Toll Brothers: Strong FY2024 Profits and Buybacks Mask Slipping Orders

Executive snapshot#

Toll Brothers [TOL] closed FY2024 with $10.85 billion in revenue (++8.60% year-over-year) and $1.57 billion in net income (++14.60% YoY), while returning capital aggressively through $627.06 million of share repurchases in the year. These headline wins on profit and capital allocation sit alongside two caution flags: operating cash flow and free cash flow have weakened versus the prior year, and company-reported new orders and backlog trends in 2025 point to softer forward demand. The result is a compelling but bifurcated investment story — durable earnings power and a clean balance sheet today, paired with a thinner pipeline for future deliveries and potential margin pressure ahead. (See Toll Brothers filings and investor materials for the reported figures.) Toll Brothers Investor Relations SEC Filings

Financial snapshot: FY2024 performance and year-over-year trends#

Toll Brothers' FY2024 income statement presents a clear incremental improvement in profitability driven by higher revenues and tight expense control. Revenue increased from $9.99B in FY2023 to $10.85B in FY2024 — an absolute increase of $0.86B, or +8.60% using the company-reported totals (calculation: (10.85 - 9.99) / 9.99 = 0.0860). Gross profit moved to $3.02B, producing a gross margin of roughly 27.85% (3.02 / 10.85), in line with the company-stated 27.87% metric. Operating income rose to $2.04B (operating margin ≈ 18.81%) and net income expanded to $1.57B, a jump of +14.60% from $1.37B a year earlier (calculation: (1.57 - 1.37) / 1.37 = 0.1460). These topline and margin improvements indicate Toll was able to translate modest volume gains and favorable mix into outsized profit growth in FY2024. (All figures per Toll Brothers FY2024 financials.) Toll Brothers Investor Relations

At the same time, cash flow tells a more nuanced story. Net cash provided by operating activities declined from $1.27B in FY2023 to $1.01B in FY2024 (change = --20.47%), and free cash flow fell from $1.19B to $936.52M (change = --21.24%). The decline in operating cash flow and FCF largely reflects working capital swings and the conversion dynamics between backlog and closings. Those trends mean the company is generating strong accounting earnings, but the pace at which those earnings turn into incremental cash is softer than it was in FY2023. Toll Brothers FY2024 cash flow statement

Table: Income statement summary (FY2021–FY2024)

(Values from Toll Brothers audited financial statements.) SEC Filings

Balance sheet and leverage: capital strength with conservative net debt#

Toll Brothers finished FY2024 with $1.30B in cash and cash equivalents and $2.96B of long-term debt, yielding a reported net debt position of $1.66B (2.96 - 1.30). Using the company’s FY2024 EBITDA of $2.12B, an independent calculation of net debt / EBITDA yields approximately 0.78x (1.66 / 2.12), indicating modest leverage relative to earnings power. That ratio contrasts with other reported TTM metrics in datasets that show higher net-debt-to-EBITDA figures; the difference stems from timing and TTM vs fiscal-year definitions. For transparency, this analysis privileges the audited FY2024 line items for point-in-time leverage calculations and flags the discrepancy where TTM aggregates diverge. Toll Brothers balance sheet (FY2024)

The company’s liquidity picture is robust on a current-assets basis. Calculating the current ratio from the FY2024 balance sheet (total current assets $11.57B / total current liabilities $2.51B) gives a current ratio of 4.61x, materially stronger than many homebuilders and suggesting ample short-term liquidity to fund operations, land purchases and working capital. Note that the data feed’s TTM current ratio of 4.17x differs from the point-in-time fiscal calculation; the discrepancy likely arises from averaging or different cutoff dates. Where such conflicts arise, we use the audited fiscal-year end balances and annotate the difference for readers. Toll Brothers FY2024 balance sheet

Table: Balance sheet snapshot (selected items, FY2021–FY2024)

(Values per Toll Brothers filings.) SEC Filings

Earnings quality: cash conversion, buybacks and the composition of profit#

Toll Brothers’ FY2024 earnings improvement is supported by a mix of higher ASPs in targeted markets, controlled SG&A and effective cost management across construction and overhead. Nevertheless, assessing earnings quality requires focusing on cash conversion: the company’s operating cash flow declined -20.47% YoY and free cash flow fell -21.24% YoY, even while net income rose +14.60%. That divergence implies working capital movements — chiefly in receivables, inventories (homes in process), and deposits — are driving a portion of the earnings improvement and that profitability is not being converted into cash at the prior pace. The cash conversion weakness is notable given Toll’s capital-return activity in FY2024: the company repurchased $627.06M of common stock and paid $93.4M in dividends, using both operational cash and balance sheet capacity to return capital. Toll Brothers cash flow statement

Buybacks can be a legitimate use of capital when shares are undervalued and the balance sheet remains conservative. In Toll’s case, the net debt-to-EBITDA (using FY2024 line items) at ~0.78x provides room for shareholder returns without stressing solvency. However, the downgrade in operating cash conversion increases the sensitivity of buybacks to short-term cash flow swings: if net cash from operations stumbles further, repurchases become more reliant on drawing down cash balances or incremental financing. That trade-off merits attention from stakeholders watching both capital returns and balance-sheet resilience. Toll Brothers investor materials

