Toll Brothers sees fall in home-building revenue

By Ilaina Jonas

Toll said preliminary results for the quarter ended January 31 showed home-building revenue of $842.7 million, down from $1.09 billion in the year-earlier quarter. It is scheduled to release final results for the quarter on February 27.

The U.S. housing market has been in a tailspin for more than two years, with demand falling and builders cutting prices in the face of dwindling orders.

To navigate the downturn, U.S. builders have shifted their focus to survival, turning the excess land and inventory accumulated during the boom times of 2002 to 2006 into cash. Investors have put their dollars in companies they believe will endure the downturn.

Meanwhile, investors have been judging the home builders on the viability instead of profitability, as most have been reporting losses rather than profits.

"The cash balance was (up) $50 million sequentially, bucking typical seasonal trends, and again reflecting the company's disciplined approach," UBS analyst David Goldberg wrote in a research note. "We believe this will allow it to take advantage of opportunities generated from less liquid competitors."

The net contracts called for a home with an average price of $580,000, compared with $634,000 before cancellations. The company attributed the difference to canceled orders for pricier homes and more orders for apartments, which tend to be less expensive than single-family houses.

(Additional reporting by Ritsuko Ando)