Core Viewpoint - Toll Brothers exceeded earnings estimates, indicating strong performance and suggesting resilience against high housing costs due to its affluent customer base [1] Company Summary - Toll Brothers reported earnings that surpassed market expectations, reflecting robust demand in the luxury home segment [1] - The company's clientele, characterized by higher income levels, provides a buffer against the broader housing market challenges, making it less vulnerable to rising housing costs [1] Industry Summary - The performance of Toll Brothers may signal positive trends within the luxury housing market, which could be less affected by economic fluctuations compared to the overall housing sector [1] - The resilience of high-end homebuilders like Toll Brothers could indicate a divergence in market dynamics, where luxury segments maintain stability amid broader economic pressures [1]

Core Viewpoint - Toll Brothers Inc. has shown significant stock performance, with a 12.39% increase over the past month and a 44.98% increase over the past year, leading to optimism among long-term shareholders [1] Group 1: Stock Performance - The current trading price of Toll Brothers Inc. is $166.94, reflecting a 1.90% spike [1] - Over the past month, the stock has increased by 12.39% [1] - In the past year, the stock has appreciated by 44.98% [1] Group 2: P/E Ratio Analysis - The P/E ratio is a critical metric for investors, comparing the current share price to the company's earnings per share (EPS) [2] - A higher P/E ratio may indicate that investors expect better future performance, potentially suggesting overvaluation, but it could also reflect a willingness to pay more for anticipated growth [2] - Toll Brothers Inc. has a P/E ratio of 12.14, which is lower than the industry average of 19.03 for the Household Durables sector [3] - This lower P/E ratio may lead shareholders to believe that the stock could perform worse than its peers, or it may indicate that the stock is undervalued [3]

Financial Data and Key Metrics Changes - The company delivered 1,899 homes in the quarter, generating $1.85 billion in home building revenue, approximately $24 million above the midpoint of guidance [5] - Adjusted gross margin was 26.5%, exceeding guidance by 25 basis points, while SG&A margin was 13.9%, better than the 14.2% guidance [20][21] - Earnings per diluted share increased by 25% to $2.19 compared to $1.75 in the same quarter last year [5] - The company signed 2,303 net contracts for $2.4 billion, flat in units but up 3% in dollars compared to the previous year [19] Business Line Data and Key Metrics Changes - The luxury move-up segment accounted for 59% of homebuilding revenues, while luxury first-time buyers made up 25% and luxury move-downs 16% [13] - The company maintains a balanced mix of build-to-order and spec homes, generating about half of revenues from each segment [14] Market Data and Key Metrics Changes - The Boston to South Carolina corridor, along with Boise, Las Vegas, Reno, and all of California, performed well, while Tampa, Atlanta, San Antonio, and the Pacific Northwest faced challenges [13] - The average sales price increased to $1,033,000, reflecting a 3% increase compared to the previous year [5] Company Strategy and Development Direction - The company plans to increase community count from 445 to 455 by the end of the second quarter, targeting an 8%-10% increase for the full year [8] - The company is focused on capital-efficient land acquisition strategies, including option arrangements and joint ventures [9] - The company aims to serve a more affluent customer base, which is less sensitive to affordability pressures [10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding increased activity in the housing market, particularly as the spring selling season begins [6][12] - The company believes that long-term demand for housing will remain strong due to demographic trends and significant home price appreciation [26][27] - Management noted that the market remains underserved, with a need for an additional 3 to 7 million new homes to reach equilibrium [27] Other Important Information - The company has approximately $3.4 billion in liquidity, including $1.2 billion in cash [22] - The company plans to repurchase $650 million in common stock for the full year, with most occurring later in the year [25] Q&A Session Summary Question: What is driving the sequential decline in gross margin from Q1 to Q2? - Management indicated that the decline is due to a mix change, with less contribution from high-margin regions in Q2 [31] Question: What are the thoughts on the Sumitomo acquisition of Tri Pointe? - Management expressed uncertainty but noted that the Japanese have historically been innovative in construction [32][33] Question: How would the company prioritize its spec strategy if demand softens? - Management stated they would lean into build-to-order homes if the market softened, rather than blindly building specs [36] Question: What is the long-term target for net debt to capital? - Management indicated a target in the mid-teens for net debt to total capital [39] Question: How is the company seeing traffic and sales trends? - Management reported modest increases in web traffic, physical traffic, and deposits compared to the previous year [42][66] Question: What percentage of communities saw price increases in Q1? - Management noted that 30%-40% of communities experienced price increases in Q1 [79] Question: How is the company managing labor and construction costs? - Management reported good availability of labor and flat building costs, with some downward pressure on certain costs [75][56]

