Toll Brothers, Inc. (TOL): Results of Operations and Financial Condition
Toll Brothers, Inc. (TOL) filed an SEC Form 8-K — Results of Operations and Financial Condition. EXHIBIT 99.1 FOR IMMEDIATE RELEASE CONTACT: Gregg Ziegler (215) 478-3820 August 18, 2026 gziegler@tollbrothers.com Toll Brothers Reports FY 2026 Third Quarter Results FORT WASHINGTON, Pa., August 18, 2026 -- Toll Brothers, Inc. (NYSE:TOL) (TollBrothers.com), the nation’s leading
How this was made
The 30-second read
Why it matters
The filing updates the market on profitability, revenue and delivery volumes, margin performance, backlog health, and capital return (repurchase projection increased to $700M). It also reaffirms full-year guidance metrics, shaping expectations for the next quarter and valuation.
Market read
Traders can reprice TOL based on the combination of Q3 profitability/margin deterioration versus last year, reaffirmed full-year targets, and a higher buyback projection.
What to watch
SG&A as a percentage of revenue rose to 10.0% from 8.8%, and backlog value declined to $6.24B from $6.38B, which could matter more than contract value growth.
Toll Brothers Reports FY 2026 Third Quarter Results
Third-quarter home sales revenue, deliveries, gross margin, operating income, net income and diluted earnings were below the prior-year quarter, while net signed contract value and contracted homes increased. The company reaffirmed its full-year operating guidance and increased projected fiscal 2026 share repurchases to $700 million.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenuesGAAP | $2.66 billion | – | – |
| Home sales revenuesGAAP | $2.65 billion | – | – |
| Land sales and other revenuesGAAP | $6.3 million | – | – |
| Delivered homesother | 2,662 units | – | – |
| Average delivered price per homeother | $996,400 | – | – |
| Net signed contract valueother | $2.52 billion | – | 5% year over year |
| Contracted homesother | 2,508 units | – | – |
| Net signed contracts per communityother | 5.4 units | – | – |
| Quarter-end backlog valueother | $6.24 billion | – | – |
| Homes in backlogother | 5,312 units | – | – |
| Average price per home in backlogother | $1,174,400 | – | – |
| Home sales gross marginGAAP | 23.9% | – | – |
| Adjusted home sales gross marginnon-GAAP | 25.6% | – | – |
| Home sales gross marginGAAP | $634.9 million | – | – |
| Adjusted home sales gross marginnon-GAAP | $680.3 million | – | – |
| Interest included in home sales cost of revenues, as a percentage of home sales revenuesGAAP | 1.1% | – | – |
| Pre-tax inventory impairments included in home sales costs of revenuesGAAP | $17.7 million | – | – |
| SG&A, as a percentage of home sales revenuesGAAP | 10.0% | – | – |
| Income from operationsGAAP | $359.2 million, or 13.5% of total revenues | – | – |
| Other income, income from unconsolidated entities, and gross margin from land sales and otherGAAP | $6.0 million | – | – |
| Pre-tax incomeGAAP | $374.8 million | – | – |
| Net incomeGAAP | $280.1 million | – | – |
| Diluted earnings per shareGAAP | $2.97 per share diluted | – | – |
| Basic earnings per shareGAAP | $2.98 | – | – |
| Effective tax rateGAAP | 25.3% | – | – |
| Quarterly cancellations as a percentage of beginning-quarter backlogother | 2.6% | – | – |
| Quarterly cancellations as a percentage of signed contracts in quarterother | 5.4% | – | – |
| Nine-month total revenuesGAAP | $7.34 billion | – | – |
| Nine-month home sales revenuesGAAP | $7.02 billion | – | – |
| Nine-month net incomeGAAP | $751.7 million | – | – |
| Nine-month diluted earnings per shareGAAP | $7.87 per share diluted | – | – |
| Nine-month home sales gross marginGAAP | 24.1% | – | – |
| Nine-month adjusted home sales gross marginnon-GAAP | 26.1% | – | – |
| Nine-month income from operationsGAAP | $924.8 million, or 12.6% of total revenues | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| NorthDelivered 425 units at an average price per unit of $1,059,700, compared to 409 units, $438.7 million, and $1,072,600 in the prior-year quarter. | $450.4 million | – | – |
| Mid-AtlanticDelivered 393 units at an average price per unit of $955,800, compared to 435 units, $400.7 million, and $921,200 in the prior-year quarter. | $375.7 million | – | – |
| SouthDelivered 810 units at an average price per unit of $809,700, compared to 932 units, $757.9 million, and $813,200 in the prior-year quarter. | $655.8 million | – | – |
| MountainDelivered 709 units at an average price per unit of $864,900, compared to 816 units, $730.2 million, and $894,900 in the prior-year quarter. | $613.2 million | – | – |
| PacificDelivered 325 units at an average price per unit of $1,712,900, compared to 367 units, $553.1 million, and $1,507,000 in the prior-year quarter. | $556.7 million | – | – |
Fourth Quarter and Full Fiscal Year 2026 outlook
- Gross marginAdjusted Home Sales Gross Margin: Fourth Quarter 26.00%; Full Fiscal Year 26.10%
- Operating expensesSG&A, as a Percentage of Home Sales Revenues: Fourth Quarter 8.10%; Full Fiscal Year 10.10%
- Tax rateFourth Quarter 26.0%; Full Fiscal Year 25.2%
- NoteDeliveries: Fourth Quarter 3,450 - 3,550 units; Full Fiscal Year 10,500 - 10,600 units
- NoteAverage Delivered Price per Home: Fourth Quarter $995,000 - $1,005,000; Full Fiscal Year $995,000 - $1,000,000
- NotePeriod-End Community Count: Fourth Quarter 480 - 490; Full Fiscal Year 480 - 490
- NoteOther Income, Income from Unconsolidated Entities, and Gross Margin from Land Sales and Other: Fourth Quarter $30 million; Full Fiscal Year $120 million
- NoteProjected share repurchases for fiscal 2026: $700 million
Capital returns
- The Company repurchased approximately 1.4 million shares at an average price of $148.63 per share for a total purchase price of $206.8 million.
