Toll Brothers posts smaller-than-expected loss

NEW YORK (Reuters) - Toll Brothers Inc (TOL.N), the largest U.S. luxury home builder, posted a quarterly net loss on Tuesday, hurt by weakened demand in most markets amid the nation's housing slump, but the results were not as bad as Wall Street had expected.

The net loss totaled $93.7 million, or 59 cents per share, in the second quarter ended on April 30, compared with a year-earlier profit of $36.7 million, or 22 cents per share.

Reuters Estimates said the company had lost 75 cents per share before a litigation-related gain, while analysts on average had expected a loss of 96 cents.

Toll Brothers shares were up 3 percent in early trading.

"Demand continues to be weak in most markets as our clients worry about selling their existing homes or entering the market before prices stabilize," Chief Executive Robert Toll said in a statement.

The U.S. housing market has been in a tailspin for almost two years amid surging defaults on risky subprime mortgages, rising foreclosures, excess supply, lower prices and tighter credit conditions.

Excluding pretax write-downs of $288.1 million, Toll said quarterly profit was 49 cents per share.

Revenue fell 30 percent to $818.8 million, exceeding analysts' estimates of $807.2 million.

To navigate the downturn, most builders have focused on bulking up their balance sheets, accumulating cash and reducing debt while waiting for opportunities to buy land at a bargain.

Toll has cut its land holdings to 51,800 lots owned and optioned, compared with 91,200 at its peak two years ago.

The company ended the quarter with a record-low net-debt-to-capital ratio of 22.7 percent and more than $2.5 billion in available capital, including $1.23 billion in cash.

"This liquidity will allow the company to take advantage of opportunities that arise from less financially flexible peers as we move through the downturn," said UBS analyst David Goldberg, who rates Toll a "buy" and calls it his top pick.

Toll said its backlog at the end of the second quarter fell 50 percent to $2.08 billion.

The company also said net contracts signed during the quarter, after cancellations, fell 44 percent to 929 homes. In dollar terms, they were down 58 percent at $496.5 million.

"Toll continues to maintain a strong balance sheet and generate positive cash flow," JPMorgan analyst Michael Rehaut wrote in a note to clients. "However, orders remain challenged."

Rehaut has a "neutral" rating on Toll and a negative stance on the home building sector as a whole.

Toll's average price per unit of gross contracts signed in the quarter was $590,000, down from $711,000 a year earlier, reflecting higher incentives, more homes sold in low-priced communities like those aimed at older adults, and fewer sales in high-priced markets such as California.

In December, Toll posted its first quarterly loss in 21 years as a public company.

Toll's shares were up 62 cents at $21.58 on the New York Stock Exchange. At Monday's close, the stock was up about 8 percent so far this year.

(Reporting by Helen Chernikoff in New York and Tenzin Pema in Bangalore; Editing by Quentin Bryar and Lisa Von Ahn)