Financial Data and Key Metrics Changes - The company delivered 1,899 homes in the quarter, generating $1.85 billion in home building revenue, approximately $24 million above the midpoint of guidance [5] - Earnings per diluted share increased by 25% to $2.19 compared to $1.75 in the previous year's Q1, exceeding implied guidance [5] - Adjusted gross margin was 26.5%, exceeding guidance by 25 basis points, while SG&A margin was 13.9%, better than the guidance of 14.2% [19][20] Business Line Data and Key Metrics Changes - The company signed 2,303 net contracts for $2.4 billion, flat in units but up 3% in dollars compared to last year's Q1, with an average sales price of $1,033,000 [5][18] - The luxury move-up segment accounted for 59% of homebuilding revenues, while luxury first-time buyers made up 25% and luxury move-down accounted for 16% [13] - The company maintains a balanced mix of build-to-order and spec homes, generating about half of homebuilding revenues from each segment [14] Market Data and Key Metrics Changes - The Boston to South Carolina corridor, along with Boise, Las Vegas, Reno, and all of California, performed well, while Tampa, Atlanta, San Antonio, and the Pacific Northwest faced challenges [13] - The company has a healthy mix of affluent customers, with over 70% of business coming from luxury segments, which are less sensitive to affordability pressures [10] Company Strategy and Development Direction - The company plans to increase community count from 445 at the end of Q1 to 455 by the end of Q2, targeting an 8%-10% increase for the full year [8][25] - The company is focused on capital-efficient land acquisition strategies, including option arrangements and joint ventures, to support growth [9] - The company aims to navigate the market by serving a more affluent customer base and driving strong returns for stockholders [27] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding increased traffic and sales activity consistent with the spring selling season [6][12] - The company believes that long-term demand for housing will remain strong due to demographic trends and a significant generational wealth transfer [26][27] - Management noted that the market continues to be underserved, with a need for an additional 3 to 7 million new homes to reach equilibrium [27] Other Important Information - The company ended Q1 with approximately $3.4 billion in liquidity, including $1.2 billion in cash [21] - The company plans to repurchase $650 million in common stock for the full year, with most occurring later in the year [25] Q&A Session Summary Question: What is driving the sequential decline in gross margin from Q1 to Q2? - Management indicated that the decline is due to a mix change, with less contribution from high-margin regions in Q2 [30] Question: What are the thoughts on the Sumitomo acquisition of Tri Pointe? - Management noted that they are not closely involved but acknowledged the potential for innovation in home building from such acquisitions [31][32] Question: How does the company prioritize its spec strategy in a softening market? - Management stated they would lean into build-to-order homes if demand softens, while maintaining a balanced spec ratio [34][36] Question: What is the long-term target for net debt to capital? - Management indicated a target in the mid-teens for net debt to total capital [37] Question: How is the company seeing traffic and sales trends year-to-date? - Management reported modest increases in web traffic, physical traffic, and deposits compared to the previous year [40][41] Question: What percentage of communities saw price increases in Q1? - Management stated that 30%-40% of communities experienced price increases in Q1 [76][79]

