TOL Q3 2026 - Preliminary Earnings Alert
Verdict
- 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.
Consensus scorecard
| Metric / basis | Quartr actual | API Ninjas consensus | Beat/Miss | Beat/Miss % |
|---|---|---|---|---|
| Total consolidated revenues (GAAP) | $2,658,781,000 | $2,618,374,000 | Beat | +1.5% |
| EPS (GAAP diluted) | $2.97 | $2.93 | Beat | +1.4% |
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.