What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-12-20 compared with 2023-12-21 · 171 added, 178 removed, 480 unchanged (42% of the section changed)

8 unchanged sentences

Backlog conversion represents the percentage of homes delivered in the period from backlog at the beginning of the period (“backlog conversion”).

We design, build, market, sell, and arrange financing for an array of luxury residential single-family detached, attached, master-planned, resort-style golf, and urban low-, mid-, and high-rise communities, principally on land we develop and improve, as we continue to pursue our strategy of broadening our product lines, price points and geographic footprint.

We cater to luxury first-time, move-up, empty-nester, active-adult, and second-home buyers in the United States, as well as urban and suburban renters.

In recent years, we have pursued a strategy of broadening our product lines, price points and geographic footprint, as well as increasing the number of spec homes that we sell relative to our traditional build-to-order homes.

We cater to luxury first-time, move-up, empty-nester (move-down), active-adult, and second-home buyers in the United States, as well as urban and suburban renters.

We also design, build, market, and sell high-density, high-rise urban luxury condominiums with third-party joint venture partners.

2 unchanged sentences

At October 31, 2024, we had 1,041 communities in various stages of planning, development or operations containing approximately 74,700 home sites that we owned or controlled through options.

At fiscal year-end, we were selling from 408 of these communities.

We operate our own architectural, engineering, mortgage, title, land development, insurance, smart home technology and landscaping subsidiaries.

We also develop master-planned and golf course communities as well as operate, in certain regions, our own lumber distribution, house component assembly and component manufacturing operations.

In addition to our residential for-sale business, we also develop and operate for-rent apartments through joint ventures.

In addition to our residential for-sale business, we also develop and, in some cases operate, for-rent apartments generally through joint ventures.

See the section entitled “Toll Brothers Apartment Living/Toll Brothers Campus Living” below.

We have investments in various unconsolidated entities, including our Land Development Joint Ventures, Home Building Joint Ventures, Rental Property Joint Ventures and Gibraltar Joint Ventures.

We have investments in various unconsolidated entities, including our Land Development Joint Ventures, Home Building Joint Ventures and Rental Property Joint Ventures.

Financial Highlights

In fiscal 2024, we recognized $10.85 billion of revenues, consisting of $10.56 billion of home sales revenues and $283.4 million of land sales and other revenues, and net income of $1.57 billion, as compared to $9.99 billion of revenues, consisting of $9.87 billion of home sales revenues and $128.9 million of land sales and other revenues, and net income of $1.37 billion in fiscal 2023.

Land sales and other revenue, pre-tax income and net income in fiscal 2024 included $185.0 million, $175.2 million and $124.1 million, respectively, related to the sale of a single parcel of land in northern Virginia to a commercial developer.

In fiscal 2024 and 2023, the value of net contracts signed was $10.07 billion (10,231 homes) and $7.91 billion (8,077 homes), respectively.

The value of our backlog at October 31, 2024 was $6.47 billion (5,996 homes), as compared to our backlog at October 31, 2023 of $6.95 billion (6,578 homes).

At October 31, 2023, we had $1.30 billion of cash and cash equivalents and approximately $1.79 billion available for borrowing under our $1.905 billion revolving credit facility (the “New Revolving Credit Facility”), which matures in February 2028.

At October 31, 2023, we had no outstanding borrowings under the New Revolving Credit Facility and had outstanding letters of credit of approximately $118.9 million.

At October 31, 2024, we had $1.30 billion of cash and cash equivalents and approximately $1.77 billion available for borrowing under our $1.955 billion revolving credit facility (the “Revolving Credit Facility”).

At October 31, 2024, we had no outstanding borrowings under the Revolving Credit Facility and had outstanding letters of credit of approximately $180.0 million.

At October 31, 2024, our total equity and our debt to total capitalization ratio were $7.69 billion and 0.27 to 1.00, respectively.

Our Business Environment and Current Outlook

Since January 2023, we have experienced solid demand for our homes as the housing market adjusted to a new environment following the steep and rapid rise in mortgage rates that occurred over the course of 2022.

Despite mortgage rates that remain elevated, the market for new homes has been supported by very low levels of resale inventory on the market, favorable demographic trends, and a supply-demand imbalance resulting from the underproduction of homes for over a decade.

In recent months, the 30-year fixed mortgage rate has declined from over 8.0% to approximately 7.25%, which we believe is also supportive of demand.

However, the direction of mortgage rates and the overall economy is uncertain, and the extent to which demand may improve, or remain at current levels, is unclear.

We believe we are well positioned to meet changing market conditions due to our strategies of expanding our product offerings, price points, and geographic footprint, balancing the mix of our built-to-order and quick move-in homes in inventory, and our focus on operational efficiency.

Over the long term, we continue to believe that the housing market will benefit from strong fundamentals, including demographic trends, the age of the existing housing stock, and an overall shortage of homes in the United States.

In addition, the disruptions in the supply chain for certain building materials and tightness in the labor market we experienced during the past two years have largely subsided, and our construction cycle times have improved.

Through fiscal 2024, demand for our homes remained solid despite geopolitical turmoil, continued inflationary pressures and mortgage rates that remained elevated compared to the prior decade.

Despite these conditions, the market for new homes, and in particular higher-end new homes, has continued to perform well.

We believe this is due to a variety of factors, including the very low levels of resale inventory on the market, favorable demographic trends that include first time millennial buyers who are acquiring homes later in life, and a continuation of a structural supply-demand imbalance that has resulted from underproduction of homes relative to population growth for well over a decade.

While home price appreciation and higher mortgage rates have made homes unaffordable for many entry-level buyers, our more affluent customer base has been less impacted by these trends.

We believe the favorable trends described above will continue to support demand for our homes for the foreseeable future.

However, historically the home building industry has been highly cyclical and there can be no guarantee that our business will not be disrupted by macroeconomic factors, such as negative impacts from inflation or mortgage rates that may trend higher.

Competitive Landscape

1 unchanged sentence

We compete with numerous home builders of varying sizes, ranging from local to national in scope, some of which have greater sales and financial resources than we do.

Sales of existing homes, whether by a homeowner or by a financial institution that may have acquired a home through a foreclosure, also provide competition.

Sales of existing homes, whether by a homeowner or by a financial institution that may have acquired a home through a foreclosure or otherwise, also provide competition.

We compete primarily based on price, location, design, quality, service, and reputation.

We believe our financial stability, relative to many others in our industry, provides us with a competitive advantage.

We believe our size and financial stability, relative to many others in our industry, provides us with a competitive advantage.

Land Acquisition and Development

2 unchanged sentences

controlling land for future development through options, which enables us to obtain necessary governmental approvals before acquiring title to the land;

commencing construction of a built-to-order home only after executing an agreement of sale and receiving a substantial down payment from the buyer;

commencing construction of a build-to-order home only after executing an agreement of sale and receiving a required down payment from the buyer;

and using subcontractors to perform home and amenity construction and land development work on a fixed-price basis.

During fiscal 2023 and 2022, we acquired control of approximately 4,200 and 5,700 home sites, respectively, net of options terminated and home sites sold.

During fiscal 2023 and 2022, we forfeited control of over 4,000 and 9,000 lots, respectively, subject to land purchase agreements primarily because the planned community no longer met our development criteria.

During fiscal 2024 and 2023, we acquired control of approximately 14,900 and 4,200 home sites, respectively, net of options terminated and land sales.

In each of fiscal 2024 and 2023 we forfeited control of approximately optioned 4,000 lots primarily because the planned community no longer met our development criteria.

At October 31, 2024, we controlled approximately 74,700 home sites, as compared to approximately 70,700 home sites at October 31, 2023, and approximately 76,000 home sites at October 31, 2022.

In addition, at October 31, 2023, we expect to purchase approximately 8,200 additional home sites from several Land Development Joint Ventures in which we have an interest, at prices not yet determined.

