ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)
This discussion and analysis is based on, should be read together with, and is qualified in its entirety by, the Consolidated Financial Statements and Notes thereto in Item 15(a)1 of this Form 10-K, beginning at page F-1. It also should be read in conjunction with the disclosure under “Forward-Looking Statements” in Part I of this Form 10-K.
When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to Toll Brothers, Inc. and its subsidiaries, unless the context otherwise requires. References herein to fiscal year refer to our fiscal years ended or ending October 31.
Unless otherwise stated in this report, net contracts signed represents a number or value equal to the gross number or value of contracts signed during the relevant period, less the number or value of contracts cancelled during the relevant period, which includes contracts that were signed during the relevant period and in prior periods. Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”). Backlog conversion represents the percentage of homes delivered in the period from backlog at the beginning of the period (“backlog conversion”).
OVERVIEW
Our Business
We design, build, market, sell, and arrange financing for an array of luxury residential single-family detached, attached, master-planned, resort-style golf, and urban low-, mid-, and high-rise communities, principally on land we develop and improve. In recent years, we have pursued a strategy of broadening our product lines, price points and geographic footprint, as well as increasing the number of spec homes that we sell relative to our traditional build-to-order homes. We cater to luxury first-time, move-up, empty-nester (move-down), active-adult, and second-home buyers in the United States. From time to time, we also design, build, market, and sell high-density, high-rise urban luxury condominiums, which we endeavor to do with third-party joint venture partners. At October 31, 2025, we were operating in 24 states and in the District of Columbia.
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 operate our own architectural, engineering, mortgage, title, land development, insurance, smart home technology and landscaping subsidiaries. We also develop master-planned and golf course communities as well as operate, in certain regions, our own lumber distribution, house component assembly and component manufacturing operations.
In addition to our residential for-sale business, we have also developed and, in some cases operated, for-rent apartments generally through joint ventures. In September 2025, we announced plans to exit this business over time. See the section entitled “Apartment Living” below.
We have investments in various unconsolidated entities, including our Land Development Joint Ventures, Home Building Joint Ventures and Rental Property Joint Ventures.
Financial Highlights
In fiscal 2025, we recognized $10.97 billion of revenues, consisting of $10.84 billion of home sales revenues and $124.5 million of land sales and other revenues, and net income of $1.35 billion, as compared to $10.85 billion of revenues, consisting of $10.56 billion of home sales revenues and $283.4 million of land sales and other revenues, and net income of $1.57 billion in fiscal 2024. Land sales and other revenue, pre-tax income and net income in fiscal 2024 included $185.0 million, $175.2 million and $124.1 million, respectively, related to the sale of a single parcel of land in northern Virginia to a commercial developer.
In fiscal 2025 and 2024, the value of net contracts signed was $9.85 billion (9,943 homes) and $10.07 billion (10,231 homes), respectively. The value of our backlog at October 31, 2025 was $5.49 billion (4,647 homes), as compared to our backlog at October 31, 2024 of $6.47 billion (5,996 homes).
At October 31, 2025, we had $1.26 billion of cash and cash equivalents and approximately $2.19 billion available for borrowing under our $2.35 billion revolving credit facility (the “Revolving Credit Facility”). At October 31, 2025, we had no outstanding borrowings under the Revolving Credit Facility and had outstanding letters of credit of approximately $155.9 million.
At October 31, 2025, our total equity and our debt to total capitalization ratio were $8.29 billion and 0.25 to 1.00, respectively.
Our Business Environment and Current Outlook
In the three months ended October 31, 2025, we signed 2,598 net contracts for an aggregate value of $2.53 billion, a decrease of 2% in units and 5% in dollars compared to the prior year period. For the full year, net signed contracts of approximately 9,943 units and $9.85 billion decreased 3% in units and 2% in dollars, respectively. On a per-community basis, contracts were also down in both the quarter and for the full year. Throughout the year, we experienced weakness in demand, which has continued into the first quarter of our fiscal 2026, and which we attribute to ongoing affordability pressures, especially at the lower end of the market, and volatile economic conditions that have negatively impacted consumer confidence. We have responded to these conditions by strategically managing our pricing, including by increasing incentives where necessary, to appropriately balance sales price and margin with pace, and to align our inventory levels with local sales environments. While the trajectory of near-term demand remains uncertain, we continue to believe the outlook for the new home market remains positive over the long term, as it is supported by strong fundamentals including favorable demographics, the structural undersupply of homes in the U.S. caused by over a decade of underproduction, the aging stock of existing homes, and wealth built up from years of stock market and home price appreciation.
Historically, most of our homes have been sold on a build-to-order basis, where we do not begin construction of the home until we have a signed contract with a customer. In recent years, we have strategically increased the number of homes that we start without a buyer (a spec home), which we generally build faster than build-to-order homes and which allow us to attract buyers who are looking for quicker move-in homes. We determine how many such homes to start within each community based on local market conditions, our current and planned sales pace, and our backlog and construction cadence for the community. We continue to monitor demand and other factors on a community-by-community basis and will make appropriate adjustments to our spec starts as market conditions evolve.
Competitive Landscape
The home building business is highly competitive and fragmented. We compete with numerous home builders of varying sizes, ranging from local to national in scope, some of which have greater sales and financial resources than we do. Sales of existing homes also provide competition. We compete primarily based on price, location, design, quality, service, and reputation. We believe our size and financial stability, relative to many others in our industry, provides us with a competitive advantage.
Land Acquisition and Development
Our business is subject to many risks because of the extended length of time that it takes to obtain the necessary approvals on a property, complete the land improvements and community amenities, and build and deliver a home. We attempt to reduce some of these risks and improve our capital efficiency by utilizing one or more of the following methods: controlling land for future development through options, which enables us to obtain necessary governmental approvals before acquiring title to the land; commencing construction of a build-to-order home only after executing an agreement of sale and receiving a required down payment from the buyer; and using subcontractors to perform home and amenity construction and land development work on a fixed-price basis.
During fiscal 2025 and 2024, we acquired control of approximately 12,700 and 14,900 home sites, respectively, net of options terminated and land sales. In fiscal 2025 and 2024 we forfeited control of approximately 5,900 and 4,000 optioned lots, respectively, primarily because the planned community no longer met our development criteria. At October 31, 2025, we controlled approximately 76,100 home sites, as compared to approximately 74,700 home sites at October 31, 2024, and approximately 70,700 home sites at October 31, 2023. In addition, at October 31, 2025, we expected to purchase approximately 8,800 additional home sites from several Land Development Joint Ventures in which we have an interest, at prices to be determined.
Of the approximately 76,100 total home sites that we owned or controlled through options at October 31, 2025, we owned approximately 33,000 and controlled approximately 43,100 through options. Of the 76,100 home sites, approximately 18,300 were substantially improved.
In addition, at October 31, 2025, our Land Development Joint Ventures owned approximately 28,900 home sites (including 832 home sites included in the 43,100 controlled through options).
At October 31, 2025, we were selling from 446 communities, compared to 408 communities at October 31, 2024, and 370 communities at October 31, 2023.
Customer Mortgage Financing
We maintain relationships with a diverse group of mortgage financial institutions, many of which are among the largest in the industry. We believe that national, regional and community banks continue to recognize the long-term value in creating relationships with our home buyers, and these banks continue to provide these customers with financing.
