Toll Brothers Reports Record Revenues Amid Softer Outlook

Toll Brothers, Inc. (NYSE: TOL) announced robust fiscal third-quarter results for the period ending July 31, 2025, featuring record revenues despite signs of a cooling housing market. The company reported a net income of $369.6 million, equating to $3.73 per diluted share, a slight decrease from $374.6 million, or $3.60 per share, in the same quarter last year.

The builder’s home sales revenue reached an impressive $2.88 billion, marking a year-over-year increase of 6%. This growth was propelled by the delivery of 2,959 homes, which also represented a 5% rise from the previous year. The average price of homes delivered remained high at $974,000, reflecting the company’s strong presence in the luxury housing segment.

Sales Contracts and Backlog Analysis

Despite the positive revenue figures, Toll Brothers reported a flat performance in net signed contracts, totaling $2.41 billion. The number of contracted homes fell 4% to 2,388 units. Additionally, the backlog value experienced a 10% decline to $6.38 billion, with the number of homes in backlog decreasing significantly by 19% to 5,492 homes. This trend indicates a slowing pace of new orders even as pricing resilience has managed to counteract volume declines.

Gross margins also showed some contraction, with home sales gross margin narrowing to 25.6% from 27.4% the previous year. The adjusted gross margin, excluding interest and inventory write-downs, fell to 27.5% from 28.8%. However, selling, general, and administrative expenses improved slightly, accounting for 8.8% of home sales revenue, down from 9.0% a year prior.

CEO Insights and Strategic Focus

Douglas C. Yearley, Jr., chairman and chief executive officer of Toll Brothers, expressed confidence in the company’s performance while acknowledging external pressures. “We delivered 2,959 homes at an average price of $974,000, generating record third-quarter home sales revenues of $2.9 billion, a 6% increase over last year,” said Yearley. He highlighted the ongoing affordability challenges and the uncertain economic landscape but noted the resilience of the luxury segment and the affluent customer base.

Yearley mentioned that the company is strategically balancing pricing and construction rates on a community-by-community basis to align with market demand. He also emphasized a disciplined approach to land acquisition, positioning the company for future growth.

Financial Health and Future Outlook

As of the end of the quarter, Toll Brothers reported $852.3 million in cash and equivalents, a decrease from $1.30 billion at the end of fiscal year 2024. The company maintained $2.19 billion accessible under its $2.35 billion revolving credit facility. In June, Toll Brothers issued $500 million in senior notes due in 2035 and redeemed $350 million in senior notes due later this year.

Stockholders’ equity rose to $8.10 billion, an increase from $7.67 billion at the end of the previous fiscal year, with book value per share climbing to $83.85. The company also reported ownership or control of approximately 76,800 lots, positioning itself for future community development while retaining flexibility in land investments.

Looking ahead, management is optimistic as it approaches the fourth quarter. Yearley stated that the company will focus on executing effectively, delivering value to shareholders, and positioning itself for success in fiscal 2026 and beyond. Despite challenges related to affordability and economic uncertainty, Toll Brothers’ strong balance sheet and strategic land management are expected to sustain growth in the luxury housing market.