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What changed in Toll Brothers, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Toll Brothers, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+301 added−305 removedSource: 10-K (2024-12-20) vs 10-K (2023-12-21)

Top changes in Toll Brothers, Inc.'s 2024 10-K

301 paragraphs added · 305 removed · 268 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

68 edited+5 added−2 removed89 unchanged
Biggest changeIn addition, we expect to purchase approximately 8,200 additional home sites over a number of years from several of these joint ventures. The purchase prices of these home sites will be determined at a future date. We count lots in these joint ventures as optioned lots if we have a contractual right to acquire them.
Biggest changeThe purchase prices of these home sites will be determined at a future date. We count lots in these joint ventures as optioned lots if we have a contractual right to acquire them. Home Building Joint Ventures At October 31, 2024, we had an aggregate $58.4 million of investments in our Home Building Joint Ventures to develop luxury for-sale homes.
Major options include home offices, fitness rooms, multi-generational living suites, 2 finished basements, and spacious indoor/outdoor living areas. We also offer numerous interior fit-out options such as flooring, wall tile, plumbing, cabinets, fixtures, appliances, lighting, and home-automation and security technologies. We market our high-quality homes to both upscale luxury and affordable luxury home buyers.
Major structural options include home offices, fitness rooms, multi-generational living suites, finished basements, and spacious indoor/outdoor 2 living areas. We also offer numerous interior fit-out options such as flooring, wall tile, plumbing, cabinets, fixtures, appliances, lighting, and home-automation and security technologies. We market our high-quality homes to both upscale luxury and affordable luxury home buyers.
See “Land Policy” in this Item 1. We also may be subject to periodic delays or may be precluded entirely from developing communities due to building moratoriums in one or more of the areas in which we operate. Generally, such moratoriums often relate to insufficient water or sewage facilities or inadequate road capacity.
See “Land Policy” in this Item 1. We also may be subject to periodic delays or may be precluded entirely from developing communities due to building moratoriums in one or more of the areas in which we operate. Generally, such moratoriums relate to insufficient water or sewage facilities or inadequate road capacity.
The impact of those statutes, rules, and regulations can be to increase our home buyers’ cost of financing, increase our cost of doing business, and restrict our home buyers’ access to some types of loans. Insurance/Warranty All of our homes are sold under our limited warranty as to workmanship and mechanical equipment.
The impact of those statutes, rules, and regulations can be to increase our home buyers’ cost of financing, increase our cost of doing business, and restrict our home buyers’ access to some types of loans. 9 Insurance/Warranty All of our homes are sold under our limited warranty as to workmanship and mechanical equipment.
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 under the brand names Toll Brothers Apartment Living ® and Toll Brothers Campus Living ® .
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 under the brand names Toll Brothers Apartment Living ® and Toll Brothers Campus Living ® .
Investments in Unconsolidated Entities We have investments in joint ventures (i) to develop lots for the joint venture participants and for sale to outside builders (“Land Development Joint Ventures”); (ii) to develop for-sale homes (“Home Building Joint Ventures”); (iii) to develop luxury for-rent residential apartments and single family homes, and commercial space (“Rental Property Joint Ventures”); and (iv) to provide financing and land banking for residential builders and developers for the acquisition and development of land and home sites (“Gibraltar Joint Ventures”).
Investments in Unconsolidated Entities We have investments in joint ventures (i) to develop lots for the joint venture participants and for sale to outside builders (“Land Development Joint Ventures”); (ii) to develop for-sale homes (“Home Building Joint Ventures”); (iii) to develop luxury for-rent residential apartments and single family homes, and commercial space (“Rental Property Joint Ventures”); and (iv) to provide financing and land banking for residential builders and developers for the acquisition and development of land and home sites (“Other Joint Ventures”).
Many of these modifications have been well received by our employees with minimal disruption to our operations and have continued through fiscal 2023. Available Information We file annual, quarterly and current reports, proxy statements, and other information with the Securities and Exchange Commission (the “SEC”). These filings are available over the internet at the SEC’s website at http://www.sec.gov.
Many of these modifications have been well received by our employees with minimal disruption to our operations and have continued through fiscal 2024. Available Information We file annual, quarterly and current reports, proxy statements, and other information with the Securities and Exchange Commission (the “SEC”). These filings are available over the internet at the SEC’s website at http://www.sec.gov.
We have also entered into several joint ventures with other builders, financial partners, or developers to develop land for the use of the joint venture partners or for sale to third parties. These structures are generally more capital efficient than outright land purchases that occur earlier in the entitlement and development process.
We have also entered into several joint ventures with other builders, financial partners, or developers to develop land for the use of the joint venture partners or for sale to third parties. These structures are generally more capital efficient and less risky than outright land purchases that occur earlier in the entitlement and development process.
The second step in the sales process occurs when we sign a binding agreement of sale contract with the home buyer and the home buyer provides a larger cash down payment that is generally non-refundable. Cash down payments averaged approximately 8% of the total purchase price of a home in fiscal year 2023.
The second step in the sales process occurs when we sign a binding agreement of sale contract with the home buyer and the home buyer provides a larger cash down payment that is generally non-refundable. Cash down payments averaged approximately 8% of the total purchase price of a home in fiscal year 2024.
We also design, build, market, and sell high-density, high-rise urban luxury condominiums with third-party joint venture partners through Toll Brothers City Living ® (“City Living”). At October 31, 2023, we were operating in 24 states and in the District of Columbia.
We also design, build, market, and sell high-density, high-rise urban luxury condominiums with third-party joint venture partners through Toll Brothers City Living ® (“City Living”). At October 31, 2024, we were operating in 24 states and in the District of Columbia.
We have also significantly expanded our geographic footprint over the past decade. In addition to our traditional “move-up” home buyer, we are focusing on the “empty-nester” market, the millennial generation, and the affordable luxury buyer. We market to the “empty-nester” market, which we believe has strong growth potential.
We have also significantly expanded our geographic footprint over the past decade. In addition to our traditional “move-up” home buyer, we are focusing on the “empty-nester” market, the millennial generation, and the affordable luxury buyer. We market to the “empty-nester” (or “move-down”) market, which we believe has strong growth potential.
Such statements may include, but are not limited to, information related to: market conditions; mortgage rates; inflation rates; demand for our homes; our built-to-order and quick move-in home strategy; sales paces and prices; effects of home buyer cancellations; our strategic priorities; growth and expansion; our land acquisition, land development and capital allocation priorities; anticipated operating results; home deliveries; financial resources and condition; changes in revenues; changes in profitability; changes in margins; changes in accounting treatment; cost of revenues, including expected labor and material costs; availability of labor and materials; selling, general and administrative expenses; interest expense; inventory write-downs; home warranty and construction defect claims; unrecognized tax benefits; anticipated tax refunds; joint ventures in which we are involved; anticipated results from our investments in unconsolidated entities; our ability to acquire land and pursue real estate opportunities; our ability to gain approvals and open new communities; our ability to market, construct and sell homes and properties; our ability to deliver homes from backlog; our ability to secure materials and subcontractors; our ability to produce the liquidity and capital necessary to conduct normal business operations or to expand and take advantage of opportunities; the outcome of legal proceedings, investigations, and claims; and the impact of public health or other emergencies.
Such statements may include, but are not limited to, information related to: market conditions; mortgage rates; inflation rates; demand for our homes; our build-to-order and spec strategy; sales paces and prices; effects of home buyer cancellations; our strategic priorities; growth and expansion; our land acquisition, land development and capital allocation priorities; anticipated operating results; home deliveries; financial resources and condition; changes in revenues, profitability, margins and returns; changes in accounting treatment; cost of revenues, including expected labor and material costs; availability of labor and materials; impacts of tariffs; selling, general and administrative expenses; interest expense; inventory write-downs; home warranty and construction defect claims; unrecognized tax benefits; anticipated tax refunds; joint ventures in which we are involved; anticipated results from our investments in unconsolidated entities; our ability to acquire land and pursue real estate opportunities; our ability to gain approvals and open new communities; our ability to market, construct and sell homes and properties; our ability to deliver homes from backlog; our ability to secure materials and subcontractors; our ability to produce the liquidity and capital necessary to conduct normal business operations or to expand and take advantage of opportunities; the outcome of legal proceedings, investigations, and claims; and the impact of public health or other emergencies.
Land Development Joint Ventures At October 31, 2023, we had investments in 16 Land Development Joint Ventures to develop land. Some of these Land Development Joint Ventures develop land for the sole use of the venture participants, including us, and others develop land for sale to the joint venture participants and to unrelated builders.
Land Development Joint Ventures At October 31, 2024, we had investments in 16 Land Development Joint Ventures to develop land. Some of these Land Development Joint Ventures develop land for the sole use of the venture participants, including us, and others develop land for sale to the joint venture participants and to unrelated builders.
Our purchase agreements are typically subject to numerous conditions, including, but not limited to, the ability to obtain necessary governmental approvals for the proposed community. In certain instances, our deposit under an agreement may be returned to us if all approvals are not obtained, although predevelopment costs usually will not be recoverable.
Our purchase agreements are typically subject to numerous conditions, including, but not limited to, obtaining necessary governmental approvals for the proposed community. In certain instances, our deposit under an agreement may be returned to us if all approvals are not obtained, although predevelopment costs usually will not be recoverable.
We determine our quick move-in home strategy for each community based on local market factors and maintain a level of quick move-in home inventory based on our current and planned sales pace and construction cadence for the community. We are continuously developing new designs to replace or augment existing ones to ensure that our homes reflect current consumer tastes.
We determine our spec home strategy for each community based on local market factors and maintain a level of spec home inventory based on our current and planned sales pace and construction cadence for the community. We are continuously developing new designs to replace or augment existing ones to ensure that our homes reflect current consumer tastes.
Acquisitions From time to time, we acquire home builders in order to increase our footprint and/or product offerings in an existing market or to expand into a new market. These acquisitions are generally completed using available cash on hand and primarily consist of smaller privately-held builders. In fiscal 2023, we did not make any acquisitions.
Acquisitions From time to time, we acquire home builders in order to expand our footprint and/or product offerings in an existing market or to enter a new market. These acquisitions are generally completed using available cash on hand and primarily consist of smaller privately-held builders. In fiscal 2024 and 2023, we did not make any acquisitions.
Our backlog conversion rate can vary based on a number of factors, including the availability of subcontractors and qualified trades people; the availability of adequate utility infrastructure and services; the ability of municipalities to process permits, conduct inspections and take similar actions in a timely manner; and shortages, delays in availability, or fluctuations in prices of building materials.
Our backlog conversion rate can vary based on a number of factors, including the availability of subcontractors and qualified trades people; the availability of adequate utility infrastructure and services; the ability of municipalities to process permits, conduct inspections and take similar actions in a timely manner; and shortages, or delays in availability.
ITEM 1. BUSINESS Toll Brothers, Inc., a corporation incorporated in Delaware in May 1986, began doing business through predecessor entities in 1967. When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to Toll Brothers, Inc. and its subsidiaries, unless the context otherwise requires.
ITEM 1. BUSINESS Toll Brothers, Inc., a corporation incorporated in Delaware in May 1986, began doing business through predecessor entities in 1967. When this report uses the words “we,” “us,” “our,” and the “Company,” it refers to Toll Brothers, Inc. and its subsidiaries, unless the context otherwise requires.
At October 31, 2023, we were operating in the following major suburban and urban residential markets: • Boston, Massachusetts metropolitan area • New Haven County, Connecticut • Westchester and Dutchess Counties, New York • New York metropolitan area • Central and northern New Jersey • Philadelphia, Pennsylvania metropolitan area • Virginia and Maryland suburbs of Washington, D.C. • Delaware • Raleigh and Charlotte, North Carolina metropolitan areas • Nashville, Tennessee 1 • Charleston, Greenville, Hilton Head and Myrtle Beach, South Carolina • Atlanta, Georgia metropolitan area • Southeast and southwest coasts and the Jacksonville, Orlando, and Tampa areas of Florida • Detroit, Michigan metropolitan area • Chicago, Illinois metropolitan area • Dallas, Houston, Austin, and San Antonio, Texas metropolitan areas • Denver, Colorado metropolitan area, Fort Collins and Colorado Springs, Colorado • Phoenix, Arizona metropolitan area • Las Vegas and Reno, Nevada metropolitan areas • Boise and Coeur d’Alene, Idaho metropolitan areas • Salt Lake City, Utah metropolitan area and St.
