Toll Brothers, Inc.

Previous wording

Three months ended July 31, 2024 compared to the three months ended July 31, 2023

Current wording

In the three months ended January 31, 2025, we signed 2,307 net contracts for an aggregate value of $2.31 billion, an increase of 13.0% in units and 12.0% in dollars compared to the prior-year period, and a 2.0% increase on a per-community basis. Although we experienced solid demand in our first quarter, as reflected in the year-over-year increase in net signed contracts, more recent demand trends coinciding with the start of the traditional spring selling season have been mixed, due in part to mortgage rates that have remained elevated despite 100 basis points of cuts to the Federal Reserve’s benchmark interest rate since September 2024. In addition, general price inflation and significant increases in the cost of home ownership have created challenges for many buyers, especially at the lower end of the market. However, demand in many markets has remained healthy, especially at the higher end where affordability concerns are less impactful. We continue to strategically manage our pricing, incentives and home starts on a community-by-community basis to align inventory levels with local sales environments and to balance our sales pace and price. Notwithstanding the mixed near-term outlook, we believe the long-term outlook for thenew home market remains positive, as it is supported by strong fundamentals including favorable demographics, the structural undersupply of homes in the U.S. caused by over a decade of underproduction, the aging stock of existing homes, and accumulated wealth built up from years of stock market and home price appreciation.

Previous wording

In the three months ended July 31, 2024, home sales revenue increased 2% as compared to the three months ended July 31, 2023. In the quarter, we delivered 2,814 homes with an average delivered price of $968,200, as compared to 2,524 delivered homes at an average price of $1,059,700 in the third quarter of fiscal 2023. The year-over-year increase in the number of homes delivered was primarily the result of the year-over-year increase in the number of communities we were operating from during the third quarter of fiscal 2024, and a higher backlog conversion ratio. The year-over-year decline in average delivered price was primarily due to our strategic expansion of our product lines and price points to include more affordable homes, and our increased production of quick move-in (or “spec”) homes. While most of our homes have historically been sold on a build-to-order basis, where we do not begin construction of the home until we have a signed contract with a customer, over the past two years, we have increased the number of spec homes in our inventory, which are homes started without a signed agreement with a customer. In the third quarter of fiscal 2024, 54% of net signed contracts were spec homes and the remainder were build-to-order. Spec homes allow us to compete more effectively with existing homes available in the market, especially for homebuyers that wish to take delivery within a short time frame. We sell our spec homes at various stages of construction and determine how many such homes to offer within each community based on local market factors, our current and planned sales pace and construction cadence for the community.

Current wording

In the three months ended January 31, 2025, we delivered 1,991 homes with an average delivered price of $924,600, as compared to 1,927 delivered homes at an average price of $1,002,500 in the three months ended January 31, 2024. The year-over-year increase in the number of homes delivered was primarily the result of the year-over-year increase in the number of communities we were operating from during the first quarter of fiscal 2025, and a higher backlog conversion ratio due to a reduction in our construction cycle times. The year-over-year decline in average delivered price was due primarily to changes in the mix of products and locations of delivered homes, reflecting our strategy of expanding our geographies and product types to include more affordable homes. The reduction in our construction cycle time was due to the continued normalization of our operations post-pandemic and an increase in the number of quick move-in (or “spec”) homes in our inventory. Historically most of our homes have been sold on a build-to-order basis, where we do not begin construction of the home until we have a signed contract with a customer. However, in recent years we have increased the number of homes that we start without a buyer (a spec home), which we generally build faster than build-to-order homes. In the first quarter of fiscal 2025, 55% of net signed contracts were spec homes and the remainder were build-to-order. Spec homes allow us to compete more effectively with existing homes available in the market, especially for homebuyers that wish to take delivery within a short time frame. We sell our spec homes at various stages of construction - from shortly after construction starts with the pouring of the foundation through to finished home. We determine how many such homes to start within each community based on local market conditions, our current and planned sales pace, and construction cadence for the community. In light of the mixed demand trends we have experienced to date in our second fiscal quarter, we expect to reduce the pace of our overall spec home starts in the near term.

Previous wording

In the three-month period ended July 31, 2024, we recognized $2.73 billion of revenues, consisting of $2.72 billion of home sales revenue and $3.5 million of land sales and other revenue, and net income of $374.6 million, as compared to $2.69 billion of revenues, consisting of $2.67 billion of home sales revenue and $13.0 million of land sales and other revenue, and net income of $414.8 million in the three-month period ended July 31, 2023.

Current wording

In the three-month period ended January 31, 2025, we recognized $1.86 billion of revenues, consisting of $1.84 billion of home sales revenues and $18.4 million of land sales and other revenues, and net income of $177.7 million, as compared to $1.95 billion of revenues, consisting of $1.93 billion of home sales revenues and $16.0 million of land sales and other revenues, and net income of $239.6 million in the three-month period ended January 31, 2024.

