Toll Brothers, Inc.: Q4 FY2025 earnings call

What management said about Q4 FY2025, from the documents filed with the SEC on 8 December 2025: press release. Guidance figures: 14 new. The quarter’s numbers.

Read the filing

Key takeaways

• Fourth-quarter net income declined: Net income was $446.7 million, or $4.58 per diluted share, against $475.4 million and $4.63 a year earlier. Pre-tax income was $593.0 million, against $621.1 million. Source
• Full-year net income and EPS lower: Full-year net income was $1.35 billion, or $13.49 per diluted share, against $1.57 billion and $15.01. Pre-tax income was $1.79 billion, against $2.09 billion. Source
• Backlog down sharply from last year: Backlog was $5.5 billion across 4,647 homes at fourth quarter end, against $6.5 billion and 5,996 homes. Average price per home in backlog was $1,182,300, up from $1,078,700. Source
• Adjusted margin fell to 27.1%: Adjusted home sales gross margin, excluding interest and inventory write-downs, was 27.1%, against 27.9%. Interest in home sales cost of revenues was 1.1% of revenue, against 1.2%. Source
• Net debt-to-capital fell sharply: Net debt-to-capital was 15.3%, down from 19.3% at third quarter end and 15.2% a year earlier. Debt-to-capital was 26.0%, against 26.7% and 27.0%. Source
• Deliveries guided to 10,300 to 10,700: Management guided first-quarter deliveries to 1,800 to 1,900 units and full-year deliveries to 10,300 to 10,700 units, with a year-end community count of 480 to 490. Source

“Fiscal 2025 proved to be another strong year for Toll Brothers, as we executed well in a choppy environment.”

Douglas C. Yearley, Jr., chairman and chief executive officer

Guidance

What changed from last quarter

• New: Agreement to sell interests in about half of the Apartment Living portfolio and its operating platform to Kennedy Wilson, announced September 18, 2025. Source
• New: Purchase price for the acquired assets is now $380 million, reflecting investments made after the September announcement. Source
• New: Company plans to sell its remaining Apartment Living interests and exit the multifamily development business. Source
• New guidance: First guidance for fiscal 2026 issued for deliveries, price, margins, SG&A, community count, other income and tax rate. Source

Fourth quarter results

• Fourth-quarter net income declined: Net income was $446.7 million, or $4.58 per diluted share, against $475.4 million and $4.63 a year earlier. Pre-tax income was $593.0 million, against $621.1 million. Source
• Home sales revenue rose on deliveries: Home sales revenue was $3.41 billion, up from $3.26 billion, on 3,443 delivered homes against 3,431 a year earlier. Source
• Other income lower than a year earlier: Other income, unconsolidated entities and land sales gross margin totaled $6.0 million, against $44.5 million. Income from operations was $564.1 million, against $611.1 million. Source

Full fiscal 2025 results

• Full-year net income and EPS lower: Full-year net income was $1.35 billion, or $13.49 per diluted share, against $1.57 billion and $15.01. Pre-tax income was $1.79 billion, against $2.09 billion. Source
• Prior-year gain excluded from comparison: FY 2024 included $124.1 million, or $1.19 per share, from a land parcel sale to a commercial developer. Excluding it, FY 2024 was $1.45 billion and $13.82 per diluted share. Source
• Full-year revenue and deliveries reported: Full-year home sales revenue was $10.8 billion on 11,292 delivered homes at an average price of $960,000, with adjusted gross margin of 27.3% and SG&A at 9.5%. Source

“Given soft demand across many markets, we remain focused on running our business in a disciplined manner and consistent with our long-term strategic objective of maximizing returns for stockholders.”

Douglas C. Yearley, Jr., chairman and chief executive officer

Segments and regions

• Pacific deliveries and prices rose: Pacific delivered 517 homes against 452, with revenue of $789.8 million versus $629.1 million and average price of $1,527,700 against $1,391,700. Source
• South deliveries fell year over year: South delivered 874 homes against 947, with revenue of $683.9 million versus $819.9 million and average price of $782,500 against $865,800. Source
• North deliveries and revenue increased: North delivered 566 homes against 498, with revenue of $584.2 million versus $501.3 million. Mountain delivered 968 against 1,039, and Mid-Atlantic 518 against 495. Source

Demand and the order book

• Net contracts fell in units and value: Net signed contracts were 2,598 homes worth $2.53 billion, against 2,658 homes and $2.66 billion. Net signed contracts per community were 6.0 units, against 6.5. Source
• Backlog down sharply from last year: Backlog was $5.5 billion across 4,647 homes at fourth quarter end, against $6.5 billion and 5,996 homes. Average price per home in backlog was $1,182,300, up from $1,078,700. Source
• Backlog fell from third quarter: Third-quarter backlog was $6.38 billion across 5,492 homes. Fourth-quarter backlog was $5.49 billion across 4,647 homes.
• Cancellations rose versus last year: Quarterly cancellations were 4.3% of beginning-quarter backlog, against 2.5%, and 8.3% of signed contracts in the quarter, against 5.9%. Source

“Our fourth quarter and full year results demonstrate that our luxury business is differentiated, as we serve a more affluent customer who is less impacted by affordability pressures.”

