Toll Brothers took a big revenue hit in the second quarter, but things are looking up overall, according to CEO and Chairman, Robert Toll.
There are "a few reasons for cautious optimism" Toll said in a statement. The luxury home builder's revenue dropped by 51-percent in the second quarter of its fiscal year, which ends April 30. That's down compared to the same time last year. But those numbers are actually double the company's first-quarter sales, and that is the upside.
"We believe many upscale-home buyers have postponed their buying decision over the past three years due to weak consumer confidence and concerns about the economy; a renewal of confidence is the key to releasing this pent-up demand," Toll said. "With interest rates at an historic low, home price affordability at an historic high and consumer confidence starting to improve, we believe that more buyers are beginning to enter the housing market."
More potential homebuyers have put down deposits recently with Toll and not as many people seem to be getting cold feet. Compared to last year and the last quarter, fewer folks cancelled their plans for new homes.
Still, there are a few reasons the real estate recession, now in its third year, may not be ending. Chief Financial Officer Joel Rassman in the statement underlined the "significant uncertainty surrounding sales paces, cancellation rates, market direction, unemployment trends" that are preventing the company from forecasting future profits.
Toll Brothers sold 648 homes from February through April of this year, which brought in nearly $400 million. Toll ended the quarter with $1.96 billion in cash.
Toll Brothers will release final quarterly results on June 3, and analysts expect a loss of 33 cents a share on revenue of $386.7 million.