At October 31, 2024, our home building communities were operating in the following major suburban and urban residential markets: • Boston, Massachusetts metropolitan area • New Haven County, Connecticut • Westchester and Dutchess Counties, New York • New York metropolitan area • Central and northern New Jersey • Philadelphia, Pennsylvania metropolitan area • Virginia and Maryland suburbs of Washington, D.C. • Delaware • Raleigh and Charlotte, North Carolina metropolitan areas 1 • Nashville, Tennessee • Charleston, Greenville, Hilton Head and Myrtle Beach, South Carolina • Atlanta, Georgia metropolitan area • Southeast and southwest coasts and the Jacksonville, Orlando, and Tampa areas of Florida • Detroit, Michigan metropolitan area • Dallas, Houston, Austin, and San Antonio, Texas metropolitan areas • Denver, Colorado metropolitan area, Fort Collins and Colorado Springs, Colorado • Phoenix and Sedona, Arizona • Las Vegas and Reno, Nevada metropolitan areas • Boise and Coeur d’Alene, Idaho metropolitan areas • Salt Lake City, Utah metropolitan area and St.
We have integrated certain of these designs and features in some of our other home types and communities. As of October 31, 2023, we were selling from 57 age-restricted active-adult communities, in which at least one home occupant must be at least 55 years of age.
We have integrated certain of these designs and features in some of our other home types and communities. As of October 31, 2024, we were selling from 76 age-restricted active-adult communities, in which at least one home occupant must be at least 55 years of age.
If we acquire all 5 of these land parcels, we will be required to pay an additional $3.77 billion. The purchases of these land parcels are expected to occur over the next several years.
If we acquire all 5 of these land parcels, we will be required to pay an additional $5.55 billion. The purchases of these land parcels are expected to occur over the next several years.
Our mortgage subsidiary funds its commitments through a combination of its own capital, capital provided from us, its loan facility, and the sale of mortgage loans to various investors. Our mortgage subsidiary has commitments from investors to acquire all $459.4 million of these locked-in loans and receivables.
Our mortgage subsidiary funds its commitments through a combination of its own capital, capital provided from us, its loan facility, and the sale of mortgage loans to various investors. Our mortgage subsidiary has commitments from investors to acquire all $351.7 million of these locked-in loans and receivables.
For example, our attached homes and our quick move-in homes do not offer the opportunity for buyers to add significant structural options to their homes and thus they have a smaller option value as a percentage of base sales price.
For example, our attached homes and our spec homes do not offer the opportunity for buyers to add significant structural options to their homes and thus they have a smaller option value as a percentage of base sales price.
Human Capital Resources At October 31, 2023, we employed approximately 4,800 persons full-time, as compared to approximately 5,200 employees at October 31, 2022. At October 31, 2023, approximately 1% of our employees were covered by a collective bargaining agreement. We believe our employees are among our most important resources and are critical to our continued success.
Human Capital Resources At October 31, 2024, we employed approximately 4,900 persons full-time, as compared to approximately 4,800 employees at October 31, 2023. At October 31, 2024, approximately 1% of our employees were covered by a collective bargaining agreement. We believe our employees are among our most important resources and are critical to our continued success.
Increasingly, we are modifying designs and the number of options we provide to offer our customers a curated experience while gaining efficiencies in the home building process, particularly in respect to our affordable luxury product and our quick move-in homes. We use our own architectural staff and also engage unaffiliated architectural firms to develop new designs.
Increasingly, we are modifying designs and the number of options we provide to offer our customers a curated experience while gaining efficiencies in the home building process, particularly in respect to our affordable luxury product and our spec homes. We use our own architectural staff and also engage third-party architectural firms to develop new designs.
We generally have the right to cancel any of our agreements to purchase land by forfeiture of some or all of the deposits we have made pursuant to the agreement. During fiscal 2023 and 2022, we acquired control of approximately 4,200 and 5,700 home sites, respectively, net of options terminated and lots sold.
We generally have the right to cancel any of our agreements to purchase land by forfeiture of some or all of the deposits we have made pursuant to the agreement. During fiscal 2024 and 2023, we acquired control of approximately 14,900 and 4,200 home sites, respectively, net of options terminated and lots sold.
The table below provides the average value of all structural and finishing options purchased by our home buyers, including lot premiums, and the value of these options and premiums as a percent of the base sales price of the homes purchased in fiscal 2023, 2022, and 2021: 2023 2022 2021 Option value (in thousands) Percent of base sales price Option value (in thousands) Percent of base sales price Option value (in thousands) Percent of base sales price Overall $ 224 26.5 % $ 190 25.3 % $ 168 23.9 % Detached $ 251 29.2 % $ 215 28.9 % $ 193 28.4 % Attached $ 136 17.0 % $ 117 15.4 % $ 105 15.3 % In general, the ability to purchase a premium lot or customize a home with structural options and interior finishes varies widely across our product lines and what stage of construction the home is in when a purchase contract is signed, which may result in significant variation in the option value as a percentage of base sales price.
The table below provides the average value of all structural and finishing options purchased by our home buyers, including lot premiums and excluding incentives, as well as the value of these options and premiums as a percent of the base sales price of the homes purchased, excluding incentives, in fiscal 2024, 2023, and 2022: 2024 2023 2022 Option value (in thousands) Percent of base sales price Option value (in thousands) Percent of base sales price Option value (in thousands) Percent of base sales price Overall $ 206 24.9 % $ 224 26.5 % $ 190 25.3 % Detached $ 232 27.3 % $ 251 29.2 % $ 215 28.9 % Attached $ 125 16.4 % $ 136 17.0 % $ 117 15.4 % In general, the ability to purchase a premium lot or customize a home with structural options and interior finishes varies widely across our product lines and what stage of construction the home is in when a purchase contract is signed, which may result in significant variation in the option value as a percentage of base sales price.
Of the 25,220 available home sites, approximately 8,700 were not yet owned by us but were controlled through options. 3 Of our 432 operating communities at October 31, 2023, a total of 370 communities were offering homes for sale; with the remaining consisting primarily of sold out communities where not all homes had been completed and delivered.
Of the 25,592 available home sites, approximately 8,900 were not yet owned by us but were controlled through options. 3 Of our 471 operating communities at October 31, 2024, a total of 408 communities were offering homes for sale; with the remaining consisting primarily of sold out communities where not all homes had been completed and delivered.
If we determine that the home buyer is not financially qualified, we will not enter into an agreement of sale. During fiscal 2023, 2022, and 2021, our customers signed binding net contracts for $7.91 billion (8,077 homes), $9.07 billion (8,255 homes), and $11.54 billion (12,472 homes), respectively.
If we determine that the home buyer is not financially qualified, we will not enter into an agreement of sale. During fiscal 2024, 2023, and 2022, our customers signed net contracts for $10.07 billion (10,231 homes), $7.91 billion (8,077 homes), and $9.07 billion (8,255 homes), respectively.
In fiscal 2023, 2022, and 2021, we recognized income from the unconsolidated entities in which we had an investment of $50.1 million, $23.7 million, and $74.0 million, respectively. In addition, we earned construction and management fee income from these unconsolidated entities of $39.2 million in fiscal 2023, $33.9 million in fiscal 2022, and $24.3 million in fiscal 2021.
In fiscal 2024, 2023, and 2022, we recognized (loss) income from the unconsolidated entities in which we had an investment of $(23.8) million, $50.1 million, and $23.7 million, respectively. In addition, we earned construction and management fee income from these unconsolidated entities of $40.0 million in fiscal 2024, $39.2 million in fiscal 2023, and $33.9 million in fiscal 2022.
Our construction managers coordinate subcontracting activities and supervise all aspects of construction work and quality control. One of the ways in which we seek to achieve home buyer satisfaction is by providing our construction managers with incentive compensation arrangements based upon each home buyer’s satisfaction, as expressed by the buyers’ responses on pre- and post-closing questionnaires.
One of the ways in which we seek to achieve home buyer satisfaction is by providing our construction managers with incentive compensation arrangements based upon each home buyer’s satisfaction, as expressed by the buyers’ responses on pre- and post-closing questionnaires.
Fiscal year Total Toll Brothers, Inc. settlements (a) TBMC financed settlements* (b) Gross capture rate (b/a) Amount financed (in millions) 2023 9,597 3,123 32.5% $ 1,598.6 2022 10,515 3,706 35.2% $ 2,030.6 2021 9,986 4,364 43.7% $ 2,160.8 * Amounts exclude referred loans, which amounted to 9.5%, 6.5%, and 5.6% of our home closings in fiscal 2023, 2022, and 2021, respectively.
Fiscal year Total Toll Brothers, Inc. settlements (a) TBMC financed settlements* (b) Gross capture rate (b/a) Amount financed (in millions) 2024 10,813 4,114 38.0% $ 2,131.2 2023 9,597 3,123 32.5% $ 1,598.6 2022 10,515 3,706 35.2% $ 2,030.6 * Amounts exclude referred loans, which amounted to 8.5%, 9.5%, and 6.5% of our home closings in fiscal 2024, 2023, and 2022, respectively.
At October 31, 2023, we were selling homes from 370 communities, compared to 348 communities at October 31, 2022, and 340 communities at October 31, 2021.
At October 31, 2024, we were selling homes from 408 communities, compared to 370 communities at October 31, 2023, and 348 communities at October 31, 2022.
At October 31, 2023 and October 31, 2022, our percentage of optioned versus owned lots was 49% and 50%, respectively. We, either alone or in joint venture, are developing several parcels of land for master-planned communities in which we intend to build homes on a portion of the lots, with the remaining lots being sold to other builders.
At October 31, 2024 and October 31, 2023, the percentage of these home sites optioned was approximately 55% and 49%, respectively. We, either alone or in joint venture, are developing several parcels of land for master-planned communities in which we intend to build homes on a portion of the lots, with the remaining lots being sold to other builders.
At October 31, 2023, joint ventures in which we had an interest had aggregate loan commitments of $3.73 billion and outstanding borrowings against these commitments of $2.15 billion.
At October 31, 2024, joint ventures in which we had an interest had aggregate loan commitments of $3.54 billion and outstanding borrowings against these commitments of $2.75 billion.
At October 31, 2023, we or joint ventures in which we have an interest, controlled 44 land parcels as for-rent apartment projects containing approximately 22,200 planned units. See “Investments in Unconsolidated Entities” below for more information relating to our joint ventures.
At October 31, 2024, we or joint ventures in which we have an interest, controlled 67 land parcels as for-rent apartment projects containing approximately 21,300 planned or completed units. See “Investments in Unconsolidated Entities” below for more information relating to our joint ventures.
Our business is subject to many risks, including risks associated with obtaining the necessary approvals on a property and completing the land improvements on it.
However, they are generally more expensive. Our business is subject to many risks, including risks associated with obtaining the necessary approvals on a property and completing the land improvements on it.
See “Risk Factors – Risks Related to Our Business and Industry – Component shortages and increased costs of labor and supplies are beyond our control and can result in delays and increased costs to develop our communities.” Competition The home building business is highly competitive and fragmented.
See “Risk Factors – Risks Related to Our Business and Industry – Component shortages and increased costs of labor and supplies are beyond our control and can result in delays and increased costs to develop our communities” in Item 1A of this Form 10-K. Competition The home building business is highly competitive and fragmented.
Of the 6,578 homes in backlog at October 31, 2023, approximately 96% are expected to be delivered by October 31, 2024. This delivery estimate is based on current expectations regarding our backlog conversion rate.
Of the 5,996 homes in backlog at October 31, 2024, approximately 97% are expected to be delivered by October 31, 2025. This delivery estimate is based on current expectations regarding our backlog conversion rate.
During fiscal year 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. At October 31, 2023, we controlled approximately 70,700 home sites, as compared to approximately 76,000 home sites at October 31, 2022.
