Toll Brothers Takes Over CamWest

Toll Brothers Inc. (TOL - Snapshot Report) recently announced that it has acquired CamWest Development LLC. The company did not disclose the financial terms of the deal but stated that it will start reaping benefits from the acquisition in the upcoming year.

CamWest is considered as one of the largest privately held home building companies in the Pacific Northwest. This acquisition will mark Toll Brothers’ entry into the Seattle market, which is both affluent and possesses a strong employment base.

As a result of the acquisition, Toll Brothers’ existing backlog increased by around 1,500 lots (1,300 lots owned and 200 lots controlled) in King and Snohomish Counties. According to management, the acquisition will increase Toll Brothers' selling community count by approximately 15 communities.

In the last reported quarter, Toll Brothers earned $3.9 million or 2 cents per share compared with $0.8 million in the year-ago quarter. Third quarter pre-tax income (adjusted) was $24.1 million compared with $14.0 million (adjusted).

Revenues, however, declined 13% year over year to $394.3 million, due to a 14% decrease in home deliveries to 693 units. The demand for luxury homes fell in the quarter driven by poor industry conditions and subdued confidence among luxury homebuyers. At quarter end, the company’s total selling communities amounted to 207 versus 190 selling communities at the end of the prior-year quarter.

The company expects to deliver 2,475 to 2,675 homes in fiscal 2011, including its estimate to deliver 620 to 820 homes in the fourth quarter in the average price band of $555,000 to $570,000. Total selling communities are projected between 210 and 220.

Based in Horsham, Pennsylvania, Toll Brothers, a Zacks #3 Rank (Hold rating), is engaged in the development, construction, financing, and sale of residential homes in the United States. It builds luxury, single-family detached and attached home communities; master planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities principally on the land it develops and improves.

The company operates its own architectural, engineering, mortgage, title, land development and land sale, golf course development and management, home security, landscape, cable TV, and broadband Internet delivery subsidiaries. Toll Brothers’ competitors include DR Horton Inc. (DHI - Analyst Report), PulteGroup Inc. (PHM - Analyst Report), Lennar Corp. (LEN - Analyst Report), KB Home (KBH - Analyst Report) and Hovnanian Enterprises Inc. (HOV - Snapshot Report).

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