We believe that our home buyers generally are, and will continue to be, well-positioned to secure mortgages due to their typically lower loan-to-value ratios and attractive credit profiles, as compared to the average home buyer.
Apartment Living
In addition to our residential for-sale business, we have also developed and in some cases operated for-rent apartments and student housing projects generally through joint ventures. In fiscal 2025, three of our Rental Property Joint Ventures sold their assets to unrelated parties, resulting in aggregate gains of $146.1 million recognized by the joint ventures. From our investments in these joint ventures we received cash and recognized our share of the gains of $45.1 million in fiscal 2025. In fiscal 2024, three of our Rental Property Joint Ventures sold their assets, or we sold a portion of our ownership interest to unrelated parties, resulting in aggregate gains of $176.1 million recognized by the joint ventures. From our investments in these joint ventures we received cash and recognized our share of the gains of $24.1 million in fiscal 2024. In fiscal 2023, two of our Rental Property Joint Ventures sold their assets to unrelated parties, resulting in aggregate gains of $106.2 million recognized by the joint ventures. From our investments in these joint ventures, we received cash and recognized gains of $50.9 million in fiscal 2023. In addition, in fiscal 2023, we sold our ownership interest in one of our Rental Property Joint Ventures and recognized a gain of $16.0 million. The gains recognized from these sales are included in “Income (loss) from unconsolidated entities” in our Consolidated Statements of Operations and Comprehensive Income included in Item 15(a)1 of this Form 10-K.
At October 31, 2025, we, or joint ventures in which we have an interest, controlled 73 land parcels that are planned or operating as for-rent apartment projects containing approximately 22,300 units. On September 18, 2025, we announced our intention to exit the multi-family 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. This sale includes 44 land parcels that are in various stages of development containing approximately 13,400 units. In December 2025, we completed a significant portion of the sale to Kennedy Wilson, including our operating platform, with the remaining portion expected to occur in the first half of our fiscal 2026. In connection with the transaction, Kennedy Wilson has agreed to assume our management responsibilities for our retained interests in for-rent properties. We expect to sell our interests in these retained assets over time.
Contracts and Backlog
The aggregate value of net signed sales contracts decreased 2% in fiscal 2025 compared to fiscal 2024, from $10.07 billion (10,231 homes) to $9.85 billion (9,943 homes). This decrease was the result of a 3% decrease in the number of net contracts signed (despite a 9% increase in operating communities in fiscal 2025) and was offset by a 1% increase in the average value attributed to each contract signed. The decline in net signed contracts, in both units and dollars, was reflective of the overall weakness in demand that we experienced in fiscal 2025, which we attribute to ongoing affordability pressures, especially at the lower end of the market, and volatile economic conditions that have negatively impacted consumer confidence.
The value of our backlog at October 31, 2025, 2024, and 2023 was $5.49 billion (4,647 homes), $6.47 billion (5,996 homes), and $6.95 billion (6,578 homes), respectively. Approximately 98% of the homes in backlog at October 31, 2025 are expected to be delivered by October 31, 2026. The 15% decrease in the value of homes in backlog at October 31, 2025, as compared to October 31, 2024, was due to the delivery of more homes out of backlog than were added during fiscal 2025, and a relatively flat average value of each contract signed.
For more information regarding revenues, net contracts signed, and backlog by geographic segment, see “Segments” in this MD&A.
CRITICAL ACCOUNTING ESTIMATES
U.S. generally accepted accounting principles (“GAAP”) require us to make estimates and assumptions that affect our reported amounts in the consolidated financial statements and accompanying notes. Our estimates are based on (i) currently known facts and circumstances, (ii) prior experience, (iii) assessments of probability, (iv) forecasted financial information, and (v) assumptions that management believes to be reasonable but that are inherently uncertain and unpredictable. We use our best judgment when measuring these estimates, and if warranted, obtain advice from external sources. On an ongoing basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. In times of economic disruption when uncertainty regarding future economic conditions is heightened, these estimates and assumptions are subject to greater variability.
For a discussion of all our significant accounting policies, including our critical accounting policies, refer to Note 1,“Significant Accounting Policies” of the Consolidated Financial Statements. We believe that the accounting estimates and assumptions described below involve significant subjectivity and judgment, and changes to such estimates or assumptions could have a
material impact on our financial condition or operating results. Therefore, we consider an understanding of the variability and judgment required in making these estimates and assumptions to be critical in fully understanding and evaluating our reported financial results.
Inventory
Inventory is stated at cost unless an impairment exists, in which case it is written down to fair value in accordance with GAAP. In addition to direct land acquisition, land development, and home construction costs, costs also include interest, real estate taxes, and direct overhead related to development and construction, which are capitalized to inventory during periods beginning with the commencement of development and ending with the completion of construction. Because our inventory is considered a long-lived asset under GAAP, we are required to regularly review the carrying value of each of our communities and write down the value of those communities when we believe the values are not recoverable.
Operating Communities : When the profitability of an operating community deteriorates, the sales pace declines significantly, or some other factor indicates a possible impairment in the recoverability of the asset, the asset is reviewed for impairment by comparing the estimated future undiscounted cash flow for the community to its carrying value. If the estimated future undiscounted cash flow is less than the community’s carrying value, the carrying value is written down to its estimated fair value. Estimated fair value is primarily determined by discounting the estimated future cash flow of each community. The discount rate used in determining each asset’s fair value reflects inherent risks associated with the related estimated cash flows, as well as current risk-free rates available in the market and estimated market risk premiums. In estimating the future undiscounted cash flow of a community, we use various estimates such as (i) the expected sales pace in a community, based upon general economic conditions that will have a short-term or long-term impact on the market in which the community is located and on competition within the market, including the number of home sites available and pricing and incentives being offered in other communities owned by us or by other builders; (ii) the expected sales prices and sales incentives to be offered in a community; (iii) costs expended to date and expected to be incurred in the future, including, but not limited to, land and land development costs, home construction, interest, and overhead costs; (iv) alternative product offerings that may be offered in a community that will have an impact on sales pace, sales price, building cost, or the number of homes that can be built in a particular community; and (v) alternative uses for the property, such as the possibility of a sale of the entire community to another builder or the sale of individual home sites. Any impairment is charged to cost of home sales revenues in the period in which the impairment is determined.
Future Communities : We evaluate all land held for future communities or future sections of operating communities, whether owned or optioned, to determine whether or not we expect to proceed with the development of the land as originally contemplated. This evaluation encompasses the same types of estimates used for operating communities described above, as well as an evaluation of the regulatory environment in which the land is located and the estimated probability of obtaining the necessary approvals, the estimated time and cost it will take to obtain those approvals, alternative land uses and the possible concessions that may be required to be given in order to obtain them. Concessions may include cash payments to fund improvements to public places such as parks and streets, dedication of a portion of the property for use by the public or as open space, or a reduction in the density or size of the homes to be built or commitment to build or fund certain dedicated workforce and affordable housing units. Based upon this review, we decide (i) as to land under contract to be purchased, whether the contract will likely be terminated or renegotiated, and (ii) as to land we own, whether the land will likely be developed as contemplated or in an alternative manner, or should be sold. We then further determine whether costs that have been capitalized to the community are recoverable or should be written off. The write-off is charged to cost of revenues in the period in which the need for the write-off is determined.