In addition, at October 31, 2024, we expected to purchase approximately 9,000 additional home sites from several Land Development Joint Ventures in which we have an interest, at prices to be determined.

Of the approximately 74,700 total home sites that we owned or controlled through options at October 31, 2024, we owned approximately 34,000 and controlled approximately 40,800 through options.

3 unchanged sentences

Customer Mortgage Financing

We maintain relationships with a diversified group of mortgage financial institutions, many of which are among the largest in the industry.

We maintain relationships with a diverse group of mortgage financial institutions, many of which are among the largest in the industry.

We believe that national, regional and community banks continue to recognize the long-term value in creating relationships with our home buyers, and these banks continue to provide these customers with financing.

We believe that our home buyers generally are, and should continue to be, well-positioned to secure mortgages due to their typically lower loan-to-value ratios and attractive credit profiles, as compared to the average home buyer.

We believe that our home buyers generally are, and will continue to be, well-positioned to secure mortgages due to their typically lower loan-to-value ratios and attractive credit profiles, as compared to the average home buyer.

Toll Brothers Apartment Living/Toll Brothers Campus Living

In addition to our residential for-sale business, we also develop and operate for-rent apartments generally through joint ventures.

At October 31, 2023, we or joint ventures in which we have an interest, controlled 44 land parcels that are planned as for-rent apartment projects containing approximately 22,200 units.

These projects, which are located in multiple metropolitan areas throughout the country, are being operated, are being developed, or will be developed with partners under the brand names Toll Brothers Apartment Living and Toll Brothers Campus Living.

In addition to our residential for-sale business, we also develop and in some cases operate for-rent apartments generally through joint ventures.

At October 31, 2024, we or joint ventures in which we have an interest, owned or controlled 67 land parcels that are planned, or being developed or operated, as for-rent apartment projects containing approximately 21,300 units.

projects, which are located in multiple metropolitan areas throughout the country, are being operated, are being developed, or will be developed with partners under the brand names Toll Brothers Apartment Living and Toll Brothers Campus Living.

Of these 21,300 units, 13,300 were owned by joint ventures in which we have an interest;

approximately 2,400 were owned by us;

and the land parcels underlying 5,600 units were under contract to be purchased by us.

At October 31, 2024, we had approximately 4,500 units in for-rent apartment projects that were occupied or ready for occupancy, 5,700 units in the lease-up stage, 6,500 units in the design phase or under development, and 4,700 units in the planning stage.

In fiscal 2024, three of our Rental Property Joint Ventures sold their assets or we sold a portion of our ownership interest to unrelated parties, resulting in aggregate gains of $176.1 million recognized by the joint ventures.

From our investments in these joint ventures we received cash and recognized our share of the gains of $24.1 million in fiscal 2024.

In fiscal 2023, two of our Rental Property Joint Ventures sold their assets to unrelated parties, resulting in aggregate gains of $106.2 million recognized by the joint ventures.

1 unchanged sentence

In addition, in fiscal 2023, we sold our ownership interest in one of our Rental Property Joint Ventures and recognized a gain of $16.0 million.

In fiscal 2022, one of our Rental Property Joint Ventures sold its assets to an unrelated party, resulting in a gain of $29.9 million recognized by the joint venture.

From our investment in this joint venture, we received cash and recognized a gain of $21.0 million in fiscal 2022.

The gains recognized from these sales are included in “Income from unconsolidated entities” in our Consolidated Statements of Operations and Comprehensive Income included in Item 15(a)1 of this Form 10-K.

At October 31, 2023, we had approximately 3,400 units in for-rent apartment projects that were occupied or ready for occupancy, 3,400 units in the lease-up stage, 9,900 units in the design phase or under development, and 5,500 units in the planning stage.

Of the 22,200 units at October 31, 2023, 14,500 were owned by joint ventures in which we have an interest;

approximately 1,800 were owned by us;

and 5,900 were under contract to be purchased by us.

Contracts and Backlog

The aggregate value of net sales contracts signed decreased 13% in fiscal 2023, as compared to fiscal 2022.

The aggregate value of net sales contracts signed increased 27% in fiscal 2024, as compared to fiscal 2023.

The value of net sales contracts signed was $10.07 billion (10,231 homes) in fiscal 2024 and $7.91 billion (8,077 homes) in fiscal 2023.

The decrease in the aggregate value of net contracts signed in fiscal 2023, as compared to fiscal 2022, was due to a 2% decrease in the number of net contracts signed and an 11% decrease in the average value of each contract signed.

The decrease in the number of net contracts signed in fiscal 2023, as compared to fiscal 2022, reflects an overall moderation in demand as compared to the first half of the prior fiscal year primarily due to increases in mortgage rates that commenced in 2022.

The decrease in average value attributed to each signed contracts signed in fiscal 2023 was principally due to a shift in the number of contracts signed to less expensive areas and/or products coupled with an increase in average sales incentives.

The increase in the aggregate value of net contracts signed in fiscal 2024, as compared to fiscal 2023, was due to a 27% increase in the number of net contracts signed.

The increase in the number of net contracts signed in fiscal 2024, as compared to fiscal 2023, reflects both solid demand and an increase in the average number of communities that we were selling from in 2024.

The average value attributed to each contract signed in fiscal 2024 was generally flat compared to those signed in fiscal 2023.

The average value attributed to each contract signed includes the value of each binding agreement of sale that was signed in the period, as well as the value of all options selected during the period, regardless of when the initial agreement of sale related to such options was signed.

12 unchanged sentences

We believe that the accounting estimates and assumptions described below involve significant subjectivity and judgment, and changes to such estimates or assumptions could have a material impact on our financial condition or operating results.

Therefore, we consider an understanding of the variability and

judgment required in making these estimates and assumptions to be critical in fully understanding and evaluating our reported financial results.

Therefore, we consider an understanding of the variability and judgment required in making these estimates and assumptions to be critical in fully understanding and evaluating our reported financial results.

We believe the following critical accounting estimates reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements.

19 unchanged sentences

We then further determine whether costs that have been capitalized to the community are recoverable or should be written off.

The write-off is charged to cost of home sales revenues in the period in which the need for the write-off is determined.

The write-off is charged to cost of revenues in the period in which the need for the write-off is determined.

The estimates used in the determination of the estimated cash flows and fair value of both current and future communities are based on factors known to us at the time such estimates are made and our expectations of future operations and economic conditions.

28 unchanged sentences

Adjustments to our warranty liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs.

Over the past decade, we have had a significant number of warranty claims related primarily to homes built in Pennsylvania and Delaware.

See Note 7, “Accrued Expenses” in Item 15(a)1 of this Form 10-K for additional information regarding these warranty charges.

Over the past decade, we have had a significant number of warranty claims related to water intrusion issues primarily impacting homes built in Pennsylvania and Delaware.

Our review process for these claims includes an analysis of many factors to determine the estimated costs to resolve such claims, including:

the closing dates of the homes;

the number of claims received;

our inspection of homes;

an estimate of the number of homes we expect to repair;

the type and cost of repairs that have been performed in each community;

the estimated costs to remediate pending and future claims;

and the previously recorded amounts related to these claims.

We also monitor legal developments relating to these types of claims and review the volume, relative merits and adjudication of claims in litigation or arbitration.

We have not made any material changes in our methodology or significant assumptions used to establish our warranty reserves during the past three fiscal years.

3 unchanged sentences

We also provide general liability insurance for our subcontractors in Arizona, California, Colorado, Nevada, Washington, and certain areas of Texas, where eligible subcontractors are enrolled as insureds under our general liability insurance policies in each community in which they perform work.

For those enrolled subcontractors, we absorb their general liability associated with the work performed on our homes within the

applicable community as part of our overall general liability insurance and our self-insurance through our captive insurance subsidiary.