- The Company returned $231 million to stockholders through share repurchases and dividends in the third quarter.
- Year-to-date capital returned through share repurchases and dividends was $506 million.
- On July 24, 2026, the Company paid its quarterly dividend of $0.26 per share to shareholders of record at the close of business on July 10, 2026.
- The company increased projected fiscal 2026 share repurchases from $650 million to $700 million.
What drove it
- Net signed contracts were $2.52 billion and 2,508 units, compared to $2.41 billion and 2,388 units in the prior-year quarter.
- Third-quarter selling communities totaled 471, compared to 459 at FY 2026 second-quarter end and 420 at FY 2025 third-quarter end.
- 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%, or 31,800, of the 75,500 lots owned and optioned were owned; approximately 18,100 owned lots, including those in backlog, were substantially improved.
- The company stated that it remains on track to grow community count by 8% to 10% in fiscal 2026 and that its existing land position supports similar growth in fiscal 2027 and beyond.
- The average price per home in backlog was $1,174,400, compared to $1,161,000 in the prior-year quarter.
Concerns
- Home sales revenues were $2.65 billion compared to $2.88 billion in the prior-year quarter, while delivered homes were 2,662 compared to 2,959.
- GAAP home sales gross margin was 23.9%, compared to 25.6%, and adjusted home sales gross margin was 25.6%, compared to 27.5%.
- SG&A, as a percentage of home sales revenues, was 10.0%, compared to 8.8%.
- Income from operations was $359.2 million compared to $487.7 million; net income was $280.1 million compared to $369.6 million.
- Third-quarter other pre-tax impairments included $10.1 million in land sales and other cost of revenues and $39.6 million in income from unconsolidated entities.
- Backlog value was $6.24 billion and homes in backlog were 5,312, compared to $6.38 billion and 5,492 homes at the prior-year third-quarter end.
What to watch
- Fourth-quarter deliveries guidance of 3,450 - 3,550 units and average delivered price per home guidance of $995,000 - $1,005,000.
- Fourth-quarter adjusted home sales gross margin guidance of 26.00% compared with third-quarter adjusted home sales gross margin of 25.6%.
- Fourth-quarter SG&A guidance of 8.10% of home sales revenues compared with 10.0% in the third quarter.
- Full-year deliveries guidance of 10,500 - 10,600 units, average delivered price per home guidance of $995,000 - $1,000,000, and adjusted home sales gross margin guidance of 26.10%.
- Period-end community count guidance of 480 - 490 and the stated plan to grow community count by 8% to 10% in fiscal 2026.
- The $700 million projected fiscal 2026 share repurchase program and ongoing land investment activity.
Balance sheet and cash flow
- Cash and cash equivalents were $1.06 billion at July 31, 2026, compared to $1.26 billion at FYE 2025 and $1.11 billion at April 30, 2026.
- The Company had $2.24 billion available under its $2.38 billion senior unsecured revolving credit facility at third-quarter end.
- Total debt was $2.77 billion at July 31, 2026, compared to $2.78 billion at April 30, 2026 and $2.90 billion at October 31, 2025.
- Debt-to-capital ratio was 24.5%, compared to 24.7% at April 30, 2026 and 26.0% at FYE 2025.
- Net debt-to-capital ratio was 15.6%, compared to 15.4% at April 30, 2026 and 15.3% at FYE 2025.
- Stockholders' equity was $8.53 billion, compared to $8.27 billion at FYE 2025; book value per share was $92.36, compared to $87.25 at FYE 2025.
- Inventory was $11.65 billion at July 31, 2026, compared to $10.68 billion at October 31, 2025.
- The Company spent approximately $451.9 million on land to purchase approximately 2,784 lots in the third quarter of FY 2026.
