Toll Brothers, Inc.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 19 May 2026: press release. Guidance figures: 3 raised, 2 lowered, 7 new, 2 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Earnings fell from prior year: Net income was $260.6 million, or $2.72 per diluted share, against $352.4 million, or $3.50, a year earlier. Pre-tax income was $350.4 million against $477.5 million. Source
• Adjusted margin above guidance: Adjusted home sales gross margin was 26.2%, against 27.5% a year earlier, and 70 basis points above management's guidance for the quarter. Source
• Orders rose in units and dollars: Net signed contracts were 2,834 homes, against 2,650, and $2.81 billion, against $2.60 billion. Management said orders were up 7% in units and 8% in dollars year-over-year. Source
• Inventory impairments rose to $32.5 million: Pre-tax inventory impairments in home sales costs were $32.5 million, against $9.8 million. Pre-development and option write-offs were $20.1 million, against $1.7 million. Source
• Full-year guidance raised: Management raised full-year guidance across key home building metrics on year-to-date performance. The full-year deliveries low end, average price and adjusted margin ranges moved up. Source
• Buybacks totalled $175 million: The company repurchased about 1.2 million shares at an average $143.72 for $175.4 million in the quarter. Management said year-to-date repurchases reached $226 million. Source
• Chief executive role passed to Mistry: Karl K. Mistry now holds the chief executive officer role, and Douglas C. Yearley, Jr. is executive chairman of the board, as both are named on the call. Source

“In the second quarter, we once again successfully navigated a challenging market and produced strong results.”

Karl K. Mistry, chief executive officer

Guidance

What changed from last quarter

• Guidance raised: Management raised full-year guidance across key home building metrics on the basis of year-to-date performance. Source
• Guidance lowered: Full-year guidance for other income, unconsolidated entities and land sales gross margin lowered to $120 million from $130 million. Source
• Guidance lowered: Full-year SG&A ratio guidance moved to 10.10% from 10.25%. Source
• New guidance: Third-quarter guidance given for deliveries, average price, adjusted margin, SG&A, community count, other income and tax rate. Source
• Guidance kept: Full-year period-end community count range and full-year tax rate guidance kept at 480 to 490 and 25.5%. Source
• New: Karl K. Mistry is chief executive officer and Douglas C. Yearley, Jr. is executive chairman of the board; the first-quarter release named Yearley as chairman and chief executive officer. Source
• New: Quarterly cash dividend increased 4%, from $0.25 to $0.26 per share, announced March 10, 2026. Source

Second quarter results

• Earnings fell from prior year: Net income was $260.6 million, or $2.72 per diluted share, against $352.4 million, or $3.50, a year earlier. Pre-tax income was $350.4 million against $477.5 million. Source
• Deliveries down, revenue above guidance: Delivered homes were 2,491 against 2,899, and home sales revenues were $2.51 billion against $2.71 billion. Management said revenue was about $110 million above the guidance midpoint. Source
• Adjusted margin above guidance: Adjusted home sales gross margin was 26.2%, against 27.5% a year earlier, and 70 basis points above management's guidance for the quarter. Source
• Operating income lower than prior year: Income from operations was $346.6 million, or 13.7% of total revenues, against $449.7 million, or 16.4% a year earlier. Source

Orders, contracts and backlog

• Orders rose in units and dollars: Net signed contracts were 2,834 homes, against 2,650, and $2.81 billion, against $2.60 billion. Management said orders were up 7% in units and 8% in dollars year-over-year. Source
• Backlog lower in units and value: Backlog ended at 5,394 homes worth $6.32 billion, against 6,063 homes and $6.84 billion a year earlier. Average price per home in backlog rose to $1,171,800 from $1,128,100. Source
• Cancellations lower as share of contracts: Cancellations were 4.8% of signed contracts in the quarter, against 6.2% a year earlier, and 2.9% of beginning-quarter backlog, against 2.8%. Source
• Contracts per community edged down: Net signed contracts per community were 6.3 units, against 6.4 a year earlier. Average price of contracts rose to $990,600 from $982,800. Source

“Based on our year-to-date performance, we are raising our full year guidance across all key home building metrics.”