Financial Data and Key Metrics Changes - The company delivered 1,899 homes in Q1 2026, generating $1.85 billion in home building revenue, approximately $24 million above the midpoint of guidance [4] - Earnings per diluted share increased by 25% to $2.19 compared to $1.75 in Q1 2025, exceeding implied guidance [4] - Adjusted gross margin was 26.5%, exceeding guidance by 25 basis points, while SG&A margin was 13.9%, better than the 14.2% guidance [17][18] Business Line Data and Key Metrics Changes - The company signed 2,303 net contracts for $2.4 billion, flat in units but up 3% in dollars compared to Q1 2025, with an average sales price of $1,033,000 [4][16] - The luxury move-up segment accounted for 59% of homebuilding revenues, while luxury first-time buyers made up 25% and luxury move-down accounted for 16% [11] - The mix of build-to-order and spec homes is balanced at approximately 50% each, with build-to-order homes maintaining a higher margin [12][13] Market Data and Key Metrics Changes - The Boston to South Carolina corridor, along with Boise, Las Vegas, Reno, and all of California, performed well, while Tampa, Atlanta, San Antonio, and the Pacific Northwest faced challenges [11] - The average delivered price for first-time buyers was approximately $670,000 in Q1 2026 [8] Company Strategy and Development Direction - The company plans to increase community count from 445 to 455 by the end of Q2 2026, targeting an overall growth of 8%-10% for the year [6][22] - The company is focused on capital-efficient land acquisition strategies, including option arrangements and joint ventures [7] - The company aims to serve a more affluent customer base, which is less sensitive to affordability pressures [8][25] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding increased traffic and sales activity consistent with the start of the Spring Selling Season [5][10] - The company remains positive about the long-term future of the U.S. housing market, driven by demographic trends and significant home price appreciation [24][25] - Management noted that the market continues to be underserved, with a need for an additional 3 to 7 million new homes to reach equilibrium [25] Other Important Information - The company has approximately $3.4 billion in liquidity, including $1.2 billion in cash, and a net debt to capital ratio of 14.2% [19] - The company plans to maintain its full-year adjusted gross margin guidance of 26.0% [17][20] Q&A Session Summary Question: What is driving the decline in gross margin from Q1 to Q2? - Management indicated that the decline is due to a mix change, with less contribution from high-margin regions [28] Question: Thoughts on the Sumitomo acquisition of Tri Pointe? - Management expressed uncertainty but noted that the Japanese have historically been innovative in construction [29][30] Question: How would the company prioritize its spec strategy if demand softens? - Management stated they would lean into build-to-order if the market softened, rather than blindly building specs [32][34] Question: What is the long-term target for net debt to capital? - Management indicated a target in the mid-teens for net debt to capital [35] Question: How is the company seeing traffic and sales trends? - Management reported modest increases in web traffic, physical traffic, and deposits compared to the previous year [38][62] Question: How does the company view pricing and incentives? - Management noted that incentives have remained stable at 8% and that they would first increase pace before adjusting incentives [68] Question: What is the outlook for land purchases? - Management indicated they are seeing more opportunities for well-structured land deals due to less competition [73]

| 1001 MILLSTONE BY TQLL BROTHERS | CARY, NC FIRST QUARTER 2026 COMPANY OVERVIEW m VI d ш > O > N √ d W O C 9 Z O Z l O STATEMENT OF FORWARD-LOOKING INFORMATION Information presented herein for the first quarter ended January 31, 2026 is subject to finalization of the Company's requlatory filings, related financial and accounting reporting procedures and external auditor procedures. This release contains or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform ...

Core Insights - Toll Brothers (TOL) reported quarterly earnings of $2.19 per share, exceeding the Zacks Consensus Estimate of $2.05 per share, and up from $1.75 per share a year ago, representing an earnings surprise of +6.66% [1] - The company achieved revenues of $2.15 billion for the quarter ended January 2026, surpassing the Zacks Consensus Estimate by 16.42%, compared to $1.86 billion in the same quarter last year [2] - Toll Brothers shares have increased by approximately 22.9% since the beginning of the year, while the S&P 500 has declined by 0.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.94 on revenues of $2.52 billion, and for the current fiscal year, it is $12.69 on revenues of $10.4 billion [7] - The estimate revisions trend for Toll Brothers was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Building Products - Home Builders industry, to which Toll Brothers belongs, is currently ranked in the bottom 2% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Core Insights - The homebuilder reported a quarterly profit of $210.9 million, which represents an increase from $177.7 million in the same quarter of the previous year [1] Financial Performance - Quarterly profit increased by $33.2 million year-over-year, reflecting a growth of approximately 18.7% [1]

Toll Brothers fell short of analysts’ estimates for quarterly orders, signaling that fewer people are signing contracts to build homes as high prices and economic uncertainty hold some buyers back https://t.co/6Cq2TJ5K0N ...

