Toll Brothers Inc.

08/28/2026 | Press release | Distributed by Public on 08/28/2026 14:22

Quarterly Report for Quarter Ending July 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ("MD&A")
This discussion and analysis is based on, should be read together with, and is qualified in its entirety by, the accompanying unaudited condensed consolidated financial statements and related notes, as well as our consolidated financial statements, notes thereto, and the related MD&A contained in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025 ("2025 Form 10-K"). It also should be read in conjunction with the disclosure under "Statement on Forward-Looking Information" and "Risk Factors" in this report and in our 2025 Form 10-K.
Unless otherwise stated in this report, net contracts signed represents a number or value equal to the gross number or value of contracts signed during the relevant period, less the number or value of contracts canceled during the relevant period (irrespective of whether the contract was signed during the relevant period or in a prior period). Backlog consists of homes under contract but not yet delivered to our home buyers ("backlog"). Backlog conversion represents the percentage of homes delivered in the period from backlog at the beginning of the period ("backlog conversion").
In evaluating our performance, we often refer to changes in "mix" as impacting metrics such as average sales price, average delivered price and gross margin. Our business mix consists of both product mix, which includes multiple home types and sizes that are marketed and sold to a broad range of luxury buyers, including move-up, first-time, empty-nester, active-adult, and second-home buyers, as well as geographical mix, which includes over sixty markets across the United States. As a result of the breadth of our products and geographic footprint, we have a wide range of base sales prices for our homes, ranging from under $500,000 to over $4,000,000. "Positive mix" refers to increases in sales or deliveries of higher priced homes, whether along product or geographical lines, while "negative mix" refers to the opposite.
RESULTS OF OPERATIONS - OVERVIEW
The following table compares certain items in our Condensed Consolidated Statements of Operations and Comprehensive Income and other supplemental information for the three months and nine months ended July 31, 2026 and 2025 ($ amounts in millions, unless otherwise stated). For more information regarding results of operations by segment, see "Segments" in this MD&A.
Three months ended July 31, Nine months ended July 31,
2026 2025 % Change 2026 2025 % Change
Revenues:
Home sales $ 2,652.5 $ 2,881.0 (8) % $ 7,019.9 $ 7,428.2 (5) %
Land sales and other 6.3 64.1 (90) % 315.7 115.1 NM
2,658.8 2,945.1 (10) % 7,335.6 7,543.3 (3) %
Cost of revenues:
Home sales 2,017.6 2,142.8 (6) % 5,326.2 5,526.5 (4) %
Land sales and other 16.0 61.0 (74) % 302.3 110.5 NM
2,033.6 2,203.7 (8) % 5,628.5 5,637.0 - %
Selling, general and administrative 266.1 253.7 5 % 782.3 749.8 4 %
Income from operations 359.2 487.7 (26) % 924.8 1,156.5 (20) %
Other
(Loss) income from unconsolidated entities (3.1) (1.0) NM 15.6 1.7 NM
Other income - net 18.7 12.8 46 % 58.2 40.1 45 %
Income before income taxes 374.8 499.5 (25) % 998.7 1,198.4 (17) %
Income tax provision 94.6 129.9 (27) % 247.1 298.6 (17) %
Net income $ 280.1 $ 369.6 (24) % $ 751.7 $ 899.8 (16) %
Supplemental information:
Home sales gross margin 23.9 % 25.6 % 24.1 % 25.6 %
SG&A as a percentage of home sale revenues 10.0 % 8.8 % 11.1 % 10.1 %
Effective tax rate 25.3 % 26.0 % 24.7 % 24.9 %
Deliveries - units 2,662 2,959 (10) % 7,052 7,849 (10) %
Deliveries - average delivered price (in '000s) $ 996.4 $ 973.6 2 % $ 995.4 $ 946.4 5 %
Net contracts signed - value $ 2,515.3 $ 2,412.0 4 % $ 7,701.8 $ 7,323.6 5 %
Net contracts signed - units 2,508 2,388 5 % 7,645 7,345 4 %
Net contracts signed - average contracted price (in '000s) $ 1,002.9 $ 1,010.1 (1) % $ 1,007.4 $ 997.1 1 %
Number of selling communities at July 31,
471 420
Home sites controlled:
Owned 31,817 32,761
Optioned 43,669 43,990
75,486 76,751
At July 31,
At October 31,
2026 2025 %
Change 		2025 2024 %
Change
Backlog - value $ 6,238.5 $ 6,376.2 (2) % $ 5,494.4 $ 6,467.8 (15) %
Backlog - units 5,312 5,492 (3) % 4,647 5,996 (22) %
Backlog - average contracted price (in '000s) $ 1,174.4 $ 1,161.0 1 % $ 1,182.4 $ 1,078.7 10 %
NM: Not meaningful.
Note: Due to rounding, amounts may not add. Net contracts signed information presented above is net of all cancellations that occurred in the period. "Net contracts signed - value" includes the value of each binding agreement of sale that was signed in the period, plus the value of all options that were selected during the period, regardless of when the initial agreement of sale related to such options was signed.
Our Business Environment and Current Outlook
In the three months ended July 31, 2026, we signed 2,508 net contracts for an aggregate value of $2.52 billion, a 5% increase in units and 4% increase in dollars compared to the prior year period, which was primarily attributable to a 12% year-over-year increase in quarter-end community count. On a per-community basis, net signed contracts declined approximately 5% year-over-year, continuing to reflect challenging demand conditions and a housing market impacted by elevated mortgage rates, weak consumer confidence, and geopolitical volatility. However, because we serve an affluent customer base with higher incomes and greater accumulated wealth, the affordability pressures that have impacted the lower end of the market have had less of an impact on our business. We anticipate that in the near term, softer overall demand for new homes may persist, which would likely result in a continuation of the elevated incentive levels and slower sales paces that have persisted over the course of fiscal 2026. In this environment, we continue to strategically manage our pricing, including by adjusting incentive levels where appropriate, to effectively balance sales price and margin with pace, and to align our inventory levels with local sales environments. While the near-term trajectory of new home demand remains uncertain and subject to a variety of unpredictable factors, over the longer term we continue to believe the outlook for the new home market remains positive, as it is supported by strong fundamentals including favorable demographics, a structural undersupply of homes, the aging stock of existing homes, and an increase in upper income households over the past several decades.
While historically most of our homes have been sold on a build-to-order basis, where we do not begin construction of the home until we have a signed contract with a customer, in recent years we have increased the number of homes we start without a buyer ("spec homes"). In general, we are able to build our spec homes faster and more efficiently than build-to-order homes, and spec homes allow us to attract buyers who are looking for a quicker move-in schedule, although the gross margin on spec homes is generally lower than build-to-order homes. We determine how many spec homes to start within each community based on local market conditions, our current and planned sales pace, and our backlog and construction cadence for the community. We continue to monitor demand and other factors on a community-by-community basis and make appropriate adjustments to our spec starts as market conditions evolve over time.
