Toll Brothers Inc. (TOL) showed a profit of $27.3 million or 16 cents per share in the third quarter of its fiscal year ended July 31, 2010 compared to a loss of $472.3 million or $2.93 per share in the prior-year quarter.
Excluding a tax benefit of $26.5 million due to the reversal of valuation allowances on taxable losses incurred and the reversal of accrued tax reserves associated with statute expirations, the profit was $800,000 during the quarter. With this, the company has beaten the Zacks Consensus Estimate of a loss of 15 cents per share.
Revenues in the quarter fell 2% to $454.2 million. However, it is higher than the Zacks Consensus Estimate of $390 million.
Despite a fall in revenue, the company reported a profit based on cost reductions and lower selling, general and administrative expenses (SG&A). SG&A declined 7% to $67.2 million during the quarter. Gross margin improved to 13.6% from a negative margin of 10.9% in the third quarter of fiscal year 2009.
Toll Brothers’ net signed contracts slid 16% to 701 units and net signed contract value decreased 11% to $400.1 million. The average price per unit of net contracts signed was $571,000 compared to $535,000 in the third quarter of fiscal year 2009.
The company’s contract cancellation rate was 6.2% compared to 8.5% in year-ago quarter. The quarter-end backlog was $939.4 million and 1,636 units, an increase of 1% in terms of both dollars and units.
Toll Brothers had cash, cash equivalents and marketable securities of $1.64 billion as of July 31, 2010 compared to $1.66 billion as of the year-ago period. The company’s net-debt-to-capital ratio was 11.5% as of the above period, compared to 14.5% as of July 31, 2009.
The company expects home building deliveries of between 560 and 760 units in the fourth quarter of the year, bringing the total deliveries to between 2,500 and 2,700 homes for the full fiscal year 2010. The average price per delivered home is expected between $560,000 and $570,000 for the fourth quarter.
Toll Brothers, a Zacks #3 Rank stock, is based in Horsham, Pennsylvania. The company engages in designing, building, marketing, and arranging finance for single-family detached and attached homes in luxury residential communities in the U.S.
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