Financial Data and Key Metrics Changes - The company delivered 2,959 homes at an average price of $974,000, generating record third-quarter home sale revenues of $2,900,000,000, which represents a 5% increase in units and a 6% increase in dollars compared to the previous year's third quarter [6][14]. - Adjusted gross margin for the quarter was 27.5%, exceeding guidance by 25 basis points, while SG&A expenses were 8.8% of home sales revenues, 40 basis points better than guidance [6][16]. - Earnings for the quarter were $370,000,000, or $3.73 per diluted share, with a return of approximately $226,000,000 to stockholders through dividends and share repurchases [6][19]. Business Line Data and Key Metrics Changes - The company signed 2,388 net contracts for $2,400,000,000, reflecting a 4% decline in units but flat in dollars due to an increase in average sales price to just over $1,000,000 [6][15]. - The average price of contracts signed in the quarter was $1,010,000, while the average price in the backlog was $1,160,000, indicating strong financial profiles of buyers [16][9]. - The cancellation rate was 3.2% of the beginning backlog, compared to 2.4% in the previous year's third quarter, reflecting the financial strength of buyers [10]. Market Data and Key Metrics Changes - The company ended the third quarter with 420 active selling communities and expects to reach 440 to 450 communities by the end of the fiscal year, representing 8% to 10% year-over-year growth [11][12]. - The company has 3,200 spec homes at various stages of construction and another 1,800 building permits ready to go, allowing for quick ramp-up in production as market conditions improve [8][9]. Company Strategy and Development Direction - The company continues to prioritize price and margin over pace, actively managing spec starts and inventory levels on a community-by-community basis to match local market conditions [7][11]. - The strategy of selling spec homes at various stages of construction allows buyers to personalize their homes while providing a faster construction schedule [8][9]. - The company remains focused on capital-efficient deal structures and maintaining a strong land position to support long-term growth [12][19]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a full-year adjusted gross margin of 27.25% and expects to deliver approximately 11,200 homes for the full year [21][22]. - The management noted that building costs are beginning to come down modestly, with no significant impact from tariffs expected this fiscal year [10][11]. - There is optimism regarding community count growth and sales pace for fiscal year 2026, with expectations of 20 to 30 openings in Q4 [34][39]. Other Important Information - The company issued $500,000,000 of ten-year senior notes at a 5.6% coupon and called $350,000,000 of senior notes scheduled to mature in November, extending the weighted average years to maturity of senior notes [19]. - The company spent $433,000,000 on new land acquisitions during the quarter, maintaining a disciplined approach to underwriting [12][19]. Q&A Session Summary Question: Cash flow from operations guidance - The company expects to generate over $1,000,000,000 in cash flow from operations, with year-to-date cash flow around $400 million [27][28]. Question: Sales pace and incentives - Sales pace improved from May to August, with incentives increasing from 7% to 8% primarily due to discounting on finished spec homes [48][49]. Question: Order picture for Q4 - Management is optimistic about community count growth in Q4, with new openings expected to drive orders [60][61]. Question: Development costs and cycle times - The company has not seen much relief on land development costs, and cycle times vary across communities, with efforts ongoing to improve efficiency [68][77]. Question: Spec mix and margin differentials - The current spec mix is around 50%, compared to 10-15% pre-COVID, with margins on build-to-order homes being higher than spec homes [88][89].