The estimates used in the determination of the estimated cash flows and fair value of both current and future communities are based on factors known to us at the time such estimates are made and our expectations of future operations and economic conditions. Should the estimates or expectations used in determining estimated fair value deteriorate in the future, we may be required to recognize additional impairment charges and write-offs related to current and future communities and such amounts could be material.
We have not made any material changes in the accounting methodology we use to assess possible impairments during the past three fiscal years.
We recognized inventory impairment charges and the expensing of costs that we believed not to be recoverable in each of the three fiscal years ended October 31, 2025, 2024, and 2023, as shown in the table below (amounts in thousands):
Land controlled for future communities
Land owned for future communities
Operating communities
We have also recognized $26.9 million, $4.4 million, and $30.6 million of impairment charges on land that we no longer plan to develop which are included in land sales and other cost of revenues during the fiscal years ended October 31, 2025, 2024, and 2023, respectively.
Cost of Revenue Recognition
Cost of revenues from home sales are recognized at the time each home is delivered and title and possession are transferred to the buyer.
For our standard attached and detached homes, land, land development, and related costs, both incurred and estimated to be incurred in the future, are amortized to the cost of homes closed based upon the total number of homes expected to be constructed in each community. Any changes resulting from a change in the estimated number of homes to be constructed or in the estimated costs subsequent to the commencement of delivery of homes are allocated to the remaining undelivered homes in the community. Home construction and related costs are charged to the cost of homes closed under the specific identification method. For our master-planned communities, the estimated land, common area development, and related costs, including the cost of golf courses, net of their estimated residual value, are allocated to individual communities within a master-planned community on a relative sales value basis. Any changes resulting from a change in the estimated number of homes to be constructed or in the estimated costs are allocated to the remaining home sites in each of the communities of the master-planned community.
For high-rise/mid-rise projects, land, land development, construction, and related costs, both incurred and estimated to be incurred in the future, are generally amortized to the cost of units closed based upon an estimated relative sales value of the units closed to the total estimated sales value. Any changes resulting from a change in the estimated total costs or revenues of the project are allocated to the remaining units to be delivered.
We rely on certain estimates to determine our construction and land development costs. Construction and land costs are comprised of direct and allocated costs, including estimated future costs. In determining these costs, we compile community budgets that are based on a variety of assumptions, including future construction schedules and costs to be incurred. Actual results can differ from budgeted amounts for various reasons, including construction delays, labor or material shortages, slower absorptions, increases in costs that have not yet been committed, changes in governmental requirements, or other unanticipated issues encountered during construction and development and other factors beyond our control. To address uncertainty in these budgets, we assess, update and revise community budgets on a regular basis, utilizing the most current information available to estimate home construction and land costs.
We have not made any material changes in the methodology used in developing and revising community budgets over the past three fiscal years.
Warranty and Self-Insurance
Warranty: We provide all of our home buyers with a limited warranty as to workmanship and mechanical equipment. We also provide many of our home buyers with a limited 10-year warranty as to structural integrity. We accrue for expected warranty costs at the time each home is closed and title and possession are transferred to the home buyer. Warranty costs are accrued based upon historical experience related to product type, geographic location and other community specific factors. Adjustments to our warranty liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs.
We have not made any material changes in our methodology or significant assumptions used to establish our warranty reserves during the past three fiscal years.
Self-Insurance: We maintain, and require the majority of our subcontractors to maintain, general liability insurance (including construction defect and bodily injury coverage) and workers’ compensation insurance. These insurance policies protect us against a portion of our risk of loss from claims related to our home building activities, subject to certain self-insured retentions, deductibles and other coverage limits (“self-insured liability”). We also provide general liability insurance for our
subcontractors in Arizona, California, Colorado, Nevada, Washington, and certain areas of Texas, where eligible subcontractors are enrolled as insureds under our general liability insurance policies in each community in which they perform work. For those enrolled subcontractors, we absorb their general liability associated with the work performed on our homes within the applicable community as part of our overall general liability insurance and our self-insurance through our captive insurance subsidiary.
We record expenses and liabilities based on the estimated costs required to cover our self-insured liability and the estimated costs of potential claims and claim adjustment expenses that are not covered by our insurance policies. These estimated costs are based on an analysis of our historical claims and industry data, and include an estimate of claims incurred but not yet reported (“IBNR”).
We engage a third-party actuary that uses our historical claim and expense data, input from our internal legal and risk management groups, as well as industry data, to estimate our liabilities, on an undiscounted basis, related to unpaid claims, IBNR associated with the risks that we are assuming for our self-insured liability and other required costs to administer current and expected claims. These estimates are subject to uncertainty due to a variety of factors, the most significant being the long period of time between the delivery of a home to a home buyer and when a structural warranty or construction defect claim is made, and the ultimate resolution of the claim. Though state regulations vary, construction defect claims are reported and resolved over a prolonged period of time, which can extend for 10 years or longer. As a result, the majority of the estimated liability relates to IBNR. Adjustments to our liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs.
The projection of losses related to these liabilities requires actuarial assumptions that are subject to variability due to uncertainties regarding construction defect claims relative to our markets and the types of product we build, insurance industry practices and legal or regulatory actions and/or interpretations, among other factors. Key assumptions used in these estimates include claim frequencies, severity and settlement patterns, which can occur over an extended period of time. In addition, changes in the frequency and severity of reported claims and the estimates to settle claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Due to the degree of judgment required, and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated, and the difference could be material to our consolidated financial statements.
We have not made any material changes in our methodology used to establish our self-insurance reserves during the past three fiscal years. Over the past three fiscal years adjustments to our estimates have not been material.
Investments in Unconsolidated Entities
We evaluate our investments in unconsolidated entities for indicators of impairment on a quarterly basis. A series of net operating losses of an investee, the inability to recover our invested capital, or other factors may indicate that a loss in value of our investment in the unconsolidated entity has occurred. If a loss exists, we further review to determine if the loss is other than temporary, in which case we write down the investment to its estimated fair value. The amount of impairment recognized is the excess of the investment’s carrying amount over its estimated fair value.
The evaluation of our investments in unconsolidated entities for other-than-temporary impairment entails a detailed cash flow analysis using many estimates, including but not limited to: (1) projected future distributions from the unconsolidated entities, (2) discount rates applied to the future distributions and (3) various other factors. For our unconsolidated entities that develop for-sale homes and condominiums these other factors include those that are similar to how we evaluate our inventory for impairment as described above, such as expected sales pace, expected sales price, expected incentives, and costs incurred and anticipated. For our unconsolidated entities that own, develop and manage for-rent residential apartments, these other factors may include rental trends, expected future expenses and cap rates. Our assumptions on the projected future distributions from unconsolidated entities are also dependent on market conditions, sufficiency of financing and capital, competition, and anticipation of cash receipts.
We believe our assumptions on discount rates require significant judgment because the selection of the discount rate may significantly impact the estimated fair value of our investments in unconsolidated entities. A higher discount rate reduces the estimated fair value of our investments in unconsolidated entities, while a lower discount rate increases the estimated fair value of our investments in unconsolidated entities. During the year ended October 31, 2025, we utilized discount rates ranging from 10% to 15% in our valuations. Because of changes in economic conditions, actual results could differ materially from management’s assumptions and may require material valuation adjustments to our investments in unconsolidated entities to be recorded in the future.