Previous wording

The value of our backlog at July 31, 2024 was $7.07 billion (6,769 homes), as compared to our backlog at July 31, 2023 of $7.87 billion (7,295 homes). Our backlog at October 31, 2023 was $6.95 billion (6,578 homes), as compared to backlog of $8.87 billion (8,098 homes) at October 31, 2022.

Current wording

The value of our backlog at January 31, 2025 was $6.94 billion (6,312 homes), as compared to our backlog at January 31, 2024 of $7.08 billion (6,693 homes). Our backlog at October 31, 2024 was $6.47 billion (5,996 homes), as compared to backlog of $6.95 billion (6,578 homes) at October 31, 2023.

Previous wording

At July 31, 2024, we had $893.4 million of cash and cash equivalents and approximately $1.77 billion available under our $1.955 billion revolving credit facility (the “Revolving Credit Facility”). At July 31, 2024, we had no borrowings and we had approximately $180.9 million of outstanding letters of credit under the Revolving Credit Facility.

Current wording

At January 31, 2025, we had $574.8 million of cash and cash equivalents and approximately $1.77 billion available under our $1.96 billion revolving credit facility (the “Revolving Credit Facility”). At January 31, 2025, we had no borrowings and we had approximately $182.7 million of outstanding letters of credit under the Revolving Credit Facility.

Previous wording

At July 31, 2024, we owned or controlled through options approximately 72,700 home sites, as compared to approximately 70,700 at October 31, 2023; and approximately 76,000 at October 31, 2022. Of the approximately 72,700 total home sites that we owned or controlled through options at July 31, 2024, we owned approximately 36,300 and controlled approximately 36,400 through options. Of the 36,300 home sites owned, approximately 19,300 were substantially improved. In addition, as of July 31, 2024, we expect to purchase approximately 8,100 additional home sites over several years from certain of the joint ventures in which we have interests, at prices to be determined.

Current wording

At January 31, 2025, we owned or controlled through options approximately 77,700 home sites, as compared to approximately 74,700 at October 31, 2024; and approximately 70,700 at October 31, 2023. Of the approximately 77,700 total home sites that we owned or controlled through options at January 31, 2025, we owned approximately 33,900 and controlled approximately 43,800 through options. Of the 33,900 home sites owned, approximately 20,300 were substantially improved. In addition, as of January 31, 2025, we expect to purchase approximately 10,600 additional home sites over several years from certain of the joint ventures in which we have interests, at prices to be determined.

Previous wording

At July 31, 2024, we were selling from 404 communities, compared to 370 at October 31, 2023; and 345 at July 31, 2023.

Current wording

At January 31, 2025, we were selling from 406 communities, compared to 408 at October 31, 2024; and 377 at January 31, 2024.

Previous wording

At July 31, 2024, our total stockholders’ equity and our debt to total capitalization ratio were $7.41 billion and 0.28 to 1.00, respectively.

Current wording

At January 31, 2025, our total stockholders’ equity and our debt-to-total capitalization ratio were $7.80 billion and 0.26 to 1.00, respectively.

Previous wording

The following table compares certain items in our Condensed Consolidated Statements of Operations and Comprehensive Income and other supplemental information for the three months and nine months ended July 31, 2024 and 2023 ($ amounts in millions, unless otherwise stated). For more information regarding results of operations by segment, see “Segments” in this MD&A.

Current wording

The following table compares certain items in our Condensed Consolidated Statements of Operations and Comprehensive Income and other supplemental information for the three months ended January 31, 2025 and 2024 ($ amounts in millions, unless otherwise stated). For more information regarding results of operations by segment, see “Segments” in this MD&A.

Previous wording

The increase in home sale revenues for thethree months ended July 31, 2024, as compared to thethree months ended July 31, 2023, was primarily attributable to an 11% increase in the number of homes delivered offset by a 9% decrease in the average price of homes delivered. The increase in the number of homes delivered in the three months ended July 31, 2024 was primarily due to an increase in operating communities, more deliveries of spec homes, and a higher backlog conversion in the three months ended July 31, 2024 compared to the three months ended July 31, 2023, primarily as a result of improvement in build times. These factors were offset, in part, by a decrease in the number of homes in backlog at October 31, 2023, as compared to the number of homes in backlog at October 31, 2022, most significantly in the Mountain and Pacific regions. The decrease in the average delivered home price was mainly due to an increase in homes delivered in less expensive product types/geographic regions, most notably in the Mid-Atlantic and Pacific regions.

Current wording

The decrease in home sale revenues for the three months ended January 31, 2025, as compared to the three months ended January 31, 2024, was primarily attributable to an 8% decrease in the average price of homes delivered offset by a 3% increase in the number of homes delivered. The decrease in the average delivered home price was mainly due to an increase in homes delivered in less expensive product types/geographic regions, including spec homes, most notably from fewer deliveries in the Pacific region and greater deliveries in the Mountain region. The increase in the number of homes delivered in the three months ended January 31, 2025 was primarily due to an increase in operating communities, more deliveries of spec homes, and a higher backlog conversion in the three months ended January 31, 2025 compared to the three months ended January 31, 2024, primarily as a result of improvement in build times. These factors were offset, in part, by a decrease in the number of homes in backlog at October 31, 2024, as compared to the number of homes in backlog at October 31, 2023, most significantly in the North, Mid-Atlantic, and South regions.

