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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended January 31, 2023
or
☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                      to                     
Commission file number 001-09186
Toll Brothers, Inc.
(Exact name of registrant as specified in its charter)
Delaware
 
23-2416878
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
1140 Virginia DriveFort Washington
Pennsylvania
19034
(Address of principal executive offices)(Zip Code)
(215) 938-8000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareTOLNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑Accelerated filer ☐Non-accelerated filer ☐
Smaller reporting company ☐Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
At February 28, 2023, there were approximately 110,733,000 shares of Common Stock, par value $0.01 per share, outstanding.



TOLL BROTHERS, INC.
TABLE OF CONTENTS
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STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included in this report or in other materials we have filed or will file with the Securities and Exchange Commission (“SEC”) (as well as information included in oral statements or other written statements made or to be made by us) contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). One can identify these statements by the fact that they do not relate to matters of a strictly historical or factual nature and generally discuss or relate to future events. These statements contain words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “can,” “could,” “might,” “should,” “likely”, “will” and other words or phrases of similar meaning. Such statements may include, but are not limited to, information and statements regarding: expectations regarding interest rates and inflation; the markets in which we operate or may operate; our strategic objectives and priorities; our land acquisition, land development and capital allocation plans and priorities; housing market conditions; demand for our homes; anticipated operating results and guidance; home deliveries; financial resources and condition; changes in revenues, in profitability and 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; sales paces and prices; effects of home buyer cancellations; growth and expansion; joint ventures in which we are involved; anticipated results from our investments in unconsolidated entities; our ability to acquire or dispose of land and pursue real estate opportunities; our ability to gain approvals to develop land, open new communities and deliver homes; our ability to market, construct and sell homes and properties; the rate at which we 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; and the outcome of legal proceedings, investigations, and claims.
From time to time, forward-looking statements also are included in other reports on Forms 10-K, 10-Q, and 8-K; in press releases; in presentations; on our website; and in other materials released to the public. Any or all of the forward-looking statements included in this report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements. This can occur as a result of incorrect assumptions or as a consequence of known or unknown risks and uncertainties. Therefore, we caution you not to place undue reliance on our forward-looking statements. The major risks and uncertainties – and assumptions that are made – that affect our business and may cause actual results to differ from these forward-looking statements include, but are not limited to:
•the effect of general economic conditions, including employment rates, housing starts, interest rate levels, home affordability, inflation, consumer sentiment, availability of financing for home mortgages and strength of the U.S. dollar;
•market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions;
•the availability of desirable and reasonably priced land and our ability to control, purchase, hold and develop such land;
•access to adequate capital on acceptable terms;
•geographic concentration of our operations;
•levels of competition;
•the price and availability of lumber, other raw materials, home components;
•the impact of labor shortages, including on our subcontractors, supply chain and municipalities;
•the effect of U.S. trade policies, including the imposition of tariffs and duties on home building products and retaliatory measures taken by other countries;
•the effects of weather and the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters;
•risks arising from acts of war, terrorism or outbreaks of contagious diseases, such as COVID-19;
•federal and state tax policies;
•transportation costs;
•the effect of land use, environmental and other governmental laws and regulations;
•legal proceedings or disputes and the adequacy of reserves;
•risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, indebtedness, financial condition, losses and future prospects;
•the effect of potential loss of key management personnel;
•changes in accounting principles; and
•risks related to unauthorized access to our computer systems, theft of our and our homebuyers’ confidential information or other forms of cyber-attack.
Many of the factors mentioned above, elsewhere in this report or in other reports or public statements made by us will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements.
Forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.
For a further discussion of factors that we believe could cause our actual results to differ materially from expected and historical results, see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report on Form 10-K filed with the SEC and in this report.
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. References herein to fiscal year refer to our fiscal years ended or ending October 31.


1

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
January 31,
2023		October 31,
2022
 (unaudited) 
ASSETS
Cash and cash equivalents$791,609 $1,346,754 
Inventory (1)
9,099,485 8,733,326 
Property, construction, and office equipment – net293,727 287,827 
Receivables, prepaid expenses, and other assets 675,662 747,228 
Mortgage loans held for sale – at fair value82,518 185,150 
Customer deposits held in escrow132,933 136,115 
Investments in unconsolidated entities (1)
908,949 852,314 
 $11,984,883 $12,288,714 
LIABILITIES AND EQUITY
Liabilities
Loans payable$1,145,646 $1,185,275 
Senior notes1,995,439 1,995,271 
Mortgage company loan facility71,187 148,863 
Customer deposits665,431 680,588 
Accounts payable510,491 619,411 
Accrued expenses1,250,546 1,345,987 
Income taxes payable129,149 291,479 
Total liabilities5,767,889 6,266,874 
Equity
Stockholders’ equity
Preferred stock, none issued— — 
Common stock, 127,937 shares issued at January 31, 2023 and October 31, 20221,279 1,279 
Additional paid-in capital696,115 716,786 
Retained earnings6,335,574 6,166,732 
Treasury stock, at cost — 17,165 and 18,312 shares at January 31, 2023 and October 31, 2022, respectively(865,775)(916,327)
Accumulated other comprehensive income ("AOCI")34,154 37,618 
Total stockholders’ equity6,201,347 6,006,088 
Noncontrolling interest15,647 15,752 
Total equity6,216,994 6,021,840 
 $11,984,883 $12,288,714 
(1)    As of January 31, 2023 and October 31, 2022, inventory or investments in unconsolidated entities include $91.3 million and $81.3 million, respectively, of assets related to consolidated variable interest entities (“VIEs”). See Note 3, “Investments in Unconsolidated Entities” for additional information regarding VIEs.