Financial Data and Key Metrics Changes - The company delivered 2,959 homes at an average price of $974,000, generating record third-quarter home sale revenues of $2,900,000,000, which represents a 5% increase in units and a 6% increase in dollars compared to the previous year [5][15] - Adjusted gross margin was 27.5%, exceeding guidance by 25 basis points, while SG&A expense was 8.8% of home sales revenues, 40 basis points better than guidance [5][16] - Third-quarter earnings were $370,000,000 or $3.73 per diluted share, with a cancellation rate of 3.2%, which remains the lowest in the industry [10][15] Business Line Data and Key Metrics Changes - The company signed 2,388 net contracts for $2,400,000,000, with units down approximately 4% year over year, but dollars flat due to an increase in average sales price to just over $1,000,000 [5][15] - The average sales price (ASP) was up 4.5% versus 2024 and up 3% versus the last quarter, indicating resilience in the luxury business [5][15] - The backlog stood at 5,492 homes valued at $6,376,000,000, with an average sales price in the backlog of $1,160,000 [9] Market Data and Key Metrics Changes - The company ended the third quarter with 420 active selling communities and expects to end the fiscal year with 440 to 450 communities, representing 8% to 10% year-over-year growth [11][12] - The company has 3,200 spec homes at various stages of completion and another 1,800 building permits ready to go, allowing for quick ramp-up of spec production as market conditions improve [7][9] Company Strategy and Development Direction - The company continues to prioritize price and margin over pace, actively managing spec starts and inventory levels on a community-by-community basis to match local market conditions [6][11] - The strategy of selling spec homes at various stages of construction allows buyers to personalize their homes while providing a faster construction schedule [8][9] - The company remains disciplined in its land acquisition strategy, focusing on high-quality land at attractive returns while keeping land off balance sheet as long as practical [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a full-year adjusted gross margin of 27.25% and expects to deliver approximately 11,200 homes for the full year [6][23] - The company anticipates a modest decline in build costs and has not seen significant impacts from tariffs, with expectations for build costs to come down in the foreseeable future [10][11] - Management highlighted the importance of community openings and spec strategy to drive growth in fiscal year 2026, with optimism about market conditions improving [36][41] Other Important Information - The company returned approximately $226,000,000 to stockholders through dividends and share repurchases in the quarter [5] - The company issued $500,000,000 of ten-year senior notes at a 5.6% coupon and called $350,000,000 of senior notes scheduled to mature in November [20][21] Q&A Session Summary Question: Cash flow from operations guidance - The year-to-date cash flow from operations is approximately $400 million, with expectations to reach over $1,000,000,000 by year-end [29][30] Question: Construction costs expectations - Management expects construction costs to be flat to modestly down in the short term, with some progress in negotiating better pricing for materials [31][32] Question: Sales pace and community growth - Management confirmed no change in the sales pace target of two homes per community per month and expressed excitement about community count growth in fiscal year 2026 [35][36] Question: Incentives and sales trends - Incentives increased to 8% due to more discounting on finished specs, but management noted that incentives have stabilized recently [50][51] Question: Development costs and community count guidance - Management has not seen much relief on land development costs but expects community count growth to be spread throughout the quarter without significant regional concentration [69][72]

Market Position and Strategy - Public homebuilders have increased their market share from 27% in 2012 to approximately 53% in 2024[15] - The company focuses on capital efficiency in land acquisition through optioned land, land banking, joint ventures, rolling takedowns, and seller financing[45] - The company is strategically focused on driving shareholder returns through land acquisition, improved operations, and buybacks & dividends[39] Financial Performance - The company's diluted earnings per share (EPS) has grown at a compound annual growth rate (CAGR) of 28%, reaching $1501 in FY 2024[54] - The company has repurchased approximately 52% of its shares since 2016, totaling 91 million shares at an average price of $50, and has paid approximately $644 million in dividends[63] - The company's revenue from home sales increased from $6937357000 in FY 2020 to $10563332000 in FY 2024[66] - The company's return on beginning equity was 231% in FY 2024[66] Industry Trends - The new home premium has compressed from a historical 17% to 3% in 2025, making the value proposition of a new home compelling compared to a used home[23] - The median age of owner-occupied U S homes is over 40 years, compared to 32 years in 2005[27] - Housing starts have not kept pace with household growth, indicating an undersupplied market[20] Land and Operations - The company operates in 24 states and over 60 markets[33] - The company's total addressable market (TAM) consists of approximately 575000 housing transactions with buyers having income greater than $200K[73]

Shares of Toll Brothers (NYSE: TOL ) have essentially tread water this year, missing out on a meaningful market rally. While still well below their 52-week high, the stock has rebounded more than 30% from its lows, and its focus on the higher-end of the housingOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or have a question for an ar ...

