Toll Brothers, Inc. Q1 FY2026 earnings call

• Douglas Yearley transitions to Executive Chairman, Karl Mistry takes over as CEO.
• First quarter results met/exceeded guidance: 1,899 homes delivered, $1.85B revenue, $2.19 diluted EPS. Signed 2,303 net contracts for $2.4B, flat in units but up 3% in dollars.
• Spec production increased for summer delivery. Balance sheet healthy with ample liquidity, low net debt, investment-grade rating.
• Karl Mistry discussed market performance by region, buyer segments, build-to-order vs spec strategy, production efficiencies.
• Gregg Ziegler reviewed financials, gross margin, SG&A, guidance on deliveries, margins, community growth.

In the first quarter, Toll Brothers delivered 1,899 homes and generated $1.85 billion of homebuilding revenue. Adjusted gross margin was 26.5% and SG&A margin was 13.9%. Buyer segments: luxury move-up accounted for 59% of homebuilding revenues, luxury first time 25%, and luxury move-down 16%. The company has ~75,000 lots owned or controlled, with 55% optioned. Build-to-order and spec homes have a healthy 50-50 mix, with build-to-order average adjusted gross margin above 30% in the first quarter.

Fiscal 2026 second quarter deliveries projected 2,400-2,500 homes, avg price $975,000-$985,000. Full year deliveries 10,300-10,700 homes, avg price $970,000-$990,000. Adjusted gross margin expected 25.5% in Q2, 26.0% full year. SG&A as % of revenue projected 10.7% Q2, 10.25% full year. Target to grow community count 8%-10%, targeting 480-490 communities by end of fiscal 2026.

Forward-looking statements subject to economy, world events, housing/financial markets, interest rates, labor/materials availability, inflation, etc. Weather impact on some regions like Mid-Atlantic to Georgia corridor. Uncertainty around Visa status affecting ethnic homebuyer demand.

Includes multiple exchanges like John Lovallo asking about gross margin decline, Stephen Kim's question on spec strategy, Richard Reid on weather impact, Michael Rehaut on year-to-date trends and incentives, etc.