Home Sales Revenues and Home Sales Cost of Revenues
Three months ended July 31, 2026 compared to the three months ended July 31, 2025
Home sales revenues for the three months ended July 31, 2026 were $2.65 billion, as compared to $2.88 billion in the three months ended July 31, 2025, a decrease primarily attributable to a 10% decrease in the number of homes delivered, offset in part, by a 2% increase in the average price of homes delivered. The decrease in the number of homes delivered was primarily due to a decrease in the number of homes in backlog at October 31, 2025, as compared to the number of homes in backlog at October 31, 2024 and fewer spec home deliveries, partially offset by faster construction cycle times. The increase in the average delivered home price was mainly due to positive mix, primarily in our Pacific and Mid-Atlantic regions.
The increase in home sales cost of revenues, as a percentage of home sales revenues, in the three months ended July 31, 2026, as compared to the three months ended July 31, 2025, was principally due to an increase in sales incentives on spec homes.
Nine months ended July 31, 2026 compared to the nine months ended July 31, 2025
Home sales revenues for the nine months ended July 31, 2026 were $7.02 billion, as compared to $7.43 billion in the nine months ended July 31, 2025, a decrease primarily attributable to a 10% decrease in the number of homes delivered, offset, in part, by a 5% increase in the average price of homes delivered. The decrease in the number of homes delivered was primarily due to a decrease in the number of homes in backlog at October 31, 2025, as compared to the number of homes in backlog at October 31, 2024, and fewer spec home deliveries, partially offset by faster construction cycle times. The increase in the average delivered home price was mainly due to positive mix, primarily in our Pacific and Mid-Atlantic regions.
The increase in home sales cost of revenues, as a percentage of home sales revenues, in the nine months ended July 31, 2026, as compared to the nine months ended July 31, 2025, was principally due to higher inventory impairment charges in the fiscal 2026 period.
Land Sales and Other Revenues and Land Sales and Other Cost of Revenues
Our revenues from land sales and other generally consist of the following: (1) land sales to joint ventures in which we retain an interest; (2) lot sales to third-party builders within our master-planned communities; (3) bulk sales to third parties of land we have decided no longer meets our development criteria; (4) sales of land parcels to third parties (typically because there is a
superior economic use of the property); and (5) sales of commercial and retail properties generally located at our urban luxury condominium and apartment projects. Land sales to joint ventures in which we retain an interest are generally sold at our land basis and therefore little to no gross margin is earned on these sales.
Land sales and other cost of revenues as a percentage of land sales and other revenues can vary period to period depending on the mix of sales to joint ventures versus third parties.
Loss from land sales and other revenues was $9.7 million for the three-month period ended July 31, 2026 compared to income of $3.2 million for the three-month period ended July 31, 2025. The increase in land sales and other cost of revenues, as a percentage of land sales and other revenues during the three months ended July 31, 2026 compared to the three months ended July 31, 2025 was primarily due to impairment charges. During the three-month periods ended July 31, 2026 and 2025, we recognized $10.1 million and $0.7 million, respectively, of impairment charges in connection with land sales.
Income from land sales and other revenues was $13.4 million for the nine-month period ended July 31, 2026 compared to $4.6 million for the nine-month period ended July 31, 2025. The increase in land sales and other revenues during the nine months ended July 31, 2026 compared to the nine months ended July 31, 2025 was primarily due to the inclusion of undeveloped land and rental properties in the sale of approximately half of our Apartment Living assets. This increase was partially offset by higher land impairment charges. In connection with such sale, we recognized $284.1 million of land sales and other revenues, $265.3 million of costs of land sales and other revenues, and a pre-tax net land sale gain of $18.8 million in the nine months ended July 31, 2026. In addition, during the nine-month periods ended July 31, 2026 and 2025, we recognized $13.7 million and $2.6 million, respectively, of impairment charges in connection with land sales. This gain on sale of Apartment Living assets, partially offset by higher impairment charges on land, resulted in land sales and other cost of revenues, as a percentage of land sales and other revenues during the nine months ended July 31, 2026, being relatively flat with the nine months ended July 31, 2025.
Selling, General and Administrative Expenses ("SG&A")
SG&A expenditures increased by $12.4 million in the three-month period ended July 31, 2026 compared to the three-month period ended July 31, 2025. As a percentage of home sales revenues, SG&A expenditures were 10.0% of home sales revenues in the three months ended July 31, 2026, as compared to 8.8% in the three months ended July 31, 2025. The dollar increase in SG&A expenditures was due primarily to higher payroll, commissions and sales center operating costs related to an increase in selling communities.
SG&A expenditures increased by $32.4 million in the nine-month period ended July 31, 2026 compared to the nine-month period ended July 31, 2025. As a percentage of home sales revenues, SG&A expenditures were 11.1% of home sales revenues in the fiscal 2026 period, as compared to 10.1% in the fiscal 2025 period. The dollar increase in SG&A expenditures was due primarily to higher payroll, commissions and sales center operating costs related to an increase in selling communities offset, in part, by reduced advertising and marketing spend.
Income from Unconsolidated Entities
In the three-month period ended July 31, 2026, we recognized a loss from unconsolidated entities of $3.1 million as compared to a loss of $1.0 million in the prior year period. During the three-month period ended July 31, 2026, we recognized gains of $3.1 million related to the sale of our ownership interest in a Rental Property Joint Venture and $35.3 million in connection with an asset sale by a Rental Property Joint Venture, which was offset by other-than-temporary impairment charges of $39.6 million related to several Rental Property Joint Ventures recognized in the current period. No similar transactions or impairment charges were recognized in the three-month period ended July 31, 2025.
In the nine-month period ended July 31, 2026, we recognized a gain from unconsolidated entities of $15.6 million as compared to a gain of $1.7 million in the prior year period. The $15.6 million gain was primarily comprised of $72.1 million of gains related to the sale of our ownership interests in Land Development and Rental Property Joint Ventures, as well as $56.7 million of gains recognized in connection with asset sales by other Rental Property Joint Ventures in the period. These gains were offset by other-than-temporary impairment charges of $97.4 million related to several Rental Property Joint Ventures. No similar impairment charges were recognized in the nine-month period ended July 31, 2025. In the nine-month period ended July 31, 2025, we recognized a gain of $2.7 million related to the sale of our ownership interest in a Rental Property Joint Venture and a gain of $18.2 million in connection with asset sales by other Rental Property Joint Ventures in the period.
Other Income - Net
The table below provides, for the periods indicated, the components of "Other income - net" (amounts in thousands):
Three months ended July 31, Nine months ended July 31,
2026 2025 2026 2025
Interest income $ 6,459 $ 6,955 $ 22,304 $ 22,978
Income from ancillary businesses 12,909 6,548 37,394 14,737
Management fee income earned by home building operations 953 925 3,448 2,696
Other (1,598) (1,635) (4,906) (288)
Total other income - net $ 18,723 $ 12,793 $ 58,240 $ 40,123
The increase in income from ancillary businesses in the three-month and nine-month periods ended July 31, 2026 was mainly due to increased revenues from our mortgage operations and reduced costs resulting from the partial sale of our Apartment Living business. The nine-month period ended July 31, 2026 also benefitted from a $3.9 million gain on a bulk sale of security monitoring accounts by our smart home technology business.