For those enrolled subcontractors, we absorb their general liability associated with the work performed on our homes within the applicable community as part of our overall general liability insurance and our self-insurance through our captive insurance subsidiary.

We record expenses and liabilities based on the estimated costs required to cover our self-insured liability and the estimated costs of potential claims and claim adjustment expenses that are not covered by our insurance policies.

These estimated costs are based on an analysis of our historical claims and industry data, and include an estimate of claims incurred but not yet reported (“IBNR”).

We engage a third-party actuary that uses our historical claim and expense data, input from our internal legal and risk management groups, as well as industry data, to estimate our liabilities related to unpaid claims, IBNR associated with the risks that we are assuming for our self-insured liability and other required costs to administer current and expected claims.

We engage a third-party actuary that uses our historical claim and expense data, input from our internal legal and risk management groups, as well as industry data, to estimate our liabilities, on an undiscounted basis, related to unpaid claims, IBNR associated with the risks that we are assuming for our self-insured liability and other required costs to administer current and expected claims.

These estimates are subject to uncertainty due to a variety of factors, the most significant being the long period of time between the delivery of a home to a home buyer and when a structural warranty or construction defect claim is made, and the ultimate resolution of the claim.

10 unchanged sentences

We evaluate our investments in unconsolidated entities for indicators of impairment on a quarterly basis.

A series of 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.

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 to determine if the loss is other than temporary, in which case we write down the investment to its estimated fair value.

2 unchanged sentences

(1) projected future distributions from the unconsolidated entities, (2) discount rates applied to the future distributions and (3) various other factors.

For our unconsolidated entities that develop for-sale homes and condominiums these other factors include those that are similar to how we evaluate our inventory for impairment as described above, such as expected sales pace, expected sales price, and costs incurred and anticipated.

For our unconsolidated entities that own, develop and manage for-rent residential apartments, these other factors may include rental trends, expected future expenses and cap rates.

Our assumptions on the projected future distributions from unconsolidated entities are also dependent on market conditions, sufficiency of financing and capital and competition.

Our assumptions on the projected future distributions from unconsolidated entities are also dependent on market conditions, sufficiency of financing and capital, competition, and anticipation of cash receipts.

We believe our assumptions on discount rates require significant judgment because the selection of the discount rate may significantly impact the estimated fair value of our investments in unconsolidated entities.

16 unchanged sentences

Income from operations 2,040.2 1,724.8 18 %

Income from unconsolidated entities 50.1 23.7 111 %

(Loss) income from unconsolidated entities (23.8) 50.1 (148) %

Other income - net 69.3 67.5 3 %

23 unchanged sentences

Home Sales Revenues and Home Sales Cost of Revenues

The increase in home sales revenues in fiscal 2023, as compared to fiscal 2022, was attributable to an 11% increase in the average price of the homes delivered, offset, in part, by a 9% decrease in the number of homes delivered.

The increase in the average delivered home price was mainly due to our ability to raise prices in certain communities as well as an increase in homes delivered in more expensive product types/geographic regions.

The decrease in the number of homes delivered in fiscal 2023, as compared to fiscal 2022, is principally due to a decrease in the number of homes in backlog at October 31, 2022, as compared to the number of homes in backlog at October 31, 2021, offset, in part, by higher backlog conversion and an increase in the number of quick move-in homes delivered in fiscal 2023.

The increase in home sales revenues in fiscal 2024, as compared to fiscal 2023, was attributable to a 13% increase in the number of homes delivered, offset, in part, by a 5% decrease in the average price of homes delivered.

The increase in the number of homes delivered in fiscal 2024, as compared to fiscal 2023, was principally due to higher backlog conversion and an increase in the number of spec homes delivered in fiscal 2024, offset, in part, by a decrease in the number of homes in backlog at October 31, 2023, as compared to the number of homes in backlog at October 31, 2022.

The decrease in the average delivered home price was mainly due to increase in homes delivered in less expensive product types/geographic regions.

Home sales cost of revenues, as a percentage of homes sales revenues, in fiscal 2024 was 73.4%, as compared to 73.1% in fiscal 2023.

The decrease in fiscal 2023 was principally due to a shift in the mix of revenues to higher margin products/areas, sales price increases outpacing cost increases, and lower interest expense as a percentage of home sales revenues.

Interest cost in fiscal 2023 was $139.4 million or 1.4% of home sales revenues, as compared to $164.8 million or 1.7% of home sales revenues in fiscal 2022.

The increase in fiscal 2024 was principally due to a shift in the mix of revenues to lower margin products/areas and increased inventory impairment charges, offset, in part, by lower interest expense as a percentage of home sales revenues.

We recognized inventory impairments and write-offs of $59.4 million, or 0.6% of home sales revenues, and $30.7 million, or 0.3% of home sales revenues, in fiscal 2024 and fiscal 2023, respectively.

Interest cost in fiscal 2024 was $129.0 million, or 1.2% of home sales revenues, as compared to $139.4 million, or 1.4% of home sales revenues in fiscal 2023.

Land Sales and Other Revenues and Land Sales and Other Cost of Revenues

3 unchanged sentences

(3) bulk land 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.

In fiscal 2023, we sold three land parcels to newly formed Rental Property Joint Ventures in which we have an interest for approximately $44.2 million.

In fiscal 2022, we sold nine land parcels to newly formed Rental Property Joint Ventures in which we have an interest for approximately $322.3 million.

Minimal gains were recognized on these land sales to joint ventures.

During fiscal 2023, we recorded impairment charges of $30.6 million in connection with planned land sales.

In fiscal 2022, we recorded an impairment charge of $6.8 million related to office space associated with certain Hoboken, New Jersey condominium projects in connection with a planned sale.

The increase in land sales and other cost of revenues as a percentage of land sales and other revenues in fiscal 2024 compared to fiscal 2023 was primarily due to the sale of a single land parcel to a commercial developer in our second quarter for net cash proceeds of $180.7 million, which resulted in a pre-tax gain of $175.2 million.

In addition, we incurred lower impairment charges in fiscal 2024.

We recognized $4.4 million of impairment charges in fiscal 2024 in connection with planned land sales.

This compares to $30.6 million of land sales and other impairment charges recognized in fiscal 2023.

Selling, General and Administrative Expenses (“SG&A”)

SG&A spending decreased by $68.3 million in fiscal 2023, as compared to fiscal 2022.

SG&A spending increased by $72.8 million in fiscal 2024, as compared to fiscal 2023.

As a percentage of home sales revenues, SG&A was 9.3% and 9.2% in fiscal 2024 and 2023, respectively.

The dollar decrease in SG&A was primarily due to lower headcount and lower variable selling expense on a decreased number of homes delivered in fiscal 2023.

In addition, fiscal 2022 includes a $10.0 million charge for a charitable contribution made to the Toll Brothers Foundation.

The decrease in SG&A, as a percentage of home sales revenues, was primarily due to improved fixed cost leverage on lower headcount and reduced commission rates in fiscal 2023, as compared to fiscal 2022.

The dollar increase in SG&A was primarily due to an increase in variable spending such as selling expenses associated with increased home sales revenues.

The increase in SG&A as a percentage of home sales revenues was primarily due to general cost inflation.

Income from Unconsolidated Entities

2 unchanged sentences

Once development is complete for land development projects and high-rise/mid-rise condominium construction projects, these unconsolidated entities will generally, over a relatively short period of time, generate revenues and earnings until all of the assets of the entity are sold.

Further, once for-rent apartments and for-rent single-family home projects are complete and stabilized, we may monetize a portion of these projects through a recapitalization or a sale of all or a portion of our ownership interest in the joint venture, resulting in an income-producing event.

Because of the long development periods associated with these entities, the earnings recognized from these entities may vary significantly from quarter to quarter and year to year.

Further, once for-rent apartments and for-rent single-family home projects are complete and stabilized, we often monetize a portion of these projects through a recapitalization or a sale of all or a portion of our ownership interest in the joint venture, resulting in an income-producing event.

