Toll Brothers Reports $27.3 Million Profit in Latest Quarter

09/02/2010

HORSHAM, PA -- Toll Brothers, Inc., the nation's leading builder of luxury homes, last week said that it posted a $27.3 million net profit in its third quarter which ended July 31, 2010. During the same period a year earlier, Toll Brothers reported a net loss of $472.3 million.

During the recently concluded third quarter, the company reported $454.2 million in revenue. Toll Brothers delivered 803 units during that time.

Douglas C. Yearley, Jr., Toll Brothers' chief executive officer, stated: "We were pleased to return to profitability this quarter, especially with volumes down 65% from our peak. Although revenues and unit deliveries for the quarter were relatively flat compared to one year ago, our gross margin, before write-offs, improved by 350 basis points. While much of this quarter's profitability was due to tax benefits, we are encouraged by the decline in impairments and our fifth consecutive quarter of more normalized cancellation rates after three years of elevated rates.

"Another bright spot has been the performance of our high-rise projects in the metro New York City urban market built under the Toll Brothers City Living brand. Among these are several 50% joint ventures, which, in FY 2010's third quarter, produced $38.5 million of contracts versus $17.7 million the previous year, and which ended this third quarter with a backlog of $103.0 million versus $19.4 million in FY 2009's same quarter. These joint ventures should continue to contribute profits for the next several quarters.

"We are pursuing growth. We are looking for attractive distressed land and debt acquisition opportunities. This quarter our count of lots owned and optioned increased to 35,800 from our trough of 31,700 at FY 2010's first-quarter-end. This was the second consecutive quarter of sequential growth in our land position. We continue to find opportunities in most of our markets and this quarter spent approximately $104 million on land acquisitions, bringing our nine month total to approximately $340 million."

"Due to our very low leverage and significant cash position, we have the flexibility to opportunistically pursue transactions that are arising from the current distress in the real estate industry. This quarter we announced the formation of Gibraltar Capital and Asset Management Corp. ("Gibraltar"), a wholly owned subsidiary. Gibraltar will look to capitalize on Toll Brothers' expertise and nationwide presence to pursue real estate opportunities.

"With a quick start out of the gate, we were pleased to announce that Gibraltar, in a joint venture with Oaktree Capital Management, L.P. and Milestone Merchant Partners, LLC, successfully completed a transaction to acquire approximately $1.7 billion (face value) of mainly distressed real estate loans and properties in partnership with the Federal Deposit and Insurance Corp. (FDIC). The primarily residential portfolio consists of approximately 200 loans and 80 real estate properties averaging about $6.1 million per asset."