Core Insights - Toll Brothers, Inc. has announced the final opportunity to build new homes in Laurel Pointe, an exclusive community in Lake Nona, Orlando, Florida, with limited homes available for sale, including the Marsanne Farmhouse model [1][2] Company Overview - Toll Brothers, Inc. is recognized as the nation's leading builder of luxury homes and is a Fortune 500 Company, founded in 1967 and publicly traded since 1986 [8][9] - The company operates in over 60 markets across 24 states and the District of Columbia, offering a range of housing options for various buyer segments [8] Community Features - Laurel Pointe features home designs from the Collage Collection, with prices starting from $1.7 million, offering high-end interiors and smart home features [2][4] - The community is conveniently located near A-rated schools, Orlando International Airport, and major highways, providing easy access to shopping, dining, and recreational destinations [4] Lake Nona Overview - Lake Nona is recognized as a smart city and one of the fastest-growing master-planned communities in the U.S., covering 17 square miles and hosting a collaborative network of businesses in healthcare, sports, and transportation [5] - Residents of Laurel Pointe will have access to Lake Nona's extensive amenities, including trails, parks, and wellness programs [5]

Core Viewpoint - Toll Brothers, Inc. reported second-quarter fiscal 2025 results with adjusted earnings and total revenues exceeding the Zacks Consensus Estimate, although the top line experienced a year-over-year decline [1][5]. Financial Performance - Adjusted earnings per share (EPS) were $3.50, surpassing the Zacks Consensus Estimate of $2.86 by 22.4% and reflecting a 3.6% increase from the previous year [5]. - Total revenues amounted to $2.74 billion, exceeding the consensus mark of $2.5 billion by 9.5%, but decreased 3.5% year over year [5]. - Home sales revenues increased by 2% year over year to $2.71 billion, contrary to expectations of a 5% decline [5]. - Homes delivered rose by 10% to 2,899 units, surpassing the projected growth of 0.1% [5]. - The average selling price (ASP) of homes delivered was $933,600, down 6.9% from $1,002,300 a year ago [5]. Market Conditions - The quarterly performance was impacted by weak contributions from land sales and other segments, while home sales revenues showed growth [2]. - Ongoing uncertainties in the housing market are anticipated to increase, particularly with the potential implementation of a new tax regime affecting homebuilding costs [2]. Strategic Outlook - The company remains optimistic about long-term growth, supported by a housing shortage and favorable demographics [2]. - Toll Brothers' diversified luxury product offerings and balanced portfolio of build-to-order and spec homes are expected to help navigate challenging market conditions [3]. Shareholder Returns - Following the earnings release, shares rose by 5.1% in after-hours trading, likely driven by a 9% increase in the quarterly dividend to 25 cents per share ($1 annually) [4]. Backlog and Contracts - At the end of the fiscal second quarter, the backlog consisted of 6,063 homes, down 14.5% year over year, with potential revenues from backlog declining 7.3% to $6.84 billion [7]. - Net-signed contracts totaled 2,650 units, a decrease from 3,041 units year over year, with a contract value of $2.6 billion, reflecting an 11.6% decline [6]. Cost Structure - The adjusted home sales gross margin was 27.5%, contracting by 70 basis points [8]. - Selling, general and administrative (SG&A) expenses as a percentage of home sales revenues increased to 9.5%, up 50 basis points from the previous year [8]. Balance Sheet - Cash and cash equivalents stood at $686.5 million, down from $1.3 billion at the end of fiscal 2024 [9]. - The debt-to-capital ratio improved to 26.1% from 27% at the end of fiscal 2024 [9]. Future Guidance - For fiscal Q3, home deliveries are expected to be between 2,800 and 3,000 units, with an average price of $965,000 to $985,000 [11]. - For fiscal 2025, home deliveries are anticipated to range from 11,200 to 11,600 units, with an average price of delivered homes expected to be $945,000 to $965,000 [13].

Group 1 - Shares of Toll Brothers (NYSE: TOL) have declined approximately 20% over the past year due to elevated mortgage rates impacting housing market activity [1] - The current market conditions have reduced expectations for homebuilders, reflecting a challenging environment for the industry [1] Group 2 - The article emphasizes the importance of a contrarian investment approach based on macro views and stock-specific turnaround stories to achieve favorable risk/reward profiles [1]

Financial Data and Key Metrics Changes - The company delivered 2,899 homes at an average price of approximately $934,000, generating record second quarter home sales revenue of $2,710,000,000, which is $236,000,000 better than the midpoint of guidance [4][5] - Adjusted gross margin was 27.5%, and SG&A margin was 9.5%, which were 25 and 80 basis points better than guidance respectively [4][20] - Earnings for the quarter were $352,400,000 or $3.5 per diluted share, marking a record for second quarter earnings per share [5][18] Business Line Data and Key Metrics Changes - The average sales price in the quarter was approximately $983,000, down from $1,000,000 in the first quarter and up from $967,000 in the second quarter of fiscal year 2024 [7] - The company signed 2,650 net agreements for $2,600,000,000, down approximately 13% in units and 11% in dollars compared to the previous year's second quarter [6][19] - The backlog at the end of the second quarter stood at $6,840,000,000 and 6,063 homes, down 7% in dollars and 15% in units compared to a year ago [19] Market Data and Key Metrics Changes - Softer demand was noted in the second quarter due to a decline in consumer confidence driven by increased economic uncertainty [6] - The company experienced a modest increase in incentives, which were approximately 7% of the average sales price, up from a recent average of 5% to 6% [7] - The financial strength of the customer base was highlighted by an industry-low cancellation rate of 2.8% and a high percentage of all-cash buyers at approximately 24% [10] Company Strategy and Development Direction - The company is focused on prioritizing price and margin over pace in the current market environment [6][24] - A balanced approach is being maintained to navigate the market effectively, with a strategy of reducing spec starts to match local market conditions [8][11] - The company aims for community count growth, projecting to reach approximately 440 to 450 communities by the end of fiscal year 2025, representing an 8% to 10% increase [11][26] Management's Comments on Operating Environment and Future Outlook - The near-term outlook for the housing market remains cloudy due to affordability pressures and macroeconomic volatility, but the long-term outlook for the luxury home market is positive [9] - Management expressed confidence in the financial strength of their customer base and the ability to navigate through challenging markets [10][12] - The company has tightened underwriting standards and reduced land spend on new deals, expecting this to primarily impact fiscal year 2026 [13] Other Important Information - The company controlled approximately 78,600 lots at the end of the second quarter, with 58% optioned, reflecting