Toll Brothers Posts Q3 FY 2025 Financial Results

Toll Brothers, Inc. (TollBrothers.com), the nation’s leading builder of luxury homes, today announced its financial results for the third quarter of fiscal year 2025, which ended on July 31, 2025. The company delivered another solid performance, showcasing revenue growth, disciplined operations, and a continued commitment to creating long-term value for shareholders.

Third Quarter FY 2025 Financial Highlights

When compared to the same period in fiscal 2024, Toll Brothers demonstrated resilience and stability despite ongoing affordability pressures and a complex housing market environment.

Net income and EPS: Net income for the quarter was $369.6 million, or $3.73 per diluted share, versus $374.6 million, or $3.60 per diluted share, in Q3 FY 2024. While slightly lower on net income, the company’s earnings per share benefited from disciplined share repurchases.
Pre-tax income: Pre-tax income totaled $499.5 million, compared to $503.6 million a year earlier.
Home sales revenue: Revenues from home sales rose to $2.88 billion, representing a 6% year-over-year increase and setting a third-quarter record. Delivered homes totaled 2,959, up 5% from the prior year.
Contracts: Net signed contract value was $2.41 billion, essentially flat with FY 2024’s third quarter. However, contracted homes fell slightly to 2,388 units, a 4% decline.
Backlog: The value of backlog stood at $6.38 billion, down 10% year-over-year, with 5,492 homes in backlog, representing a 19% decrease.
Margins: Home sales gross margin was 25.6%, down from 27.4% in the prior year. Adjusted home sales gross margin, excluding interest and write-downs, came in at 27.5%, versus 28.8% last year.
SG&A efficiency: Selling, general, and administrative expenses represented 8.8% of revenues, an improvement compared to 9.0% in Q3 FY 2024.
Operations: Income from operations was $487.7 million, while other income and contributions from unconsolidated entities added $15.0 million.
Share repurchases: The company repurchased approximately 1.8 million shares at an average price of $112.40 per share, spending $201.4 million in the process.

CEO Commentary

Douglas C. Yearley, Jr., Chairman and Chief Executive Officer of Toll Brothers, highlighted the company’s performance and strategic positioning:

“We are pleased to report another strong quarter. 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. We achieved an adjusted gross margin of 27.5%, or 25 basis points above guidance, and our SG&A margin of 8.8% was 40 basis points better than guidance. We earned $370 million after taxes, or $3.73 per diluted share, and returned $226 million to stockholders through share repurchases and dividends, positioning us for another year of healthy profitability and solid returns.”

Yearley emphasized the resilience of Toll Brothers’ luxury-focused business model, noting:

“We signed 2,388 net contracts for $2.4 billion in our third quarter. The average sales price of new contracts was $1.0 million, up 4.5% year-over-year. Contract dollars were flat despite a 4% decline in units. While affordability pressures and uncertain economic conditions persist, we are pleased with the resilience of our luxury business and more affluent customer base. In this environment, we continue to focus on strategically balancing price and pace in order to maximize profitability and returns. Additionally, we are actively managing our spec starts on a community-by-community basis to best match local demand.”

Looking ahead, he underscored Toll Brothers’ financial strength and discipline:

“Our financial position remains solid, with significant cash flows and liquidity and a strong balance sheet. We also control sufficient land to support continued community count growth over the next several years, allowing us to be highly selective and disciplined in our land acquisition. As we enter the fourth quarter, we remain focused on executing at a high level, delivering value to our stockholders, and positioning our Company for success in fiscal 2026 and beyond.”

Balance Sheet and Liquidity

Toll Brothers continues to maintain one of the strongest balance sheets in the industry, with ample liquidity to support operations and growth initiatives:

The company ended Q3 FY 2025 with $852.3 million in cash and cash equivalents, compared to $1.30 billion at fiscal year-end 2024, and up from $686.5 million at the end of Q2 FY 2025.
Availability under its $2.35 billion revolving credit facility stood at $2.19 billion.
In June 2025, Toll Brothers issued $500 million of 5.600% senior notes due 2035.
In July 2025, the company redeemed $350 million of 4.875% senior notes originally due in November 2025.
The company declared and paid a $0.25 per share quarterly dividend on July 25, 2025, to shareholders of record as of July 11, 2025.

Stockholders’ equity grew to $8.10 billion at quarter end, compared to $7.67 billion at fiscal year-end 2024. Book value per share rose to $83.85, up from $76.87.

Debt and Capital Structure

The company continues to manage its leverage prudently:

The debt-to-capital ratio was 26.7% at Q3 FY 2025’s end, compared to 26.1% at the end of Q2 and 27.0% at FY 2024 year-end.
The net debt-to-capital ratio, a non-GAAP measure that excludes cash, improved to 19.3%, down from 19.8% in Q2 FY 2025 but higher than the 15.2% at FY 2024 year-end.

Land Position and Community Count

Land acquisition and community development remain central to Toll Brothers’ long-term growth strategy.

At Q3 FY 2025 end, the company controlled approximately 76,800 lots, compared to 78,600 lots one quarter earlier and 72,700 lots a year earlier.
Of these, approximately 32,800 lots (43%) were owned. Roughly 19,000 lots — including those in backlog — were substantially improved and ready for development.
During the third quarter, Toll Brothers spent $432.7 million on land, purchasing approximately 2,755 lots.
Community count ended the quarter at 420 selling communities, down slightly from 421 at the end of Q2 FY 2025, but up from 404 communities in Q3 FY 2024.

Strategic Outlook

Toll Brothers continues to differentiate itself within the homebuilding sector by focusing on affluent buyers and the luxury market. While broader housing affordability issues and macroeconomic uncertainty persist, the company benefits from a customer base with stronger financial capacity, supporting demand stability.

The company’s ongoing investments in land, community development, and operational efficiency position it well for continued growth. Additionally, Toll Brothers’ balanced approach to spec home starts ensures alignment with local market dynamics, enabling the company to capture demand without overextending resources.

With a solid capital structure, disciplined expense management, and record-setting revenues, Toll Brothers expects to deliver strong performance in the fourth quarter of FY 2025 and is already positioning itself for fiscal 2026.

Toll Brothers’ third quarter of FY 2025 reflects both the challenges and opportunities in today’s housing market. Revenues reached record levels, margins remained healthy despite some compression, and the company continued to return significant capital to shareholders through dividends and share repurchases.

The company enters the final quarter of the fiscal year with confidence, supported by a robust balance sheet, disciplined land strategy, and a strong brand presence in the luxury housing sector. These factors, combined with its focus on delivering shareholder value, position Toll Brothers for sustained success in FY 2026 and beyond.

Source link