Shares of Toll Brothers widened declines in afternoon trading Thursday after the luxury home builder cut forecasts for fiscal 2007 and said a rebound in the housing market was unlikely to materialize in time for the spring selling season.
"There are too many soft markets at this stage of the selling season to call a general upturn in the new home market," said Chief Executive Robert Toll in a prepared statement.
The Horsham, Pa.-based homebuilder lowered 2007 earnings guidance to a range of $1.46 to $1.85 a share from the previous forecast of $1.58 to $2.08. Annual sales are expected to decline 19% to 31% -- a range of $4.2 to $5.0 billion -- from fiscal 2006.
Toll Brothers said a sluggish U.S. housing market drove down profit by 67% in the fiscal first quarter, after write-downs for lower land values. The results, although weak, topped Wall Street forecasts.
The company reported quarterly earnings of 33 cents a share, down 66% from 98 cents a share in earnings reported in the year-earlier quarter.
The results included write-downs of $96.9 million for the lower value of the land Toll owns or from forfeiting payments for land options Toll decided not to exercise, as well as a $9 million goodwill impairment charge related to its 1999 acquisition of Silverman Cos. in Detroit.
Excluding these items, the company said it earned 72 cents a share.
Analysts on average had expected the company to earn 29 cents a share, according to Thomson Financial. Total revenue for the quarter fell 19% to $1.09 billion, in line with the company's preliminary results released on Feb. 9.
Contracts for new homes fell 33% to 1,027 units, the company said, while the value of the contracts fell 34% to $749 million.