Luxury home builder Toll Brothers Inc. said Tuesday its fourth-quarter profit slipped 44 percent due to writedowns of owned and optioned land and cancellations as the housing market continues to soften.
Earnings for the period ending Oct. 31 fell to $173.8 million, or $1.07 per share, from $310.3 million, or $1.84 per share, during the same period last year.
The most-recent quarter’s results were hurt by writedowns of $68.7 million, or 42 cents per share, versus writedowns of $1.4 million, or less than a penny per share, last year. Excluding writedowns, fourth-quarter earnings were $1.49 per share in 2006.
Analysts polled by Thomson Financial were looking for fourth-quarter earnings of $1.06 per share.
Quarterly revenue dropped 10 percent to $1.81 billion from $2.02 billion, narrowly missing Wall Street’s estimate of $1.82 billion.
“This quarter’s results were negatively impacted by our higher than normal 585 cancellations. With these cancellations creating unintended specs, we could face increasing margin pressure as we seek to move these homes,” Chairman and Chief Executive Robert Toll said in a statement.
Full-year net income declined 15 percent to $687.2 million, or $4.17 per share, compared with $806.1 million, or $4.78 per share, in the prior year.
The full-year results include writedowns of $92.7 million, or 56 cents per share, versus writedowns of $5.1 million, or 2 cents per share, last year. Excluding writedowns, full-year earnings were $4.73 per share.
Full-year revenue climbed 6 percent to $6.12 billion from $5.79 billion.
The company said it is reevaluating and renegotiating many of its optioned land positions due to current market conditions.
Toll Brothers said it expects to deliver between 6,300 and 7,300 homes next year and produce total home-building revenues between $4.34 billion and $5.1 billion.
It anticipates full-year 2007 earnings in a range of $260 million to $340 million, or $1.58 to $2.08 per share. Analysts are expecting full-year earnings of $2.30 next year.