Toll Brothers, Inc. (NYSE: TOL) reported impressive fiscal third-quarter results for the period ending July 31, 2025, achieving record revenues despite indications of softening demand in the luxury housing market. The company posted a net income of $369.6 million, or $3.73 per diluted share, slightly lower than the $374.6 million, or $3.60 per share, reported during the same quarter last year. This performance underscores the resilience of Toll Brothers amid ongoing affordability challenges.
Financial performance showed that pre-tax income reached $499.5 million, compared to $503.6 million the previous year. Home sales revenue hit a record $2.88 billion, reflecting a 6% year-over-year increase, supported by the delivery of 2,959 homes, a 5% rise from last year.
Contracts and Backlog Insights
Toll Brothers indicated a more cautious outlook as net signed contracts remained stable at $2.41 billion, with the number of contracted homes declining by 4% to 2,388 units. The company’s backlog value saw a notable 10% decrease, totaling $6.38 billion with 5,492 homes in backlog, a striking 19% drop year-on-year. This data suggests a slowing pace of new orders, although pricing remains robust enough to mitigate volume declines.
Gross margins reflected some tightening, with home sales gross margin narrowing to 25.6% from 27.4% last year. Adjusted gross margin, factoring out interest and inventory write-downs, decreased to 27.5% from 28.8%. Selling, general, and administrative (SG&A) expenses improved slightly, now accounting for 8.8% of home sales revenue, down from 9.0% a year ago. The company also returned $226 million to shareholders through share repurchases and dividends during the quarter.
Management’s Strategic Focus
CEO Douglas C. Yearley, Jr. conveyed optimism about the company’s performance and strategic direction. “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,” he stated. He acknowledged the pressures of affordability and economic uncertainty but highlighted the strength of Toll Brothers’ luxury segment and its affluent clientele.
Yearley noted that the company is actively balancing pricing strategies and construction timelines on a community-by-community basis to align with market demand. This disciplined approach to land acquisition and development positions Toll Brothers for sustainable growth.
The company concluded the quarter with $852.3 million in cash and equivalents, down from $1.30 billion at the end of fiscal year 2024. Toll Brothers maintained $2.19 billion available under its $2.35 billion revolving credit facility. Additionally, the company issued $500 million in senior notes due 2035 and redeemed $350 million in senior notes due later this year.
Stockholders’ equity rose to $8.10 billion, up from $7.67 billion at the close of fiscal year 2024, with book value per share climbing to $83.85. Toll Brothers also reported ownership or control of approximately 76,800 lots, providing flexibility for future community growth.
Looking ahead, management remains confident entering the fourth quarter, emphasizing a strong liquidity position and a disciplined development pipeline. Yearley concluded, “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.” Despite the challenges posed by affordability issues and economic uncertainty, Toll Brothers’ solid balance sheet and strategic land management are anticipated to support continued growth in the luxury housing market.
