9 unchanged sentences
Fiscal 2023 Operating Results
−Removed: In fiscal 2022, our number of homes closed and home sales revenues increased 1% and 20%, respectively, compared to the prior year, and our consolidated revenues increased 21% to $33.5 billion compared to $27.8 billion in the prior year.
+Added: In fiscal 2023, our number of homes closed increased slightly compared to the prior year, and our consolidated revenues increased 6% to $35.5 billion compared to $33.5 billion in the prior year.
Our pre-tax income was $6.3 billion in fiscal 2023 compared to $7.6 billion in fiscal 2022, and our pre-tax operating margin was 17.8% compared to 22.8%.
Net income was $4.8 billion in fiscal 2023 compared to $5.9 billion in fiscal 2022, and our diluted earnings per share was $13.82 compared to $16.51.
−Removed: Consolidated net cash provided by operating activities was $561.8 million in fiscal 2022 and $534.4 million in fiscal 2021, and cash provided by our homebuilding operations was $1.9 billion in fiscal 2022 compared to $1.2 billion in fiscal 2021.
+Added: Consolidated net cash provided by operating activities was $4.3 billion in fiscal 2023 and $561.8 million in fiscal 2022, and cash provided by our homebuilding operations was $3.1 billion in fiscal 2023 compared to $1.9 billion in fiscal 2022.
In fiscal 2023, our return on equity (ROE) was 22.7% compared to 34.5% in fiscal 2022, and our homebuilding return on inventory (ROI) was 29.7% compared to 42.8%.
2 unchanged sentences
Homebuilding ROI is calculated as homebuilding pre-tax income for the year divided by average inventory, where average inventory is the sum of ending homebuilding inventory balances for the trailing five quarters divided by five.
−Removed: During the first half of fiscal 2022 and for most of the third quarter, demand for our homes remained strong.
−Removed: In June 2022, we began to see a moderation in housing demand that persisted through the end of our fiscal year as mortgage interest rates increased substantially and inflationary pressures remained elevated.
−Removed: The supply of homes at affordable price points remains limited across most of our markets, and disruptions in the supply chains for certain building materials and tightness in the labor market have caused our construction cycle to lengthen.
−Removed: Although these pressures may persist for some time, we believe we are well-positioned to meet these changing market conditions with our affordable product offerings and lot supply, and we will manage our home pricing, sales incentives and number of homes in inventory based on the level of homebuyer demand.
+Added: Demand for new homes remained solid during fiscal 2023 as our net sales orders increased 3% compared to fiscal 2022.
+Added: Although inflationary pressures and mortgage interest rates remain elevated, demand improved beginning in the second quarter of fiscal 2023 due to typical seasonal factors, coupled with our use of incentives and pricing adjustments to adapt to market conditions.
+Added: The disruptions in the supply chain for certain building materials and tightness in the labor market we experienced during the past two years have largely subsided, and our construction cycle times are improving.
+Added: Our homebuilding operating margins are lower than last year due to pricing adjustments, incentives and cost inflation, but margins improved in the second half of the year as home prices and incentives stabilized and some reductions in construction costs were realized.
+Added: Although higher interest rates and economic uncertainty may persist for some time, the supply of both new and existing homes at affordable price points remains limited, and demographics supporting housing demand remain favorable.
+Added: We believe we are well-positioned to meet changing market conditions with our affordable product offerings and lot supply and will manage our home pricing, sales incentives and number of homes in inventory based on the level of homebuyer demand.
Within our homebuilding land and lot portfolio, our lots controlled through purchase contracts represent 75% of the lots owned and controlled at September 30, 2023 compared to 77% at September 30, 2022.
−Removed: Our relationship with Forestar and expanded relationships with other land developers across the country have allowed us to significantly increase the controlled portion of our lot pipeline over the past few years.
+Added: We remain focused on our relationships with Forestar and other land developers across the country and expect to continue to control a substantial majority of our lot pipeline through purchase contracts .
We believe our strong balance sheet and liquidity position provide us with the flexibility to operate effectively through changing economic conditions.
We plan to continue to generate strong cash flows from our homebuilding operations and manage our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments in each of our communities based on local housing market conditions.
−Removed: Our operating strategy focuses on enhancing long-term value to our shareholders by leveraging our financial and competitive position to maximize the returns on our inventory investments and generate strong profitability and cash flows, while managing risk and maintaining financial flexibility to navigate changing economic conditions.
−Removed: Our strategy remains consistent and includes the following initiatives:
+Added: Our operating strategy focuses on consistently enhancing long-term value to our shareholders by leveraging our financial and competitive position to maximize the returns on our inventory investments and generate strong profitability and cash flows, while managing risk and maintaining financial flexibility to navigate changing economic conditions.
+Added: Our strategy includes the following initiatives:
• Developing and retaining highly experienced and productive teams of personnel throughout our company that are aligned and focused on continuous improvement in our operational execution and financial performance.
2 unchanged sentences
• Offering new home communities that appeal to a broad range of entry-level, move-up, active adult and luxury homebuyers based on consumer demand in each market.
−Removed: • Modifying product offerings, sales pace, home prices and sales incentives as necessary in each of our markets to meet consumer demand and maintain affordability.
+Added: • Modifying product offerings, sales pace, home prices and incentives as necessary in each of our markets to meet consumer demand and maintain affordability.
• Delivering high quality homes and a positive experience to our customers both during and after the sale.
1 unchanged sentence
• Investing in lots, land and land development in desirable markets, while controlling the level of land and lots we own in each market relative to the local new home demand.
−Removed: • Continuing to seek opportunities to expand the portion of our land and finished lots controlled through purchase contracts with Forestar and other land developers.
−Removed: • Controlling the cost of goods purchased from both vendors and subcontractors.
+Added: • Controlling a significant portion of our land and finished lot position through purchase contracts with Forestar and other land developers.
+Added: • Controlling the cost of labor and goods provided by vendors and subcontractors.
• Improving the efficiency of our land development, construction, sales and other key operational activities.
7 unchanged sentences
Homebuilding:
−Removed: • Homebuilding revenues increased 20% to $31.9 billion compared to $26.6 billion.
−Removed: • Homes closed increased 1% to 82,744 homes, and the average closing price of those homes increased 19% to $385,100.
−Removed: • Net sales orders decreased 6% to 76,137 homes, while the value of net sales orders increased 9% to $30.4 billion.
+Added: • Homebuilding revenues decreased 1% to $31.7 billion compared to $31.9 billion.
+Added: • Homes closed increased slightly to 82,917 homes, and the average closing price of those homes decreased 1% to $381,600.
+Added: • Net sales orders increased 3% to 78,342 homes, while the value of net sales orders decreased 3% to $29.5 billion.
• Sales order backlog decreased 23% to 15,197 homes, and the value of sales order backlog decreased 26% to $5.9 billion.
8 unchanged sentences
• Homes in inventory totaled 42,000 compared to 46,400.
−Removed: • Owned lots totaled 131,100 compared to 127,800, and lots controlled through purchase contracts increased to 442,100 from 402,500.
+Added: • Owned lots totaled 141,100 compared to 131,100, and lots controlled through purchase contracts totaled 427,300 compared to 442,100.
• Homebuilding debt was $2.3 billion compared to $2.9 billion.
−Removed: • Homebuilding debt to total capital was 13.2% compared to 17.8%, and net homebuilding debt to total capital was 4.4% compared to 1.7%.
−Removed: • Forestar’s revenues increased 15% to $1.5 billion compared to $1.3 billion.
+Added: • Rental revenues were $2.6 billion compared to $510.2 million.
+Added: • Rental pre-tax income was $524.2 million compared to $202.0 million.
+Added: • Rental inventory totaled $2.7 billion compared to $2.6 billion.
+Added: • Multi-family rental units closed totaled 2,112 compared to 775.
+Added: • Single-family rental homes closed totaled 6,175 compared to 774.
+Added: • Forestar’s revenues decreased 5% to $1.4 billion compared to $1.5 billion.
Revenues in both fiscal 2023 and 2022 included $1.2 billion of revenue from land and lot sales to our homebuilding segment.
