Toll Brothers, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Significant Accounting Policies

Basis of Presentation

Our condensed consolidated financial statements include the accounts of Toll Brothers, Inc. (the “Company,” “we,” “us,” or “our”), a Delaware corporation, and its majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Investments in 50% or less owned partnerships and affiliates are accounted for using the equity method unless it is determined that we have effective control of the entity, in which case we would consolidate the entity.

Our unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. The October 31, 2025 balance sheet amounts and disclosures have been derived from our October 31, 2025 audited financial statements. Since the condensed consolidated financial statements do not include all the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements, they should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025 (“2025 Form 10-K”). In the opinion of management, the unaudited condensed consolidated financial statements include all recurring adjustments necessary to present fairly our financial position as of April 30, 2026; the results of our operations and changes in equity for the three-month and six-month periods ended April 30, 2026 and 2025; and our cash flows for the six-month periods ended April 30, 2026 and 2025. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates and assumptions may prove to be incorrect for a variety of reasons, whether as a result of the risks and uncertainties our business is subject to or for other reasons. In times of economic disruption when uncertainty regarding future economic conditions is heightened, our estimates and assumptions are subject to greater variability. Actual results could differ from the estimates and assumptions we make, and such differences may be material.

Revenue Recognition

Home sales revenues: Revenues and cost of revenues from home sales are recognized at the time each home is delivered and title and possession are transferred to the buyer. For the majority of our home closings, our performance obligation to deliver a home is satisfied in less than one year from the date a binding sale agreement is signed. In certain states where we build, we may not be able to complete certain outdoor features prior to the closing of the home. To the extent these separate performance obligations are not complete upon the home closing, we defer a portion of the home sales revenues related to these obligations and subsequently recognize the revenue upon completion of such obligations. As of April 30, 2026, the home sales revenues and related costs we deferred related to these obligations were immaterial. Our contract liabilities, consisting of deposits received from customers for sold but undelivered homes, totaled $472.1 million and $418.9 million at April 30, 2026 and October 31, 2025, respectively. Of the outstanding customer deposits held as of October 31, 2025, we recognized $113.8 million and $221.3 million in home sales revenues during the three months and six months ended April 30, 2026, respectively. Of the outstanding customer deposits held as of October 31, 2024, we recognized $145.1 million and $265.3 million in home sales revenues during the three months and six months ended April 30, 2025, respectively.

Land sales and other revenues: Our revenues from land sales and other generally consist of: (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 lot 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 high-rise urban luxury condominium and apartment projects. In general, our performance obligation for each of these sales is fulfilled upon the delivery of the property, which generally coincides with the receipt of cash consideration from the counterparty. For sales transactions that contain repurchase options, revenues and related costs are not recognized until the repurchase option expires. In addition, when we sell land to a joint venture in which we retain an interest, we do not recognize revenue or gains on the sale to the extent of our retained interest in such joint venture.

Forfeited Customer Deposits: Forfeited customer deposits are recognized in “Home sales revenues” in our Condensed Consolidated Statements of Operations and Comprehensive Income in the period in which the customer defaults on or cancels the contract and we have the right to retain the deposit.

Sales Incentives: In order to promote sales of our homes, we may offer our home buyers sales incentives. These incentives vary by type and amount on a community-by-community and home-by-home basis. Incentives are reflected as a reduction in home sales revenues. Incentives are recognized at the time the home is delivered to the home buyer and we receive the sales proceeds.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires expanded disclosure of our income tax rate reconciliation and income taxes paid. ASU 2023-09 will be effective for our fiscal year ending October 31, 2026 and may be applied either retrospectively or prospectively. We are currently evaluating the impact this standard will have on our disclosures.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements. ASU 2024-03 will be effective for our fiscal year 2028. The amendments in this update are to be applied on a prospective basis, with the option for retrospective application. Early adoption is permitted. We are currently evaluating the impact this standard will have on our disclosures.

Disposition

During the six months ended April 30, 2026, we substantially completed the previously announced sale of approximately half of our Apartment Living portfolio, as well as our Apartment Living operating platform, to Kennedy Wilson for net cash proceeds of approximately $330.0 million. As previously disclosed, in connection with the transaction, Kennedy Wilson also agreed to assume our management responsibilities for our retained interests in for-rent properties. We expect to sell our interests in these retained assets over time.

At October 31, 2025, we concluded that the business was not considered to be a strategic component of the Company’s operations, nor did it have a major effect on our operations and financial results. Accordingly, the operating results of the properties included in the sale were included within continuing operations for all periods reported. However, the transaction met the criteria to be classified as held for sale during the period and was classified accordingly in our Consolidated Balance Sheet at October 31, 2025. No assets or liabilities met the held for sale criteria as of April 30, 2026.

