Aug 19, 2026 earnings call — Quarter results and community growth
Toll delivered 2,662 homes and generated $2.65 billion of home sales revenue this quarter.
Revenue $2.7B (est $2.6B) · EPS $2.97 (est $2.93)
Key quotes
"Our move-up business accounted for approximately 61% of home sales revenues in our third quarter, while our luxury first-time and move-down businesses represented approximately 23% and 16%, respectively."
"We remain focused on opening new communities across the country and continue to expect to end the year with 480 to 490 selling communities."
"We continue to project significant operating cash flow in 2026 and are increasing our projected stock repurchases for the year to $700 million, up from our previous projection of $650 million."
Analyst Q&A 13
Q4 deliveries and community growth
Q (John Lovallo · UBS): He asked how conservative the Q4 delivery and gross margin outlook is given macro uncertainty. He also asked whether the planned 8% to 10% community count growth would be pulled back if the market softened.
A: Karl said 2,700 of the projected 3,500 homes at the midpoint come from backlog, leaving 800 homes that must sell and settle in the quarter; they have about 900 finished specs and nearly 1,000 homes that can also close by quarter end. Gregg said mix should help Q4 gross margin with a bit more luxury move-up settlements and positive regional mix from the North and Pacific. Karl said they feel good about the 8% to 10% community growth and would not modify it even in a softening market.
"The dynamics at play there are that we think we're going to have a little positive mix coming out of certain regions to be specific, our North and our Pacific region." — Gregg Ziegler (CFO)
Owned land levels
Q (Stephen Kim · Evercore): He asked how much lower the owned lot count can go given continued growth plans and wanted clarity on an absolute lot basis.
A: Karl said owned land for backlog is in a 1.5- to 2-year range. He said they have been land banking modestly, shifting more to option and control rather than owned, and using seller financing when possible to be more efficient in land acquisitions.
"Our owned land for backlog is sort of in this 1.5- to 2-year range." — Karl Mistry (CEO)
Luxury move-up and contingencies
Q (Alan Ratner · Zelman): He asked whether luxury move-up demand is softening and asked how Toll handles buyers who need to sell an existing home, including accounting and deposit refunds.
A: Karl said they have not seen any material change in luxury move-up demand; 25% of buyers pay cash, 70% loan-to-value is sticky, and about 30% of communities raised prices in the quarter. On contingent sales, Karl said they do not offer traditional home sale contingencies; deposits on finished specs are not refundable but, from an accounting view, the sale is not an agreement until the home closes.
"We do not offer the traditional home sale contingencies you're referencing." — Karl Mistry (CEO)
Quarter sales trend and margin timing
Q (Michael Dahl · RBC): He asked for more quantification of the quarter-to-quarter sales step-up and whether the 4Q margin guide light was due to mix or lower spec margin expectations.
A: Karl described the usual step-up inside the quarter (May to June to July) but said July's pop was muted due to higher mortgage rates, lower consumer confidence and geopolitical uncertainty, and cautioned it's too early to draw conclusions a few weeks into August. Gregg said the margin differences are timing of settlements — the dynamics they described 90 days ago remain intact, but some geographic, buyer segment or spec settlements shifted between Q3 and Q4.
"All the dynamics we laid out for you 90 days ago and how we thought the second half of fiscal 2026 would play out remain intact." — Gregg Ziegler (CFO)
Buffington impact and starts
Q (Rafe Jadrosich · BofA): He asked about Buffington's contribution in the quarter and Q4, whether there was purchase accounting drag on gross margin, and what drove the acceleration in starts and the outlook for Q4.
A: Karl said Buffington joined in May, added about half a dozen open communities, and contributed roughly 30 sales and maybe 25 settlements in the quarter, with expectations for a bit better results in Q4. Gregg confirmed purchase accounting will drag gross margin and that drag is included in guidance. Karl said starts timing is managed community-by-community; they reduced finished specs to 1.9 and are building specs now to prepare for the spring selling season.
"And your last point on purchase accounting, yes, purchase accounting will have that drag on the gross margin, which is factored into the guidance." — Gregg Ziegler (CFO)
Incentives and lot cost outlook
Q (Richard Reid · Wells Fargo): He asked whether there were any tweaks in incentive programs that affected margins and wanted early perspective on lot cost inflation into next year.
A: Gregg said there were no real tweaks to the incentive bucket and buyers are not taking mortgage buydowns with any greater velocity. Karl said about 70% of year-to-date land spend has been in their core luxury segment; because they buy non-commoditized land and face low competition, it's hard for them to point to a clear lot inflation trend.
