FORT WASHINGTON, PA — Toll Brothers (NYSE: TOL) reported lower second-quarter profit and revenue as softer home deliveries and margin compression offset gains in signed contracts, underscoring continued pressure across the luxury housing market despite resilient demand from higher-income buyers.
Net income for the quarter ended April 30 fell to $260.6 million, or $2.72 per diluted share, from $352.4 million, or $3.50 per diluted share, a year earlier.
Home sales revenue declined to $2.51 billion from $2.71 billion as delivered homes fell to 2,491 from 2,899 in the prior-year quarter.
The earnings decline came despite stronger order activity. Net signed contract value rose to $2.81 billion from $2.60 billion, while contracted homes increased to 2,834 from 2,650.
Backlog value at quarter-end fell to $6.32 billion from $6.84 billion a year earlier, while homes in backlog declined to 5,394 from 6,063.
Gross margin pressure continued during the quarter. Home sales gross margin narrowed to 23.9% from 26.0%, while adjusted home sales gross margin fell to 26.2% from 27.5%.
Selling, general, and administrative expenses increased to 10.3% of home sales revenue from 9.5% a year earlier.
Chief Executive Officer Karl K. Mistry characterized the quarter as operationally strong despite market headwinds, pointing to order growth and results that exceeded internal guidance on revenue and margins.
“In the second quarter, we once again successfully navigated a challenging market and produced strong results,” Mistry stated.
The company delivered homes at an average price of approximately $1.009 million during the quarter.
Toll Brothers continued returning capital to shareholders through stock repurchases and dividends. The company repurchased approximately 1.2 million shares during the quarter at an average price of $143.72 per share for a total of $175.4 million.
The homebuilder also increased its quarterly cash dividend earlier this year by 4% to $0.26 per share.
The company ended the quarter with $1.11 billion in cash and cash equivalents and $2.24 billion available under its revolving credit facility.
Toll Brothers extended the maturity of its revolving credit facility to February 2031 and increased total commitments under the facility to $2.38 billion.
The company’s community count increased to 459 selling communities from 421 a year earlier, while its controlled lot position totaled approximately 76,800 lots at quarter-end.
Toll Brothers spent approximately $422 million during the quarter to acquire nearly 1,943 lots as the builder continued positioning for future growth.
Mistry added that the company expects land holdings and community expansion to support 8% to 10% growth in 2027 and beyond.
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