The table below summarizes the components of real estate assets and liabilities held for sale as of October 31, 2025 (amounts in thousands):

(1) Includes investments in unconsolidated entities for 18 joint ventures as of October 31, 2025. At October 31, 2025, of these 18 joint ventures, six had remaining funding commitments of $23.5 million. Additionally,16 of these 18 joint ventures had aggregate loan commitments of $1.24 billion and amounts outstanding under such commitments totaling $1.03 billion as of October 31, 2025. At October 31, 2025, our maximum estimated exposure under repayment and carry cost guarantees related to these loan commitments totaled $171.1 million and our exposure based on amounts outstanding at October 31, 2025 was $134.9 million. Notwithstanding the disposition of our interests in the related joint ventures, we expect to remain on certain of these guarantees until the guaranteed obligations are terminated or refinanced. We entered into reimbursement or similar agreements with Kennedy Wilson whereby Kennedy Wilson will reimburse us if we are required to fund repayment or carry cost guarantees.

2. Acquisition

In May 2026, we acquired substantially all of the assets and operations of Buffington Homes of Arkansas, a privately-held home builder based in Fayetteville, Arkansas. The assets acquired were primarily inventory fornine active/coming soon communities, including approximately 1,500 home sites owned or controlled through land purchase agreements.

3. Inventory

Major components of inventory at April 30, 2026 and October 31, 2025 were (amounts in thousands):

(1) Includes the allocated land and land development costs associated with each of our model homes in operation.

The following table provides a summary of the composition of our inventory based on community status at April 30, 2026 and October 31, 2025 (amounts in thousands):

Operating communities include communities offering homes for sale; communities that have sold all available home sites but have not completed delivery of the homes; and communities preparing to open for sale. The carrying value attributable to operating communities includes the cost of homes under construction, land and land development costs, the carrying cost of home sites in current and future phases of these communities, and the carrying cost of model homes.

The amounts we have provided for inventory impairment charges and the expensing of costs that we believed not to be recoverable, included in home sales cost of revenues, are shown in the table below (amounts in thousands):

We recognized $2.3 million of impairment charges on land held for sale during the three-month period ended April 30, 2026. No impairment charges on land held for sale were recognized in the three-month period ended April 30, 2025. We recognized $3.7 million and $1.8 million of impairment charges on land that we no longer plan to develop, which were included in land sales and other cost of revenues during the six-month periods ended April 30, 2026 and 2025.

See Note 14, “Commitments and Contingencies,” for information regarding land purchase commitments.

At April 30, 2026, we evaluated our land purchase contracts to determine whether any of the selling entities were variable interest entities (“VIEs”) and, if they were, whether we were the primary beneficiary of any of them. Under these land purchase contracts, we do not possess legal title to the land; our maximum exposure to loss is generally limited to deposits paid to the sellers and predevelopment costs incurred; and the creditors of the sellers generally have no recourse against us. At April 30, 2026, we determined that 318 land purchase contracts, with an aggregate purchase price of $7.24 billion, on which we had made aggregate deposits totaling $814.2 million, were VIEs, and that we were not the primary beneficiary of any VIE related to our land purchase contracts. At October 31, 2025, we determined that 349 land purchase contracts, with an aggregate purchase price of $7.30 billion, on which we had made aggregate deposits totaling $724.6 million, were VIEs, but that we were not the primary beneficiary of any VIE related to such land purchase contracts. However, at April 30, 2026 and October 31, 2025, certain contracts were accrued as we concluded we were economically compelled to purchase the land. See Note 7, “Accrued Expenses,” for information regarding liabilities related to consolidated inventory not owned.

Interest incurred, capitalized, and expensed, for the periods indicated, were as follows (amounts in thousands):

4. Investments in Unconsolidated Entities

We have investments in various unconsolidated entities and our ownership interest in these investments ranges from 2.5% to 75%. These entities are structured as joint ventures and either: (i) develop land for the joint venture participants and for sale to outside builders (“Land Development Joint Ventures”); (ii) develop for-sale homes (“Home Building Joint Ventures”); or (iii) develop luxury for-rent residential apartments and single family homes, commercial space, and a hotel (“Rental Property Joint Ventures”).

As described in Note 1, “Significant Accounting Policies - Disposition”, certain of our investments in unconsolidated entities were classified within “Real estate and related assets held for sale” on our Consolidated Balance Sheet as of October 31, 2025. As such, the related data for those unconsolidated entities has been excluded from the tables below. Applicable information with respect to these unconsolidated entities held for sale can be found within Note 1.