See accompanying notes.
2

TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Three months ended January 31,
 20232022
Revenues:
Home sales$1,749,422 $1,687,352 
Land sales and other30,747 103,729 
1,780,169 1,791,081 
Cost of revenues:
Home sales1,300,923 1,289,527 
Land sales and other42,435 99,617 
1,343,358 1,389,144 
Selling, general and administrative211,497 226,870 
Income from operations225,314 175,067 
Other:
(Loss) income from unconsolidated entities(4,433)22,037 
Other income – net32,915 3,712 
Income before income taxes253,796 200,816 
Income tax provision62,266 48,912 
Net income$191,530 $151,904 
Other comprehensive (loss) income – net of tax(3,464)4,702 
Total comprehensive income$188,066 $156,606 
Per share:
Basic earnings$1.72 $1.26 
Diluted earnings$1.70 $1.24 
Weighted-average number of shares:
Basic111,397 120,996 
Diluted112,336 122,858 








See accompanying notes.
3

TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands)
(Unaudited)

For the three months ended January 31, 2023 and 2022:
Common
Stock		Addi-
tional
Paid-in
Capital		Retained
Earnings		Treasury
Stock		AOCINon-controlling InterestTotal
Equity
Balance, October 31, 2022$1,279 $716,786 $6,166,732 $(916,327)$37,618 $15,752 $6,021,840 
Net income191,530 191,530 
Purchase of treasury stock
(9,357)(9,357)
Exercise of stock options, stock based compensation issuances, and employee stock purchase plan issuances(35,055)59,909 24,854 
Stock-based compensation
14,384 14,384 
Dividends declared
(22,688)(22,688)
Other comprehensive loss(3,464)(3,464)
Loss attributable to non-controlling interest(105)(105)
Balance, January 31, 2023$1,279 $696,115 $6,335,574 $(865,775)$34,154 $15,647 $6,216,994 
Balance, October 31, 2021$1,279 $714,453 $4,969,839 $(391,656)$1,109 $45,431 $5,340,455 
Net income151,904 151,904 
Purchase of treasury stock
(185,768)(185,768)
Exercise of stock options, stock based compensation issuances, and employee stock purchase plan issuances(16,510)13,806 (2,704)
Stock-based compensation
13,615 13,615 
Dividends declared
(20,902)(20,902)
Other comprehensive income4,702 4,702 
Income attributable to non-controlling interest21 21 
Capital contributions – net127 127 
Balance, January 31, 2022$1,279 $711,558 $5,100,841 $(563,618)$5,811 $45,579 $5,301,450 













See accompanying notes.
4

TOLL BROTHERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three months ended January 31,
 20232022
Cash flow used in operating activities:
Net income$191,530 $151,904 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization15,482 14,679 
Stock-based compensation14,384 13,615 
Loss (income) from unconsolidated entities4,433 (22,037)
Distributions of earnings from unconsolidated entities1,460 23,502 
Deferred tax provision3,307 2,408 
Inventory impairments and write-offs8,004 2,233 
Land impairments13,000 — 
Other1,462 2,372 
Changes in operating assets and liabilities: 
Inventory(353,284)(565,482)
Origination of mortgage loans(290,474)(412,955)
Sale of mortgage loans399,744 520,370 
Receivables, prepaid expenses, and other assets25,875 (6,557)
Current income taxes – net(164,463)(48,074)
Customer deposits – net(11,975)77,618 
Accounts payable and accrued expenses(216,249)(34,294)
Net cash used in operating activities(357,764)(280,698)
Cash flow used in investing activities:
Purchase of property, construction, and office equipment – net(19,738)(18,475)
Investments in unconsolidated entities(74,550)(109,866)
Return of investments in unconsolidated entities15,866 65,792 
Proceeds from the sale of assets9,041 — 
Other— 194 
Net cash used in investing activities(69,381)(62,355)
Cash flow used in financing activities:
Proceeds from loans payable703,990 766,858 
Principal payments of loans payable(829,134)(822,142)
Redemption of senior notes— (409,856)
Proceeds (payments) related to stock-based benefit plans – net24,857 (2,701)
Purchase of treasury stock(9,357)(128,069)
Dividends paid(22,878)(21,077)
Payments related to noncontrolling interest – net— (61)
Net cash used in financing activities(132,522)(617,048)
Net decrease in cash, cash equivalents, and restricted cash(559,667)(960,101)
Cash, cash equivalents, and restricted cash, beginning of period1,398,550 1,684,412 
Cash, cash equivalents, and restricted cash, end of period$838,883 $724,311 