Group 1: Earnings Performance - Toll Brothers reported quarterly earnings of $3.73 per share, exceeding the Zacks Consensus Estimate of $3.59 per share, and up from $3.6 per share a year ago, representing an earnings surprise of +3.90% [1] - The company posted revenues of $2.95 billion for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 3.25%, compared to revenues of $2.73 billion in the same quarter last year [2] - Over the last four quarters, Toll Brothers has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Group 2: Stock Performance and Outlook - Toll Brothers shares have increased by approximately 4.2% since the beginning of the year, while the S&P 500 has gained 9.7% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $5.24 on revenues of $3.48 billion, and for the current fiscal year, it is $13.95 on revenues of $10.93 billion [7] Group 3: Industry Context - The Building Products - Home Builders industry, to which Toll Brothers belongs, is currently ranked in the bottom 8% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5] - The Zacks Rank for Toll Brothers is currently 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6]

Market Overview - The Nasdaq experienced a significant drop, shedding -314 points (-1.46%), while the Dow and S&P 500 showed minor fluctuations, closing up +10 points (+0.02%) and down -37 points (-0.59%) respectively [1] - The decline in tech stocks has been a continuing trend, with Palantir (PLTR) falling -9.3% on the day and -16.5% over the past five sessions [2] Company Earnings - Toll Brothers (TOL) reported fiscal Q3 earnings of $3.73 per share, exceeding the Zacks consensus estimate of $3.59, with revenues of $2.88 billion, surpassing the projected $2.85 billion [3] - The company achieved its fourth earnings beat in the last five quarters, although gross margins remained steady at +27.5% [4] - Orders for Toll Brothers were down -4% compared to expectations of flat, and the average home sold was $974K, slightly below analyst expectations [4] Upcoming Earnings Reports - Anticipation is building for retail earnings reports from Target (TGT), TJX Stores (TJX), Lowe's (LOW), and Estee Lauder (EL), with expected year-over-year earnings changes of -18.7%, +5%, +3.2%, and -87.5% respectively [5] Federal Reserve Insights - The Federal Open Market Committee (FOMC) minutes will be released, highlighting that the Fed has maintained rates at 4.25-4.50% for the fifth consecutive meeting, with notable dissent from two voting members for the first time in over 30 years [6]

[Q3 FY2025 Earnings Overview](index=1&type=section&id=Toll%20Brothers%20Reports%20FY%202025%20Third%20Quarter%20Results) [Q3 FY2025 Financial Highlights](index=1&type=section&id=FY%202025's%20Third%20Quarter%20Financial%20Highlights) The company achieved record Q3 revenues of $2.9 billion, though net income slightly declined and backlog value fell 10% Q3 FY2025 vs Q3 FY2024 Key Metrics | Metric | Q3 FY2025 | Q3 FY2024 | Change | | :--- | :--- | :--- | :--- | | **Net Income** | $369.6 million | $374.6 million | -1.3% | | **Diluted EPS** | $3.73 | $3.60 | +3.6% | | **Home Sales Revenues** | $2.88 billion | $2.72 billion (approx.) | +6% | | **Homes Delivered** | 2,959 units | 2,814 units | +5% | | **Net Signed Contract Value** | $2.41 billion | $2.41 billion | Flat | | **Contracted Homes** | 2,388 units | 2,490 units | -4% | | **Quarter-End Backlog Value** | $6.38 billion | $7.07 billion | -10% | | **Adjusted Gross Margin** | 27.5% | 28.8% | -130 bps | | **SG&A as % of Revenue** | 8.8% | 9.0% | -20 bps | - The company repurchased approximately **1.8 million shares** for a total of **$201.4 million** during the quarter[7](index=7&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted record Q3 revenues and strong margins, citing the resilience of its luxury business - Delivered 2,959 homes at an average price of $974,000, resulting in record Q3 home sales revenues of **$2.9 billion**, a **6% increase YoY**[4](index=4&type=chunk) - **Adjusted gross margin of 27.5%** and **SG&A margin of 8.8%** both beat company guidance[4](index=4&type=chunk) - The average sales price of new contracts rose **4.5% YoY to $1.0 million**, offsetting a 4% decline in contract units and keeping contract dollar value flat[5](index=5&type=chunk) - The company maintains a solid financial position with significant cash flow and liquidity, and controls sufficient land for community count growth over the next several years, allowing for selective