Toll Swings to Profit on Tax Benefits

HORSHAM, (TheStreet) -- Toll Brothers(TOL), the nation's No. 1 luxury homebuilder, swung to a third-quarter profit of $27.3 million, or 16 cents a share, on tax benefits.

A year earlier, Toll reported a loss of $472.3 million, or $2.93 a share.

The latest quarter includes pretax writedowns of $12.5 million and a tax benefit of $26.5 million. A year earlier, pretax writedowns were $115 million.

Toll Brothers said excluding writedowns its third-quarter pretax income was $13.3 million, compared with pretax income of $3.7 million a year earlier.

Toll said third-quarter revenue fell to $454.2 million from $461.4 million a year. Toll said its homebuilding deliveries of 803 units in the quarter rose 1%.

"We were pleased to return to profitability this quarter, especially with volumes down 65% from our peak," said Douglas Yearley, Toll's CEO, in a statement Wednesday. "Although revenues and unit deliveries for the quarter were relatively flat compared to one year ago, our gross margin, before write-offs, improved by 350 basis points.

"While much of this quarter's profitability was due to tax benefits, we are encouraged by the decline in impairments and our fifth consecutive quarter of more normalized cancelation rates after three years of elevated rates," he added.

The company has reported 11 consecutive quarters of losses.

The company's contract cancellation rate in the third quarter was 6.2% vs. 8.5% last year.

Toll said it expects fourth-quarter revenue to be lower than the same period in fiscal 2009.

-- Written by Joseph Woelfel

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