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Toll Says 1st-Qtr Orders Plunge 29%; Cuts Forecast (Update1)
Feb. 7 (Bloomberg) -- Toll Brothers Inc., the largest U.S. builder of luxury houses, said fiscal first-quarter orders plunged 29 percent, the first drop in three years, and cut its sales forecast for the year as demand for new homes weakened.
Orders for the quarter ended Jan. 31 fell to 1,544 from 2,173 a year earlier, according to preliminary results. New-home sales in 2006 will rise 4.9 percent to 13 percent, down from a previous forecast of 8.3 percent to 16 percent, the Horsham, Pennsylvania-based company said in a statement today.
Rising prices and mortgage rates have started to hold back U.S. sales of new homes, which set a record last year. Sales this year will fall 4.4 percent to 1.23 million, the second-highest ever, according to Mortgage Bankers Association in Washington.
``We can't hold at the pace we had last year,'' David Seiders, 59, chief economist for the National Association of Home Builders, said before Toll's announcement. ``It's not going to be the end of the world -- it's going to be a simmering down to a very healthy pace.''
The average U.S. rate for a 30-year fixed mortgage probably will be 6.3 percent this year, rising from 5.9 percent in 2005, MBA said in a Jan. 25 forecast.
Toll said it expects to sell 9,200 to 9,900 homes in fiscal 2006, down from a previous forecast of 9,500 to 10,200. Last year, the company delivered 8,769 homes.
Homebuilding revenue for the quarter rose 34 percent to $1.33 billion from $989.1 million. Toll delivered 1,879 homes in the quarter, up from 1,590 a year earlier. Its backlog of homes orders but not delivered rose to 8,667 homes, with a value of $5.97 billion, from 7,439 at $4.95 billion.
`More Difficult'
``Selling homes this first quarter was certainly more difficult than one year ago,'' Robert Toll, chairman and chief executive officer, said in the statement. ``We experienced softening demand, to varying degrees, in a number of markets and continue to be constrained by long delivery times at many of our communities.''
Toll's shares fell 98 cents to $31.20 yesterday in New York Stock Exchange composite trading. They've declined 24 percent in the past year, compared with the 1.1 percent increase by the Standard & Poor's Supercomposite Homebuilding Index.
Toll's stock dropped 14 percent on Nov. 8 after it cut its sales forecast for fiscal 2006 to a range of 9,500 to 10,000 homes.
Toll, the six-largest U.S. builder by stock market value, typically issues preliminary revenue figures in advance of its earnings report, scheduled for Feb. 23.
(Toll Brothers will hold a conference call to discuss preliminary results at 2 p.m. New York time. It will be broadcast via the investor relations page of the company's Web site at http://www.tollbrothers.com .)
To contact the reporter on this story:Kathleen M. Howley in Boston at kmhowley@bloomberg.net
Last Updated: February 7, 2006 06:09 EST
Toll Says 1st-Qtr Orders Plunge 29%; Cuts Forecast (Update1)
Feb. 7 (Bloomberg) -- Toll Brothers Inc., the largest U.S. builder of luxury houses, said fiscal first-quarter orders plunged 29 percent, the first drop in three years, and cut its sales forecast for the year as demand for new homes weakened.
Orders for the quarter ended Jan. 31 fell to 1,544 from 2,173 a year earlier, according to preliminary results. New-home sales in 2006 will rise 4.9 percent to 13 percent, down from a previous forecast of 8.3 percent to 16 percent, the Horsham, Pennsylvania-based company said in a statement today.
Rising prices and mortgage rates have started to hold back U.S. sales of new homes, which set a record last year. Sales this year will fall 4.4 percent to 1.23 million, the second-highest ever, according to Mortgage Bankers Association in Washington.
``We can't hold at the pace we had last year,'' David Seiders, 59, chief economist for the National Association of Home Builders, said before Toll's announcement. ``It's not going to be the end of the world -- it's going to be a simmering down to a very healthy pace.''
The average U.S. rate for a 30-year fixed mortgage probably will be 6.3 percent this year, rising from 5.9 percent in 2005, MBA said in a Jan. 25 forecast.
Toll said it expects to sell 9,200 to 9,900 homes in fiscal 2006, down from a previous forecast of 9,500 to 10,200. Last year, the company delivered 8,769 homes.
Homebuilding revenue for the quarter rose 34 percent to $1.33 billion from $989.1 million. Toll delivered 1,879 homes in the quarter, up from 1,590 a year earlier. Its backlog of homes orders but not delivered rose to 8,667 homes, with a value of $5.97 billion, from 7,439 at $4.95 billion.
`More Difficult'
``Selling homes this first quarter was certainly more difficult than one year ago,'' Robert Toll, chairman and chief executive officer, said in the statement. ``We experienced softening demand, to varying degrees, in a number of markets and continue to be constrained by long delivery times at many of our communities.''
Toll's shares fell 98 cents to $31.20 yesterday in New York Stock Exchange composite trading. They've declined 24 percent in the past year, compared with the 1.1 percent increase by the Standard & Poor's Supercomposite Homebuilding Index.
Toll's stock dropped 14 percent on Nov. 8 after it cut its sales forecast for fiscal 2006 to a range of 9,500 to 10,000 homes.
Toll, the six-largest U.S. builder by stock market value, typically issues preliminary revenue figures in advance of its earnings report, scheduled for Feb. 23.
(Toll Brothers will hold a conference call to discuss preliminary results at 2 p.m. New York time. It will be broadcast via the investor relations page of the company's Web site at http://www.tollbrothers.com .)
To contact the reporter on this story:Kathleen M. Howley in Boston at kmhowley@bloomberg.net
Last Updated: February 7, 2006 06:09 EST
posted by Jones Lang LaSalle NJ News Blog at 10:39 AM
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