See accompanying notes.
5

TOLL BROTHERS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Significant Accounting Policies
Basis of Presentation
Our condensed consolidated financial statements include the accounts of Toll Brothers, Inc. (the “Company,” “we,” “us,” or “our”), a Delaware corporation, and its majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Investments in 50% or less owned partnerships and affiliates are accounted for using the equity method unless it is determined that we have effective control of the entity, in which case we would consolidate the entity.
Our unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. The October 31, 2022 balance sheet amounts and disclosures have been derived from our October 31, 2022 audited financial statements. Since the condensed consolidated financial statements do not include all the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements, they should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2022 (“2022 Form 10-K”). In the opinion of management, the unaudited condensed consolidated financial statements include all recurring adjustments necessary to present fairly our financial position as of January 31, 2023; the results of our operations and changes in equity for the three-month periods ended January 31, 2023 and 2022; and our cash flows for the three-month periods ended January 31, 2023 and 2022. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates and assumptions may prove to be incorrect for a variety of reasons, whether as a result of the risks and uncertainties our business is subject to or for other reasons. In times of economic disruption when uncertainty regarding future economic conditions is heightened, our estimates and assumptions are subject to greater variability. Actual results could differ from the estimates and assumptions we make and such differences may be material.
Revenue Recognition
Home sales revenues: Revenues and cost of revenues from home sales are recognized at the time each home is delivered and title and possession are transferred to the buyer. For the majority of our home closings, our performance obligation to deliver a home is satisfied in less than one year from the date a binding sale agreement is signed. In certain states where we build, we are not able to complete certain outdoor features prior to the closing of the home. To the extent these separate performance obligations are not complete upon the home closing, we defer a portion of the home sales revenues related to these obligations and subsequently recognize the revenue upon completion of such obligations. As of January 31, 2023, the home sales revenues and related costs we deferred related to these obligations were immaterial. Our contract liabilities, consisting of deposits received from customers for sold but undelivered homes, totaled $665.4 million and $680.6 million at January 31, 2023 and October 31, 2022, respectively. Of the outstanding customer deposits held as of October 31, 2022, we recognized $122.9 million in home sales revenues during the three months ended January 31, 2023. Of the outstanding customer deposits held as of October 31, 2021, we recognized $110.9 million in home sales revenues during the three months ended January 31, 2022.
Land sales and other revenues: Our revenues from land sales and other generally consist of: (1) land sales to joint ventures in which we retain an interest; (2) lot sales to third-party builders within our master-planned communities; (3) bulk 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 high-rise urban luxury condominium buildings. In general, our performance obligation for each of these land sales is fulfilled upon the delivery of the land, which generally coincides with the receipt of cash consideration from the counterparty. For land sale transactions that contain repurchase options, revenues and related costs are not recognized until the repurchase option expires. In addition, when we sell land to a joint venture in which we retain an interest, we do not recognize revenue or gains on the sale to the extent of our retained interest in such joint venture.
Forfeited Customer Deposits: Forfeited customer deposits are recognized in “Home sales revenues” in our Condensed Consolidated Statements of Operations and Comprehensive Income in the period in which we determine that the customer will not complete the purchase of the home and we have the right to retain the deposit.
6

Sales Incentives: In order to promote sales of our homes, we may offer our home buyers sales incentives. These incentives vary by type of incentive and by amount on a community-by-community and home-by-home basis. Incentives are reflected as a reduction in home sales revenues. Incentives are recognized at the time the home is delivered to the home buyer and we receive the sales proceeds.
Recent Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, “Reference Rate Reform (Topic 848),” as amended by ASU 2021-01 in January 2021 and ASU 2022-06 in December 2022 (“ASC 848”), directly addressing the effects of reference rate reform on financial reporting as a result of the cessation of the publication of certain London Interbank Offered Rate (“LIBOR”) rates beginning December 31, 2021. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform by virtue of referencing LIBOR or another reference rate expected to be discontinued. This guidance became effective on March 12, 2020 and can be adopted no later than December 31, 2024, with early adoption permitted. We elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance on our consolidated financial statements and may apply other elections as applicable as additional changes in the market occur.

Reclassification
Certain prior period amounts have been reclassified to conform to the fiscal 2023 presentation.
2. Inventory
Inventory at January 31, 2023 and October 31, 2022 consisted of the following (amounts in thousands):
January 31,
2023		October 31,
2022
Land controlled for future communities$229,844 $240,751 
Land owned for future communities850,056 808,851 
Operating communities8,019,585 7,683,724 
$9,099,485 $8,733,326 
Operating communities include communities offering homes for sale; communities that have sold all available home sites but have not completed delivery of the homes and communities preparing to open for sale. The carrying value attributable to operating communities includes the cost of homes under construction, land and land development costs, the carrying cost of home sites in current and future phases of these communities, and the carrying cost of model homes.
Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”).
The amounts we have provided for inventory impairment charges and the expensing of costs that we believe not to be recoverable, for the periods indicated, which are included in home sales cost of revenues, are shown in the table below (amounts in thousands):
 Three months ended January 31,
 20232022
Land controlled for future communities$2,604 $793 
Land owned for future communities— 1,440 
Operating communities5,400 — 
$8,004 $2,233 
We have also recognized $13.0 million of land impairment charges on land held for sale included in land sales and other cost of revenues during the three-month period ended January 31, 2023. No similar charges were recognized during the three-month period ended January 31, 2022.
See Note 13, “Commitments and Contingencies,” for information regarding land purchase commitments.
At January 31, 2023, we evaluated our land purchase contracts, including those to acquire land for apartment developments, to determine whether any of the selling entities were variable interest entities (“VIEs”) and, if they were, whether we were the
7