"No real tweaks in the incentive bucket, meaning our buyers are not taking mortgage buydowns with any greater velocity or anything like that." — Gregg Ziegler (CFO)
SG&A and build costs
Q (Trevor Allinson · Wolfe): He asked how SG&A should trend with community growth and whether build costs (excluding lumber) have been pushed up or could rise when contracts roll over.
A: Karl said 9% to 10% SG&A is the right range today and the company was built to handle more homes with the current infrastructure, so in a normal environment SG&A could be squarely in the 9s. Seth said build costs are flat overall; lumber is slightly up and is a potential headwind, but those increases have been offset by other modest reductions so far.
"Lumber is slightly up and a potential headwind, but those cost increases have been offset with other modest reductions." — Seth Ring (COO)
Geography of new communities
Q (Jay McCanless · Citizens): He asked if next year's community openings would be heavier in certain regions or in luxury move-up. He also asked about horizontal development cost pressure like diesel.
A: Karl said next year they will open more communities in the South and the mountain regions, and the luxury move-up share as a percent of openings looks set to climb. On development costs, Karl said things have been surprisingly quiet and he would characterize those costs as flat so far.
"next year, we have more concentration in our community openings in the South and the mountain regions where we've been investing for some time" — Karl Mistry (CEO)
Spec vs build-to-order mix and North orders
Q (Ryan Gilbert · BTIG): He asked if the settlement mix will shift more toward build-to-order and why order growth in the North decelerated in Q3.
A: Karl said about 52% of settlements were spec and those represented about 44% of revenues, and they are comfortable with a roughly 50-50 mix that will flex a few percent either way and is managed community by community. On the North, Karl said there was no specific issue; the region remains the best absorbing and its modest deceleration is a function of its strong prior outperformance.
"We're -- about 52% of settlements in the quarter were spec that represented about 44% of revenues." — Karl Mistry (CEO)
Capital allocation and brand advantage
Q (Susan Maklari · Goldman Sachs): She asked how the company is thinking about capital allocation and shareholder returns for fiscal '27. She also asked how Toll leverages its position as peers shift toward higher price points.
A: Karl said first priority is smart, profitable growth; they have reduced leverage materially and are returning cash via buybacks (guide raised to $700 million) and a growing dividend. Doug said Toll's 60-year brand, 45-plus design studios, and focus on special locations differentiate them and make them confident in the move-up strategy and the ability of their buyer base to weather tougher markets.
"First and foremost, for us, we still have the opportunity to grow our business." — Karl Mistry (CEO)
Buffington M&A and incentives outlook
Q (Alex Barrón · Housing Research Center): He asked how the Buffington deal came together and how Toll thinks about M&A going forward. He also asked for outlook on incentives and margins.
A: Karl said Buffington was a good fit (higher average sales price and luxury segment), they did not have an Arkansas operation before, and they like bolt-on M&A; they have done about 16 such acquisitions over 30 years. Doug said they are running at a 26% margin with elevated incentives around 7.5% to 8%, that move-up currently runs at lower incentives than other segments, and he believes cycles are long and expects margins and returns to improve when incentives and sales pace normalize, though he would not call the timing.
"We like that type of bolt-on M&A, which we have done now for 30 years." — Karl Mistry (CEO)
Gross margin and ASP outlook into 2027
Q (Matthew Bouley · Barclays): He asked for any directional expectations for gross margins into fiscal 2027 and what mix elements to watch. He also asked whether delivered ASP can continue to grow into 2027.
A: Karl said they are not ready to give specific guidance for 2027, but in a normal environment they think 26% to 28% gross margins is how the company is built. He added that with next year's community openings skewing more to luxury move-up, delivered ASP in 2027 could be up.
"We think in a normal environment, 26% to 28% gross margins is now how this company is built." — Karl Mistry (CEO)
Community growth vs deliveries and segment spread
Q (Jason Sabshon · KBW): He asked how much the 8% to 10% community growth should translate into stronger delivery growth and whether luxury move-up gross margins differ from other segments.
A: Gregg said they cannot give guidance on throughput per community, so the conversion of community openings to deliveries will depend on market improvement over time. Karl said they will follow up with a breakdown, noting that as price goes up the incentive percentage goes down and move-up business outperforms from a margin perspective. Doug said the average luxury move-up home sells for $1.35 million and that segment represents roughly 61% of the business, is higher margin, more build-to-order, and faces less land competition.
"That was really hard because we're -- we can't give you guidance on what that throughput per community might look like." — Gregg Ziegler (CFO)