Luxury home builder Toll Brothers, in a preliminary earnings report today, announced that home-building revenues dropped 22 percent in the first quarter compared to the same quarter last year, while builder Standard Pacific Corp. this week reported a $440.9 million net loss in fourth-quarter 2007.
Builder D.R. Horton Inc. is scheduled to discuss its first-quarter earnings in a conference call Thursday.
Toll Brothers reported home-building revenues of $842.7 million in the first quarter of the 2008 fiscal year that ended Jan. 31, down from $1.09 billion in first-quarter 2007.
The company had net contracts valued at $375.3 million in the first quarter, down 50 percent compared to the value of contracts in first-quarter 2007. Its backlog of $2.4 billion worth of homes at the close of first-quarter 2008 was down 42 percent from a backlog valued at $4.15 billion at the end of first-quarter 2007.
"The housing market remains very weak in most areas. Based on current traffic and deposits, we are not yet seeing much light at the end of the tunnel," said Robert I. Toll, company chairman and CEO, in a statement.
And Joel H. Rassman, the company’s chief financial officer, stated, "With conditions still weak in most markets, we expect to continue to face challenging times ahead." He said the company estimates that pre-tax write-downs in the first quarter will be between $150 million and $300 million.
Toll Brothers had $950 million in cash and about $1.2 billion available under its multibank credit facility at the close of the first quarter, the company also reported.
Its cancellation rate of 28.4 percent in the first quarter was down from a rate of 29.8 percent in first-quarter 2007.
The average price per unit of gross contracts signed in the 2008 fiscal year’s first quarter was $634,000, down 13.2 percent compared to $730,000 in first-quarter 2007.
Stock in Toll Brothers was trading at $21.68 per share as of 1:54 p.m. E.T. today, down 19 cents compared to the previous day’s closing price.
Home builder Standard Pacific Corp., meanwhile, reported a $440.9 million net loss in fourth-quarter 2007 compared with a net loss of $98.4 million for that quarter in 2006, and announced that the company has "substantially exited" the Tucson and San Antonio markets.
The net loss for the full year in 2007 was $767.3 million, or $11.85 per share. That compares to net income of $123.7 million, or $1.85 per share, in 2006.
Stephen J. Scarborough, chairman, CEO and president for Standard Pacific, said in a statement that the company has faced "unprecedented housing market conditions," and worked to reduce inventory, sell lots, lower its overhead and reduce its geographic footprint.
"As we enter 2008, we anticipate that housing market conditions will continue to weaken, resulting in a decrease in companywide deliveries. In response, we plan to cut new-home starts, new community openings and spends for land acquisitions and site development costs, and continue to balance overhead to sales levels. Based on our current view of market conditions, we expect to generate positive cash flow during the year even after paying off the remaining balance of the 2008 senior notes," he said in an earnings announcement.
The company reported home-building revenues of $933.6 million in the fourth quarter, down from $1.2 billion in fourth-quarter 2006. Also, the company reported that new-home deliveries shrank 23 percent year-over-year in the fourth quarter, to 2,150. Net new-home orders fell 11 percent year-over-year in the fourth quarter, while the cancellation rate declined to 37 percent compared with 44 percent in fourth-quarter 2006.
At the end of the fourth quarter, Standard Pacific had a backlog of 1,279 homes valued at $443 million. That compares to a backlog of 2,443 homes valued at $885 million in fourth-quarter 2006.
The company’s average home price in California during fourth-quarter 2007 dropped 23 percent compared to the same quarter in the previous year, the company reported, due to increased incentives and discounts, among other factors.
A 20 percent drop in home-building revenues in fourth-quarter 2007 compared to the prior year’s quarter was due mostly to a 23 percent drop in new-home deliveries and also to a 6 percent decline in the company’s consolidated average home price to $384,000, Standard Pacific reported.
The company reported a $180.5 million impairment charge in fourth-quarter 2007 relating to an accounting standard, which put the company out of compliance with a covenant in its $900 million revolving credit facility at the end of the quarter. ON Jan. 30 Standard Pacific "obtained from its bank group a waiver until March 30 … of any default arising from the noncompliance," the company reported in an earnings statement, and Standard Pacific "intends to commence further discussions with its banks to amend its covenant package."
Standard Pacific had pretax impairment charges of $433.5 million in the fourth quarter, including $211.4 million related to land sold or held for sale.