a focus on capital-efficient land deals [12] - Cash and cash equivalents stood at approximately $686,000,000, with a net debt to capital ratio of 19.8% [13][21] - The company increased its projected share repurchases for fiscal year 2025 from $500,000,000 to $600,000,000 [14][22] Q&A Session Summary Question: Update on spec data and homes under construction - The company has just over 1,000 fully completed spec units and approximately 2,400 in progress, with permits available for another 1,000 to 2,000 [34][36] Question: Thoughts on second half gross margin sustainability - The company expects the fourth quarter margin to be about the same as the third quarter at 27.25%, with some downward pressure from spec sell and settles but offset by a favorable mix [46] Question: Granularity on homes in progress and potential settlements - Approximately 1,900 homes will need to come from spec inventory, with 1,000 completed and more than 900 under construction expected to deliver by the end of the fiscal year [52][54] Question: Demand trends in May compared to previous months - Demand in May was consistent with March and April, with expectations for better sales in June and July, but overall market conditions remain softer than anticipated [62][66] Question: Commentary on foreign national buyers - Less than 5% of buyers are foreign nationals, with no significant changes in demand noted year to date [96]

Financial Data and Key Metrics Changes - The company delivered 2,899 homes at an average price of approximately $934,000, generating record second quarter home sales revenue of $2,710,000,000, which is $236,000,000 better than the midpoint of guidance [4][16] - Adjusted gross margin was 27.5%, and SG&A margin was 9.5%, which were 25 and 80 basis points better than guidance respectively [4][18] - Earnings for the quarter were $352,400,000 or $3.5 per diluted share, marking a record for second quarter earnings per share [5] Business Line Data and Key Metrics Changes - The company signed 2,650 net agreements for $2,600,000,000, down approximately 13% in units and 11% in dollars compared to the previous year's second quarter [6][17] - The average price of contracts signed in the quarter was approximately $983,000, up 1.6% compared to last year [17] - The backlog at the end of the second quarter stood at $6,840,000,000 and 6,063 homes, down 7% in dollars and 15% in units compared to a year ago [17] Market Data and Key Metrics Changes - The average sales price in the quarter was approximately $983,000, compared to $1,000,000 in the first quarter and $967,000 in the second quarter of the previous fiscal year [7] - Incentives were approximately 7% of the average sales price, up from the recent average of 5% to 6% [7] - The company has been reducing spec starts to match local market conditions [8] Company Strategy and Development Direction - The company is focused on prioritizing price and margin over pace in the current market environment [6][21] - The strategy includes a balanced approach to managing spec homes while enhancing capital efficiency and returning capital to stockholders [8][14] - The long-term outlook for the new home market remains positive, particularly for the luxury niche, despite short-term challenges [10] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer confidence has declined due to increased economic uncertainty, impacting demand [6][10] - The company is confident in its ability to navigate the current market conditions and maintain its guidance for fiscal 2025 [5][12] - Management highlighted the financial strength of its customer base, with a low cancellation rate and a high percentage of all-cash buyers [11] Other Important Information - The company controlled approximately 78,600 lots at the end of the second quarter, with 58% optioned [13] - Cash and cash equivalents stood at approximately $686,000,000, with a net debt to capital ratio of 19.8% [14][19] - The company plans to increase projected share repurchases in fiscal 2025 from $500,000,000 to $600,000,000 [15][20] Q&A Session Summary Question: Update on spec data and homes under construction - The company has just over 1,000 fully completed spec units and approximately 2,400 in progress, with permits available for another 1,000 or two [29][32] Question: Insights on gross margin outlook for the second half - The company expects the fourth quarter margin to be about the same as the third quarter at 27.25%, with some downward pressure from spec sell and settles [42][43] Question: Clarification on backlog and deliveries - The company has roughly 6,400 units left to deliver this year, with about 4,500 expected from backlog and 1,900 from spec inventory [46][48] Question: Commentary on demand trends and market conditions - Demand has been softer than expected, but the company is managing well in the current market, with a focus on affluent buyers [58][62] Question: Land spend dynamics and confidence in the land market - The land spend in the second quarter was $362,000,000, with a cautious approach expected moving forward due to market conditions [104][106] Question: Geographic market performance - Strong markets included New Jersey, Pennsylvania, New York, and parts of California, while softer markets included the Pacific Northwest and parts of Florida [110]

Core Insights - Toll Brothers reported revenue of $2.74 billion for the quarter ended April 2025, a decrease of 3.5% year-over-year, but exceeded the Zacks Consensus Estimate of $2.5 billion by 9.54% [1] - The company's EPS was $3.50, up from $3.38 in the same quarter last year, representing an EPS surprise of 22.38% against the consensus estimate of $2.86 [1] Financial Performance Metrics - Closed/Delivered Units: 2,899, exceeding the average estimate of 2,621 units by five analysts [4] - Backlog Units: 6,063, below the average estimate of 6,738 units by five analysts [4] - Average Delivered Price: $933.60, lower than the estimated $949.89 by five analysts [4] - Net Contracts Units: 2,650, below the average estimate of 3,046 units by five analysts [4] - Average Backlog Price: $1,128.10, higher than the average estimate of $1,100.15 by three analysts [4] - Backlog Value: $6.84 billion, below the average estimate of $7.47 billion by two analysts [4] - Revenues from Home Sales: $2.71 billion, exceeding the average estimate of $2.49 billion by six analysts, representing a 2.3% increase year-over-year [4] - Revenues from Land Sales: $32.60 million, significantly higher than the estimated $18.21 million, but a decrease of 82.9% year-over-year [4] - Gross Margin from Home Sales: $704.24 million, surpassing the average estimate of $640.39 million by four analysts [4] - Gross Margin from Land Sales and Other: $1.20 million, compared to the average estimate of $0.56 million based on three analysts [4] Stock Performance - Toll Brothers shares have returned +15.1% over the past month, outperforming the Zacks S&P 500 composite's +13.1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Toll Brothers (TOL) came out with quarterly earnings of $3.50 per share, beating the Zacks Consensus Estimate of $2.86 per share. This compares to earnings of $3.38 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 22.38%. A quarter ago, it was expected that this home builder would post earnings of $1.99 per share when it actually produced earnings of $1.75, delivering a surprise of -12.06%.Over the last four quarters, the compa ...