primary beneficiary of any of them. Under these land purchase contracts, we do not possess legal title to the land; our risk is generally limited to deposits paid to the sellers and predevelopment costs incurred; and the creditors of the sellers generally have no recourse against us. At January 31, 2023, we determined that 228 land purchase contracts, with an aggregate purchase price of $3.67 billion, on which we had made aggregate deposits totaling $408.9 million, were VIEs, and that we were not the primary beneficiary of any VIE related to our land purchase contracts. At October 31, 2022, we determined that 237 land purchase contracts, with an aggregate purchase price of $3.89 billion, on which we had made aggregate deposits totaling $417.6 million, were VIEs and that we were not the primary beneficiary of any VIE related to our land purchase contracts.
Interest incurred, capitalized, and expensed, for the periods indicated, was as follows (amounts in thousands):
 Three months ended January 31,
 20232022
Interest capitalized, beginning of period$209,468 $253,938 
Interest incurred36,854 31,005 
Interest expensed to home sales cost of revenues(25,080)(32,437)
Interest expensed to land sales and other cost of revenues(3,477)(3,409)
Interest capitalized on investments in unconsolidated entities(2,463)(1,290)
Previously capitalized interest transferred to investments in unconsolidated entities(244)— 
Previously capitalized interest on investments in unconsolidated entities transferred to inventory139 135 
Interest capitalized, end of period$215,197 $247,942 
During the three months ended January 31, 2023 and 2022, we recognized approximately $(3.8) million and $274,000 of net (gains) losses related to our interest rate swaps which is included in accumulated other comprehensive income, respectively, and approximately $(362,000) and $76,000 of net (gains) losses were reclassified out of accumulated other comprehensive income to home sales cost of revenues, respectively.
3. Investments in Unconsolidated Entities
We have investments in various unconsolidated entities and our ownership interest in these investments ranges from 5.0% to 50%. These entities are structured as joint ventures and either: (i) develop land for the joint venture participants and for sale to outside builders (“Land Development Joint Ventures”); (ii) develop for-sale homes (“Home Building Joint Ventures”); (iii) develop luxury for-rent residential apartments and single family homes, commercial space, and a hotel (“Rental Property Joint Ventures”); or (iv) provide financing and land banking to residential builders and developers for the acquisition and development of land and home sites (“Gibraltar Joint Ventures”).
The table below provides information as of January 31, 2023, regarding active joint ventures that we are invested in, by joint venture category ($ amounts in thousands):
 Land
Development
Joint Ventures		Home Building
Joint Ventures		Rental Property
Joint Ventures		Gibraltar
Joint Ventures		Total
Number of unconsolidated entities
16342465
Investment in unconsolidated entities (1)
$355,513 $66,555 $469,358 $17,523 $908,949 
Number of unconsolidated entities with funding commitments by the Company
101201 32
Company’s remaining funding commitment to unconsolidated entities (2)
$218,343 $1,255 $76,914 $11,791 $308,303 
(1)    Our total investment includes $103.2 million related to 13 unconsolidated joint venture-related variable interests in VIEs and our maximum exposure to losses related to these VIEs is approximately $199.0 million as of January 31, 2023. Our ownership interest in such unconsolidated Joint Venture VIEs ranges from 20% to 50%.
(2)    Our remaining funding commitment includes approximately $104.0 million related to our unconsolidated joint venture-related variable interests in VIEs.

8

The table below provides information as of October 31, 2022, regarding active joint ventures that we are invested in, by joint venture category ($ amounts in thousands):
 Land
Development
Joint Ventures		Home Building
Joint Ventures		Rental Property
Joint Ventures		Gibraltar
Joint Ventures		Total
Number of unconsolidated entities
15341463
Investment in unconsolidated entities (1)
$343,314 $49,385 $441,399 $18,216 $852,314 
Number of unconsolidated entities with funding commitments by the Company
91181 29
Company’s remaining funding commitment to unconsolidated entities (2)
$180,812 $20,072 $90,900 $12,533 $304,317 
(1)    Our total investment includes $100.2 million related to 13 unconsolidated joint venture-related variable interests in VIEs and our maximum exposure to losses related to these VIEs is approximately $200.0 million as of October 31, 2022. Our ownership interest in such unconsolidated Joint Venture VIEs ranges from 20% to 50%.
(2)    Our remaining funding commitment includes approximately $105.0 million related to our unconsolidated joint venture-related variable interests in VIEs.
Certain joint ventures in which we have investments obtained debt financing to finance a portion of their activities. The table below provides information at January 31, 2023, regarding the debt financing obtained by category ($ amounts in thousands):
 Land
Development
Joint Ventures		Home Building
Joint Ventures		Rental Property
Joint Ventures		Total
Number of joint ventures with debt financing
1123750
Aggregate loan commitments$576,959 $219,650 $3,502,133 $4,298,742 
Amounts borrowed under loan commitments
$467,999 $40,355 $1,923,967 $2,432,321 
The table below provides information at October 31, 2022, regarding the debt financing obtained by category ($ amounts in thousands):
 Land
Development
Joint Ventures		Home Building
Joint Ventures		Rental Property
Joint Ventures		Total
Number of joint ventures with debt financing
1023547
Aggregate loan commitments$557,185 $219,650 $3,317,261 $4,094,096 
Amounts borrowed under loan commitments$444,306 $17,583 $1,774,567 $2,236,456 
More specific and/or recent information regarding our investments in, advances to, and future commitments to these entities is provided below.
New Joint Ventures
The table below provides information on joint ventures entered into during the three-months ended January 31, 2023 ($ amounts in thousands):
Land Development Joint VenturesRental Property Joint Ventures
Number of unconsolidated joint ventures entered into during the period11
Investment balance at January 31, 2023$8,676 $3,215 
The table below provides information on joint ventures entered into during the three-months ended January 31, 2022 ($ amounts in thousands):
Land Development Joint VenturesRental Property Joint VenturesGibraltar Joint Ventures
Number of unconsolidated joint ventures entered into during the period24 1
Investment balance at January 31, 2022$13,557 $47,569 $1,641 


