Toll Brothers profitable in 4Q on fewer write-downs, tax benefit
Toll Brothers (TOL) returned to a profit for its fiscal fourth quarter, as fewer write-downs and a tax benefit helped earnings. The luxury homebuilder earned $50.5 million, or 30 cents a share, for the three months ended Oct. 31, up from a loss of $111.4 million, or 68 cents a share, a year earlier. Fourth-quarter revenue fell 17.2% to $402.6 million from $486.6 million last year. For its fiscal year ended Oct. 31, Toll Brothers reported a loss of $3.4 million, or 2 cents a share, down from a loss of $755.8 million, or $4.68 a share, for fiscal 2009, when the company recorded $476.7 million of inventory write-downs. The company has now been in the black for two consecutive quarters, after posting income of $27.3 million, or 16 cents a share, for its fiscal third quarter ended July 31, which was its first profitable quarter in about three years. "Despite home deliveries down 76% from our fourth quarter peak in 2005, we achieved modest pre-tax profitability on a pre-write-down basis for the second consecutive quarter," Chief Executive Douglas Yearley said. He said a "return of normalized demand" helped results for fiscal 2010. But "the persistent drag of high unemployment, reduced home equity, weak consumer confidence and frustration with the nation's economic and political climate outweighed the appeal of historic low interest rates and tremendous home affordability." The company signed contracts for 558 units worth $315.3 million during the fourth quarter. Both figures are 27% lower than a year ago. Yearley said Toll Brothers expects to end fiscal 2011 with between 215 and 225 new housing communities, which would be up from 195 at the end of 2010 and higher than 200 at the end of fiscal 2009. "Many of our clients remain on the sidelines waiting for clearer signs that the economy is on the road to recovery," he said. Toll Brothers said inventory write-downs during the fourth quarter fell to $27 million from $85.5 million a year ago. Charges for early retirement of debt slid to $500,000 from $11.6 million the year earlier. Excluding items, the company said fourth-quarter earnings were $18.1 million. The company reported total assets of $4.17 billion at Oct. 31, down from $5.63 billion a year ago. In late October, Toll Brothers secured an $885 million line of credit, and the company ended the fiscal year with $1.24 billion in cash and equivalents. Write to Jason Philyaw.