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Toll Brothers said quarterly home-building revenue dropped about 34 percent, less sharply than analysts were expecting, but it did not provide an earnings outlook because of the current state of the market.
Preliminary results for the third quarter ended July 31 showed home-building revenue had fallen to about $796.5 million from $1.21 billion a year earlier, the company said on Wednesday.
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Analysts on average had expected revenue of $717.6 million, according to Reuters Estimates.
Toll [TOL
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], the largest U.S. luxury home builder, plans to release final results Sept. 4.
"Our third-quarter results for revenues, contracts and backlog reflect the continued weakness in most of our markets," Chief Executive Robert Toll said in a statement.
Contracts declined 35 percent to about $469.7 million for the quarter.
The U.S. housing market has been in a tailspin for almost two years amid surging defaults on risky subprime mortgages, rising foreclosures, excess supply, lower prices and tighter credit conditions.
The slump has even helped push some builders into bankruptcy, including WCI Communities [WCI
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] last week.
The survivors have had to mark down the value of their inventories and take charges for walking away from land deals.
Toll estimated third-quarter pretax write-downs for operating communities, land and land options, and joint ventures at $100 million to $200 million.
To navigate the downturn, most builders have focused on accumulating cash by reducing debt and selling land acquired at lofty prices during the boom.
Toll controls 48,500 lots, down from a peak of 91,200 at the end of the second quarter of fiscal year 2006.
The company ended the third quarter with about $1.5 billion in cash and about $1.3 billion available under its bank credit facility.
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With more liquidity than its peers, Toll can take advantage of land-buying opportunities later in the downturn, UBS analyst David Goldberg wrote in a note to clients.
Toll reported 195 cancellations for the third quarter, its lowest total in the past two years. The cancellation rate was 19.4 percent, down from 23.8 percent a year earlier.
"We believe this reduction in cancellations is a positive sign," Toll said.
- Toll is scheduled to appear Wednesday on CNBC's "Closing Bell."
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