RESULTS OF OPERATIONS
The following table compares certain items in our Consolidated Statements of Operations and Comprehensive Income and other supplemental information for fiscal 2025 and 2024 ($ amounts in millions, unless otherwise stated). For more information regarding results of operations by operating segment, see “Segments” in this MD&A.
Years ended October 31,
% Change
Revenues:
Home sales
Land sales and other
Cost of revenues:
Home sales
Land sales and other
Selling, general and administrative
Income from operations
Other:
Income (loss) from unconsolidated entities
Other income - net
Income before income taxes
Income tax provision
Net income
Supplemental information:
Home sales cost of revenues as a percentage of home sales revenues
Land sales and other cost of revenues as a percentage of land sales and other revenues
SG&A as a percentage of home sales revenues
Effective tax rate
Deliveries – units
Deliveries – average sales price (in ‘000s)
Net contracts signed – value
Net contracts signed – units
Net contracts signed – average sales price (in ‘000s)
At October 31,
% Change
Backlog – value
Backlog – units
Backlog – average sales price (in ‘000s)
Note: Due to rounding, amounts may not add. “Net contracts signed – value” is net of all cancellations that occurred in the period. It includes the value of each binding agreement of sale that was signed in the period, plus the value of all options that were selected during the period, regardless of when the initial agreements of sale related to such options were signed.
A discussion and analysis regarding Results of Operations and Analysis of Financial Condition for the year ended October 31, 2024, as compared to the year ended October 31, 2023, is included in Part II, Item 7, “MD&A” to our Annual Report on Form 10-K for the fiscal year ended October 31, 2024, filed with the SEC on December 20, 2024.
FISCAL 2025 COMPARED TO FISCAL 2024
Home Sales Revenues and Home Sales Cost of Revenues
The increase in home sales revenues in fiscal 2025, as compared to fiscal 2024, was attributable to a 4% increase in the number of homes delivered, offset, in part, by a 2% decrease in the average price of homes delivered. The increase in the number of homes delivered in fiscal 2025, as compared to fiscal 2024, was principally due to higher backlog conversion and an increase in the number of spec homes delivered in fiscal 2025, offset, in part, by a decrease in the number of homes in backlog at October 31, 2024, as compared to the number of homes in backlog at October 31, 2023. The decrease in the average delivered home price was mainly due to an increase in homes delivered in less expensive product types/geographic regions and an increase in the number of spec homes closed.
Home sales cost of revenues, as a percentage of homes sales revenues, in fiscal 2025 was 74.4%, as compared to 73.4% in fiscal 2024. The increase in fiscal 2025 was principally due to an increase in incentives as a result of soft market conditions, as well as shifts in the mix of revenues to lower margin products/areas, offset, in part, by lower interest expense as a percentage of home sales revenues. We recognized inventory impairments and write-offs of $65.9 million, or 0.6% of home sales revenues, and $59.4 million, or 0.6% of home sales revenues, in fiscal 2025 and fiscal 2024, respectively. Interest cost in fiscal 2025 was $118.1 million, or 1.1% of home sales revenues, as compared to $129.0 million, or 1.2% of home sales revenues in fiscal 2024.
Land Sales and Other Revenues and Land Sales and Other Cost of Revenues
Our revenues from land sales and other generally consist of the following: (1) land sales to joint ventures in which we retain an interest; (2) lot sales to third-party builders within our master-planned communities; (3) bulk land sales to third parties of land we have decided no longer meets our development criteria; (4) sales of land parcels to third parties (typically because there is a superior economic use of the property); and (5) sales of commercial and retail properties generally located at our urban luxury condominium communities. Land sales to joint ventures in which we retain an interest are generally sold at our land basis and therefore little to no gross margin is earned on these sales.
The increase in land sales and other cost of revenues as a percentage of land sales and other revenues in fiscal 2025 compared to fiscal 2024 was primarily due to the sale of a single land parcel to a commercial developer for net cash proceeds of $180.7 million, which resulted in a pre-tax gain of $175.2 million in fiscal 2024. In addition, we had higher impairment charges in fiscal 2025. We recognized $26.9 million of land sales and other impairment charges in fiscal 2025 in connection with planned land sales compared to $4.4 million of land sales and other impairment charges recognized in fiscal 2024.
Selling, General and Administrative Expenses (“SG&A”)
SG&A spending increased by $51.3 million in fiscal 2025 compared to fiscal 2024. As a percentage of home sales revenues, SG&A was 9.5% and 9.3% in fiscal 2025 and 2024, respectively. The dollar increase in SG&A was primarily due to an increase in payroll, marketing and insurance costs. These increases were offset, in part, by modestly lower selling commissions.
Income from Unconsolidated Entities
We recognize our proportionate share of the earnings and losses from the various unconsolidated entities in which we have an investment. Many of our unconsolidated entities are land development projects, high-rise/mid-rise condominium construction projects, or for-rent apartment projects and for-rent single-family home projects, which do not generate revenues and earnings for a number of years during the development of the property. Once development is complete for land development projects and high-rise/mid-rise condominium construction projects, these unconsolidated entities will generally, over a relatively short period of time, generate revenues and earnings until all of the assets of the entity are sold. Further, once for-rent apartments and for-rent single-family home projects are complete and stabilized, we often monetize a portion of these projects through a recapitalization or a sale of all or a portion of our ownership interest in the joint venture, resulting in an income-producing event. Because of the long development periods associated with these projects, the earnings recognized from these entities may vary significantly from quarter to quarter and year to year.
For our Rental Property Joint Ventures specifically, these entities typically generate operating losses until the related property reaches stabilization. For fiscal years 2025 and 2024, our earnings related to the Rental Property Joint Ventures include approximately $68.0 million and $50.3 million, respectively, representing our share of net operating losses incurred by these joint ventures, of which approximately $38.3 million and $29.8 million, respectively, was our share of the depreciation expense recognized by these joint ventures.
We recognized a gain from unconsolidated entities of $19.1 million in fiscal 2025, as compared to a loss of $23.8 million in fiscal 2024. This increase was mainly due to $45.1 million of gains recognized in fiscal 2025 related to property sales by our joint ventures compared to $24.1 million of such gains in fiscal 2024, increased earnings by certain Home Building Joint Ventures and lower other-than-temporary impairment charges. We recognized other-than-temporary impairment charges in
fiscal 2025 of $2.1 million related to one investment in a Rental Property Joint Venture compared to $6.6 million related to two investments in Rental Property Joint Ventures in fiscal 2024. These increases were offset, in part, by higher losses from certain Rental Property Joint Ventures.
Other Income - Net
The table below provides the components of “Other Income – net” for the years ended October 31, 2025 and 2024 (amounts in thousands):
Interest income
Income from ancillary businesses
Management fee income earned by home building operations
Other
Total other income – net
The decrease in interest income in fiscal 2025, as compared to fiscal 2024, was principally due to lower average cash balances in fiscal 2025.
The decrease in income from ancillary businesses in fiscal 2025, as compared to fiscal 2024, was principally due to a $4.4 million gain from a bulk sale of security monitoring accounts by our smart home technology business in fiscal 2024 and higher operating losses incurred in our Apartment Living operations, offset, in part, by higher earnings from our mortgage and title operations due to increased closing volume and a higher capture rate by our mortgage operations. In fiscal 2025 and fiscal 2024, we also recognized $7.3 million and $8.9 million, respectively, of write-offs related to previously incurred costs that we believed not to be recoverable in our Apartment Living operations.