During fiscal year 2024 and 2023, we forfeited control of over 4,000 lots in each year that were subject to land purchase agreements primarily because the planned community no longer met our development criteria. At October 31, 2024, we owned or controlled approximately 74,700 home sites, as compared to approximately 70,700 home sites at October 31, 2023.
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.
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.
Our home buyers had not locked in the interest rate on the remaining $1.82 billion of mortgage loan commitments as of October 31, 2023. Backlog We had a backlog of $6.95 billion (6,578 homes) at October 31, 2023; $8.87 billion (8,098 homes) at October 31, 2022; and $9.50 billion (10,302 homes) at October 31, 2021.
Our home buyers had not locked in the interest rate on the remaining $1.67 billion of mortgage loan commitments as of October 31, 2024. Backlog We had a backlog of $6.47 billion (5,996 homes) at October 31, 2024; $6.95 billion (6,578 homes) at October 31, 2023; and $8.87 billion (8,098 homes) at October 31, 2022.
At October 31, 2023, we had investments of $959.0 million in these unconsolidated entities 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, 2024, we had investments of $1.01 billion in these unconsolidated entities 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, 2023, the aggregate purchase price of land parcels subject to option and purchase agreements in both operating and future communities was approximately $4.22 billion (including $31.5 million of land to be acquired from joint ventures in which we have invested). Of the $4.22 billion of land purchase contracts, we paid or deposited $449.9 million.
At October 31, 2024, the aggregate purchase price of land parcels subject to option and purchase agreements in both operating and future communities was approximately $6.10 billion (including $26.8 million of land to be acquired from joint ventures in which we have invested). Of the $6.10 billion of land purchase contracts, we paid or deposited $549.2 million.
A wide selection of structural and finishing options are available to our home buyers for additional charges. The number and complexity of options available typically increase with the size and base sales price of our homes and are generally only available on our built-to-order homes.
A wide selection of structural and finishing options are available to our home buyers for additional charges. The number and complexity of options available typically increase with the size and base sales price of our homes. A greater variety of options are generally available for detached build-to-order homes as compared to attached homes and spec homes.
The percentage of the 9,597 homes delivered in fiscal 2023 within the various ranges of base sales price was as follows: Range of Base Sales Price Percentage of Homes Delivered in Fiscal 2023 Less than $500,000 7% $500,000 to $750,000 31% $750,000 to $1,000,000 24% $1,000,000 to 2,000,000 32% More than $2,000,000 6% Of the homes delivered in fiscal 2023, approximately 24% of our home buyers paid the full purchase price in cash; the remaining home buyers borrowed approximately 69% of the sales price of the home.
The percentage of the 10,813 homes delivered in fiscal 2024 within the various ranges of base sales price was as follows: Range of Base Sales Price Percentage of Homes Delivered in Fiscal 2024 Less than $500,000 11% $500,000 to $750,000 31% $750,000 to $1,000,000 25% $1,000,000 to 2,000,000 27% More than $2,000,000 6% Of the homes delivered in fiscal 2024, approximately 27% of our home buyers paid the full purchase price in cash; the remaining home buyers borrowed approximately 68% of the sales price of the home.
The use of these agreements may increase our overall cost basis in the land that we eventually acquire, but reduces our risk by allowing us to obtain the necessary development approvals before acquiring the land or allowing us to forego or delay the acquisition to a later date.
The use of these agreements may increase our overall cost basis in the land that we eventually acquire, but reduces our risk by allowing us to obtain the necessary development approvals before we expend significant funds to acquire the land.
At October 31, 2023, one of these master-planned communities was wholly owned, while the remaining communities were developed through joint ventures with other builders or financial partners. At October 31, 2023, our Land Development Joint Ventures owned approximately 25,800 home sites.
At October 31, 2024, one of these master-planned communities was wholly owned, while the remaining communities were being developed through joint ventures with other builders or financial partners. At October 31, 2024, our Land Development Joint Ventures owned approximately 22,700 home sites. At October 31, 2024, we had agreed to acquire 316 home sites.
At October 31, 2023, we had $351.2 million invested in our Land Development Joint Ventures and funding commitments of $204.4 million to nine of the Land Development Joint Ventures which will be funded if additional investments in the ventures are required.
At October 31, 2024, we had $388.6 million invested in our Land Development Joint Ventures and funding commitments of $243.0 million to six of the Land Development Joint Ventures which will be funded if additional investments in the ventures are required.
At October 31, 2023, we had an aggregate of $531.8 million of investments in 43 Rental Property 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.
At October 31, 2024, we had an aggregate of $549.2 million of investments in 40 Rental Property Joint Ventures. At October 31, 2024, we or joint ventures in which we have an interest controlled 67 land parcels that are planned or operating as for-rent apartment projects containing approximately 21,300 units.
At October 31, 2023, our mortgage subsidiary was committed to fund $2.17 billion of mortgage loans. Of these commitments, $354.7 million, as well as $104.7 million of mortgage loans receivable, had “locked-in” interest rates as of October 31, 2023.
At October 31, 2024, our mortgage subsidiary was committed to fund $1.84 billion of mortgage loans. Of these commitments, $168.8 million, as well as $182.8 million of mortgage loans receivable, had “locked-in” interest rates as of October 31, 2024.
In the five years ended October 31, 2023, we delivered 46,701 homes from 931 communities, including 9,597 homes from 481 communities in fiscal 2023. At October 31, 2023, we had 930 communities in various stages of planning, development or operations containing approximately 70,700 home sites that we owned or controlled through options.
In the five years ended October 31, 2024, we delivered 49,407 homes from 986 communities, including 10,813 homes from 527 communities in fiscal 2024. 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.
The majority of our homes are sold on a built-to-order basis where we do not begin construction of the home until we have a signed contract with a customer. However, we also build quick move-in homes (also known as “spec” homes) in most of our communities, which are homes started without a signed agreement with a customer.
While historically most of our homes have been sold on a build-to-order basis where we do not begin construction of the home until we have a signed contract with a customer, over the past two years, we have increased the number of spec homes in most of our communities, which are homes started without a signed agreement with a customer.
Complying with these environmental laws may result in delays, may cause us to incur substantial compliance and other costs, and/or may prohibit or severely restrict development in certain environmentally sensitive regions or areas. 9 Before consummating an acquisition of land, we generally engage independent environmental consultants to evaluate land for the potential of hazardous or toxic materials, wastes, or substances, and we believe that because of this, we have not been significantly affected to date by the presence of such materials on our land.
Before consummating an acquisition of land, we generally engage independent environmental consultants to evaluate land for the potential of hazardous or toxic materials, wastes, or substances, and we believe that because of this, we have not been significantly affected to date by the presence of such materials on our land.
At October 31, 2023, we had agreed to acquire 332 home sites and expect to purchase approximately 8,200 additional home sites from several of our Land Development Joint Ventures over a number of years.
We expect to purchase approximately 9,000 additional home sites from several of our Land Development Joint Ventures over a number of years.
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.
Of the 21,300 units at October 31, 2024, 13,300 were owned by joint ventures in which we have an interest, approximately 2,400 were owned by us, and land underlying 5,600 were under contract to be purchased by us.
However, factors beyond our control can and have resulted in disruptions to our supply chain, the availability of labor, and the ability of municipalities to process approvals, which can result in elongated production cycles. See “Risk Factors – Risks Related to Our Business and Industry” in Item 1A and “Manufacturing/Distribution Facilities” in Item 2 of this Form 10-K.
However, factors beyond our control can and have resulted in disruptions to our supply chain, the availability of labor, and the ability of municipalities to process approvals, which can result in increased costs and elongated production cycles.
We may invest up to $100.0 million in these ventures. As of October 31, 2023, we had an investment of $10.8 million. Regulatory and Environmental Matters We are subject to various local, state, and federal statutes, ordinances, rules, and regulations concerning zoning, building design, construction, and similar matters, including local regulations that impose restrictive zoning and density requirements.
Regulatory and Environmental Matters We are subject to various local, state, and federal statutes, ordinances, rules, and regulations concerning zoning, building design, construction, and similar matters, including local regulations that impose restrictive zoning and density requirements.
We also develop master-planned and golf course communities as well as operate, in certain regions, our own lumber distribution, house component assembly and manufacturing operations. In addition to our residential for-sale business, we also develop and operate urban and suburban for-rent apartment communities primarily through joint ventures.
In addition to our residential for-sale business, we also develop and operate urban and suburban for-rent apartment communities primarily through joint ventures.
The following is a summary of home sites for future communities (as distinguished from operating communities) that we either owned or controlled through options or purchase agreements at October 31, 2023: Number of communities Number of home sites North 74 4,905 Mid-Atlantic 121 8,353 South 137 11,084 Mountain 102 9,602 Pacific 64 4,922 Total 498 38,866 Of the 38,866 planned home sites at October 31, 2023, we owned 12,866 and controlled 26,000 through options and purchase agreements.
The following is a summary of home sites for future communities (as distinguished from operating communities) that we either owned or controlled through options or purchase agreements at October 31, 2024: Number of communities Number of home sites North 95 6,595 Mid-Atlantic 133 8,621 South 142 11,799 Mountain 117 9,727 Pacific 83 6,389 Total 570 43,131 Of the 43,131 planned home sites at October 31, 2024, we owned 11,268 and controlled 31,863 through options and purchase agreements.
At October 31, 2023, our Land Development Joint Ventures owned approximately 25,800 home sites. 8 At October 31, 2023, we had agreed to acquire 332 home sites from three of our Land Development Joint Ventures for an aggregate purchase price of approximately $31.5 million.
At October 31, 2024, we had agreed to acquire 316 home sites from four of our Land Development Joint Ventures for an aggregate purchase price of approximately $26.8 million. In addition, we expect to purchase approximately 9,000 additional 8 home sites over a number of years from several of these joint ventures.
Of the 370 communities in which homes were being offered for sale at October 31, 2023, a total of 304 were detached home communities and 66 were attached home communities.
Of the 408 communities in which homes were being offered for sale at October 31, 2024, a total of 329 were detached home communities and 79 were attached home communities. At October 31, 2024, we had 3,526 spec homes in our communities, of which 2,664 were under construction and 862 were completed.
Backlog consists of homes under contract but not yet delivered to our home buyers. We had a backlog of $6.95 billion (6,578 homes) at October 31, 2023; we expect to deliver approximately 96% of these homes in fiscal 2024. We operate our own architectural, engineering, mortgage, title, land development, insurance, smart home technology and landscaping subsidiaries.
At fiscal year-end, were were selling from 408 of these communities. Backlog consists of homes under contract but not yet delivered to our home buyers. We had a backlog of $6.47 billion (5,996 homes) at October 31, 2024; we expect to deliver approximately 97% of these homes in fiscal 2025.
Home Building Joint Ventures At October 31, 2023, we had an aggregate $65.3 million of investments in our Home Building Joint Ventures to develop luxury for-sale homes. In fiscal 2023, the value of net contracts signed by our Home Building Joint Ventures was $101.3 million (77 homes), and they delivered $38.9 million (9 homes) of revenue.
In fiscal 2024, the value of net contracts signed by our Home Building Joint Ventures was $125.0 million (101 homes), and they delivered $267.6 million (238 homes) of revenue.
These homes allow us to compete more effectively with existing homes available in the market, especially for homebuyers that require a home within a short time frame. We sell our quick move-in homes at various stages of construction, which allows many buyers of such homes to select their finishing options at our design studios.
In fiscal 2024 and 2023, approximately 49% and 27% of deliveries were spec homes. These homes allow us to compete more effectively with existing homes available in the market, especially for homebuyers that require a home within a short time frame.
At October 31, 2023, we had 3,026 quick move-in homes in various stages of construction in our communities, of which 1,460 were affordable luxury homes, 1,011 were luxury homes, and 555 were active-adult homes. As a result of the breath of our products and geographic footprint, we have a wide range of base sales prices for our homes.
As a result of the breath of our products and geographic footprint, we have a wide range of base sales prices for our homes.
At October 31, 2023, twelve of these joint ventures had aggregate loan commitments of $610.8 million and outstanding borrowings against these commitments of $445.5 million.