The table below provides information as of April 30, 2026, regarding active joint ventures that we were invested in, by joint venture category ($ amounts in thousands):

(1) Our total investment includes $86.2 million related tofive unconsolidated joint venture-related variable interests in VIEs and our maximum exposure to losses related to these VIEs is approximately $135.3 million as of April 30, 2026, inclusive of our investment in these joint ventures. Our ownership interest in such unconsolidated Joint Venture VIEs ranges from 25% to 50%.

(2) Our remaining funding commitment includes approximately $28.6 million related to our unconsolidated joint venture-related variable interests in VIEs.

The table below provides information as of October 31, 2025, regarding active joint ventures that we were invested in, by joint venture category ($ amounts in thousands):

(1) Our total investment includes $151.6 million related toseven unconsolidated joint venture-related variable interests in VIEs and our maximum exposure to losses related to these VIEs is approximately $219.7 million as of October 31, 2025, inclusive of our investment in joint ventures. Our ownership interest in such unconsolidated Joint Venture VIEs ranges from 25% to 50%.

(2) Our remaining funding commitment includes approximately $47.5 million related to our unconsolidated joint venture-related variable interests in VIEs.

Certain joint ventures in which we have investments obtained debt financing to finance a portion of their activities. The table below provides information at April 30, 2026, regarding the debt financing obtained by category ($ amounts in thousands):

The table below provides information at October 31, 2025, regarding the debt financing obtained by category ($ amounts in thousands):

More specific and/or recent information regarding our investments in, advances to, and future commitments to these entities is provided below.

New Joint Ventures

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There wasone Land Development Joint Venture formed during the three and six-month periods ended April 30, 2026. At April 30, 2026, the investment balance was $12.4 million and the aggregate joint venture fair value at formation date was $50.3 million.

The table below provides information on joint ventures entered into during the six months ended April 30, 2025 ($ amounts in thousands):

Results of Operations and Intra-entity Transactions

In the six-month period ended April 30, 2026, we sold our ownership interest in 16 Rental Property Joint Ventures andone Land Development Joint Venture and recognized a net gain of $69.0 million. In the six-month period ended April 30, 2025, we sold our ownership interest inone of our Rental Property Joint Ventures and recognized a net gain of $2.7 million. These net gains are included in “(Loss) income from unconsolidated entities” in our Condensed Consolidated Statements of Operations and Comprehensive Income. No similar transactions occurred in the three-month periods ended April 30, 2026 or 2025.

From time to time, certain of our Land Development and Rental Property Joint Ventures sell assets to unrelated parties or to our joint venture partners. In the six-month period ended April 30, 2026, three of our Rental Property Joint Ventures sold their assets and we recognized $21.4 million, in “(Loss) income from unconsolidated entities,” representing our proportionate share of the gains. In the three-month and six-month periods ended April 30, 2025, two of our Rental Property Joint Ventures sold their assets and we recognized $15.5 million and $18.2 million, respectively, representing our proportionate share of the gains. No similar transactions occurred in the three-month period ended April 30, 2026.

In the three-month period ended April 30, 2026, we recognized other-than-temporary impairment charges on our investments in several Rental Property Joint Ventures of $13.5 million. In the six-month period ended April 30, 2026, we recognized other-than-temporary impairment charges on our investments in several Rental Property Joint Ventures of $57.8 million. No similar impairment charges were recognized in the three or six-month periods ended April 30, 2025.

In the three-month periods ended April 30, 2026 and 2025, we purchased land from unconsolidated entities, principally related to our acquisition of lots from our Land Development Joint Ventures, totaling $44.1 million and $36.7 million, respectively. In the six-month periods ended April 30, 2026 and 2025, we purchased land from unconsolidated entities, principally related to our acquisition of lots from our Land Development Joint Ventures, totaling $73.5 million and $53.9 million, respectively. Our share of income from the lots we acquired was not material in either period.

In the normal course of our business, we may contribute land to certain of our joint ventures in exchange for ownership interests. In the three-month and six-month periods ended April 30, 2025, we sold land to unconsolidated entities, which principally involved land sales to Home Building and Rental Property Joint Ventures, for $8.6 million and $25.7 million, respectively. These amounts are included in “Land sales and other revenues” on our Condensed Consolidated Statement of Operations and Comprehensive Income and were sold at our land cost basis. No similar transactions occurred in the three-month or six-month periods ended April 30, 2026.

Guarantees

The unconsolidated entities in which we have investments generally finance their activities with a combination of partner equity and debt financing. In some instances, we have guaranteed portions of the debt of unconsolidated entities. These guarantees may include any or all of the following: (i) project completion guarantees, including any cost overruns; (ii) repayment guarantees, generally covering a percentage of the outstanding loan; (iii) carry cost guarantees, which cover costs such as interest, real estate taxes, and insurance; (iv) an environmental indemnity provided to the lender that holds the lender harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (v) indemnification of the lender from “bad boy acts” of the unconsolidated entity or its partners.