Executive Summary & Highlights Toll Brothers reported strong Q2 FY2025 results with record home sales revenues and reaffirmed full-year guidance, despite a softer demand environment [Second Quarter FY2025 Performance Overview](index=1&type=section&id=1.1_Second_Quarter_FY2025_Performance_Overview) Toll Brothers reported strong second-quarter FY2025 results, exceeding expectations with record home sales revenues of $2.71 billion, up 2% YoY. Despite a softer demand environment, the company achieved a 10% increase in delivered homes and maintained a healthy gross margin, reaffirming its full-year guidance - CEO Douglas C. Yearley, Jr. stated that the company delivered earnings significantly exceeding expectations, with record second quarter home sales revenues of **$2.71 billion**, well above guidance, and beat both adjusted gross margin and SG&A guidance, reaffirming its full-year guidance based on first-half results and backlog strength[4](index=4&type=chunk) Q2 FY2025 Financial Highlights (YoY Comparison) | Metric | FY2025 Q2 | FY2024 Q2 | Change | | :-------------------------------- | :---------- | :---------- | :----- | | Net Income ($M) | $352.4M | $481.6M | -26.8% | | EPS (diluted) ($) | $3.50 | $4.55 | -23.1% | | Pre-tax Income ($M) | $477.5M | $649.8M | -26.5% | | Home Sales Revenues ($B) | $2.71B | $2.65B | +2.3% | | Delivered Homes (Units) | 2,899 | 2,641 | +9.8% | | Net Signed Contract Value ($B) | $2.60B | $2.94B | -11.6% | | Contracted Homes (Units) | 2,650 | 3,041 | -12.8% | | Backlog Value (end of Q2) ($B) | $6.84B | $7.38B | -7.4% | | Homes in Backlog (end of Q2) (Units) | 6,063 | 7,093 | -14.5% | | Home Sales Gross Margin (%) | 26.0% | 25.8% | +0.2 pp | | Adjusted Home Sales Gross Margin (%) | 27.5% | 28.2% | -0.7 pp | | SG&A as % of Home Sales Revenues (%) | 9.5% | 9.0% | +0.5 pp | | Income from Operations ($M) | $449.7M | $623.5M | -27.9% | | Other Income, etc. ($M) | $29.0M | $203.7M | -85.7% | | Shares Repurchased (Shares) | 1.6M shares | N/A | N/A | | Total Purchase Price (Repurchases) ($M) | $177.4M | N/A | N/A | FY2024 Q2 Adjusted Net Income/EPS (Excluding Land Sale) | Metric | FY2024 Q2 (Reported) ($M) | Land Sale Impact ($M) | FY2024 Q2 (Adjusted) ($M) | | :-------------------- | :------------------- | :----------------- | :------------------- | | Net Income | $481.6M | -$124.1M | $357.5M | | EPS (diluted) ($) | $4.55 | -$1.17 | $3.38 | [Financial Guidance](index=2&type=section&id=1.2_Financial_Guidance) Toll Brothers reaffirmed its full-year FY2025 guidance, projecting 11,200 to 11,600 home deliveries at an average price of $945,000 to $965,000, with an adjusted home sales gross margin of 27.25% Third Quarter and Full Fiscal Year 2025 Guidance | Metric | Third Quarter | Full Fiscal Year | | :------------------------------------ | :-------------------- | :-------------------- | | Deliveries (Units) | 2,800 to 3,000 units | 11,200 to 11,600 units | | Average Delivered Price per Home ($) | $965,000 to $985,000 | $945,000 to $965,000 | | Adjusted Home Sales Gross Margin (%) | 27.25 % | 27.25 % | | SG&A, as a Percentage of Home Sales Revenues (%) | 9.2 % | 9.4% to 9.5% | | Period-End Community Count (Units) | 430 | 440 to 450 | | Other Income, Income from Unconsolidated Entities, and Gross Margin from Land Sales and Other ($M) | $—M | $110M | | Tax Rate (%) | 26.0 % | 25.5 % | Company Overview Toll Brothers, a Fortune 500 luxury home builder, operates across 24 states and faces various economic, market, and regulatory risks [About Toll Brothers](index=4&type=section&id=2.1_About_Toll_Brothers) Toll Brothers, Inc. is a Fortune 500 company and the nation's leading builder of luxury homes, operating in over 60 markets across 24 states. The company offers a diversified product range and operates various subsidiaries, including architectural, engineering, mortgage, and land development - Toll Brothers, Inc. is a **Fortune 500 Company** and the nation's leading builder of luxury homes, founded 58 years ago in 1967 and became a public company in 1986 (NYSE: TOL)[12](index=12&type=chunk) - The Company serves first-time, move-up, empty-nester, active-adult, and second-home buyers, as well as urban and suburban renters, building in over **60 markets in 24 states** and the District of Columbia, operating its own architectural, engineering, mortgage, title, land development, insurance, smart home technology, and landscape subsidiaries, and also develops master-planned and golf course communities[12](index=12&type=chunk) - Toll Brothers has been recognized as one of Fortune magazine's World's Most Admired Companies™ for **10+ years** in a row, and its Chairman and CEO was named one of 25 Top CEOs by Barron's magazine in 2024[13](index=13&type=chunk) [Forward-Looking Statements & Risk Factors](index=5&type=section&id=2.2_Forward-Looking_Statements_Risk_Factors) This section outlines the