In fiscal 2025 and 2024, income from ancillary businesses included management fees earned on our apartment rental development, high-rise urban luxury condominium, and other unconsolidated entities and operations totaling $20.4 million and $35.7 million, respectively.
The decrease in “other” was principally due to a $5.0 million gain in fiscal 2024 related to an investment we held in a privately held company that sold substantially all of its assets to a third party.
Income Before Income Taxes
In fiscal 2025, we reported income before income taxes of $1.79 billion, or 16.3% of revenues, as compared to $2.09 billion, or 19.2% of revenues, in fiscal 2024.
Income Tax Provision
We recognized a $444.9 million income tax provision in fiscal 2025. Based upon the federal statutory rate of 21.0% for fiscal 2025, our federal tax provision would have been $376.2 million. The difference between the tax provision recognized and the tax provision based on the federal statutory rate was mainly due to the provision for state income taxes of $85.6 million and a $2.6 million increase in unrecognized tax benefits, offset, in part, by a benefit of $15.2 million from excess tax benefits related to stock-based compensation, $2.7 million of miscellaneous and other deferred tax adjustments, and $1.7 million of reversals of accruals for uncertain tax positions.
We recognized a $514.4 million income tax provision in fiscal 2024. Based upon the federal statutory rate of 21.0% for fiscal 2024, our federal tax provision would have been $438.0 million. The difference between the tax provision recognized and the tax provision based on the federal statutory rate was mainly due to the provision for state income taxes of $103.9 million, $2.7 million of other permanent differences, and a $2.6 million increase in unrecognized tax benefits, offset, in part, by a benefit of $17.5 million from excess tax benefits related to stock-based compensation, $2.1 million of reversal of accruals for uncertain tax positions and $13.0 million of miscellaneous and other deferred tax adjustments.
CAPITAL RESOURCES AND LIQUIDITY
Funding for our business has been, and continues to be, provided principally by cash flow from operating activities before inventory additions, credit arrangements with third parties, and the public capital markets.
Our cash flows from operations generally provide us with a significant source of liquidity. Our cash flows provided by operating activities, supplemented with our short-term borrowings and long-term debt, have been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our Company. Our primary uses of cash
include inventory additions in the form of land acquisitions and deposits to obtain control of land, land development, working capital to fund day-to-day operations, and investments in existing and future unconsolidated joint ventures. We may also use cash to fund capital expenditures such as investments in our information technology systems. We also use cash to pay dividends on our common stock, to repay debt and make share repurchases. We believe our sources of cash and liquidity will continue to be adequate to fund operations, finance our strategic operating initiatives, repay debt, fund our share repurchases and pay dividends for the foreseeable future.
At October 31, 2025, we had $1.26 billion of cash and cash equivalents on hand and approximately $2.19 billion available for borrowing under our Revolving Credit Facility. The Revolving Credit Facility provides us with a committed borrowing capacity of $2.35 billion, which we have the ability to increase up to $3.00 billion with the consent of lenders, and is scheduled to mature on February 7, 2030. Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries are guarantors of the borrower’s obligations under the Revolving Credit Facility. Our $650.0 million unsecured Term Loan Facility is also scheduled to mature on February 7, 2030 and is also guaranteed by Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries.
Short-term Liquidity and Capital Resources
In fiscal 2026, we expect our principal demand for funds will be for inventory additions (in the form of land acquisition, land development, home construction costs, and deposits to control land, which could occur directly or indirectly through builder acquisitions), operating expenses, including our general and administrative expenses, investments and funding of capital improvements, investments in existing and future unconsolidated joint ventures, repayment of community level debt, common stock repurchases, and dividend payments. Demand for funds include interest and principal payments on current and future debt financing. We expect to meet our short-term liquidity requirements primarily through our cash and cash equivalents on hand and net cash flows provided by operations. Additional sources of funds include distributions from our unconsolidated joint ventures, proceeds from the sale of a portion of our Apartment Living portfolio to Kennedy Wilson, borrowing capacity under our Revolving Credit Facility and borrowings from banks and other lenders.
We believe we will have sufficient liquidity available to fund our business needs, commitments and contractual obligations in a timely manner for the next twelve months. We may, however, seek additional financing to fund future growth or refinance our existing indebtedness through the debt capital markets, but we cannot be assured that such financing will be available on favorable terms, or at all.
Long-term Liquidity and Capital Resources
Beyond fiscal 2026, our principal demands for funds will be for the payments of the principal amount of our long-term debt as it becomes due or matures, land purchases and inventory additions needed to maintain and grow our business, long-term capital investments and investments in unconsolidated joint ventures, common stock repurchases, and dividend payments.
Over the longer term, to the extent the sources of capital described above are insufficient to meet our needs, we may also conduct additional public offerings of our securities, refinance debt or dispose of certain assets to fund our operating activities and debt service. We expect these resources will be adequate to fund our ongoing operating activities as well as provide capital for investment in future land purchases and related development activities and future joint ventures.
Material Cash Requirements
We are a party to many agreements that include contractual obligations and commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the Consolidated Balance Sheet as of October 31, 2025, while others are considered future commitments. Our contractual obligations primarily consist of long-term debt and related interest payments, payments due on our mortgage company loan facility, purchase obligations related to expected acquisition of land under purchase agreements and land development agreements (many of which are secured by letters of credit or surety bonds), operating leases, obligations under our deferred compensation plan, and obligations under our supplemental executive retirement plans. We also enter into certain short-term lease commitments, commitments to fund our existing or future unconsolidated joint ventures, letters of credit and other purchase obligations in the normal course of business. For more information regarding our primary obligations, refer to Note 5, “Loans Payable, Senior Notes, and Mortgage Company Loan Facility,” and Note 13, “Commitments and Contingencies,” to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for amounts outstanding as of October 31, 2025, related to debt and commitments and contingencies, respectively.
We also operate through a number of joint ventures and have undertaken various commitments as a result of those arrangements. At October 31, 2025, we had investments in these entities of $1.03 billion, and were committed to invest or advance up to an additional $331.2 million to these entities if they require additional funding. At October 31, 2025, we had agreed to terms for the acquisition of 832 home sites from five joint ventures for an estimated aggregate purchase price of
$111.3 million. In addition, we expect to purchase approximately 8,800 additional home sites over a number of years from several joint ventures in which we have interests. The purchase price of these home sites will be determined at a future date.
The unconsolidated joint ventures in which we have investments generally finance their activities with a combination of partner equity and debt financing. In some instances, we and our joint venture partner have guaranteed debt of unconsolidated entities. These guarantees may include any or all of the following: (i) project completion guarantees, including any cost overruns; (ii) repayment guarantees, generally covering a percentage of the outstanding loan; (iii) carry cost guarantees, which cover costs such as interest, real estate taxes, and insurance; (iv) environmental indemnities provided to lenders that holds them harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (v) indemnifications of lenders from “bad boy acts” of the unconsolidated entity.