Previous wording

The decrease in home sales cost of revenues, as a percentage of home sales revenues, for the nine months ended July 31, 2024, as compared to the nine months ended July 31, 2023, was principally due toa shift in the mix of revenues to higher margin products/areas and lower interest expense as a percentage of home sales revenues, offset, in part, byhigher inventory impairment charges in the fiscal 2024 period. In the nine months ended July 31, 2024 and 2023, interest expense, as a percentage of home sales revenues, was 1.2% and 1.4%, respectively.

Current wording

The increase in home sales cost of revenues, as a percentage of home sales revenues, for the three months ended January 31, 2025, as compared to the three months ended January 31, 2024, was principally due toa shift in the mix of revenues to lower margin products/areas and higher inventory impairment charges in the fiscal 2025 period, partially offset by lower interest expense as a percentage of home sales revenues. In the three months ended January 31, 2025 and 2024, interest expense, as a percentage of home sales revenues, was 1.1% and 1.2%, respectively.

Previous wording

Our revenues from land sales and other generally consist of the following: (1) land sales to joint ventures in which we retain an interest; (2) lot sales to third-party builders within our master-planned communities; (3) bulk sales to third parties of land we have decided no longer meets our development criteria; (4) sales of land parcels to third parties (typically because there is a superior economic use of the property); and (5) sales of commercial and retail properties generally located at our

Current wording

Our revenues from land sales and other generally consist of the following: (1) land sales to joint ventures in which we retain an interest; (2) lot sales to third-party builders within our master-planned communities; (3) bulk sales to third parties of land we have decided no longer meets our development criteria; (4) sales of land parcels to third parties (typically because there is a superior economic use of the property); and (5) sales of commercial and retail properties generally located at our urban luxury condominium communities. Land sales to joint ventures in which we retain an interest are generally sold at our land basis and therefore little to no gross margin is earned on these sales.

Previous wording

SG&A expenditures increased by $44.5 million in the fiscal 2024 nine-month period, as compared to the fiscal 2023 nine-month period. As a percentage of home sales revenues, SG&A expense was 9.8% in the fiscal 2024 period, as compared to 9.7% in the fiscal 2023 period. The dollar increase in SG&A expenditures was primarily due to higher commissions and marketing spend from greater sales volume and increased community count. The increase in SG&A expense as a percentage of revenues was due to revenues increasing 6% year-over-year in the fiscal 2024 period, while SG&A expenditures increased 7%.

Current wording

SG&A expenditures increased by $10.4 million in the fiscal 2025 three-month period, as compared to the fiscal 2024 three-month period. As a percentage of home sales revenues, SG&A expense was 13.1% in the fiscal 2025 period, as compared to 11.9% in the fiscal 2024 period. The dollar increase in SG&A expenditures was primarily due to higher commissions and marketing spend from greater sales volume and increased community count. The increase in SG&A expense as a percentage of revenues was due to revenues decreasing 5% year-over-year in the fiscal 2025 period, while SG&A expenditures increased 5%.

Previous wording

In the nine-month period ended July 31, 2024, we recognized a loss from unconsolidated entities of $13.8 million, as compared to income of $20.8 million in the prior year period. The decrease was primarily due to a $35.0 million gain in the fiscal 2023 period related to a property sale by one of our Rental Property Joint Ventures compared to $21.0 million of such gains in the fiscal 2024 period. In addition, there were higher losses by various Rental Property Joint Ventures, higher losses incurred by one Home Building Joint Venture, reduced income at one Home Building Joint Venture due to its underlying assets being sold out, and lower earnings from a Land Development Joint Venture due to reduced sales volume.

Current wording

In the three-month period ended January 31, 2025, we recognized a loss from unconsolidated entities of $8.7 million, as compared to a loss of $9.2 million in the prior-year period. The decrease in loss was primarily due to lower losses by various Rental Property Joint Ventures and higher earnings from a Land Development Joint Venture, offset, in part, by higher losses incurred by one Home Building Joint Venture.

Previous wording

The increase in interest income in the three-month and nine-month periods ended July 31, 2024 was primarily due to higher interest rates on invested cash balances.

Current wording

The decrease in interest income in the three-month period ended January 31, 2025 was primarily due to lower average cash balances in the fiscal 2025 period.

Previous wording

The increase in income from ancillary businesses in the nine-month period ended July 31, 2024, was mainly due to a $4.4 million gain from a bulk sale of security monitoring accounts by our smart home technology business. In addition, the fiscal 2024 periods benefited from higher income from our mortgage and title operations due to increased volume and increased management fees related to our high-rise urban luxury condominium business operations as a result of unit closings. These increases were offset, in part, by higher operating losses incurred in our apartment living operations. Our apartment living operations were also impacted by $1.8 million and $6.7 million of write-offs related to previously incurred costs that we believed not to be recoverable in both the three-month and nine-month periods ended July 31, 2024, respectively, compared to $2.9 million and $3.3 million in the three-month and nine-month periods ended July 31,2023, respectively.

