Toll Brothers Reports Revenue Decline and Decreased Net Income for January 2025

Toll Brothers, Inc. reported a decline in financial performance for the three months ending January 31, 2025, with total revenues of $1.86 billion, down from $1.95 billion in the same period last year. Home sales revenues decreased to $1.84 billion from $1.93 billion, while land sales and other revenues rose slightly to $18.4 million from $16 million. The company’s net income also fell to $177.7 million, a decrease of 26% from $239.6 million in the prior year. The decline in revenues and profitability was attributed to a combination of factors, including a decrease in the average price of homes delivered and a shift in product mix towards more affordable options.

In terms of operational metrics, Toll Brothers signed 2,307 net contracts valued at $2.31 billion, reflecting a 13% increase in units and a 12% increase in dollar value compared to the previous year. However, the backlog of homes decreased to $6.94 billion, down from $7.08 billion a year earlier, with the number of homes in backlog also declining from 6,693 to 6,312. The average contracted price for homes increased by 4% to $1.10 million, indicating a shift towards higher-value contracts despite the overall decrease in backlog.

The company’s inventory increased to $10.68 billion as of January 31, 2025, compared to $9.71 billion at the end of October 2024. This increase was driven by higher land and development costs associated with homes under construction. Additionally, Toll Brothers reported a significant rise in accrued expenses, which reached $1.83 billion, up from $1.75 billion, reflecting increased liabilities related to land development and construction.

Strategically, Toll Brothers continues to adapt to market conditions by managing pricing and incentives on a community-by-community basis. The company has also increased its focus on building quick move-in homes, with 55% of net signed contracts in the latest quarter being spec homes. This shift is aimed at addressing the demand for homes that can be delivered more quickly, particularly in a market where buyers are facing elevated mortgage rates and inflationary pressures.

Looking ahead, Toll Brothers remains cautiously optimistic about the long-term outlook for the new home market, supported by favorable demographics and a structural undersupply of homes in the U.S. However, the company anticipates mixed demand trends in the near term, particularly as it navigates the challenges posed by current economic conditions. The company has ample liquidity, with $574.8 million in cash and cash equivalents and approximately $1.77 billion available under its revolving credit facility, positioning it well to manage its operations and pursue growth opportunities.