Toll Brothers , a builder of luxury homes in 21 states and one of the nation’s top-10 homebuilders, reported a fiscal fourth-quarter loss of $111.4 million, or 68 cents a share, compared to a fourth-quarter loss of $78.8 million, or 49 cents a share, in 2008. About 75% of the 2009 loss ($85.5 million) is attributed to pretax inventory write-downs. Excluding charges, Toll Brothers posted a pretax loss of $6.9 million for 4Q 09, compared with a pretax profit of $69.9 million the previous year.
Despite the heavy losses and uneven housing market, the company is seeing some signs of economic recovery in the housing market:
- Driven by low mortgage rates and the first-time homebuyer tax credit, new contracts jumped 42% in 4Q 09.
- Although home-building revenue fell by 30% and closings by 20%, both drops were less than analysts expected.
- Net signed contracts rose 42% to 765 units, with an increase of 62% in dollar value to $430.8 million—about 17% higher than 4Q 08.
- Cancellation rate for 4Q 09 was 6.9%, about the same as pre-recession averages.
- Toll Brothers ended fiscal 2009 with a significantly lower backlog of projects than the previous year.
Based on these glimmers of hope, the company believes the housing market will continue to recover gradually, much as it did following the last recession in the early 1990s.