Current wording

The decrease in (loss) income from ancillary businesses in the three-month period ended January 31, 2025, was mainly due to $4.4 million of net write-offs related to previously incurred costs that we believed not to be recoverable related to our apartment living operations in the three-month period ended January 31, 2025.

Previous wording

The increase in “other” in the nine-month period ended July 31, 2024 was primarily due to a $5.0 million gain related to an investment we held in a privately held company which sold substantially all of its assets to a third party during the period.

Current wording

The increase in “other” in the three-month period ended January 31, 2025 was primarily due to a $1.6 million gain related to the sale of a land purchase contract to a third party during the period.

Previous wording

For the three-month period ended July 31, 2024, we reported income before income taxes of $503.6 million, as compared to $553.0 million in the three-month period ended July 31, 2023.

Current wording

For the three-month period ended January 31, 2025, we reported income before income taxes of $221.4 million, as compared to $311.2 million in the three-month period ended January 31, 2024.

Previous wording

We recognized income tax provisions of $368.8 million and $310.9 million in the nine-month periods ended July 31, 2024 and 2023, respectively. Based upon the federal statutory rate of 21.0% for the fiscal 2024 and 2023 periods, our federal tax provisions would have been $307.6 million and $259.9 million, in the nine-month periods ended July 31, 2024 and 2023, respectively. The difference between the tax provisions recognized and the tax provision based on the federal statutory rate was mainly due to the provision for state income taxes and permanent differences, offset, in part, by excess tax benefits related to stock-based compensation.

Current wording

We recognized income tax provisions of $43.7 million and $71.6 million in the three-month periods ended January 31, 2025 and 2024, respectively. The effective tax rate was 19.7% for the three months ended January 31, 2025, compared to 23.0% for the three months ended January 31, 2024. Based upon the federal statutory rate of 21.0% for each period, our federal tax provisions would have been $46.5 million and $65.3 million, in the three-month periods ended January 31, 2025 and 2024, respectively. The difference between the tax provisions recognized and the tax provision based on the federal statutory rate was mainly due to excess tax benefits related to stock-based compensation, offset, in part, by the provision for state income taxes and permanent differences. The decrease in the effective tax rate for the three months ended January 31, 2025 compared to the three months ended January 31, 2024 was primarily due to an increase in excess tax benefits related to stock-based compensation.

Previous wording

In the three-month periods ended July 31, 2024 and 2023, the value of net contracts signed was $2.41 billion (2,490 homes) and $2.16 billion (2,245 homes), respectively. The aggregate value of net contracts signed increased $244.0 million, or 11.3%, in the three-month period ended July 31, 2024, as compared to the three-month period ended July 31, 2023. The increase in the aggregate value of net contracts signed was due to a 10.9% increase in the number of net contracts signed and a 0.3% increase in the average value attributed to each signed contract. The increase in the number of net contracts signed was primarily due to the year-over-year increase in the number of communities from which we were operating during the period. The average value of each signed contract in the three-months ended July 31, 2024 was essentially flat compared to the prior year period.

Current wording

In the three-month periods ended January 31, 2025 and 2024, the value of net contracts signed was $2.31 billion (2,307 homes) and $2.06 billion (2,042 homes), respectively. The aggregate value of net contracts signed increased $242.4 million, or 11.7%, in the three-month period ended January 31, 2025, as compared to the three-month period ended January 31, 2024. The increase in the aggregate value of net contracts signed was due to a 13.0% increase in the number of net contracts signed offset by a 1.1% decrease in the average value attributed to each signed contract. The increase in the number of net contracts signed primarily reflects the year-over-year increase in the number of communities from which we were operating during the period. The decrease in the average value of each signed contract in the three months ended January 31, 2025 was primarily due to a net increase inthe mix of contracts from lower margin products/areas.

Previous wording

The value of our backlog at July 31, 2024 decreased 10% to $7.07 billion (6,769 homes), as compared to $7.87 billion (7,295 homes) at July 31, 2023. Our backlog at October 31, 2023 and 2022 was $6.95 billion (6,578 homes) and $8.87 billion (8,098 homes), respectively. The decrease in the value of our backlog at July 31, 2024 as compared to July 31, 2023, is due to a 7% decrease in the number of homes in backlog and a 3% decrease in the average contracted price per home. These decreases are primarily attributable to spec homes representing a larger portion of our net signed contracts and homes delivered.

Current wording

The value of our backlog at January 31, 2025 decreased 2% to $6.94 billion (6,312 homes), as compared to $7.08 billion (6,693 homes) at January 31, 2024. Our backlog at October 31, 2024 and 2023 was $6.47 billion (5,996 homes) and $6.95 billion (6,578 homes), respectively. The decrease in the value of our backlog at January 31, 2025 as compared to January 31, 2024, was due to a 6% decrease in the number of homes in backlog offset by a 4% increase in the average contracted price per home. The decrease in the number of homes in backlog was primarily attributable to spec homes representing a larger portion of our net signed contracts and homes delivered.