Backlog, new orders and leading indicators: the critical risk vector#

The most important operational signal for any homebuilder is new orders and backlog, because those metrics feed future revenue and are leading indicators for delivery cadence and margin realization. The provided research and company commentary flag a meaningful decline in Net Signed Contracts and backlog value in the most recent reporting periods (2025 quarters), and analysts have noted a slowdown in new orders despite the FY2024 closings that buoyed revenue. That gap — strong near-term closings converting earlier commitments versus weaker current contract signings — creates a timing mismatch between reported profits and underlying demand. Company commentary in 2025 quarters and the blog draft indicate that management’s quarterly beats were achieved more through backlog conversion and cost control than through a durable pickup in buyer demand. Toll Brothers investor relations

Quantitatively, the risk is straightforward: fewer Net Signed Contracts implies lower future deliveries unless the company can increase conversion rates from its prospects, accelerate closings from existing backlog, or materially stimulate demand through incentives. Toll’s FY2024 backlog was large enough to support near-term closings, but the drop in orders reported in 2025 means future comparisons will be harder and revenue growth driven by deliveries risks decelerating. A crucial monitor for the next several quarters will therefore be sequential changes in net signed contracts and backlog dollar values disclosed in quarterly reports. SEC Filings and Toll press releases

Margin dynamics and segment positioning: luxury exposure is a double-edged sword#

Toll Brothers’ business model targets the upper end of the single-family and move-up luxury market, and that positioning shows up in above-average gross margins and returns metrics. Over the four-year window (2021–2024), gross margin improved from 22.10% to 27.85%, operating margin rose from 11.61% to 18.81%, and net margin expanded from 9.48% to 14.47%. Those improvements reflect both better price realization and operational leverage. Importantly, the luxury focus provides pricing power when high-income buyers remain active, aiding margin preservation even as volume softens. Toll historical margins, SEC Filings

That said, luxury exposure also increases sensitivity to swings in demand among higher-priced buyers and to regional variations. The blog draft and management commentary point to geographic differences in order rates — stronger pockets in Sun Belt and affluent suburbs, weaker activity in some coastal and inland markets. Because luxury product mix can materially lift or depress absolute gross profit per unit, a decline in order cadence concentrated in higher-ASP markets would disproportionately pressure aggregate margins. Toll’s margin resiliency in FY2024 demonstrates operational strength, but sustaining those margins requires stable new-order flows in the higher-priced cohorts. Toll Brothers investor commentary

Competitive posture and industry context#

Toll Brothers sits among the largest luxury homebuilders, and its balance sheet and scale provide competitive advantages relative to smaller regional builders. The company’s land positions, purchasing scale for materials and subcontractor relationships support margin outcomes and execution. Its low leverage and substantial current assets give Toll flexibility to be opportunistic in land acquisitions and to sustain land investment through a market trough. Industry-wide headwinds — higher mortgage rates, affordability constraints, and consumer sensitivity to monthly payments — are affecting most builders, but Toll’s product and regional footprint have historically allowed it to outperform peers in margin recovery phases. Industry analysis, investor materials

However, the principal competitive risk stems from the pace of demand normalization. If macro conditions keep order flow subdued for a prolonged period, Toll’s premium positioning may not be enough to offset the volume decline. In that scenario, smaller nimble competitors could undercut with aggressive incentives in specific markets, and Toll could face a choice between protecting margin (by offering fewer incentives and taking volume hits) or protecting volume (by increasing incentives and compressing margin). The balance between those strategic choices will shape near-term margin realization and the company’s ability to maintain ROIC. Toll Brothers filings and market commentary

What this means for investors#

Key takeaways: Toll delivered a very strong FY2024 on the P&L front — revenue $10.85B (+8.60%), net income $1.57B (+14.60%), and strong margins — while preserving balance-sheet flexibility with net debt of $1.66B and a current ratio calculated at 4.61x. However, operating cash conversion softened (-20.47% OCF YoY; -21.24% FCF YoY) and management’s more recent commentary and quarterly order disclosures point to a material slowdown in Net Signed Contracts and backlog. Those leading indicators create near-term risk to deliveries and margin expansion. Investors should therefore view recent earnings strength as partly balance-sheet and backlog-driven, with the sustainability of growth and margins contingent on stabilization in new orders. Toll Brothers filings

Operational monitors to watch in upcoming releases include sequential changes in Net Signed Contracts and backlog dollar values, quarterly operating cash flow and free cash flow trends, and the cadence of repurchase activity versus cash generation. Policy or macro shifts that affect mortgage rates and affordability will remain the primary external driver of order behavior; internally, Toll’s ability to defend margins through mix and cost controls will determine how resilient reported profits are as backlog normalizes. SEC Filings and Toll press releases

Conclusion#

Toll Brothers’ FY2024 results deliver a clear short-term story: rising revenue, higher margins and disciplined capital returns backed by a conservative net-debt profile. Yet the company’s most important forward-looking signal — new orders and backlog — has softened in subsequent quarters, turning what looks like operational success into a test of sustainability. The company enters the near term with healthy earnings power and balance-sheet flexibility, but the next chapters will be written by whether demand re-accelerates and whether management can protect margins without materially sacrificing volume. For stakeholders, the distinction between current profitability and the durability of future cash flows is the central analytic lens.

(Reported figures are drawn from Toll Brothers’ FY2024 financial statements and company investor materials. For detailed line-item verification, see Toll Brothers Investor Relations at https://ir.tollbrothers.com and SEC filings at https://www.sec.gov.)

Key takeaways: Toll posted $10.85B revenue (++8.60%) and $1.57B net income (++14.60%) in FY2024 while repurchasing $627.06M of shares; however, operating cash flow and free cash flow declined -20.47% and -21.24% respectively, and recent drops in new orders/backlog create meaningful near-term delivery and margin risk.