Toll Brothers, Inc.

Toll Brothers, Inc. designs, builds, markets, sells, and arranges financing for an array of luxury residential single-family detached home, attached home, master-planned, and urban low-, mid-, and high-rise communities. The company caters to luxury first-time, move-up, empty-nester (move-down), active-adult and second-home buyers in the United States. At October 31, 2025, the company was operating in 24 states and in the District of Columbia. In the five years ended October 31, 2025, the company delivered 52,203 homes from 1,061 communities, including 11,292 homes from 556 communities in fiscal 2025. At October 31, 2025, the company had 1,137 communities in various stages of planning, development or operations containing approximately 76,100 home sites that it owned or controlled through options. At fiscal year-end, the company was selling from 446 of these communities. The company also develops and operates urban and suburban for-rent apartment and student housing communities primarily through joint ventures under the brand names Toll Brothers Apartment Living and Toll Brothers Campus Living. At October 31, 2025, the company or joint ventures in which it has an interest controlled 73 land parcels as for-rent apartment or student housing projects containing approximately 22,300 planned or completed units. On September 18, 2025, the company announced its intention to exit the multifamily development business, beginning with the sale of its interests in approximately half of its portfolio, as well as its operating platform, to Kennedy Wilson for a purchase price of approximately $380 million ¹, as adjusted to reflect investments in certain assets since the September announcement. In December 2025, the company completed a significant portion of the sale to Kennedy Wilson, including its operating platform, with the remaining portion expected to occur in the first half of its fiscal 2026.

The home building business is highly competitive and fragmented. The company competes with numerous home builders of varying sizes, ranging from local to national in scope, some of which have greater sales and financial resources. Sales of existing homes also provide competition. The company competes primarily on the basis of price, location, design, quality, service, and reputation. The company believes its financial stability, relative to many other home builders in its industry, is a favorable competitive factor. The company believes its size and financial stability, relative to many others in its industry, provides it with a competitive advantage.

The company generates revenue primarily through the sale of luxury residential homes. In fiscal 2025, the company recognized $10.97 billion ² of revenues, consisting of $10.84 billion ³ of home sales revenues and $124.5 million ⁴ of land sales and other revenues. The company operates its own architectural, engineering, mortgage, title, land development, insurance, smart home technology and landscaping subsidiaries. It also develops master-planned and golf course communities as well as operates, in certain regions, its own lumber distribution, house component assembly and manufacturing operations. The company's mortgage subsidiary, Toll Brothers Mortgage Company, provides mortgage financing for a portion of its home closings. In fiscal 2025, the mortgage subsidiary financed 4,898 ⁵ settlements, representing a gross capture rate of 43.4% ⁶ and an amount financed of $2,641.8 million ⁷.

The company's home building communities are generally located in affluent suburban areas near major transit hubs and highways that provide access to employment and urban centers. The company develops individual stand-alone single-product communities as well as multi-product, master-planned communities. Each detached home community offers several home plans with the opportunity for many home buyers to select various structural options and exterior styles. Attached home communities generally offer one- to four-story homes, provide for select exterior options, and often include commonly owned recreational facilities. While historically most homes have been sold on a build-to-order basis, over the past three years the company has increased the number of spec homes. In fiscal 2025 and 2024, approximately 54% ⁸ and 49% ⁹ of deliveries were spec homes, respectively. The company markets its high-quality homes to both upscale luxury and affordable luxury home buyers. As of October 31, 2025, the company was selling from 81 ¹⁰ age-restricted active-adult communities, in which at least one home occupant must be at least 55 years of age. Through its City Living brand, the company typically develops with third party joint venture partners, high-density, high-rise urban luxury communities. The company is currently developing one such community with a joint venture partner in West New York, New Jersey. At October 31, 2025, the company had 3,043 ¹¹ spec homes in its communities, of which 1,783 ¹² were under construction and 1,260 ¹³ were completed. Of the 11,292 ¹⁴ homes delivered in fiscal 2025, approximately 25% ¹⁵ of home buyers paid the full purchase price in cash; the remaining home buyers borrowed approximately 69% ¹⁶ of the sales price of the home. The overall option value, including lot premiums and excluding incentives, was $202,000 ¹⁷ per home, representing 24.5% ¹⁸ of the base sales price in fiscal 2025.