land acquisition[6](index=6&type=chunk) [Financial Guidance for Q4 and Full Year FY2025](index=2&type=section&id=Fourth%20Quarter%20and%20FY%202025%20Financial%20Guidance) The company projects delivering 11,200 homes for the full year with an adjusted gross margin of 27.25% Q4 and Full Year FY2025 Guidance | Metric | Fourth Quarter Guidance | Full Fiscal Year Guidance | | :--- | :--- | :--- | | **Deliveries** | 3,350 units | 11,200 units | | **Avg. Delivered Price** | $970,000 - $980,000 | $950,000 - $960,000 | | **Adj. Gross Margin** | 27.00% | 27.25% | | **SG&A % of Revenue** | 8.3% | 9.4% - 9.5% | | **Period-End Community Count** | 440 - 450 | 440 - 450 | | **Tax Rate** | 25.5% | 25.1% | [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) [Q3 & YTD FY2025 Financial Performance](index=2&type=section&id=Q3%20%26%20YTD%20FY2025%20Financial%20Performance) Q3 home sales revenue grew 6%, while nine-month pre-tax income declined due to lower land sales income Financial Highlights for the three months ended July 31 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | **Net Income** | $369.6M | $374.6M | | **Home Sales Revenues** | $2.88B | $2.72B | | **Net Signed Contracts** | $2.41B (2,388 units) | $2.41B (2,490 units) | | **Quarter-End Backlog** | $6.38B (5,492 units) | $7.07B (6,769 units) | | **Adjusted Gross Margin** | 27.5% | 28.8% | | **Cancellations as % of Beginning Backlog** | 3.2% | 2.4% | Financial Highlights for the nine months ended July 31 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | **Net Income** | $899.8M | $1.10B | | **Home Sales Revenues** | $7.43B | $7.30B | | **Net Signed Contracts** | $7.32B | $7.41B | | **Adjusted Gross Margin** | 27.4% | 28.6% | | **Income from Operations** | $1.16B | $1.43B | [Financial Position and Liquidity](index=3&type=section&id=Financial%20Position%20and%20Liquidity) The company maintained strong liquidity, managed its capital structure, and increased book value per share to $83.85 - Ended Q3 with **$852.3 million in cash** and cash equivalents and **$2.19 billion available** under its revolving credit facility[13](index=13&type=chunk) - Issued **$500.0 million of 5.600% senior notes** due 2035 and redeemed **$350.0 million of 4.875% senior notes** due 2025[13](index=13&type=chunk) - **Book value per share increased to $83.85** at quarter-end, up from $76.87 at FYE 2024[13](index=13&type=chunk) - The **net debt-to-capital ratio was 19.3%** at the end of Q3 FY2025, compared to 19.8% at the end of Q2 FY2025 and 15.2% at FYE 2024[13](index=13&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) Financial statements show increased assets from inventory and a decline in net income for Q3 and the nine-month period [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $14.40 billion, driven by a significant increase in inventory Balance Sheet Highlights (in millions) | Account | July 31, 2025 | October 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $852.3 | $1,303.0 | | **Inventory** | $11,071.5 | $9,712.9 | | **Total Assets** | $14,396.8 | $13,367.9 | | **Total Liabilities** | $6,285.6 | $5,681.2 | | **Total Stockholders' Equity** | $8,095.6 | $7,670.9 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 revenue rose 6% while net income slightly fell; nine-month net income saw a more significant decline Statement of Operations Highlights (Q3, in millions) | Account | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | **Home Sales Revenue** | $2,881.0 | $2,724.5 | | **Gross Margin - Home Sales** | $738.2 (25.6%) | $747.3 (27.4%) | | **Income from Operations** | $487.7 | $497.2 | | **Net Income** | $369.6 | $374.6 | | **Diluted EPS** | $3.73 | $3.60 | Statement of Operations Highlights (Nine Months, in millions) | Account | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | **Home Sales Revenue** | $7,428.2 | $7,303.3 | | **Gross Margin - Home Sales** | $1,901.7 (25.6%) | $1,963.7 (26.9%) | | **Income from Operations** | $1,156.5 | $1,429.1 | | **Net Income** | $899.8 | $1,095.8 | | **Diluted EPS** | $8.95 | $10.40 | [Supplemental and Segment Data](index=9&type=section&id=Supplemental%20and%20Segment%20Data) This section details inventory, impairments, and geographic segment performance, with the Pacific region showing the highest prices [Supplemental Financial Data](index=9&type=section&id=Supplemental%20Financial%20Data) Inventory grew to $11.07 billion, and inventory impairments increased significantly to $23.3 million in Q3 Home Sites Controlled | Type | July 31, 2025 | July 31, 2024 | | :--- | :--- | :--- | | **Owned** | 32,761 | 36,345 | | **Optioned** | 43,990 | 36,384 | | **Total** | 76,751 | 72,729 | - Inventory impairments and write-offs charged to home sales cost of revenues increased to **$23.3 million in Q3 2025**, compared to $5.5 million in Q3 2024[30](index=30&type=chunk) [Geographic Segment Performance](index=10&type=section&id=Geographic%20Segment%20Performance) The South segment led in revenue and deliveries, while the Pacific segment had the highest average contract price Q3 2025 Performance by Geographic Segment | Segment | Revenues ($M) | Contracts ($M) | Backlog ($M) | | :--- | :--- | :--- | :--- | | **North** | $438.7 | $431.3 | $1,021.2 | | **Mid-Atlantic** | $400.7 | $369.0 | $956.2 | | **South** | $757.9 | $524.2 | $1,543.3 | | **Mountain** | $730.2 | $575.6 | $1,410.8 | | **Pacific** | $553.1 | $511.9 | $1,444.7 | - The average price per unit in backlog at quarter-end was **$1,161,000**, a significant increase from $1,044,000 in the prior year, driven largely by a substantial price increase in the Pacific segment's backlog[31](index=31&type=chunk) [Reconciliation of Non-GAAP Measures](index=12&type=section&id=RECONCILIATION%20OF%20NON-GAAP%20MEASURES) This section reconciles non-GAAP measures like adjusted gross margin and net debt-to-capital ratio to their GAAP equivalents [Adjusted Home Sales Gross Margin](index=12&type=section&id=Adjusted%20Home%20Sales%20Gross%20Margin) The adjusted home sales gross margin of 27.5% excludes interest and inventory write-downs from the GAAP margin Adjusted Home Sales Gross Margin Reconciliation (Q3) | Metric | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | **Home Sales Gross Margin (GAAP)** | 25.6% | 27.4% | | Add: Interest | 1.1% (approx.) | 1.2% (approx.) | | Add: Inventory Impairments | 0.8% (approx.) | 0.2% (approx.) | | **Adjusted Home Sales Gross Margin (Non-GAAP)** | 27.5% | 28.8% | - Management believes this non-GAAP measure allows investors to evaluate the performance of home building operations without the often varying effects of capitalized interest costs and inventory impairments[41](index=41&type=chunk) [Net Debt-to-Capital Ratio](index=14&type=section&id=Net%20Debt-to-Capital%20Ratio) The net debt-to-capital ratio, an indicator of leverage, stood at 19.3% at the end of Q3 Net Debt-to-Capital Ratio Reconciliation | Metric | July 31, 2025 | April 30, 2025 | Oct 31, 2024 | | :--- | :--- | :--- | :--- | | **Debt-to-Capital Ratio (GAAP)** | 26.7% | 26.1% | 27.0% | | **Net Debt-to-Capital Ratio (Non-GAAP)** | 19.3% | 19.8% | 15.2% | - 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[48](index=48&type=chunk) [Company Information and Disclosures](index=3&type=section&id=Company%20Information%20and%20Disclosures) [About Toll Brothers](index=4&type=section&id=About%20Toll%20Brothers) Toll Brothers is a leading U.S. luxury home builder operating in over 60 markets across 24 states - Toll Brothers is the nation's leading builder of luxury homes, serving various buyer segments including first-time, move-up, active-adult, and second-home buyers[16](index=16&type=chunk) - The company operates in **over 60 markets in 24 states** and the District of Columbia and has been recognized as one of Fortune magazine's World's Most Admired Companies for over 10 consecutive years[16](index=16&type=chunk)[17](index=17&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section outlines risks and uncertainties that could cause future results to differ from forward-looking statements - The release contains forward-looking statements regarding future events and performance, which are not guarantees and are subject to risks and uncertainties[20](index=20&type=chunk)[21](index=21&type=chunk) - Major risks that could affect future results include general economic conditions, interest rates, market demand, land availability, competition, and the price of raw materials and labor[21](index=21&type=chunk)

Toll Brothers at Tesoro Highlands Valencia, CA FORT WASHINGTON, Pa., Aug. 19, 2025 (GLOBE NEWSWIRE) -- Toll Brothers, Inc. (NYSE:TOL) (TollBrothers.com), the nation’s leading builder of luxury homes, today announced results for its third quarter ended July 31, 2025. FY 2025’s Third Quarter Financial Highlights (Compared to FY 2024’s Third Quarter): Net income and earnings per share were $369.6 million and $3.73 per diluted share, compared to net income of $374.6 million and $3.60 per diluted share in FY ...