Karl K. Mistry, chief executive officer

Segments and regions

• South and Mountain deliveries fell: South delivered 791 homes against 928 and Mountain 638 against 856. South revenue was $661.5 million against $758.6 million; Mountain revenue was $565.1 million against $755.9 million. Source
• Pacific average price higher: Pacific delivered 287 homes at an average $1,689,500, against 347 at $1,418,400. Pacific backlog value fell to $1,320.8 million from $1,484.9 million. Source
• Mid-Atlantic deliveries and revenue rose: Mid-Atlantic delivered 401 homes against 379, with revenue of $413.3 million against $321.8 million. North delivered 374 homes against 389, with revenue of $388.5 million against $378.5 million. Source
• Contracts up in North and South: Contracts rose in North, to 468 from 372, and South, to 937 from 753. Mountain fell to 738 from 776, Mid-Atlantic to 384 from 407, and Pacific to 307 from 342. Source

Margins and costs

• Gross margin lower than prior year: Home sales gross margin was 23.9%, against 26.0%, and adjusted margin was 26.2%, against 27.5%. The adjusted figure excludes interest and inventory write-downs. Source
• Inventory impairments rose to $32.5 million: Pre-tax inventory impairments in home sales costs were $32.5 million, against $9.8 million. Pre-development and option write-offs were $20.1 million, against $1.7 million. Source
• SG&A ratio higher than prior year: SG&A was 10.3% of home sales revenues, against 9.5%, and management said that was 40 basis points under its second-quarter guidance of 10.7%. Source
• Unconsolidated entities turned to loss: Income from unconsolidated entities was a loss of $16.7 million, against income of $11.5 million a year earlier. The company recorded a $13.5 million joint venture impairment in the quarter. Source
• Other income and land sales lower: Other income, income from unconsolidated entities and land sales gross margin totalled $9.3 million, against $29.0 million. Land sales and other revenue was $18.8 million, against $32.6 million. Source

“In our second quarter, we repurchased $175 million of common stock, bringing our year-to-date total to $226 million, and we raised our quarterly dividend.”

Karl K. Mistry, chief executive officer

Full-year and third-quarter guidance

• Full-year guidance raised: Management raised full-year guidance across key home building metrics on year-to-date performance. The full-year deliveries low end, average price and adjusted margin ranges moved up. Source
• Third-quarter ranges given for first time: Third-quarter guidance covers 2,600 to 2,700 deliveries, a $965,000 to $985,000 average price, a 25.25% adjusted margin, a 10.0% SG&A ratio and 475 communities. Source
• Other income guidance lowered: Full-year guidance for other income, unconsolidated entities and land sales gross margin fell to $120 million from $130 million. The third-quarter figure is $5 million. Source

Capital and shareholder returns

• Buybacks totalled $175 million: The company repurchased about 1.2 million shares at an average $143.72 for $175.4 million in the quarter. Management said year-to-date repurchases reached $226 million. Source
• Cash and liquidity lower over quarter: Cash and cash equivalents ended at $1.11 billion, from $1.20 billion at first-quarter end. Of the $2.38 billion revolving facility, $2.24 billion was available at quarter end. Source
• Net debt-to-capital rose: Debt-to-capital ended at 24.7%, against 24.4% a quarter earlier. Net debt-to-capital ended at 15.4%, against 14.2% a quarter earlier and 15.3% at fiscal 2025 year-end. Stockholders' equity was $8.48 billion. Source

Land, communities and leadership

• Community count up 9%: Selling communities reached 459, from 445 at first-quarter end and 421 a year earlier. Management said community count rose 9% year-over-year. Source
• Land spend and lot position: The company held about 76,800 lots owned and optioned, from 75,000 a quarter earlier, with roughly 42% owned. About $422.0 million was spent on land for about 1,943 lots in the quarter. Source
• Multifamily exit in progress: The previous release said the company intends to exit the multifamily development business by selling its remaining Apartment Living assets over several years.
• Chief executive role passed to Mistry: Karl K. Mistry now holds the chief executive officer role, and Douglas C. Yearley, Jr. is executive chairman of the board, as both are named on the call. Source

Coming up, as management said on 19 May 2026

• Community growth expected to continue: Management said the company controls sufficient land for continued 8% to 10% community growth in 2027 and beyond. Source

Figures management reported

Risks management discussed

• Financial: Inventory write-downs cannot be projected in advance, and management said they may have a potentially significant effect on third-quarter and full-year gross margin. Source
• External: Management described the quarter as taking place in a challenging market. Source

Earlier plans management reported on

• Ahead: Management said revenue ran about $110 million above the midpoint of its second-quarter guidance. Source
• Ahead: Adjusted home sales gross margin came in 70 basis points above the second-quarter guidance. Source
• Ahead: SG&A ratio came in 40 basis points below the second-quarter guidance, per management. Source
• Not stated: Management referred to continued 8% to 10% community growth in 2027 and beyond; no status was given. Source

Other quarters

• Q3 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 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.