Toll Brothers, Inc. announced that Douglas Yearley will step down as chief executive officer and become executive chairman of the board on March 30, 2026, while Executive Vice President Karl Mistry will take the CEO role and join the board on the same date.
Mistry, a 22‑year Toll Brothers veteran who joined the company in 2004, has overseen home‑building operations across 15 eastern states and will lead the firm’s expansion into new markets and product lines. Yearley, who has served as CEO since 2010 and chairman since 2018, will continue to guide strategic initiatives and support the transition, ensuring continuity for shareholders and employees.
In its most recent quarterly report, Toll Brothers posted Q4 2025 revenue of $3.42 billion, up 3.0% year‑over‑year and beating the consensus estimate of $3.32 billion. Diluted earnings per share were $4.58, missing the consensus of $4.87 by 6.2% and falling 1.1% from the prior year. The miss was largely driven by a delayed sale of the company’s Apartment Living business and a decline in net signed contracts from $2.66 billion to $2.53 billion, signaling a slowdown in future sales. Home deliveries rose modestly to 3,443 units, a 0.4% increase, while the backlog fell to $5.5 billion from $6.5 billion. Adjusted gross margin contracted to 27.1% from 27.9% year‑over‑year, reflecting higher input costs, a shift toward lower‑margin product lines, and a price‑adjustment strategy to sustain demand.
Management guidance for FY2026 indicates a cautious outlook. Toll Brothers expects 10,300–10,700 home deliveries for the year, with an average selling price of $970,000–$990,000, and an adjusted gross margin of 26.0%, down from 27.3% in FY2025. For Q1 FY2026, the company projects 1,800–1,900 deliveries at an average price of $985,000–$995,000 and a margin of 26.25%. The guidance reflects management’s concern about soft demand, high mortgage rates, and inflationary pressure on material costs, while still highlighting confidence in the luxury segment’s resilience.
Analysts responded positively to the succession plan, upgrading the company to a “Market Outperform” rating and raising price targets to $175.00. The smooth, internal transition and Mistry’s deep operational experience were cited as key factors supporting the upgrade. However, the EPS miss in Q4 2025 and the downward revision of full‑year margin guidance tempered enthusiasm, underscoring the company’s exposure to cost inflation and demand softness.
“Fiscal 2025 proved to be another strong year for Toll Brothers,” said Yearley. “We delivered 11,292 homes at an average price of $960,000, generating a record $10.8 billion of home‑sales revenue and posting an adjusted gross margin of 27.3%.” Mistry added, “I am honored to become the third CEO of Toll Brothers and look forward to building on the foundation laid by Doug and Bob Toll.” Stowell, the lead independent director, noted that the succession plan “demonstrates the deep talent bench at Toll Brothers and the thoughtful process that has guided this leadership transition.” The company’s focus on affluent, move‑up buyers and its strategic shift toward speculative and affordable‑luxury homes provide a buffer against broader market headwinds, while ongoing cost‑control initiatives aim to mitigate margin compression in the near term.
The transition signals a strategic intent to balance continuity with fresh leadership. Mistry’s long tenure and operational breadth position him to navigate the company through a challenging macro environment, while Yearley’s continued involvement offers stability. The move is expected to reinforce investor confidence in Toll Brothers’ long‑term growth prospects, even as the firm confronts headwinds such as high mortgage rates, material cost inflation, and a soft demand landscape.
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