Toll Brothers Q3 Earnings: Sales Fall, Guidance Reaffirmed

Toll Brothers, Inc. (NYSE: TOL) reported fiscal 2026 third-quarter results for the period ended July 31, 2026, showing lower home sales revenue and earnings year over year. Management reaffirmed full-year revenue and margin guidance on August 18, signaling margin resilience while maintaining capital returns and share repurchases as priorities.

Sales Decline and Margins Hold

Home sales revenue declined to $2.65 billion with 2,662 homes delivered, down from $2.88 billion and 2,959 deliveries a year earlier. The average selling price was $996,400 per home. Net income fell to $280.1 million, or $2.97 per diluted share, from $369.6 million, or $3.73 per share, in the prior-year quarter. Pre-tax income was $374.8 million and income from operations was $359.2 million, both below last year’s levels.

Adjusted home-sales gross margin, which excludes interest and inventory write-downs, was 25.6%, down from 27.5% a year earlier but about 35 basis points above the company’s prior guidance of 25.25%. The unadjusted home-sales gross margin was 23.9%. Selling, general and administrative expenses rose to 10.0% of home-sales revenue from 8.8% a year earlier. Other income, including land sales and unconsolidated-entity results, totaled $6.0 million versus $15.0 million in the prior-year quarter.

Backlog Strength and Buybacks

Net signed contract value increased about 5% to $2.52 billion on 2,508 contracted homes. Backlog at quarter-end stood at $6.24 billion, comprising 5,312 homes, compared with $6.38 billion and 5,492 homes a year earlier, indicating sustained demand in the upper-end market.

The company raised its planned fiscal 2026 share repurchases to $700 million from $650 million. In the quarter, it repurchased roughly 1.4 million shares for $206.8 million at an average price of $148.63. Toll Brothers returned $231 million to shareholders in the quarter through repurchases and dividends, bringing year-to-date returns to $506 million. Book value per share rose to $92.36 from $87.25 at the fiscal 2025 year-end.

Management reaffirmed full-year guidance, including expected home-sales revenues of $10.5 billion and an adjusted home-sales gross margin target of 26.1%. The company provided a fourth-quarter delivery range of 3,450 to 3,550 homes. Given year-to-date margins, fourth-quarter adjusted gross margin will need to approach 26.4% for Toll Brothers to meet its annual margin target, making fourth-quarter margin performance critical to achieving guidance.

"Toll Brothers delivered solid third quarter results in a challenging market," Chief Executive Karl K. Mistry said.