unconsolidated entities, the ability to acquire land, the ability to gain approvals and to open new communities, the ability to sell homes and properties, the ability to deliver homes from backlog, the ability to secure materials and subcontractors, the ability to produce the liquidity and capital necessary to expand and take advantage of opportunities in the future, industry trends, and stock market valuations. Such forward-looking information involves important risks and uncertainties that could significantly affect actual results and cause them to differ materially from expectations expressed herein and in other Company reports, SEC filings, statements and presentations. These risks and uncertainties include local, regional and national economic conditions, the demand for homes, domestic and international political events, uncertainties created by terrorist attacks, the effects of governmental regulation, the competitive environment in which the Company operates, fluctuations in interest rates, changes in home prices, the availability and cost of land for future growth, the availability of capital, uncertainties and fluctuations in capital and securities markets, changes in tax laws and their interpretation, legal proceedings, the availability of adequate insurance at reasonable cost, the ability of customers to finance the purchase of homes, the availability and cost of labor and materials, and weather conditions.
Toll Brothers operates in four geographic segments:
North: Connecticut, Illinois, Massachusetts, Michigan, Minnesota,
New Jersey, New York, Ohio (2006 only) and Rhode Island
Mid-Atlantic: Delaware, Maryland, Pennsylvania, Virginia and
West Virginia
South: Florida, North Carolina, South Carolina and Texas
West: Arizona, California, Colorado and Nevada
#'s are preliminary
Three Months Ended Three Months Ended
April 30, April 30,
--------------------- ---------------------
UNITS $ (MILL)
--------------------- ---------------------
HOME BUILDING
REVENUES 2007 2006 2007 2006
-------------- -------- -------- -------- --------
TRADITIONAL
PRODUCT
North 325 466 $ 215.2 $ 307.6
Mid-Atlantic 534 687 333.2 454.6
South 467 486 268.7 260.9
West 360 424 307.2 377.4
-------- -------- -------- --------
Total 1,686 2,063 $1,124.3 $1,400.5
======== ======== ======== ========
PERCENTAGE OF
COMPLETION(1)
North $ 32.2 $ 22.5
South 15.0 15.2
West 2.3
-------- -------- -------- --------
Total -- -- $ 47.2 $ 40.0
======== ======== ======== ========
TOTAL
North 325 466 $ 247.4 $ 330.1
Mid-Atlantic 534 687 333.2 454.6
South 467 486 283.7 276.1
West 360 424 307.2 379.7
-------- -------- -------- --------
Total
consolidated 1,686 2,063 1,171.5 1,440.5
Unconsolidated
entities 23 45 14.8 29.0
-------- -------- -------- --------
1,709 2,108 $1,186.3 $1,469.5
======== ======== ======== ========
CONTRACTS
---------------
TRADITIONAL
PRODUCT
North 352 482 $ 218.9 $ 322.3
Mid-Atlantic 528 643 342.4 412.6
South 285 472 164.6 280.2
West 308 479 290.6 462.8
-------- -------- -------- --------
Total 1,473 2,076 $1,016.5 $1,447.9
======== ======== ======== ========
NON TRADITIONAL
PRODUCT -
LONG TERM
North 151 52 $ 137.0 $ 50.4
Mid-Atlantic 8 5 3.6 1.7
West 1 11 0.6 8.2
-------- -------- -------- --------
Total 160 68 $ 141.2 $ 60.3
======== ======== ======== ========
PERCENTAGE OF
COMPLETION
North 13 19 $ 10.1 $ 14.5
South 1 4 1.2 11.5
-------- -------- -------- --------
Total 14 23 $ 11.3 $ 26.0
======== ======== ======== ========
TOTAL
North 516 553 $ 366.0 $ 387.2
Mid-Atlantic 536 648 346.0 414.3
South 286 476 165.8 291.7
West 309 490 291.2 471.0
-------- -------- -------- --------
Total
consolidated 1,647 2,167 1,169.0 1,564.2
Unconsolidated
entities 48 25 34.6 15.9
-------- -------- -------- --------
1,695 2,192 $1,203.6 $1,580.1
======== ======== ======== ========
#'s are preliminary
April 30, April 30,
--------------------- ---------------------
UNITS $ (MILL)
--------------------- ---------------------
BACKLOG 2007 2006 2007 2006
--------------- -------- -------- -------- --------
TRADITIONAL
PRODUCT
North 1,141 1,659 $ 741.2 $1,141.3