−Removed: • Forestar’s lots sold increased 11% to 17,691 compared to 15,915.
+Added: • Forestar’s lots sold decreased 21% to 14,040 compared to 17,691.
Lots sold to D.R.
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Financial Services:
−Removed: • Financial services revenues decreased 3% to $795.0 million compared to $823.6 million.
+Added: • Financial services revenues increased 1% to $801.5 million compared to $795.0 million.
• Financial services pre-tax income decreased 3% to $283.3 million compared to $290.6 million.
• Financial services pre-tax income was 35.3% of financial services revenues compared to 36.6%.
−Removed: • Rental revenues were $510.2 million compared to $267.8 million.
−Removed: • Rental pre-tax income was $202.0 million compared to $86.5 million.
−Removed: • Rental inventory totaled $2.6 billion compared to $840.9 million.
−Removed: • Multi-family rental units closed totaled 775 compared to 959.
−Removed: • Single-family rental homes closed totaled 774 compared to 257.
Consolidated Results:
• Consolidated revenues increased 6% to $35.5 billion compared to $33.5 billion.
−Removed: • Consolidated pre-tax income increased 42% to $7.6 billion compared to $5.4 billion.
+Added: • Consolidated pre-tax income decreased 17% to $6.3 billion compared to $7.6 billion.
• Consolidated pre-tax income was 17.8% of consolidated revenues compared to 22.8%.
1 unchanged sentence
• Net income attributable to D.R.
−Removed: Horton increased 40% to $5.9 billion compared to $4.2 billion.
+Added: Horton decreased 19% to $4.7 billion compared to $5.9 billion.
• Diluted net income per common share attributable to D.R.
−Removed: Horton increased 45% to $16.51 compared to $11.41.
−Removed: • Net cash provided by operations was $561.8 million compared to $534.4 million.
+Added: Horton decreased 16% to $13.82 compared to $16.51.
+Added: • Net cash provided by operations was $4.3 billion compared to $561.8 million.
• Stockholders’ equity was $22.7 billion compared to $19.4 billion.
2 unchanged sentences
Results of Operations — Homebuilding
−Removed: Our operating segments are our 78 homebuilding divisions, our majority-owned Forestar residential lot development operations, our financial services operations, our rental operations and our other business activities.
+Added: Our operating segments are our 81 homebuilding divisions, our rental operations, our majority-owned Forestar residential lot development operations, our financial services operations and our other business activities.
The homebuilding operating segments are aggregated into six reporting segments.
37 unchanged sentences
Net Sales Orders
−Removed: The number of net sales orders decreased 6% during 2022 compared to 2021, and the value of net sales orders increased 9% to $30.4 billion (76,137 homes) in 2022 from $27.7 billion (81,378 homes) in 2021 due to the increase in our average selling price.
−Removed: The average selling price of net sales orders during fiscal 2022 was $398,900, up 17% from the prior year.
−Removed: During the first half of fiscal 2022 and for most of the third quarter, demand for our homes remained strong.
−Removed: We restricted our sales order pace during the year in most of our communities to match our longer construction cycles, which have resulted from disruptions in the supply chains for certain building materials and tightness in the labor market.
−Removed: In June 2022, we began to see a moderation in housing demand that persisted through the end of our fiscal year as mortgage interest rates increased substantially and inflationary pressures remained elevated.
−Removed: Our net sales order volume decreased 15% in the fourth quarter of fiscal 2022 compared to the prior year quarter, and the average selling price of net sales orders declined by 4% sequentially in the fourth quarter compared to the third quarter.
−Removed: Although these pressures may persist for some time, we believe we are well-positioned to meet these changing market conditions with our affordable product offerings.
−Removed: In regions with a decrease in sales order volume, the markets contributing most to the decreases were:
−Removed: the Arizona and California markets in the Southwest;
−Removed: the Austin market in the South Central;
−Removed: the Louisiana markets in the Southeast;
−Removed: and the Atlanta market in the East.
−Removed: In the North region, the markets contributing most to the increase in sales order volume were the Chicago, Indianapolis, New Jersey and Iowa markets.
+Added: The number of net sales orders increased 3% during 2023 compared to 2022, while the value of net sales orders decreased 3% to $29.5 billion (78,342 homes) in 2023 from $30.4 billion (76,137 homes) in 2022 due to the decrease in our average selling price.
+Added: The average selling price of net sales orders during fiscal 2023 was $376,900, down 6% from the prior year.
+Added: The overall increase in sales order volume was primarily due to increases in the East and North where our Carolina (particularly Myrtle Beach) and Ohio markets, respectively, contributed the most.
+Added: In late fiscal 2022, we began to see a moderation in housing demand that persisted into early fiscal 2023 as mortgage interest rates increased substantially and inflationary pressures remained elevated.
+Added: Despite the continuation of those conditions, demand improved beginning in the second quarter of fiscal 2023 due to typical seasonal factors, coupled with an increased use of incentives and pricing adjustments to adapt to changing market conditions.
+Added: Although higher interest rates and economic uncertainty may persist for some time, the supply of both new and existing homes at affordable price points remains limited, and demographics supporting housing demand remain favorable.
+Added: We believe we are well-positioned to meet changing market conditions with our affordable product offerings and lot supply.
Our sales order cancellation rate (cancelled sales orders divided by gross sales orders for the period) was 20% in 2023 compared to 21% in 2022.
−Removed: The increase in the cancellation rate primarily reflects the moderation in demand we experienced beginning in June 2022 as mortgage rates increased substantially and inflationary pressures remained elevated throughout the remainder of the year.
−Removed: Our cancellation rate in the fourth quarter of fiscal 2022 was 32%, up sequentially from 24% in the third quarter.
Sales Order Backlog
27 unchanged sentences
Home Sales Revenue
−Removed: Revenues from home sales increased 20% to $31.9 billion (82,744 homes closed) in 2022 from $26.5 billion (81,965 homes closed) in 2021.
−Removed: Although our homes closed during the year were negatively impacted by supply chain disruptions, home sales revenues increased in all of our regions due to an increase in average selling price.
−Removed: The number of homes closed in 2022 increased 1% from 2021.
−Removed: In regions with an increase in closings volume, the markets contributing most to the increases were:
−Removed: the Dallas market in the South Central and the Chicago and New Jersey markets in the North.
−Removed: In regions with a decrease in closings volume, the markets contributing most to the decreases were:
−Removed: the Seattle market in the Northwest and the Orlando market in the Southeast.
+Added: Revenues from home sales decreased 1% to $31.6 billion (82,917 homes closed) in 2023 from $31.9 billion (82,744 homes closed) in 2022.
+Added: The increase in closings volume in the Southeast was due to our Florida markets (particularly Tampa) and in the North was due to our Indianapolis and Maryland markets.
+Added: The decrease in closings volume in the Southwest was due to our California markets (particularly Southern California).
Homebuilding Operating Margin Analysis
9 unchanged sentences
Home Sales Gross Profit
−Removed: Gross profit from home sales increased to $9.1 billion in 2022 from $6.8 billion in 2021 and increased 320 basis points to 28.7% as a percentage of home sales revenues.
−Removed: The percentage increase resulted from improvements of 340 basis points due to the average selling price of our homes closed increasing by more than the average cost of those homes, partially offset by increased warranty and construction defect costs of 20 basis points.
+Added: Gross profit from home sales decreased to $7.4 billion in 2023 from $9.1 billion in 2022 and decreased 520 basis points to 23.5% as a percentage of home sales revenues.
+Added: The percentage decrease resulted from a decrease of 530 basis points due to the average cost of our homes closed increasing while the average selling price of those homes decreased, partially offset by 10 basis points due to a reduction in warranty and construction defect costs.
We remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the returns on our inventory investments and adjust to local market conditions and new home demand.
−Removed: To adjust to market conditions, we increased our use of incentives in the fourth quarter of fiscal 2022, and our home sales gross profit margin declined sequentially by 180 basis points from 30.1% in the third quarter to 28.3% in the fourth quarter.
−Removed: During fiscal 2023, we expect to continue offering a higher level of incentives and also expect our average sales price to decrease, which will cause our gross profit margins to decline from current levels.
+Added: To adjust to changing market conditions and higher mortgage interest rates during fiscal 2023, we increased our use of incentives and reduced home prices and sizes of our home offerings where necessary to provide better affordability to homebuyers.
+Added: Based on current market conditions, we expect to continue offering a higher level of incentives in fiscal 2024.
Land/Lot Sales and Other Revenues
7 unchanged sentences
At the end of each quarter, we review the performance and outlook for all of our communities and land inventories for indicators of potential impairment and perform detailed impairment evaluations and analyses when necessary.
−Removed: As a result of these reviews, there were no impairments recorded in our homebuilding segment during the three months ended September 30, 2022 or during fiscal 2022.
−Removed: There were $5.6 million of homebuilding impairment charges recorded in fiscal 2021.
+Added: As a result of this review, there were $2.0 million of impairments recorded in our homebuilding segment during the three months ended September 30, 2023.
+Added: During fiscal 2023, impairment charges related to our homebuilding segment totaled $7.7 million.
+Added: There were no impairment charges recorded in our homebuilding segment in fiscal 2022.
As we manage our inventory investments across our operating markets to optimize returns and cash flows, we may modify our pricing and incentives, construction and development plans or land sale strategies in individual active communities and land held for development, which could result in the affected communities being evaluated for potential impairment.
1 unchanged sentence
These evaluations could result in impairment charges, which could be significant.
−Removed: During fiscal 2022 and 2021, earnest money and pre-acquisition cost write-offs related to land purchase contracts that we have terminated or expect to terminate were $57.2 million and $19.3 million, respectively.
+Added: During fiscal 2023 and 2022, earnest money and pre-acquisition cost write-offs related to our homebuilding segment’s land purchase contracts that we have terminated or expect to terminate were $53.0 million and $57.2 million, respectively.
Selling, General and Administrative (SG&A) Expense
9 unchanged sentences
Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer.
−Removed: Interest incurred by our homebuilding operations was $110.7 million and $93.6 million in fiscal 2022 and 2021, respectively.
−Removed: Interest charged to cost of sales was 0.6% and 0.7% of total cost of sales (excluding inventory and land option charges) in those years.
−Removed: Other income, net of other expenses, included in our homebuilding operations was $16.4 million in fiscal 2022 compared to $10.3 million in fiscal 2021.
−Removed: Other income consists of interest income and various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots.
+Added: Interest incurred by our homebuilding operations decreased 38% to $68.8 million in fiscal 2023 from $110.7 million in fiscal 2022, primarily due to a 25% decrease in our average homebuilding debt.
+Added: Interest charged to cost of sales was 0.4% and 0.5% of homebuilding cost of sales (excluding inventory and land option charges) in those years.
+Added: Other income, net of other expenses, included in our homebuilding operations increased to $78.8 million in fiscal 2023 compared to $16.4 million in fiscal 2022, primarily due to an increase in interest income.
+Added: Other income also consists of various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots.
The activities that result in this ancillary income are not significant, either individually or in the aggregate.
+Added: Business Acquisitions
+Added: In December 2022, we acquired the homebuilding operations of Riggins Custom Homes in Northwest Arkansas for approximately $107 million in cash.
+Added: The assets acquired included approximately 170 homes in inventory, 3,000 lots and a sales order backlog of 100 homes.
+Added: In June 2023, we acquired the homebuilding operations of Truland Homes for approximately $110 million in cash.
+Added: Truland Homes operates in Baldwin County, Alabama and Northwest Florida.
+Added: The assets acquired included approximately 155 homes in inventory, 620 lots and a sales order backlog of 55 homes.
+Added: We also acquired control of approximately 660 additional lots through land purchase contracts.
Homebuilding Results by Reporting Region
15 unchanged sentences
The amortization of capitalized interest and property taxes is allocated to each segment based on the segment’s cost of sales, while expenses associated with the corporate office are allocated to each segment based on the segment’s inventory balances.
−Removed: Northwest Region — Homebuilding revenues increased 6% in fiscal 2022 compared to fiscal 2021, due to increases in the average selling price of homes closed in all markets, partially offset by a decrease in the number of homes closed in our Seattle and Portland markets.
+Added: Northwest Region — Homebuilding revenues decreased 3% in fiscal 2023 compared to fiscal 2022, due to decreases in the average selling price of homes closed in most of our markets, partially offset by an increase in homes closed in our Salt Lake City and Seattle markets.
The region generated pre-tax income of $391.1 million in 2023 compared to $560.8 million in 2022.
−Removed: Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) increased by 130 basis points in 2022 compared to 2021, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes.
−Removed: As a percentage of homebuilding revenues, SG&A expenses increased by 10 basis points in 2022 compared to 2021.
−Removed: Southwest Region — Homebuilding revenues increased 19% in fiscal 2022 compared to fiscal 2021, primarily due to increases in the average selling price of homes closed in all markets.
+Added: Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) decreased by 600 basis points in 2023 compared to 2022, primarily due to the average cost of homes closed increasing while the average selling price of those homes decreased.
+Added: As a percentage of homebuilding revenues, SG&A expenses increased by 30 basis points in 2023 compared to 2022, primarily due to an increase in SG&A expenses.
+Added: Southwest Region — Homebuilding revenues decreased 12% in fiscal 2023 compared to fiscal 2022, primarily due to decreases in the number of homes closed in most markets and a decrease in the average selling price.
The region generated pre-tax income of $489.3 million in 2023 compared to $968.3 million in 2022.
−Removed: Home sales gross profit percentage increased by 330 basis points in 2022 compared to 2021, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes.
−Removed: As a percentage of homebuilding revenues, SG&A expenses decreased by 70 basis points in 2022 compared to 2021, primarily due to the increase in homebuilding revenues.
−Removed: South Central Region — Homebuilding revenues increased 34% in fiscal 2022 compared to fiscal 2021, primarily due to increases in the average selling price of homes closed in all markets.
+Added: Home sales gross profit percentage decreased by 820 basis points in 2023 compared to 2022, primarily due to the average cost of homes closed increasing while the average selling price of those homes decreased.
+Added: As a percentage of homebuilding revenues, SG&A expenses increased by 50 basis points in 2023 compared to 2022, primarily due to the decrease in homebuilding revenues.
+Added: South Central Region — Homebuilding revenues decreased 7% in fiscal 2023 compared to fiscal 2022, primarily due to decreases in the number of homes closed in our Dallas and Houston markets.
The region generated pre-tax income of $1.4 billion in 2023 compared to $1.9 billion in 2022.
−Removed: Home sales gross profit percentage increased by 370 basis points in 2022 compared to 2021, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes.
−Removed: As a percentage of homebuilding revenues, SG&A expenses decreased by 80 basis points in 2022 compared to 2021, primarily due to the increase in homebuilding revenues.
−Removed: Southeast Region — Homebuilding revenues increased 12% in fiscal 2022 compared to fiscal 2021, due to increases in the average selling price of homes closed in all markets, partially offset by a decrease in the number of homes closed.
+Added: Home sales gross profit percentage decreased by 490 basis points in 2023 compared to 2022, primarily due to the average cost of homes closed increasing while the average selling price of those homes decreased.
+Added: As a percentage of homebuilding revenues, SG&A expenses increased by 40 basis points in 2023 compared to 2022, primarily due to the decrease in homebuilding revenues.
+Added: Southeast Region — Homebuilding revenues increased 10% in fiscal 2023 compared to fiscal 2022, primarily due to increases in the number of homes closed in our Jacksonville, Orlando and Tampa markets.
The region generated pre-tax income of $1.7 billion in 2023 compared to $1.9 billion in 2022.
−Removed: Home sales gross profit percentage increased by 440 basis points in 2022 compared to 2021, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes.
−Removed: As a percentage of homebuilding revenues, SG&A expenses decreased by 30 basis points in 2022 compared to 2021, primarily due to the increase in homebuilding revenues.
−Removed: East Region — Homebuilding revenues increased 19% in fiscal 2022 compared to fiscal 2021, due to increases in the average selling price of homes closed in all markets.
−Removed: The region generated pre-tax income of $1.1 billion in 2022 compared to $795.1 million in 2021.
−Removed: Home sales gross profit percentage increased by 300 basis points in 2022 compared to 2021, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes.
+Added: Home sales gross profit percentage decreased by 520 basis points in 2023 compared to 2022, primarily due to the average cost of homes closed increasing by more than the average selling price of those homes.
As a percentage of homebuilding revenues, SG&A expenses decreased by 40 basis points in 2023 compared to 2022, primarily due to the increase in homebuilding revenues.
−Removed: North Region — Homebuilding revenues increased 27% in fiscal 2022 compared to fiscal 2021, due to increases in the average selling price and the number of homes closed in all markets.
+Added: East Region — Homebuilding revenues were essentially flat in fiscal 2023 compared to fiscal 2022.
+Added: The region generated pre-tax income of $935.7 million in 2023 compared to $1.1 billion in 2022.
+Added: Home sales gross profit percentage decreased by 350 basis points in 2023 compared to 2022, primarily due to the average cost of homes closed increasing while the average selling price of those homes decreased.
+Added: As a percentage of homebuilding revenues, SG&A expenses increased by 30 basis points in 2023 compared to 2022, primarily due to an increase in SG&A expenses.
+Added: North Region — Homebuilding revenues increased 7% in fiscal 2023 compared to fiscal 2022, due to increases in the number of homes closed in most of our markets.
The region generated pre-tax income of $350.8 million in 2023 compared to $456.3 million in 2022.
−Removed: Home sales gross profit percentage increased by 120 basis points in 2022 compared to 2021, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes.
−Removed: As a percentage of homebuilding revenues, SG&A expenses decreased by 20 basis points in 2022 compared to 2021, primarily due to the increase in homebuilding revenues.
+Added: Home sales gross profit percentage decreased by 470 basis points in 2023 compared to 2022, primarily due to the average cost of homes closed increasing while the average selling price of those homes decreased.
+Added: As a percentage of homebuilding revenues, SG&A expenses increased by 40 basis points in 2023 compared to 2022, primarily due to an increase in SG&A expenses.
Homebuilding Inventories, Land and Lot Position and Homes in Inventory
68 unchanged sentences
(1) Land/lots owned included approximately 50,300 and 37,600 owned lots that are fully developed and ready for home construction at September 30, 2023 and 2022, respectively.
−Removed: Land/lots owned also included land held for development representing 400 and 1,300 lots at September 30, 2022 and 2021, respectively.
(2) The total remaining purchase price of lots controlled through land and lot purchase contracts at September 30, 2023 and 2022 was $21.1 billion and $19.7 billion, respectively, secured by earnest money deposits of $1.8 billion and $1.6 billion, respectively.
The total remaining purchase price of lots controlled through land and lot purchase contracts at September 30, 2023 and 2022 included $1.3 billion and $1.4 billion, respectively, related to lot purchase contracts with Forestar, secured by $139.1 million and $131.7 million, respectively, of earnest money.
−Removed: Our lots controlled under land and lot purchase contracts include approximately 4,077 lots at September 30, 2022, representing lots controlled under contracts for which we do not expect to exercise our option to purchase the land or lots, but the underlying contracts have yet to be terminated.
−Removed: We have reserved the deposits related to these contracts if the deposits are not refundable.
−Removed: (3) Lots controlled at September 30, 2022 included approximately 36,700 lots owned or controlled by Forestar, 17,800 of which our homebuilding divisions have under contract to purchase and 18,900 of which our homebuilding divisions have a right of first offer to purchase.
+Added: (3) Lots controlled at September 30, 2023 included approximately 31,400 lots owned or controlled by Forestar, 14,400 of which our homebuilding divisions had under contract to purchase and 17,000 of which our homebuilding divisions had a right of first offer to purchase.
Of these, approximately 12,000 lots were in our Southeast region, 6,000 lots were in our East region, 4,700 lots were in our South Central region, 3,300 lots were in our Southwest region, 3,300 lots were in our North region and 2,100 lots were in our Northwest region.
3 unchanged sentences
At September 30, 2022, approximately 4,400 of our unsold homes were completed, of which approximately 90 homes had been completed for more than six months.
−Removed: Homes in inventory exclude approximately 1,800 model homes at both September 30, 2022 and 2021.
+Added: Homes in inventory exclude approximately 2,100 and 1,800 model homes at September 30, 2023 and 2022, respectively.
+Added: Results of Operations — Rental
+Added: Our rental segment consists of single-family and multi-family rental operations.
+Added: The single-family rental operations primarily construct and lease single-family homes within a community and then market each community for a bulk sale of rental homes.
+Added: The multi-family rental operations develop, construct, lease and sell residential rental properties, with a primary focus on constructing garden style apartment communities in high growth suburban markets.
+Added: Single-family and multi-family rental property sales are recognized as revenues, and rental income is recognized as other income.
+Added: The following tables provide further information regarding our rental operations as of and for the fiscal years ended September 30, 2023 and 2022.
+Added: Rental Homes/Units Closed
+Added: Year Ended September 30,
+Added: Single-family rental homes 6,175 774
+Added: Multi-family rental units 2,112 775
+Added: Results of Operations
+Added: (In millions)
+Added: Single-family rental $ 2,014.8 $ 313.8
+Added: Multi-family rental and other 590.7 196.4
+Added: Total revenues 2,605.5 510.2
+Added: Cost of sales
+Added: Single-family rental 1,504.8 147.8
+Added: Multi-family rental and other 382.0 95.6
+Added: Inventory and land option charges 6.7 0.8
+Added: Total cost of sales 1,893.5 244.2
+Added: Selling, general and administrative expense 290.2 91.1
+Added: Other (income) expense (102.4) (27.1)
+Added: Income before income taxes $ 524.2 $ 202.0
+Added: Revenues from our rental operations increased to $2.6 billion in fiscal 2023 from $510.2 million in fiscal 2022, and pre-tax income increased to $524.2 million from $202.0 million.
+Added: These increases reflect the significant growth of our rental operations resulting from our increased investment in this segment of our business during the past two years.
+Added: At September 30, 2023, our rental property inventory of $2.7 billion included $1.3 billion of inventory related to our single-family rental operations and $1.4 billion of inventory related to our multi-family rental operations.
+Added: At September 30, 2022, our rental property inventory of $2.6 billion included $1.7 billion of inventory related to our single-family rental operations and $897.2 million of inventory related to our multi-family rental operations.
+Added: Single-family rental homes and lots and multi-family rental units at September 30, 2023 and 2022 consisted of the following:
+Added: Rental Inventory
+Added: September 30,
+Added: Single-family rental homes (1) 5,630 7,400
+Added: Single-family rental lots (2) 3,380 6,680
+Added: Multi-family rental units (3) 9,150 6,110
+Added: ________________________
+Added: (1) Single-family rental homes at September 30, 2023 consist of 1,260 homes under construction and 4,370 completed homes.
+Added: Single-family rental homes at September 30, 2022 consist of 3,870 homes under construction and 3,530 completed homes.
+Added: (2) Single-family rental lots at September 30, 2023 consist of 2,210 undeveloped lots and 1,170 finished lots.
+Added: Single-family rental lots at September 30, 2022 consist of 4,910 undeveloped lots and 1,770 finished lots.
+Added: (3) Multi-family rental units at September 30, 2023 consist of 7,200 units under construction and 1,950 units that were substantially complete and in the lease-up phase.
+Added: Multi-family rental units at September 30, 2022 consist of 5,810 units under construction and 300 units that were substantially complete and in the lease-up phase.
Results of Operations — Forestar
−Removed: In fiscal 2018, we acquired 75% of the outstanding shares of Forestar and at September 30, 2022, we owned 63% of its outstanding shares.
+Added: At September 30, 2023, we owned 63% of the outstanding shares of Forestar.
Forestar is a publicly traded residential lot development company with operations in 54 markets across 22 states as of September 30, 2023.
−Removed: Forestar’s segment results are presented on their historical cost basis, consistent with the manner in which management evaluates segment performance.
(See Note B to the accompanying financial statements for additional Forestar segment information.)
7 unchanged sentences
Selling, general and administrative expense 97.7 93.6
−Removed: Loss on extinguishment of debt — 18.1
Other (income) expense (15.3) (5.4)
Income before income taxes $ 221.6 $ 235.8
−Removed: Revenues are primarily derived from sales of single-family residential lots to local, regional and national homebuilders.
−Removed: During fiscal 2022 and 2021, Forestar’s land and lot sales, including the portion sold to D.R.
−Removed: Horton and the revenues generated from those sales, were as follows:
+Added: Forestar’s revenues are primarily derived from sales of single-family residential lots to local, regional and national homebuilders and land bankers for homebuilders.
+Added: The following tables provide further information regarding Forestar’s revenues and lot position as of and for the fiscal years ended September 30, 2023 and 2022.
Year Ended September 30,
−Removed: ($ in millions)
−Removed: Total residential single-family lots sold 17,691 15,915
−Removed: Residential single-family lots sold to D.R.
−Removed: Horton 14,895 14,839
−Removed: Residential lot sales revenues from sales to D.R.
+Added: Lots Sold Value (In millions)
+Added: 2023 2022 2023 2022
+Added: Residential single-family lots sold
+Added: Lots sold to D.R.
Horton 12,249 14,895 $ 1,094.7 $ 1,231.8
+Added: Total lots sold 14,040 17,691 $ 1,275.7 $ 1,455.5
Tract acres sold to D.R.
−Removed: Tract sales revenues from sales to D.R.
Horton 820 — $ 114.1 $ —
+Added: September 30,
+Added: Residential single-family lots in inventory and under contract
+Added: Lots owned 52,400 61,800
+Added: Lots controlled through land purchase contracts 26,800 28,300
+Added: Total lots owned and controlled 79,200 90,100
+Added: Owned lots under contract to sell to D.R.
+Added: Horton 14,400 17,800
+Added: Owned lots under contract to customers other than D.R.
+Added: Horton 600 1,400
+Added: Total owned lots under contract 15,000 19,200
+Added: Owned lots subject to right of first offer with D.R.
+Added: Horton 17,000 18,900
+Added: Owned lots fully developed 6,400 5,500
+Added: At September 30, 2023 and 2022, Forestar’s inventory, which includes land and lots developed, under development and held for development, totaled $1.8 billion and $2.0 billion, respectively.
+Added: Forestar’s inventory and land option charges during fiscal 2023 and 2022 included impairment charges of $19.4 million and $3.8 million, respectively.
SG&A expense for fiscal 2023 and 2022 included charges of $3.8 million and $4.1 million, respectively, related to the shared services agreement between Forestar and D.R.
1 unchanged sentence
Horton provides Forestar with certain administrative, compliance, operational and procurement services.
−Removed: Loss on extinguishment of debt of $18.1 million in fiscal 2021 was due to Forestar’s redemption of its $350 million principal amount of 8.0% senior notes due 2024 in May 2021.
−Removed: At September 30, 2022, Forestar owned directly or controlled through land and lot purchase contracts approximately 90,100 residential lots, of which 5,500 are fully developed.
−Removed: Approximately 36,700 of these lots are under contract to sell to D.R.
−Removed: Horton or subject to a right of first offer under the master supply agreement with D.R.
−Removed: Horton, and 1,400 of these lots are under contract to sell to other builders.
Results of Operations — Financial Services
33 unchanged sentences
Mortgage Loan Activity
−Removed: The volume of loans originated by our mortgage operations is directly related to the number of homes closed by our homebuilding operations.
−Removed: In fiscal 2022, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers increased 5% from the prior year due to an increase in the percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing.
−Removed: Homes closed by our homebuilding operations constituted 98% of DHI Mortgage loan originations in both fiscal 2022 and 2021.
−Removed: This percentage reflects DHI Mortgage’s consistent focus on the captive business provided by our homebuilding operations.
+Added: DHI Mortgage’s primary focus is to originate loans for our homebuilding operations and those loan originations account for the majority of its total loan volume.
+Added: In fiscal 2023, while the number of homes closed by our homebuilding operations increased only slightly, the percentage of the loans originated by DHI Mortgage related to those homes closed was 76%, up from 69% in fiscal 2022.
+Added: This increase reflects DHI Mortgage’s ongoing efforts to align their business with our homebuilding operations by offering competitive products and pricing.
The number of loans sold increased 9% in fiscal 2023 compared to the prior year.
3 unchanged sentences
Financial Services Revenues and Expenses
−Removed: Revenues from our mortgage operations decreased 8% to $617.4 million in fiscal 2022 from $670.8 million in fiscal 2021, primarily due to a more competitive environment in the mortgage industry due to rising interest rates.
−Removed: Revenues from our title operations increased 16% to $177.6 million in fiscal 2022 from $152.8 million in fiscal 2021, primarily due to an increase in the average premium collected on closing transactions from higher sales prices of homes closed by our homebuilding operations, as well as expansion of our title insurance operations.
+Added: Total loan origination volume increased 8% during fiscal 2023, while revenues from our mortgage operations decreased slightly to $616.3 million from $617.4 million in fiscal 2022, primarily due to competitive pricing pressure in the secondary market.
+Added: Revenues from our title operations increased 4% to $185.2 million in fiscal 2023 from $177.6 million in fiscal 2022.
General and administrative (G&A) expense related to our financial services operations increased 9% to $594.9 million in fiscal 2023 from $547.6 million in the prior year.
+Added: G&A expenses increased in fiscal 2023 due to increased loan origination volume.
As a percentage of financial services revenues, G&A expense was 74.2% in fiscal 2023 compared to 68.9% in the prior year.
2 unchanged sentences
Other income, net of other expense, included in our financial services operations consists primarily of the interest income of our mortgage subsidiary.
−Removed: Primarily as a result of the reduction in revenue and operating margin of our mortgage operations, pre-tax income from our financial services operations decreased 20% to $290.6 million in fiscal 2022 from $364.6 million in fiscal 2021.
−Removed: Results of Operations — Rental
−Removed: Our rental segment consists of multi-family and single-family rental operations.
−Removed: The multi-family rental operations develop, construct, lease and sell residential rental properties, with a primary focus on constructing garden style multi-family rental communities typically accommodating 200 to 400 dwelling units in high growth suburban markets.
−Removed: The single-family rental operations primarily construct and lease single-family homes within a community and then market each community for a bulk sale of rental homes.
−Removed: Multi-family and single-family rental property sales are recognized as revenues, and rental income is recognized as other income.
−Removed: Results of operations for the rental segment for the fiscal years ended September 30, 2022 and 2021 were as follows:
−Removed: Year Ended September 30,
−Removed: (In millions)
−Removed: Single-family rental $ 313.8 $ 75.9
−Removed: Multi-family rental and other 196.4 191.9
−Removed: Total revenues 510.2 267.8
−Removed: Cost of sales
−Removed: Single-family rental 147.8 42.4
−Removed: Multi-family rental and other 96.4 119.1
−Removed: Total cost of sales 244.2 161.5
−Removed: Selling, general and administrative expense 91.1 44.6
−Removed: Other (income) expense (27.1) (24.8)
−Removed: Income before income taxes $ 202.0 $ 86.5
−Removed: At September 30, 2022, our rental property inventory of $2.6 billion included $1.7 billion of inventory related to our single-family rental operations and $897.2 million of inventory related to our multi-family rental operations.
−Removed: At September 30, 2021, our rental property inventory of $840.9 million included $415.8 million of assets related to our single-family rental operations and $425.1 million of assets related to our multi-family rental operations.
−Removed: During fiscal 2022, we sold 774 single-family rental homes for $313.8 million compared to 257 homes sold for $75.9 million in fiscal 2021.
−Removed: At September 30, 2022, we had single-family rental properties consisting of 7,400 homes, of which 3,530 were completed, and 6,680 lots, of which 1,770 were finished.
−Removed: At September 30, 2021, we had single-family rental properties consisting of 1,895 homes, of which 895 homes were completed, and 3,930 lots, of which 760 were finished.
−Removed: During fiscal 2022, we sold 775 multi-family rental units for $195.5 million compared to 959 units sold for $191.9 million in fiscal 2021.
−Removed: At September 30, 2022, we had multi-family rental properties consisting of 5,810 units under active construction and 300 units that were substantially complete and in the lease-up phase.
−Removed: At September 30, 2021, we had multi-family rental properties consisting of 4,340 units under active construction and 350 units that were substantially complete and in the lease-up phase.
+Added: Other income increased 78% to $76.7 million in fiscal 2023 from $43.2 million in the prior year, primarily due to an increase in interest rates on our loan origination volume.
Results of Operations — Other Businesses
−Removed: In addition to our homebuilding, Forestar, financial services and rental operations, we engage in other business activities through our subsidiaries.
−Removed: We conduct insurance-related operations, own water rights and other water-related assets, own non-residential real estate including ranch land and improvements and own and operate energy-related assets.
+Added: In addition to our homebuilding, rental, Forestar and financial services operations, we engage in other business activities through our subsidiaries.
+Added: We conduct insurance-related operations, own water rights and other water-related assets and own non-residential real estate including ranch land and improvements.
The pre-tax income of all of our subsidiaries engaged in other business activities was $32.4 million in fiscal 2023 compared to $58.1 million in fiscal 2022.
−Removed: In May 2022, we acquired Vidler Water Resources, Inc.
−Removed: (Vidler) for a total purchase price of $290.5 million.
−Removed: The assets acquired through the Vidler transaction consisted primarily of water rights and other water-related assets.
Results of Operations — Consolidated
1 unchanged sentence
Pre-tax income was $6.3 billion in fiscal 2023 compared to $7.6 billion in fiscal 2022.
−Removed: The increase was primarily due to an increase in pre-tax income generated by our homebuilding operations as a result of higher revenues from increased average selling prices and an increase in home sales gross margin.
−Removed: In fiscal 2022, our homebuilding, financial services, Forestar and rental businesses generated pre-tax income of $6.9 billion, $290.6 million, $235.8 million and $202.0 million, respectively, compared to $4.8 billion, $364.6 million, $146.6 million and $86.5 million, respectively, in fiscal 2021.
+Added: The decrease was primarily due to a decrease in the pre-tax income of our homebuilding operations as a result of a decrease in home sales gross margin.
+Added: In fiscal 2023, our homebuilding, rental, financial services and Forestar businesses generated pre-tax income of $5.3 billion, $524.2 million, $283.3 million and $221.6 million, respectively, compared to $6.9 billion, $202.0 million, $290.6 million and $235.8 million, respectively, in fiscal 2022.
Our income tax expense was $1.5 billion and $1.7 billion in fiscal 2023 and 2022, respectively, and our effective tax rate was 24.1% and 22.7% in those years.
The effective tax rates for both years include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient homes tax credits.
−Removed: The federal energy efficient homes tax credit was retroactively extended to qualifying homes closed from January 1, 2022 through December 31, 2032 as a result of the enactment of the Inflation Reduction Act (IRA) that was signed into law on August 16, 2022.
−Removed: Beginning with homes closed after December 31, 2022, the requirements to qualify for the energy efficient homes tax credit will be increased.
−Removed: We are currently analyzing the impact of the increased requirements on our ability to qualify homes for the credit.
−Removed: Other tax related provisions of the IRA, including the corporate alternative minimum tax, had no material impact on our financial statements and are not expected to have a material impact on our financial statements in the future.
Our deferred tax assets, net of deferred tax liabilities, were $202.0 million at September 30, 2023 compared to $159.0 million at September 30, 2022.
We have a valuation allowance of $14.8 million and $17.9 million at September 30, 2023 and 2022, respectively, related to deferred tax assets for state net operating loss (NOL), state capital loss and tax credit carryforwards that are expected to expire before being realized.
−Removed: Of the $17.9 million valuation allowance, $15.8 million relates to state NOL, state capital loss and tax credit carryforwards acquired in the Vidler acquisition.
−Removed: We will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to our remaining state NOL, state capital loss and tax credit carryforwards.
+Added: We will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to our remaining state NOL and tax credit carryforwards.
Any reversal of the valuation allowance in future periods will impact our effective tax rate.
−Removed: We have $30.9 million of tax benefits for a federal NOL carryforward acquired in the Vidler acquisition.
−Removed: The utilization of the federal NOL is subject to IRC Section 382 limitations;
−Removed: however, it is expected that all of the federal NOL will be utilized within the carryforward period.
−Removed: Horton has $12.0 million of tax benefits for state NOL carryforwards that expire at various times depending on the tax jurisdiction.
−Removed: Of the total amount, $4.3 million of the tax benefits expire over the next ten years and the remaining $7.7 million expire from fiscal years 2033 to 2042.
−Removed: Forestar has $1.2 million of tax benefits for state NOL carryforwards that expire at various times depending on the tax jurisdiction.
−Removed: The accounting for deferred taxes is based upon estimates of future results.
−Removed: Differences between the anticipated and actual outcomes of these future results could have a material impact on our consolidated results of operations or financial position.
−Removed: Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation of our deferred tax assets.
−Removed: Unrecognized tax benefits are the differences between tax positions taken or expected to be taken in a tax return and the benefits recognized in our financial statements.
−Removed: Our unrecognized tax benefits totaled $2.9 million at both September 30, 2022 and 2021.
−Removed: Horton is subject to federal income tax and state income tax in multiple jurisdictions.
−Removed: The statute of limitations for D.R.
−Removed: Horton’s major tax jurisdictions remains open for examination for fiscal years 2018 through 2022.
−Removed: An audit by the Internal Revenue Service of a federal refund claim related to the retroactive extension of energy efficient homes tax credits for fiscal 2018 and additional energy efficient tax credits for fiscal 2017 was completed during the current fiscal year with no material adjustments.
−Removed: Horton is under audit by various states;
−Removed: however, we are not aware of any significant findings by the state taxing authorities.
−Removed: Forestar is subject to federal income tax and state income tax in multiple jurisdictions.
−Removed: The statute of limitations for Forestar’s federal income tax remains open for examination for tax years 2019 through 2022.
−Removed: The statute of limitations for Forestar’s major state tax jurisdictions generally remain open for examination for tax years 2017 through 2022.
−Removed: Forestar is not currently under audit for federal or state income taxes.
Capital Resources and Liquidity
1 unchanged sentence
Our current levels of cash, borrowing capacity and balance sheet leverage provide us with the operational flexibility to adjust to changes in economic and market conditions.
−Removed: We have continued to increase our investments in homebuilding inventories and single-family and multi-family rental properties to expand our operations and grow our revenues and profitability.
+Added: We have continued to increase our investments in our homebuilding and rental inventories to expand our operations.
We are also returning capital to our shareholders through dividend payments and repurchases of our common stock.
We are maintaining significant homebuilding cash balances and liquidity to support the increased scale and level of activity in our business and to provide flexibility to adjust to changing conditions and opportunities.
−Removed: At September 30, 2022, we had outstanding notes payable with varying maturities totaling an aggregate principal amount of $6.1 billion, of which $2.5 billion is payable within 12 months and includes $1.6 billion outstanding under the mortgage repurchase facility.
+Added: At September 30, 2023, we had outstanding notes payable with varying maturities totaling an aggregate principal amount of $5.1 billion, of which $1.9 billion is payable within 12 months and includes $1.7 billion outstanding under our mortgage repurchase facilities.
Future interest payments associated with the notes total $396.1 million, of which $224.4 million is payable within 12 months.
1 unchanged sentence
Our net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 5.1% at September 30, 2023 compared to 15.4% at September 30, 2022.
−Removed: At September 30, 2022, our ratio of homebuilding debt to total capital (homebuilding notes payable divided by stockholders’ equity plus homebuilding notes payable) was 13.2% compared to 17.8% at September 30, 2021.
−Removed: Our net homebuilding debt to total capital (homebuilding notes payable net of cash divided by stockholders’ equity plus homebuilding notes payable net of cash) was 4.4% at September 30, 2022 compared to 1.7% at September 30, 2021.
−Removed: Over the long term, we intend to maintain our ratio of homebuilding debt to total capital below 30%, and we expect it to remain significantly lower than 30% throughout fiscal 2023.
−Removed: We believe that the ratio of homebuilding debt to total capital is useful in understanding the leverage employed in our homebuilding operations and comparing our capital structure with other homebuilders.
−Removed: We exclude the debt of Forestar, DRH Rental and our financial services business because they are separately capitalized and not guaranteed by our parent company or any of our homebuilding entities.
+Added: Over the long term, we intend to maintain our ratio of debt to total capital below 25%, and we expect it to remain below 20% in fiscal 2024.
At September 30, 2023, we had outstanding letters of credit of $254.3 million and surety bonds of $3.2 billion, issued by third parties to secure performance under various contracts.
4 unchanged sentences
Horton has an automatically effective universal shelf registration statement filed with the SEC in July 2021, registering debt and equity securities that may be issued from time to time in amounts to be determined.
−Removed: Forestar also has an effective shelf registration statement filed with the SEC in October 2021, registering $750 million of equity securities, of which $300 million was reserved for sales under its at-the-market equity offering program that became effective in November 2021.
−Removed: At September 30, 2022, $748.2 million remained available for issuance under Forestar’s shelf registration statement, of which $298.2 million was reserved for sales under its at-the-market equity offering program.
+Added: Forestar also has an effective shelf registration statement filed with the SEC in October 2021, registering $750 million of equity securities, of which $300 million was reserved for sales under its at-the-market equity offering (ATM) program that became effective in November 2021.
+Added: At September 30, 2023, $748.2 million remained available for issuance under Forestar’s shelf registration statement, of which $298.2 million was reserved for sales under its ATM program.
As market conditions permit, we may issue new debt or equity securities through the capital markets or obtain additional bank financing to fund our projected capital requirements or provide additional liquidity.
−Removed: We believe that our existing cash resources, revolving credit facilities, mortgage repurchase facility and ability to access the capital markets or obtain additional bank financing will provide sufficient liquidity to fund our near-term working capital needs and debt obligations for the next 12 months and thereafter for the foreseeable future.
+Added: We believe that our existing cash resources, revolving credit facilities, mortgage repurchase facilities and ability to access the capital markets or obtain additional bank financing will provide sufficient liquidity to fund our near-term working capital needs and debt obligations for the next 12 months and for the foreseeable future thereafter.
Capital Resources - Homebuilding
3 unchanged sentences
Letters of credit issued under the facility reduce the available borrowing capacity.
−Removed: Borrowings and repayments under the facility totaled $3.45 billion each during fiscal 2022.
+Added: The maturity date of the facility is October 28, 2027.
At September 30, 2023, there were no borrowings outstanding and $226.6 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $1.96 billion.
−Removed: In October 2022, our senior unsecured homebuilding revolving credit facility was amended to extend its maturity date to October 28, 2027.
Our homebuilding revolving credit facility imposes restrictions on our operations and activities, including requiring the maintenance of a maximum allowable leverage ratio and a borrowing base restriction if our leverage ratio exceeds a certain level.
3 unchanged sentences
At September 30, 2023, we were in compliance with all of the covenants, limitations and restrictions of our homebuilding revolving credit facility.
−Removed: Public Unsecured Debt — We have $2.8 billion principal amount of homebuilding senior notes outstanding as of September 30, 2022 that mature from February 2023 through October 2027.
+Added: Public Unsecured Debt — In February 2023, we repaid $300 million principal amount of our 4.75% senior notes at maturity, and in July 2023, we redeemed $400 million principal amount of our 5.75% senior notes due August 2023.
+Added: The senior notes were redeemed at a price equal to 100% of the principal amount of the notes, together with accrued and unpaid interest.
+Added: At September 30, 2023, we had $2.1 billion principal amount of homebuilding senior notes outstanding that mature from October 2024 through October 2027.
The indentures governing our senior notes impose restrictions on the creation of secured debt and liens.
4 unchanged sentences
In April 2023, our Board of Directors authorized the repurchase of up to $1.0 billion of our common stock, replacing the prior stock repurchase authorization.
−Removed: During fiscal 2022, we repurchased 14.0 million shares of our common stock for $1.1 billion.
+Added: During fiscal 2023, we repurchased 11.1 million shares at a total cost, including commissions and excise taxes, of $1.2 billion.
At September 30, 2023, the full amount of the debt repurchase authorization was remaining, and $234.0 million of the stock repurchase authorization was remaining.
−Removed: These authorizations have no expiration date.
+Added: In October 2023, our Board of Directors authorized the repurchase of up to $1.5 billion of our common stock, replacing the previous authorization, which at that time had only $32.8 million remaining due to repurchases made subsequent to year end.
+Added: The debt and stock repurchase authorizations have no expiration date.
+Added: Capital Resources - Rental
+Added: During the past two years, we have made significant investments in our rental operations.
+Added: The inventory in our rental segment totaled $2.7 billion and $2.6 billion at September 30, 2023 and 2022, respectively.
+Added: Cash and Cash Equivalents — At September 30, 2023, cash and cash equivalents of our rental segment totaled $136.1 million.
+Added: Bank Credit Facility — Our rental subsidiary, DRH Rental, has a $1.025 billion senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $1.25 billion, subject to certain conditions and availability of additional bank commitments.
+Added: Availability under the rental revolving credit facility is subject to a borrowing base calculation based on the book value of DRH Rental’s real estate assets and unrestricted cash.
+Added: The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments.
+Added: The maturity date of the facility is March 4, 2026.
+Added: Borrowings and repayments under the facility totaled $700 million and $1.1 billion, respectively, during fiscal 2023.
+Added: At September 30, 2023, there were $400 million of borrowings outstanding at a 7.7% annual interest rate, and no letters of credit issued under the facility, resulting in available capacity of $625 million.
+Added: In October 2023, DRH Rental’s credit facility was amended to extend its maturity date to October 10, 2027 and to increase its accordion feature to allow for an increase in the size of the facility up to $2.0 billion, subject to certain conditions and availability of additional bank commitments.
+Added: The rental revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants.
+Added: The financial covenants require DRH Rental to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio.
+Added: These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly.
+Added: A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.
+Added: At September 30, 2023, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.
+Added: The rental revolving credit facility is guaranteed by DRH Rental’s wholly-owned subsidiaries that are not immaterial subsidiaries or have not been designated as unrestricted subsidiaries.
+Added: The rental revolving credit facility is not guaranteed by D.R.
+Added: or any of the subsidiaries that guarantee the debt of our homebuilding, Forestar or financial services operations.
Capital Resources - Forestar
8 unchanged sentences
Letters of credit issued under the facility reduce the available borrowing capacity.
+Added: The maturity date of the facility is October 28, 2026.
At September 30, 2023, there were no borrowings outstanding and $27.7 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $382.3 million.
−Removed: In October 2022, Forestar’s senior unsecured revolving credit facility was amended to extend its maturity date to October 28, 2026.
The Forestar revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants.
4 unchanged sentences
These notes include $400 million principal amount of 3.85% senior notes that mature in May 2026 and $300 million principal amount of 5.0% senior notes that mature in March 2028.
+Added: At September 30, 2023, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations.
Forestar’s revolving credit facility and its senior notes are guaranteed by Forestar’s wholly-owned subsidiaries that are not immaterial subsidiaries or have not been designated as unrestricted subsidiaries.
They are not guaranteed by D.R.
−Removed: or any of the subsidiaries that guarantee the debt of our homebuilding, financial services or rental operations.
−Removed: At September 30, 2022, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations.
+Added: or any of the subsidiaries that guarantee the debt of our homebuilding, rental or financial services operations.
Debt Repurchase Authorization — In April 2020, Forestar’s Board of Directors authorized the repurchase of up to $30 million of Forestar’s debt securities.