Previous wording

At July 31, 2024, we had $893.4 million of cash and cash equivalents on hand and approximately $1.77 billion available for borrowing under our Revolving Credit Facility. The Revolving Credit Facility provides us with a committed borrowing capacity of $1.955 billion, which we have the ability to increase up to $3.00 billion with the consent of lenders, and is scheduled to mature on February 14, 2028. Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries are guarantors of the borrower’s obligations under the Revolving Credit Facility. We are also a party to a $650.0 million unsecured Term Loan Facility of which $487.5 million matures on February 14, 2028, $101.6 million matures on November 1, 2025, and the remaining $60.9 million matures on November 1, 2026.

Current wording

At January 31, 2025, we had $574.8 million of cash and cash equivalents on hand and approximately $1.77 billion available for borrowing under our Revolving Credit Facility. At quarter-end, the Revolving Credit Facility provided us with a committed borrowing capacity of $1.96 billion, which we had the ability to increase to up to $3.00 billion with the consent of lenders, and was scheduled to mature on February 14, 2028. Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries are guarantors of the borrower’s obligations under the Revolving Credit Facility. We are also a party to a $650.0 million unsecured Term Loan Facility. At quarter-end, $487.5 million was scheduled to mature on February 14, 2028, $101.6 million was scheduled to mature on November 1, 2025, and the remaining $60.9 million was scheduled to mature on November 1, 2026.

Previous wording

For the next twelve months, we expect our principal demand for funds will be for inventory additions (in the form of land acquisition, land development, home construction costs, and deposits to control land, which could occur directly or indirectly through builder acquisitions), operating expenses, including our selling, general and administrative expenses, investments and funding of capital improvements, investments in existing and future unconsolidated joint ventures, repayment of community-level borrowings, common stock repurchases, and dividend payments. Demand for funds include interest and principal payments on current and future debt financing. We expect to meet our short-term liquidity requirements primarily through our cash and cash equivalents on hand and net cash flows provided by operations. Additional sources of funds include distributions from our unconsolidated joint ventures, borrowing capacity under our Revolving Credit Facility, and other borrowings from banks and other lenders.

Current wording

For the next twelve months, we expect our principal demand for funds will be for inventory additions (in the form of land acquisition, land development, home construction costs, and deposits to control land, which could occur directly or indirectly through builder acquisitions), operating expenses, including our selling, general and administrative expenses, investments and funding of capital improvements, investments in existing and future unconsolidated joint ventures, repayment of community-level borrowings, common stock repurchases, and dividend payments. Demand for funds include interest and principal payments on current and future debt financing (including our $350.0 million 4.875% Senior Notes due November 15, 2025). We expect to meet our short-term liquidity requirements primarily through our cash and cash equivalents on hand and net cash flows provided by operations. Additional sources of funds include distributions from our unconsolidated joint ventures, borrowing capacity under our Revolving Credit Facility, and other borrowings from banks and other lenders.

Previous wording

We are a party to many agreements that include contractual obligations and commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the Condensed Consolidated Balance Sheet as of July 31, 2024, while others are considered future commitments. Our contractual obligations primarily consist of long-term debt and related interest payments, payments due on our mortgage company loan facility, purchase obligations related to expected acquisition of land under purchase agreements and land development agreements (many of which are secured by letters of credit or surety bonds), operating leases, obligations under our deferred compensation plan, and obligations under our supplemental executive retirement plans. We also enter into certain short-term lease commitments, commitments to fund our existing or future unconsolidated joint ventures, letters of credit and other purchase obligations in the normal course of business. For more information regarding our primary obligations, refer to Note 5, “Loans Payable, Senior Notes, and Mortgage Company Loan Facility,” and Note 13, “Commitments and Contingencies,” in the Notes to the Condensed Consolidated Financial Statements for amounts outstanding as of July 31, 2024, related to debt and commitments and contingencies, respectively.

Current wording

We are a party to many agreements that include contractual obligations and commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the Condensed Consolidated Balance Sheet as of January 31, 2025, while others are considered future commitments. Our contractual obligations primarily consist of long-term debt and related interest payments, payments due on our mortgage company loan facility, purchase obligations related to expected acquisition of land under purchase agreements and land development agreements (many of which are secured by letters of credit or surety bonds), operating leases, obligations under our deferred compensation plan, and obligations under our supplemental executive retirement plans. We also enter into certain short-term lease commitments, commitments to fund our existing or future unconsolidated joint ventures, letters of credit and other purchase obligations in the normal course of business. For more information regarding our primary obligations, refer to Note 5, “Loans Payable, Senior Notes, and Mortgage Company Loan Facilities,” and Note 13, “Commitments and Contingencies,” in the Notes to the Condensed Consolidated Financial Statements for amounts outstanding as of January 31, 2025, related to debt and commitments and contingencies, respectively.

