Toll Brothers delivered a solid Q3 2024 despite ongoing housing market volatility, underscoring the durability of the company’s luxury homebuilding model. Revenue of $2.728 billion and adjusted gross margin of 28.8% (versus prior guidance) reflected operating efficiencies and favorable product mix. Deliveries rose 11% year-over-year to 2,814 homes, while average selling price held near $968k, contributing to a record third-quarter home sale revenue run-rate. Toll maintained a disciplined approach to capital allocation, signaling confidence through higher buyback guidance and a robust dividend policy, supported by strong operating cash flow and a healthy balance sheet.
Management reiterated a durable long-term margin thesis (27%–28% gross margin; mid-teens operating margins) driven by a broader price-geometry, geographic diversification, and a target of approximately 50% spec homes. The firm also signaled confidence in 410 communities by year-end (11% YoY growth from 370 at the start of the year) and continued land control to sustain growth into 2025 and beyond. Importantly, Toll outlined its intention to maintain a programmatic buyback framework, raising buybacks to roughly $600 million for the full year and highlighting ROE expectations above 20% for a third consecutive year. The quarter also featured a sizable backlog of $7.1 billion (6,769 homes) and a low cancellation rate of 2.4%, underscoring healthy demand and pricing power in a slower housing backdrop.