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Toll Brothers Inc. (TOL)
F4Q09 Outlook Call
November 11, 2009 2:00 pm ET
Robert Toll - Chairman & Chief Executive Officer
Joel Rassman - Chief Financial Officer
Doug Yearley - Executive Vice President
Marty Connor - Assistant Chief Financial Officer
Fred Cooper - Senior Vice President of Finance & Investor Relations
Joe Sicree - Chief Accounting Officer
Kira McCarron - Chief Marketing Officer
Mike Snyder - Chief Planning Officer
Don Salmon - President of TBI mortgage Co.
Greg Ziegler - Vice President of Finance
Dan Oppenheim - Credit Suisse
Joshua Pollard - Goldman Sachs
David Goldberg - UBS
Michael Rehaut - JP Morgan
Kenneth Zener - Macquarie Capital
Stephen East - Pali Capital
Nishu Sood - Deutsche Bank
Megan McGrath - Barclays Capital
Carl Reichardt - Wells Fargo Securities
Josh Levin - Citi
Mike Widner - Stifel Nicolaus
Jay McCanless - FTN Equity
Joel Walker - FBN Securities
Timothy Jones - Wasserman & Associates
Jim Wilson - JMP Securities
Bose George - KBW
Michael Rehaut - JP Morgan
Previous Statements by TOL
» Toll Brothers F4Q09 (Qtr End 10/31/2009) Earnings Call Transcript
» Toll Brothers, Inc. F3Q09 (Qtr End 07/31/2009) Earnings Call Transcript
» Toll Brothers Inc. Q3 2009 Outlook Call Transcript
I would now like to turn the call over to Mr. Robert Toll.
Thank you, Litangie. Welcome and thank you for joining us everybody. With me today are Joel Rassman, Chief Financial Officer; Doug Yearley, our newly promoted Executive Vice President; Marty Connor, Assistant CFO; Fred Cooper, Senior Vice President of Finance and Investor Relations; Joe Sicree, Chief Accounting Officer; Kira McCarron, Chief Marketing Officer; Mike Snyder, Chief Planning Officer; Don Salmon, President of TBI mortgage Co; and Greg Ziegler, Vice President of Finance or the man with the answers.
Before I begin, I ask you to read the statement on forward-looking information in today’s release and on our website. I caution you that many statements on this call are based on assumptions about the economy, world events, housing and financial markets, many other factors beyond our control that could significantly affect future results. Those listening on the web can email questions to email@example.com.
This will be our final pre earnings conference call. Starting in fiscal year 2010, we will do just one call a quarter, which will be at our earnings announcement. We believe this is consistent with what other companies in our industry now do. We also believe the analysts only need to wakeup at oh-dark-hundred once a quarter instead of twice in order to publish reports on our results.
Yesterday we reported preliminary results for our fourth quarter ended October 31, 2009. We will announce final results when we report earnings on December 3. Since our detailed release has been out since yesterday evening and is posted on our website, I will just hit certain highlights. Our fiscal year ‘09 fourth quarter net signed contracts of approximately 765 units and $430.8 million rose 42% in units and 62% in dollars, compared to fiscal year ‘08 fourth quarter totals.
‘09 first fourth quarter totals also exceeded fiscal year ‘07s fourth quarter net signed contracts by 17% in units and 18% in dollars. These increases were achieved despite having fewer selling communities. During fiscal year ‘09s fourth quarter we averaged 215 selling communities, down 26% from 290 in fiscal year ‘08s fourth quarter and down 32% from 315 the fourth quarter peak in fiscal year ‘07.
Our contract cancellation rate, current quarter cancellations divided by current quarter signed contracts, was at 6.9% in Q4 of fiscal year ‘09, which was inline with our pre downturn historical averages. On a per community basis, fiscal year ‘09s fourth quarter net signed contracts of 3.56 per community exceeded fiscal year ‘08s fourth quarter of 1.86 units per community by 91% and exceeded fiscal year ‘07s fourth quarter of 2.08 units per community by 71%.
Our fiscal year ‘09s fourth quarter per community net signed contracts were 4% above fiscal year ‘06s fourth quarter of 3.42 units per community, but still well below our 20 year fourth quarter average of 6.16 units per community. Our fiscal year ‘09s fourth quarter home building deliveries and revenues declined 20% in units, 30% in dollars and our fourth quarter end backlog declined 25% in units and 34% in dollars, compared to fiscal year ‘08.
For the full fiscal year ‘09, net signed contracts declined 16% and 19% respectively, compared to fiscal year ‘08. Home building deliveries and revenues declined 37% in units and 44% in dollars compared to fiscal year ‘08. We have definitely progressed from one year ago. The shock to the financial system in mid-September 08 that shut down the capital markets appears to be mostly behind us.
The improvement in consumer confidence over the past year, the increasing stabilization of home prices, the decline in unsold home inventories and the reduction in buyer cancellation rates suggest that the new home market should be improving; we sense that it is, though slowly and through choppy waters. Home buyers began to emerge from their bunkers in late March 2009 and the market continued to gain momentum up to Labor Day.
Since then demand has been volatile: This maybe due in part to typical seasonality, but the more likely cause is concern about unemployment and the overall economy. We continue to focus on maintaining significant liquidity. We ended fiscal year ‘09 with $1.81 billion of cash and $101 million of marketable treasury securities, compared to $1.68 billion of cash at fiscal year ‘09s third quarter end and $1.63 billion at fiscal year end ‘08.