9

Results of Operations and Intra-entity Transactions
From time to time, certain of our land development and rental property joint ventures sell assets to unrelated parties or to our joint venture partners. In connection with these sales, we recognized a gain of $21.0 million in the three-month period ended January 31, 2022. No similar gains were recognized in the three-month period ended January 31, 2023. These gains are included in “Income from unconsolidated entities” on our Condensed Consolidated Statements of Operations and Comprehensive Income.
There were no other-than-temporary impairment charges recognized during the three-month periods ended January 31, 2023 and 2022.
In our first quarters of fiscal 2023 and 2022, we purchased land from unconsolidated entities, principally related to our acquisition of lots from our Land Development Joint Ventures, totaling $16.7 million and $23.8 million, respectively. Our share of income from the lots we acquired was insignificant in each period. We sold land to unconsolidated entities, which principally involved land sales to our Rental Property Joint Ventures, totaling $8.2 million and $78.0 million in our first quarters of fiscal 2023 and 2022, respectively. These amounts are included in “Land sales and other revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income and are generally sold at or near our land basis.
Guarantees
The unconsolidated entities in which we have investments generally finance their activities with a combination of partner equity and debt financing. In some instances, we have guaranteed portions of debt of unconsolidated entities. These guarantees may include any or all of the following: (i) project completion guarantees, including any cost overruns; (ii) repayment guarantees, generally covering a percentage of the outstanding loan; (iii) carry cost guarantees, which cover costs such as interest, real estate taxes, and insurance; (iv) an environmental indemnity provided to the lender that holds the lender harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (v) indemnification of the lender from “bad boy acts” of the unconsolidated entity or its partners.
In some instances, we and our joint venture partner have provided joint and several guarantees in connection with loans to unconsolidated entities. In these situations, we generally seek to implement a reimbursement agreement with our partner that provides that neither party is responsible for more than its proportionate share or agreed upon share of the guarantee; however, we are not always successful. In addition, if the joint venture partner does not have adequate financial resources to meet its obligations under such a reimbursement agreement, we may be liable for more than our proportionate share.
We believe that, as of January 31, 2023, in the event we become legally obligated to perform under a guarantee of an obligation of an unconsolidated entity due to a triggering event, the collateral in such entity should be sufficient to repay a significant portion of the obligation. If it is not, we and our partners would need to contribute additional capital to the venture.
Information with respect to certain of the Company’s unconsolidated entities’ outstanding debt obligations, loan commitments and our guarantees thereon are as follows ($ amounts in thousands):
January 31, 2023October 31, 2022
Loan commitments in the aggregate$3,044,300 $2,858,800 
Our maximum estimated exposure under repayment and carry cost guarantees if the full amount of the debt obligations were borrowed (1)
$627,300 $597,800 
Debt obligations borrowed in the aggregate$1,288,500 $1,110,900 
Our maximum estimated exposure under repayment and carry cost guarantees of the debt obligations borrowed$418,800 $390,500 
Estimated fair value of guarantees provided by us related to debt and other obligations$18,200 $16,900 
Terms of guarantees
1 month -
4.0 years
1 month -
3.7 years
(1)    At January 31, 2023 and October 31, 2022, our maximum estimated exposure under repayment and carry cost guarantees includes approximately $95.0 million and $95.0 million, respectively, related to our unconsolidated Joint Venture VIEs.

The maximum exposure estimates presented above do not take into account any recoveries from the underlying collateral or any reimbursement from our partners. In addition, they do not include any potential exposures related to project completion guarantees or the indemnities noted above, which are not estimable. We have not made payments under any of the outstanding guarantees, nor have we been called upon to do so.
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Variable Interest Entities

We have both unconsolidated and consolidated joint venture-related variable interests in VIEs. Information regarding our involvement in unconsolidated joint-venture related variable interests in VIEs has been disclosed throughout information presented above.