Financial Performance - Toll Brothers delivered 1,899 homes at an average price of $977,000, generating home sales revenues of $1.85 billion, a slight increase from $1.84 billion in FY 2025's first quarter [4][7]. - Net income for the first quarter was $210.9 million, or $2.19 per diluted share, representing a 25% increase compared to $177.7 million, or $1.75 per diluted share, in FY 2025's first quarter [7][9]. - Total revenues for the three months ended January 31, 2026, were $2,145.6 million, compared to $1,859.1 million for the same period in 2025, representing an increase of 15.4% [26]. - Home sales revenue was $1,854.9 million, slightly up from $1,840.8 million in the prior year, while land sales and other revenue surged to $290.6 million from $18.4 million [26]. - Net income for the three months ended January 31, 2026, was $210.9 million, compared to $177.7 million in the same period last year, reflecting a year-over-year increase of 18.7% [26]. - Basic earnings per share increased to $2.20 from $1.76, while diluted earnings per share rose to $2.19 from $1.75 [26]. Sales and Contracts - The company signed 2,303 net contracts valued at $2.38 billion, flat in units but up 3% in dollars year-over-year, with an average sales price of $1,033,000 [4][9]. - For the second quarter, the company projects deliveries of 2,400 to 2,500 units and an average delivered price per home of $975,000 to $985,000 [8]. Backlog and Inventory - The backlog value at the end of the first quarter was $6.02 billion, down from $6.94 billion at the end of FY 2025's first quarter, with homes in backlog decreasing to 5,051 from 6,312 [7][9]. - The company reported a backlog of 5,051 units valued at $6,022.3 million, down from 6,312 units valued at $6,938.4 million in the previous year [29]. - Total inventory as of January 31, 2026, was $11,203.5 million, up from $10,678.5 million as of October 31, 2025 [24]. Margins and Financial Ratios - Adjusted home sales gross margin was 26.5%, slightly down from 26.9% in FY 2025's first quarter, while home sales gross margin was 24.8% compared to 25.0% in the prior year [7][9]. - Gross margin for home sales was 24.8%, down from 25.0% in the previous year, while gross margin for land sales and other was 6.0%, up from 1.4% [26]. - The adjusted home sales gross margin for the three months ended January 31, 2026, was $491,277, down from $495,789 in 2025, indicating a decrease of about 0.9% [37]. - The home sales gross margin as a percentage of home sales revenues was 24.8% for Q1 2026, slightly down from 25.0% in Q1 2025 [37]. - The adjusted home sales gross margin as a percentage of home sales revenues was 26.5% for Q1 2026, compared to 26.9% in Q1 2025, showing a decline of 0.4 percentage points [37]. Debt and Equity - Total liabilities decreased to $6,012.1 million from $6,233.8 million, indicating a reduction of approximately 3.5% [24]. - The total debt as of January 31, 2026, was $2,721,319, a decrease from $2,902,167 as of October 31, 2025 [40]. - The net debt-to-capital ratio improved to 14.2% as of January 31, 2026, down from 15.3% in October 2025 and significantly lower than 21.1% in January 2025 [40]. - The total stockholders' equity increased to $8,409,092 as of January 31, 2026, compared to $8,270,663 in October 2025, reflecting a growth of approximately 1.7% [40]. Share Repurchase and Asset Sales - Toll Brothers repurchased approximately 0.3 million shares at an average price of $146.75 per share, totaling $50.5 million [7]. - The company completed the sale of approximately half of its Apartment Living portfolio for net cash proceeds of approximately $330 million, planning to exit the multi-family development business [7][10]. Cash and Liquidity - The company ended the first quarter with approximately 75,000 lots owned or controlled, allowing for an annual community growth rate of 8% to 10% in fiscal 2026 [6][16]. - The company ended the first quarter with $1.20 billion in cash and cash equivalents, down from $1.26 billion at the end of FY 2025 [10]. Tax Rate - The effective tax rate for the three months ended January 31, 2026, was 22.9%, compared to 19.7% in the prior year [26].