The decrease in "Other" during the nine-month period ended July 31, 2026 was primarily due to higher directly expensed interest costs and lower referral fee income compared to the nine-month period ended July 31, 2025.
Income Before Income Taxes
For the three-month period ended July 31, 2026, we reported income before income taxes of $374.8 million, as compared to $499.5 million in the three-month period ended July 31, 2025.
For the nine-month period ended July 31, 2026, we reported income before income taxes of $998.7 million, as compared to $1.20 billion in the nine-month period ended July 31, 2025.
Income Tax Provision
In the three-month periods ended July 31, 2026 and 2025, we recognized income tax provisions of $94.6 million and $129.9 million, respectively. The effective tax rate was 25.3% for the three months ended July 31, 2026, compared to 26.0% for the three months ended July 31, 2025. The decrease in the effective tax rate for the three months ended July 31, 2026 was primarily due to higher excess tax benefits related to stock-based compensation recognized in the current year period. Based upon the federal statutory rate of 21.0% for each period, our federal tax provision would have been $78.7 million and $104.9 million in the three-month periods ended July 31, 2026 and 2025, respectively. The difference between the tax provisions recognized and the tax provisions based on the federal statutory rate was mainly due to the provisions for state income taxes.
We recognized income tax provisions of $247.1 million and $298.6 million in the nine-month periods ended July 31, 2026 and 2025, respectively. The effective tax rate was 24.7% for the nine months ended July 31, 2026, compared to 24.9% for the nine months ended July 31, 2025. The decrease in the effective tax rate for the nine months ended July 31, 2026 was primarily due to higher excess tax benefits related to stock-based compensation recognized in the current year period. Based upon the federal statutory rate of 21.0% for each period, our federal tax provisions would have been $209.7 million and $251.7 million in the nine-month periods ended July 31, 2026 and 2025, respectively. The difference between the tax provisions recognized and the tax provisions based on the federal statutory rate was mainly due to the provisions for state income taxes, offset, in part, by excess tax benefits related to stock-based compensation.
Contracts and Average Contracted Price
In the three-month periods ended July 31, 2026 and 2025, the value of net contracts signed was $2.52 billion (2,508 homes) and $2.41 billion (2,388 homes), respectively. The increase of $103.3 million, or 4%, in the aggregate value of net contracts signed was primarily due to a 5% increase in the number of net contracts signed, primarily in our North, South, and Mountain regions, offset by a reduction of 1% in the average contracted price. In the three-month period ended July 31, 2026, the average value of each contract signed was $1.00 million, as compared to $1.01 million at July 31, 2025, with the slight decline attributable to mix.
In the nine-month periods ended July 31, 2026 and 2025, the value of net contracts signed was $7.70 billion (7,645 homes) and $7.32 billion (7,345 homes), respectively. The increase of $378.2 million, or 5%, in the aggregate value of net contracts signed was primarily due to a 4% increase in the number of net contracts signed, primarily in our North, South, and Mountain regions, in addition to a 1% increase in the average contracted price. In the nine-month period ended July 31, 2026, the average value of
each contract signed was $1.01 million, as compared to $1.00 million in the prior year period, with the slight increase attributable to mix.
Backlog
The value of our backlog at July 31, 2026 decreased 2% to $6.24 billion (5,312 homes), as compared to $6.38 billion (5,492 homes) at July 31, 2025. Our backlog at October 31, 2025 and 2024 was $5.49 billion (4,647 homes) and $6.47 billion (5,996 homes), respectively. The decrease in the value of our backlog at July 31, 2026 as compared to July 31, 2025, was due to a 3% decrease in the number of homes in backlog partially offset by a 1% increase in the average contracted price per home. The decrease in the number of homes in backlog was primarily attributable to spec homes representing a larger portion of our net signed contracts and homes delivered, as a much larger percentage of spec homes are contracted for and delivered within a quarter (and therefore are not included in our quarter-end backlog) as compared to build-to-order homes. The increase in the average contracted price per home was primarily due to mix.
Selling Communities and Lots
At July 31, 2026, we were selling from 471 communities, compared to 446 at October 31, 2025 and 420 at July 31, 2025.
At July 31, 2026, we owned or controlled through options approximately 75,500 home sites, as compared to approximately 76,100 at October 31, 2025; and approximately 74,700 at October 31, 2024. Of the approximately 75,500 home sites that we owned or controlled through options at July 31, 2026, we owned approximately 31,800 and controlled approximately 43,700 through options. Of the 31,800 home sites owned, approximately 18,100 were substantially improved. In addition, as of July 31, 2026, we expect to purchase approximately 8,600 additional home sites over several years from certain of the joint ventures in which we have interests, at prices to be determined.
For more information regarding results of operations by segment, see "Segments" in this MD&A.
CAPITAL RESOURCES AND LIQUIDITY
Funding for our business has been, and continues to be, provided principally by cash flow from operating activities before inventory additions, credit arrangements with third parties, and the public capital markets.
Our cash flows from operations generally provide us with a significant source of liquidity. Our cash flows provided by operating activities, supplemented with our short-term borrowings and long-term debt, have been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our Company. Our primary uses of cash include inventory additions in the form of land acquisitions and deposits to obtain control of land (which could occur directly or indirectly through builder acquisitions), land development, working capital to fund day-to-day operations, and investments in existing and future unconsolidated joint ventures. We may also use cash to fund capital expenditures such as investments in our information technology systems. We also use cash flows from operations and other sources to pay dividends on our common stock, to repay debt and make share repurchases. We believe our sources of cash and liquidity will continue to be adequate to fund operations, finance our strategic operating initiatives, repay debt, fund our share repurchases and pay dividends for the foreseeable future.
At July 31, 2026, we had $1.06 billion of cash and cash equivalents on hand, restricted cash of $72.4 million, and approximately $2.24 billion available for borrowing under our Revolving Credit Facility. At July 31, 2026, we had no borrowings and we had approximately $130.1 million of outstanding letters of credit under the Revolving Credit Facility. On February 5, 2026, we amended the Revolving Credit Facility to extend its maturity date to February 5, 2031 and increase its borrowing capacity to $2.38 billion. We have the ability to further increase the borrowing capacity under the Revolving Credit Facility to up to $3.00 billion by adding additional lenders or obtaining the consent of any existing lender agreeing to a commitment increase. Under the Revolving Credit Facility, up to 50% of the commitment is available for letters of credit. Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries are guarantors of the borrower's obligations under the Revolving Credit Facility. On February 5, 2026, we also amended our Term Loan Facility to extend the maturity date of $548.4 million of the $650.0 million of outstanding loans to February 5, 2031, with the remaining $101.6 million due February 7, 2030. Our Term Loan Facility is also guaranteed by Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries.