The table below provides information as of January 31, 2023 and October 31, 2022, regarding our consolidated joint venture-related variable interests in VIEs ($ amounts in thousands):
Balance Sheet ClassificationJanuary 31,
2023		October 31,
2022
Number of Joint Venture VIEs that the Company is the primary beneficiary and consolidates
6 5 
Carrying value of consolidated VIEs assetsInventory or investments in unconsolidated entities$91,300 $81,300 
Our partners’ interests in consolidated VIEsNoncontrolling interest$9,600 $9,700 
Our ownership interest in the above consolidated Joint Venture VIEs ranges from 80% to 98%.
As shown above, we are the primary beneficiary of certain VIEs due to our controlling financial interest in such ventures as we have the power to direct the activities that most significantly impact the joint ventures’ performance and the obligation to absorb expected losses or receive benefits from the joint ventures. The assets of these VIEs can only be used to settle the obligations of the VIEs. In addition, in certain of the joint ventures, in the event additional contributions are required to be funded to the joint ventures prior to the admission of any additional investor at a future date, we will fund 100% of such contributions, including our partner’s pro rata share, which we expect would be funded through an interest-bearing loan. For other VIEs, we are not the primary beneficiary because the power to direct the activities of such VIEs that most significantly impact their performance was either shared by us and such VIEs’ other partners or such activities were controlled by our partner. For VIEs where the power to direct significant activities is shared, business plans, budgets, and other major decisions are required to be unanimously approved by all partners. Management and other fees earned by us are nominal and believed to be at market rates, and there is no significant economic disproportionality between us and other partners.
Joint Venture Condensed Combined Financial Information
The Condensed Combined Balance Sheets, as of the dates indicated, and the Condensed Combined Statements of Operations, for the periods indicated, for the unconsolidated entities in which we have an investment are included below (in thousands):
Condensed Combined Balance Sheets:
 January 31,
2023		October 31,
2022
Cash and cash equivalents$245,014 $254,884 
Inventory1,311,563 1,256,215 
Loans receivable – net48,342 48,217 
Rental properties1,795,600 1,702,690 
Rental properties under development1,498,838 1,413,607 
Other assets361,197 305,250 
Total assets$5,260,554 $4,980,863 
Debt – net of deferred financing costs$2,421,511 $2,248,754 
Other liabilities393,811 399,818 
Partners’ equity2,445,232 2,332,291 
Total liabilities and equity$5,260,554 $4,980,863 
Company’s net investment in unconsolidated entities (1)
$908,949 $852,314 
(1)    Our underlying equity in the net assets of the unconsolidated entities was less than our net investment in unconsolidated entities by $17.5 million and $18.5 million as of January 31, 2023 and October 31, 2022, respectively, and these differences are primarily a result of unrealized gains on our retained joint venture interests; distributions from entities in excess of the carrying amount of our net investment; interest capitalized on our investments; other than temporary impairments we have recognized; gains recognized from the sale of our ownership interests; and the estimated fair value of the guarantees provided to the joint ventures.
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Condensed Combined Statements of Operations:
 Three months ended January 31,
 20232022
Revenues$109,270 $155,752 
Cost of revenues59,353 108,483 
Other expenses63,074 43,603 
Total expenses122,427 152,086 
Loss on disposition of loans and real estate owned— (113)
(Loss) income from operations(13,157)3,553 
Other (loss) income (2)
(1,356)33,347 
(Loss) income before income taxes(14,513)36,900 
Income tax (benefit) expense(18)83 
Net (loss) income(14,495)36,817 
Company’s (loss) income from unconsolidated entities (3)
$(4,433)$22,037 
(2)     The three months ending January 31, 2022 includes $29.9 million related to the sale of an asset by one Rental Property Joint Venture.
(3)    Differences between our (loss) income from unconsolidated entities and the underlying net (loss) income of the entities are primarily a result of distributions from entities in excess of the carrying amount of our investment; promote earned on the gains recognized by joint ventures and those promoted cash flows being distributed; other than temporary impairments we have recognized; recoveries of previously incurred charges; unrealized gains on our retained joint venture interests; gains recognized from the sale of our investment to our joint venture partner; and our share of the entities’ profits related to home sites purchased by us which reduces our cost basis of the home sites acquired.
4. Receivables, Prepaid Expenses, and Other Assets
Receivables, prepaid expenses, and other assets at January 31, 2023 and October 31, 2022, consisted of the following (amounts in thousands):
January 31, 2023October 31, 2022
Expected recoveries from insurance carriers and others$36,654 $41,527 
Improvement cost receivable61,236 60,812 
Escrow cash held by our wholly owned captive title company47,274 51,796 
Properties held for rental apartment and commercial development230,691 224,593 
Prepaid expenses35,396 44,307 
Right-of-use asset121,381 116,660 
Derivative assets40,298 71,929 
Other102,732 135,604 
 $675,662 $747,228 
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5. Loans Payable, Senior Notes, and Mortgage Company Loan Facility
Loans Payable
At January 31, 2023 and October 31, 2022, loans payable consisted of the following (amounts in thousands):
January 31,
2023		October 31,
2022
Senior unsecured term loan$650,000 $650,000 
Loans payable – other497,284 537,043 
Deferred issuance costs(1,638)(1,768)
$1,145,646 $1,185,275 
Senior Unsecured Term Loan
We are party to a $650.0 million senior unsecured term loan facility (the “Term Loan Facility”) with a syndicate of banks. On October 31, 2021, we entered into term loan extension agreements to extend the maturity date of $548.4 million of outstanding term loans from November 1, 2025 to November 1, 2026, with the remainder of the term loans remaining due November 1, 2025. At January 31, 2023, other than $101.6 million of term loans that were scheduled to mature on November 1, 2025, there were no payments required before the final maturity date on the Term Loan Facility. At January 31, 2023, the interest rate on the Term Loan Facility was 5.37% per annum. We and substantially all of our 100%-owned home building subsidiaries are guarantors under the Term Loan Facility. The Term Loan Facility contains substantially the same financial covenants as the Revolving Credit Facility described below.
