Toll Brothers’ QQ1 2025 results show a resilient core homebuilding operation against a backdrop of a mixed spring selling season. The company delivered 1,991 homes at an average price of $925,000, generating $1.84 billion in home sales revenue. Adjusted gross margin reached 26.9%—above the 26.25% guided—while SG&A as a percentage of home sales revenue was 13.1%, modestly above guidance by 40 basis points. Net income was $177.7 million ($1.75 per share diluted), pressured by impairments and a delayed sale of a stabilized apartment property in a joint venture, causing the earnings miss relative to consensus. Despite near-term earnings variability, Toll reaffirmed full-year guidance for deliveries, average price, adjusted gross margin, SG&A margin, and community count growth, underscoring confidence in its business model and long-term luxury housing cycle.
Management emphasized a demand environment that remains solid in higher-end markets but mixed when looking across the portfolio. Net contracts of 2,307 for $2.3 billion were up 13% in units and 12% in dollars versus the prior-year quarter, with an 82% deposit conversion rate (well above the five-year average of 70%). Toll highlighted a healthy land/landbank position and a disciplined, market-by-market approach to spec inventory, pricing, and incentives. The company is balancing pace and price through the spring season and remains committed to an 8% to 10% community-count growth in 2025, targeting 440-450 communities by year-end. Liquidity remains robust, with over $2.3 billion available (cash and revolver capacity), an extended revolver to February 2030, and no significant maturities until 2026. Toll also signaled ongoing emphasis on selective land opportunities and maintaining a long-term positive view on the luxury home market, supported by a substantial cash/asset base and a flexible, asset-light approach to portfolio optimization.