Mid-Atlantic 1,357 2,153 928.1 1,444.4
South 1,218 2,165 677.5 1,206.0
West 1,191 2,142 1,130.2 1,860.2
-------- -------- -------- --------
Total 4,907 8,119 $3,477.0 $5,651.9
======== ======== ======== ========
NON TRADITIONAL
PRODUCT -
LONG TERM
North 530 179 $ 521.0 $ 168.0
Mid-Atlantic 67 48 27.5 19.9
West 28 23 19.2 17.7
-------- -------- -------- --------
Total 625 250 $ 567.7 $ 205.6
======== ======== ======== ========
PERCENTAGE OF
COMPLETION
North 193 294 $ 124.5 $ 196.1
South 21 76 51.7 114.3
Less revenue
recognized on
units
remaining in
backlog (74.1) (97.6)
-------- -------- -------- --------
Total 214 370 $ 102.1 $ 212.8
======== ======== ======== ========
TOTAL
North 1,864 2,132 $1,386.7 $1,505.4
Mid-Atlantic 1,424 2,201 955.6 1,464.3
South 1,239 2,241 729.2 1,320.3
West 1,219 2,165 1,149.4 1,877.9
Less revenue
recognized on
units
remaining in
backlog (74.1) (97.6)
-------- -------- -------- --------
Total
consolidated 5,746 8,739 4,146.8 6,070.3
Unconsolidated
entities 68 12 46.4 7.7
-------- -------- -------- --------
5,814 8,751 $4,193.2 $6,078.0
======== ======== ======== ========
#'s are preliminary
Six Months Ended Six Months Ended
April 30, April 30,
--------------------- ----------------------
UNITS $ (MILL)
--------------------- ----------------------
HOME BUILDING
REVENUES 2007 2006 2007 2006
--------------- -------- -------- -------- --------
TRADITIONAL
PRODUCT
North 612 883 $ 406.8 $ 579.2
Mid-Atlantic 1,046 1,276 662.3 848.1
South 870 956 501.8 514.6
West 717 827 607.5 737.3
-------- -------- -------- --------
Total 3,245 3,942 $2,178.4 $2,679.2
======== ======== ======== ========
PERCENTAGE OF
COMPLETION(1)
North $ 51.7 $ 62.2
South 28.5 33.1
West 2.3
-------- -------- -------- --------
Total -- -- $ 80.2 $ 97.6
======== ======== ======== ========
TOTAL
North 612 883 $ 458.5 $ 641.4
Mid-Atlantic 1,046 1,276 662.3 848.1
South 870 956 530.3 547.7
West 717 827 607.5 739.6
-------- -------- -------- --------
Total
consolidated 3,245 3,942 2,258.6 2,776.8
Unconsolidated
entities 50 144 35.4 81.0
-------- -------- -------- --------
3,295 4,086 $2,294.0 $2,857.8
======== ======== ======== ========
CONTRACTS
--------------
TRADITIONAL
PRODUCT
North 569 747 $ 355.2 $ 499.7
Mid-Atlantic 856 1,099 549.2 726.0
South 497 803 283.0 483.7
West 429 822 419.6 778.0
-------- -------- -------- --------
Total 2,351 3,471 $1,607.0 $2,487.4
======== ======== ======== ========
NON TRADITIONAL
PRODUCT - LONG
TERM
North 274 163 $ 277.0 $ 152.4
Mid-Atlantic 9 18 4.0 7.0
West 2 16 1.0 12.2
-------- -------- -------- --------
Total 285 197 $ 282.0 $ 171.6
======== ======== ======== ========
PERCENTAGE OF
COMPLETION
North 37 39 $ 25.3 $ 28.9
South 1 4 3.4 16.2
-------- -------- -------- --------
Total 38 43 $ 28.7 $ 45.1
======== ======== ======== ========
TOTAL
North 880 949 $ 657.5 $ 681.0
Mid-Atlantic 865 1,117 553.2 733.0
South 498 807 286.4 499.9
West 431 838 420.6 790.2
-------- -------- -------- --------
Total
consolidated 2,674 3,711 1,917.7 2,704.1
Unconsolidated
entities 93 53 63.8 32.7
-------- -------- -------- --------
2,767 3,764 $1,981.5 $2,736.8
======== ======== ======== ========
(1) Percentage of Completion Deliveries: During the three-month and
six month periods ended April 30, 2007, the Company delivered units
which it accounted for using the percentage of completion
accounting method. The table below provides information related to
those deliveries:
Deliveries for the three-month period ended April 30,
2007 2006 2007 2006
Units Units $ (MILL) $ (MILL)
-------- -------- -------- --------
North 108 $ 75.0
South 56 65.7
-------- -------- -------- --------
Total 164 -- $ 140.7 --
======== ======== ======== ========
Deliveries for the six-month period ended April 30,
2007 2006 2007 2006
Units Units $ (MILL) $ (MILL)
-------- -------- -------- --------
North 160 $ 111.3
South 56 65.7
-------- -------- -------- --------
Total 216 -- $ 177.0 --
======== ======== ======== ========
CONTACT: Toll Brothers, Inc.
Frederick N. Cooper
(215) 938-8312
[email protected]
Joseph R. Sicree
(215) 938-8045
[email protected]