In some instances, we and our joint venture partners have provided joint and several guarantees in connection with loans to unconsolidated entities. In these situations, 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 April 30, 2026, in the event we become legally obligated to perform under a guarantee of an 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 venture.

Information regarding certain of the Company’s unconsolidated entities’ outstanding debt obligations, loan commitments and our guarantees thereon are as follows ($ amounts in thousands):

(1) At April 30, 2026 and October 31, 2025, our maximum estimated exposure under repayment and carry cost guarantees includes approximately $20.6 million related to our unconsolidated joint venture VIEs.

(2) As discussed in Note 1, “Significant Accounting Policies - Disposition”, we remain liable on several guarantees subsequent to the sale of certain of our Rental Property Joint Venture interests until the related loan commitments are terminated or refinanced. At April 30, 2026, the amounts included within the table above exclude approximately $122.5 million related to our maximum estimated exposure under repayment and carry cost guarantees, the full amount of which was borrowed as of that date. We have entered into reimbursement or similar agreements with Kennedy Wilson whereby they will reimburse us if we are required to fund any repayment or carry cost guarantees.

The maximum exposure estimates presented above 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 indemnities noted above, which are not estimable. We have not made significant payments under any of the outstanding guarantees, nor have we been called upon to do so.

Variable Interest Entities

We have both unconsolidated and consolidated joint venture-related variable interests in VIEs. Information regarding our involvement in unconsolidated joint-venture related variable interests in VIEs has been disclosed throughout information presented above. Our ownership interest in consolidated Joint Venture VIEs presented in the table below ranges from 82% to 97%. The income/losses generated from such joint ventures were not material.

The table below provides information as of April 30, 2026 and October 31, 2025, regarding our consolidated joint venture-related variable interests in VIEs ($ amounts in thousands):

(1) Excluded from the table above arethree of our consolidated joint venture-related interests in VIEs that have been classified within “Real estate and related assets held for sale” on our Consolidated Balance Sheet as of October 31, 2025. Our ownership interest in these joint ventures ranges from 75% to 98%. These consolidated joint ventures had an aggregate carrying value of $50.4 million and our noncontrolling interest totaled $4.5 million as of October 31, 2025.

As shown above, we are the primary beneficiary of certain VIEs due to our controlling financial interest in such ventures as we have the power to direct the activities that most significantly impact the joint ventures’ performance and the obligation to absorb expected losses or receive benefits from the joint ventures. The assets of these VIEs can only be used to settle the obligations of the VIEs. In addition, in certain of the joint ventures, in the event additional contributions are required to be made to the joint ventures prior to the admission of any additional investor at a future date, we would fund 100% of such contributions, including our partner’s pro rata share, which we expect would be funded through an interest-bearing loan. For other VIEs, we are not the primary beneficiary because the power to direct the activities of such VIEs that most significantly impact their performance was either shared by us and such VIE’s other partners or such activities were controlled by our partner. For VIEs where the power to direct significant activities is shared, business plans, budgets, and other major decisions are required to be unanimously approved by all partners. Management and other fees earned by us are nominal and believed to be at market rates, and there is no significant economic disproportionality between us and other partners.

5. Receivables, Prepaid Expenses, and Other Assets

Receivables, prepaid expenses, and other assets at April 30, 2026 and October 31, 2025, consisted of the following (amounts in thousands):

6. Loans Payable, Senior Notes, and Mortgage Company Loan Facility

Loans Payable

At April 30, 2026 and October 31, 2025, loans payable consisted of the following (amounts in thousands):

Senior Unsecured Term Loan

We are party to a $650.0 million senior unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks that, prior to its amendment on February 5, 2026, was scheduled to mature on February 7, 2030. On February 5, 2026, we amended the Term Loan Facility to, among other things, extend the maturity date of $548.4 million of outstanding term loans to February 5, 2031, with the remaining $101.6 million continuing to be due on February 7, 2030. No principal payments are required before such maturity dates. Under the Term Loan Facility, we may select interest rates equal to (i) the Secured Overnight Financing Rate (“SOFR”) plus an applicable margin, (ii) the base rate (as defined in the agreement) plus an applicable margin, or (iii) the federal funds/Euro rate (as defined in the agreement) plus an applicable margin, in each case, based on our leverage ratio. At April 30, 2026, the interest rate on the Term Loan Facility was 4.45% per annum. Toll Brothers, Inc. and substantially all of its 100%-owned home building subsidiaries are guarantors under the Term Loan Facility. The Term Loan Facility contains substantially the same financial covenants as the Revolving Credit Facility described below.