In fiscal 2025, 2024 and 2023, the company did not make any acquisitions. During fiscal 2025 and 2024, the company acquired control of approximately 12,700 ¹⁹ and 14,900 ²⁰ home sites, respectively, net of options terminated and lots sold. During fiscal year 2025 and 2024, the company forfeited control of over 5,900 ²¹ and 4,000 ²² lots, respectively, that were subject to land purchase agreements primarily because the planned community no longer met its development criteria. At October 31, 2025, the company owned or controlled approximately 76,100 ²³ home sites, as compared to approximately 74,700 ²⁴ home sites at October 31, 2024. At October 31, 2025 and October 31, 2024, the percentage of these home sites optioned was approximately 57% ²⁵ and 55% ²⁶, respectively. On September 18, 2025, the company announced its intention to exit the multifamily development business, beginning with the sale of its interests in approximately half of its portfolio, as well as its operating platform, to Kennedy Wilson for a purchase price of approximately $380 million ²⁷, as adjusted to reflect investments in certain assets since the September announcement. In December 2025, the company completed a significant portion of the sale to Kennedy Wilson, including its operating platform, with the remaining portion expected to occur in the first half of its fiscal 2026. During fiscal 2025, the company repurchased shares of its common stock. During the three months ended October 31, 2025, the company repurchased 1,787,000 ²⁸ shares of its common stock at an average price paid per share of $137.16 ²⁹ in August, $140.85 ³⁰ in September, and $134.17 ³¹ in October. On December 13, 2023, the Board of Directors authorized the repurchase of 20 million ³² shares of common stock. During fiscal 2025, the company paid aggregate cash dividends of $0.98 ³³ per share to its shareholders.

In fiscal 2025, the company recognized $10.97 billion ³⁴ of revenues, consisting of $10.84 billion ³⁵ of home sales revenues and $124.5 million ³⁶ of land sales and other revenues, and net income of $1.35 billion ³⁷, as compared to $10.85 billion ³⁸ of revenues, consisting of $10.56 billion ³⁹ of home sales revenues and $283.4 million ⁴⁰ of land sales and other revenues, and net income of $1.57 billion ⁴¹ in fiscal 2024. Land sales and other revenue, pre-tax income and net income in fiscal 2024 included $185.0 million ⁴², $175.2 million ⁴³ and $124.1 million ⁴⁴, respectively, related to the sale of a single parcel of land in northern Virginia to a commercial developer. In fiscal 2025 and 2024, the value of net contracts signed was $9.85 billion ⁴⁵ (9,943 ⁴⁶ homes) and $10.07 billion ⁴⁷ (10,231 ⁴⁸ homes), respectively. The value of backlog at October 31, 2025 was $5.49 billion ⁴⁹ (4,647 ⁵⁰ homes), as compared to backlog at October 31, 2024 of $6.47 billion ⁵¹ (5,996 ⁵² homes). At October 31, 2025, the company had $1.26 billion ⁵³ of cash and cash equivalents and approximately $2.19 billion ⁵⁴ available for borrowing under its $2.35 billion ⁵⁵ revolving credit facility. At October 31, 2025, the company had no outstanding borrowings under the Revolving Credit Facility and had outstanding letters of credit of approximately $155.9 million ⁵⁶. At October 31, 2025, total equity and the debt to total capitalization ratio were $8.29 billion ⁵⁷ and 0.25 to 1.00 ⁵⁸, respectively.

Management states that approximately 98% ⁵⁹ of the homes in backlog at October 31, 2025 are expected to be delivered by October 31, 2026.

The company continues to pursue growth initiatives by expanding its product lines and price points to appeal to buyers across the demographic spectrum. It has significantly expanded its geographic footprint over the past decade. In addition to its traditional move-up home buyer, the company is focusing on the empty-nester market, the millennial and Gen Z generations, and the affordable luxury buyer. The company has developed a number of home designs with features such as single-story living and first-floor primary bedroom suites, as well as communities with recreational amenities that it believes appeal to the empty-nester category. As of October 31, 2025, the company was selling from 81 ⁶⁰ age-restricted active-adult communities. With the millennial generation in its prime family formation years and the Gen Z generation either in or approaching adulthood, the company continues to focus on these groups with its core suburban homes, affordable luxury offerings, and urban condominiums. The company believes that the demographics supporting the luxury first-time, move-up, empty-nester, active-adult, affordable luxury and second-home upscale markets will provide it with an opportunity for growth in the future. The company continues to believe that many of its communities are in desirable locations that are difficult to replace and that many of these communities have substantial embedded value that may be realized in the future.

The company has strategically increased the number of spec homes that it sells relative to its traditional build-to-order homes. In fiscal 2025 and 2024, approximately 54% ⁶¹ and 49% ⁶² of deliveries were spec homes, respectively. The company determines its spec home strategy for each community based on local market factors and maintains a level of spec home inventory based on its current and planned sales pace and construction cadence for the community. The company continues to monitor demand and other factors on a community-by-community basis and will make appropriate adjustments to its spec starts as market conditions evolve. The company is continuously developing new designs to replace or augment existing ones to ensure that its homes reflect current consumer tastes. Increasingly, the company is modifying designs and the number of options it provides to offer its customers a curated experience while gaining efficiencies in the home building process, particularly with respect to its affordable luxury and spec homes.The company notes that home sales cost of revenues, as a percentage of home sales revenues, in fiscal 2025 was 74.4% ⁶³, as compared to 73.4% ⁶⁴ in fiscal 2024. The increase in fiscal 2025 was principally due to an increase in incentives as a result of soft market conditions, as well as shifts in the mix of revenues to lower margin products/areas, offset, in part, by lower interest expense as a percentage of home sales revenues. The company recognized inventory impairments and write-offs of $65.9 million ⁶⁵, or 0.6% ⁶⁶ of home sales revenues, and $59.4 million ⁶⁷, or 0.6% ⁶⁸ of home sales revenues, in fiscal 2025 and fiscal 2024, respectively.