Because of the long development periods associated with these projects, the earnings recognized from these entities may vary significantly from quarter to quarter and year to year.

For our Rental Property Joint Ventures specifically, these entities typically generate operating losses until the related property reaches stabilization.

For the fiscal years 2023 and 2022, our earnings related to the Rental Property Joint Ventures include approximately $32.9 million and $17.5 million of our share of net operating losses incurred by these joint ventures, respectively, of which approximately $26.1 million and $21.7 million was our share of the depreciation expense recognized by these joint ventures, respectively.

The increase in income from unconsolidated entities to $50.1 million in fiscal 2023 from $23.7 million in fiscal 2022, was mainly due to $50.9 million of gains recognized related to property sales by two of our Rental Property Joint Ventures and a $16.0 million gain recognized as the result of the sale of our ownership interest in one of our Rental Property Joint Ventures in fiscal 2023.

In the fiscal 2022 period, we recognized a $21.0 million gain related to a property sale by one of our Rental Property Joint Ventures, lower losses from our Rental Property Joint Ventures of approximately $14.2 million and increased earnings of approximately $7.2 million from our Land Development Joint Ventures due to lot sales.

In addition, during the fiscal 2022 period, we recognized an other-than-temporary impairment charge on one of our investments in a Rental Property Joint Venture of $8.0 million.

There were no similar other-than-temporary impairment charges in the fiscal 2023 period.

For the fiscal years 2024 and 2023, our earnings related to the Rental Property Joint Ventures include approximately $50.3 million and $32.9 million, respectively, of our share of net operating losses incurred by these joint ventures, of which approximately $29.8 million and $26.1 million, respectively, was our share of the depreciation expense recognized by these joint ventures.

We recognized a loss from unconsolidated entities of $23.8 million in fiscal 2024, as compared to income of $50.1 million in fiscal 2023.

This decrease was mainly due to $50.9 million of gains recognized in fiscal 2023 related to property sales compared to $24.1 million of such gains in fiscal 2024.

We also recognized a $16.0 million gain as the result of the sale of our ownership interest in a Rental Property Joint Venture in fiscal 2023.

No similar sales occurred in fiscal 2024.

Fiscal 2024 was

also impacted by higher losses incurred by various Rental Property Joint Ventures, reduced income at one Home Building Joint Venture due to its underlying assets being sold out, lower earnings from a Land Development Joint Venture due to reduced sales volume, and an increase in other-than-temporary impairment charges recognized.

We recognized other-than-temporary impairment charges in fiscal 2024 of $6.6 million related to two investments in Rental Property Joint Ventures.

No similar impairment charges were recognized in fiscal 2023.

Other Income - Net

7 unchanged sentences

$ 69,296 $ 67,518

The increase in interest income in fiscal 2023, as compared to fiscal 2022, was primarily due to higher interest rates.

The decrease in income from ancillary businesses in fiscal 2023, as compared to fiscal 2022, was principally due to lower earnings from our mortgage operations due to lower volume and increased competition, as well as higher operating losses incurred in our apartment living operations.

In addition, fiscal 2022 included a gain of $9.0 million related to the bulk sale of security monitoring accounts by our smart home technologies business.

This was offset by higher income generated in fiscal 2023 from our high-rise urban luxury condominium business operations principally due to property sales of approximately $4.0 million.

In fiscal 2023 and fiscal 2022, we also recognized $8.4 million and $0.3 million of write-offs related to previously incurred costs that we believed not to be recoverable in our apartment rental development business operations, respectively.

In fiscal 2023, income from ancillary businesses included management fees earned on our apartment rental development, high-rise urban luxury condominium, and Gibraltar unconsolidated entities and operations totaling $34.7 million.

In fiscal 2022, income from ancillary businesses included management fees earned on our apartment rental development and Gibraltar unconsolidated entities and operations totaling $25.9 million.

Prior to fiscal 2023, management fees earned on our high-rise luxury condominium unconsolidated entities were included in “Management fees earned by home building operations” above.

Management fee income earned by home building operations includes fees earned by our high-rise urban luxury condominium business and home building operations.

The increase in fiscal 2023, as compared to fiscal 2022, was primarily related to a decrease in Joint Ventures to which we provide services.

In fiscal 2022, we entered into a $192.5 million settlement agreement with Southern California Gas Company to resolve our claims associated with a natural gas leak that occurred from October 2015 through February 2016 at the Aliso Canyon underground storage facility located near certain of our communities in southern California.

As a result, net of legal fees and expenses, we recorded a pre-tax gain of $148.4 million, of which $141.2 million was recorded in Other Income - net in our Consolidated Statements of Operations and Comprehensive Income in fiscal 2022.

The remainder was recorded as an offset to previously incurred expenses.

The gain on litigation settlements - net in fiscal 2023 primarily relates to the settlement of an insurance claim.

The increase in income from ancillary businesses in fiscal 2024, as compared to fiscal 2023, was principally due to higher earnings from our mortgage and title operations due to increased closing volume and a $4.4 million gain from a bulk sale of security monitoring accounts by our smart home technology business, offset, in part, by higher operating losses incurred in our apartment living operations.

In fiscal 2024 and fiscal 2023, we also recognized $8.9 million and $8.4 million, respectively, of write-offs related to previously incurred costs that we believed not to be recoverable in our apartment living operations.

In fiscal 2024 and 2023, income from ancillary businesses included management fees earned on our apartment rental development, high-rise urban luxury condominium, and other unconsolidated entities and operations totaling $35.7 million and $34.7 million, respectively.

In fiscal 2023, the gain on litigation settlements - net primarily related to the settlement of an insurance claim.

The increase in “other” in fiscal 2024 was principally due to a $5.0 million gain related to an investment we held in a privately held company that sold substantially all of its assets to a third party during the year.

Income Before Income Taxes

3 unchanged sentences

Based upon the federal statutory rate of 21.0% for fiscal 2024, our federal tax provision would have been $438.0 million.

stock-based compensation, $2.8 million of other permanent differences, and a $2.3 million benefit of federal energy efficient home credits.

The difference between the tax provision recognized and the tax provision based on the federal statutory rate was mainly due to the provision for state income taxes of $103.9 million, $2.7 million of other permanent differences, and a $2.6 million increase in unrecognized tax benefits, offset, in part, by a benefit of $17.5 million from excess tax benefits related to stock-based compensation, $2.1 million of reversal of accruals for uncertain tax positions and $13.0 million of miscellaneous and other deferred tax adjustments.

We recognized a $470.3 million income tax provision in fiscal 2023.

Based upon the federal statutory rate of 21.0% for fiscal 2023, our federal tax provision would have been $386.9 million.

The difference between the tax provision recognized and the tax provision based on the federal statutory rate was mainly due to the provision for state income taxes of $75.5 million and $4.4 million of other permanent differences, offset, in part, by a $22.2 million benefit of federal energy efficient home credits;

a benefit of $3.0 million from excess tax benefits related to stock-based compensation;

and the reversal of $1.7 million of previously accrued tax provisions on uncertain tax positions that were no longer necessary due to the expiration of the statute of limitations.

The difference between the tax provision recognized and the tax provision based on the federal statutory rate was mainly due to the provision for state income taxes of $90.7 million and a $2.2 million increase in unrecognized tax benefits, offset, in part, by a benefit of $7.3 million from excess tax benefits related to stock-based compensation, $2.8 million of other permanent differences, and a $2.3 million benefit of federal energy efficient home credits.

CAPITAL RESOURCES AND LIQUIDITY

1 unchanged sentence

Our cash flows from operations generally provide us with a significant source of liquidity.

Our cash flows provided by operating activities, supplemented with our short-term borrowings and long-term debt, have been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our Company.

Our cash flows provided by operating activities, supplemented with our short-term borrowings and long-term debt, have been sufficient to fund our

operations while allowing us to invest in activities that support the long-term growth of our Company.