nature of forward-looking statements, which are not guarantees of future performance, and details various risks and uncertainties that could cause actual results to differ materially from expectations, including economic conditions, market demand, land availability, and regulatory changes - Forward-looking statements are not guarantees of future performance and may turn out to be inaccurate due to incorrect assumptions or known/unknown risks and uncertainties[17](index=17&type=chunk) - Major risks and uncertainties include general economic conditions (employment, inflation, interest rates, financing), market demand, availability of desirable land, access to capital, competition, price and availability of materials and labor, U.S. trade policies, weather and natural disasters, acts of war/terrorism/diseases, federal and state tax policies, land use/environmental regulations, legal proceedings, unforeseen changes to liabilities/expenses, loss of key management, changes in accounting principles, and cyber-attacks[17](index=17&type=chunk)[20](index=20&type=chunk) Financial Statements Toll Brothers' balance sheet shows increased assets and liabilities, while the income statement reflects a decline in net income despite a rise in home sales revenue for Q2 FY2025 [Condensed Consolidated Balance Sheets](index=7&type=section&id=3.1_Condensed_Consolidated_Balance_Sheets) As of April 30, 2025, Toll Brothers reported total assets of $14.20 billion, an increase from $13.37 billion at FYE 2024, primarily driven by an increase in inventory. Total liabilities also increased to $6.23 billion, while stockholders' equity grew to $7.95 billion Condensed Consolidated Balance Sheets (Amounts in thousands) | Metric | April 30, 2025 | October 31, 2024 | Change | | :-------------------------------- | :--------------- | :--------------- | :------- | | **ASSETS** | | | | | Cash and cash equivalents ($M) | $686.5M | $1.30B | -$616.6M | | Inventory ($B) | $10.99B | $9.71B | +$1.28B | | Investments in unconsolidated entities ($B) | $1.17B | $1.01B | +$164.9M | | Total Assets ($B) | $14.20B | $13.37B | +$827.9M | | **LIABILITIES** | | | | | Loans payable ($B) | $1.05B | $1.09B | -$33.1M | | Senior notes ($B) | $1.60B | $1.60B | +$0.4M | | Accrued expenses ($B) | $2.09B | $1.75B | +$335.7M | | Total Liabilities ($B) | $6.23B | $5.68B | +$550.2M | | **EQUITY** | | | | | Total Stockholders' Equity ($B) | $7.95B | $7.67B | +$277.8M | | Total Equity ($B) | $7.96B | $7.69B | +$277.7M | [Condensed Consolidated Statements of Operations](index=8&type=section&id=3.2_Condensed_Consolidated_Statements_of_Operations) For the three months ended April 30, 2025, home sales revenue increased by 2.3% to $2.71 billion, while net income decreased by 26.8% to $352.4 million, largely due to a significant reduction in land sales and other income compared to the prior year. For the six months, home sales revenue slightly decreased, and net income was down 26.4% Three Months Ended April 30 (Amounts in thousands, except per share data) | Metric | 2025 | % of Revenue | 2024 | % of Revenue | Change (2025 vs 2024) | | :------------------------------------ | :--------- | :----------- | :--------- | :----------- | :-------------------- | | Home sales revenues ($B) | $2.71B | | $2.65B | | +2.3% | | Land sales and other ($M) | $32.6M | | $190.5M | | -82.8% | | Total Revenues ($B) | $2.74B | | $2.84B | | -3.5% | | Home sales gross margin ($M) | $704.2M | 26.0% | $683.7M | 25.8% | +2.9% | | Land sales and other gross margin ($M) | $1.2M | 3.7% | $177.5M | 93.2% | -99.3% | | SG&A expenses ($M) | $255.8M | 9.5% | $237.7M | 9.0% | +7.6% | | Income from operations ($M) | $449.7M | | $623.5M | | -27.9% | | Income before income taxes ($M) | $477.5M | | $649.8M | | -26.5% | | Net income ($M) | $352.4M | | $481.6M | | -26.8% | | Diluted earnings per share ($) | $3.50 | | $4.55 | | -23.1% | Six Months Ended April 30 (Amounts in thousands, except per share data) | Metric | 2025 | % of Revenue | 2024 | % of Revenue | Change (2025 vs 2024) | | :------------------------------------ | :--------- | :----------- | :--------- | :----------- | :-------------------- | | Home sales revenues ($B) | $4.55B | | $4.58B | | -0.7% | | Land sales and other ($M) | $51.0M | | $206.5M | | -75.3% | | Total Revenues ($B) | $4.60B | | $4.79B | | -3.9% | | Home sales gross margin ($B) | $1.16B | 25.6% | $1.22B | 26.6% | -4.3% | | Land sales and other gross margin ($M) | $1.5M | 2.8% | $183.3M | 88.8% | -99.2% | | SG&A expenses ($M) | $496.2M | 10.9% | $467.7M | 10.2% | +6.1% | | Income from operations ($M) | $668.8M | | $931.9M | | -28.2% | | Income before income taxes ($M) | $698.9M | | $960.9M | | -27.2% | | Net income ($M) | $530.2M | | $721.2M | | -26.4% | | Diluted earnings per share ($) | $5.24 | | $6.80 | | -22.9% | Supplemental Financial Data This section provides detailed quarterly