Previous wording

We also operate through a number of joint ventures and have undertaken various commitments as a result of those arrangements. At July 31, 2024, we had investments in these entities of $983.6 million and were committed to invest or advance up to an additional $247.6 million to these entities if they require additional funding. At July 31, 2024, we had agreed to terms for the acquisition of 472 home sites from four joint ventures for an estimated aggregate purchase price of $35.7 million. We also expect to purchase approximately 8,100 additional home sites over a number of years from several joint ventures in which we have interests. The purchase price of these home sites will be determined at a future date.

Current wording

We also operate through a number of joint ventures and have undertaken various commitments as a result of those arrangements. At January 31, 2025, we had investments in these entities of $1.11 billion and were committed to invest or advance up to an additional $370.3 million to these entities if they require additional funding. At January 31, 2025, we had agreed to terms for the acquisition of 659 home sites from four joint ventures for an estimated aggregate purchase price of $68.9 million. We also expect to purchase approximately 10,600 additional home sites over a number of years from several joint ventures in which we have interests. The purchase price of these home sites will be determined at a future date.

Previous wording

In situations where we have joint and several guarantees with our joint venture partner, we generally seek to implement a reimbursement agreement with our partner that provides that neither party is responsible for more than its proportionate share or agreed-upon share of the guarantee; however, we are not always successful. In addition, if the joint venture partner does not have adequate financial resources to meet its obligations under such a reimbursement agreement, we may be liable for more than our proportionate share. We believe that, as of July 31, 2024, in the event we become legally obligated to perform under a guarantee of the obligation of an unconsolidated entity due to a triggering event, the collateral in such entity should be sufficient to repay all or a significant portion of the obligation. If it is not, we and our partners would need to contribute additional capital to the entity. At July 31, 2024, we had guaranteed the debt of certain unconsolidated entities that have loan commitments aggregating $3.10 billion, of which, if the full amount of the debt obligations were borrowed, we estimate $665.5 million to be our maximum exposure related to repayment and carry cost guarantees. At July 31, 2024, the unconsolidated entities had borrowed an aggregate of $2.12 billion, of which we estimate $569.5 million to be our maximum exposure related to repayment and carry cost guarantees. The terms of these guarantees generally range from 1 month to 3.3 years. These maximum exposure estimates do not take into account any recoveries from the underlying collateral or any reimbursement from our partners, nor do they include any potential exposures related to project completion guarantees or the other (non-carry cost/repayment) indemnities noted above, which are not estimable.

Current wording

In situations where we have joint and several guarantees with our joint venture partner, we generally seek to implement a reimbursement agreement with our partner that provides that neither party is responsible for more than its proportionate share or agreed-upon share of the guarantee; however, we are not always successful. In addition, if the joint venture partner does not have adequate financial resources to meet its obligations under such a reimbursement agreement, we may be liable for more than our proportionate share. We believe that, as of January 31, 2025, in the event we become legally obligated to perform under a guarantee of the obligation of an unconsolidated entity due to a triggering event, the collateral in such entity should be sufficient to repay all or a significant portion of the obligation. If it is not, we and our partners would need to contribute additional capital to the entity. At January 31, 2025, we had guaranteed the debt of certain unconsolidated entities that have loan commitments aggregating $2.98 billion, of which, if the full amount of the debt obligations were borrowed, we estimate $599.9 million to be our maximum exposure related to repayment and carry cost guarantees. At January 31, 2025, the unconsolidated entities had borrowed an aggregate of $2.16 billion, of which we estimate $523.4 million to be our maximum exposure related to repayment and carry cost guarantees. The terms of these guarantees generally range from 1 month to 4.9 years. These maximum exposure estimates do not take into account any recoveries from the underlying collateral or any reimbursement from our partners, nor do they include any potential exposures related to project completion guarantees or the other (non-carry cost/repayment) indemnities noted above, which are not estimable.

Previous wording

Outside of the normal course of operations, one of our principal liquidity needs is the payment of principal and interest on outstanding indebtedness. We are required by the terms of certain loan documents to meet certain covenants, such as financial ratios and reporting requirements. As of July 31, 2024, we were in compliance with all such covenants and requirements on our term loan, revolving credit facility and other loans payable. Refer to Note 5, “Loans Payable, Senior Notes, and Mortgage Company Loan Facility” in the Notes to the Condensed Consolidated Financial Statements.

Current wording

Outside of the normal course of operations, one of our principal liquidity needs is the payment of principal and interest on outstanding indebtedness. We are required by the terms of certain loan documents to meet certain covenants, such as financial ratios and reporting requirements. As of January 31, 2025, we were in compliance with all such covenants and requirements on our term loan, revolving credit facility and other loans payable. Refer to Note 5, “Loans Payable, Senior Notes, and Mortgage Company Loan Facilities” in the Notes to the Condensed Consolidated Financial Statements.