Our primary uses of cash include inventory additions in the form of land acquisitions and deposits to obtain control of land, land development, working capital to fund day-to-day operations, and investments in existing and future unconsolidated joint ventures.

We may also use cash to fund capital expenditures such as investments in our information technology systems.

From time to time we use some or all of the remaining available cash flow to repay debt, and to fund share repurchases and dividends on our common stock.

We also use cash to pay dividends on our common stock, to repay debt and make share repurchases.

We believe our sources of cash and liquidity will continue to be adequate to fund operations, finance our strategic operating initiatives, repay debt, fund our share repurchases and pay dividends for the foreseeable future.

At October 31, 2024, we had $1.30 billion of cash and cash equivalents on hand and approximately $1.77 billion available for borrowing under our Revolving Credit Facility.

On February 14, 2023, we entered into a $1.905 billion New Revolving Credit Facility with a syndicate of banks that is scheduled to mature on February 14, 2028.

The New Revolving Credit Facility replaced the prior $1.905 billion revolving credit facility, which was terminated in connection with the execution of the new agreement.

The New Revolving Credit Facility provides us with a committed borrowing capacity of $1.905 billion, which we have the ability to increase up to $3.0 billion with the consent of lenders.

The terms of the New Revolving Credit Facility are substantially the same as the prior agreement, except that the LIBOR-based interest rate provisions have been replaced with SOFR-based provisions.

The Revolving Credit Facility provides us with a committed borrowing capacity of $1.955 billion, which we have the ability to increase up to $3.00 billion with the consent of lenders, and is scheduled to mature on February 14, 2028.

Toll Brothers, Inc.

and substantially all of its 100%-owned home building subsidiaries are guarantors of the borrower’s obligations under the New Revolving Credit Facility.

Also on February 14, 2023, we entered into an amendment to the Term Loan Facility to extend the maturity date of $487.5 million of outstanding term loans to February 14, 2028, with $60.9 million due on November 1, 2026 and the remaining $101.6 million due on November 1, 2025.

and substantially all of its 100%-owned home building subsidiaries are guarantors of the borrower’s obligations under the Revolving Credit Facility.

We are also a party to a $650.0 million unsecured Term Loan Facility, of which $487.5 million matures February 14, 2028, $101.6 million matures on November 1, 2025 and the remaining $60.9 million matures on November 1, 2026.

Short-term Liquidity and Capital Resources

For at least the next twelve months, we expect our principal demand for funds will be for inventory additions (in the form of land acquisition, land development, home construction costs, and deposits to control land), operating expenses, including our general and administrative expenses, investments and funding of capital improvements, investments in existing and future unconsolidated joint ventures, community level debt repayment, common stock repurchases, and dividend payments.

In fiscal 2025, we expect our principal demand for funds will be for inventory additions (in the form of land acquisition, land development, home construction costs, and deposits to control land, which could occur directly or indirectly through builder acquisitions), operating expenses, including our general and administrative expenses, investments and funding of capital improvements, investments in existing and future unconsolidated joint ventures, repayment of community level debt, common stock repurchases, and dividend payments.

Demand for funds include interest and principal payments on current and future debt financing.

We expect to meet our short-term liquidity requirements primarily through our cash and cash equivalents on hand and net cash flows provided by operations.

Additional sources of funds include distributions from our unconsolidated joint ventures, borrowing capacity under our New Revolving Credit Facility and borrowings from banks and other lenders.

Additional sources of funds include distributions from our unconsolidated joint ventures, borrowing capacity under our Revolving Credit Facility and borrowings from banks and other lenders.

We believe we will have sufficient liquidity available to fund our business needs, commitments and contractual obligations in a timely manner for the next twelve months.

1 unchanged sentence

Long-term Liquidity and Capital Resources

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 matures, land purchases and inventory additions needed to grow our business, long-term capital investments and investments in unconsolidated joint ventures, common stock repurchases, and dividend payments.

Over the longer term, to the extent the sources of capital described above are insufficient to meet our needs, we may also conduct additional public offerings of our securities, refinance debt or dispose of certain assets to fund our operating activities

and debt service.

Beyond fiscal 2025, our principal demands for funds will be for the payments of the principal amount of our long-term debt as it becomes due or matures, land purchases and inventory additions needed to grow our business, long-term capital investments and investments in unconsolidated joint ventures, common stock repurchases, and dividend payments.

We expect these resources will be adequate to fund our ongoing operating activities as well as provide capital for investment in future land purchases and related development activities and future joint ventures.

7 unchanged sentences

We also operate through a number of joint ventures and have undertaken various commitments as a result of those arrangements.

At October 31, 2023, we had investments in these entities of $959.0 million, and were committed to invest or advance up to an additional $400.8 million to these entities if they require additional funding.

At October 31, 2023, we had agreed to terms for the acquisition of 332 home sites from three joint ventures for an estimated aggregate purchase price of $31.5 million.

At October 31, 2024, we had investments in these entities of $1.01 billion, and were committed to invest or advance up to an additional $312.8 million to these entities if they require additional funding.

At October 31, 2024, we had agreed to terms for the acquisition of 316 home sites from four joint ventures for an estimated aggregate purchase price of $26.8

In addition, we expect to purchase approximately 9,000 additional home sites over a number of years from several joint ventures in which we have interests.

6 unchanged sentences

(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.

(iv) environmental indemnities provided to lenders that holds them harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws;

and (v) indemnifications of lenders from “bad boy acts” of the unconsolidated entity.

In these 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;

1 unchanged sentence

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 October 31, 2023, 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.

We believe that, as of October 31, 2024, in the event we had 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.

9 unchanged sentences

As of October 31, 2024, we were in compliance with all such covenants and requirements on our term loan, credit facility and other loans payable.

Refer to Note 6, “Loans Payable, Senior Notes, and Mortgage Company

Loan Facility” in the Notes to the Consolidated Financial Statements in Item 15(a)1 of this Form 10-K for additional information.

Refer to Note 6, “Loans Payable, Senior Notes, and Mortgage Company Loan Facility” in the Notes to the Consolidated Financial Statements in Item 15(a)1 of this Form 10-K for additional information.

Operating Activities

2 unchanged sentences

(1) $1.57 billion of net income plus the following non-cash activities:

$76.5 million of depreciation and amortization, $69.5 million of impairments and write-offs, $24.8 million of stock-based compensation, $38.3 million of cash received, net of income earned, from unconsolidated entities;

and a net deferred tax benefit of $36.2 million and (2) $78.9 million in mortgage loan sales, net of originations.

$81.2 million of depreciation and amortization, a net deferred tax benefit of $80.3 million, $72.8 million of impairments and write-offs, $29.6 million of stock-based compensation, $23.8 million of losses from unconsolidated entities;

and (2) $39.3 million of distributions received from unconsolidated entities and $31.9 million in current income taxes, net.

This activity was offset, in part, by an increase of $575.7 million in inventory, a decrease of $77.2 million in net customer deposits;

$78.5 million in mortgage loan originations, net of sales, and a decrease of $21.8 million in accounts payable and accrued expenses.

Cash provided by operating activities during fiscal 2023 was $1.27 billion.

Cash provided by operating activities was generated primarily from:

(1) $1.37 billion of net income plus the following non-cash activities:

$76.5 million of depreciation and amortization, $69.5 million of impairments and write-offs, $24.8 million of stock-based compensation, $50.1 million of income earned from unconsolidated entities;

and a net deferred tax expense of $36.2 million and (2) $88.4 million of distributions received from unconsolidated entities and $78.9 million in mortgage loan sales, net of originations.

This activity was offset, in part, by a decrease of $162.6 million in current income taxes, net;

3 unchanged sentences

and an increase of $22.2 million in inventory.

Cash provided by operating activities during fiscal 2022 was $986.8 million.