At July 31, 2026, our total stockholders' equity and our debt to total capitalization ratio were $8.53 billion and 0.24 to 1.00, respectively.
Short-term Liquidity and Capital Resources
For the next twelve months, we expect our principal demand for funds will be for inventory additions (in the form of land acquisition, land development, home construction costs, and deposits to control land, which could occur directly or indirectly
through builder acquisitions), operating expenses, including our selling, general and administrative expenses, investments and funding of capital improvements, investments in existing and future unconsolidated joint ventures, repayment of community-level borrowings, common stock repurchases, and dividend payments. Demand for funds also includes interest and principal payments on current and future debt (including our $450.0 million 4.875% Senior Notes due March 15, 2027). We expect to meet our short-term liquidity requirements primarily through our cash and cash equivalents on hand and net cash flows provided by operations, although we may from time to time access other sources. Additional sources of funds include distributions from our unconsolidated joint ventures, borrowing capacity under our Revolving Credit Facility, and other borrowings from banks and other lenders.
We believe we will have sufficient liquidity available to fund our business needs, commitments and contractual obligations in a timely manner for the next twelve months. We may, however, seek additional financing to fund future growth or refinance our existing indebtedness through the debt capital markets, but there is no assurance that such financing will be available on favorable terms, or at all.
Long-term Liquidity and Capital Resources
Beyond the next twelve months, our principal demands for funds will be for the payments of the principal amount of our long-term debt as it becomes due or otherwise matures, land purchases and inventory additions needed to maintain and grow our business (which could occur directly or indirectly through builder acquisitions), long-term capital investments and investments in unconsolidated joint ventures, common stock repurchases, and dividend payments.
Over the longer term, to the extent the sources of capital described above are insufficient to meet our needs, we may also conduct additional public offerings of our securities, refinance or incur additional debt or dispose of certain assets to fund our operating activities and debt service. We expect these resources will be adequate to fund our ongoing operating activities as well as provide capital for investment in future land purchases, and related development activities and future joint ventures.
Material Cash Requirements
We are a party to many agreements that include contractual obligations and commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the Condensed Consolidated Balance Sheet as of July 31, 2026, while others are considered future commitments and not included. Our contractual obligations primarily consist of long-term debt and related interest payments, payments due on our mortgage company loan facility, purchase obligations related to expected acquisition of land under purchase agreements and land development agreements (many of which are secured by letters of credit or surety bonds), operating leases, obligations under our deferred compensation plan, and obligations under our supplemental executive retirement plans. We also enter into certain short-term lease commitments, commitments to fund our existing or future unconsolidated joint ventures, letters of credit and other purchase obligations in the normal course of business. For more information regarding these obligations, see Note 6, "Loans Payable, Senior Notes, and Mortgage Company Loan Facility," and Note 14, "Commitments and Contingencies" to the Condensed Consolidated Financial Statements.
We also operate through a number of joint ventures and have undertaken various commitments as a result of those arrangements. At July 31, 2026, we had investments in these entities of $907.1 million and were committed to invest or advance up to an additional $269.0 million to these entities if they required additional funding at such date. At July 31, 2026, we had agreed to terms for the acquisition of 707 home sites from four joint ventures for an estimated aggregate purchase price of $76.1 million. We also expect to purchase approximately 8,600 additional home sites over a number of years from several joint ventures in which we have interests. The purchase price of these home sites will be determined at a future date.
The unconsolidated joint ventures in which we have investments generally finance their activities with a combination of partner equity and debt financing. In some instances, we and our joint venture partner have guaranteed debt of unconsolidated entities. These guarantees may include any or all of the following: (i) project completion guarantees, including any cost overruns; (ii) repayment guarantees, generally covering a percentage of the outstanding loan; (iii) carry cost guarantees, which cover costs such as interest, real estate taxes, and insurance; (iv) an environmental indemnity provided to the lender that holds the lender harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (v) indemnification of the lender from "bad boy acts" of the unconsolidated entity.
In situations where we have joint and several guarantees with our joint venture partner, we generally seek to implement a reimbursement agreement with our partner that provides that neither party is responsible for more than its proportionate share or agreed-upon share of the guarantee; however, we are not always successful. In addition, if the joint venture partner does not have adequate financial resources to meet its obligations under such a reimbursement agreement, we may be liable for more than our proportionate or agreed upon share. We believe that, as of July 31, 2026, in the event we become legally obligated to perform under a guarantee of the obligation of an unconsolidated entity due to a triggering event, the collateral in such entity should be sufficient to repay all or a significant portion of the obligation. If it is not, we and our partners would need to
contribute additional capital to the entity. At July 31, 2026, we had guaranteed the debt of certain unconsolidated entities that had loan commitments aggregating $1.73 billion, of which, if the full amount of the debt obligations were borrowed, we estimate $388.9 million to have been our maximum exposure related to repayment and carry cost guarantees at such date. At July 31, 2026, the unconsolidated entities had borrowed an aggregate of $1.44 billion, of which we estimate $388.9 million to have been our maximum exposure related to repayment and carry cost guarantees. The terms of these guarantees generally range from 1 month to 7.4 years. These maximum exposure estimates do not take into account any recoveries from the underlying collateral or any reimbursement from our partners, nor do they include any potential exposures related to project completion guarantees or the other (non-carry cost/repayment) indemnities noted above, which are not estimable.
For more information regarding these joint ventures, see Note 4, "Investments in Unconsolidated Entities" in the Notes to the Condensed Consolidated Financial Statements.
Debt Service Requirements
Our financing strategy is to ensure liquidity and access to capital markets, to maintain a balanced profile of debt maturities, and to manage our exposure to floating interest rate volatility.
Outside of the normal course of operations, one of our principal liquidity needs is the payment of principal and interest on outstanding indebtedness. We are required by the terms of certain loan documents to meet certain covenants, such as financial ratios and reporting requirements. As of July 31, 2026, we were in compliance with all such covenants and requirements on our term loan, revolving credit facility and other loans payable. Refer to Note 6, "Loans Payable, Senior Notes, and Mortgage Company Loan Facility" in the Notes to the Condensed Consolidated Financial Statements.
Operating Activities
At July 31, 2026 and October 31, 2025, we had $1.13 billion and $1.34 billion, respectively, of cash, cash equivalents, and restricted cash. Cash provided by operating activities during the nine-month period ended July 31, 2026 was $392.1 million. Cash provided by operating activities during the fiscal 2026 period was primarily related to net income (adjusted for depreciation and amortization, impairments, stock-based compensation, income and distributions of earnings from unconsolidated entities, and deferred taxes); a decrease in receivables, prepaid expenses, and other assets, including rental and commercial properties; mortgage loans sold, net of mortgage loans originated; and an increase in customer deposits - net. This activity was offset, in part, by an increase in inventory; a decrease in current income taxes - net; and a decrease in accounts payable and accrued expenses.
