Toll Brothers — FY 2026 Third Quarter Earnings Summary

Financial Performance

• Net income was $280.1 million ($2.97 per diluted share) compared to $369.6 million ($3.73 per diluted share) in FY 2025's third quarter.
• Pre-tax income was $374.8 million compared to $499.5 million in the prior year quarter.
• Home sales revenues were $2.65 billion compared to $2.88 billion in FY 2025's third quarter.
• Delivered homes were 2,662 compared to 2,959 in the prior year quarter.
• Net signed contract value was $2.52 billion compared to $2.41 billion in the prior year quarter; contracted homes were 2,508 compared to 2,388.
• Backlog value was $6.24 billion (5,312 homes) at quarter-end compared to $6.38 billion (5,492 homes) in FY 2025's third quarter.
• Home sales gross margin was 23.9% compared to 25.6% in the prior year quarter.
• Adjusted home sales gross margin was 25.6% compared to 27.5% in the prior year quarter.
• SG&A as a percentage of home sales revenues was 10.0% compared to 8.8% in the prior year quarter.
• Income from operations was $359.2 million compared to $487.7 million in the prior year quarter.
• Other income, income from unconsolidated entities, and gross margin from land sales and other was $6.0 million compared to $15.0 million in the prior year quarter.
• The Company repurchased approximately 1.4 million shares at an average price of $148.63 per share for a total of $206.8 million.
• Cash and cash equivalents were $1.06 billion at quarter-end compared to $1.26 billion at FYE 2025.
• Stockholders' equity was $8.53 billion at quarter-end compared to $8.27 billion at FYE 2025.
• Debt-to-capital ratio was 24.5% at quarter-end compared to 26.0% at FYE 2025.
• Net debt-to-capital ratio was 15.6% at quarter-end compared to 15.3% at FYE 2025.
• For the nine months ended July 31, 2026, net income was $751.7 million ($7.87 per share) compared to $899.8 million ($8.95 per share) in the prior year period.
• For the nine months ended July 31, 2026, home sales revenues were $7.02 billion compared to $7.43 billion in the prior year period.
• For the nine months ended July 31, 2026, home sales gross margin was 24.1% compared to 25.6% in the prior year period.
• For the nine months ended July 31, 2026, adjusted home sales gross margin was 26.1% compared to 27.4% in the prior year period.

Guidance and Future Outlook

• The Company reaffirmed full-year FY 2026 guidance of approximately $10.5 billion in home sales revenues and an adjusted gross margin of 26.1%.
• Fourth Quarter FY 2026 guidance includes deliveries of 3,450 to 3,550 units, average delivered price per home of $995,000 to $1,005,000, and adjusted home sales gross margin of 26.00%.
• Full Fiscal Year FY 2026 guidance includes deliveries of 10,500 to 10,600 units, average delivered price per home of $995,000 to $1,000,000, and adjusted home sales gross margin of 26.10%.
• SG&A as a percentage of home sales revenues is guided at 8.10% for the fourth quarter and 10.10% for the full fiscal year.
• Other income, income from unconsolidated entities, and gross margin from land sales and other is guided at $30 million for the fourth quarter and $120 million for the full fiscal year.
• The tax rate is guided at 26.0% for the fourth quarter and 25.2% for the full fiscal year.
• The Company expects to grow community count by 8% to 10% in fiscal 2026.
• Existing land position supports similar growth in fiscal 2027 and beyond.
• Projected share repurchases for fiscal 2026 were increased from $650 million to $700 million.

Business Segments and Product Lines

• The Company operates in five geographic segments: North, Mid-Atlantic, South, Mountain, and Pacific.
• In the third quarter, the North segment delivered 425 homes (revenue $450.4 million) and signed 446 contracts (value $476.1 million).
• In the third quarter, the Mid-Atlantic segment delivered 393 homes (revenue $375.7 million) and signed 361 contracts (value $339.7 million).
• In the third quarter, the South segment delivered 810 homes (revenue $655.8 million) and signed 697 contracts (value $638.6 million).
• In the third quarter, the Mountain segment delivered 709 homes (revenue $613.2 million) and signed 733 contracts (value $663.5 million).
• In the third quarter, the Pacific segment delivered 325 homes (revenue $556.7 million) and signed 271 contracts (value $397.4 million).
• The Company ended the quarter with 471 selling communities compared to 459 at the end of the second quarter and 420 at the end of the prior year.
• The Company ended the quarter with approximately 75,500 lots owned and optioned, compared to 76,800 one quarter earlier and 76,800 one year earlier.
• Approximately 42% (31,800) of the lots were owned, with approximately 18,100 lots substantially improved.
• In the third quarter, the Company spent approximately $451.9 million to purchase approximately 2,784 lots.
• The Company operates its own architectural, engineering, mortgage, title, land development, smart home technology, landscape, and building components manufacturing businesses.

Market and Competitive Landscape

• The Company is the nation's leading builder of luxury homes.
• Toll Brothers was named the #1 Most Admired Home Builder in Fortune magazine's 2026 list of the World's Most Admired Companies.
• The Company serves first-time, move-up, active-adult, and second-home buyers in over 60 markets across the United States.
• Net signed contracts grew 5% year over year in the third quarter.
• Quarterly cancellations as a percentage of beginning-quarter backlog were 2.6% compared to 3.2% in the prior year quarter.
• Quarterly cancellations as a percentage of signed contracts in the quarter were 5.4% compared to 7.5% in the prior year quarter.

Risks and Challenges

• Forward-looking statements are subject to risks including general economic conditions, housing starts, inflation rates, interest and mortgage rates, and availability of financing.
• Risks include market demand related to U.S. business segments and economic conditions, availability of desirable land, and access to adequate capital.
• Risks include geographic concentration, competition levels, and price/availability of labor and materials.
• Risks include U.S. trade policies, tariffs, and retaliatory measures.
• Risks include weather events, natural disasters, and associated delays or shortages.
• Risks include acts of war, terrorism, or contagious disease outbreaks.
• Risks include federal and state tax policies, transportation costs, and land use/environmental regulations.
• Risks include legal proceedings, management succession, and cyber-attacks.
• Inventory write-downs are based on future activity and cannot be projected, potentially impacting fourth quarter and full year gross margin.

Management Commentary and Tone

• Karl K. Mistry, CEO, stated the Company delivered solid third quarter results in a challenging market.
• Management noted they exceeded the midpoint of guidance with $2.65 billion in home sales revenues, delivering 2,662 homes at an average price of $996,400.
• Adjusted gross margin was 25.6%, or 35 basis points above guidance.
• Management stated results position the Company for another year of healthy profitability and returns.
• Management highlighted the strength of the luxury brand, resilience of the affluent customer base, and successful execution of the differentiated business model.
• Management emphasized a focus on operational efficiency and disciplined land investments.
• Management noted the balance sheet remains very strong with ample liquidity, low leverage, and substantial operating cash flows.

Other Key Points

• The Company returned $231 million to stockholders through share repurchases and dividends in the third quarter, bringing the year-to-date total to $506 million.
• A quarterly dividend of $0.26 per share was paid on July 24, 2026.
• The Company has a $2.38 billion senior unsecured revolving credit facility with $2.24 billion available at quarter-end.
• Book value per share was $92.36 at quarter-end compared to $87.25 at FYE 2025.
• The Company operates in the North, Mid-Atlantic, South, Mountain, and Pacific regions.
• The Company announced an exit from the multifamily development business, including the disposition of remaining assets.