Cash provided by operating activities was generated primarily from:

(1) $1.29 billion of net income plus the following non-cash activities:

$76.8 million of depreciation and amortization, $39.5 million of impairments and write-offs, $21.1 million of stock-based compensation, $8.6 million of cash received, net of income earned, from unconsolidated entities;

offset by a net deferred tax benefit of $96.7 million and (2) an increase of $152.5 million in accounts payable and accrued expenses;

an increase of $160.5 million in current income taxes, net;

and an increase of $50.7 million in mortgage loan sales, net of originations.

This activity was offset, in part, by an increase of $618.8 million in inventory, and a decrease of $95.0 million in receivables, prepaid assets, and other assets.

Investing Activities

Cash used in investing activities during fiscal 2024 was $167.6 million, primarily related to $193.2 million used to fund our investments in unconsolidated entities and $73.6 million for the purchase of property and equipment.

This activity was offset, in part, by $112.7 million of cash received as returns from our investments in unconsolidated entities and $26.0 million of cash proceeds from the sale of assets, including ownership interests in unconsolidated entities.

This activity was offset, in part, by $101.4 million of cash received as returns from our investments in unconsolidated entities.

Cash used in investing activities during fiscal 2023 was $150.6 million, primarily related to $216.4 million used to fund our investments in unconsolidated entities and $73.0 million for the purchase of property and equipment.

This activity was offset, in part, by $116.8 million of cash received as returns from our investments in unconsolidated entities and $28.3 million of cash proceeds from the sale of assets.

Financing Activities

We used $1.17 billion of cash from financing activities in fiscal 2023, primarily for the repurchase of $561.6 million of our common stock;

the redemption of $400.0 million of senior notes;

We used $816.5 million of cash from financing activities in fiscal 2024, primarily for the repurchase of $627.1 million of our common stock;

payments of $100.1 million of loans payable, net of new borrowings;

the payment of dividends on our common stock of $91.1 million and $5.4 million of payments for debt issuance costs.

and the payment of dividends on our common stock of $93.4 million.

This activity was offset by $4.1 million of proceeds from stock-based benefit plans.

2 unchanged sentences

payments of $160.3 million of loans payable, net of new borrowings;

the payment of dividends on our common stock of $88.9 million and payments related to noncontrolling interest - net of $25.8 million.

the payment of dividends on our common stock of $91.1 million and $5.4 million of payments for debt issuance costs.

This activity was offset by $48.3 million of proceeds from stock-based benefit plans.

The long-term impact of inflation on us is manifested in increased costs for land, land development, construction, and overhead.

1 unchanged sentence

Accordingly, to the extent land acquisition costs are fixed, subsequent increases or decreases in the sales prices of homes will affect our profits.

Because the sales price of each of our homes is fixed at the time a buyer enters into a contract to purchase a home and because we contract to sell a majority of our homes before we begin construction, any inflation of costs in excess of those anticipated may result in lower gross margins.

Because the sales price of each of our homes is fixed at the time a buyer enters into a contract to purchase a home and because we contract to sell a substantial number of our homes before we begin construction, any inflation of costs in excess of those anticipated would likely result in lower gross margins for these homes.

We generally attempt to minimize that effect by entering into fixed-price contracts with our subcontractors and material suppliers for specified periods of time, which generally do not exceed one year.

In general, housing demand is adversely affected by increases in interest rates and housing costs.

In general, housing demand is adversely affected by increases in interest rates and other housing costs.

Additionally, interest rates, the length of time that land remains in inventory, and the proportion of inventory that is financed affect our interest costs.

1 unchanged sentence

Increases in sales prices, whether the result of inflation or demand, may affect the ability of prospective buyers to afford new homes.

See “Risk Factors — Risks Related to Our Business and Industry - Significant inflation, higher interest rates or deflation could adversely affect our business and financial results” in Item 1A of this Form 10-K.

SUPPLEMENTAL GUARANTOR INFORMATION

11 unchanged sentences

The obligations of the Guarantors under their guarantees will be limited as necessary to recognize certain defenses generally available to guarantors (including those that relate to fraudulent conveyance or transfer, voidable preference or similar laws affecting the rights of creditors generally) under applicable law.

The indentures under which the Senior Notes were issued provide that any of our subsidiaries that provide a guarantee of our obligations under the New Revolving Credit Facility will guarantee the Senior Notes.

The indentures under which the Senior Notes were issued provide that any of our subsidiaries that provide a guarantee of our obligations under the Revolving Credit Facility will guarantee the Senior Notes.

The indentures further provide that any Guarantor Subsidiary may be released from its guarantee so long as (i) no default or event of default exists or would result from release of such guarantee;

2 unchanged sentences

(iv) such release would not have a material adverse effect on ours and our subsidiaries’ home building business;

and (v) the Guarantor Subsidiary is released from its guaranty under the New Revolving Credit Facility.

If there are no guarantors under the New Revolving Credit Facility, all Guarantor Subsidiaries under the indentures will be released from their guarantees.

and (v) the Guarantor Subsidiary is released from its guaranty under the Revolving Credit Facility.

If there are no guarantors under the Revolving Credit Facility, all Guarantor Subsidiaries under the indentures will be released from their guarantees.

The following summarized financial information is presented for Toll Brothers, Inc., the Subsidiary Issuer, and the Guarantor Subsidiaries on a combined basis after intercompany transactions and balances have been eliminated among Toll Brothers, Inc., the Subsidiary Issuer and the Guarantor Subsidiaries, as well as their investment in, and equity in earnings from the Non-Guarantor Subsidiaries.

17 unchanged sentences

Net income $ 1,543.3

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

Eastern Region:

During fiscal 2024 and 2023, we operated in five geographic segments, with operations generally located in the states listed below:

• The North region:

4 unchanged sentences

Florida, South Carolina and Texas

Western Region:

• The Mountain region:

3 unchanged sentences

Our geographic reporting segments are consistent with how our chief operating decision makers are assessing operating performance and allocating capital.

The following tables summarize information related to revenues, net contracts signed, and income (loss) before income taxes by segment for fiscal years 2023 and 2022.

The following tables summarize information related to revenues, net contracts signed, and

income (loss) before income taxes by segment for fiscal years 2024 and 2023.

Information related to backlog and assets by segment at October 31, 2024 and 2023 has also been provided.

52 unchanged sentences

income from certain of our ancillary businesses, including our apartment rental development business and our high-rise urban luxury condominium operations;

and income from our Rental Property Joint Ventures and Gibraltar Joint Ventures.

and income from our Rental Property Joint Ventures and Other Joint Ventures.

Total Assets ($ amounts in millions):

8 unchanged sentences

Total consolidated $ 13,367.9 $ 12,527.0

“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, our Gibraltar investments and operations, manufacturing facilities, our apartment rental development and high-rise urban luxury condominium operations, and our mortgage and title subsidiaries.

Due to rounding, amounts may not add.

“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.

A discussion and analysis regarding our Segments’ Results of Operations and Analysis of Financial Condition for the year ended October 31, 2023, as compared to the year ended October 31, 2022 is included in Part II, Item 7, “MD&A” to our Annual Report on Form 10-K for the fiscal year ended October 31, 2023, filed with the SEC on December 21, 2023.

17 unchanged sentences

Number of selling communities at October 31, 43 40 8 %

The decrease in the number of homes delivered in fiscal 2023 was mainly due to a decrease in the number of homes in backlog at October 31, 2022, as compared to the number of homes in backlog at October 31, 2021, partially offset by higher backlog conversion and an increase in the number of quick move-in homes delivered in fiscal 2023.

The increase in the average price of homes delivered in fiscal 2023 was principally due to sales price increases and a shift in the number of homes delivered to more expense areas and/or products.

The decrease in the number of net contracts signed in fiscal 2023, as compared to fiscal 2022, was principally due to a decrease in the number of selling communities, offset, in part, by an increase in demand in fiscal 2023.