On February 14, 2023, we entered into an amendment to the Term Loan Facility to extend the maturity date of $487.5 million of outstanding term loans to February 14, 2028, with $60.9 million due on November 1, 2026 and the remaining $101.6 million due on November 1, 2025. In addition, this amendment replaced the LIBOR-based interest rate provisions applicable to borrowings under the Term Loan Facility with Secured Overnight Financing Rate (“SOFR”)-based interest rate provisions.
In November 2020, we entered into five interest rate swap transactions to hedge $400.0 million of the Term Loan Facility. 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 at January 31, 2023 was 0.80%. These interest rate swaps were designated as cash flow hedges.
Revolving Credit Facility
At January 31, 2023, we had a $1.905 billion, senior unsecured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks. On October 31, 2021, we entered into extension letter agreements which extended the maturity date of $1.78 billion of the revolving loans and commitments under the Revolving Credit Facility from November 1, 2025 to November 1, 2026, with the remainder of the revolving loans and commitments terminating on November 1, 2025. We and substantially all of our 100%-owned home building subsidiaries were guarantors under the Revolving Credit Facility.
Under the terms of the Revolving Credit Facility, at January 31, 2023, our maximum leverage ratio, as defined, was not permitted to exceed 1.75 to 1.00, and we were required to maintain a minimum tangible net worth, as defined, of no less than approximately $4.00 billion. Under the terms of the Revolving Credit Facility, at January 31, 2023, our leverage ratio was approximately 0.38 to 1.00, and our tangible net worth was approximately $6.15 billion. Based upon the terms of the Revolving Credit Facility, our ability to repurchase our common stock was limited to approximately $3.55 billion as of January 31, 2023. In addition, under the provisions of the Revolving Credit Facility, our ability to pay cash dividends was limited to approximately $2.15 billion as of January 31, 2023.
At January 31, 2023, we had no outstanding borrowings under the Revolving Credit Facility and had approximately $120.4 million of outstanding letters of credit that were issued under the Revolving Credit Facility. At January 31, 2023, the interest rate on outstanding borrowings under the Revolving Credit Facility would have been 5.67% per annum.
On February 14, 2023, we entered into a new five-year senior unsecured revolving credit facility with a syndicate of banks that is scheduled to terminate on February 14, 2028. The new agreement provides for a revolving credit facility with committed borrowing capacity of $1.905 billion. The terms of the new credit facility are substantially the same as those of the Revolving Credit Facility, except that the LIBOR-based interest rate provisions have been replaced with SOFR-based provisions. As with the Revolving Credit Facility, Toll Brothers, Inc. and substantially all of its home building subsidiaries are guarantors of the borrower’s obligations under the new credit facility. In connection with the execution of the new revolving credit facility, the Revolving Credit Facility was terminated.
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Loans Payable – Other
“Loans payable – other” primarily represents purchase money mortgages on properties we acquired that the seller had financed, project-level financing, and various revenue bonds that were issued by government entities on our behalf to finance community infrastructure and our manufacturing facilities. At January 31, 2023, the weighted-average interest rate on “Loans payable – other” was 4.19% per annum.
Senior Notes
At January 31, 2023, we had five issues of senior notes outstanding with an aggregate principal amount of $2.00 billion.
In our first quarter of fiscal 2022, we redeemed the remaining $409.9 million principal amount of 5.875% Senior Notes due February 15, 2022, at par, plus accrued interest.
Mortgage Company Loan Facility
Toll Brothers Mortgage Company (“TBMC”), our wholly owned mortgage subsidiary, has a mortgage warehousing agreement (the “Warehousing Agreement”) with a bank, which has been amended from time to time, to finance the origination of mortgage loans by TBMC. The Warehousing Agreement is accounted for as a secured borrowing under ASC 860, “Transfers and Servicing.” The Warehousing Agreement provides for loan purchases up to $75.0 million, subject to certain sublimits. In addition, the Warehousing Agreement provides for an accordion feature under which TBMC may request that the aggregate commitments under the Warehousing Agreement be increased to an amount up to $150.0 million for a short period of time. In April 2022, the Warehousing Agreement was amended and restated to extend the expiration date to March 31, 2023 and borrowings thereunder bear interest at the Bloomberg Short-Term Bank Yield Index Rate (“BSBY”) plus 1.75% per annum (with a BSBY floor of 0.50%). At January 31, 2023, the interest rate on the Warehousing Agreement was 6.26% per annum.
6. Accrued Expenses
Accrued expenses at January 31, 2023 and October 31, 2022 consisted of the following (amounts in thousands):
January 31,
2023		October 31,
2022
Land, land development, and construction$352,549 $334,975 
Compensation and employee benefits147,807 223,609 
Escrow liability associated with our wholly owned captive title company40,965 44,115 
Self-insurance251,529 251,576 
Warranty156,895 164,409 
Lease liabilities143,714 139,664 
Deferred income46,540 50,973 
Interest34,654 31,988 
Commitments to unconsolidated entities28,276 26,905 
Other47,617 77,773 
$1,250,546 $1,345,987 
The table below provides, for the periods indicated, a reconciliation of the changes in our warranty accrual (amounts in thousands):
 Three months ended January 31,
 20232022
Balance, beginning of period$164,409 $145,062 
Additions – homes closed during the period7,186 9,455 
Change in accruals for homes closed in prior years – net2,096 2,957 
Charges incurred(16,796)(14,431)
Balance, end of period$156,895 $143,043 
Since fiscal 2014, we have received water intrusion claims from owners of homes built since 2002 in communities located in Pennsylvania and Delaware. Our recorded estimated repair costs to resolve these claims were approximately $45.6 million at January 31, 2023 and $46.9 million at October 31, 2022, and are included in the Warranty accrued expense above. We continue
