FY 2026 Third Quarter
Filed Aug 18, 2026Toll 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.
AlphaAI 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.