Analysis
Toll Brothers reported lower third-quarter revenue and earnings than in the prior-year quarter. Home sales revenues were $2.65 billion versus $2.88 billion, reflecting 2,662 delivered homes versus 2,959. Net income was $280.1 million, or $2.97 per diluted share, versus $369.6 million, or $3.73 per diluted share. Income from operations was $359.2 million, or 13.5% of total revenues, versus $487.7 million, or 16.6% of total revenues.
The margin profile was the central earnings pressure. GAAP home sales gross margin was 23.9%, compared with 25.6%, while adjusted home sales gross margin was 25.6%, compared with 27.5%. SG&A was 10.0% of home sales revenues, compared with 8.8%. The quarter also included $17.7 million of pre-tax inventory impairments in home sales costs of revenues, $10.1 million of land and other impairments, and $39.6 million of joint venture impairments included in loss from unconsolidated entities.
Order activity improved against the prior-year period despite lower deliveries. Net signed contracts reached $2.52 billion and 2,508 homes, compared with $2.41 billion and 2,388 homes, and management stated that net signed contracts grew 5% year over year. Cancellations were 2.6% of beginning-quarter backlog and 5.4% of signed contracts in the quarter, compared with 3.2% and 7.5%, respectively. Backlog remained below the prior-year level at $6.24 billion and 5,312 homes, although its average price per home was $1,174,400 compared with $1,161,000.
Geographic delivery revenue was lower in Mid-Atlantic, South and Mountain, while North and Pacific revenue were higher than the prior-year quarter. Pacific revenue was $556.7 million on 325 deliveries at an average price per unit of $1,712,900, compared with $553.1 million on 367 deliveries at $1,507,000. Community count increased to 471 from 459 at the second-quarter end and 420 at the prior-year third-quarter end, and the company said it remains on track for 8% to 10% fiscal 2026 community-count growth.
Capital deployment combined land spending with shareholder returns. The company spent approximately $451.9 million to purchase approximately 2,784 lots, returned $231 million through repurchases and dividends during the quarter, and increased projected fiscal 2026 repurchases to $700 million. Cash and cash equivalents were $1.06 billion, with $2.24 billion available under the revolver; the debt-to-capital ratio was 24.5% and net debt-to-capital was 15.6%. Management reaffirmed full-year guidance, including 10,500 - 10,600 deliveries, adjusted home sales gross margin of 26.10%, and 480 - 490 communities, while fourth-quarter guidance calls for 3,450 - 3,550 deliveries and 26.00% adjusted home sales gross margin.
Management, verbatim
Toll Brothers delivered solid third quarter results in a challenging market. We exceeded the midpoint of our guidance with $2.65 billion of home sales revenues, delivering 2,662 homes at an average price of $996,400. Our adjusted gross margin was 25.6%, or 35 basis points above guidance, and we earned $2.97 per diluted share. We also grew net signed contracts by 5% year over year.
Karl K. Mistry, chief executive officer
These results position us for another year of healthy profitability and returns, and we are reaffirming all of our full-year guidance metrics, including approximately $10.5 billion of home sales revenues and an adjusted gross margin of 26.1%.
Karl K. Mistry, chief executive officer
Consistent with this strategy, we are increasing our projected share repurchases for fiscal 2026 from $650 million to $700 million
Karl K. Mistry, chief executive officer
Not in the filing
stated, not guessed- Prior-quarter income statement comparisons other than the specified balance-sheet, leverage, cash, lot and community-count measures were not provided.
- Operating cash flow was not provided.
- Free cash flow was not provided.
- A GAAP reconciliation for projected fourth-quarter and full-year adjusted home sales gross margin was not provided; the company stated that it could not provide one without unreasonable efforts.
- Segment operating income or segment profitability was not provided.
- A prior quarterly outlook section was not provided, so no reported results-versus-prior-guidance comparison is available.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is Toll Brothers’ SEC 8-K filing for FY2026 third quarter results ended July 31, 2026, including an earnings release exhibit and full-year guidance.
Ticker impact
Toll Brothers reported FY2026 Q3 results and reaffirmed full-year guidance, including adjusted gross margin of 26.1% and $700M projected buybacks.
Likely near-term volatility around guidance and margin trajectory, with downside risk if investors focus on year-over-year declines in net income and gross margin.
The filing provides concrete Q3 datapoints (net income, home sales revenue, gross margin, backlog) plus explicit reaffirmed full-year guidance and an increased buyback projection, which are direct inputs to valuation and sentiment.
Market effects
Luxury homebuilder demand and pricing power signals via net signed contracts, backlog, and gross margin trends.
No specific region disclosed, but backlog and community growth targets imply continued activity in key US housing markets.
Limited, as the disclosure is company-specific to US residential construction.
Counterpoint
Investors may discount the “midpoint of guidance” beat if year-over-year net income, pre-tax income, and home sales gross margin deterioration indicates a broader margin compression trend.
Key entities
- companyToll Brothers, Inc.
Luxury homebuilder reporting FY2026 Q3 results and reaffirming full-year guidance, with increased projected share repurchases.
- executiveKarl K. Mistry
CEO quoted on Q3 performance, guidance midpoint beat, and capital return strategy.
