#Toll Brothers Reports Q2 Fiscal 2026 Results
Toll Brothers, Inc. (NYSE: TOL) reported second-quarter fiscal 2026 results on May 19, 2026, posting home sales revenues of $2.51 billion on 2,491 homes delivered, while net signed contracts rose 8% in value and 7% in units compared to the same period a year earlier.
Net income for the quarter ended April 30, 2026 was $260.6 million, or $2.72 per diluted share, down from $352.4 million, or $3.50 per diluted share, in Q2 FY2025. Pre-tax income declined to $350.4 million from $477.5 million. The company recorded $32.5 million in inventory impairments within home sales costs during the quarter, compared to $9.8 million in the prior-year period, and $13.5 million in joint venture impairments.
#Orders Rise as Deliveries and Margins Contract Year-Over-Year
Home sales revenues fell from $2.71 billion and 2,899 delivered homes in Q2 FY2025. Home sales gross margin narrowed to 23.9% from 26.0% a year earlier, and adjusted home sales gross margin, which excludes interest and inventory write-downs, declined to 26.2% from 27.5%.
Despite the year-over-year margin compression, both metrics exceeded the company's own guidance. Adjusted gross margin came in 70 basis points above the guidance midpoint, and SG&A as a percentage of home sales revenues was 10.3%, or 40 basis points better than guided. Total home sales revenues were approximately $110 million above the midpoint of guidance, Toll Brothers said.
Net signed contracts reached $2.81 billion on 2,834 homes, compared to $2.60 billion on 2,650 homes in Q2 FY2025. Backlog at quarter end stood at $6.32 billion and 5,394 homes, down from $6.84 billion and 6,063 homes a year earlier, though the average price per home in backlog rose to $1,171,800 from $1,128,100.
#Full-Year Guidance Raised Across All Key Homebuilding Metrics
Following the Q2 results, Toll Brothers raised its full-year fiscal 2026 guidance. The company now projects full-year home deliveries of 10,400 to 10,700 units, with an average delivered price of $985,000 to $1,000,000 per home. Full-year adjusted home sales gross margin guidance is 26.10%, and SG&A as a percentage of revenues is guided at 10.10%.
For the third quarter, the company guided for 2,600 to 2,700 deliveries at an average price of $965,000 to $985,000, with adjusted gross margin of 25.25%.
"Based on our year-to-date performance, we are raising our full year guidance across all key home building metrics," Karl K. Mistry, chief executive officer, said in the earnings release. Mistry also noted that orders were up 7% in units and 8% in dollars year-over-year, and that the company increased community count by 9% year-over-year.
#Capital Returns and Balance Sheet
Toll Brothers repurchased approximately 1.2 million shares at an average price of $143.72 per share during the quarter, for a total of $175.4 million. Year-to-date repurchases reached $226 million. On March 10, 2026, the company raised its quarterly cash dividend by 4% to $0.26 per share.
The company ended the quarter with $1.11 billion in cash and $2.24 billion available under its $2.38 billion senior unsecured revolving credit facility. Stockholders' equity was $8.48 billion, with a net debt-to-capital ratio of 15.4%.
Toll Brothers operates across more than 60 markets in the United States, competing in the luxury segment of the new-home construction market. The broader homebuilding sector has faced pressure from elevated mortgage rates and affordability constraints, factors the company cited as part of a challenging market environment.
Management projected 8% to 10% community count growth in 2027 and beyond, supported by land controlled for that purpose. The outlook is subject to risks including mortgage rate movements, labor and material costs, tariff exposure on homebuilding products, macroeconomic conditions, and the company's ability to deliver homes from its existing backlog.