Toll Brothers posts profit for 3rd quarter

August 25, 2010 9:17:33 AM PDT
Toll Brothers Inc. on Wednesday posted a fiscal third-quarter profit, but the luxury homebuilder said fewer buyers signed contracts, another sign that housing and the broader economy are stumbling.

The company earned $27.3 million, or 16 cents per share, for the quarter that ended in late July, mostly on tax credits and fewer write-downs. That compares with a loss of $472.3 million, or $2.93 a share, last year.

Excluding one-time charges, Toll's pretax adjusted income more than tripled to $13.3 million.

Analysts polled by Thomson Reuters expected the homebuilder to lose 14 cents a share.

However, the company's new orders dropped 16 percent in the quarter to 701 units and the value of those units fell 11 percent to $400.1 million dollars.

Other indicators Wednesday showed a similar slowdown in housing.

July new home sales dropped 12.4 percent to the slowest pace on records dating back to 1963, the Commerce Department said. And the number of borrowers who applied for a purchase mortgage this week remains 41.5 percent below its April levels, the Mortgage Bankers Association reported.

Home sales revived this spring as affordable prices, low mortgage rates and two federal tax credits lured homebuyers into the market. But they stalled after the credits expired at the end of April.

Now a weakening economy, high unemployment, slow job growth and tight credit are sidelining buyers and many experts don't expect home sales to recover until the job market improves.

"Although the unemployment rate among our buyer profile remains at half the national unemployment rate, recent economic and political news continues to dampen our customers' confidence," said Executive Chairman Robert I. Toll in a company statement.

Toll's revenue for the quarter slipped to $454.2 million from $461.4 million the year before. Analysts expected revenue of $396.4 million.

Based in Horsham, Pa., Toll Brothers has operations in 20 states and is the nation's largest builder of luxury homes.

Its shares rose 54 cents, or 3.3 percent, to $16.73 in morning trading.


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