Revolving Credit Facility

We are party to a senior unsecured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks that, prior to its amendment on February 5, 2026, was scheduled to mature on February 7, 2030. On February 5, 2026, we amended the Revolving Credit Facility to, among other things, extend its maturity date to February 5, 2031 and increase the total amount of revolving loans and commitments available from $2.35 billion to $2.38 billion. We have the ability to increase the maximum borrowing capacity of the Revolving Credit Facility to up to $3.00 billion by adding additional lenders or obtaining the consent of any existing lenders that agrees 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.

Both our Revolving Credit Facility and Term Loan Facility require us to maintain certain financial covenants, which include not exceeding a defined maximum leverage ratio and maintaining a minimum tangible net worth. In addition, our ability to repurchase our common stock and pay cash dividends is limited by these agreements. However, during the three-month and six-month periods ended April 30, 2026, these limitations did not meaningfully restrict our ability to pay cash dividends or repurchase stock. We were in compliance with all covenants and requirements as of April 30, 2026.

On April 30, 2026, the maximum borrowing capacity under the Revolving Credit Facility was $2.38 billion, we hadno outstanding borrowings, and had approximately $136.5 million of outstanding letters of credit issued. At April 30, 2026, the interest rate on outstanding borrowings under the Revolving Credit Facility, which is a variable rate, would have been 4.75% per annum.

Loans Payable – Other

“Loans payable – other” primarily represents purchase money mortgages on properties we acquired that the seller had financed, project-level financing, and various revenue bonds that were issued by government entities on our behalf to finance community infrastructure. At April 30, 2026, the weighted-average interest rate on “Loans payable – other” was 5.49% per annum.

Senior Notes

At April 30, 2026, we hadfour issues of fixed rate senior notes outstanding with an aggregate principal amount of $1.75 billion.

Mortgage Company Loan Facility

Our wholly owned mortgage subsidiary, Toll Brothers Mortgage Company (“TBMC”), is a party to a mortgage warehousing

facility (the “Warehousing Agreement”) with a bank that provides for loan purchases up to $75.0 million, subject to certain sublimits. The Warehousing Agreement provides for an accordion feature under which TBMC may request that the aggregate commitments under the Warehousing Agreement be increased to an amount up to $150.0 million for a short period of time. The Warehousing Agreement is accounted for as a secured borrowing under ASC 860, “Transfers and Servicing.” TBMC is also subject to an under-usage fee based on outstanding balances, as defined in the Warehousing Agreement. Prior to its scheduled expiration on December 2, 2025, the Warehousing Agreement was amended to extend the expiration date to November 25, 2026. No other changes were made to the terms of the Warehousing Agreement as a result of the amendment. The Warehousing Agreement bears interest at SOFR plus 1.75% per annum (with a SOFR floor of 2.50%). At April 30, 2026, the interest rate on the Warehousing Agreement was 5.41% per annum.

7. Accrued Expenses

Accrued expenses at April 30, 2026 and October 31, 2025 consisted of the following (amounts in thousands):

The table below provides, for the periods indicated, a reconciliation of the changes in our warranty accrual (amounts in thousands):

8. Income Taxes

We recorded income tax provisions of $89.8 million and $125.1 million for the three months ended April 30, 2026 and 2025, respectively. The effective tax rate was 25.6% for the three months ended April 30, 2026, compared to 26.2% for the three months ended April 30, 2025. We recorded income tax provisions of $152.4 million and $168.7 million for the six months ended April 30, 2026 and 2025, respectively. The effective tax rate was 24.4% for the six months ended April 30, 2026, compared to 24.1% for the six months ended April 30, 2025. The income tax provisions for all periods included the provision for state income taxes, interest accrued on anticipated tax assessments, excess tax benefits related to stock-based compensation, and other permanent differences.

We are subject to state tax in the jurisdictions in which we operate. We estimate our state tax liability based upon the individual taxing authorities’ regulations, estimates of income by taxing jurisdiction, and our ability to utilize certain tax-saving strategies. Based on our estimate of the allocation of income or loss among the various taxing jurisdictions and changes in tax regulations and their impact on our tax strategies, we estimate that our state income tax rate for the full fiscal year 2026 will be approximately 5.7%. Our state income tax rate for the full fiscal year 2025 was 6.1%.

At April 30, 2026, we had $24.7 million of gross unrecognized tax benefits, including interest and penalties. If these unrecognized tax benefits were to reverse in the future, they would have a beneficial impact on our effective tax rate at that time. During the next 12 months, it is reasonably possible that our unrecognized tax benefits will change, but we are not able to provide a range of such change. The possible changes would be principally due to the expiration of tax statutes, settlements with taxing jurisdictions, increases due to new tax positions taken, and the accrual of estimated interest and penalties.