Douglas C. Yearley, Jr., chairman and chief executive officer

Margins, costs and pricing

• Home sales gross margin lower: Home sales gross margin was 25.5%, against 26.0% a year earlier. Source
• Adjusted margin fell to 27.1%: Adjusted home sales gross margin, excluding interest and inventory write-downs, was 27.1%, against 27.9%. Interest in home sales cost of revenues was 1.1% of revenue, against 1.2%. Source
• SG&A ratio flat in quarter: SG&A was 8.3% of home sales revenues, the same as a year earlier. For the full year SG&A was 9.5%, against 9.3%. Source
• Full-year margin declined: Full-year home sales gross margin was 25.6%, against 26.6%. Full-year adjusted margin was 27.3%, against 28.4%. Source
• Inventory write-downs fell in quarter: Pre-tax inventory impairments in home sales cost of revenues were $16.4 million, against $24.1 million. Full-year impairments were $65.9 million, against $59.4 million. Source
• Pace and price balanced by community: Management said it balances price and pace and manages spec starts and inventory community by community to match local demand. Source

Land and communities

• Community count rose to 446: Selling communities were 446 at fourth quarter end, against 420 at third quarter end and 408 a year earlier. Source
• Lots owned and optioned slightly lower: About 76,100 lots were owned and optioned, down from 76,800 a quarter earlier and up from 74,700 a year earlier. About 33,000 of them, or 43%, were owned. Source
• Land spend about $580 million in quarter: The company spent approximately $580.0 million on land to buy about 3,214 lots in the quarter, against $432.7 million and 2,755 lots in the third quarter. Source

Capital, cash and shareholder returns

• Operating cash flow and shareholder returns: Management said operating cash flow was $1.1 billion for the year, about $750 million was returned through repurchases and dividends, and return on beginning equity was 17.6%. Source
• Cash higher than third quarter: Cash and cash equivalents were $1.26 billion, up from $852.3 million at third quarter end and down from $1.30 billion at fiscal year end 2024. Source
• Revolver availability at year end: $2.19 billion was available under the $2.35 billion senior unsecured revolving credit facility at fourth quarter end. Source
• Net debt-to-capital fell sharply: Net debt-to-capital was 15.3%, down from 19.3% at third quarter end and 15.2% a year earlier. Debt-to-capital was 26.0%, against 26.7% and 27.0%. Source
• Notes issued and redeemed: The company issued $500.0 million of 5.600% notes due 2035 in June 2025 and redeemed $350.0 million of 4.875% notes due November 2025 in July 2025. Source
• Repurchases and dividend in period: Full-year repurchases were about 5.4 million shares for $651.6 million. Fourth-quarter repurchases were about 1.8 million shares for $249.1 million. The $0.25 quarterly dividend was paid October 24, 2025. Source

Fiscal 2026 guidance framing

• Deliveries guided to 10,300 to 10,700: Management guided first-quarter deliveries to 1,800 to 1,900 units and full-year deliveries to 10,300 to 10,700 units, with a year-end community count of 480 to 490. Source
• Adjusted margin guided near 26%: Adjusted home sales gross margin was guided to 26.25% for the first quarter and 26.00% for the full year. SG&A was guided to 14.2% and 10.25% respectively. Source
• Write-down effects not projected: The company did not give projected home sales gross margin, because inventory write-downs are based on future activity and cannot be projected. Source
• Community growth from land control: Management said it controls enough land for community count growth over several years, including 8% to 10% growth in fiscal 2026, and stays selective in land purchases. Source
• Tax rate guided higher: Tax rate was guided to 23.2% for the first quarter and 25.5% for the full year, against a 24.8% effective rate for fiscal 2025. Source

Coming up, as management said on 8 December 2025

• Apartment Living sale closing timing: Management said the sale is now expected to complete in the first quarter of fiscal 2026, with Kennedy Wilson assuming management of the retained interests. Source

Figures management reported

Risks management discussed

• Demand: Management cited soft demand across many markets and said it manages spec starts and pricing community by community. Source
• Demand: Management referred to affordability pressures and said its more affluent customer is less affected by them. Source
• Operational: Management said the effect of inventory write-downs on future gross margin is hard to predict and could be significant. Source

Earlier plans management reported on

• Met: Management said it met or exceeded guidance across core home building metrics in the fourth quarter. Source
• Missed: Management said EPS of $4.58 was modestly below guidance, citing the delayed closing of the Apartment Living sale. Source

Other quarters

• Q3 FY2026 earnings call
• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q3 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.