Although the quarter's 233 contract cancellations were lower than the comparable quarter's 417, they had declined to 195 in the third quarter of 2008, and, coupled with increased traffic in a number of markets, led company executives to believe that sales might finally be on an upswing.
Preliminary numbers for Toll's fiscal year ended Oct. 31 also were not encouraging. Revenue of $3.15 billion was 32 percent lower than fiscal 2007's $4.64 billion. These figures represented sales of 4,743 units, 29 percent fewer than fiscal 2007's 6,687.
Net signed contracts worth about $1.61 billion were 46 percent lower than the $2.99 billion of fiscal 2007. The number of units involved fell 34 percent, from 4,440 to 2,927, year over year.
Until last month, the fourth quarter's net contract total "was shaping up to be about the same" as the 2007 fourth quarter, said Robert I. Toll, chairman and chief executive officer. Yet these "signs of stability were upended by the past month's financial crisis."
The effects of the crisis on Toll drove up cancellations to 233 units, or about 30 percent of current quarter contracts, and "reduced our traffic and demand down to record lows," Toll said.
So how is Toll weathering the storm?
The builder has reduced the number of its communities to 273 from 315 at the end of fiscal 2007, and expects to end fiscal 2009 with 255 or fewer communities - 22 percent below the 325 communities at its peak at the end of the second quarter of 2007.
It continues to negotiate or reduce its inventory of land under option. Toll ended its fiscal year with half the number of lots it owned or optioned at the peak of the boom in 2006. About 14,000 of the remaining 46,000 lots are already improved, meaning that Toll does not have to spend money to get them to market.