At July 31, 2025 and October 31, 2024, we had $938.3 million and $1.37 billion, respectively, of cash, cash equivalents, and restricted cash. Cash provided by operating activities during the nine-month period ended July 31, 2025 was $312.4 million. Cash provided by operating activities during the fiscal 2025 period was primarily related to net income (adjusted for depreciation and amortization, impairments, stock-based compensation, income and distributions of earnings from unconsolidated entities, and deferred taxes); an increase in accounts payable and accrued expenses; an increase in current income taxes - net and mortgage loans sold, net of mortgage loans originated. This activity was offset, in part, by an increase in inventory; an increase in receivables, prepaid expenses and other assets, and a decrease in customer deposits - net.
Investing Activities
In the nine-month period ended July 31, 2026, cash provided by investing activities was $116.3 million, which was primarily related to $219.5 million of proceeds related to the sale of ownership interests in unconsolidated entities and $104.2 million of cash received as returns from our investments in unconsolidated entities. This activity was offset, in part, by $129.1 million used to fund our investments in unconsolidated entities and $74.0 million used for the purchase of property and equipment, net.
In the nine-month period ended July 31, 2025, cash used in investing activities was $240.2 million, which was primarily related to $250.4 million used to fund our investments in unconsolidated entities and $58.4 million used for the purchase of property and equipment. This activity was offset, in part, by $64.9 million of cash received as returns from our investments in unconsolidated entities.
Financing Activities
We used $717.1 million of cash in financing activities in the nine-month period ended July 31, 2026, primarily for repurchase of $434.9 million of our common stock, payments of $182.1 million of loans payable, net of borrowings, the payment of dividends on our common stock of $73.5 million, payments of $8.0 million related to stock-based benefit plans - net, payments of $7.8 million related to sales to land bank programs, net of proceeds, and payments of $4.4 million related to non-controlling interest - net.
We used $504.4 million of cash in financing activities in the nine-month period ended July 31, 2025, primarily for the repurchase of $404.3 million of our common stock, $350.0 million for the redemption of senior notes, payments of $100.9 million of loans payable, net of borrowings, the payment of dividends on our common stock of $73.3 million, $62.3 million of payments related to repurchases from land bank programs, $21.3 million of payments related to stock-based benefit plans - net and $13.1 million of debt issuance costs. This activity was offset, in part, by $498.2 million of proceeds from the issuance of senior notes and $22.1 million of proceeds related to sales to land bank programs.
CRITICAL ACCOUNTING ESTIMATES
As disclosed in our 2025 Form 10-K, our most critical accounting estimates relate to inventory, cost of revenue recognition, warranty and self-insurance, and investments in unconsolidated entities. Since October 31, 2025, there have been no material changes to those critical accounting estimates.
SUPPLEMENTAL GUARANTOR INFORMATION
At July 31, 2026, our 100%-owned subsidiary, Toll Brothers Finance Corp. (the "Subsidiary Issuer"), had issued and outstanding $1.75 billion aggregate principal amount of senior notes maturing on various dates between March 15, 2027 and June 15, 2035 (the "Senior Notes"). For further information regarding the Senior Notes, see Note 6, "Loans Payable, Senior Notes and Mortgage Company Loan Facility" in the Notes to the Consolidated Condensed Financial Statements under the caption "Senior Notes."
The obligations of the Subsidiary Issuer to pay principal, premiums, if any, and interest are guaranteed jointly and severally on a senior basis by Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries (the "Guarantor Subsidiaries" and, together with us, the "Guarantors"). The guarantees are full and unconditional, and the Subsidiary Issuer and each of the Guarantor Subsidiaries are consolidated subsidiaries of Toll Brothers, Inc. Our non-home building subsidiaries and several of our home building subsidiaries (together, the "Non-Guarantor Subsidiaries") do not guarantee the Senior Notes. The Subsidiary Issuer generates no operating revenues and does not have any independent operations other than the financing of our other subsidiaries by lending the proceeds of its public debt offerings, including the Senior Notes. Our home building operations are conducted almost entirely through the Guarantor Subsidiaries. Accordingly, the Subsidiary Issuer's cash flow and ability to service the Senior Notes is dependent upon the earnings of the Company's subsidiaries and the distribution of those earnings to the Subsidiary Issuer, whether by dividends, loans or otherwise. Holders of the Senior Notes have a direct claim only against the Subsidiary Issuer and the Guarantors. The obligations of the Guarantors under their guarantees will be limited as necessary to recognize certain defenses generally available to guarantors (including those that relate to fraudulent conveyance or transfer, voidable preference or similar laws affecting the rights of creditors generally) under applicable law.
The indentures under which the Senior Notes were issued provide that any of our subsidiaries that provide a guarantee of our obligations under the Revolving Credit Facility will guarantee the Senior Notes. The indentures further provide that any Guarantor Subsidiary may be released from its guarantee so long as (i) no default or event of default exists or would result from release of such guarantee; (ii) the Guarantor Subsidiary being released has consolidated net worth of less than 5% of the Company's consolidated net worth as of the end of our most recent fiscal quarter; (iii) the Guarantor Subsidiaries released from their guarantees in any fiscal year comprise in the aggregate less than 10% (or 15% if and to the extent necessary to permit the cure of a default) of our consolidated net worth as of the end of our most recent fiscal quarter; (iv) such release would not have a material adverse effect on ours and our subsidiaries' home building business; and (v) the Guarantor Subsidiary is released from its guaranty under the Revolving Credit Facility. If there are no guarantors under the Revolving Credit Facility, all Guarantor Subsidiaries under the indentures will be released from their guarantees.
The following summarized financial information is presented for Toll Brothers, Inc., the Subsidiary Issuer, and the Guarantor Subsidiaries on a combined basis after intercompany transactions and balances have been eliminated among Toll Brothers, Inc., the Subsidiary Issuer and the Guarantor Subsidiaries, as well as their investment in, and equity in earnings from the Non-Guarantor Subsidiaries.
Summarized Balance Sheet Data (amounts in millions):
July 31, 2026
Assets
Cash $ 857.4
Inventory $ 11,546.6
Amount due from Non-Guarantor Subsidiaries $ 421.4
Total assets $ 13,678.2
Liabilities & Stockholders' Equity
Loans payable $ 894.1
Senior notes $ 1,742.5
Total liabilities $ 5,611.1
Stockholders' equity $ 8,067.1
Summarized Statement of Operations Data (amounts in millions):
For the nine months ended July 31, 2026
Revenues $ 6,920.1
Cost of revenues $ 5,273.0
Selling, general and administrative $ 775.3
Income before income taxes $ 889.4
Net income $ 669.4
SEGMENTS
We operate in the following five geographic segments, with operations generally located in the states listed below:
•The North region: Connecticut, Delaware, Massachusetts, Michigan, New Jersey, New York and Pennsylvania;
•The Mid-Atlantic region: Georgia, Maryland, North Carolina, Tennessee and Virginia;
•The South region: Arkansas, Florida, South Carolina and Texas;
•The Mountain region: Arizona, Colorado, Idaho, Nevada and Utah; and
•The Pacific region: California, Oregon and Washington.