At October 31, 2024, eleven of these joint ventures had aggregate loan commitments of $639.6 million and outstanding borrowings against these commitments of $381.6 million. At October 31, 2024, our Land Development Joint Ventures owned approximately 22,700 home sites.
The following table summarizes certain information with respect to our operating communities at October 31, 2023: Total number of operating communities Number of selling communities Homes approved Homes closed Homes under contract but not closed (Backlog) Home sites available North 57 40 7,541 4,283 956 2,302 Mid-Atlantic 60 43 6,606 2,692 945 2,969 South 133 115 16,050 6,151 2,312 7,587 Mountain 126 120 17,958 6,882 1,577 9,479 Pacific 56 52 6,044 2,393 788 2,883 Total 432 370 54,199 22,401 6,578 25,220 At October 31, 2023, significant site improvements had not yet commenced on approximately 15,000 of the 25,220 available home sites.
The following table summarizes certain information with respect to our operating communities at October 31, 2024: Total number of operating communities Number of selling communities Homes approved Homes closed Homes under contract but not closed (Backlog) Home sites available North 59 43 6,029 3,200 855 1,974 Mid-Atlantic 64 52 6,247 1,918 786 3,543 South 165 145 18,454 6,662 2,003 9,789 Mountain 126 117 17,266 8,126 1,595 7,545 Pacific 57 51 5,519 2,021 757 2,741 Total 471 408 53,515 21,927 5,996 25,592 At October 31, 2024, significant site improvements had not yet commenced on approximately 12,000 of the 25,592 available home sites.
Removed
This is done principally on land we develop and improve, as we continue to pursue our strategy of broadening our product lines, price points and geographic footprint.
Added
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 quick move-in (or “spec”) homes that we sell relative to our traditional build-to-order homes.
Removed
Gibraltar Joint Ventures Over the past several years, we, through Gibraltar, entered into several ventures with an institutional investor to provide financing and land banking to residential buildings and developers. We have an approximate 25% interest in these ventures. These ventures finance builders’ and developers’ acquisition and development of land and home sites and pursue other complementary investment strategies.
Added
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 manufacturing operations.
Added
We sell our spec homes at various stages of construction, which allows many buyers of such homes to select their finishing options at our design studios.
Added
See “Risk Factors – Risks Related to Our Business and Industry” in Item 1A and “Manufacturing/Distribution Facilities” in Item 2 of this Form 10-K. Our construction managers coordinate subcontracting activities and supervise all aspects of construction work and quality control.
Added
Complying with these environmental laws may result in delays, may cause us to incur substantial compliance and other costs, and/or may prohibit or severely restrict development in certain environmentally sensitive regions or areas.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

48 edited+8 added−7 removed111 unchanged
Biggest changeThe timing of these gains or losses cannot be predicted with certainty and, as a result, can cause our net income to fluctuate from quarter to quarter. 15 In addition to our residential for-sale business, we also develop, operate and, in certain situations, sell for-rent apartments, which we accomplish mainly through joint ventures.
Biggest changeIn addition to our residential for-sale business, we also develop, operate and/or, in certain situations, sell for-rent apartments, which we accomplish mainly through joint ventures. Often, the joint venture through which we develop and lease-up a rental property sells the property to a third party or to the joint venture partner upon stabilization.
We also cannot provide any assurance that we will be able to maintain our strategies, and any related initiatives or actions, in the future and, due to unexpectedly favorable or unfavorable market conditions or other factors, we may determine that we need to adjust, refine or 12 abandon all or portions of our strategies, and any related initiatives or actions, though we cannot guarantee that any such adjustments will be successful.
We also cannot provide any assurance that we will be able to maintain our strategies, and any related initiatives or actions, in the future and, due to unexpectedly favorable or unfavorable market conditions or other factors, we may determine that we need to adjust, refine or abandon all or portions of our strategies, and any 12 related initiatives or actions, though we cannot guarantee that any such adjustments will be successful.
These laws and regulations, which are generally intended to directly or indirectly 16 reduce greenhouse gas emissions, conserve water or limit other potential climate change impacts, may impose restrictions or additional requirements on land development and home construction in certain areas.
These laws and regulations, which are generally intended to directly or indirectly reduce greenhouse gas emissions, conserve water or limit other potential climate change impacts, may impose restrictions or 16 additional requirements on land development and home construction in certain areas.
These factors include, but are not limited to: changes in the regulatory and fiscal environment; prolonged economic downturns; high levels of foreclosures; lack of affordability; a decline in foreign buyer demand; severe weather including drought; the risk of local governments imposing building moratoriums and of state or local governments imposing regulations that increase building costs; natural disasters such as earthquakes and wild fires; environmental incidents; and declining population and/or growth rates and the related reduction in housing demand in this region.
These factors include, but are not limited to: changes in the regulatory and fiscal environment; prolonged economic downturns; high levels of foreclosures; lack of affordability; a lack of foreign buyer demand; severe weather including drought; natural disasters such as earthquakes and wild fires; the risk of local governments imposing building moratoriums and of state or local governments imposing regulations that increase building costs; environmental incidents; and declining population and/or growth rates and the related reduction in housing demand in this region.
We are subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning the protection of health and the environment, including those regulating the emission or discharge of materials into the environment, the management of storm water runoff at construction sites, the handling, use, storage and disposal of hazardous substances, impacts to wetlands and other sensitive environments, and the remediation of contamination at properties that we own or develop.
We are subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning the protection of health and the environment, including those regulating the emission or discharge of materials into the environment, the management of storm water runoff at construction sites, the handling, use, storage and disposal of hazardous substances, impacts to wetlands and other sensitive environments, and the remediation of contamination at properties that we acquire, own or develop.
Adverse changes in mortgage interest rates, employment levels, job growth, consumer confidence, perceptions regarding the strength of the housing market, and population growth, or an oversupply of homes for sale may reduce demand or depress prices for our homes and cause home buyers to cancel their agreements to purchase our homes.
Adverse changes in mortgage rates, employment levels, job growth, consumer confidence, perceptions regarding the strength of the housing market, and population growth, or an oversupply of homes for sale may reduce demand or depress prices for our homes and cause home buyers to cancel their agreements to purchase our homes.
The projection of losses related to these liabilities requires actuarial assumptions that are subject to variability due to uncertainties regarding construction defect claims relative to our markets and the types of products we build, insurance industry practices, and legal or regulatory actions and/or interpretations, among other factors.
The projection of losses related to these liabilities requires actuarial assumptions that are subject to variability due to uncertainties regarding construction defect claims relative to our markets and the types of products we build, insurance industry practices, and legal or regulatory actions and/or interpretations, among other 15 factors.
Demand for our homes and rental apartments is subject to fluctuations and difficult to predict, often due to factors outside of our control, such as employment levels, consumer confidence and spending, housing demand, availability of financing for homebuyers, interest rates, availability and prices of new homes compared to existing inventory, and demographic trends.
Demand for our homes and rental apartments is subject to fluctuations and difficult to predict, often due to factors outside of our control, such as employment levels, consumer confidence and spending, housing demand, availability of financing for homebuyers, interest rates, availability, quality and prices of new homes compared to existing inventory, and demographic trends.
In some areas, municipalities may enact growth control initiatives, which will restrict the number of building permits available in a given year. In addition, we may be required to apply for additional approvals or modify our existing approvals because of changes in local circumstances or applicable law.
In some areas, municipalities may enact growth control initiatives, which restrict the number of building permits available in a given year. In addition, we may be required to apply for additional approvals or modify our existing approvals because of changes in local circumstances or applicable law.
However, attempts at mitigation may not be successful and we could be subject to claims relating to actions of, or matters relating to, our subcontractors. We participate in certain joint ventures where we may be adversely impacted by the actions of the joint venture or its participants.
However, attempts at mitigation may not be successful and we could be subject to claims relating to actions of, or matters relating to, our subcontractors. 14 We participate in certain joint ventures where we may be adversely impacted by the actions of the joint venture or its participants.
We must obtain the approval of numerous governmental authorities in connection with our development activities, and these governmental authorities often have broad discretion in exercising their approval authority. We incur substantial costs related to compliance with legal and regulatory requirements.
We must obtain the approval of numerous governmental authorities in connection with our development and construction activities, and these governmental authorities often have broad discretion in exercising their approval authority. We incur substantial costs related to compliance with legal and regulatory requirements.
Our quarterly operating results will fluctuate depending on the timing of completion of construction of our multi-unit condominium buildings, levels of pre-sales, and the relatively short delivery time of the pre-sold units once the building is completed.
Our quarterly operating results will fluctuate depending on the timing of completion of construction of our multi-unit condominium buildings, levels of pre-sales, and the relatively short delivery time of the pre-sold units once the building is 13 completed.
We have received a deposit from our home buyer for each home reflected in our backlog, and generally we have the right to retain the deposit if the 13 home buyer does not complete the purchase.
We have received a deposit from our home buyer for each home reflected in our backlog, and generally we have the right to retain the deposit if the home buyer does not complete the purchase.
Our mortgage subsidiary, TBMC, is subject to various state and federal statutes, rules, and regulations, including those that relate to licensing, lending operations, and other areas of mortgage origination and financing.
Our mortgage subsidiary is subject to various state and federal statutes, rules, and regulations, including those that relate to licensing, lending operations, and other areas of mortgage origination and financing.
In addition, state and local jurisdictions have in recent years enacted regulations that require new homes to be more energy efficient than existing homes, or have mandated energy efficient features, such as solar panels, be included in new construction.
In addition, state and local jurisdictions have in recent years enacted regulations that require new homes to be more energy efficient than existing homes, or to be more weather-resistant, or have mandated energy efficient features, such as solar panels, be included in new construction.
Our strategy includes growing our business by expanding our luxury brand to new price points, product lines and geographies, including expansion of our affordable luxury products. If we are unable to maintain the position of the Toll Brothers brand, our business may be adversely affected by diminishing the distinctive appeal of the brand and tarnishing its image.
Our strategy has involved growing our business by expanding our luxury brand to new price points, product lines and geographies, including expansion of our affordable luxury products. If we are unable to maintain the position of the Toll Brothers brand, our business may be adversely affected by diminishing the distinctive appeal of the brand and tarnishing its image.
Construction of one of our homes typically proceeds after signing the agreement of sale with our customer and typically require nine to 12 months to complete, although construction times may extend beyond 12 months due to a variety of reasons, including high demand, labor shortages, supply chain disruption and municipal related delays.
Construction of our build-to-order homes typically proceeds after signing the agreement of sale with our customer and typically require nine to 12 months to complete, although construction times may extend beyond 12 months due to a variety of reasons, including high demand, labor shortages, supply chain disruption and municipal related delays.
The environmental regulations applicable to each community in which we operate vary greatly depending on the location of the community site, the site's environmental conditions and the present and former use of the site.
The environmental and housing code regulations applicable to each community in which we operate vary greatly depending on the location of the community site, the site's environmental conditions and the present and former use of the site.
At October 31, 2023, we had approximately 70,700 home sites that we owned or controlled through options. In the future, changes in the availability of land, competition for available land, availability of financing to acquire land, zoning regulations that limit housing density, and other market conditions may hurt our ability to obtain land for new residential communities at acceptable prices.
At October 31, 2024, we had approximately 74,700 home sites that we owned or controlled through options. In the future, changes in the availability of land, competition for available land, availability of financing to acquire land, zoning regulations that limit housing density, and other market conditions may hurt our ability to obtain land for new residential communities at acceptable prices.
Adverse publicity or negative commentary from any media outlets could damage our reputation and reduce the demand for our homes, which would adversely affect our business.
Adverse publicity or negative commentary from media outlets or social media could damage our reputation and reduce the demand for our homes, which would adversely affect our business.
Significant inflation, higher interest rates or deflation could adversely affect our business and financial results. Inflation can adversely affect us by increasing costs of land, materials and labor, and interest rates. All of these factors can have a negative impact on housing affordability.
Significant inflation, higher interest rates or deflation could adversely affect our business and financial results. Inflation can adversely affect us by increasing costs of land, materials and labor, and interest rates. All of these factors can have a negative impact on housing affordability and demand for our homes.
