As we reach the midpoint of 2026, I’m pleased to share our Arizona Division Q1/Q2 Progress Report with you. Taren, Kennedy, with reporting from our Dept leadership team, have put together a brief, but informational report on our efforts, accomplishments, key milestones, and results in the first half of Fiscal 2026. My goal in sharing this report is simple: to keep everyone informed, connected, and aware of the many contributions being made across every function of our business.
There is no question that we are operating in a challenging market. The homebuilding industry continues to require discipline, creativity, patience, and teamwork, and Arizona, with our own affordability problems is no exception. Even so, this report is a reminder that progress is still being made every day. Across our communities and departments, teams are solving problems, supporting one another, serving our customers, opening new opportunities, and continuing to move the business forward.
Thank you for your hard work, professionalism, and commitment through the first half of the year. As we look ahead, let’s continue to keep our heads up, stay focused on what we can control, take great care of our customers, and take great care of each other. If we remain disciplined, accountable, and united, we will continue to build momentum and put ourselves in the best position for stronger results in the quarters ahead.
Bob F laherty
Bob Flaherty Group President, Arizona
F O R E W O R D
COMMUNITY PLANNING
Q1 & Q2 Updates
Community Planning activity remains strong in the first half of FY2026, with six communities open, seven model homes open, and strategic amenity investments scheduled through 2028.
6 of 7 communities opened in FY2026
7 of 9 new model homes opened in FY2026 +$750K year-to-date HOA expense savings
R E P O R T S
CUSTOMER CARE
Q2 Improvements & Community Closeouts
The Arizona Division has transitioned away from the previous 30-day and 11-month check-ins and now follows a service-on-demand approach for warrantable repairs, with the exception of expansion and contraction repairs, which continue to be addressed at year-end. HVAC labor costs are no longer covered during the second year. Communities including Ranch Gate and Reserve at Black Mountain are nearing closeout.
Ongoing training efforts include the March 2026 HVAC Field Training with Ron Brocks, the May 2026 kickoff and midway meetings for customer-facing interaction training, and upcoming sessions consisting of an XO Windows warehouse tour in June and field training with Brewer Plumbing in July.
E P O R T S
LAND ACQUISITION
Land Acquisition Department Q2 2026 Status
NOTABLE MILESTONES
Closed escrow on Ashmoore (492-acres, 1,066 lots)
Rezoning and preliminary plat approval for Aspen & Wrangler
Preliminary plat approval for Arroyo Vista & Hawk
TEAM ENGAGEMENT
Participated in HomeAid Charity Golf Tournament
Participated in HBACA PAC Tournament
Participated in Office Olympics
Exiting DD on Arcadia Sky
Exiting DD on McDowell Mountain Ranch Townhomes
Participated in various networking opportunities
FY 2026 STRATEGIC INITIATIVES
P O R T S
Source a new deal in each targeted luxury infill submarket
Respond to all solicitations and leads in at least 24 hours
Reload Southeast Valley Luxury and AFL pipelines
LAND DEVELOPMENT
First Half Fiscal Year 2026 Update
Land Development made steady progress throughout the first half of the year, with key milestones achieved across planning, infrastructure coordination, and project execution. Several development phases moved forward on schedule, supported by strong collaboration between engineering, construction, and regulatory teams. As we move into the second half of the year, priorities will include advancing active projects, streamlining approvals, and ensuring timely delivery of development goals.
169 of 403
Building Permit Ready Lots in FY2026
234 of 403
Under Development Lots in FY2026
$17.3M
E P O R T S
PRODUCTION
Q1/Q2 Production & Quality Performance Summary
Total Closings: 74 Exceeded projection of 65 closings, delivering a positive start to the year Q2 Goal: 110 closings
Total Closings: 79 Missed November projections of 110 closings Q3 Goal: 134 closings
CLOSINGS FIRST HALF OF FISCAL 2026 TOTALS
Total Closings: 153 closings YTD compared to a November projection of 175 closings
Fiscal Q1/Q2 was a fun but fast and furious quarter for the Purchasing team. Significant progress was made across operational efficiencies, process improvement, cost reduction initiatives, bidding activity, team development, and strategic option revisions.
Purchasing Mission Statement
Our mission is to source high-quality materials and services at the best overall value, supporting efficient, cost-effective homebuilding while upholding the Toll Brothers standard of excellence. Through strategic sourcing, disciplined purchasing, and strong collaboration with trusted trade partners, we protect margins, strengthen quality, and create lasting value for our customers in the Toll Brothers Arizona Division.
R
Finalized spec level 1 through 4 with associated graduating costs
No more OCIP - Removed from vendors contracts for single family homes
Roll-out of the new Electrical and LV National Program
Q3 anticipated to bid out approximately 16 new plans
Q3 goal of average base house sqft costs below $113.00
Team Development & Milestones
RPromoted team-building initiatives through participation in events with the Humane Society, Spring Training, and PopStroke to strengthen morale and collaboration
Coordinated shadowing opportunities with other departments for a greater understanding of how each department functions and best ways to support each other Sierra
SALES
Executive Narrative
The 2H26 operating plan requires a 233 sale load and 306 settlement load while protecting QMI margin and maintaining disciplined community level forecast assumptions, with special focus on the 187 Q4 settlements.
Team Development & Milestones
Several team members were nominated for MAME Awards, and the following were selected as finalists:
Katrina Dickes (Rookie Salesperson of the Year)
Heather Lacy (Salesperson of the Year)
Alexa Nachtweih (Salesperson of the Year)
Shaneice Rayunas (Salesperson of the Year)
Steven Sachs (Salesperson of the Year)
The Sales Team participated in many teambuilding events, including the Arizona Division Spring Training Game, team dinners, bonding events at Soda Jerk + Karaoke, and much more
The team continues to be motivated by engaging challenges, Phone-aThons, and competitions.
