Toll beat on both lines -- $2.66bn of total revenue against a $2.62bn estimate and $2.97 of diluted EPS against $2.93 -- but did it while home sales revenue fell 7.9% and deliveries fell 10.0% year over year.
Adjusted home sales gross margin of 25.6% came in 190bps below last year, with SG&A up 120bps to 10.0% of home sales revenues; income from operations fell 26.3% to $359.2m.
Orders are the offset: net signed contracts of $2.52bn on 2,508 homes rose 4.3% and 5.0% respectively, the first line in the release growing year over year.
Full-year guidance was reaffirmed at approximately $10.5bn of home sales revenues and a 26.1% adjusted gross margin, and the buyback authorization for fiscal 2026 was raised to $700m from $650m.
Key metrics
Metric
Reported
Prior year
Change
Home sales revenues
$2.65bn
$2.88bn
-7.9%
Homes delivered
2,662 units
2,959 units
-10.0%
Adjusted home sales gross margin
25.6%
27.5%
-190bps
Net signed contract value
$2.52bn
$2.41bn
+4.3%
Backlog value
$6.24bn
$6.38bn
-2.2%
Income from operations
$359.2m
$487.7m
-26.3%
Guidance changes
Item
New guidance
Prior guidance
FY 2026 home sales revenues
approximately $10.5 billion
approximately $10.5 billion (reaffirmed)
FY 2026 adjusted home sales gross margin
26.1%
26.1% (reaffirmed)
FY 2026 deliveries
10,500 - 10,600 units
—
FY 2026 projected share repurchases
$700 million
$650 million
Quality of earnings
Home sales revenue of $2,652.5m cleared the $2,618.4m estimate by $34.1m on its own; land sales and other added a further $6.3m, down from $64.1m a year ago.
Joint-venture impairments of $39.6m ran through loss from unconsolidated entities this quarter against nil a year ago, and $97.4m across nine months.
Home sales gross margin of 23.9% carries $17.7m of inventory impairments; the 25.6% adjusted figure excludes those and $27.7m of capitalized interest.
Gotchas & watch items
Backlog fell to $6.24bn and 5,312 homes from $6.38bn and 5,492 -- the order growth has not yet rebuilt the delivery pipeline.
Selling communities rose 12.1% to 471 while deliveries fell 10.0%, so net signed contracts per community slipped to 5.4 from 5.6.
Pacific backlog fell to 524 homes from 753 even as average backlog price there rose to $2.22m from $1.92m, concentrating the region's value in fewer units.
Cash fell to $1.06bn from $1.26bn at fiscal year end while $206.8m went to repurchases at an average $148.63 per share.