In recent years, we have been subject to cyber incidents including an attack that temporarily disrupted access to certain of our systems and an incident involving identity theft through the unauthorized access of one of our third-party service provider’s information systems.
We have been subject to cyber incidents in the past, including an attack that temporarily disrupted access to certain of our systems and an incident involving identity theft through the unauthorized access of one of our third-party service provider’s information systems.
We may not be able to recover these increased costs by raising our home prices because the price for each home is typically set months prior to its delivery pursuant to the agreement of sale with the home buyer. If that happens, our operating results could be harmed.
We may not be able to recover these increased costs by raising our home prices because the price for each home, especially our build-to-order homes, is typically set months prior to its delivery pursuant to the agreement of sale with the home buyer. If that happens, our operating results could be harmed.
Our New Revolving Credit Facility, which provides for approximately $1.90 billion in committed borrowing capacity and letters of credit, and substantial portions of our $650.0 million term loan mature in February 2028, with smaller portions maturing in Novemb er 2025 and November 2026.
Our Revolving Credit Facility, which provides for $1.955 billion 17 in committed borrowing capacity and letters of credit, and substantial portions of our $650.0 million term loan mature in February 2028, with smaller portions maturing in Novemb er 2025 and November 2026.
In addition, because we have increased our supply of quick move-in (or “spec”) homes relative to our built-to-order homes, adverse changes in economic conditions could cause us to reduce prices more rapidly to avoid carrying large amounts of finished inventory. This, in turn, could adversely affect our results of operations and financial condition.
In addition, because we have increased our supply of spec homes relative to our build-to-order homes, adverse changes in economic conditions could cause us to reduce prices more rapidly to avoid carrying large amounts of finished inventory. This, in turn, could adversely affect our results of operations and financial condition.
In the past several years, strong demand for homes combined with supply chain disruptions, labor shortages and municipal related delays caused our construction cycles to lengthen and the costs of building materials to increase. Longer construction cycles can lead to increased cancellation rates.
In the recent past, strong demand for homes combined with supply chain disruptions, labor shortages and municipal related delays caused our construction cycles to lengthen and the costs of building materials to increase. Longer construction cycles can lead to increased cancellation rates, lower customer satisfaction and brand diminishment.
At October 31, 2023, we had investments of $959.0 million in unconsolidated entities and were committed to invest or advance up to an additional $400.8 million to these unconsolidated entities if they require additional funding. These joint ventures generally borrow money to help finance their activities.
At October 31, 2024, we had investments of $1.01 billion in unconsolidated entities and were committed to invest or advance up to an additional $312.8 million to these unconsolidated entities if they require additional funding. These joint ventures generally borrow money to help finance their activities.
Conversely, deflation could cause an overall decrease in spending and borrowing capacity, which could lead to deterioration in economic conditions and employment levels. Deflation could also cause the value of our inventories to decline or reduce the value of existing homes.
If these trends persist, they could adversely impact our business and financial results in the future. Conversely, deflation could cause an overall decrease in spending and borrowing capacity, which could lead to deterioration in economic conditions and employment levels. Deflation could also cause the value of our inventories to decline or reduce the value of existing homes.
We cannot guarantee that (i) our strategies, which include expanding our geographic footprint, product lines and price points, becoming a more capital and operationally efficient home builder, and increasing the supply of our quick move-in homes for sale relative to our built-to-order homes, and any related initiatives or actions (including home builder acquisitions), will be successful or that they will generate growth, earnings or returns at any particular level or within any particular time frame; (ii) in the future we will achieve positive operational or financial results or results in any particular metric or measure equal to or better than those attained in the past; or (iii) we will perform in any period as well as other home builders.
We cannot guarantee that (i) our strategies, which include expanding our presence in existing markets and potential expansion into new markets, offering a wide variety of products and price points, becoming a more capital and operationally efficient home builder, and maintaining an appropriate balance of spec homes for sale relative to our build-to-order homes, and any related initiatives or actions (including home builder acquisitions), will be successful or that they will generate growth, earnings or returns at any particular level or within any particular time frame; (ii) in the future we will achieve positive operational or financial results or results in any particular metric or measure equal to or better than those attained in the past; or (iii) we will perform in any period as well as other home builders.
Market conditions and/or government actions could cause mortgage rates to increase even further in the future.
A variety of factors, including market conditions and government actions could cause mortgage rates to increase even further in the future.
The cost of satisfying our legal obligations in these instances may be significant, and we may be unable to recover the cost of repair from subcontractors, suppliers and insurers. For example, we have incurred significant costs to repair homes built in Pennsylvania and Delaware.
The cost of satisfying our legal obligations in these instances may be significant, and we may be unable to recover the cost of repair from subcontractors, suppliers and insurers.
In addition, shortages and cost increases in building materials and tightness in the labor market can erode our profit margins and adversely affect our results of operations, especially if such disruptions, shortages and delays persist for extended periods of time. We are subject to one collective bargaining agreement that covers approximately 1% of our employees.
In addition, shortages and cost increases in building materials and tightness in the labor market can erode our profit margins and adversely affect our results of operations, especially if such disruptions, shortages and delays persist for extended periods of time.
Our operations could be adversely affected if key members of our senior management unexpectedly leave the Company; if we cannot attract qualified personnel to manage our business; or if we are unable to successfully manage transition matters when our senior executives, several of whom are approaching retirement age, retire. Information technology failures and data security breaches could harm our business.
Our operations could be adversely affected if key members of our senior management unexpectedly leave the Company; if we cannot attract qualified personnel to manage our business; or if we are unable to successfully manage transition matters when our senior executives, several of whom are retirement eligible under our various compensation plans.
Inflation may also accompany higher interest rates, which could adversely impact our customers’ ability to obtain financing on favorable terms, thereby decreasing demand for our homes. During 2022 and 2023, high inflation and rising interest rates were primary drivers of decreases in home demand, including our homes. These trends could adversely impact our business and financial results in the future.
Inflation may also accompany or give rise to higher interest rates, which could adversely impact our customers’ ability to obtain financing on favorable terms, if at all, thereby decreasing demand for our homes. In recent years, high inflation and rising interest rates were primary drivers of decreases in home demand, including our homes.
Factors beyond our control could have a material adverse effect on our revenues and/or income from operations generated in California.
In addition, our gross margin in California tends to be higher than Company average. Factors beyond our control could have a material adverse effect on our revenues, gross margin and/or income from operations generated in California.
In addition, we may in certain circumstances be liable for the actions of its third-party partners. 14 Government regulations and legal challenges may delay the start or completion of our communities, increase our expenses, or limit our home building activities, which could have a negative impact on our operations.
Government regulations and legal challenges may delay the start or completion of our communities, increase our expenses, or limit our home building activities, which could have a negative impact on our operations.
These sales can result in significant gains or losses that we recognize on our Consolidated Statements of Operations and Comprehensive Income as income from unconsolidated entities.
These sales can result in significant gains or losses that we recognize on our Consolidated Statements of Operations and Comprehensive Income as income from unconsolidated entities. The timing of these gains or losses cannot be predicted with certainty and, as a result, can cause our net income to fluctuate from quarter to quarter.
As a home builder, we are subject to construction defect and home warranty claims arising in the ordinary course of business. These claims are common in the home building industry and can be costly. In addition, the costs of insuring against construction defect and product liability claims are high, and the amount of coverage offered by insurance companies is limited.
As a home builder, we are subject to construction defect and home warranty claims arising in the ordinary course of business. These claims are common in the home building industry and can be costly.
We have not experienced any work stoppages due to strikes by unionized workers, but we cannot make assurances that there will not be any work stoppages due to strikes or other job actions in the future. We engage independent contractors that employ non-unionized workers to construct our homes.
We are subject to one collective bargaining agreement that covers approximately 1% of our employees. We have not experienced any work stoppages due to strikes by unionized workers, but we cannot make assurances that there will not be any work stoppages due to strikes or other job actions in the future.
In addition, if values of the building or units decline, we may also be required to recognize significant impairments in the future. Increases in cancellations of existing agreements of sale could have an adverse effect on our business. Our backlog reflects agreements of sale with our home buyers for homes that have not yet been delivered.
Increases in cancellations of existing agreements of sale could have an adverse effect on our business. Our backlog reflects agreements of sale with our home buyers for homes that have not yet been delivered.
Disputes between us and partners may result in litigation or arbitration that could increase our expenses and distract our management team.
Disputes between us and partners may result in litigation or arbitration that could increase our expenses and distract our management team. In addition, we may in certain circumstances be liable for the actions of its third-party partners.
We use information technology and other computer resources to carry out important operational and marketing activities as well as maintain our business records, including information provided by our customers. Many of these resources are provided to us and/or maintained on our behalf by third-party service providers pursuant to agreements that specify certain security and service level standards.
Many of these resources are provided to us and/or maintained on our behalf by third-party service providers pursuant to agreements that specify certain security and service level standards.
See Note 7 – “Accrued Expenses” in Item 15(a)1 of this Form 10-K for additional information regarding warranty charges. We also can suffer damage to our reputation, and may be exposed to possible liability, if subcontractors fail to comply with applicable laws, including laws involving matters that are not within our control.
We also can suffer damage to our reputation, and may be exposed to possible liability, if subcontractors fail to comply with applicable laws, including laws involving matters that are not within our control.
Home buyers may also choose to cancel their home agreement and forfeit their deposit. At October 31, 2023, we had 6,578 homes with a sales value of $6.95 billion in backlog.
Home buyers may also choose to cancel their home agreement and forfeit their deposit. The amount of deposit that we require varies by community and market and may be insufficient to compel a home buyer to complete the purchase. At October 31, 2024, we had 5,996 homes with a sales value of $6.47 billion in backlog.
The timing of these gains or losses cannot be predicted with certainty and, as a result, can cause our net income to fluctuate from quarter to quarter. Our quarterly operating results may fluctuate due to the seasonal nature of our business.
These sales can result in significant gains or losses that we recognize on our Consolidated Statements of Operations and Comprehensive Income as income from unconsolidated entities. The timing of these gains or losses cannot be predicted with certainty and, as a result, can cause our net income to fluctuate from quarter to quarter.
Due to the degree of judgment required and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated, and the difference could be material to our consolidated financial statements. Over the past several years, we have had a significant number of water intrusion claims related to homes we built in Pennsylvania and Delaware.
Due to the degree of judgment required and the potential for variability in these assumptions, our actual future costs could differ from those estimated, and the difference could be material to our consolidated financial statements. Our quarterly operating results may fluctuate due to the seasonal nature of our business.
See Note 7 – “Accrued Expenses” in Item 15(a)1 of this Form 10-K for additional information regarding these warranty charges. Our condominium and rental multi-unit buildings are subject to fluctuations in delivery volume due to their extended construction time, levels of pre-sales and lease-up, and quick delivery of units once buildings are complete.
In addition, if values of the building or units decline, we may also be required to recognize significant impairments in the future. Our condominium and rental multi-unit buildings are subject to fluctuations in delivery volume due to their extended construction time, levels of pre-sales and lease-up, and quick delivery of units once buildings are complete.
At any given point in time, the employees of those subcontractors may decide to unionize. We are implementing a new enterprise resource planning system, and challenges with the implementation of the system may impact our business and operations. We are in the process of completing a multi-year implementation of a complex new enterprise resource planning system (“ERP”).
We engage independent contractors that employ non-unionized workers to construct our homes. At any given point in time, the employees of those subcontractors may decide to unionize.
Removed
In the construction of a mid-rise, high-rise or multifamily building, whether a for-sale or a for-rent property, we incur significant costs before we can begin construction, sell and deliver the units to our customers, or commence the collection of rent and recover our costs.
Added
The construction cycle for mid-rise, high-rise and multifamily building is generally longer than that of single family detached homes, which puts us at greater risk of construction delays and changing market conditions that could adversely affect our operating results in this part of our business.
Removed
We may be subject to delays in construction that could lead to higher costs that could adversely affect our operating results. Changing market conditions during the construction period could negatively impact sales prices and rents, which could adversely affect our operating results.
Added
In addition, insuring against construction defect and product liability claims has become increasingly difficult due to limited coverage options, high costs, lack of reinsurance options and the exit of insurers from the market.There can be no assurance that any form of insurance coverage will be available in the future or, if it is offered, that it will be available on reasonable terms.
