About Toll Brothers, Inc
Toll Brothers, Inc. (NYSE: TOL) is a leading U.S. luxury homebuilder founded in 1967 by Robert and Bruce Toll and headquartered in Fort Washington, Pennsylvania. The company designs, builds, markets, and finances residential properties across more than 60 markets in the United States and is listed on the New York Stock Exchange under the ticker TOL.
Toll Brothers primarily targets the luxury housing segment, offering single-family homes, townhomes, condominiums, and active-adult communities. It serves first-time buyers, move-up buyers, empty-nesters, and second-home purchasers. The company also operates related businesses such as mortgage, architectural, land development, and smart-home technology services to support its core homebuilding operations.
Toll Brothers is one of the largest homebuilders in the United States and has been ranked among the top builders based on revenue. It delivered over 10,000 homes in fiscal 2024 and generated billions of dollars in annual revenue and profits, reflecting its strong presence in the luxury housing market.
The company focuses on premium home designs, community development, and high-margin luxury properties. Its performance is influenced by housing demand, mortgage rates, economic conditions, and affordability trends. In recent years, Toll Brothers has also streamlined operations and focused more on its core luxury homebuilding business to improve profitability.
Profitability Performance
In the first quarter of FY 2026, net income increased to $210.9 million, with earnings per diluted share rising to $2.19, compared to net income of $177.7 million and $1.75 per diluted share in the first quarter of FY 2025. Pre-tax income also improved to $273.6 million from $221.4 million in the prior-year quarter, reflecting stronger overall profitability.
Home Sales and Deliveries
Home sales revenues were $1.85 billion, slightly higher than $1.84 billion in the comparable period last year. However, delivered homes declined to 1,899 units from 1,991 units in FY 2025’s first quarter, indicating higher average selling prices despite lower volumes.
Contracts and Backlog
Net signed contract value increased to $2.38 billion from $2.31 billion a year ago, while contracted homes were relatively flat at 2,303 units compared to 2,307 units last year. Backlog value at quarter-end stood at $6.02 billion, down from $6.94 billion in the prior year, with homes in backlog decreasing to 5,051 units from 6,312 units.
Margins and Expenses
Home sales gross margin was 24.8%, slightly below 25.0% in the first quarter of FY 2025. Adjusted home sales gross margin, excluding interest and inventory write-downs, was 26.5% compared to 26.9% last year. SG&A expenses as a percentage of home sales revenues increased to 13.9% from 13.1% in the prior-year quarter.
Operating and Other Income
Income from operations totaled $219.1 million. Additionally, other income, loss from unconsolidated entities, and gross margin from land sales and other activities contributed $72.0 million during the quarter.
Capital Allocation and Strategic Actions
During the quarter, the company repurchased approximately 0.3 million shares at an average price of $146.75 per share, for a total of $50.5 million. It also substantially completed the previously announced sale of approximately half of its Apartment Living portfolio, including its operating platform, to Kennedy Wilson, generating net cash proceeds of approximately $330 million. The company plans to exit the multi-family development business by selling its remaining Apartment Living assets over the next several years.
Management Comments
Douglas C. Yearley, Jr., Chairman and Chief Executive Officer, stated that the company was pleased with its first-quarter results, noting that it had met or exceeded guidance across nearly all metrics. He said the company delivered 1,899 homes at an average price of $977,000, generating home sales revenues of $1.85 billion. He added that the adjusted gross margin was 26.5%, which was 25 basis points better than guidance, while SG&A expenses as a percentage of homebuilding revenues were 13.9%, or 30 basis points better than guidance.
As a result, earnings were $2.19 per diluted share in the quarter, representing a 25% increase compared with the first quarter of fiscal 2025. He further noted that the company signed 2,303 net contracts valued at about $2.4 billion, which was flat in units but up 3% in dollar value year-over-year due to an increase in average sales price to $1,033,000.
He also stated that the company remained very pleased with its focus on the luxury housing market and affluent customer base. He said Toll Brothers continued to benefit from its broad geographic footprint, wide range of home offerings and price points, and balanced mix of build-to-order and spec homes, which helped the company perform well in the current environment and maintain full-year guidance.
Yearley added that, at the end of the first quarter, the company owned or controlled approximately 75,000 lots, providing sufficient land to support community growth of 8% to 10% annually in fiscal 2026 and beyond. He noted that the company’s balance sheet remained strong with low net debt and ample liquidity, and that it expected significant operating cash flows in fiscal 2026, enabling continued investment while delivering strong shareholder returns.
He further mentioned that Toll Brothers had been named the #1 Most Admired Home Builder in Fortune magazine’s 2026 list of the World’s Most Admired Companies for the ninth time, describing it as recognition of the company’s strong luxury brand and the dedication and talent of its employees.
Financial Position and Liquidity
At the end of the first quarter of FY 2026, the company had $1.20 billion in cash and cash equivalents, compared with $1.26 billion at fiscal year-end 2025 and $574.8 million in the first quarter of FY 2025. It also had $2.20 billion available under its $2.35 billion senior unsecured revolving credit facility, reflecting strong liquidity.
Credit Facility Updates
On February 5, 2026, the company extended the maturity of its senior unsecured revolving credit facility from February 7, 2030 to February 5, 2031 and increased total commitments from $2.35 billion to $2.38 billion. It also extended the maturity of approximately $548 million outstanding under its $650 million term loan credit facility to February 5, 2031, with the remaining balance still maturing on February 7, 2030.
Shareholder Returns and Equity
The company paid a quarterly dividend of $0.25 per share on January 23, 2026, to shareholders of record as of January 9, 2026. Stockholders’ equity at the end of the quarter was $8.41 billion, up from $8.27 billion at fiscal year-end 2025, while book value per share increased to $88.73 from $87.25.
Leverage Metrics
Toll Brothers ended the quarter with a debt-to-capital ratio of 24.4%, down from 26.0% at both the fourth quarter and first quarter ends of FY 2025. Net debt-to-capital ratio improved to 14.2%, compared with 15.3% in the prior quarter and 21.1% a year earlier, indicating a stronger balance sheet.
Land Holdings and Investments
At the end of the first quarter, the company owned or controlled approximately 75,000 lots, compared with 76,100 in the prior quarter and 77,700 a year earlier. About 45%, or 33,600 lots, were owned, of which around 18,900 lots, including backlog lots, were substantially improved. During the quarter, the company invested approximately $424.4 million in land acquisitions, purchasing about 2,189 lots.
Community Count
The company ended the first quarter of FY 2026 with 445 selling communities, compared with 446 at the end of FY 2025’s fourth quarter and 406 in the first quarter of FY 2025, reflecting continued expansion in active communities.
Second Quarter Outlook
For the second quarter of FY 2026, the company expects home deliveries to be in the range of 2,400 to 2,500 units. The average delivered price per home is projected to be between $975,000 and $985,000. Adjusted home sales gross margin is anticipated to be about 25.5%, while SG&A expenses are expected to be approximately 10.7% of home sales revenues. The projected tax rate for the quarter is around 26.0%.
Full Fiscal Year 2026 Guidance
For the full fiscal year 2026, Toll Brothers expects total deliveries to range between 10,300 and 10,700 homes, with an average delivered price per home between $970,000 and $990,000. Adjusted home sales gross margin is projected to be about 26.0%, and SG&A expenses are expected to be approximately 10.25% of home sales revenues. The company forecasts a period-end community count of 480 to 490 communities and anticipates about $130 million in other income, income from unconsolidated entities, and gross margin from land sales and other activities. The full-year tax rate is estimated to be approximately 25.5%.