Previous wording

At July 31, 2024 and October 31, 2023, we had $963.3 million and $1.34 billion, respectively, of cash, cash equivalents, and restricted cash. Cash provided by operating activities during the nine-month period ended July 31, 2024 was $327.7 million. Cash provided by operating activities during the fiscal 2024 period was primarily related to net income (adjusted for depreciation and amortization, impairments, stock-based compensation, losses and distributions of earnings from unconsolidated entities, deferred taxes, and gain on sale of assets); and increases in accounts payable and accrued expenses. This activity was offset, in part, by an increase in inventory; mortgage loans originated, net of mortgage loans sold, a decrease in customer deposits – net; an increase in prepaid expenses, receivables and other assets; and a decrease in current income taxes – net.

Current wording

At January 31, 2025 and October 31, 2024, we had $653.0 million and $1.37 billion, respectively, of cash, cash equivalents, and restricted cash. Cash used in operating activities during the three-month period ended January 31, 2025 was $420.8 million. Cash used in operating activities during the fiscal 2025 period was primarily related to an increase in inventory and a decrease in current income taxes – net. This activity was offset, in part, by net income (adjusted for depreciation and amortization, impairments, stock-based compensation, losses and distributions of earnings from unconsolidated entities, and deferred taxes);

Previous wording

At July 31, 2023 and October 31, 2022, we had $1.08 billion and $1.40 billion, respectively, of cash, cash equivalents, and restricted cash. Cash provided by operating activities during the nine-month period ended July 31, 2023 was $675.0 million. Cash provided by operating activities during the fiscal 2023 period was primarily related to net income (adjusted for stock-based compensation, impairments, depreciation and amortization, income and distributions of earnings from unconsolidated entities and deferred taxes); and mortgage loans sold, net of mortgage loans originated. This activity was offset, in part, by an increase in inventory; decreases in accounts payable and accrued expenses, current income taxes – net, and customer deposits – net; and an increase in receivables, prepaid expenses, and other assets.

Current wording

At January 31, 2024 and October 31, 2023, we had $800.0 million and $1.34 billion, respectively, of cash, cash equivalents and restricted cash. Cash used in operating activities during the three-month period ended January 31, 2024 was $307.0 million. Cash used in operating activities during the fiscal 2024 period was primarily related to an increase in inventory; decreases in accounts payable and accrued expenses, current income taxes – net, and customer deposits – net; and an increase in receivables, prepaid expenses, and other assets. This activity was offset, in part, by net income (adjusted for stock-based compensation, depreciation and amortization, income and distributions of earnings from unconsolidated entities, deferred taxes and impairments); and mortgage loans sold, net of mortgage loans originated.

Previous wording

In the nine-month period ended July 31, 2024, cash used in investing activities was $116.0 million, which was primarily related to $134.5 million used to fund our investments in unconsolidated entities and $55.5 million used for the purchase of property and equipment. This activity was offset, in part, by $74.3 million of cash received as returns from our investments in unconsolidated entities.

Current wording

In the three-month period ended January 31, 2025, cash used in investing activities was $119.5 million, which was primarily related to $118.7 million used to fund our investments in unconsolidated entities and $17.3 million used for the purchase of property and equipment. This activity was offset, in part, by $18.4 million of cash received as returns from our investments in unconsolidated entities.

Previous wording

In the nine-month period ended July 31, 2023, cash used in investing activities was $133.6 million, which was primarily related to $162.6 million used to fund our investments in unconsolidated entities and $54.1 million used for the purchase of property and equipment. This activity was offset, in part, by $74.0 million of cash received as returns from our investments in unconsolidated entities and $9.0 million of cash proceeds from the sale of assets.

Current wording

In the three-month period ended January 31, 2024, cash used in investing activities was $59.4 million, which was primarily related to $58.9 million used to fund our investments in unconsolidated entities and $13.6 million used for the purchase of property and equipment. This activity was offset, in part, by $13.1 million of cash received as returns from our investments in unconsolidated entities.

Previous wording

We used $592.7 million of cash in financing activities in the nine-month period ended July 31, 2024, primarily for the repurchase of $423.6 million of our common stock, the payments of $96.9 million of loans payable, net of borrowings, the payment of dividends on our common stock of $70.3 million, and $1.9 million of payments related to stock-based benefit plans - net.

Current wording

We used $177.2 million of cash in financing activities in the three-month period ended January 31, 2025, primarily for the payments of $106.5 million of loans payable, net of borrowings, the payment of dividends on our common stock of $24.4 million, the repurchase of $23.7 million of our common stock, and $22.9 million of payments related to stock-based benefit plans - net.

Previous wording

We used $857.3 million of cash in financing activities in the nine-month period ended July 31, 2023, primarily for the redemption of $400.0 million of senior notes, payments of $190.6 million of loans payable, net of borrowings, the payment of dividends on our common stock of $69.1 million, the repurchase of $239.3 million of our common stock and payments of $5.3 million of debt issuance costs. This activity was offset, in part, by $47.1 million of proceeds related to stock-based benefit plans - net.

Current wording

We used $178.0 million of cash in financing activities in the three-month period ended January 31, 2024, primarily for the payments of $145.6 million of loans payable, net of borrowings, the payment of dividends on our common stock of $23.3 million, and $9.3 million of payments related to stock-based benefit plans - net.

Previous wording

We operate in the following five geographic segments, with current operations generally located in the states listed below:

Current wording

We operate in the following five geographic segments, with operations generally located in the states listed below:

Previous wording

“Corporate and other” is comprised principally of general corporate expenses such as our executive offices; the corporate finance, accounting, audit, tax, human resources, risk management, information technology, marketing, and legal groups; interest income; income from certain of our ancillary businesses, including our apartment rental development business and our high-rise urban luxury condominium operations; and income from our Rental Property Joint Ventures and Gibraltar Joint Ventures.

Current wording

“Corporate and other” is comprised principally of general corporate expenses such as our executive offices; the corporate finance, accounting, audit, tax, human resources, risk management, information technology, marketing, and legal groups; interest income; income from certain of our ancillary businesses, including our apartment rental development business and our high-rise urban luxury condominium operations; and income from our Rental Property Joint Ventures and Other Joint Ventures.

Previous wording

The decreases in the number of homes delivered in the fiscal 2024 periods were mainly due to a decrease in the number of homes in backlog at October 31, 2023, as compared to the number of homes in backlog at October 31, 2022 offset, in part, by an increase in spec homes delivered. The increase in the average prices of homes delivered in the nine-month period ended July 31, 2024 was primarily due to sales price increases and a shift in the number of homes delivered to more expensive areas and/or products.

Current wording

The decrease in the number of homes delivered in the fiscal 2025 period was mainly due to a decrease in the number of homes in backlog at October 31, 2024, as compared to the number of homes in backlog at October 31, 2023 offset, in part, by an increase in spec homes delivered. The increase in the average prices of homes delivered in the three-month period ended January 31, 2025 was primarily due to sales price increases and a shift in the number of homes delivered to more expensive areas and/or products.

Previous wording

The decreases in the number of net contracts signed in the three-month period ended July 31, 2024, compared to the prior year period, was due to a decrease in the average number of selling communities offset by improved demand. The increases in the average value of each contract signed in the fiscal 2024 periods were mainly due to a shift in the number of contracts signed to more expensive areas and/or products.

Current wording

The decrease in the number of net contracts signed in the three-month period ended January 31, 2025, compared to the prior year period, was due to a decrease in the average number of selling communities offset by improved demand. The increase in the average value of each contract signed in the fiscal 2025 period was mainly due to a shift in the number of contracts signed to more expensive areas and/or products partially offset by increased sales incentives.

Previous wording

The increases in income before income taxes in the fiscal 2024 periods were principally due to higher earnings from increased revenues and lower home sales cost of revenues, as a percentage of home sale revenues, offset, in part, by higher SG&A costs. The decrease in home sales cost of revenues, as a percentage of home sales revenues, in the fiscal 2024 periods were primarily due to a shift in product mix/areas to higher-margin areas and lower interest expense as a percentage of home sales revenues.

Current wording

The decrease in income before income taxes in the fiscal 2025 period was attributable to lower earnings from decreased revenue and reduced income from unconsolidated entities, offset, in part, by lower home sales cost of revenues, as a percentage of home sale revenues. The decreases in home sales cost of revenues, as a percentage of home sales revenues, in the three-month fiscal 2025 period was primarily due to a shift in product mix/areas to higher-margin areas and by lower interest expense as a percentage of home sales revenues.

Previous wording

The increases in the number of homes delivered in the fiscal 2024 periods were mainly due to an increase in the number of homes in backlog at October 31, 2023, as compared to the number of homes in backlog at October 31, 2022, higher backlog conversion, an increase in community count and an increase in spec homes delivered. The decreases in the average price of homes delivered in the fiscal 2024 periods were primarily due to a shift in the number of homes delivered to less expensive areas and/or products, as well as an increase in the number of spec homes delivered.

Current wording

The decrease in the number of homes delivered in the fiscal 2025 period was mainly due to a decrease in the number of homes in backlog at October 31, 2024, as compared to the number of homes in backlog at October 31, 2023 and lower backlog conversion. The decrease in the average price of homes delivered in the fiscal 2025 period was primarily due to a shift in the number of homes delivered to less expensive areas and/or products, as well as an increase in the number of spec homes delivered.

Previous wording

The increases in the number of net contracts signed in the fiscal 2024 periods were primarily due to an increase in the number of selling communities and improved demand. The increases in the average value of each contract signed in the fiscal 2024 periods were mainly due to a shift in the number of contracts signed to more expensive areas or product types.

Current wording

The increase in the number of net contracts signed in the fiscal 2025 period was mainly due to the increase in the average number of selling communities and improved demand. The decrease in the average value of each contract signed in the three-month fiscal 2025 period was mainly due to a shift in the number of contracts signed to less expensive areas and/or products and increased sales incentives.