and six-month operating metrics, insights into liquidity and capital structure, land development activities, and geographic segment performance [Detailed Quarterly Financial Highlights](index=2&type=section&id=4.1_Detailed_Quarterly_Financial_Highlights) For Q2 FY2025, home sales revenues increased by 2.3% to $2.71 billion with 2,899 units delivered. Net signed contracts decreased by 11.6% in value and 12.8% in units, while backlog value decreased by 7.4%. Home sales gross margin improved slightly to 26.0% Key Operating Metrics (Three Months Ended April 30) | Metric | 2025 | 2024 | Change | | :------------------------------------ | :--------- | :--------- | :----- | | Home Sales Revenues | $2.71B (2,899 units) | $2.65B (2,641 units) | +2.3% (units +9.8%) | | Net Signed Contracts | $2.60B (2,650 units) | $2.94B (3,041 units) | -11.6% (units -12.8%) | | Net Signed Contracts per Community (Units) | 6.4 units | 8.0 units | -20.0% | | Quarter-End Backlog | $6.84B (6,063 units) | $7.38B (7,093 units) | -7.4% (units -14.5%) | | Average Price per Home in Backlog ($) | $1.13M | $1.04M | +8.5% | | Home Sales Gross Margin (%) | 26.0% | 25.8% | +0.2 pp | | Adjusted Home Sales Gross Margin (%) | 27.5% | 28.2% | -0.7 pp | | SG&A, as a percentage of Home Sales Revenues (%) | 9.5% | 9.0% | +0.5 pp | | Income from Operations ($M) | $449.7M (16.4% of total revenues) | $623.5M (22.0% of total revenues) | -27.9% | | Other Income, Income from Unconsolidated Entities, and Gross Margin from Land Sales and Other ($M) | $29.0M | $203.7M | -85.7% | | Quarterly Cancellations as a Percentage of Beginning Quarter Backlog (%) | 2.8% | 2.8% | 0.0 pp | | Quarterly Cancellations as a Percentage of Signed Contracts in Quarter (%) | 6.2% | 5.7% | +0.5 pp | [Detailed Six-Month Financial Highlights](index=3&type=section&id=4.2_Detailed_Six-Month_Financial_Highlights) For the six months ended April 30, 2025, home sales revenues slightly decreased by 0.7% to $4.55 billion, with a 7.0% increase in delivered units. Net signed contracts also saw a slight decline. Home sales gross margin was 25.6%, down from 26.6% in the prior year Key Operating Metrics (Six Months Ended April 30) | Metric | 2025 | 2024 | Change | | :------------------------------------ | :--------- | :--------- | :----- | | Home Sales Revenues | $4.55B (4,890 units) | $4.58B (4,568 units) | -0.7% (units +7.0%) | | Net Signed Contracts | $4.91B (4,957 units) | $5.01B (5,083 units) | -2.0% (units -2.5%) | | Home Sales Gross Margin (%) | 25.6% | 26.6% | -1.0 pp | | Adjusted Home Sales Gross Margin (%) | 27.3% | 28.5% | -1.2 pp | | SG&A, as a percentage of Home Sales Revenues (%) | 10.9% | 10.2% | +0.7 pp | | Income from Operations ($M) | $668.8M (14.5% of total revenues) | $931.9M (19.5% of total revenues) | -28.2% | | Other Income, Income from Unconsolidated Entities, and Gross Margin from Land Sales and Other ($M) | $31.5M | $212.3M | -85.2% | [Liquidity, Capital, and Debt](index=3&type=section&id=4.3_Liquidity_Capital_and_Debt) Toll Brothers ended Q2 FY2025 with $686.5 million in cash, a decrease from FYE 2024 but an increase from Q1 FY2025. The company extended its revolving credit facility to $2.35 billion and increased its quarterly cash dividend by 9% to $0.25 per share. Stockholders' equity grew to $7.95 billion, and the net debt-to-capital ratio improved to 19.8% from 21.1% in Q1 FY2025 - Cash and cash equivalents were **$686.5 million** at Q2 FY2025 end, compared to **$1.30 billion** at FYE 2024 and **$574.8 million** at Q1 FY2025[9](index=9&type=chunk) - The company extended the maturity date of its senior unsecured revolving credit facility from February 14, 2028, to February 7, 2030, and increased the total available amount from $1.96 billion to **$2.35 billion**, also extending the maturity of all **$650 million** of loans outstanding under its term loan credit facility to February 7, 2030[9](index=9&type=chunk) - The quarterly cash dividend was increased by **9% from $0.23 to $0.25 per share** on March 11, 2025, and paid on April 25, 2025, with stockholders' equity at Q2 FY2025 end at **$7.95 billion** and book value per share at **$80.84**[9](index=9&type=chunk) - The debt-to-capital ratio was 26.1% at Q2 FY2025 end (vs. 26.0% at Q1 FY2025 and 27.0% at FYE 2024), and the net debt-to-capital ratio was **19.8%** (vs. 21.1% at Q1 FY2025 and 15.2% at FYE 2024)[9](index=9&type=chunk) [Land and Community Development](index=9&type=section&id=4.4_Land_and_Community_Development) Toll Brothers increased its controlled home sites to approximately 78,600 at Q2 FY2025 end, with 42% owned. The company spent $723.0 million on land to acquire 4,380 lots during the quarter and increased its selling communities to 421 Home Sites Controlled | Metric | April 30, 2025 | April 30, 2024 | Change | | :---------- | :------------- | :------------- | :----- | | Owned (Units) | 32,763 | 36,985 | -11.4% | | Optioned (Units) | 45,843 | 34,779 | +31.8% | | Total (Units) | 78,606 | 71,764 | +9.5% | - In Q2 FY2025, the Company spent approximately **$723.0 million** on land to purchase approximately **4,380 lots**[9](index=9&type=chunk) - The Company ended FY 2025's second quarter with **421 selling communities**, compared to 406 at FY 2025's first quarter end and 386 at FY 2024's second quarter end[9](index=9&type=chunk) Inventory Composition (Amounts in thousands) | Inventory Category | April 30, 2025 | October 31, 2024 | | :------------------------------------------ | :--------------- | :--------------- | | Land deposits and costs of future communities ($M) | $781.3M | $620.0M | | Land and land development costs ($B) | $2.99B | $2.53B | | Land and land development costs associated with homes under construction ($B) | $3.79B | $3.62B | | Total land and land development costs ($B) | $7.56B | $6.77B | | Homes under construction ($B) | $2.95B | $2.46B | | Model homes ($M) | $489.9M | $484.9M | | **Total Inventory ($B)** | **$10.99B** | **$9.71B** | [Geographic Segment Performance](index=10&type=section&id=4.5_Geographic_Segment_Performance) In Q2 FY2025, the Mountain region saw the highest growth in home sales revenues (+25.2%) and delivered units (+24.8%), while the Pacific region experienced significant declines in both revenues (-27.1%) and average price per unit. For the six months, the Mountain region also led in revenue growth, whereas the Pacific region continued to show declines Home Sales Revenues by Segment (Three Months Ended April 30) | Segment | 2025 Units | 2024 Units | 2025 Revenue ($M) | 2024 Revenue ($M) | 2025 Avg Price ($) | 2024 Avg Price ($) | | :---------- | :--------- | :--------- | :---------------- | :---------------- | :----------------- | :----------------- | | North | 389 | 349 | $378.5M | $335.2M | $973,000 | $960,500 | | Mid-Atlantic | 379 | 378 | $321.8M | $376.1M | $849,000 | $995,000 | | South | 928 | 804 | $758.6M | $658.4M | $817,500 | $818,900 | | Mountain | 856 | 686 | $755.9M | $603.6M | $883,000 | $879,800 | | Pacific | 347 | 424 | $492.2M | $674.7M | $1.42M | $1.59M | | **Total** | **2,899** | **2,641** | **$2.71B** | **$2.65B** | **$933,700** | **$1.00M** | Net Signed Contracts by Segment (Three Months Ended April 30) | Segment | 2025 Units | 2024 Units | 2025 Value ($M) | 2024 Value ($M) | 2025 Avg Price ($) | 2024 Avg Price ($) | | :---------- | :--------- | :--------- | :---------------- | :---------------- | :----------------- | :----------------- | | North | 372 | 412 | $386.9M | $422.1M | $1.04M | $1.02M | | Mid-Atlantic | 407 | 376 | $378.7M | $348.9M | $930,500 | $928,000 | | South | 753 | 892 | $636.8M | $746.8M | $845,700 | $837,200 | | Mountain | 776 | 944 | $695.5M | $814.6M | $896,300 | $862,900 | | Pacific | 342 | 417 | $506.5M | $608.6M | $1.48M | $1.46M | | **Total** | **2,650** | **3,041** | **$2.60B** | **$2.94B** | **$982,800** | **$967,100** | Backlog by Segment (April 30) | Segment | 2025 Units | 2024 Units | 2025 Value ($M) | 2024 Value ($M) | 2025 Avg Price ($) | 2024 Avg Price ($) | | :---------- | :--------- | :--------- | :---------------- | :---------------- | :----------------- | :----------------- | | North | 909 | 1,055 | $1.03B | $1.11B | $1.13M | $1.05M | | Mid-Atlantic | 906 | 912 | $987.4M | $900.8M | $1.09M | $987,700 | | South | 1,932 | 2,344 | $1.77B | $2.12B | $918,600 | $904,500 | | Mountain | 1,480 | 1,891 | $1.56B | $1.84B | $1.06M | $971,000 | | Pacific | 836 | 891 | $1.48B | $1.41B | $1.78M | $1.59M | | **Total** | **6,063** | **7,093** | **$6.84B** | **$7.38B** | **$1.13M** | **$1.04M** | Home Sales Revenues by Segment (Six Months Ended April 30) | Segment | 2025 Units | 2024 Units | 2025 Revenue ($M) | 2024 Revenue ($M) | 2025 Avg Price ($) | 2024 Avg Price ($) | | :---------- | :--------- | :--------- | :---------------- | :---------------- | :----------------- | :----------------- | | North | 636 | 638 | $633.2M | $607.9M | $995,600 | $952,800 | | Mid-Atlantic | 645 | 655 | $558.0M | $640.3M | $865,100 | $977,600 | | South | 1,524 | 1,435 | $1.26B | $1.19B | $830,000 | $830,200 | | Mountain | 1,519 | 1,171 | $1.31B | $1.06B | $864,100 | $902,600 | | Pacific | 566 | 669 | $779.3M | $1.08B | $1.38M | $1.62M | | **Total** | **4,890** | **4,568** | **$4.55B** | **$4.58B** | **$930,100** | **$1.00M** | Net Signed Contracts by Segment (Six Months Ended April 30) | Segment | 2025 Units | 2024 Units | 2025 Value ($M) | 2024 Value ($M) | 2025 Avg Price ($) | 2024 Avg Price ($) | | :---------- | :--------- | :--------- | :---------------- | :---------------- | :----------------- | :----------------- | | North | 690 | 737 | $723.6M | $751.0M | $1.05M | $1.02M | | Mid-Atlantic | 765 | 622 | $720.2M | $587.6M | $941,400 | $944,700 | | South | 1,453 | 1,467 | $1.23B | $1.22B | $846,500 | $829,400 | | Mountain | 1,404 | 1,485 | $1.23B | $1.31B | $875,800 | $884,400 | | Pacific | 645 | 772 | $1.01B | $1.14B | $1.56M | $1.47M | | **Total** | **4,957** | **5,083** | **$4.91B** | **$5.01B** | **$990,800** | **$984,800** | [Unconsolidated Entities Performance](index=11&type=section&id=4.6_Unconsolidated_Entities_Performance) Revenues from unconsolidated entities decreased for the three months ended April 30, 2025, but increased for the six-month period. Contracts and backlog for these entities saw significant declines compared to the prior year Unconsolidated Entities Performance | Metric | 2025 Units | 2024 Units | 2025 Value ($M) | 2024 Value ($M) | 2025 Avg Price ($) | 2024 Avg Price ($) | | :-------------------------- | :--------- | :--------- | :---------------- | :---------------- | :----------------- | :----------------- | | **Three months ended April 30,** | | | | | | | | Revenues | 24 | 40 | $36.9M | $40.9M | $1.54M | $1.02M | | Contracts | 18 | 33 | $27.5M | $43.9M | $1.53M | $1.33M | | **Six months ended April 30,** | | | | | | | | Revenues | 39 | 40 | $57.8M | $40.9M | $1.48M | $1.02M | | Contracts | 36 | 55 | $53.4M | $65.4M | $1.48M | $1.19M | | **Backlog at April 30,** | 9 | 164 | $13.0M | $184.5M | $1.44M | $1.13M | Non-GAAP Reconciliations This section provides reconciliations for non-GAAP financial measures, including adjusted home sales gross margin, adjusted net income and EPS, and the net debt-to-capital ratio, offering alternative views of financial performance and leverage [Adjusted Home Sales Gross Margin](index=12&type=section&id=5.1_Adjusted_Home_Sales_Gross_Margin) The adjusted home sales gross margin, a non-GAAP measure excluding interest and inventory write-downs, was 27.5% for Q2 FY2025, down from 28.2% in Q2 FY2024. This metric is used by management to evaluate home building operations performance - Adjusted home sales gross margin is a non-GAAP financial measure calculated as (i) home sales gross margin plus interest recognized in home sales cost of revenues plus inventory write-downs recognized in home sales cost of revenues divided by (ii) home sales revenues[35](index=35&type=chunk) - Management uses this measure to evaluate the performance of home building operations without the varying effects of capitalized interest costs and inventory impairments, aiding in assessing profitability and making strategic decisions[37](index=37&type=chunk) Adjusted Home Sales Gross Margin Reconciliation (Amounts in thousands, except percentages) | Metric | Three Months Ended April 30, 2025 | Three Months Ended April 30, 2024 | Six Months Ended April 30, 2025 | Six Months Ended April 30, 2024 | | :---------------------------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Home sales gross margin ($M) | $704.2M | $683.7M | $1.16B | $1.22B | | Add: Interest recognized in cost of revenues - home sales ($M) | $30.3M | $34.7M | $50.4M | $58.3M | | Inventory impairments and write-offs in cost of revenues - home sales ($M) | $9.8M | $28.4M | $26.2M | $29.9M | | **Adjusted home sales gross margin ($M)** | **$744.3M** | **$746.9M** | **$1.24B** | **$1.30B** | | Home sales gross margin as a percentage of home sale revenues (%) | 26.0 % | 25.8 % | 25.6 % | 26.6 % | | **Adjusted home sales gross margin as a percentage of home sale revenues (%)** | **27.5 %** | **28.2 %** | **27.3 %** | **28.5 %** | [Adjusted Net Income and Diluted EPS](index=13&type=section&id=5.2_Adjusted_Net_Income_and_Diluted_EPS) Adjusted net income for Q2 FY2025 was $352.4 million ($3.50 per diluted share), compared to an adjusted $357.5 million ($3.38 per diluted share) in Q2 FY2024, after excluding a significant gain from a land sale in the prior year Adjusted Net Income and Diluted Per Share Reconciliation (Amounts in thousands, except per share data) | Metric | Three Months Ended April 30, 2025 | Three Months Ended April 30, 2024 | Six Months Ended April 30, 2025 | Six Months Ended April 30, 2024 | | :-------------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income ($M) | $352.4M | $481.6M | $530.2M | $721.2M | | Subtract: Net income resulting from the sale of a parcel of land to a commercial developer ($M) | — | ($124.1M) | — | ($124.1M) | | **Adjusted net income ($M)** | **$352.4M** | **$357.5M** | **$530.2M** | **$597.1M** | | Diluted earnings per share ($) | $3.50 | $4.55 | $5.24 | $6.80 | | Subtract: Diluted earnings per share resulting from the sale of a parcel of land to a commercial developer ($) | — | ($1.17) | — | ($1.17) | | **Adjusted diluted earnings per share ($)** | **$3.50** | **$3.38** | **$5.24** | **$5.63** | [Net Debt-to-Capital Ratio](index=14&type=section&id=5.3_Net_Debt-to-Capital_Ratio) The net debt-to-capital ratio, a non-GAAP measure indicating overall leverage, was 19.8% at April 30, 2025, an improvement from 21.1% at January 31, 2025, but higher than 15.2% at October 31, 2024 - The net