Q3 2025 Toll Brothers Inc Earnings Call Transcript
Key Points
- Toll Brothers Inc (TOL) delivered 2,959 homes at an average price of $974,000, generating record third quarter home sale revenues of $2.9 billion.
- The company achieved an adjusted gross margin of 27.5%, exceeding guidance by 25 basis points.
- Toll Brothers Inc (TOL) returned approximately $226 million to stockholders through dividends and share repurchases in the quarter.
- The average sales price of new contracts increased to just over $1 million, reflecting the resilience of their luxury business.
- The company ended the third quarter with a strong balance sheet, including $852 million in cash and equivalents and $2.2 billion available under its revolving bank credit facility.
- Sales volumes were impacted by the softer market, leading to a reduction in expected deliveries to approximately 11,200 homes for the full year.
- The cancellation rate increased to 3.2% of beginning backlog, compared to 2.4% in the previous year's third quarter.
- The average incentive in new contracts increased to approximately 8%, up from 7% in the second quarter, indicating pressure on pricing.
- The company experienced a 4% decline in units signed for net contracts compared to the previous year.
- There has been no significant relief on land development costs, which could impact future profitability.
Good morning, and welcome to the Toll Brothers Third Quarter Fiscal Year 2025 Conference Call. (Operator Instructions) The company is planning to end the call at 9:30 when the market opens. (Operator Instructions) Please note, this event is being recorded.
I would now like to turn the conference over to Douglas Yearley, CEO. Please go ahead.
Thank you, Drew. Good morning. Welcome, and thank you all for joining us. With me today are Marty Connor, Chief Financial Officer; Rob Parahus, President and Chief Operating Officer; Wendy Marlett, Chief Marketing Officer; and Gregg Ziegler, Senior VP, Treasurer and Head of Investor Relations.
As usual, I caution you that many statements on this call are forward-looking based on assumptions about the economy, world events, housing and financial markets, interest rates, the availability of labor and materials, inflation and many other factors beyond our control that could significantly affect future results. Please read our
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