Second Quarter Toll Brothers Sales Drop 31.8 Percent; Company Urges Government to Restart the Market
- Jun 04, 2008
Horsham, Pa.–Even though luxury homebuilder Toll Brothers announced fiscal second quarter net losses that were lower than many analysts had expected, the company called for Congress to help invigorate the housing market, Forbes reported Wednesday.Toll Brothers chief executive Robert I. Toll said that in “this continuing severe down-cycle,” the builder would look for growth opportunities and try to keep a strong balance sheet.In the second quarter, Horsham, Pa.-based Toll posted a 31.8 percent drop in sales–which sunk from $1.2 billion in the second quarter of 2007 to $818.8 million,The company also saw $93.7 million in net losses, compared to net profits of $36.7 million a year ago.Toll’s backlog at the end of the second quarter was 50 percent lower than the same quarter a year ago. The company had 308 cancellations; last year, it had 384.In an investor conference call, Toll suggested Congress “jump-start” housing with tax incentives to encourage home buying because he believes legislation “would create a sense of urgency” and would work to “stop the downward spiral of home prices.””Demand continues to be weak in most markets as our clients worry about selling their existing homes or entering the market before prices stabilize,” Toll said. “In this difficult market, we continue to develop incentive strategies, when appropriate, on a community-by-community basis, which has enabled us to continue to generate pre-write-off profits. Although this strategy has resulted in slower sales, we believe it has helped sustain the reputation of our communities and value for our home buyers.”Toll said that investment funds have expressed interest in purchasing distressed properties and that the builder possibly would provide 80 to 90 percent of the required capital for partnered deals.