The company operates its own manufacturing facilities. It owns manufacturing facilities of approximately 225,000 square feet located in Morrisville, Pennsylvania; approximately 150,000 square feet located in Emporia, Virginia; approximately 30,500 square feet in Bartow, Florida; and 34,000-square feet in Culpepper, Virginia. It also leases, from unrelated parties, a facility of approximately 56,000 square feet located in Fairless Hills, Pennsylvania and two facilities of approximately 38,000 square feet, on a combined basis, located in Westfield, Massachusetts. At these facilities, its Toll Integrated Systems subsidiary manufactures open wall panels, roof and floor trusses, and certain interior and exterior millwork to supply a portion of its construction needs. These facilities supply components used in its North, Mid-Atlantic, and portions of its South geographic regions. The company believes that increased efficiencies, cost savings, quality control and productivity result from the operation of these plants and from the wholesale purchase of materials.

The filing does not provide specific R&D spending levels, capital expenditure plans, or share repurchase authorization amounts beyond the existing authorization. On December 13, 2023, the Board of Directors authorized the repurchase of 20 million ⁶⁹ shares of common stock. During fiscal 2025, the company paid aggregate cash dividends of $0.98 ⁷⁰ per share to its shareholders. The payment of dividends is within the discretion of the Board of Directors. The revolving credit agreement and term loan agreement each require the company to maintain a minimum tangible net worth, which restricts the amount of dividends it may pay. At October 31, 2025, under the provisions of the revolving credit agreement and term loan agreement, the company could have paid up to approximately $4.24 billion ⁷¹ of cash dividends.

The company experienced weakness in demand throughout fiscal 2025, which has continued into the first quarter of its fiscal 2026, and which it attributes to ongoing affordability pressures, especially at the lower end of the market, and volatile economic conditions that have negatively impacted consumer confidence. The company has responded to these conditions by strategically managing its pricing, including by increasing incentives where necessary, to appropriately balance sales price and margin with pace, and to align its inventory levels with local sales environments. While the trajectory of near-term demand remains uncertain, the company continues to believe the outlook for the new home market remains positive over the long term, as it is supported by strong fundamentals including favorable demographics, the structural undersupply of homes in the U.S. caused by over a decade of underproduction, the aging stock of existing homes, and wealth built up from years of stock market and home price appreciation.

The company is subject to various local, state, and federal statutes, ordinances, rules, and regulations concerning zoning, building design, construction, and similar matters, including local regulations that impose restrictive zoning and density requirements. In a number of its markets, there has been an increase in state and local legislation authorizing the acquisition of land as dedicated open space. The company also may be subject to periodic delays or may be precluded entirely from developing communities due to building moratoriums in one or more of the areas in which it operates. The company is also subject to a variety of local, state, and federal statutes, ordinances, rules, and regulations concerning protection of public health and the environment. An increased regulatory focus on reducing greenhouse gas emissions has led to legislative mandates in certain jurisdictions that require new homes to be more energy efficient than existing homes, or that mandate energy efficient features, such as solar panels, be included in new construction. Complying with these environmental laws may result in delays, may cause the company to incur substantial compliance and other costs, and/or may prohibit or severely restrict development in certain environmentally sensitive regions or areas.

Demand for the company's homes is subject to fluctuations due to factors outside its control such as employment levels, consumer confidence, interest rates, and availability of financing. Adverse changes in economic conditions, including significant inflation or higher interest rates, could reduce demand and adversely affect results. The company faces substantial risks inherent in controlling, owning and developing land; if housing demand declines, it may not be able to recover costs and may forfeit deposits. A significant portion of revenues and income from operations is concentrated in California, where factors such as regulatory changes, natural disasters, and economic downturns could have a material adverse effect. The company is subject to construction defect and home warranty claims common in the industry, and insuring against these claims has become increasingly difficult due to limited coverage options and high costs. The company's mortgage subsidiary is subject to various state and federal regulations that can increase costs and restrict access to some types of loans for home buyers.

Management's message emphasizes that the company has responded to ongoing affordability pressures and volatile economic conditions by strategically managing pricing, including increasing incentives where necessary, to balance sales price and margin with pace and align inventory levels with local sales environments. Management states that while the trajectory of near-term demand remains uncertain, the company continues to believe the outlook for the new home market remains positive over the long term, supported by strong fundamentals including favorable demographics, the structural undersupply of homes in the U.S. caused by over a decade of underproduction, the aging stock of existing homes, and wealth built up from years of stock market and home price appreciation. The strategic priorities emphasized for the period ahead include expanding product lines and price points to appeal to buyers across the demographic spectrum, including the empty-nester market, millennial and Gen Z generations, and the affordable luxury buyer, as well as continuing to increase the number of spec homes sold relative to build-to-order homes. Management also highlights the company's intention to exit the multifamily development business, beginning with the sale of its interests in approximately half of its portfolio, as well as its operating platform, to Kennedy Wilson for a purchase price of approximately $380 million ⁷², as adjusted.