In these situations where we have joint and several guarantees with our joint venture partner, we generally seek to implement a reimbursement agreement with our partner that provides that neither party is responsible for more than its proportionate share or agreed-upon share of the guarantee; however, we are not always successful. In addition, if the joint venture partner does not have adequate financial resources to meet its obligations under such a reimbursement agreement, we may be liable for more than our proportionate share. We believe that, as of October 31, 2025, in the event we had become legally obligated to perform under a guarantee of the obligation of an unconsolidated entity due to a triggering event, the collateral in such entity should be sufficient to repay all or a significant portion of the obligation. If it is not, we and our partners would need to contribute additional capital to the entity. At October 31, 2025, we had guaranteed the debt of certain unconsolidated entities that have loan commitments aggregating $1.92 billion, of which, if the full amount of the debt obligations were borrowed, we estimate $414.8 million to be our maximum exposure related to repayment and carry cost guarantees. At October 31, 2025, the unconsolidated entities had borrowed an aggregate of $1.46 billion, of which we estimate $413.5 million to be our maximum exposure related to repayment and carry cost guarantees. The terms of these guarantees generally range from 1 month to 8.2 years. These maximum exposure estimates do not take into account any recoveries from the underlying collateral or any reimbursement from our partners, nor do they include any potential exposures related to project completion guarantees or the indemnities noted above, which are not estimable.
For more information regarding these joint ventures, see Note 3, “Investments in Unconsolidated Entities” in the Notes to Consolidated Financial Statements in Item 15(a)1 of this Form 10-K.
Debt Service Requirements
Our financing strategy is to ensure liquidity and access to capital markets, to maintain a balanced profile of debt maturities, and to manage our exposure to floating interest rate volatility.
Outside of the normal course of operations, one of our principal liquidity needs is the payment of principal and interest on outstanding indebtedness. We are required by the terms of certain loan documents to meet certain covenants, such as financial ratios and reporting requirements. As of October 31, 2025, we were in compliance with all such covenants and requirements on our term loan, credit facility and other loans payable. Refer to Note 5, “Loans Payable, Senior Notes, and Mortgage Company Loan Facility” in the Notes to the Consolidated Financial Statements in Item 15(a)1 of this Form 10-K for additional information.
Operating Activities
Cash provided by operating activities during fiscal 2025 was $1.11 billion. Cash provided by operating activities was generated primarily from: (1) $1.35 billion of net income plus the following non-cash activities: $82.1 million of depreciation and amortization, a net deferred tax expense of $86.7 million, $100.0 million of impairments and write-offs, $30.8 million of stock-based compensation, offset by $19.1 million of income from unconsolidated entities; and (2) $61.4 million of distributions received from unconsolidated entities and an increase of $64.6 million in accounts payable and accrued expenses. This activity was offset, in part, by an increase of $521.2 million in inventory, a decrease of $66.7 million in net customer deposits; a $24.8 million increase in receivables, prepaid expenses and other assets, $21.1 million in current income taxes, net, and $7.6 million in mortgage loan originations, net of sales.
Cash provided by operating activities during fiscal 2024 was $1.01 billion. Cash provided by operating activities was generated primarily from: (1) $1.57 billion of net income plus the following non-cash activities: $81.2 million of depreciation and amortization, a net deferred tax benefit of $80.3 million, $72.8 million of impairments and write-offs, $29.6 million of stock-based compensation, $23.8 million of losses from unconsolidated entities; and (2) $39.3 million of distributions received from unconsolidated entities and $31.9 million in current income taxes, net. This activity was offset, in part, by an increase of $575.7 million in inventory, a decrease of $77.2 million in net customer deposits; $78.5 million in mortgage loan originations, net of sales, and a decrease of $21.8 million in accounts payable and accrued expenses.
Investing Activities
Cash used in investing activities during fiscal 2025 was $310.0 million, primarily related to $309.7 million used to fund our investments in unconsolidated entities and $86.2 million for the purchase of property and equipment. This activity was offset, in part, by $82.2 million of cash received as returns from our investments in unconsolidated entities.
Cash used in investing activities during fiscal 2024 was $167.6 million, primarily related to $193.2 million used to fund our investments in unconsolidated entities and $73.6 million for the purchase of property and equipment. This activity was offset, in part, by $101.4 million of cash received as returns from our investments in unconsolidated entities.
Financing Activities
We used $833.9 million of cash from financing activities in fiscal 2025, primarily for the repurchase of $651.0 million of our common stock; $350.0 million for the redemption of senior notes; payments of $162.2 million of loans payable, net of new borrowings; the payment of dividends on our common stock of $97.1 million; $39.4 million of payments related to repurchases from land bank programs, net of proceeds; $19.9 million of payments related to stock-based benefit plans - net
and $13.0 million of debt issuance costs. This activity was offset, in part, by $498.2 million of proceeds from the issuance of senior notes.
We used $816.5 million of cash from financing activities in fiscal 2024, primarily for the repurchase of $627.1 million of our common stock; payments of $100.1 million of loans payable, net of new borrowings; and the payment of dividends on our common stock of $93.4 million. This activity was offset by $4.1 million of proceeds from stock-based benefit plans.
INFLATION
The long-term impact of inflation on us is manifested in increased costs for land, land development, construction, and overhead. We generally enter into contracts to acquire land a significant period of time before development and sales efforts begin. Accordingly, to the extent land acquisition costs are fixed, subsequent increases or decreases in the sales prices of homes will affect our profits. Because the sales price of each of our homes is fixed at the time a buyer enters into a contract to purchase a home and because we contract to sell a substantial number of our homes before we begin construction, any inflation of costs in excess of those anticipated would likely result in lower gross margins for these homes. We generally attempt to minimize that effect by entering into fixed-price contracts with our subcontractors and material suppliers for specified periods of time, which generally do not exceed one year.
In general, housing demand is adversely affected by increases in interest rates and other housing costs. Additionally, interest rates, the length of time that land remains in inventory, and the proportion of inventory that is financed affect our interest costs. If we are unable to raise sales prices enough to compensate for higher costs, or if mortgage rates increase significantly, affecting prospective buyers’ ability to adequately finance home purchases, our home sales revenues, gross margins, and net income could be adversely affected. Increases in sales prices, whether the result of inflation or demand, may affect the ability of prospective buyers to afford new homes. See “Risk Factors — Risks Related to Our Business and Industry - Significant inflation, higher interest rates or deflation could adversely affect our business and financial results” in Item 1A of this Form 10-K.
SUPPLEMENTAL GUARANTOR INFORMATION
At October 31, 2025, our 100%-owned subsidiary, Toll Brothers Finance Corp. (the “Subsidiary Issuer”), had issued and outstanding $1.75 billion aggregate principal amount of senior notes maturing on various dates between March 15, 2027 and June 15, 2035 (the “Senior Notes”). For further information regarding the Senior Notes, see Note 5 to our Consolidated Financial Statements under the caption “Senior Notes.”
The obligations of the Subsidiary Issuer to pay principal, premiums, if any, and interest are guaranteed jointly and severally on a senior basis by Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries (the “Guarantor Subsidiaries” and, together with us, the “Guarantors”). The guarantees are full and unconditional, and the Subsidiary Issuer and each of the Guarantor Subsidiaries are consolidated subsidiaries of Toll Brothers, Inc. Our non-home building subsidiaries and several of our home building subsidiaries (together, the “Non-Guarantor Subsidiaries”) do not guarantee the Senior Notes. The Subsidiary Issuer generates no operating revenues and does not have any independent operations other than the financing of our other subsidiaries by lending the proceeds of its public debt offerings, including the Senior Notes. Our home building operations are conducted almost entirely through the Guarantor Subsidiaries. Accordingly, the Subsidiary Issuer’s cash flow and ability to service the Senior Notes is dependent upon the earnings of the Company’s subsidiaries and the distribution of those earnings to the Subsidiary Issuer, whether by dividends, loans or otherwise. Holders of the Senior Notes have a direct claim only against the Subsidiary Issuer and the Guarantors. The obligations of the Guarantors under their guarantees will be limited as necessary to recognize certain defenses generally available to guarantors (including those that relate to fraudulent conveyance or transfer, voidable preference or similar laws affecting the rights of creditors generally) under applicable law.
