Toll Brothers Inc. (TOL:US), the largest U.S. luxury-home builder, fell after reporting that orders declined in the fiscal first quarter from a year earlier as bad weather and slowing demand hurt sales.
Signed contracts fell 6 percent to 916 homes in the quarter ending Jan. 31, the Horsham, Pennsylvania-based company said today in a statement. Toll lowered the upper end of its sales forecast for the year by 4 percent to 5,850 homes.
“The first three and a half weeks of February were down 8 percent in units,” Chief Executive Officer Douglas Yearley Jr. said on a conference call today. “Confidence is still a bit fragile and I think we’re all feeling that.”
U.S. homebuilders have been hurt as rising interest rates and climbing prices deter some buyers. New-home (NHSLTOT) sales in January probably fell to an annual pace of 400,000, the median of 81 economist estimates compiled by Bloomberg. That would be the third consecutive monthly decline. The Commerce Department reports the new-home sales data tomorrow.
Toll was the only company of the 11 in the Standard & Poor’s Supercomposite Homebuilding Index to have a share-price decline today, falling 0.2 percent to $38.25. Toll has gained 16 percent in the past 12 months, compared with a 15 percent increase for the index.
Toll’s net income for the three months through Jan. 31 was $45.6 million, or 25 cents a share, compared with $4.4 million, or 3 cents, a year earlier. The average estimate (TOL:US) of 10 analysts was for earnings of 17 cents a share, according to data compiled by Bloomberg.
Toll’s first-quarter revenue was $643.7 million, up from $424.6 million a year earlier. The average price of homes sold rose to $694,000 from $569,000.
Severe weather hurt business in the Northeast, Mid-Atlantic and Midwest, where Toll sells about half of its homes, according to the statement.
“This was the coldest January since 2001 and one of the worst winters since we entered the business,” Chairman Robert Toll said in the statement. “Although the weather will result in some delays and some additional but not major costs, it should not result in lost sales or deliveries.”
Orders also fell in the West, where weather has been less severe and Toll this month completed its $1.6 billion purchase of Beverly Hills, California-based Shapell Homes. Activity in the most populous U.S. state remains strong, Yearley said.
“Really everything we have in California, whether it be the new Shapell land or the old Toll land, it’s fabulous,” he said. “Huge numbers. Price increases.”
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