TOLMEDIUM SIGNALFINANCIAL10-K

Toll Brothers posted a meaningful decline in profitability in fiscal 2025, with operating income and net income both contracting roughly 15%, even as the company expanded its community count and deliveries.

The drop in earnings despite higher home deliveries (11,292 in FY2025 vs. 10,813 in FY2024) and a larger active selling community base (446 vs. 408) suggests margin compression rather than a volume problem — investors should monitor whether pricing pressure, land costs, or incentive spending is eroding per-home economics. The backlog also shrank meaningfully, falling from $6.47 billion (5,996 homes) to $5.49 billion (4,647 homes), pointing to softer demand entering fiscal 2026 and a lower revenue runway. The removal of the apartment and campus living brands from the business description signals a strategic narrowing back toward for-sale luxury homebuilding, which reduces diversification but may improve capital focus.

Comparing 2025-12-19 vs 2024-12-20View on EDGAR →
FINANCIAL ANALYSIS

Operating income declined approximately 16% year-over-year and net income fell roughly 14%, indicating that cost pressures or pricing concessions are outpacing the benefit of incremental volume growth. On a more constructive note, operating cash flow grew modestly — up approximately 10% — suggesting the business continues to convert earnings to cash efficiently despite the profit headwinds, likely aided by working capital management. Overall, the financial picture reflects a profitable but decelerating business where margin defense and backlog replenishment will be the key metrics for investors to watch heading into fiscal 2026.

FINANCIAL STATEMENT CHANGES
Operating Income
P&L
-15.7%
$2.0B→$1.7B

Operating profitability softening — costs rising faster than revenue, watch for margin recovery plan.

Net Income
P&L
-14.3%
$1.6B→$1.3B

Net income declined 14.3% — review whether driven by operations, interest costs, or non-recurring items.

Operating Cash Flow
Cash Flow
+10.1%
$1.0B→$1.1B

Operating cash flow grew 10.1% — strong conversion of earnings to cash, healthy business fundamentals.

LANGUAGE CHANGES
NEW — 2025-12-19
PRIOR — 2024-12-20
ADDED
As of December 17, 2025, there were approximately 95,003,000 shares of our Common Stock outstanding.
We cater to luxury first-time, move-up, empty-nester (move-down), active-adult and second-home buyers in the United States.
In the five years ended October 31, 2025, we delivered 52,203 homes from 1,061 communities, including 11,292 homes from 556 communities in fiscal 2025.
At October 31, 2025, we had 1,137 communities in various stages of planning, development or operations containing approximately 76,100 home sites that we owned or controlled through options.
At fiscal year-end, we were selling from 446 of these communities.
We had a backlog of $5.49 billion (4,647 homes) at October 31, 2025; we expect to deliver approximately 98% of these homes in fiscal 2026.
In addition to our residential for-sale business, we also develop and operate urban and suburban for-rent apartment and student housing communities ( Apartment Living ) primarily through joint ventures.
These projects are located in various metropolitan areas throughout the country and have generally been operated or developed with partners under the brand names Toll Brothers Apartment Living and Toll Brothers Campus Living .
At October 31, 2025, we or joint ventures in which we have an interest, controlled 73 land parcels as for-rent apartment or student housing projects containing approximately 22,300 planned or completed units.
On September 18, 2025, we announced our intention to exit the multifamily development business, beginning with the sale of our interests in approximately half of our portfolio, as well as our operating platform, to Kennedy Wilson for a purchase price of approximately $380 million, as adjusted to reflect investments in certain assets since the September announcement.
REMOVED
As of December 18, 2024, there were approximately 100,037,000 shares of our Common Stock outstanding.
We cater to luxury first-time, move-up, empty-nester (move-down), active-adult and second-home buyers in the United States, as well as urban and suburban renters under the brand names Toll Brothers Apartment Living and Toll Brothers Campus Living .
In the five years ended October 31, 2024, we delivered 49,407 homes from 986 communities, including 10,813 homes from 527 communities in fiscal 2024.
At October 31, 2024, we had 1,041 communities in various stages of planning, development or operations containing approximately 74,700 home sites that we owned or controlled through options.
At fiscal year-end, were were selling from 408 of these communities.
We had a backlog of $6.47 billion (5,996 homes) at October 31, 2024; we expect to deliver approximately 97% of these homes in fiscal 2025.
In addition to our residential for-sale business, we also develop and operate urban and suburban for-rent apartment communities primarily through joint ventures.
These projects are located in various metropolitan areas throughout the country and are generally being operated or developed (or we expect will be developed) with partners under the brand names Toll Brothers Apartment Living and Toll Brothers Campus Living .
At October 31, 2024, we or joint ventures in which we have an interest, controlled 67 land parcels as for-rent apartment projects containing approximately 21,300 planned or completed units.
In fiscal 2024 and 2023, approximately 49% and 27% of deliveries were spec homes.
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