Toll Brothers Orders Decline 32%,
Trims Luxury-Home Sales Forecast

Toll Brothers Inc. said Tuesday its fiscal first-quarter revenue rose 35% from a year earlier to about $1.33 billion, but the luxury home builder lowered its outlook for home deliveries amid softening demand in a number of markets.

The company, which is based in Horsham, Pa., said its backlog as of quarter-end was up 22% at about $5.95 billion. However, signed contracts were down about 21% from last year to $1.14 billion. The company's first quarter ended Jan. 31 and its full earnings results are due out Feb. 23.

"Selling homes this first quarter was certainly more difficult than one year ago," said Robert I. Toll, chairman and chief executive, in a prepared statement. "We experienced softening demand, to varying degrees, in a number of markets and continue to be constrained by long delivery times at many of our communities.

He added that, although demand had eased, "most of our markets remain fundamentally healthy, based on job and income growth data."

"Demand at our communities, which began to soften in early September, now appears to be improving, although demand pressure from speculators has certainly passed," he said.

Deliveries were below the company's projection due primarily to delays in obtaining certificates of occupancy, construction inspections and utility hook-ups. As a result, Toll Brothers reduced its fiscal-year deliveries projection to between 9,200 and 9,900 homes, compared with a prior projection of 9,500 to 10,200 deliveries and 8,769 deliveries in fiscal 2005.

The company, which operates in 21 states, didn't specify which markets were soft.

In November, Toll announced plans to build 895 single family and townhouse residences, a clubhouse/community center, swimming pool and tennis courts in Berkeley County, W.Va. The development is to cater to a growing number of people who work near Washington, D.C., which is about 90 miles away.

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