The tables below summarize information related to units delivered and revenues, net contracts signed, and income (loss) before income taxes, by segment, for the periods indicated, and information related to backlog, by segment, as of the dates indicated.
Units Delivered and Revenues:
Three months ended July 31,
Revenues
($ in millions) 		Units Delivered Average Delivered Price
($ in thousands)
2026 2025 % Change 2026 2025 % Change 2026 2025 % Change
North $ 450.4 $ 438.7 3 % 425 409 4 % $ 1,059.7 $ 1,072.6 (1) %
Mid-Atlantic 375.7 400.7 (6) % 393 435 (10) % $ 955.8 $ 921.2 4 %
South 655.8 757.9 (13) % 810 932 (13) % $ 809.7 $ 813.2 - %
Mountain 613.2 730.2 (16) % 709 816 (13) % $ 864.9 $ 894.9 (3) %
Pacific 556.7 553.1 1 % 325 367 (11) % $ 1,712.9 $ 1,507.0 14 %
Total home building 2,651.8 2,880.6 (8) % 2,662 2,959 (10) % $ 996.2 $ 973.5 2 %
Other 0.7 0.4
Total home sales revenue 2,652.5 2,881.0 (8) % 2,662 2,959 (10) % $ 996.4 $ 973.6 2 %
Land sales and other revenue 6.3 64.1
Total revenue $ 2,658.8 $ 2,945.1
Nine months ended July 31,
Revenues
($ in millions) 		Units Delivered Average Delivered Price
($ in thousands)
2026 2025 % Change 2026 2025 % Change 2026 2025 % Change
North $ 1,117.3 $ 1,071.9 4 % 1,077 1,045 3 % $ 1,037.4 $ 1,025.7 1 %
Mid-Atlantic 1,027.1 958.7 7 % 1,046 1,080 (3) % $ 981.9 $ 887.7 11 %
South 1,786.8 2,022.8 (12) % 2,179 2,456 (11) % $ 820.0 $ 823.6 - %
Mountain 1,654.2 2,042.8 (19) % 1,884 2,335 (19) % $ 878.0 $ 874.9 - %
Pacific 1,434.7 1,332.4 8 % 866 933 (7) % $ 1,656.7 $ 1,428.1 16 %
Total home building 7,020.1 7,428.6 (5) % 7,052 7,849 (10) % $ 995.5 $ 946.4 5 %
Other (0.2) (0.4)
Total home sales revenue 7,019.9 7,428.2 (5) % 7,052 7,849 (10) % $ 995.4 $ 946.4 5 %
Land sales and other revenue 315.7 115.1
Total revenue $ 7,335.6 $ 7,543.3
Note: Due to rounding, amounts may not add.
Net Contracts Signed:
Three months ended July 31,
Net Contract Value
($ in millions) 		Net Contracted Units Average Contracted Price
($ in thousands)
2026 2025 % Change 2026 2025 % Change 2026 2025 % Change
North $ 476.1 $ 431.3 10 % 446 407 10 % $ 1,067.3 $ 1,059.6 1 %
Mid-Atlantic 339.7 369.0 (8) % 361 385 (6) % $ 941.0 $ 958.4 (2) %
South 638.6 524.2 22 % 697 659 6 % $ 916.3 $ 795.5 15 %
Mountain 663.5 575.6 15 % 733 653 12 % $ 905.2 $ 881.5 3 %
Pacific 397.4 511.9 (22) % 271 284 (5) % $ 1,466.5 $ 1,802.5 (19) %
Total consolidated $ 2,515.3 $ 2,412.0 4 % 2,508 2,388 5 % $ 1,002.9 $ 1,010.1 (1) %
Nine months ended July 31,
Net Contract Value
($ in millions) 		Net Contracted Units Average Contracted Price
($ in thousands)
2026 2025 % Change 2026 2025 % Change 2026 2025 % Change
North $ 1,405.5 $ 1,154.9 22 % 1,317 1,097 20 % $ 1,067.2 $ 1,052.8 1 %
Mid-Atlantic 964.8 1,089.2 (11) % 1,046 1,150 (9) % $ 922.4 $ 947.1 (3) %
South 1,982.3 1,754.2 13 % 2,288 2,112 8 % $ 866.4 $ 830.6 4 %
Mountain 1,881.3 1,805.2 4 % 2,125 2,057 3 % $ 885.3 $ 877.6 1 %
Pacific 1,467.9 1,520.1 (3) % 869 929 (6) % $ 1,689.2 $ 1,636.3 3 %
Total consolidated $ 7,701.8 $ 7,323.6 5 % 7,645 7,345 4 % $ 1,007.4 $ 997.1 1 %
Backlog:
At July 31,
Backlog Value
($ in millions) 		Backlog Units Average Backlog Price
($ in thousands)
2026 2025 % Change 2026 2025 % Change 2026 2025 % Change
North $ 1,260.1 $ 1,021.2 23 % 1,073 907 18 % $ 1,174.4 $ 1,126.0 4 %
Mid-Atlantic 761.9 956.2 (20) % 708 856 (17) % $ 1,076.1 $ 1,117.1 (4) %
South 1,704.8 1,543.3 10 % 1,742 1,659 5 % $ 978.7 $ 930.2 5 %
Mountain 1,348.7 1,410.8 (4) % 1,265 1,317 (4) % $ 1,066.1 $ 1,071.2 - %
Pacific 1,163.0 1,444.7 (19) % 524 753 (30) % $ 2,219.5 $ 1,918.6 16 %
Total consolidated $ 6,238.5 $ 6,376.2 (2) % 5,312 5,492 (3) % $ 1,174.4 $ 1,161.0 1 %
At October 31,
Backlog Value
($ in millions) 		Backlog Units Average Backlog Price
($ in thousands)
2025 2024 % Change 2025 2024 % Change 2025 2024 % Change
North $ 971.1 $ 937.5 4 % 833 855 (3) % $ 1,165.8 $ 1,096.5 6 %
Mid-Atlantic 822.2 824.8 - % 708 786 (10) % $ 1,161.3 $ 1,049.4 11 %
South 1,456.6 1,807.5 (19) % 1,561 2,003 (22) % $ 933.1 $ 902.4 3 %
Mountain 1,119.4 1,645.5 (32) % 1,024 1,595 (36) % $ 1,093.2 $ 1,031.7 6 %
Pacific 1,125.1 1,252.5 (10) % 521 757 (31) % $ 2,159.5 $ 1,654.6 31 %
Total consolidated $ 5,494.4 $ 6,467.8 (15) % 4,647 5,996 (22) % $ 1,182.3 $ 1,078.7 10 %
Income (Loss) Before Income Taxes ($ amounts in millions):
Three months ended July 31, Nine months ended July 31,
2026 2025 % Change 2026 2025 % Change
North $ 83.3 $ 97.0 (14) % $ 195.1 $ 207.4 (6) %
Mid-Atlantic 46.6 71.3 (35) % 160.2 168.0 (5) %
South 93.5 146.9 (36) % 266.4 400.1 (33) %
Mountain 93.1 137.9 (32) % 236.9 356.6 (34) %
Pacific 105.3 106.0 (1) % 261.6 233.8 12 %
Total home building 421.8 559.1 (25) % 1,120.1 1,365.9 (18) %
Corporate and other (47.0) (59.6) 21 % (121.4) (167.5) 28 %
Total consolidated $ 374.8 $ 499.5 (25) % $ 998.7 $ 1,198.4 (17) %
Note: Due to rounding, amounts may not add.