9. Stock-Based Benefit Plans

We grant various types of restricted stock units to our employees and our non-employee directors. We also previously granted stock options to certain of our employees and non-employee directors, but discontinued this practice in fiscal year 2023. Additionally, we have an employee stock purchase plan that allows employees to purchase our stock at a discount. Information regarding the amount of total stock-based compensation expense and tax benefit recognized by us, for the periods indicated, is as follows (amounts in thousands):

At April 30, 2026 and October 31, 2025, the aggregate unamortized value of unvested stock-based compensation awards was approximately $34.5 million and $23.0 million, respectively.

10. Stockholders’ Equity

Stock Repurchase Program

From time to time, our Board of Directors authorizes the repurchase of shares of our common stock in open market transactions, privately negotiated transactions (including accelerated share repurchases), issuer tender offers or other financial arrangements or transactions for general corporate purposes, including to obtain shares for the Company’s equity awards and other employee benefit plans. Most recently, on December 13, 2023, our Board of Directors authorized the repurchase of up to 20 million shares of our common stock and cancelled all open authorizations effective the same date. The Board of Directors did not fix any expiration date for this repurchase program.

The table below provides, for the periods indicated, information about our share repurchase programs:

(1) Average price per share includes costs associated with the repurchases, including accrued excise taxes.

Cash Dividends

On March 11, 2026, our Board of Directors approved an increase in our quarterly dividend from $0.25 per share to $0.26 per share. During the three-month periods ended April 30, 2026 and 2025, we declared and paid cash dividends of $0.26 and $0.25 per share, respectively, to our shareholders. During the six-month periods ended April 30, 2026 and 2025, we declared and paid cash dividends of $0.51 and $0.48 per share, respectively, to our shareholders.

Accumulated Other Comprehensive Income

The changes in each component of accumulated other comprehensive income (“AOCI”), for the periods indicated, were as follows (amounts in thousands):

(1) Reclassified to “Other income – net”

(2) Reclassified to “Income tax provision”

(3) Reclassified to “Cost of revenues – home sales”

11. Earnings per Share Information

The table below provides, for the periods indicated, information pertaining to the calculation of earnings per share, common stock equivalents, weighted-average number of antidilutive options and restricted stock units, and shares issued (amounts in thousands):

(1) Common stock equivalents represent the dilutive effect of outstanding in-the-money stock options using the treasury stock method and shares expected to be issued upon the conversion of restricted stock units under our equity award programs.

(2) Weighted-average number of antidilutive options and restricted stock units are based upon the average closing price of our common stock on the New York Stock Exchange for the period.

12. Fair Value Disclosures

Financial Instruments

The table below provides, as of the dates indicated, a summary of assets/(liabilities) related to our financial instruments, measured at fair value on a recurring basis (amounts in thousands):

At April 30, 2026 and October 31, 2025, the carrying value of cash and cash equivalents, escrow cash held by our wholly owned captive title company, and customer deposits held in escrow approximated fair value.

Mortgage Loans Held for Sale

At the end of the reporting period, we determine the fair value of our mortgage loans held for sale, interest rate lock commitments, and the forward loan commitments we have entered into as a hedge against the interest rate risk of our mortgage loans and commitments using the market approach to determine fair value.

The table below provides, as of the dates indicated, the aggregate unpaid principal and fair value of mortgage loans held for sale (amounts in thousands):

Inventory

We recognize inventory impairment charges and land impairment charges based on the difference in the carrying value of the inventory and its fair value at the time of the evaluation. The fair value of the aforementioned inventory is determined using Level 3 criteria. Estimated fair value is primarily determined by discounting the estimated future cash flow of each community. In determining the fair value related to land impairments, we consider recent offers received, prices for land in recent comparable sales transactions, and other factors. We record land impairments related to land parcels we plan to sell to third parties within land sales and other cost of revenues. See Note 1, “Significant Accounting Policies – Inventory,” in our 2025 Form 10-K for additional information regarding our methodology for determining fair value. Impairments on operating and future communities were not significant during the three-month or six-month periods ended April 30, 2026 and 2025 and, accordingly, we did not disclose the ranges of certain quantitative unobservable inputs utilized in determining the fair value of such impaired operating and future communities.

