This summary is based on the fourth quarter fiscal 2007 earnings call conducted by Toll Brothers, Inc. (TOL) on December 6, 2007.
Management:
Chairman of the Board, Chief Executive Officer: Robert I. Toll
Chief Financial Officer, Executive Vice President, Treasurer, Director: Joel H. Rassman
President of TBI: Don Salmon
Key Investors Issues
- EPS were a loss of 52 cents per share compared to a profit of $1.07 per share a year ago.
- Toll lost $81.8 million compared to profit of $173.8 million a year earlier.
- Revenues fell 35% to $1.17 billion.
Fourth Quarter Highlights
The company generated a net loss of $81.8 million, or 52 cents per share, compared to 2006''s fourth-quarter net income of $173.8 million, or $1.07 per share.
The net loss included $314.9 million of pre-tax write-downs ($200 million, or $1.22 per share, after-tax).
Total pre-tax write-downs included $59.2 million of write-downs related to joint ventures. In 2006, fourth-quarter pre-tax write-downs totaled $115.0 million ($68.7 million, or 42 cents per share, after-tax). Excluding write-downs, earnings were 72 cents per share, compared to $1.49 per share in 2006''s fourth quarter.
Total revenues were $1.17 billion, compared to 2006''s fourth-quarter total revenues of $1.81 billion.
- Net signed contracts were $365.3 million, compared to 2006''s fourth-quarter total of $706.3 million.
- The company signed 1,073 gross contracts, before cancellations, a 33% decline from the 1,595 signed in 2006''s fourth quarter. Net of cancellations, fourth-quarter contracts totaled 656 units, down 35% from 1,010 units in the fourth quarter of 2006.
Cancellations totaled 417 units, versus 585 units in fourth-quarter 2006.
Cancellations were 38.9% of current-quarter contracts and 8.3% of beginning-quarter backlog, compared to 36.7% and 7.3%, respectively, in the fourth quarter of 2006.
The company ended its quarter with $900 million in cash and more than $1.2 billion available under its bank credit facility, which matures in 2011.
Its net debt-to-capital ratio at October 31, 2007 stood at 26.8%, its lowest level ever, compared to 31.8% one year ago.
The company, which has continued to renegotiate, and in some cases, reduce its optioned land positions, ended 2007''s fourth quarter with approximately 59,300 lots owned and optioned, compared to approximately 91,200 at its peak at the second-quarter-end of 2006.
The company ended the fourth quarter with 315 selling communities, down from the peak of 325 at second-quarter-end, and expects to be selling from approximately 300 communities by fiscal year end 2008.
- The company had about $1.2 billion available and unused under bank credit facility, which expires in March 2011.
- This, combined with $900 million in cash, gave approximately $2.1 billion of available liquidity.
- In addition, the company has no maturities on $1.5 billion of outstanding public debt until 2011 and its average maturity is over 5.6 years.
- The company has strategically trimmed land position by 35% in the past eighteen months.
- The company signed 1,073 gross contracts totaling approximately $693.7 million in 2007''s fourth quarter, a decline of 33% and 38%, respectively, compared to the 1,595 gross contracts totaling $1.12 billion signed in 2006''s fourth quarter.
- The company''s net contracts of 656 units, or approximately $365.2 million, declined by 35% and 48%, respectively, compared to 2006''s fourth-quarter contracts of 1,010 units, or $706.3 million. In addition, in the quarter, unconsolidated entities in which the company had an interest signed contracts of approximately $20 million.
Fiscal 2007 Highlights