The indentures under which the Senior Notes were issued provide that any of our subsidiaries that provide a guarantee of our obligations under the Revolving Credit Facility will guarantee the Senior Notes. The indentures further provide that any Guarantor Subsidiary may be released from its guarantee so long as (i) no default or event of default exists or would result from release of such guarantee; (ii) the Guarantor Subsidiary being released has consolidated net worth of less than 5% of the Company’s consolidated net worth as of the end of our most recent fiscal quarter; (iii) the Guarantor Subsidiaries released from their guarantees in any fiscal year comprise in the aggregate less than 10% (or 15% if and to the extent necessary to permit the cure of a default) of our consolidated net worth as of the end of our most recent fiscal quarter; (iv) such release would not have a material adverse effect on ours and our subsidiaries’ home building business; and (v) the Guarantor Subsidiary is released from its guaranty under the Revolving Credit Facility. If there are no guarantors under the Revolving Credit Facility, all Guarantor Subsidiaries under the indentures will be released from their guarantees.
The following summarized financial information is presented for Toll Brothers, Inc., the Subsidiary Issuer, and the Guarantor Subsidiaries on a combined basis after intercompany transactions and balances have been eliminated among Toll Brothers, Inc., the Subsidiary Issuer and the Guarantor Subsidiaries, as well as their investment in, and equity in earnings from the Non-Guarantor Subsidiaries.
Summarized Balance Sheet Data (amounts in millions)
October 31, 2025
Assets
Cash
Inventory
Amount due from Non-Guarantor Subsidiaries
Total assets
Liabilities & Stockholders' Equity
Loans payable
Senior notes
Total liabilities
Stockholders' equity
Summarized Statement of Operations Data (amounts in millions)
For the
year ended October 31, 2025
Revenues
Cost of revenues
Selling, general and administrative
Income before income taxes
Net income
SEGMENTS
During fiscal 2025 and 2024, we operated in five geographic segments, with operations generally located in the states listed below:
• The North region: Connecticut, Delaware, Massachusetts, Michigan, New Jersey, New York and Pennsylvania;
• The Mid-Atlantic region: Georgia, Maryland, North Carolina, Tennessee and Virginia;
• The South region: Florida, South Carolina and Texas
• The Mountain region: Arizona, Colorado, Idaho, Nevada and Utah; and
• The Pacific region: California, Oregon and Washington.
In fiscal 2024, we discontinued the sale of homes in Illinois. Our operations in Illinois were immaterial to the North geographic segment.
Our geographic reporting segments are consistent with how our chief operating decision makers are assessing operating performance and allocating capital. The following tables summarize information related to revenues, net contracts signed, and income (loss) before income taxes by segment for fiscal years 2025 and 2024. Information related to backlog and assets by segment at October 31, 2025 and 2024 has also been provided.
Units Delivered and Revenues:
Fiscal 2025 Compared to Fiscal 2024
Revenues
($ in millions)
Units Delivered
Average Delivered Price
($ in thousands)
% Change
% Change
% Change
North
Mid-Atlantic
South
Mountain
Pacific
Total home building
Other
Total home sales revenue
Land sales and other revenue
Total revenue
Net Contracts Signed:
Fiscal 2025 Compared to Fiscal 2024
Net Contract Value
($ in millions)
Net Contracted Units
Average Contracted Price
($ in thousands)
% Change
% Change
% Change
North
Mid-Atlantic
South
Mountain
Pacific
Total consolidated
Backlog at October 31:
October 31, 2025 Compared to October 31, 2024
Backlog Value
($ in millions)
Backlog Units
Average Backlog Price
($ in thousands)
% Change
% Change
% Change
North
Mid-Atlantic
South
Mountain
Pacific
Total consolidated
Income (Loss) Before Income Taxes ($ amounts in millions):
% Change 2025 vs 2024
North
Mid-Atlantic
South
Mountain
Pacific
Total home building
Corporate and other
Total consolidated
“Corporate and other” is comprised principally of general corporate expenses such as our executive offices; the corporate finance, accounting, audit, tax, human resources, risk management, information technology, marketing, and legal groups; interest income; income from certain of our ancillary businesses, including our apartment rental development business and our high-rise urban luxury condominium operations; and income from our Rental Property Joint Ventures and Other Joint Ventures.
Total Assets ($ amounts in millions):
At October 31,
North
Mid-Atlantic
South
Mountain
Pacific
Total home building
Corporate and other
Total consolidated
Note: Due to rounding, amounts may not add.
“Corporate and other” is comprised principally of cash and cash equivalents, restricted cash, investments in our Rental Property Joint Ventures, expected recoveries from insurance carriers and suppliers, manufacturing facilities, our apartment rental development operations, and our mortgage and title subsidiaries.
A discussion and analysis regarding our Segments’ Results of Operations and Analysis of Financial Condition for the year ended October 31, 2024, as compared to the year ended October 31, 2023 is included in Part II, Item 7, “MD&A” to our Annual Report on Form 10-K for the fiscal year ended October 31, 2024, filed with the SEC on December 20, 2024.
FISCAL 2025 COMPARED TO FISCAL 2024
North
Year ended October 31,
% Change
Units Delivered and Home Sales Revenues:
Home sales revenues ($ in millions)
Units delivered
Average delivered price ($ in thousands)
Net Contracts Signed:
Net contract value ($ in millions)
Net contracted units
Average contracted price ($ in thousands)
Home sales cost of revenues as a percentage of home sales revenues
Income before income taxes ($ in millions)
Number of selling communities at October 31,
The increase in the number of homes delivered in fiscal 2025, as compared to fiscal 2024, was mainly due to an increase in the number of spec homes delivered, offset, in part, by a decrease in the number of homes in backlog at October 31, 2024, as compared to the number of homes in backlog at October 31, 2023. The increase in the average delivered price in fiscal 2025 was primarily due to a shift in the number of homes delivered to more expensive areas and/or products, offset, in part by an increase in incentives as a result of soft market conditions.
The increase in the number of net contracts signed in fiscal 2025, as compared to fiscal 2024, was due to a continuation of favorable demand conditions, as well as an increase in the number of selling communities in the fourth quarter of fiscal 2025. The increase in the average value of each contract signed in the fiscal 2025 period was primarily due to favorable demand conditions, as well as a shift in the number of contracts signed to more expensive areas and/or products, partially offset by a modest increase in sales incentives.
The increase in income before income taxes in fiscal 2025 was principally attributable to higher earnings from increased revenue and lower home sales cost of revenues, as a percentage of home sales revenues. The decrease in home sales costs of revenues, as a percentage of home sale revenues, was primarily due to a shift in the mix of homes delivered in higher-margin areas/products and lower interest expense as a percentage of home sales revenue. Fiscal 2025 also benefitted from higher income from unconsolidated entities, primarily from one Home Building Joint Venture. These increases were offset by higher SG&A costs in fiscal 2025.