Removed
There can be no assurance that this coverage will not be further restricted and become more costly.
Added
Changes in laws, government regulations, or enforcement priorities, such as the imposition of tariffs (in particular on materials imported from Canada or Mexico) or changes in immigration laws and/or their enforcement, could result in higher component costs, tighter overall labor conditions and a shortage of skilled tradespeople, which could in turn adversely affect our business.
Removed
Often, the joint venture through which we develop and lease-up a rental property sells the property to a third party or to the joint venture partner upon stabilization. These sales can result in significant gains or losses that we recognize on our Consolidated Statements of Operations and Comprehensive Income as income from unconsolidated entities.
Added
Another source of credit and liquidity for us is our ability to use letters of credit and surety bonds to back certain performance-related obligations and as security for certain land option agreements and insurance programs.
Removed
The ERP implementation has required the integration of the new ERP with multiple new and existing information systems and business processes, and has been designed to accurately maintain our books and records and provide information to our management teams important to the operation of the business. Our ERP implementation will continue to require ongoing maintenance and monitoring.
Added
The majority of these letters of credit and surety bonds support our land development and construction obligations to various municipalities, other government agencies, and utility companies related to infrastructure construction. At October 31, 2024, we had outstanding letters of credit and surety bonds totaling $180.0 million and $1.16 billion, respectively.
Removed
Conversion from our old system to the new ERP may cause inefficiencies until the ERP is stabilized and mature. The implementation of our new ERP has mandated new procedures and many new controls over 17 financial reporting. These procedures and controls are not yet mature in their operation.
Added
Our letters of credit are generally, but not always, issued under our Revolving Credit Facility, which contains certain financial covenants and other limitations. If we are unable to obtain letters of credit or surety bonds when required, or the conditions imposed by issuers increase significantly, our liquidity and costs of operations could be adversely affected.
Removed
If we are unable to adequately implement and maintain procedures and controls relating to our new ERP, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired and impact our assessment of the effectiveness of our internal controls over financial reporting.
Added
In addition, adverse weather events could prompt governmental authorities to adopt more stringent building codes, which would likely increase development costs in affected areas and negatively impact home affordability and/or demand.
Added
Information technology failures and data security breaches could harm our business. We use information technology and other computer resources to carry out important operational and marketing activities as well as maintain our business records, including information provided by our customers.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeWe believe that adequate provision for resolution of all current claims and pending litigation has been made and that the disposition of these matters will not have a material adverse effect on our results of operations and liquidity or on our financial condition. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 20 PART II
Biggest changeWe believe that adequate provision for resolution of all current claims and pending litigation has been made and that the disposition of these matters will not have a material adverse effect on our results of operations and liquidity or on our financial condition. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 21 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+0 added−0 removed3 unchanged
Biggest changeThis authorization terminated, effective May 17, 2022, the prior authorization that had been in effect since March 10, 2020. Most recently, on December 13, 2023, the Board of Directors renewed its authorization to repurchase 20 million shares of our common stock and terminated, effective the same date, the existing authorization that had been in effect since May 17, 2022.
Biggest changeThis authorization terminated, effective December 13, 2023, the prior authorization that had been in effect since March 17, 2022. Our Board of Directors did not fix any expiration date for the current share repurchase program.
The payment of dividends is within the discretion of our Board of Directors and any decision to pay dividends in the future, and the amount of any such dividend, will depend upon an evaluation of a number of factors, including our results of operations, our capital requirements, our operating and financial condition, and any contractual limitations then in effect.
The payment of dividends is within the discretion of our Board of Directors and any decision to pay dividends in the future, and the amount of any such dividend, will depend upon an evaluation of a number of factors, including our results of operations, our capital requirements, 22 our operating and financial condition, and any contractual limitations then in effect.
During the three-month period ended October 31, 2023, the net exercise method was not employed to exercise options. (b) Average price paid per share includes costs associated with the purchases, but excludes any excise tax that we accrue on our share repurchases as a result of the Inflation Reduction Act of 2022.
During the three-month period ended October 31, 2024, the net exercise method was not employed to exercise options. (b) Average price paid per share includes costs associated with the purchases, but excludes any excise tax that we accrue on our share repurchases as a result of the Inflation Reduction Act of 2022.
(c) On May 17, 2022, our Board of Directors authorized the repurchase of 20 million shares of our common stock in open market transactions, privately negotiated transactions (including accelerated share repurchases), issuer tender offers or other financial arrangements or transactions for general corporate purposes, including to obtain shares for the Company’s equity award and other employee benefit plans.
(c) On December 13, 2023, our Board of Directors authorized the repurchase of 20 million shares of our common stock in open market transactions, privately negotiated transactions (including accelerated share repurchases), issuer tender offers or other financial arrangements or transactions for general corporate purposes, including to obtain shares for the Company’s equity award and other employee benefit plans.
At October 31, 2023, under the provisions of our revolving credit agreement and term loan agreement, we could have paid up to approximately $2.76 billion of cash dividends.
At October 31, 2024, under the provisions of our revolving credit agreement and term loan agreement, we could have paid up to approximately $3.57 billion of cash dividends.
During the three months ended October 31, 2023, we withheld 153,756 of the shares subject to performance based restricted stock units and restricted stock units to cover approximately $181,000 of income tax withholdings and we issued the remaining 6,837 shares to the recipients. The shares withheld are not included in the total number of shares purchased in the table above.
During the three months ended October 31, 2024, we withheld 1,147 of the shares subject to performance based restricted stock units and restricted stock units to cover approximately $159,000 of income tax withholdings and we issued the remaining 3,024 shares to the recipients. The shares withheld are not included in the total number of shares purchased in the table above.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Shares of our common stock are listed on the New York Stock Exchange (“NYSE”) under the symbol “TOL”. At December 15, 2023, there were approximately 399 record holders of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Shares of our common stock are listed on the New York Stock Exchange under the symbol “TOL.” On December 18, 2024, there were approximately 381 record holders of our common stock.
Issuer Purchases of Equity Securities During the three months ended October 31, 2023, we repurchased the following shares of our common stock: Period Total number of shares purchased (a) Average price paid per share (b) Total number of shares purchased as part of a publicly announced plan or program (c) Maximum number of shares that may yet be purchased under the plan or program (c) (in thousands) (in thousands) (in thousands) August 1, 2023 to August 31, 2023 707 $ 78.18 707 10,309 September 1, 2023 to September 30, 2023 2,301 $ 76.39 2,301 8,008 October 1, 2023 to October 31, 2023 1,292 $ 70.64 1,292 6,716 Total 4,300 4,300 (a) Our stock incentive plans permit us to withhold from the total number of shares that otherwise would be issued to a performance based restricted stock unit recipient or a restricted stock unit recipient upon distribution that number of shares having a fair value at the time of distribution equal to the applicable income tax withholdings due and remit the remaining shares to the recipient.
Issuer Purchases of Equity Securities During the three months ended October 31, 2024, we repurchased the following shares of our common stock: Period Total number of shares purchased (a) Average price paid per share (b) Total number of shares purchased as part of a publicly announced plan or program (c) Maximum number of shares that may yet be purchased under the plan or program (c) (in thousands) (in thousands) (in thousands) August 1, 2024 to August 31, 2024 97 $ 143.95 97 16,327 September 1, 2024 to September 30, 2024 472 $ 145.95 472 15,855 October 1, 2024 to October 31, 2024 768 $ 151.36 768 15,087 Total 1,337 1,337 (a) Our stock incentive plans permit us to withhold from the total number of shares that otherwise would be issued to a performance based restricted stock unit recipient or a restricted stock unit recipient upon distribution that number of shares having a fair value at the time of distribution equal to the applicable income tax withholdings due and remit the remaining shares to the recipient.
Our Board of Directors did not fix any expiration date for the current share repurchase program. Our revolving credit agreement and term loan agreement each require us to maintain a minimum tangible net worth (as defined in the respective agreements), which limit the amount of share repurchases we may make.
Our revolving credit agreement and term loan agreement each require us to maintain a minimum tangible net worth (as defined in the respective agreements), which limit the amount of share repurchases we may make. Based upon these provisions, our ability to repurchase our common stock was limited to approximately $3.90 billion as of October 31, 2024.
Stockholder Return Performance Graph The following graph and chart compares the five-year cumulative total return (assuming that an investment of $100 was made on October 31, 2018, and that dividends were reinvested) from October 31, 2018 to October 31, 2023, for (a) our common stock, (b) the S&P Homebuilding Index and (c) the S&P 500 ® : Comparison of 5 Year Cumulative Total Return Among Toll Brothers, Inc., the S&P 500 ® , and the S&P Homebuilding Index October 31: 2018 2019 2020 2021 2022 2023 Toll Brothers, Inc. $ 100.00 $ 119.55 $ 128.77 $ 185.36 $ 134.77 $ 224.13 S&P 500 ® $ 100.00 $ 114.33 $ 125.43 $ 179.25 $ 153.06 $ 168.59 S&P Homebuilding Index $ 100.00 $ 146.42 $ 171.86 $ 227.93 $ 193.98 $ 273.26 ITEM 6. [RESERVED] 22
Stockholder Return Performance Graph The following graph and chart compares the five-year cumulative total return (assuming that an investment of $100 was made on October 31, 2019, and that dividends were reinvested) from October 31, 2019 to October 31, 2024, for (a) our common stock, (b) the S&P Homebuilding Index and (c) the S&P 500 ® : Comparison of 5 Year Cumulative Total Return Among Toll Brothers, Inc., the S&P 500 ® , and the S&P Homebuilding Index October 31: 2019 2020 2021 2022 2023 2024 Toll Brothers, Inc. $ 100.00 $ 107.71 $ 155.05 $ 112.73 $ 187.48 $ 391.20 S&P 500 ® $ 100.00 $ 109.71 $ 156.79 $ 133.88 $ 147.46 $ 203.52 S&P 500 Homebuilding Index $ 100.00 $ 117.37 $ 155.67 $ 132.48 $ 186.63 $ 310.37 ITEM 6. [RESERVED] 23
Based upon these provisions, our ability to repurchase our common stock was limited to approximately $3.60 billion as of October 31, 2023. 21 Dividends During fiscal 2023, we paid aggregate cash dividends of $0.83 per share to our shareholders.