The decrease in the average value of each contract signed in fiscal 2023, as compared to fiscal 2022, was mainly due to shifts in the number of contracts signed to less expensive areas and/or products and an increase in average sales incentives.

The decrease in income before income taxes in fiscal 2023 was principally attributable to lower earnings from decreased revenues and higher home sales cost of revenues, as a percentage of home sales revenues , partially offset by decreased variable SG&A spend on lower revenues.

The increase in home sales costs of revenues, as a percentage of home sale revenues, in fiscal 2023 was primarily due to a shift in product mix/areas to lower-margin areas, offset, in part, by lower interest costs as a percentage of home sales revenue and decreased inventory impairment charges.

Inventory impairment charges were $0.7 million in fiscal 2023, as compared to $11.9 million in fiscal 2022.

In fiscal 2022, we decided to sell a parcel in Philadelphia, Pennsylvania.

In connection with this planned sale, we recognized an inventory impairment charge of $10.3 million.

In addition, we recognized $15.6 million of land impairment charges, included in land sales and other cost of revenues in fiscal 2023 in connection with planned land sales compared to $6.8 million in fiscal 2022.

The decrease in the number of homes delivered in fiscal 2024, as compared to fiscal 2023, was mainly due to a decrease in the number of homes in backlog at October 31, 2023, as compared to the number of homes in backlog at October 31, 2022, offset, in part by a higher backlog conversion in fiscal 2024 and an increase in the number of spec homes delivered.

The increase in the average delivered price in fiscal 2024 was primarily due to a shift in the number of homes delivered to more expensive areas and/or products, as well as sales price increases.

The increase in the number of net contracts signed in fiscal 2024, as compared to fiscal 2023, was principally due to an increase in the number of selling communities in fiscal 2024.

The increase in the average value of each contract signed in the fiscal 2024 period was primarily due to a shift in the number of contracts signed to more expensive areas and/or products and a decrease in average sales incentives in fiscal 2024.

The increase in income before income taxes in fiscal 2024 was principally attributable to lower home sales cost of revenues, as a percentage of home sales revenues, and decreased SG&A spend, partially offset by lower income from unconsolidated entities.

The decrease in home sales costs of revenues, as a percentage of home sale revenues, in fiscal 2024 was primarily due to a shift in product mix/areas to higher-margin areas and lower interest expense as a percentage of home sales revenue.

The decrease in income from unconsolidated entities was principally due to one joint venture delivering its final home in fiscal 2023.

In addition, we recognized $15.6 million of land impairment charges in fiscal 2023 in connection with planned land sales.

No similar charges were recognized in fiscal 2024.

Year ended October 31,

13 unchanged sentences

Number of selling communities at October 31,

The decrease in the number of homes delivered in fiscal 2023, as compared to fiscal 2022, was mainly due to a decrease in the number of homes in backlog at October 31, 2022, as compared to the number of homes in backlog at October 31, 2021, partially offset by a higher backlog conversion and an increase in the number of quick move-in homes delivered in fiscal 2023.

The increase in the average delivered price in fiscal 2023 was primarily due a shift in the number of homes delivered to more expensive areas and/or products, as well as sales price increases.

The increase in the number of net contracts signed in fiscal 2023, as compared to fiscal 2022, was principally due to an increase in the number of selling communities coupled with an increase in demand in fiscal 2023.

The decrease in the average value of each contract signed in fiscal 2023 was primarily due to shifts in the number of contracts signed to less expensive areas and/or products, as well as an increase in average sales incentives in fiscal 2023.

The increase in income before income taxes in fiscal 2023, as compared to fiscal 2022, was mainly due to higher earnings from increased revenues, coupled with lower home sales costs of revenues, as a percentage of home sale revenues and lower SG&A spend.

The decrease in home sales costs of revenues, as a percentage of home sale revenues, in fiscal 2023 was primarily due to a shift in product mix/areas to higher-margin areas and lower interest costs as a percentage of home sales revenue, partially offset by higher inventory impairment charges.

The increase in the number of homes delivered in fiscal 2024, as compared to fiscal 2023, was mainly due to an increase in the number of homes in backlog at October 31, 2023, as compared to the number of homes in backlog at October 31, 2022, higher backlog conversion, and an increase in the number of spec homes delivered in fiscal 2024.

The decrease in the average price of homes delivered in fiscal 2024 was primarily due to a shift in the number of homes delivered to less expensive areas and/or products, as well as an increase in the number of spec homes delivered.

The increase in the number of net contracts signed in fiscal 2024, as compared to fiscal 2023, was principally due to an increase in the number of selling communities, partially offset by a modestly lower community sales pace.

The decrease in the average value of each contract signed in fiscal 2024 was mainly due to shifts in the number of contracts signed to less expensive areas and/or products and an increase in average sales incentives.

The increase in income before income taxes in fiscal 2024, as compared to fiscal 2023, was mainly due the sale of a land parcel to a commercial developer that resulted in a pre-tax gain of $175.2 million and higher earnings from increased revenues, offset, in part, with higher home sales costs of revenues, as a percentage of home sale revenues, and increased SG&A spend.

The increase in home sales costs of revenues, as a percentage of home sale revenues, in fiscal 2024 was primarily due to a shift in product mix/areas to lower-margin areas.

Inventory impairment charges were $15.2 million and $15.9 million in fiscal 2024 and 2023, respectively.

In addition, we recognized a $10.3 million land impairment charge, included in land sales and other cost of revenues in fiscal 2023 in connection with a planned land sale.

No similar charges were recognized in fiscal 2022.

In addition, in fiscal 2024 and 2023 we recognized $0.6 million and $10.3 million, respectively, in land impairment charges included in land sales and other cost of revenues in connection with planned land sales.

Year ended October 31,

14 unchanged sentences

Number of selling communities at October 31,

The increase in the number of homes delivered in fiscal 2023, as compared to fiscal 2022, was mainly due to a higher backlog conversion in fiscal 2023, an increase in the number of homes in backlog at October 31, 2022, as compared to the number of homes in backlog at October 31, 2021, and an increase in the number of quick move-in homes delivered.

The increase in the average delivered price in fiscal 2023 was primarily due to a shift in the number of homes delivered to more expensive areas and/or products, as well as sales price increases.

The increase in the number of net contracts signed in fiscal 2023, as compared to fiscal 2022, was principally due to an increase in the number of selling communities in fiscal 2023.

The decrease in the average value of each contract signed in the fiscal 2023 period was primarily due to a shift in the number of contracts signed to less expensive areas and/or products and an increase in average sales incentives in fiscal 2023.

The increase in the number of homes delivered in fiscal 2024, as compared to fiscal 2023, was mainly due to a higher backlog conversion and an increase in the number of spec homes delivered in fiscal 2024, partially offset by a decrease in the number of homes in backlog at October 31, 2023, as compared to the number of homes in backlog at October 31, 2022.

The slight decrease in the average price of homes delivered in fiscal 2024 was primarily due to a shift in the number of homes delivered to less expensive areas and/or products.

The increase in the number of net contracts signed in fiscal 2024, as compared to fiscal 2023, was principally due to an increase in the number of selling communities.

The increase in the average value of each contract signed in fiscal 2024 was mainly due to a shift in the number of contracts signed to more expensive areas, partially offset by an increase in average sales incentives.

The increase in income before income taxes in fiscal 2024, as compared to fiscal 2023, was principally due to higher earnings from increased home sales revenues and lower home sales costs of revenues, as a percentage of home sales revenues, offset, in part, by higher SG&A costs resulting from increased sales volume.

The decrease in home sales cost of revenues, as a percentage of home sales revenues, was mainly due to a shift in product mix/areas to higher-margin areas, lower interest costs as a percentage of home sales revenue and lower inventory impairment changes in fiscal 2023.

