UPDATE 3-Toll Brothers loss wider than expected
* Q2 loss $0.52/shr vs loss $0.50 expected
* Says order cancellations leveling off, buyers emerge
* Analyst says Toll poised to gain market share
* Shares down 1.4 pct (Recasts, adds dateline, analyst comment, background on recent home sale data)
NEW YORK, June 3 (Reuters) - Luxury homebuilder Toll Brothers Inc (TOL.N) posted a wider-than-expected quarterly loss, but said order cancellations were leveling off and some buyers were emerging to take advantage of low mortgage rates.
The second-quarter net loss was $83.2 million, or 52 cents a share, compared with a net loss of $93.7 million, or 59 cents a share, in the year-ago quarter.
The latest quarter results included pre-tax writedowns of $119.6 million, or 48 cents a share.
Analysts on average were expecting a loss of 50 cents a share, excluding items, on revenue of $399.4 million, according to Reuters Estimates.
Revenue for the quarter fell 51 percent to $398.3 million, while order backlog decreased 55 percent to $944.3 million. Net signed contracts dropped 40 percent $298.3 million.
"With interest rates near historic lows and housing affordability near historic highs, it appears that some buyers are beginning to re-enter the new home market," Chief Executive Robert Toll said in a statement.
"The recently reported strong rise in consumer confidence was consistent with our recent experience," he added, noting that a measure of buyers' deposits has improved in nine of the past 11 weeks.
Toll's order cancellation rate, at 21.7 percent, marked an improvement from both the prior quarter and from a year ago. The company also noted it had no public debt maturing until 2013.
POISED TO GAIN SHARE?
Toll's balance sheet "remains among the best in the group," said UBS analyst David Goldberg in a research note. He noted the company has $1.96 billion in cash, $1.34 billion available on credit lines, and limited near term debt maturities.
"As such, we continue to believe the company has the requisite financial flexibility to gain market share as opportunities arise from less well capitalized peers," Goldberg said.
Toll's results come after better-than-expected results from Hovnanian Enterprises (HOV.N), which also reported a slowing rate of cancellations on Tuesday, and amid encouraging signs about the health of the sector.
U.S. pending home sales in April notched their biggest monthly gain in 7-1/2 years, a report showed on Tuesday, the pace of sales of existing homes has risen, and U.S. consumer confidence has improved.
However, U.S. mortgage applications fell last week, reflecting a drop in demand for home refinancing loans as interest rates surged to their highest levels since late January.
Homebuilders have been bogged down by a glut of homes on the U.S. market, many a result of foreclosures. To survive, they have been streamlining operations, reducing land positions, selling off homes started without buyers and focusing on generating cash to pay bills and maintain debt obligations.
Toll said it would not give earnings outlook, citing the uncertain environment.For 2009, It expects to deliver 2,200 to 2,800 homes, at an average delivered price of about $590,000 and $620,000 per home.
Shares of the company, which have jumped more than 10 percent over the past three trading sessions, were down 28 cents to $19.25 in early trading on the New York Stock Exchange.
(Additional reporting by Esha Dey and Amulya Nagaraj in Bangalore, editing by Dave Zimmerman)