"Corporate and other" is comprised principally of general corporate expenses such as our executive offices; the corporate finance, accounting, audit, tax, human resources, risk management, information technology, marketing, and legal groups; interest income; income from certain of our ancillary businesses, including our apartment rental development business and our high-rise urban luxury condominium operations; and income from our Rental Property Joint Ventures and Other Joint Ventures.
FISCAL 2026 COMPARED TO FISCAL 2025
North
Three months ended July 31, Nine months ended July 31,
2026 2025 Change 2026 2025 Change
Units Delivered and Revenues:
Home sales revenues ($ in millions) $ 450.4 $ 438.7 3 % $ 1,117.3 $ 1,071.9 4 %
Units delivered 425 409 4 % 1,077 1,045 3 %
Average delivered price ($ in thousands)
$ 1,059.7 $ 1,072.6 (1) % $ 1,037.4 $ 1,025.7 1 %
Net Contracts Signed:
Net contract value ($ in millions) $ 476.1 $ 431.3 10 % $ 1,405.5 $ 1,154.9 22 %
Net contracted units 446 407 10 % 1,317 1,097 20 %
Average contracted price ($ in thousands)
$ 1,067.3 $ 1,059.6 1 % $ 1,067.2 $ 1,052.8 1 %
Home sales gross margin 24.9 % 26.8 % 24.7 % 25.8 %
Income before income taxes ($ in millions)
$ 83.3 $ 97.0 (14) % $ 195.1 $ 207.4 (6) %
Number of selling communities at July 31,
59 43 37 %
The number of homes delivered in each fiscal 2026 period increased despite a lower backlog of homes at October 31, 2025 compared to October 31, 2024. Each fiscal 2026 period benefited from faster construction cycle times, with the three-month period also benefiting from increased spec home deliveries. The average price of homes delivered in each fiscal 2026 period was relatively flat compared to the corresponding fiscal 2025 periods.
The increase in the number of net contracts signed in each fiscal 2026 period was primarily due to the increase in selling communities. The average value of each contract signed in the fiscal 2026 periods was relatively flat compared to the prior year periods.
The decrease in income before income taxes in each fiscal 2026 period was primarily attributable to increased home sales cost of revenues, as a percentage of home sales revenues, an increase in SG&A costs due to increased community openings, and decreased income (loss) from unconsolidated entities.
Mid-Atlantic
Three months ended July 31, Nine months ended July 31,
2026 2025 Change 2026 2025 Change
Units Delivered and Revenues:
Home sales revenues ($ in millions) $ 375.7 $ 400.7 (6) % $ 1,027.1 $ 958.7 7 %
Units delivered 393 435 (10) % 1,046 1,080 (3) %
Average delivered price ($ in thousands)
$ 955.8 $ 921.2 4 % $ 981.9 $ 887.7 11 %
Net Contracts Signed:
Net contract value ($ in millions) $ 339.7 $ 369.0 (8) % $ 964.8 $ 1,089.2 (11) %
Net contracted units 361 385 (6) % 1,046 1,150 (9) %
Average contracted price ($ in thousands)
$ 941.0 $ 958.4 (2) % $ 922.4 $ 947.1 (3) %
Home sales gross margin 22.3 % 24.4 % 24.3 % 25.6 %
Income before income taxes ($ in millions)
$ 46.6 $ 71.3 (35) % $ 160.2 $ 168.0 (5) %
Number of selling communities at July 31,
72 65 11 %
The number of homes delivered in each fiscal 2026 period decreased from the prior year period primarily due to fewer spec home deliveries, as well as a lower backlog of homes at October 31, 2025 compared to October 31, 2024. The average price of homes delivered in each fiscal 2026 period increased compared to the corresponding fiscal 2025 period primarily due to mix.
Despite an increase in selling communities during each period, the number of net signed contracts decreased in each fiscal 2026 period, mainly due to continued soft demand conditions. The average value of net signed contracts in each fiscal 2026 period decreased compared to the corresponding prior year period primarily due to mix shifts.
The decrease in income before income taxes in the three-month fiscal 2026 period was mainly due to lower earnings from decreased revenues, increased home sales cost of revenues, as a percentage of home sales revenues, higher land impairment charges and higher SG&A costs. Land impairment charges were $6.6 million and $9.6 million for the three-month and nine-month fiscal 2026 periods and there were no similar charges in the fiscal 2025 periods. The increase in home sales cost of revenues, as a percentage of home sales revenues, during the fiscal 2026 periods was principally due to a shift in the number of homes delivered to less expensive areas and/or products and higher inventory impairment charges during the nine-month fiscal 2026 period. Inventory impairment charges were $8.2 million and $8.5 million during the three months ended July 31, 2026 and 2025, respectively, and $17.6 million and $12.6 million during the nine months ended July 31, 2026 and 2025, respectively.
South
Three months ended July 31, Nine months ended July 31,
2026 2025 Change 2026 2025 Change
Units Delivered and Revenues:
Home sales revenues ($ in millions) $ 655.8 $ 757.9 (13) % $ 1,786.8 $ 2,022.8 (12) %
Units delivered 810 932 (13) % 2,179 2,456 (11) %
Average delivered price ($ in thousands)
$ 809.7 $ 813.2 - % $ 820.0 $ 823.6 - %
Net Contracts Signed:
Net contract value ($ in millions) $ 638.6 $ 524.2 22 % $ 1,982.3 $ 1,754.2 13 %
Net contracted units 697 659 6 % 2,288 2,112 8 %
Average contracted price ($ in thousands)
$ 916.3 $ 795.5 15 % $ 866.4 $ 830.6 4 %
Home sales gross margin 24.1 % 26.2 % 24.5 % 27.4 %
Income before income taxes ($ in millions)
$ 93.5 $ 146.9 (36) % $ 266.4 $ 400.1 (33) %
Number of selling communities at July 31,
163 140 16 %
The decrease in the number of homes delivered in each fiscal 2026 period compared to the corresponding prior year period was primarily due to a lower backlog of homes at October 31, 2025 compared to October 31, 2024, as well as fewer spec homes delivered in each period. The average price of homes delivered in each fiscal 2026 period was relatively flat compared to the corresponding prior year period.
The increase in the number of net contracts signed in each fiscal 2026 period was due primarily to increased community count and improved demand in Florida. The increase in the average value of each contract signed in each fiscal 2026 period was primarily due to positive mix, principally in Florida.
The decrease in income before income taxes in each fiscal 2026 period was principally due to lower earnings from decreased revenues, increased home sales cost of revenues, as a percentage of home sales revenues, and lower income (loss) from unconsolidated entities. The increase in home sales cost of revenues, as a percentage of home sales revenues, in each fiscal 2026 period was primarily due to mix shifts, partially offset by lower inventory impairment charges in the fiscal 2026 periods. Inventory impairment charges were $4.0 million and $8.5 million during the three months ended July 31, 2026 and 2025, respectively, and $8.2 million and $13.5 million during the nine months ended July 31, 2026 and 2025, respectively.
Mountain
Three months ended July 31, Nine months ended July 31,
2026 2025 Change 2026 2025 Change
Units Delivered and Revenues:
Home sales revenues ($ in millions) $ 613.2 $ 730.2 (16) % $ 1,654.2 $ 2,042.8 (19) %
Units delivered 709 816 (13) % 1,884 2,335 (19) %
Average delivered price ($ in thousands)
$ 864.9 $ 894.9 (3) % $ 878.0 $ 874.9 - %
Net Contracts Signed:
Net contract value ($ in millions) $ 663.5 $ 575.6 15 % $ 1,881.3 $ 1,805.2 4 %
Net contracted units 733 653 12 % 2,125 2,057 3 %
Average contracted price ($ in thousands)
$ 905.2 $ 881.5 3 % $ 885.3 $ 877.6 1 %
Home sales gross margin 22.6 % 25.0 % 22.1 % 24.3 %
Income before income taxes ($ in millions)
$ 93.1 $ 137.9 (32) % $ 236.9 $ 356.6 (34) %
Number of selling communities at July 31,
119 115 3 %
The decrease in the number of homes delivered in each fiscal 2026 period was primarily due to a lower backlog of homes at October 31, 2025 compared to October 31, 2024, as well as fewer spec home deliveries. The decrease in the average price of homes delivered in the three-month fiscal 2026 period was primarily due to mix shifts.
The increase in the number of net contracts signed in the fiscal 2026 periods was primarily due to improving demand and an increase in the average number of selling communities. The increase in the average value of each contract signed in each of the fiscal 2026 periods was due to a shift in the number of contracts signed in more expensive areas and/or product types.
The decrease in income before income taxes in each fiscal 2026 period was due mainly to lower earnings from decreased revenues and higher home sales cost of revenues, offset, in part by reduced SG&A costs. The increase in home sales cost of revenues, as a percentage of home sales revenues, in the fiscal 2026 periods was primarily due to mix shifts. During the nine-month fiscal 2026 period, the decrease was partially offset by lower inventory impairment charges. Inventory impairment charges were $1.6 million and $0.5 million during the three months ended July 31, 2026 and 2025, respectively, and $11.1 million and $15.3 million during the nine months ended July 31, 2026 and 2025, respectively.
Pacific
Three months ended July 31, Nine months ended July 31,
2026 2025 Change 2026 2025 Change
Units Delivered and Revenues:
Home sales revenues ($ in millions) $ 556.7 $ 553.1 1 % $ 1,434.7 $ 1,332.4 8 %
Units delivered 325 367 (11) % 866 933 (7) %
Average delivered price ($ in thousands)
$ 1,712.9 $ 1,507.0 14 % $ 1,656.7 $ 1,428.1 16 %
Net Contracts Signed:
Net contract value ($ in millions) $ 397.4 $ 511.9 (22) % $ 1,467.9 $ 1,520.1 (3) %
Net contracted units 271 284 (5) % 869 929 (6) %
Average contracted price ($ in thousands)
$ 1,466.5 $ 1,802.5 (19) % $ 1,689.2 $ 1,636.3 3 %
Home sales gross margin 25.3 % 25.4 % 25.4 % 25.0 %
Income before income taxes ($ in millions)
$ 105.3 $ 106.0 (1) % $ 261.6 $ 233.8 12 %
Number of selling communities at July 31,
58 57 2 %
The decrease in the number of homes delivered in each fiscal 2026 period was primarily due to a lower backlog of homes at October 31, 2025 compared to October 31, 2024, as well as fewer spec home deliveries. The average price of homes delivered increased in each fiscal 2026 period primarily due to positive mix, primarily in California.
The decrease in the number of net contracts signed in each fiscal 2026 period was due primarily to continued soft demand conditions. The decrease in the average value of each contract signed in the three-month fiscal 2026 period was primarily due to mix shifts.
The increase in income before income taxes in the fiscal 2026 nine-month period was mainly due to higher earnings from increased revenues and a decrease in home sales cost of revenues, as a percentage of home sales revenues. The decrease in home sales cost of revenues, as a percentage of home sales revenues,was primarily due to mix shifts, partially offset by an increase in inventory impairment charges in the fiscal 2026 period. Inventory impairment charges were $24.1 million and $7.0 million during the nine months ended July 31, 2026 and 2025, respectively.
Corporate and Other
In the three months ended July 31, 2026, loss before income taxes was $47.0 million compared to a loss before income taxes of $59.6 million in the three months ended July 31, 2025. The reduction in loss before income taxes in the fiscal 2026 period was principally due to higher income from ancillary businesses and lower losses from unconsolidated entities. The three-month fiscal 2026 period included a gain of $38.4 million related to two Rental Property Joint Venture sale transactions that was offset by other-than-temporary impairment charges of $39.6 million related to several other Rental Property Joint Ventures. No similar sale transactions or other-than-temporary impairment charges were recognized in the fiscal 2025 period.
In the nine months ended July 31, 2026, loss before income taxes was $121.4 million compared to a loss before income taxes of $167.5 million in the nine months ended July 31, 2025. The reduction in loss before income taxes in the fiscal 2026 period was principally due to higher income from ancillary businesses, lower losses from unconsolidated entities primarily due to the sale of approximately half of our Apartment Living portfolio, offset, in part, by other-than-temporary impairment charges of $97.4 million related to Rental Property Joint Ventures. No similar other-than-temporary impairment charges were recognized in the fiscal 2025 period.
AVAILABLE INFORMATION
Our principal Internet address is www.tollbrothers.com, and our Investor Relations website is located at investors.tollbrothers.com. We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act available through our Investor Relations website, free of charge, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We provide information about our business and financial performance, including our company overview, on our Investor Relations website. Additionally, we webcast our earnings calls and certain events we participate in with members of the investment community on our Investor Relations website. Corporate governance information, including our codes of ethics, corporate governance guidelines, and board committee charters, is also available on our Investor Relations website. The content of our websites is not incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
Toll Brothers Inc. published this content on August 28, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 28, 2026 at 20:22 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]