Mid-Atlantic
Year ended October 31,
% Change
Units Delivered and Home Sales Revenues:
Home sales revenues ($ in millions)
Units delivered
Average delivered price ($ in thousands)
Net Contracts Signed:
Net contract value ($ in millions)
Net contracted units
Average contracted price ($ in thousands)
Home sales cost of revenues as a percentage of home sales revenues
Income before income taxes ($ in millions)
Number of selling communities at October 31,
The number of homes delivered in fiscal 2025 increased as compared to fiscal 2024. This was primarily due to an increase in the number of spec homes delivered in the region, as the number of homes in backlog at October 31, 2024 was lower than the number of homes in backlog at October 31, 2023. The decrease in the average price of homes delivered in fiscal 2025 was primarily due to a shift in the number of homes delivered to less expensive areas and/or products, as well as the increase in spec home deliveries with higher sales incentives in fiscal 2025.
The increase in the number of net contracts signed in fiscal 2025, as compared to fiscal 2024, was principally due to an increase in the number of selling communities, offset, in part, by moderately softer demand. The average value of each contract signed in fiscal 2025 decreased primarily due to shifts in the number of contracts signed to less expensive areas and/or products and increased sales incentives.
The decrease in income before income taxes in fiscal 2025, as compared to fiscal 2024, was mainly due to the fiscal 2024 sale of a land parcel to a commercial developer that resulted in a pre-tax gain of $175.2 million, which did not recur in fiscal 2025. In addition, fiscal 2025 was impacted by higher home sales costs of revenues, as a percentage of home sale revenues, higher land impairment charges, and increased SG&A spend. The increase in home sales costs of revenues, as a percentage of home sale revenues, was primarily due to a shift in the number of homes delivered to less expensive areas and/or products. Inventory impairment charges were $16.8 million and $15.2 million in fiscal 2025 and 2024, respectively. In addition, in fiscal 2025 and 2024 we recognized $12.1 million and $0.6 million, respectively, in land impairment charges included in land sales and other cost of revenues in connection with planned land sales on future communities which we no longer intend to develop.
South
Year ended October 31,
% Change
Units Delivered and Home Sales Revenues:
Home sales revenues ($ in millions)
Units delivered
Average delivered price ($ in thousands)
Net Contracts Signed:
Net contract value ($ in millions)
Net contracted units
Average contracted price ($ in thousands)
Home sales cost of revenues as a percentage of home sales revenues
Income before income taxes ($ in millions)
Number of selling communities at October 31,
The number of homes delivered in fiscal 2025, as compared to fiscal 2024, was relatively flat. The decrease in the average price of homes delivered in fiscal 2025 was primarily due to an increase in incentives as a result of soft market conditions coupled with a shift in the number of homes delivered to less expensive areas and/or products.
The decrease in the number of net contracts signed in fiscal 2025, as compared to fiscal 2024, was principally due to soft demand, offset, in part by an increase in the number of selling communities. The decrease in the average value of each contract signed in fiscal 2025 was mainly due to a shift in the number of contracts signed to less expensive areas or product types and increased sales incentives.
The decrease in income before income taxes in fiscal 2025, as compared to fiscal 2024, was principally due to higher home sales costs of revenues, as a percentage of home sales revenues, and lower earnings from decreased home sales revenues. The increase in home sales cost of revenues, as a percentage of home sales revenues, was mainly due to a shift in product mix/areas to lower-margin areas and higher inventory impairment charges. Inventory impairment charges were $16.9 million and $3.4 million in fiscal 2025 and 2024, respectively. In addition, we recognized $2.6 million of land impairment charges in fiscal 2025 in connection with planned land sales. No similar charges were recognized in fiscal 2024.
Mountain
Year ended October 31,
% Change
Units Delivered and Home Sales Revenues:
Home sales revenues ($ in millions)
Units delivered
Average delivered price ($ in thousands)
Net Contracts Signed:
Net contract value ($ in millions)
Net contracted units
Average contracted price ($ in thousands)
Home sales cost of revenues as a percentage of home sales revenues
Income before income taxes ($ in millions)
Number of selling communities at October 31,
The increase in the number of homes delivered in fiscal 2025, as compared to fiscal 2024, was mainly due to higher backlog conversion and an increase in the number of spec homes delivered. The average price of homes delivered in fiscal 2025
increased compared with fiscal 2024 primarily due to a shift in the number of homes delivered in more expensive areas, offset, in part by an increase in incentives as a result of soft market conditions.
The decrease in the number of net contracts signed in fiscal 2025, as compared to fiscal 2024, was principally due to soft demand and a decrease in the number of selling communities. The average value of each contract signed in fiscal 2025 was relatively flat as compared to fiscal 2024.
The increase in income before income taxes in fiscal 2025, as compared to fiscal 2024, was mainly due to higher earnings from increased revenues, lower home sales cost of revenues, as a percentage of home sales revenues, partially offset by higher SG&A costs. The decrease in home sales cost of revenues, as a percentage of home sales revenues, was primarily due to lower inventory impairment charges. Inventory impairment charges were $15.6 million and $26.0 million in fiscal 2025 and 2024, respectively.
Pacific
Year ended October 31,
% Change
Units Delivered and Home Sales Revenues:
Home sales revenues ($ in millions)
Units delivered
Average delivered price ($ in thousands)
Net Contracts Signed:
Net contract value ($ in millions)
Net contracted units
Average contracted price ($ in thousands)
Home sales cost of revenues as a percentage of home sales revenues
Income before income taxes ($ in millions)
Number of selling communities at October 31,
The number of homes delivered in fiscal 2025 was relatively flat as compared to fiscal 2024. The decrease in the average price of homes delivered in fiscal 2025 was primarily due to a shift in the number of homes delivered to less expensive areas and/or product types.
The decrease in the number of net contracts signed in fiscal 2025, as compared to fiscal 2024, was primarily due to soft demand, offset, in part, by an increase in the number of selling communities. The increase in the average value of each contract signed in fiscal 2025 was mainly due to a shift in the number of contracts signed to more expensive areas or product types.
The decrease in income before income taxes in fiscal 2025, as compared to fiscal 2024, was primarily due to higher home sales cost of revenues, as a percentage of home sales revenues, and lower earnings from decreased revenues. The increase in home sales cost of revenues, as a percentage of home sales revenues, was primarily due to a shift in product mix/areas to lower-margin areas and an increase in impairment charges. Inventory impairment charges were $15.2 million and $13.7 million in fiscal 2025 and 2024, respectively. In addition, we recognized $8.8 million of land impairment charges in fiscal 2025 in connection with planned land sales. No similar charges were recognized in fiscal 2024.
Corporate and Other
In fiscal 2025 and 2024, loss before income taxes was $225.3 million and $204.6 million respectively. The increase in the loss before income taxes in fiscal 2025 was principally due to higher SG&A costs and a decrease in other income - net, partially offset by lower losses from unconsolidated entities and lower gross margin from land sales. The decrease in other income - net was primarily due to lower interest income as well as gains recognized in fiscal 2024 that did not recur in fiscal 2025. Specifically, in the fiscal 2024 period, we recognized a $5.0 million gain related to an investment in a privately held company that sold substantially all of its assets to a third party and a $4.4 million gain from a bulk sale of security monitoring accounts by our smart home technology business. The decrease in gross margin related to land sales in fiscal 2025 was primarily due to a lower volume of transactions.