The housing market is under scrutiny today, after privately owned starts for July came in well above analysts' estimates at an adjusted annual rate of 1.428 million, while building permits fell 2.8% from June and missed expectations. Despite the mixed data, Lennar Corp (NYSE:LEN) and Toll Brothers Inc (NYSE:TOL) are enjoying afternoon gains.LEN Breaks Above Technical ResistanceLEN was last seen 1.6% higher to trade at $133.52, following Friday's rally to its highest level since January. The stock sports a 2 ...

Core Insights - Toll Brothers, Inc. is scheduled to report its third-quarter fiscal 2025 results on August 19, 2025, with a focus on maintaining strong margins and steady deliveries in a challenging housing market [1] Financial Performance - The company achieved a record fiscal second quarter with earnings per share of $3.50, exceeding estimates by 22.4% and showing a year-over-year increase of 3.6% [2] - Revenue for the second quarter was $2.74 billion, surpassing consensus by 9.5% and reflecting a 2.3% year-over-year growth [2] - Home deliveries totaled 2,899 units at an average price of $934,000, with a gross margin of 27.5% and SG&A expenses at 9.5% of sales, both exceeding guidance [2] - Despite a 13% decline in net signed contracts due to economic uncertainty, the backlog remains strong at $6.84 billion [2] Future Estimates - The Zacks Consensus Estimate for the fiscal third-quarter earnings per share is $3.59, indicating a slight decline from the previous year's EPS of $3.60 [4] - Revenue for the third quarter is estimated at $2.85 billion, suggesting a 4.6% year-over-year increase [4] - For fiscal 2025, revenues are expected to increase by 0.8%, while the bottom line is projected to decline by 7.1% [5] Guidance for Q3 2025 - Toll Brothers anticipates home deliveries between 2,800 and 3,000 units at an average selling price of $965,000 to $985,000 [7] - The company expects adjusted gross margin to be 27.25%, slightly below the previous year's margin of 28.8% [8] - SG&A expenses are projected to be 9.2% of home sales revenue, up from 9% in the same quarter last year [9] Market Position and Customer Base - The company serves a financially resilient customer base, with over 70% of its business targeting move-up and empty-nester segments [10] - More than 24% of buyers in the second quarter paid in cash, with an average loan-to-value ratio of 70% [10] - Toll Brothers operates in over 60 markets across 24 states, offering a diverse range of homes priced from $300,000 to over $5 million [11] Challenges and Risks - The company faces challenges such as declining consumer confidence, with net signed contracts down significantly year-over-year [12] - Increased incentives to support sales may pressure margins, with current incentives at about 7% of the average selling price [12] - The need to sell and close 1,900 spec homes in the second half of the year poses a risk to meeting delivery guidance [12] Stock Performance and Valuation - Toll Brothers stock has risen 23% over the past three months, outperforming some peers in the homebuilding industry [16] - The stock is currently trading at a discount to its industry in terms of forward price/earnings ratios [20] - The company holds a Zacks Rank of 3, indicating a hold recommendation, with limited near-term upside due to current earnings estimates [15][23]