Posted on 11/07/2006 7:57:28 PM PST by MeneMeneTekelUpharsin
2 Major Homebuilders See Drop in Fourth-Quarter Orders, Profits
PHILADELPHIA (AP) -- In a sign of a deepening housing slump, two major homebuilders on Tuesday reported steep declines in new orders and weaker fourth-quarter results. Luxury home builder Toll Brothers Inc. of Horsham, Pa., said home-building revenue fell by 10 percent and signed contracts were down by 55 percent compared with a year ago. The company, which released its quarterly outlook ahead of earnings, also said it will incur a hefty charge against profits as it pares down the number of lots it controls. Beazer Homes USA Inc. of Atlanta reported a 44 percent decline in profit as higher revenue was offset by squeezed margins. The company said there was "significant" discounting in most markets.
New orders for Beazer fell by 58 percent to 2,064 homes from 4,937 last year, as the housing market continued to slow. It has cut 1,000 jobs, or 25 percent of its work force. "We think it's a loss of confidence in the buyers," Toll Brothers Chief Executive Robert Toll said during a conference call with analysts Tuesday. "Nobody wants to buy something that they think will cost less two weeks later." He said at one point he thought the housing market was bumping along at the bottom, but business continued to worsen. Toll noted the company has had two rounds of layoffs, but didn't say how many people were let go.
"I am surprised," Toll said, adding that the downturn seems atypical, given good conditions for housing with low unemployment and interest rates. The average rate on the 30-year, fixed rate mortgage was 6.31 percent last week, according to Freddie Mac. The rate has fallen from 6.8 percent in July. In the quarter, Toll Brothers' home-building revenue fell to $1.81 billion from last year's $2 billion. Signed contracts -- a sign of future business -- fell to $710 million from last year's record $1.59 billion. The housing backlog declined as well, by 25 percent, to $4.5 billion. Toll Brothers said its fourth quarter was hurt by an above-average 585 cancellations. One-fourth of the quarter's cancellations came from Orlando, Fla., and Northern California.
The Southeast region, comprising Florida and the Carolinas, saw the biggest drop in signed contracts, down 78 percent to 101 in the quarter. It was followed by the Southwest -- Arizona, Colorado, Nevada and Texas -- down 62 percent to 163 contracts. Toll Brothers also pared back the number of lots it controls by about 6,500. As such, it expects to take write-downs of between $50 million and $100 million on lands owned and on option. The company expects earnings to be reduced by 18 to 36 cents per share as a result.
Toll Brothers now expects to deliver between 6,300 and 7,300 homes for fiscal 2007, down from its prior outlook of 7,000 to 8,000 deliveries. For the first quarter, the homebuilder expects to deliver between 1,500 and 1,800 homes. Beazer's fourth-quarter net income fell to $91.9 million, or $2.19 per share, from $164.4 million, or $3.61 per share, a year ago. Revenue climbed 4 percent to $1.88 billion. On average, analysts surveyed by Thomson Financial were looking for profits of $1.65 per share on sales of $1.51 billion. Beazer said it closed 6,411 homes during the quarter, up about 1 percent from the prior year as decreased closings in Florida and the Mid-Atlantic were offset by increases in the West, Southeast and other homebuilding segments.
The company previously said it expected 2007 home closings of 12,000 to 13,500, and sees new orders in the range of 12,000 to 14,000 for this period. If Beazer closes on 13,500 homes, it is forecasting 2007 earnings per share of about $3.65 -- slightly below analysts' current consensus estimate of $3.69 per share. Shares of Toll Brothers fell 1 cent to close at $28.04 on the New York Stock Exchange The stock had fallen to as low as $27.36 earlier in the day. Beazer shares had recovered as well, up13 cents at $42.07. They fell as low as $41.18 in trading.
For your information.
Wow!
You posted without lying about the Roman Catholic Church. That's an amazing accomplishment for you.
A lot of illegal aliens are going to be out of work.
Congratulations!
How true!
Caveat Emptor.
I work for one of the other major builders. We'll be reporting a big decline as well come year-end (Nov 30 for us).
After tonight that will not be the only thing diving.
I bet the stock market doesn't do so hot tomorrow.
Thanks for the honest reply. Lots of deceivers around and people who don't do their research are going to get burned -- badly.
Yawn.
Don't think it will go down too sharply right after the election. It's going to tank after the first of the year. I'm waiting for settlement date with a lot of people -- some on here and the rest out in society. It will take a major economic crash to obtain settlement date.
But will they go home? Probably not.
They can swoop in and buy any decent land for a bargain basement price from the small to medium sized outfits that are cash strapped
And so it goes.....
relax folks. give this six months and it will all be very different. housing stocks and 'housing' are not exactly related subjects. Beazer and Toll are in entirely different parts of the market. Beazer is not exactly high quality and Toll is VERY high end (mostly) so neither is THE bellweather of the industry. Don't go buying single family homes if you are investor but otherwise just relax and enjoy your home while this temporary surplus excess gets absorbed.
Absolutely not. However, since you mentioned it, maybe you can get flamed instead of me. Not a one of them will voluntarily go home -- they'll find something, anything, to be able to stay here considering what they have to go home to -- corruption, no free healthcare, drug war, revolution in southern Mexico, etc., ad nauseum.
The new fence will help keep them out.
A big part of what fueled this massive bubble was the slave rates illegal labor and the major home builders who don't check immigration status of their construction employees, along with mortgage lenders handing out loans like crack to anyone and everyone, and a fed that kept rates too low for too long.
Voila!!! The american housing market resembles Dubai's.
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