Dividends During fiscal 2024, we paid aggregate cash dividends of $0.90 per share to our shareholders.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

138 edited+19 added−28 removed77 unchanged
Biggest changeUnits Delivered and Revenues: Fiscal 2023 Compared to Fiscal 2022 Revenues ($ in millions) Units Delivered Average Delivered Price ($ in thousands) 2023 2022 % Change 2023 2022 % Change 2023 2022 % Change North $ 1,494.1 $ 1,853.7 (19) % 1,577 2,163 (27) % $ 947.4 $ 857.0 11 % Mid-Atlantic 1,175.3 1,149.0 2 % 1,067 1,222 (13) % $ 1,101.5 $ 940.3 17 % South 2,204.8 1,519.6 45 % 2,597 2,033 28 % $ 849.0 $ 747.5 14 % Mountain 2,660.7 2,747.8 (3) % 2,897 3,366 (14) % $ 918.4 $ 816.3 13 % Pacific 2,329.4 2,442.0 (5) % 1,459 1,731 (16) % $ 1,596.6 $ 1,410.7 13 % Total home building 9,864.3 9,712.1 2 % 9,597 10,515 (9) % $ 1,027.9 $ 923.6 11 % Other 1.7 (0.9) Total home sales revenue 9,866.0 9,711.2 2 % 9,597 10,515 (9) % $ 1,028.0 $ 923.6 11 % Land sales and other revenue 128.9 564.4 Total revenue $ 9,994.9 $ 10,275.6 Net Contracts Signed: Fiscal 2023 Compared to Fiscal 2022 Net Contract Value ($ in millions) Net Contracted Units Average Contracted Price ($ in thousands) 2023 2022 % Change 2023 2022 % Change 2023 2022 % Change North $ 1,336.9 $ 1,534.7 (13) % 1,411 1,596 (12) % $ 947.5 $ 961.6 (1) % Mid-Atlantic 1,165.5 1,105.4 5 % 1,170 1,012 16 % $ 996.2 $ 1,092.3 (9) % South 1,938.3 1,838.3 5 % 2,386 1,981 20 % $ 812.4 $ 928.0 (12) % Mountain 1,633.1 2,319.7 (30) % 1,950 2,292 (15) % $ 837.5 $ 1,012.1 (17) % Pacific 1,834.0 2,269.3 (19) % 1,160 1,374 (16) % $ 1,581.0 $ 1,651.6 (4) % Total consolidated $ 7,907.8 $ 9,067.4 (13) % 8,077 8,255 (2) % $ 979.1 $ 1,098.4 (11) % 37 Backlog at October 31: October 31, 2023 Compared to October 31, 2022 Backlog Value ($ in millions) Backlog Units Average Backlog Price ($ in thousands) 2023 2022 % Change 2023 2022 % Change 2023 2022 % Change North $ 964.1 $ 1,119.5 (14) % 956 1,122 (15) % $ 1,008.5 $ 997.8 1 % Mid-Atlantic 953.0 960.5 (1) % 945 842 12 % $ 1,008.4 $ 1,140.7 (12) % South 2,093.4 2,352.5 (11) % 2,312 2,523 (8) % $ 905.5 $ 932.4 (3) % Mountain 1,577.7 2,597.3 (39) % 1,577 2,524 (38) % $ 1,000.5 $ 1,029.0 (3) % Pacific 1,357.1 1,844.3 (26) % 788 1,087 (28) % $ 1,722.2 $ 1,696.7 2 % Total consolidated $ 6,945.3 $ 8,874.1 (22) % 6,578 8,098 (19) % $ 1,055.8 $ 1,095.8 (4) % Income (Loss) Before Income Taxes ($ amounts in millions): 2023 2022 % Change 2023 vs 2022 North $ 197.4 $ 280.8 (30) % Mid-Atlantic 243.5 189.5 28 % South 416.7 249.7 67 % Mountain 517.1 509.5 1 % Pacific 610.1 572.8 7 % Total home building 1,984.8 1,802.3 10 % Corporate and other (142.4) (98.6) (44) % Total consolidated $ 1,842.4 $ 1,703.7 8 % “Corporate and other” is comprised principally of general corporate expenses such as our executive offices; the corporate finance, accounting, audit, tax, human resources, risk management, information technology, marketing, and legal groups; interest income; income from certain of our ancillary businesses, including our apartment rental development business and our high-rise urban luxury condominium operations; and income from our Rental Property Joint Ventures and Gibraltar Joint Ventures.
Biggest changeUnits Delivered and Revenues: Fiscal 2024 Compared to Fiscal 2023 Revenues ($ in millions) Units Delivered Average Delivered Price ($ in thousands) 2024 2023 % Change 2024 2023 % Change 2024 2023 % Change North $ 1,484.3 $ 1,494.1 (1) % 1,522 1,577 (3) % $ 975.2 $ 947.4 3 % Mid-Atlantic 1,422.0 1,175.3 21 % 1,512 1,067 42 % $ 940.5 $ 1,101.5 (15) % South 2,787.4 2,204.8 26 % 3,316 2,597 28 % $ 840.6 $ 849.0 (1) % Mountain 2,590.4 2,660.7 (3) % 2,984 2,897 3 % $ 868.1 $ 918.4 (5) % Pacific 2,279.1 2,329.4 (2) % 1,479 1,459 1 % $ 1,541.0 $ 1,596.6 (3) % Total home building 10,563.2 9,864.3 7 % 10,813 9,597 13 % $ 976.9 $ 1,027.9 (5) % Other 0.1 1.7 Total home sales revenue 10,563.3 $ 9,866.0 7 % 10,813 9,597 13 % $ 976.9 $ 1,028.0 (5) % Land sales and other revenue 283.4 128.9 Total revenue $ 10,846.7 $ 9,994.9 Net Contracts Signed: Fiscal 2024 Compared to Fiscal 2023 Net Contract Value ($ in millions) Net Contracted Units Average Contracted Price ($ in thousands) 2024 2023 % Change 2024 2023 % Change 2024 2023 % Change North $ 1,456.8 $ 1,336.9 9 % 1,421 1,411 1 % $ 1,025.2 $ 947.5 8 % Mid-Atlantic 1,292.0 1,165.5 11 % 1,353 1,170 16 % $ 954.9 $ 996.2 (4) % South 2,498.2 1,938.3 29 % 3,007 2,386 26 % $ 830.8 $ 812.4 2 % Mountain 2,655.0 1,633.1 63 % 3,002 1,950 54 % $ 884.4 $ 837.5 6 % Pacific 2,170.6 1,834.0 18 % 1,448 1,160 25 % $ 1,499.0 $ 1,581.0 (5) % Total consolidated $ 10,072.6 $ 7,907.8 27 % 10,231 8,077 27 % $ 984.5 $ 979.1 1 % Backlog at October 31: October 31, 2024 Compared to October 31, 2023 Backlog Value ($ in millions) Backlog Units Average Backlog Price ($ in thousands) 2024 2023 % Change 2024 2023 % Change 2024 2023 % Change North $ 937.5 $ 964.1 (3) % 855 956 (11) % $ 1,096.5 $ 1,008.5 9 % Mid-Atlantic 824.8 953.0 (13) % 786 945 (17) % $ 1,049.4 $ 1,008.4 4 % South 1,807.5 2,093.4 (14) % 2,003 2,312 (13) % $ 902.4 $ 905.5 — % Mountain 1,645.5 1,577.7 4 % 1,595 1,577 1 % $ 1,031.7 $ 1,000.5 3 % Pacific 1,252.5 1,357.1 (8) % 757 788 (4) % $ 1,654.6 $ 1,722.2 (4) % Total consolidated $ 6,467.8 $ 6,945.3 (7) % 5,996 6,578 (9) % $ 1,078.7 $ 1,055.8 2 % 37 Income (Loss) Before Income Taxes ($ amounts in millions): 2024 2023 % Change 2024 vs 2023 North $ 252.7 $ 197.4 28 % Mid-Atlantic 471.5 243.5 94 % South 578.0 416.7 39 % Mountain 446.2 517.1 (14) % Pacific 541.8 610.1 (11) % Total home building 2,290.2 1,984.8 15 % Corporate and other (204.6) (142.4) (44) % Total consolidated $ 2,085.6 $ 1,842.4 13 % “Corporate and other” is comprised principally of general corporate expenses such as our executive offices; the corporate finance, accounting, audit, tax, human resources, risk management, information technology, marketing, and legal groups; interest income; income from certain of our ancillary businesses, including our apartment rental development business and our high-rise urban luxury condominium operations; and income from our Rental Property Joint Ventures and Other Joint Ventures.
Income Tax Provision 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.
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.
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; payments of $160.3 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.
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; payments of $160.3 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.
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; (ii) the Guarantor Subsidiary being released has consolidated net worth of less than 5% of the Company’s consolidated net worth as of the end of our most recent fiscal quarter; (iii) the Guarantor Subsidiaries released from their guarantees in any fiscal year comprise in the aggregate less than 10% (or 15% if and to the extent necessary to permit the cure of a default) of our consolidated net worth as of the end of our most recent fiscal quarter; (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.
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; (ii) the Guarantor Subsidiary being released has consolidated net worth of less than 5% of the Company’s consolidated net worth as of the end of our most recent fiscal quarter; (iii) the Guarantor Subsidiaries released from their guarantees in any fiscal year comprise in the aggregate less than 10% (or 15% if and to the extent necessary to permit the cure of a default) of our consolidated net worth as of the end of our most recent fiscal quarter; (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 Revolving Credit Facility.
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 31 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 $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.
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. 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.
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.
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.
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 or otherwise, also provide competition.
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.
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 other housing costs.
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. For our Rental Property Joint Ventures specifically, these entities typically generate operating losses until the related property reaches stabilization.
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.
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 32 and debt service.
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.
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 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, expected incentives, and costs incurred and anticipated.
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 32 operations while allowing us to invest in activities that support the long-term growth of our Company.
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.
These 25 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.
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 compete primarily based on price, location, design, quality, service, and reputation. We believe our size and financial stability, relative to many others in our industry, provides us with a competitive advantage.
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 there are no guarantors under the New Revolving Credit Facility, all Guarantor Subsidiaries under the indentures will be released from their guarantees.
If there are no guarantors under the Revolving Credit Facility, all Guarantor Subsidiaries under the indentures will be released from their guarantees.
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.
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.
We are required by the terms of certain loan documents to meet certain covenants, such as financial ratios and reporting requirements. As of October 31, 2023, we were in compliance with all such covenants and requirements on our term loan, credit facility and other loans payable.
We are required by the terms of certain loan documents to meet certain covenants, such as financial ratios and reporting requirements. 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.
The increase in income before income taxes in fiscal 2023, as compared to fiscal 2022, 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 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.
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.
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 revenues in the period in which the need for the write-off is determined.
We attempt to reduce some of these risks and improve our capital efficiency by utilizing one or more of the following methods: 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; and using subcontractors to perform home and amenity construction and land development work on a fixed-price basis.
We attempt to reduce some of these risks and improve our capital efficiency by utilizing one or more of the following methods: 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 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.
These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the Consolidated Balance Sheet as of October 31, 2023, while others are considered future commitments.
These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the Consolidated Balance Sheet as of October 31, 2024, while others are considered future commitments.
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 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.
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.
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, competition, and anticipation of cash receipts.
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 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.
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.
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 36 income (loss) before income taxes by segment for fiscal years 2024 and 2023.
Because of changes in economic conditions, actual results could differ materially from management’s assumptions and may require material valuation adjustments to our investments in unconsolidated entities to be recorded in the future. 28 RESULTS OF OPERATIONS The following table compares certain items in our Consolidated Statements of Operations and Comprehensive Income and other supplemental information for fiscal 2023 and 2022 ($ amounts in millions, unless otherwise stated).
Because of changes in economic conditions, actual results could differ materially from management’s assumptions and may require material valuation adjustments to our investments in unconsolidated entities to be recorded in the future. 29 RESULTS OF OPERATIONS The following table compares certain items in our Consolidated Statements of Operations and Comprehensive Income and other supplemental information for fiscal 2024 and 2023 ($ amounts in millions, unless otherwise stated).
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.
For more information regarding our primary obligations, refer to Note 6, “Loans Payable, Senior Notes, and Mortgage Company Loan Facility,” and Note 15, “Commitments and Contingencies,” to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for amounts outstanding as of October 31, 2023, related to debt and commitments and contingencies, respectively.
For more information regarding our primary obligations, refer to Note 6, “Loans Payable, Senior Notes, and Mortgage Company Loan Facility,” and Note 14, “Commitments and Contingencies,” to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for amounts outstanding as of October 31, 2024, related to debt and commitments and contingencies, respectively.
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.
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 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.
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.
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 to water intrusion issues primarily impacting homes built in Pennsylvania and Delaware.
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.
Long-term Liquidity and Capital Resources 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.
Information related to backlog and assets by segment at October 31, 2023 and 2022 has also been provided.
Information related to backlog and assets by segment at October 31, 2024 and 2023 has also been provided.
These guarantees may include any or all of the following: (i) project completion guarantees, including any cost overruns; (ii) repayment guarantees, generally covering a percentage of the outstanding loan; (iii) carry cost guarantees, which cover costs such as interest, real estate taxes, and insurance; (iv) an environmental indemnity provided to the lender that holds the lender harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (v) indemnification of the lender from “bad boy acts” of the unconsolidated entity.
These guarantees may include any or all of the following: (i) project completion guarantees, including any cost overruns; (ii) repayment guarantees, generally covering a percentage of the outstanding loan; (iii) carry cost guarantees, which cover costs such as interest, real estate taxes, and insurance; (iv) 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.
Refer to Note 6, “Loans Payable, Senior Notes, and Mortgage Company 33 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 Cash provided by operating activities during fiscal 2023 was $1.27 billion.
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 Cash provided by operating activities during fiscal 2024 was $1.01 billion.