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to perform review procedures to assess, among other things, the number of affected homes, whether repairs are likely to be required, and the extent of such repairs.
Our review process, conducted quarterly, includes an analysis of many factors to determine whether a claim is likely to be received and the estimated costs to resolve any such claim, including: the closing dates of the homes; the number of claims received; our inspection of homes; an estimate of the number of homes we expect to repair; the type and cost of repairs that have been performed in each community; the estimated costs to remediate pending and future claims; the expected recovery from our insurance carriers and suppliers; and the previously recorded amounts related to these claims. We also monitor legal developments relating to these types of claims and review the volume, relative merits and adjudication of claims in litigation or arbitration. Our review process includes a number of estimates that are based on assumptions with uncertain outcomes. Due to the degree of judgment required in making these estimates and the inherent uncertainty in potential outcomes, it is reasonably possible that our actual costs and recoveries could differ from those recorded and such differences could be material. In addition, due to such uncertainty, we are unable to estimate the range of any such differences.
7. Income Taxes
We recorded income tax provisions of $62.3 million and $48.9 million for the three months ended January 31, 2023 and 2022, respectively. The effective tax rate was 24.5% for the three months ended January 31, 2023, compared to 24.4% for the three months ended January 31, 2022. The income tax provisions for all periods included the provision for state income taxes, interest accrued on anticipated tax assessments, and excess tax benefits related to stock-based compensation.
We are subject to state tax in the jurisdictions in which we operate. We estimate our state tax liability based upon the individual taxing authorities’ regulations, estimates of income by taxing jurisdiction, and our ability to utilize certain tax-saving strategies. Based on our estimate of the allocation of income or loss among the various taxing jurisdictions and changes in tax regulations and their impact on our tax strategies, we estimate that our state income tax rate for the full fiscal year 2023 will be approximately 5.7%. Our state income tax rate for the full fiscal year 2022 was 5.6%.
At January 31, 2023, we had $5.3 million of gross unrecognized tax benefits, including interest and penalties. If these unrecognized tax benefits were to reverse in the future, they would have a beneficial impact on our effective tax rate at that time. During the next 12 months, it is reasonably possible that our unrecognized tax benefits will change, but we are not able to provide a range of such change. The possible changes would be principally due to the expiration of tax statutes, settlements with taxing jurisdictions, increases due to new tax positions taken, and the accrual of estimated interest and penalties.
8. Stock-Based Benefit Plans
We grant stock options and various types of restricted stock units to our employees and our non-employee directors. Additionally, we have an employee stock purchase plan that allows employees to purchase our stock at a discount. Information regarding the amount of total stock-based compensation expense and tax benefit recognized by us, for the periods indicated, is as follows (amounts in thousands):
Three months ended January 31,
20232022
Total stock-based compensation expense recognized$14,384 $13,615 
Income tax benefit recognized$3,638 $3,413 
At January 31, 2023 and October 31, 2022, the aggregate unamortized value of unvested stock-based compensation awards was approximately $25.7 million and $15.5 million, respectively.
9. Stockholders’ Equity
Stock Repurchase Program
From time to time since fiscal 2017, our Board of Directors has renewed its authorization to repurchase up to 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. Most recently, on May 17, 2022, our Board of Directors renewed its authorization to repurchase 20 million shares of our common stock. Shares may be repurchased for general corporate purposes, including to obtain shares for the Company’s equity awards and other employee benefit plans. The Board of Directors did not fix any expiration date for this repurchase program.
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The table below provides, for the periods indicated, information about our share repurchase programs:
 Three months ended January 31,
 20232022
Number of shares purchased (in thousands)187 3,013 
Average price per share$49.95 $61.65 
Remaining authorization at January 31 (in thousands)14,389 9,550 
Cash Dividends
During the three months ended January 31, 2023 and 2022, we declared and paid cash dividends of $0.20 and $0.17 per share, respectively, to our shareholders.
Accumulated Other Comprehensive Income (Loss)
The changes in each component of accumulated other comprehensive income (loss) (“AOCI”), for the periods indicated, were as follows (amounts in thousands):
Three months ended January 31,
20232022
Employee Retirement Plans
Beginning balance$2,475 $(6,024)
Gains reclassified from AOCI to net income (1)
23 451 
Less: Tax benefit (2)
(6)(113)
Net gains reclassified from AOCI to net income17 338 
Other comprehensive income – net of tax17 338 
Ending balance$2,492 $(5,686)
Derivative Instruments
Beginning balance$35,143 $7,133 
(Losses) gains on derivative instruments(4,297)5,748 
Less: Tax benefit (expense)1,086 (1,441)
Net (losses) gains on derivative instruments(3,211)4,307 
(Losses) gains reclassified from AOCI to net income (3)
(362)76 
Less: Tax expense (benefit) (2)
92 (19)
Net (gains) losses reclassified from AOCI to net income(270)57 
Other comprehensive (loss) income – net of tax(3,481)4,364 
Ending balance$31,662 $11,497 
Total AOCI ending balance$34,154 $5,811 
(1) Reclassified to “Other income – net”
(2) Reclassified to “Income tax provision”
(3) Reclassified to “Cost of revenues – home sales”
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10. Earnings per Share Information
The table below provides, for the periods indicated, information pertaining to the calculation of earnings per share, common stock equivalents, weighted-average number of antidilutive options, and shares issued (amounts in thousands):
 Three months ended January 31,
 20232022
Numerator:
Net income as reported$191,530 $151,904 
Denominator:
Basic weighted-average shares111,397 120,996 
Common stock equivalents (1)