Toll Brothers, Inc.

Third quarter results included 2,662 home deliveries, $2.65 billion of home sales revenue, pretax income of $374.8 million, net income of $280.1 million, and $2.97 per diluted share. Adjusted gross margin was 25.6%, 35 basis points above guidance; SG&A was 10.0% of revenue; and cancellation rates were 2.6% of beginning-quarter backlog and 5.4% of signed contracts. Net signed contracts were 2,508, up 5% in units and 4% in dollars year over year. For FY26, the company reaffirmed adjusted gross margin of 26.1% and home sales revenue of approximately $10.5 billion, now expecting average delivered price of $995,000 to $1 million, full-year deliveries of 10,500 to 10,600 homes, and community count of 480 to 490. Fourth-quarter guidance calls for 3,450 to 3,550 deliveries, average delivered price of $995,000 to $1.005 million, adjusted gross margin of 26.0%, SG&A of about 8.1% of home sale revenues, and tax rate of about 26.0%.

Management framed the quarter as evidence that Toll’s luxury-focused model is holding up in a tough housing market. The CEO and executive chairman emphasized price discipline over sales pace, the strength of the affluent customer base, and the company’s differentiated brand, design studios, and land positions. Tone was confident and upbeat, with repeated comments that Toll is well positioned for higher growth, margins, and returns when conditions improve.

The CFO highlighted that Q3 adjusted gross margin outperformed guidance by 35 bps at 25.6% and that SG&A at 10.0% was in line with expectations. He pointed to $17.7 million of write-offs in home sales gross margin, $6 million of joint venture/land sales/other income, a 25.3% tax rate, and $3.3 billion of liquidity, including $1.1 billion of cash and $2.2 billion of revolver availability. Net debt-to-capital improved to 15.6% from 19.3% a year ago, and share repurchases through quarter-end totaled $433 million, with full-year buybacks now expected at $700 million.

Analysts pressed on how much conservatism is embedded in Q4 guidance, and management said the delivery target is well covered by backlog and finished specs, while margin support should come from mix, earlier-stage spec settlements, and more luxury move-up deliveries. Questions also focused on whether softer demand, rising mortgage rates, or buyer concerns about selling existing homes were hurting luxury demand; management said they had not seen a material change and reiterated that they do not offer traditional home-sale contingencies. Other questions covered land supply, community growth, and future margins, with management saying owned lots can keep declining within a 1.5- to 2-year range, community growth plans are intact even in a softer market, and they see 2027 as potentially higher on ASP and still supportive of strong margins, though they did not provide detailed 2027 guidance.