Some interesting points + perspective on the current state of the U.S. LUXARY Homebuilding industry courtesy of Toll Brothers CEO, Robert Toll during an interview today with Fox Business News:
* Homebuyer TRAFFIC is running at about 1/2 of what it would be if the market was functioning 'normally'
* Toll Brothers (TOL) Average Loan to Value ratio in 2Q08 was 67%...meaning the average customer's mortgage down payment was 33% for his/her loan
* Average deposit placed on homes is about $5000...in today's market, of the people who put down deposits approx 35-40% are following through and buying the home (vs. 65-70% during the 'boom' times)
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TOL's 2Q08 EARNINGS highlights (per link below)
* Toll's fiscal 2Q08 net loss was $93.7 million, or 59 cents a share...The company was projected to report a net loss of 90 cents a share, according to the average estimate of 11 analysts in a Bloomberg survey
* Second quarter revenue at Toll Brothers dropped 30 percent to $819 million as prices and the number of homes sold fell
* The loss included after-tax charges of about $175 million as a result of writedowns (about 2/3 of which came from Nevada, Florida and California)...Excluding the writedowns, earnings were $81.3 million
* The avg price of contracts signed in the second quarter was down 26% yoy to $534,000 (and down 7.9% vs. the previous three months)...The lower sales prices were partly due to fewer sales in expensive markets such as California and Manhattan
* Toll Brothers said customers canceled 25% of contracts in the quarter (308 cancellations), the lowest rate since the same quarter a year earlier...The net value of contracts fell 58% yoy to $496.5 million or 929 homes (a year over year decline of 44% in homes)...Gross contracts were $730.5 million for 1,237 homes (a decline of 49% and 39% respectively, from 2Q07).
* TOL order backlog, or homes under contract that have yet to be sold, declined 50% to $2.08 billion.
* Toll received the most 2Q08 revenue from its 'Mid-Atlantic' States (Delaware, Maryland, Pennsylvania, Virginia and West Virginia).
* TOL's GEO Breakdown of Contract Volume during the Qtr:
1. Northern States --> Down 69%
(Connecticut, Illinois, Massachusetts, Michigan, Minnesota, New Jersey and New York)
2. Western States --> Down 40%
(Arizona, California, Colorado and Nevada)
3. Mid-Atlantic States --> Down 35%
(Delaware, Maryland, Pennsylvania, Virginia and West Virginia)
4. Southern States --> Down 17%
(Florida, Georgia, North Carolina, South Carolina and Texas)
* Toll reduced its Debt-to-Capital ratio to 23% at April 30, 2008 from 32% a year earlier...The company had $2.5 billion of capital available at the end of the quarter, including $1.2 billion of cash
* TOL ended the quarter with 51,800 lots owned and optioned vs. 91,200 at the 2Q06 peak
* Cost of sales as a percentage of homebuilding revenue excluding writedowns was 75.2% vs. 73.1% in second quarter 2007...This equates to a decline in margins, which was attributed to higher incentives and product mix shift.
* TOL did not provide EPS guidance. The ASP (average sales price) for Fiscal Year 2008 is expected to be between $630,000 - $650,000 and $625,000 for the second half of 2008. Toll also expects that cost of sales will be higher in 2008 vs. 2007 and will increase in the 3rd and 4th quarters of this year.
http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=TOL:US&sid=aloYhMdG_LZM
Data Courtesy: FBN and Bloomberg
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