debt-to-capital ratio is a non-GAAP financial measure calculated as (i) total debt minus mortgage warehouse loans minus cash and cash equivalents divided by (ii) total debt minus mortgage warehouse loans minus cash and cash equivalents plus stockholders' equity[42](index=42&type=chunk) - Management uses the net debt-to-capital ratio as an indicator of its overall leverage and believes it is a useful financial measure for investors to understand the leverage employed in the Company's operations[44](index=44&type=chunk) Net Debt-to-Capital Ratio Reconciliation (Amounts in thousands, except percentages) | Metric | April 30, 2025 | January 31, 2025 | October 31, 2024 | | :------------------------------------ | :--------------- | :--------------- | :--------------- | | Total debt ($B) | $2.80B | $2.75B | $2.83B | | Total stockholders' equity ($B) | $7.95B | $7.80B | $7.67B | | Total capital ($B) | $10.75B | $10.54B | $10.50B | | **Ratio of debt-to-capital (%)** | **26.1 %** | **26.0 %** | **27.0 %** | | Total net debt ($B) | $1.96B | $2.08B | $1.38B | | Total net capital ($B) | $9.91B | $9.88B | $9.05B | | **Net debt-to-capital ratio (%)** | **19.8 %** | **21.1 %** | **15.2 %** |

Core Insights - Toll Brothers, Inc. reported strong second quarter results for FY 2025, with home sales revenues reaching a record $2.71 billion, exceeding guidance and reflecting the strength of its diversified luxury offerings [3][4][5] - The company reaffirmed its full-year guidance based on robust first-half results and a strong backlog, despite a softer demand environment [3][4] Financial Performance - Net income for the second quarter was $352.4 million, or $3.50 per diluted share, down from $481.6 million, or $4.55 per diluted share in the same quarter of FY 2024 [5][8] - Home sales revenues increased by 2% year-over-year, with 2,899 homes delivered, a 10% increase from the previous year [5][8] - The backlog value at the end of the quarter was $6.84 billion, down 7% from the previous year, with 6,063 homes in backlog, a 15% decrease [5][8] Margins and Costs - Home sales gross margin improved to 26.0%, compared to 25.8% in FY 2024's second quarter, while adjusted home sales gross margin was 27.5%, down from 28.2% [5][8] - Selling, general, and administrative expenses as a percentage of home sales revenues increased to 9.5% from 9.0% in the prior year [5][8] Guidance and Outlook - For the third quarter, the company expects deliveries between 2,800 to 3,000 units and an average delivered price per home of $965,000 to $985,000 [4] - Full fiscal year guidance remains at 11,200 to 11,600 units delivered, with an average delivered price of $945,000 to $965,000 [4] Cash and Capital Structure - The company ended the quarter with $686.5 million in cash and cash equivalents, down from $1.30 billion at the end of FY 2024 [19] - Stockholders' equity increased to $7.95 billion from $7.67 billion at the end of FY 2024, with a book value per share of $80.84 [19][27] Market Position and Strategy - The company maintains a positive long-term outlook for the new home market, particularly in the luxury segment, supported by favorable demographics and a housing shortage [4] - Toll Brothers continues to adapt to changing market conditions with a balanced operating platform and disciplined underwriting [4]

Market Overview - Pre-market futures are flat following a sixth-straight up-day on the S&P 500, with market sentiment buoyed by positive trade deal expectations [1] - The Dow is up +0.03%, while the S&P 500 is down -0.17%, and the tech-heavy Nasdaq has grown nearly +20% recently but is down -0.28% in early trading [2] Economic Indicators - U.S. Leading Economic Indicators (LEI) dropped -1.0% to 99.4 points in April, marking the first time below 100 since September of last year [3] - This decline represents the fifth consecutive drop in LEI, which had previously shown a hopeful turn around the 2024 election [3] Home Depot Earnings - Home Depot reported mixed Q1 results with earnings of $3.56 per share, missing the Zacks consensus by 3 cents, while revenues were $39.86 billion, up +9.4% year over year [5] - Shares of Home Depot are up +2% in pre-market trading, recovering most of year-to-date losses [5] Viking Holdings Earnings - Viking Holdings reported Q1 results with negative earnings of -$0.24 per share, which was 2 cents better than expected, and revenues of $897.06 million, exceeding estimates by +4.49% [6] - Despite outperforming expectations, shares are down -5% in early trading [6] Upcoming Earnings Reports - Palo Alto Networks is expected to report negative -8% earnings growth with revenues projected to increase by +14.67% [7] - Toll Brothers is anticipated to report fiscal Q2 numbers with expected declines of -15.3% on earnings and -11.9% on revenues, although it may achieve its third earnings beat in the last four quarters [8]