A higher discount rate reduces the estimated fair value of our investments in unconsolidated entities, while a lower discount rate increases the estimated fair value of our investments in unconsolidated entities. During the year ended October 31, 2023, we utilized discount rates ranging from 10% to 18% in our valuations.
A higher discount rate reduces the estimated fair value of our investments in unconsolidated entities, while a lower discount rate increases the estimated fair value of our investments in unconsolidated entities. During the year ended October 31, 2024, we utilized discount rates ranging from 10% to 15% in our valuations.
The 22% decrease in the value of homes in backlog at October 31, 2023, as compared to October 31, 2022, was due to the delivery of more homes out of backlog than were added during fiscal 2023, and a decrease in the average value of each contract signed.
The 7% decrease in the value of homes in backlog at October 31, 2024, as compared to October 31, 2023, was due to the delivery of more homes out of backlog than were added during fiscal 2024, and a decrease in the average value of each contract signed.
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, $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.
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.
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 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.
At October 31, 2023, we were selling from 370 communities, compared to 348 communities at October 31, 2022, and 340 communities at October 31, 2021. Customer Mortgage Financing We maintain relationships with a diversified group of mortgage financial institutions, many of which are among the largest in the industry.
At October 31, 2024, we were selling from 408 communities, compared to 370 communities at October 31, 2023, and 348 communities at October 31, 2022. Customer Mortgage Financing We maintain relationships with a diverse group of mortgage financial institutions, many of which are among the largest in the industry.
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 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.
A discussion and analysis regarding Results of Operations and Analysis of Financial Condition for the year ended October 31, 2022, as compared to the year ended October 31, 2021, is included in Part II, Item 7, “MD&A” to our Annual Report on Form 10-K for the fiscal year ended October 31, 2022, filed with the SEC on December 19, 2022. 29 FISCAL 2023 COMPARED TO FISCAL 2022 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.
A discussion and analysis regarding 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. 30 FISCAL 2024 COMPARED TO FISCAL 2023 Home Sales Revenues and Home Sales Cost of Revenues 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.
At October 31, 2023, we had guaranteed the debt of certain unconsolidated entities that have loan commitments aggregating $3.34 billion, of which, if the full amount of the debt obligations were borrowed, we estimate $688.0 million to be our maximum exposure related to repayment and carry cost guarantees.
At October 31, 2024, we had guaranteed the debt of certain unconsolidated entities that have loan commitments aggregating $3.03 billion, of which, if the full amount of the debt obligations were borrowed, we estimate $646.9 million to be our maximum exposure related to repayment and carry cost guarantees.
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.
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.
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.
Land Sales and Other Revenues and Land Sales and Other Cost of Revenues Our revenues from land sales and other generally consist of the following: (1) land sales to joint ventures in which we retain an interest; (2) lot sales to third-party builders within our master-planned communities; (3) bulk land sales to third parties of land we have decided no longer meets our development criteria; and (4) sales of commercial and retail properties generally located at our urban luxury condominium communities.
Land Sales and Other Revenues and Land Sales and Other Cost of Revenues Our revenues from land sales and other generally consist of the following: (1) land sales to joint ventures in which we retain an interest; (2) lot sales to third-party builders within our master-planned communities; (3) bulk 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.
At October 31, 2023, the unconsolidated entities had borrowed an aggregate of $1.64 billion, of which we estimate $544.1 million to be our maximum exposure related to repayment and carry cost guarantees. The terms of these guarantees generally range from 1 month to 4.0 years.
At October 31, 2024, the unconsolidated entities had borrowed an aggregate of $2.20 billion, of which we estimate $560.4 million to be our maximum exposure related to repayment and carry cost guarantees. The terms of these guarantees generally range from 1 month to 3.0 years.
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 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.
We also operate through a number of joint ventures and have undertaken various commitments as a result of those arrangements. 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.
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 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 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.
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.
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 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.
At October 31, 2023, we controlled approximately 70,700 home sites, as compared to approximately 76,000 home sites at October 31, 2022, and approximately 80,900 home sites at October 31, 2021.
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.
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.
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.
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. We recognized inventory impairments and write-offs of $30.7 million, or 0.3% of home sales revenues, and $32.7 million, or 0.3% of home sales revenues, in fiscal 2023 and fiscal 2022, respectively.
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.
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. Inventory impairment charges were $6.7 million and $10.0 million in fiscal 2023 and 2022, respectively.
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.
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.
Short-term Liquidity and Capital Resources 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.
This activity was offset by $48.3 million of proceeds from stock-based benefit plans.
This activity was offset by $4.1 million of proceeds from stock-based benefit plans.
Investing Activities 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 $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.
OVERVIEW Our Business 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.
OVERVIEW Our Business 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.
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. In addition, we expect to purchase approximately 8,200 additional home sites over a number of years from several joint ventures in which we have interests.
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 33 million. 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.
Financial Highlights In fiscal 2023, we recognized $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, as compared to $10.28 billion of revenues, consisting of $9.71 billion of home sales revenues and $564.4 million of land sales and other revenues, and net income of $1.29 billion in fiscal 2022.
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.
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 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.
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 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.
In fiscal 2023 and 2022, the value of net contracts signed was $7.91 billion (8,077 homes) and $9.07 billion (8,255 homes), respectively. The value of our backlog at October 31, 2023 was $6.95 billion (6,578 homes), as compared to our backlog at October 31, 2022 of $8.87 billion (8,098 homes).
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).
The value of our backlog at October 31, 2023, 2022, and 2021 was $6.95 billion (6,578 homes), $8.87 billion (8,098 homes), and $9.50 billion (10,302 homes), respectively. Approximately 96% of the homes in backlog at October 31, 2023 are expected to be delivered by October 31, 2024.
The value of our backlog at October 31, 2024, 2023, and 2022 was $6.47 billion (5,996 homes), $6.95 billion (6,578 homes), and $8.87 billion (8,098 homes), respectively. Approximately 97% of the homes in backlog at October 31, 2024 are expected to be delivered by October 31, 2025.
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 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 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 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 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 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.
We have not made any material changes in the accounting methodology we use to assess possible impairments during the past three fiscal years. 26 We recognized inventory impairment charges and the expensing of costs that we believed not to be recoverable in each of the three fiscal years ended October 31, 2023, 2022, and 2021, as shown in the table below (amounts in thousands): 2023 2022 2021 Land controlled for future communities $ 10,712 $ 13,051 $ 5,620 Land owned for future communities 1,493 19,690 19,805 Operating communities 18,501 — 1,110 $ 30,706 $ 32,741 $ 26,535 Cost of Revenue Recognition Cost of revenues from home sales are recognized at the time each home is delivered and title and possession are transferred to the buyer.
We recognized inventory impairment charges and the expensing of costs that we believed not to be recoverable in each of the three fiscal years ended October 31, 2024, 2023, and 2022, as shown in the table below (amounts in thousands): 2024 2023 2022 Land controlled for future communities $ 6,676 $ 10,712 $ 13,051 Land owned for future communities — 1,493 19,690 Operating communities 52,765 18,501 — $ 59,441 $ 30,706 $ 32,741 27 Cost of Revenue Recognition Cost of revenues from home sales are recognized at the time each home is delivered and title and possession are transferred to the buyer.
INFLATION The long-term impact of inflation on us is manifested in increased costs for land, land development, construction, and overhead. We generally enter into contracts to acquire land a significant period of time before development and sales efforts begin.
This activity was offset by $48.3 million of proceeds from stock-based benefit plans. INFLATION The long-term impact of inflation on us is manifested in increased costs for land, land development, construction, and overhead. We generally enter into contracts to acquire land a significant period of time before development and sales efforts begin.
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 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 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 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 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.
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.
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 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. 35 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.
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.
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.
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.
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. 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.
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. Of the approximately 70,700 total home sites that we owned or controlled through options at October 31, 2023, we owned approximately 35,900 and controlled approximately 34,700 through options.
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.
Inventory impairment charges were $1.8 million and $3.4 million in fiscal 2023 and 2022, respectively. 41 Mountain Year ended October 31, 2023 2022 % Change Units Delivered and Home Sales Revenues: Home sales revenues ($ in millions) $ 2,660.7 $ 2,747.8 (3) % Units delivered 2,897 3,366 (14) % Average delivered price ($ in thousands) $ 918.4 $ 816.3 13 % Net Contracts Signed: Net contract value ($ in millions) $ 1,633.1 $ 2,319.7 (30) % Net contracted units 1,950 2,292 (15) % Average contracted price ($ in thousands) $ 837.5 $ 1,012.1 (17) % Home sales cost of revenues as a percentage of home sales revenues 74.0 % 74.6 % Income before income taxes ($ in millions) $ 517.1 $ 509.5 1 % Number of selling communities at October 31, 120 113 6 % 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.
Mountain Year ended October 31, 2024 2023 % Change Units Delivered and Home Sales Revenues: Home sales revenues ($ in millions) $ 2,590.4 $ 2,660.7 (3) % Units delivered 2,984 2,897 3 % Average delivered price ($ in thousands) $ 868.1 $ 918.4 (5) % Net Contracts Signed: Net contract value ($ in millions) $ 2,655.0 $ 1,633.1 63 % Net contracted units 3,002 1,950 54 % Average contracted price ($ in thousands) $ 884.4 $ 837.5 6 % Home sales cost of revenues as a percentage of home sales revenues 76.5 % 74.0 % Income before income taxes ($ in millions) $ 446.2 $ 517.1 (14) % Number of selling communities at October 31, 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 41 homes in backlog at October 31, 2023, as compared to the number of homes in backlog at October 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe following table shows our debt obligations by scheduled maturity, weighted-average interest rates, and estimated fair value as of October 31, 2023 ($ amounts in thousands): Fixed-rate debt Variable-rate debt (a) Fiscal year of maturity Amount Weighted- average interest rate (%) Amount Weighted- average interest rate (%) 2024 $ 215,925 4.61% $ 101,668 7.10% 2025 123,930 5.48% — 2026 434,787 5.12% 101,562 6.20% 2027 468,861 4.83% 60,938 6.20% 2028 407,890 4.30% — Thereafter (b) 464,374 3.76% 487,500 6.20% Bond discounts, premiums, and deferred issuance costs - net (6,968) — Total $ 2,108,799 4.57% $ 751,668 6.32% Fair value at October 31, 2023 $ 1,980,314 $ 751,668 (a) Based upon the amount of variable-rate debt outstanding at October 31, 2023, and holding the variable-rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately $7.5 million per year, without consideration of the Company’s interest rate swap transactions.
Biggest changeThe following table shows our debt obligations by scheduled maturity, weighted-average interest rates, and estimated fair value as of October 31, 2024 ($ amounts in thousands): Fixed-rate debt Variable-rate debt (a) Fiscal year of maturity Amount Weighted- average interest rate (%) Amount Weighted- average interest rate (%) 2025 $ 165,472 5.17% $ 185,024 6.72% 2026 412,922 4.98% 178,277 6.62% 2027 493,194 4.89% 60,937 5.73% 2028 410,488 4.30% 487,500 5.73% 2029 409,820 3.77% — Thereafter (b) 41,759 3.46% — Bond discounts, premiums, and deferred issuance costs - net (10,322) (2,152) Total $ 1,923,333 4.56% $ 909,586 6.12% Fair value at October 31, 2024 $ 1,880,418 $ 911,738 (a) Based upon the amount of variable-rate debt outstanding at October 31, 2024, and holding the variable-rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately $9.1 million per year, without consideration of the Company’s interest rate swap transactions.
The interest rate swaps effectively fix the interest cost on the $400.0 million at 0.369% plus the spread set forth in the pricing schedule in the Term Loan Facility through October 2025. The spread was 0.90% as of October 31, 2023. These interest rate swaps were designated as cash flow hedges.
The interest rate swaps effectively fix the interest cost on the $400.0 million at 0.369% plus the spread set forth in the pricing schedule in the Term Loan Facility through October 2025. The spread was 0.90% as of October 31, 2024. These interest rate swaps were designated as cash flow hedges. ITEM 8.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements, listed in Item 15(a)(1) beginning on page F-1 of this report are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 43

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