The decrease in home sales cost of revenues, as a percentage of home sales revenues, was mainly due to a shift in product mix/areas to higher-margin areas and lower interest expense as a percentage of home sales revenue, offset by higher inventory impairment changes in fiscal 2024.

Inventory impairment charges were $3.4 million and $1.8 million in fiscal 2024 and 2023, respectively.

15 unchanged sentences

Number of selling communities at October 31,

The decrease in the number of homes delivered in fiscal 2023, as compared to fiscal 2022, was mainly due to a decrease in the number of homes in backlog at October 31, 2022, as compared to the number of homes in backlog at October 31, 2021, partially offset by higher backlog conversion and an increase in the number of quick move-in homes delivered in fiscal 2023.

The increase in the average price of homes delivered in fiscal 2023 was primarily due to a shift in the number of homes delivered to more expensive areas and/or products and sales price increases.

The decrease in the number of net contracts signed in fiscal 2023, as compared to fiscal 2022, was principally due to a weakening in demand in fiscal 2023, offset, in part, by an increase in the number of selling communities.

The decrease in the average value of each contract signed in fiscal 2023 was mainly due to shifts in the number of contracts signed to less expensive areas and/or products and an increase in average sales incentives.

The increase in income before income taxes in fiscal 2023, as compared to fiscal 2022, was mainly due lower home sales cost of revenues, as a percentage of home sales revenues, and reduced SG&A resulting from decreased volume.

The decrease in home sales cost of revenues, as a percentage of home sales revenues, was primarily due to a shift in product mix/areas to higher-margin areas, partially offset by higher interest costs and inventory impairment charges.

117 120 (3) %

The increase in the number of homes delivered in fiscal 2024, as compared to fiscal 2023, was mainly due to higher backlog conversion and an increase in the number of spec homes delivered in fiscal 2024, partially offset by a decrease in the number of

homes in backlog at October 31, 2023, as compared to the number of homes in backlog at October 31, 2022.

The decrease in the average price of homes delivered in fiscal 2024 was primarily due to a shift in the number of homes delivered to less expensive areas or product types.

The increase in the number of net contracts signed in fiscal 2024, as compared to fiscal 2023, was principally due to improved demand in fiscal 2024, offset, in part, by a decrease in the number of selling communities.

The increase in the average value of each contract signed in fiscal 2024 was mainly due to shifts in the number of contracts signed to more expensive areas and/or products, partially offset by an increase in average sales incentives.

The decrease in income before income taxes in fiscal 2024, as compared to fiscal 2023, was mainly due lower earnings from decreased revenues, higher home sales cost of revenues, as a percentage of home sales revenues, and increased SG&A spend, partially offset by higher earnings from land sales and other revenues.

The increase in home sales cost of revenues, as a percentage of home sales revenues, was primarily due to a shift in product mix/areas to lower-margin areas and lower interest expense as a percentage of home sales revenues, and higher inventory impairment charges.

Inventory impairment charges were $26.0 million and $5.7 million in fiscal 2024 and 2023, respectively.

15 unchanged sentences

Number of selling communities at October 31,

The decrease in the number of homes delivered in fiscal 2023, as compared to fiscal 2022, was mainly due to a decrease in the number of homes in backlog at October 31, 2022, as compared to the number of homes in backlog at October 31, 2021, partially offset by higher backlog conversion and an increase in the number of quick move-in homes delivered in fiscal 2023.

The increase in the average price of homes delivered in fiscal 2023 was primarily due to increases in sales prices.

The decrease in the number of net contracts signed in fiscal 2023, as compared to fiscal 2022, was principally due to a weakening in demand in fiscal 2023, partially offset by an increase in the number of selling communities.

The decrease in the average value of each contract signed in fiscal 2023 was mainly due to a shift in the number of contracts signed in less expensive areas and an increase in average sales incentives.

The increase in income before income taxes in fiscal 2023, as compared to fiscal 2022, was primarily due to lower home sales cost of revenues, as a percentage of home sales revenues, and reduced SG&A resulting from decreased volume.

The decrease in home sales cost of revenues, as a percentage of home sales revenues, was primarily due to a shift in product mix/areas to higher-margin areas, lower interest costs and a decrease in inventory impairment charges.

The decrease in the average price of homes delivered in fiscal 2024 was primarily due to higher sales incentives and a shift in the number of homes delivered to less expensive areas and/or product types.

The increase in the number of net contracts signed in fiscal 2024, as compared to fiscal 2023, was principally due to an increase in demand in fiscal 2024, partially offset by an decrease in the number of selling communities.

The decrease in the average value of each contract signed in fiscal 2024 was mainly due to a shift in the number of contracts signed in less expensive areas or product types, offset, in part, by a decrease in average sale incentives.

The decrease in income before income taxes in fiscal 2024, as compared to fiscal 2023, was primarily due to lower earnings from decreased revenues and higher home sales cost of revenues, as a percentage of home sales revenues.

The increase in home sales cost of revenues, as a percentage of home sales revenues, was primarily due to a shift in product mix/areas to lower-margin areas and an increase in inventory impairment charges, partially offset by lower interest expense as a percentage of home sales revenues.

Inventory impairment charges were $13.7 million and $6.7 million in fiscal 2024 and 2023, respectively.

During the fourth quarter of fiscal 2022, we decided to sell a land parcel in California.

In connection with this planned sale, we recognized an impairment charge of $5.6 million.

In addition, we recognized a $2.2 million land impairment charge, included in land sales and other cost of revenues in fiscal 2023 in connection with a planned land sale.

In addition, we recognized a $2.2 million impairment charge in land sales and other cost of revenues in fiscal 2023 in connection with a planned land sale.

No similar charges were recognized in fiscal 2024.

1 unchanged sentence

In fiscal 2024 and 2023, loss before income taxes was $204.6 million and $142.4 million respectively.

The increase in the loss before income taxes in fiscal 2023 was principally attributable to a favorable litigation settlement in fiscal 2022.

As a result of the settlement, net of legal fees and expenses, we recorded a pre-tax gain of $148.4 million, of which $141.2 million was recorded in Other Income - net in our Consolidated Statements of Operations and Comprehensive Income in fiscal 2022.

The remainder was recorded as an offset to previously incurred expenses.

Coincident with this settlement, we made a charitable contribution of $10.0 million to the Toll Brothers Foundation, which was recorded in Selling, general and administrative in our Consolidated Statements of Operations and Comprehensive Income in fiscal 2022.

During fiscal 2022, we also recognized a $21.0 million gain related to a property sale by one of our Rental Property Joint Ventures and a $9.0 million gain related to the bulk sale of security monitoring accounts by our smart home technology business.

In addition, fiscal 2023 was impacted by lower earnings from our mortgage and our apartment living operations and a $2.5 million land impairment charge, included in land sales and other cost of revenues, in connection with a planned land sale.

These increases were offset by lower SG&A costs as a result of decreased headcount, $50.9 million in gain recognized from property sales by two of our Rental Property Joint Ventures, $27.7 million of gains from litigation settlements-net recognized, a $16.0 million gain as a result of the sale of our ownership interest in one of our Rental Property Joint Ventures and an increase in interest income due to higher interest rates in fiscal 2023.

The increase in the loss before income taxes in fiscal 2024 was principally due to $27.7 million of gains from litigation settlements - net, recognized in fiscal 2023, which did not recur in fiscal 2024.

In addition, fiscal 2023 was positively impacted by $50.9 million of gains

recognized from property sales by two of our Rental Property Joint Ventures and a $16.0 million gain from the sale of our ownership interest in one of our Rental Property Joint Ventures.

The fiscal 2024 period was positively impacted by a $5.0 million gain related to our investment in a privately held company that sold substantially all of its assets to a third party;

a $4.4 million gain from a bulk sale of security monitoring accounts by our smart home technology business;

higher earnings from our mortgage and title company operations primarily due to increased volume;

offset by higher losses by various Rental Property Joint Ventures.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis