Toll Brothers, Inc.

Previous wording

In the three months ended July 31, 2025, we signed 2,388 net contracts for an aggregate value of $2.41 billion, a decrease of 4.1% in units but an increase of 0.2% in dollars compared to the prior year period, as our average sales price in the quarter increased by 4.5%. On a per-community basis, contracts were down 10% year-over-year. In the quarter, the overall weakness in demand that we experienced in our second quarter continued, which we attribute to ongoing affordability pressures, especially at the lower end of the market, and volatile economic conditions that have negatively impacted consumer confidence. We have responded to these conditions by strategically managing our pricing, including by increasing incentives where necessary, to appropriately balance sales price and margin with pace, and to align our inventory levels with local sales environments. We anticipate that, in the near term, overall housing demand may remain soft, which would likely result in a continuation of the elevated incentive levels and slower sales paces that have characterized our past two quarters. However, overall economic conditions and the near-term trajectory of new home demand remain uncertain and subject to a variety of unpredictable factors. Over the long term, we continue to believe the 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 wealth built up from years of stock market and home price appreciation.

Current wording

In the three months ended January 31, 2026, we signed 2,303 net contracts for an aggregate value of $2.38 billion, relatively flat in units but an increase of 3.1% in dollars compared to the prior year period, as our average sales price in the quarter increased by 3.3%. On a per-community basis, contracts were down 8% year-over-year. In our first quarter, overall housing demand remained soft due primarily to ongoing affordability challenges, which continued to disproportionately impact the entry-level market, and weak consumer confidence. We continued to respond to these market conditions by strategically managing our pricing, including by increasing incentives where necessary, to appropriately balance sales price and margin with pace, and to align our inventory levels with local sales environments. We anticipate that in the near term the overall housing market may remain subdued due to the factors noted above, although normal seasonal trends should lift demand in our fiscal second quarter. Persistent softer conditions would likely result in a continuation of the elevated incentive levels and slower sales paces that characterized most of fiscal 2025 and the first quarter of fiscal 2026. However, overall economic conditions and the near-term trajectory of new home demand remain uncertain and subject to a variety of unpredictable factors. Over the longer term, we continue to believe the 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 wealth built up from years of stock market and home price appreciation.

Previous wording

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. In recent years, we have strategically increased the number of homes that we start without a buyer (a spec home), which we generally build faster than build-to-order homes and which allow us to attract buyers who are looking for quicker move-in homes. We determine how many such homes to start within each community based on local market conditions, our current and planned sales pace, and our backlog and construction cadence for the community. As a result of weaker demand, we reduced the pace of our overall spec home starts over the past two quarters. We continue to monitor demand and other factors on a community-by-community basis and will make appropriate adjustments to our spec starts as market conditions evolve over the coming months.

Current wording

While 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, in recent years we have increased the number of homes we start without a buyer (“spec homes”). In fiscal 2025, approximately 50% of our homebuilding revenues were derived from build-to-order homes and the remaining 50% from spec homes. In general, we are able to build our spec homes faster and more efficiently than build-to-order homes, and spec homes allow us to attract buyers who are looking for a quicker move-in schedule, although the gross margin on spec homes is generally lower than build-to-order homes. We determine how many spec homes to start within each community based on local market conditions, our current and planned sales pace, and our backlog and construction cadence for the community. We continue to monitor demand and other factors on a community-by-community basis and will make appropriate adjustments to our spec starts as market conditions evolve over time.

Previous wording

In the three-month period ended July 31, 2025, we recognized $2.95 billion of revenues, consisting of $2.88 billion of home sales revenue and $64.1 million of land sales and other revenue, and net income of $369.6 million, as compared to $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 in the three-month period ended July 31, 2024.

Current wording

In the three-month period ended January 31, 2026, we recognized $2.15 billion of revenues, consisting of $1.85 billion of home sales revenue and $290.6 million of land sales and other revenue, and net income of $210.9 million, as compared to $1.86 billion of revenues, consisting of $1.84 billion of home sales revenue and $18.4 million of land sales and other revenue, and net income of $177.7 million in the three-month period ended January 31, 2025.

Previous wording

The value of our backlog at July 31, 2025 was $6.38 billion (5,492 homes), as compared to our backlog at July 31, 2024 of $7.07 billion (6,769 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.

Current wording

The value of our backlog at January 31, 2026 was $6.02 billion (5,051 homes), as compared to our backlog at January 31, 2025 of $6.94 billion (6,312 homes). Our backlog at October 31, 2025 was $5.49 billion (4,647 homes), as compared to backlog of $6.47 billion (5,996 homes) at October 31, 2024.

Previous wording

At July 31, 2025, we had $852.3 million of cash and cash equivalents and approximately $2.19 billion available under our $2.35 billion revolving credit facility (the “Revolving Credit Facility”). At July 31, 2025, we had no borrowings and we had approximately $158.5 million of outstanding letters of credit under the Revolving Credit Facility.

Current wording

At January 31, 2026, we had $1.20 billion of cash and cash equivalents and we had approximately $2.20 billion of borrowing capacity of the $2.35 billion available under our revolving credit facility (the “Revolving Credit Facility”) on such date. At January 31, 2026, we had no borrowings and we had approximately $155.0 million of outstanding letters of credit under the Revolving Credit Facility.

Previous wording

At July 31, 2025, we owned or controlled through options approximately 76,800 home sites, as compared to approximately 74,700 at October 31, 2024; and approximately 70,700 at October 31, 2023. Of the approximately 76,800 total home sites that we owned or controlled through options at July 31, 2025, we owned approximately 32,800 and controlled approximately 44,000 through options. Of the 32,800 home sites owned, approximately 19,000 were substantially improved. In addition, as of July 31, 2025, we expect to purchase approximately 10,700 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, 2026, we owned or controlled through options approximately 75,000 home sites, as compared to approximately 76,100 at October 31, 2025; and approximately 74,700 at October 31, 2024. Of the approximately 75,000 home sites that we owned or controlled through options at January 31, 2026, we owned approximately 33,600 and controlled approximately 41,400 through options. Of the 33,600 home sites owned, approximately 18,900 were substantially improved. In addition, as of January 31, 2026, we expect to purchase approximately 8,700 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, 2025, we were selling from 420 communities, compared to 408 at October 31, 2024; and 404 at July 31, 2024.

Current wording

At January 31, 2026, we were selling from 445 communities, compared to 446 at October 31, 2025; and 406 at January 31, 2025.

Previous wording

At July 31, 2025, our total stockholders’ equity and our debt to total capitalization ratio were $8.10 billion and 0.27 to 1.00, respectively.

Current wording

At January 31, 2026, our total stockholders’ equity and our debt to total capitalization ratio were $8.41 billion and 0.24 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, 2025 and 2024 ($ 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, 2026 and 2025 ($ 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, 2025, as compared to thethree months ended July 31, 2024, was primarily attributable to a 5%increase in the number of homes delivered and a 1% increase in the average price of homes delivered. The increase in the number of homes delivered in the three months ended July 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 July 31, 2025 compared to the three months ended July 31, 2024, primarily as a result of improvement in construction cycle 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. The slight increase in the average delivered home price was mainly due to the mix of deliveries in the quarter, with an increased number of more expensive product types being delivered in our North region, offset, in part, by an increase in the number of less expense product types delivered in our Pacific region.

Current wording

The increase in home sale revenues for thethree months ended January 31, 2026, as compared to thethree months ended January 31, 2025, was primarily attributable to a 6% increase in the average price of homes delivered offset by a 5% decrease in the number of homes delivered. The decrease in the number of homes delivered in the three months ended January 31, 2026 was primarily due to a decrease in the number of homes in backlog at October 31, 2025, as compared to the number of homes in backlog at October 31, 2024 offset, in part, by an increase in the number of spec homes sold and delivered within the current period. The increase in the average delivered home price was mainly due to the mix of deliveries in the quarter, primarily as a result of the increase in deliveries in our higher priced North and Pacific regions.

Previous wording

The increase in home sales cost of revenues, as a percentage of home sales revenues, in thethree months ended July 31, 2025, as compared to thethree months ended July 31, 2024, was principally due to a shift in the mix of revenues to lower margin products/geographic regions, most notably in the Pacific region, and higher inventory impairment charges in the fiscal 2025 period. In addition, the fiscal 2025 period was impacted by an increase in sales incentives.

Current wording

The increase in home sales cost of revenues, as a percentage of home sales revenues, in thethree months ended January 31, 2026, as compared to thethree months ended January 31, 2025, was princip ally due to an increase in sales incentives, partially offset by lower inventory impairment charges in the fiscal 2026 period.

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 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. The decrease in land sales and other revenues during the nine months ended July 31, 2025 compared to the nine months ended July 31, 2024 were primarily due to the sale of a land parcel in the second quarter of 2024 to a commercial developer for net cash proceeds of $180.7 million which resulted in a pre-tax gain of $175.2 million, and which did not recur in the fiscal 2025 periods.

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 and apartment projects. 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

Land sales and other cost of revenues as a percentage of land sales and other revenues can vary period to period depending on the mix of sales to joint ventures versus third parties. The increase in land sales and other cost of revenues, as a percentage of land sales and other revenues, in the nine months ended July 31, 2025 was primarily impacted by the $180.7 million land parcel sale in the second quarter of 2024 described above, which carried a low basis. In addition, we recognized $0.7 million and $2.6 million of impairment charges in the three-month and nine-month periods ended July 31, 2025, respectively, in connection with planned land sales, respectively. This compares to $3.8 million and $4.4 million of land sales and other impairment charges recognized in the three and nine months ended July 31, 2024, respectively.

Current wording

Land sales and other cost of revenues as a percentage of land sales and other revenues can vary period to period depending on the mix of sales to joint ventures versus third parties. The increase in land sales and other revenues during the three months ended January 31, 2026 compared to the three months ended January 31, 2025 was primarily due to the inclusion of raw land and rental properties in the sale of approximately half of our Apartment Living assets. As a result of the sale of these rental properties and land parcels, we recognized $284.1 million of land sales and other revenues, $265.3 million of costs of land sales and other revenues, and a pre-tax net land sale gain of $18.8 million.

Previous wording

SG&A expenditures increased by $8.9 million in the three-month period ended July 31, 2025, as compared to the three-month period ended July 31, 2024. As a percentage of home sales revenues, SG&A expenditures were 8.8% of home sales revenues in the three months ended July 31, 2025, as compared to 9.0% in the three months ended July 31, 2024. The dollar increase in SG&A expenditures was due primarily to higher payroll, insurance and marketing costs. These increases were offset, in part, by modestly lower selling commissions.

Current wording

SG&A expenditures increased by $17.5 million in the three-month period ended January 31, 2026, as compared to the three-month period ended January 31, 2025. As a percentage of home sales revenues, SG&A expenditures were 13.9% of home sales revenues in the three months ended January 31, 2026, as compared to 13.1% in the three months ended January 31, 2025. The dollar increase in SG&A expenditures was due primarily to higher payroll and commissions. In addition, we had higher sales center operating costs due to the increase in the number of selling communities.

Previous wording

For the three-month period ended July 31, 2025, we reported income before income taxes of $499.5 million, as compared to $503.6 million in the three-month period ended July 31, 2024.

Current wording

For the three-month period ended January 31, 2026, we reported income before income taxes of $273.6 million, as compared to $221.4 million in the three-month period ended January 31, 2025.

Previous wording

We recognized income tax provisions of $298.6 million and $368.8 million in the nine-month periods ended July 31, 2025 and 2024, respectively. The effective tax rate was 24.9% for the nine months ended July 31, 2025, compared to 25.2% for the nine months ended July 31, 2024. Based upon the federal statutory rate of 21.0% for each period, our federal tax provisions would have been $251.7 million and $307.6 million in the nine-month periods ended July 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 the provision for state income taxes and other permanent differences, offset, in part, by excess tax benefits related to stock-based compensation. The decrease in the effective tax rate for the nine months ended July 31, 2025 compared to the nine months ended July 31, 2024 was primarily due to an increase in excess tax benefits related to stock-based compensation.

Current wording

We recognized income tax provisions of $62.6 million and $43.7 million in the three-month periods ended January 31, 2026 and 2025, respectively. The effective tax rate was 22.9% for the three months ended January 31, 2026, compared to 19.7% for the three months ended January 31, 2025. The increase in the income tax provision and effective tax rate for the three months ended January 31, 2026 compared to the three months ended January 31, 2025 was primarily due to lower excess tax benefits related to stock-based compensation recognized in the current year period. Based upon the federal statutory rate of 21.0% for each period, our federal tax provisions would have been $57.5 million and $46.5 million in the three-month periods ended January 31, 2026 and 2025, 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 other permanent differences, offset, in part, by excess tax benefits related to stock-based compensation.

Previous wording

The value of our backlog at July 31, 2025 decreased 10% to $6.38 billion (5,492 homes), as compared to $7.07 billion (6,769 homes) at July 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 July 31, 2025 as compared to July 31, 2024, was due to a 19% decrease in the number of homes in backlog partially offset by an 11% 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, as a much larger percentage of spec homes are contracted for and delivered within a quarter (and therefore are not included in our quarter-end backlog) as compared to build-to-order homes.

Current wording

The value of our backlog at January 31, 2026 decreased 13% to $6.02 billion (5,051 homes), as compared to $6.94 billion (6,312 homes) at January 31, 2025. Our backlog at October 31, 2025 and 2024 was $5.49 billion (4,647 homes) and $6.47 billion (5,996 homes), respectively. The decrease in the value of our backlog at January 31, 2026 as compared to January 31, 2025, was due to a 20% decrease in the number of homes in backlog partially offset by an 8% 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, as a much larger percentage of spec homes are contracted for and delivered within a quarter (and therefore are not included in our quarter-end backlog) as compared to build- to-order homes. The increase in the average contracted price per home was primarily due to the mix of backlog from higher margin products/areas.

Previous wording

At July 31, 2025, we had $852.3 million of cash and cash equivalents on hand and approximately $2.19 billion available for borrowing under our Revolving Credit Facility. The Revolving Credit Facility, which is scheduled to mature on February 7, 2030, provides us with a committed borrowing capacity of $2.35 billion, which we have the ability to increase to up to $3.00 billion with the consent of lenders. Under the Revolving Credit Facility, up to 50% of the commitment is available for letters of credit. 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. Our $650.0 million Term Loan Facility is also scheduled to mature on February 7, 2030 and is also guaranteed by Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries.

Current wording

At January 31, 2026, we had $1.20 billion of cash and cash equivalents on hand and approximately $2.20 billion available for borrowing under our Revolving Credit Facility. Prior to its amendment on February 5, 2026, the Revolving Credit Facility was scheduled to mature on February 7, 2030 and provided committed borrowing capacity of $2.35 billion. As amended, the maturity date is February 5, 2031 and the committed borrowing capacity is $2.38 billion. We continue to have the ability to increase the borrowing capacity under the Revolving Credit Facility to up to $3.00 billion by adding a new lender or obtaining the consent of any existing lender agreeing to a commitment increase. Under the Revolving Credit Facility, up to 50% of the commitment is available for letters of credit. 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. As a result of the February 5, 2026 amendment, of the $650.0 million of outstanding loans under our Term Loan Facility, $548.4 million is scheduled to mature on February 7, 2031 with the remaining $101.6 million due February 7, 2030. Our Term Loan Facility is also guaranteed by Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries.

Previous wording

Beyond the next twelve months, our principal demands for funds will be for the payments of the principal amount of our long-term debt as it becomes due or otherwise matures, land purchases and inventory additions needed to grow our business (which could occur directly or indirectly through builder acquisitions), long-term capital investments and investments in unconsolidated joint ventures, common stock repurchases, and dividend payments.

Current wording

Beyond the next twelve months, our principal demands for funds will be for the payments of the principal amount of our long-term debt as it becomes due or otherwise matures, land purchases and inventory additions needed to maintain and grow our business (which could occur directly or indirectly through builder acquisitions), long-term capital investments and investments in unconsolidated joint ventures, common stock repurchases, and dividend payments.

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, 2025, while others are considered future commitments and not included. 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 July 31, 2025, 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, 2026, while others are considered future commitments and not included. 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 these obligations, see Note 5, “Loans Payable, Senior Notes, and Mortgage Company Loan Facility,” and Note 13, “Commitments and Contingencies” to the Condensed Consolidated Financial Statements.

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, 2025, we had investments in these entities of $1.12 billion and were committed to invest or advance up to an additional $353.8 million to these entities if they require additional funding. At July 31, 2025, we had agreed to terms for the acquisition of 924 home sites from five joint ventures for an estimated aggregate purchase price of $123.9 million. We also expect to purchase approximately 10,700 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, 2026, we had investments in these entities of $956.5 million and were committed to invest or advance up to an additional $288.0 million to these entities if they required additional funding at such date. At January 31, 2026, we had agreed to terms for the acquisition of 652 home sites from four joint ventures for an estimated aggregate purchase price of $71.2 million. We also expect to purchase approximately 8,700 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, 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 July 31, 2025, we had guaranteed the debt of certain unconsolidated entities that have loan commitments aggregating $2.65 billion, of which, if the full amount of the debt obligations were borrowed, we estimate $574.8 million to be our maximum exposure related to repayment and carry cost guarantees. At July 31, 2025, the unconsolidated entities had borrowed an aggregate of $1.94 billion, of which we estimate $523.0 million to be our maximum exposure related to repayment and carry cost guarantees. The terms of these guarantees generally range from 1 month to 8.4 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 or agreed upon share. We believe that, as of January 31, 2026, 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, 2026, we had guaranteed the debt of certain unconsolidated entities that had loan commitments aggregating $1.92 billion, of which, if the full amount of the debt obligations were borrowed, we estimate $573.6 million to have been our maximum exposure related to repayment and carry cost guarantees at such date. At January 31, 2026, the unconsolidated entities had borrowed an aggregate of $1.55 billion, of which we estimate $570.9 million to have been our maximum exposure related to repayment and carry cost guarantees. The terms of these guarantees generally range from 1 month to 7.9 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, 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.

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, 2026, 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.

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, 2026 and October 31, 2025, we had $1.28 billion and $1.34 billion, respectively, of cash, cash equivalents, and restricted cash. Cash provided by operating activities during the three-month period ended January 31, 2026 was $7.3 million. Cash provided by operating activities during the fiscal 2026 period was primarily related to net income (adjusted for depreciation and amortization, impairments, stock-based compensation, income and distributions of earnings from unconsolidated entities, and deferred taxes); a decrease in receivables, prepaid expenses, and other assets, including rental and commercial properties; mortgage loans sold, net of mortgage loans originated; and a decrease in customer deposits – net. This activity was offset, in part, by an increase in inventory; a decrease in accounts payable and accrued expenses; and a decrease in current income taxes – net.

Previous wording

At July 31, 2025 and October 31, 2024, we had $938.3 million and $1.37 billion, respectively, of cash, cash equivalents, and restricted cash. Cash provided by operating activities during the nine-month period ended July 31, 2025 was $312.4 million. Cash provided by operating activities during the fiscal 2025 period was primarily related to net income (adjusted for depreciation and amortization, impairments, stock-based compensation, income and distributions of earnings from unconsolidated entities, and deferred taxes); an increase in accounts payable and accrued expenses; an increase in current income taxes – net and mortgage loans sold, net of mortgage loans originated. This activity is offset, in part, by an increase in inventory, an increase in receivables, prepaid expenses, and other assets, and a decrease in customer deposits – net.

Current wording

At January 31, 2025 and October 31, 2024, we had $653 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

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, 2026, cash provided by investing activities was $187.7 million, which was primarily related to $204.3 million of proceeds related to the sale of ownership interests in unconsolidated entities, and $65.1 million of cash received as returns from our investments in unconsolidated entities. This activity was offset, in part, by $61.9 million used to fund our investments in unconsolidated entities and $18.9 million used for the purchase of property and equipment.

Previous wording

In the nine-month period ended July 31, 2025, cash used in investing activities was $240.2 million, which was primarily related to $250.4 million used to fund our investments in unconsolidated entities and $58.4 million used for the purchase of property and equipment. This activity was offset, in part, by $64.9 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

We used $504.4 million of cash in financing activities in the nine-month period ended July 31, 2025, primarily for the repurchase of $404.3 million of our common stock, $350.0 million for the redemption of senior notes, payments of $100.9 million of loans payable, net of borrowings, the payment of dividends on our common stock of $73.3 million, $62.3 million of payments related to repurchases from land bank programs, $21.3 million of payments related to stock-based benefit plans - net and $13.1 million of debt issuance costs. This activity was offset, in part, by $498.2 million of proceeds from the issuance of senior notes and $22.1 million of proceeds related to sales to land bank programs.

Current wording

We used $257.3 million of cash in financing activities in the three-month period ended January 31, 2026, primarily for payments of $182.1 million of loans payable, net of borrowings, repurchase of $50.4 million of our common stock, the payment of dividends on our common stock of $25.0 million, $15.1 million of payments related to stock-based benefit plans - net and $4.5 million of payments related to non-controlling interest - net. This activity was offset, in part, by $19.8 million of proceeds related to sales to land bank programs.

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

•The North region: Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Jersey, New York and Pennsylvania;

Current wording

•The North region: Connecticut, Delaware, Massachusetts, Michigan, New Jersey, New York and Pennsylvania;

Previous wording

The number of homes delivered in the fiscal 2025 nine-month period increased year over year. Although the number of homes in backlog at October 31, 2024, as compared to the number of homes in backlog at October 31, 2023 was lower, the region delivered more spec homes in the fiscal 2025 nine-month period. The average price of homes delivered in the fiscal 2025 nine-month period decreased compared to the fiscal 2024 period, primarily due to a shift in the number of homes delivered in less expensive areas.

Current wording

The increase in the number of homes delivered in the fiscal 2026 period was mainly due to faster construction cycle times and increased demand, offset, in part, by a decrease in the number of homes in backlog at October 31, 2025, as compared to the number of homes in backlog at October 31, 2024. The average price of homes delivered in the fiscal 2026 period decreased compared to the fiscal 2025 period primarily due to an increase in the mix of homes delivered in less expensive areas and/or products.

Previous wording

The decrease in the number of net contracts signed in each fiscal 2025 period was due primarily to softer demand and a decrease in the average number of selling communities. The decrease in the average value of each contract signed in the fiscal 2025 three-month period was primarily due to a shift in the number of contracts signed to less expensive areas or product types, and increased sales incentives. The average value of each contract signed in the fiscal 2025 nine-month period was relatively flat with the fiscal 2024 period.

Current wording

The decrease in the number of net contracts signed in the fiscal 2026 period was mainly due to softer demand, offset, in part by an increase in the average number of selling communities. The average value of signed contracts in the fiscal 2026 period decreased compared to the prior year period primarily due to a shift in the number of contracts signed to less expensive areas and/or products, coupled with increased sales incentives.

Previous wording

The decrease in income before income taxes in the fiscal 2025 three-month period was mainly due to an increase in home sales cost of revenues, as a percentage of home sales revenues, and higher SG&A costs. The percentage increase in home sales cost of revenues was principally due to a shift in the number of homes delivered to less expensive areas and/or products and an increase in impairment charges in the fiscal 2025 three-month period.

Current wording

The increase in income before income taxes in the fiscal 2026 three-month period was mainly due to a decrease in home sales cost of revenues, as a percentage of home sales revenues, and higher income from unconsolidated entities and other income-net. These increases are offset, in part, by higher SG&A costs. The percentage decrease in home sales cost of revenues was principally due to a shift in the number of homes delivered to less expensive areas and/or products and lower inventory impairment charges.

Previous wording

The number of homes delivered in the fiscal 2025 three-month period was flat compared to the prior year period despite 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, as the region increased backlog conversion and the delivery of more spec homes in the period. The average price of homes delivered in each fiscal 2025 period was relatively flat with the fiscal 2024 period.

Current wording

The decrease in the number of homes delivered in the fiscal 2026 three-month period compared to the prior year period was primarily due to a decrease in the number of homes in backlog at October 31, 2025, as compared to the number of homes in backlog at October 31, 2024, offset, in part, by the delivery of more spec homes that were sold within the quarter. The decrease in the average price of homes delivered in the fiscal 2026 period was primarily due to a shift in the number of homes delivered to less expensive areas and/or products.

Previous wording

The decrease in the number of net contracts signed in each fiscal 2025 period was primarily due to softer demand and a decrease in the number of selling communities. The decrease in the average value of each contract signed in each fiscal 2025 period was mainly due to a shift in the number of contracts signed to less expensive areas or product types and increased sales incentives.

Current wording

The decrease in the number of net contracts signed in the fiscal 2026 period was due primarily to softer demand, partially offset by an increase in the average number of selling communities. The decrease in the average value of each contract signed in the fiscal 2026 three-month period was primarily due to a shift in the number of contracts signed in less expensive areas and/or product types, as well as increased sales incentives.

Previous wording

The decrease in income before income taxes in the fiscal 2025 three-month period was principally due to lower earnings from decreased revenues and higher home sales cost of revenues, as a percentage of home sale revenues, offset, in part by lower SG&A costs and higher other income - net. The percentage increase in home sales cost of revenues in the fiscal 2025 period was primarily due to a shift in product mix/areas to lower-margin areas and higher inventory impairment charges. Inventory impairment charges were $8.5 million and $2.3 million during the three months ended July 31, 2025 and 2024, respectively.

Current wording

The decrease in income before income taxes in the fiscal 2026 three-month period was principally due to lower earnings from decreased revenues and higher home sales cost of revenues, as a percentage of home sale revenues, and lower income (loss) from unconsolidated entities. The percentage increase in home sales cost of revenues in the fiscal 2026 period was primarily due to mix shifts to lower margin products/areas, partially offset by lower inventory impairment charges. Inventory impairment charges were $1.3 million and $4.4 million during the three months ended January 31, 2026 and 2025, respectively.

Previous wording

The increase in the number of homes delivered in each fiscal 2025 period was mainly due to higher backlog conversion, an increase in spec homes delivered, and an increase in the number of homes in backlog at October 31, 2024, as compared to the number of homes in backlog at October 31, 2023. The average price of homes delivered in the fiscal 2025 three-month period increased compared with the fiscal 2024 period primarily due to a shift in the number of homes delivered in more expensive areas. The average price of homes delivered in the fiscal 2025 nine-month period was relatively flat compared with the fiscal 2024 period.

Current wording

The decrease in the number of homes delivered in the fiscal 2026 period was primarily due to a decrease in the number of homes in backlog at October 31, 2025, as compared to the number of homes in backlog at October 31, 2024. The average price of homes delivered in the fiscal 2026 three-month period increased compared with the fiscal 2025 period primarily due to a shift in the number of homes delivered in more expensive areas.

Previous wording

The decrease in income before income taxes in each fiscal 2025 period was mainly due to lower earnings from decreased revenues and higher home sales cost of revenues, as a percentage of home sales revenues. The percentage increase in home sales cost of revenues was primarily due to a shift in product mix/areas to lower-margin areas and an increase in inventory impairment charges in the fiscal 2025 periods. Inventory impairment charges were $5.4 million and $0.1 million during the three months ended July 31, 2025 and 2024, respectively. Inventory impairment charges were $7.0 million and $0.1 million during the nine months ended July 31, 2025 and 2024, respectively. These were offset in part by lower SG&A costs in the nine-month fiscal 2025 period.

Current wording

The decrease in income before income taxes in the fiscal 2026 period was due mainly to lower earnings from decreased revenues and higher home sales cost of revenues, as a percentage of home sale revenues. The percentage increase in home sales cost of revenues in the fiscal 2026 period was primarily due to a shift in product mix/areas to lower margin areas.

Previous wording

The decrease in the number of net contracts signed in each fiscal 2025 period was primarily due to softer demand, offset, in part, by an increase in the number of selling communities in the fiscal 2025 periods. The increase in the average value of each contract signed in each fiscal 2025 period was primarily due to a shift in the number of contracts signed to more expensive areas or product types.

Current wording

The modest decrease in the number of net contracts signed in the fiscal 2026 period was due primarily to softness in certain markets in the Pacific Northwest offset, in part, by an increase in the number of selling communities in the fiscal 2026 period. The increase in the average value of each contract signed in the fiscal 2026 period was primarily due to a shift in the number of contracts signed to more expensive areas and/or product types.

Previous wording

The increase in income before income taxes in each fiscal 2025 period was due mainly to higher earnings from increased revenues in the fiscal 2025 periods and lower home sales cost of revenues, as a percentage of home sale revenues. The fiscal 2025 nine-month period was also impacted by higher SG&A costs. The percentage decrease in home sales cost of revenues in each fiscal 2025 period was primarily due to a shift in product mix/areas to higher-margin areas. The nine-month fiscal 2025 period also benefited from lower inventory impairment charges. Inventory impairment charges were $15.3 million and $25.7 million during the nine months ended July 31, 2025 and 2024, respectively.

Current wording

The increase in income before income taxes in the fiscal 2026 period was mainly due to higher earnings from increased revenues, lower home sales cost of revenues, as a percentage of home sales revenues, and lower SG&A expenses. The decrease in home sales cost of revenues as a percentage of home sale revenues was primarily due to a shift in product mix/areas to higher-margin areas, partially offset by an increase in inventory impairment charges in the fiscal 2026 period. Inventory impairment charges were $3.7 million and $0.6 million during the three months ended January 31, 2026 and 2025, respectively.