Investments in Unconsolidated Entities

We review each of our investments on a quarterly basis for indicators of impairment. A series of net operating losses of an investee, the inability to recover our invested capital, or other factors may indicate that a loss in value of our investment in the unconsolidated entity has occurred. If a loss exists, we further review the investment to determine if the loss is other than temporary, in which case we write down the investment to its estimated fair value. The fair value of the aforementioned investment is determined using Level 3 criteria. See Note 1, “Significant Accounting Policies – Investments in Unconsolidated Entities,” in our 2025 Form 10-K for additional information regarding our methodology for determining fair value. With respect to the other-than-temporary impairment charges taken during the three-month and six-month periods ended April 30, 2026, our estimate of the fair value of the investment’s underlying property also included consideration of letters of intent as well as broker opinions, where applicable.

Debt

The table below provides, as of the dates indicated, the book value, excluding any bond discounts, premiums, and deferred issuance costs, and estimated fair value of our debt (amounts in thousands):

(1) The estimated fair value of loans payable was based upon contractual cash flows discounted at interest rates that we believed were available to us for loans with similar terms and remaining maturities as of the applicable valuation date.

(2) The estimated fair value of our senior notes is based upon their market prices as of the applicable valuation date.

(3) We believe that the carrying value of our mortgage company loan borrowings approximates their fair value.

13. Other Income– Net

The table below provides the significant components of “Other income – net” (amounts in thousands):

Income from ancillary businesses is generated by our mortgage, title, landscaping, smart home technology, apartment living, city living, and golf course and country club operations. The table below provides, for the periods indicated, revenues and expenses for our ancillary businesses (amounts in thousands):

In the three-month and six-month periods ended April 30, 2026, our smart home technology business recognized a $3.9 million gain from a bulk sale of security monitoring accounts, which is included in income from ancillary businesses above. No similar amounts were recognized in the three-month and six-month periods ended April 30, 2025.

In the six-month period ended April 30, 2025, we recognized $4.4 million of net write-offs related to previously incurred costs that we believed not to be recoverable in our apartment rental development business operations. No similar charges were recognized in the three-month or six-month periods ended April 30, 2026 or the three-month period ended April 30, 2025.

In the three-month and six-month periods ended April 30, 2026, income from ancillary businesses included management fees earned on our apartment rental development, high-rise urban luxury condominium, and other unconsolidated entities and operations that totaled $0.7 million and $15.2 million, respectively. The six-month period ended April 30, 2026 included $10.0 million of previously deferred management fees that were recognized due to the sale of Apartment Living assets described in Note 1, “Significant Accounting Policies - Disposition.” In the three-month and six-month periods ended April 30, 2025, income from ancillary businesses included management fees earned on our apartment rental development, high-rise urban luxury condominium, and other unconsolidated entities and operations that totaled $6.1 million and $13.2 million, respectively.

14. Commitments and Contingencies

Legal Proceedings

We are involved in various claims and litigation arising principally in the ordinary course of business. We believe that adequate provision for resolution of all current claims and pending litigation has been made and that the disposition of these matters will not have a material adverse effect on our results of operations and liquidity or on our financial condition.

Land Purchase Contracts

Generally, our agreements to acquire land parcels do not require us to purchase those land parcels, although, in some cases, we forfeit any deposit balance outstanding if and when we terminate an agreement. Information regarding our land purchase contracts, as of the dates indicated, is provided in the table below (amounts in thousands):

In addition, we expect to purchase approximately 8,900 additional home sites over a number of years from several joint ventures in which we have interests; the purchase prices of these home sites will be determined at a future date.

At October 31, 2025, we also had similar purchase contracts to acquire land for apartment developments of approximately $326.2 million, of which we had made outstanding deposits in the amount of $14.7 million. As previously disclosed, in September 2025, we agreed to sell our interests in approximately half of our Apartment Living portfolio, which included substantially all of these purchase contracts. We substantially completed this transaction during the six months ended April 30, 2026, and, as a result, reduced these outstanding purchase contracts to $18.0 million at April 30, 2026. Outstanding deposits made in respect of these contracts were $0.7 million as of such date.

We have additional land parcels under option that have been excluded from the aggregate purchase price since we do not believe that we will complete the purchase of these land parcels and no additional funds will be required from us to terminate these contracts.

Investments in Unconsolidated Entities

At April 30, 2026, we had investments in a number of unconsolidated entities, were committed to invest or advance additional funds, and had guaranteed a portion of the indebtedness and/or loan commitments of these entities. See Note 4, “Investments in Unconsolidated Entities,” for more information regarding our commitments to these entities.

Surety Bonds and Letters of Credit

At April 30, 2026, we had outstanding surety bonds of $845.0 million primarily related to our obligations to governmental entities to construct improvements in our communities. We have an additional $394.3 million of surety bonds outstanding that guarantee other obligations. Although significant construction and development activities have been completed related to these improvements, the bonds are generally not released until all construction and development activities are completed and acceptance by the counterparty is received. The aggregate amount of surety bonds outstanding is in excess of the estimated cost of the remaining work to be performed. We do not believe that it is probable that any outstanding bonds will be drawn upon.

At April 30, 2026, we had outstanding letters of credit of $136.5 million under our Revolving Credit Facility and $101.5 million under other letter of credit facilities. These letters of credit were issued to secure our various financial obligations, including insurance policy deductibles and other claims, land deposits, and security to complete improvements in communities in which we are operating. We do not believe that it is probable that any outstanding letters of credit will be drawn upon.

At April 30, 2026, we had provided financial guarantees of $45.5 million related to fronted letters of credit to secure obligations related to certain of our insurance policy deductibles and other claims.

Backlog

Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”). At April 30, 2026, we had agreements of sale outstanding to deliver 5,394 homes with an aggregate sales value of $6.32 billion.

Mortgage Commitments

Our mortgage subsidiary provides mortgage financing for a portion of our home closings. For those home buyers to whom our mortgage subsidiary provides mortgages, we determine whether the home buyer qualifies for the mortgage based upon information provided by the home buyer and other sources. For those home buyers who qualify, our mortgage subsidiary provides the home buyer with a mortgage commitment that specifies the terms and conditions of a proposed mortgage loan based upon then-current market conditions. Prior to the actual closing of the home and funding of the mortgage, the home buyer will lock in an interest rate based upon the terms of the commitment. At the time of rate lock, our mortgage subsidiary agrees to sell the proposed mortgage loan to one of several outside recognized mortgage financing institutions (“investors”) that is willing to honor the terms and conditions, including interest rate, committed to the home buyer. We believe that these investors have adequate financial resources to honor their commitments to our mortgage subsidiary.

Mortgage loans are sold to investors with limited recourse provisions derived from industry-standard representations and warranties in the relevant agreements. These representations and warranties primarily involve the absence of misrepresentations by the borrower or other parties, the appropriate underwriting of the loan and in some cases, a required minimum number of payments to be made by the borrower. The Company generally does not retain any other continuing interest related to mortgage loans sold in the secondary market.

Information regarding our mortgage commitments, as of the dates indicated, is provided in the table below (amounts in thousands):

15. Information on Segments

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

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

•The Mid-Atlantic region: Georgia, Maryland, North Carolina, Tennessee and Virginia;

•The South region: Florida, South Carolina and Texas;

•The Mountain region: Arizona, Colorado, Idaho, Nevada and Utah;

•The Pacific region: California, Oregon and Washington.

Our Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Chief Operating Officer (COO) are our chief operating decision makers (“CODMs”). Our CODMs use segment measures, principally income from operations (the primary measure of segment profit or loss), in addition to revenue, operating profit, and other key homebuilding metrics regularly provided to assess each segment’s performance and decide how to allocate resources. These operating results are reviewed against actual and forecasted figures. Our geographic reporting segments are consistent with how our CODMs assess operating performance and allocate capital.

Total revenues, significant expenses, income (loss) from operations and income (loss) before income taxes for each of our reportable segments were as follows (amounts in thousands):

Land sales and other revenues during the six months ended April 30, 2026 includes $284.1 million related to the sale of apartment living properties and land parcels which resulted in a pre-tax gain of $18.8 million that is included in Corporate and other.

Corporate and other is a non-operating segment 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.

Total assets for each of our segments, as of the dates indicated, are shown in the table below (amounts in thousands):

“Corporate and other” is comprised principally of cash and cash equivalents, restricted cash, investments in our Rental Property Joint Ventures, expected recoveries from insurance carriers and suppliers, manufacturing facilities, our apartment rental development operations, and our mortgage and title subsidiaries.

The amounts we have provided for inventory impairment charges and the expensing of costs that we believe not to be recoverable, for the three-month and six-month periods ended April 30, 2026 and 2025, which are included in home sales cost of revenues, were as follows (amounts in thousands):

The amounts we have provided for land impairment charges included in land sales and other costs of revenues, for the three-month and six-month periods ended April 30, 2026 and 2025, are shown in the table below (amounts in thousands):

In the three-month period ended April 30, 2026, we recognized $13.5 million of impairment charges related to several Rental Property Joint Ventures, which are included in Corporate and other. In the six-month period ended April 30, 2026, we recognized $57.8 million of impairment charges related to several Rental Property Joint Ventures, which are included in Corporate and other. No similar charges were taken during the three-month or six-month periods ended April 30, 2025.

16. Supplemental Disclosure to Condensed Consolidated Statements of Cash Flows

The following are supplemental disclosures to the Condensed Consolidated Statements of Cash Flows, for the periods indicated (amounts in thousands):