All of the $30 million authorization was remaining at September 30, 2023, and the authorization has no expiration date.
−Removed: Issuance of Common Stock — During fiscal 2022, Forestar issued 84,547 shares of common stock under its at-the-market equity offering program for proceeds of $1.7 million, net of commissions and other issuance costs totaling $0.1 million.
−Removed: At September 30, 2022, $748.2 million remained available for issuance under Forestar’s shelf registration statement, of which $298.2 million was reserved for sales under its at-the-market equity offering program.
+Added: Issuance of Common Stock — During fiscal 2023, there were no shares of common stock issued under Forestar’s ATM program.
+Added: At September 30, 2023, $748.2 million remained available for issuance under Forestar’s shelf registration statement, of which $298.2 million was reserved for sales under its ATM program.
Capital Resources - Financial Services
Cash and Cash Equivalents — At September 30, 2023, cash and cash equivalents of our financial services segment totaled $189.1 million.
−Removed: Mortgage Repurchase Facility — Our mortgage subsidiary, DHI Mortgage, has a mortgage repurchase facility that provides financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to the counterparties upon receipt of funds from the counterparties.
−Removed: DHI Mortgage then has the right and obligation to repurchase the purchased loans upon their sale to third-party purchasers in the secondary market or within specified time frames from 45 to 60 days in accordance with the terms of the mortgage repurchase facility.
−Removed: The total capacity of the facility is $1.6 billion;
−Removed: however, the capacity automatically increases during certain higher volume periods and can be further increased through additional commitments.
−Removed: The total capacity of the facility at September 30, 2022 was $2.2 billion, and its maturity date is February 17, 2023.
−Removed: As of September 30, 2022, $2.5 billion of mortgage loans held for sale with a collateral value of $2.4 billion were pledged under the mortgage repurchase facility.
−Removed: As a result of advance paydowns totaling $827.2 million, DHI Mortgage had an obligation of $1.6 billion outstanding under the mortgage repurchase facility at September 30, 2022 at a 4.6% annual interest rate.
−Removed: The mortgage repurchase facility is not guaranteed by D.R.
−Removed: or any of the subsidiaries that guarantee the debt of our homebuilding, Forestar or rental operations.
−Removed: The facility contains financial covenants as to the mortgage subsidiary’s minimum required tangible net worth, its maximum allowable leverage ratio and its minimum required liquidity.
−Removed: These covenants are measured and reported to the lenders monthly.
−Removed: At September 30, 2022, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facility.
−Removed: In the past, DHI Mortgage has been able to renew or extend its mortgage credit facility at a sufficient capacity and on satisfactory terms prior to its maturity and obtain temporary additional commitments through amendments to the credit agreement during periods of higher than normal volumes of mortgages held for sale.
−Removed: The liquidity of our financial services business depends upon its continued ability to renew and extend the mortgage repurchase facility or to obtain other additional financing in sufficient capacities.
−Removed: Capital Resources - Rental
−Removed: Cash and Cash Equivalents — At September 30, 2022, cash and cash equivalents of our rental segment totaled $109.9 million.
−Removed: During fiscal 2022, we continued to increase the investment in our rental operations.
−Removed: The inventory in our rental segment totaled $2.6 billion at September 30, 2022 compared to $840.9 million at September 30, 2021.
−Removed: Bank Credit Facility — In March 2022, our rental subsidiary, DRH Rental, entered into a $625 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $1.25 billion, subject to certain conditions and availability of additional bank commitments.
−Removed: On subsequent occasions, DRH Rental utilized the accordion feature to obtain additional commitments, thereby increasing the size of the facility to $975 million at September 30, 2022.
−Removed: Availability under the revolving credit facility is subject to a borrowing base calculation based on the book value of DRH Rental’s real estate assets and unrestricted cash.
−Removed: At September 30, 2022, the borrowing base limited the available capacity under the facility to $811.9 million.
−Removed: The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments.
−Removed: The maturity date of the facility is March 4, 2026.
−Removed: At September 30, 2022, there were $800 million of borrowings outstanding at a 4.8% annual interest rate and no letters of credit issued under the facility, resulting in available capacity of $11.9 million.
−Removed: In November 2022, DRH Rental utilized the accordion feature and increased the size of the revolving credit facility to $1.025 billion through an additional commitment.
−Removed: The revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants.
−Removed: The financial covenants require DRH Rental to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio.
−Removed: These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly.
−Removed: A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.
−Removed: At September 30, 2022, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.
−Removed: DRH Rental’s revolving credit facility is guaranteed by DRH Rental’s wholly-owned subsidiaries that are not immaterial subsidiaries or have not been designated as unrestricted subsidiaries.
−Removed: The rental revolving credit facility is not guaranteed by D.R.
−Removed: or any of the subsidiaries that guarantee the debt of our homebuilding, Forestar or financial services operations.
+Added: Mortgage Repurchase Facilities — Our mortgage subsidiary, DHI Mortgage, has two mortgage repurchase facilities, one of which is committed and the other of which is uncommitted, that provide financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to counterparties upon receipt of funds from the counterparties.
+Added: DHI Mortgage then has the right and obligation to repurchase the purchased loans upon their sale to third-party purchasers in the secondary market or within specified time frames in accordance with the terms of the mortgage repurchase facilities.
+Added: The committed mortgage repurchase facility has a total capacity of $2.0 billion and a maturity date of February 16, 2024.
+Added: The capacity of the committed mortgage repurchase facility can be increased to $2.3 billion subject to the availability of additional commitments.
+Added: At September 30, 2023, DHI Mortgage had an obligation of $1.4 billion under the committed mortgage repurchase facility at a 6.9% annual interest rate.
+Added: In April 2023, DHI Mortgage entered into a master repurchase agreement providing for an uncommitted mortgage repurchase facility.
+Added: At September 30, 2023, DHI Mortgage could borrow up to $300 million under the uncommitted mortgage repurchase facility and had an obligation of $296.3 million at a 6.6% annual interest rate.
+Added: As of September 30, 2023, $2.22 billion of mortgage loans held for sale with a collateral value of $2.18 billion were pledged under the committed mortgage repurchase facility, and $323.0 million of mortgage loans held for sale with a collateral value of $300.9 million were pledged under the uncommitted mortgage repurchase facility.
+Added: The facilities contain financial covenants as to the mortgage subsidiary’s minimum required tangible net worth, its maximum allowable indebtedness to tangible net worth ratio and its minimum required liquidity.
+Added: At September 30, 2023, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities.
+Added: These mortgage repurchase facilities are not guaranteed by D.R.
+Added: or any of the subsidiaries that guarantee the debt of our homebuilding, rental or Forestar operations.
+Added: In the past, DHI Mortgage has been able to renew or extend its committed mortgage repurchase facility at a sufficient capacity and on satisfactory terms prior to its maturity and obtain temporary additional commitments through amendments to the facility during periods of higher than normal volumes of mortgages held for sale.
+Added: The liquidity of our financial services business depends upon its continued ability to renew and extend the committed mortgage repurchase facility or to obtain other additional financing in sufficient capacities.
Operating Cash Flow Activities
−Removed: In fiscal 2022, net cash provided by operating activities was $561.8 million compared to $534.4 million in fiscal 2021.
−Removed: Cash provided by operating activities in the current year primarily consisted of $1.9 billion and $108.7 million of cash provided by our homebuilding and Forestar segments, respectively, partially offset by $1.4 billion and $10.5 million of cash used in our rental and financial services segments, respectively.
+Added: In fiscal 2023, net cash provided by operating activities was $4.3 billion compared to $561.8 million in fiscal 2022.
+Added: Cash provided by operating activities in the current year primarily consisted of $3.1 billion, $739.2 million, $364.1 million and $13.2 million of cash provided by our homebuilding, rental, Forestar and financial services segments, respectively.
The most significant source of cash provided by operating activities in both years was net income.
−Removed: Cash used to increase construction in progress and finished home inventory was $2.1 billion in fiscal 2022 compared to $1.7 billion in fiscal 2021.
−Removed: The increase is due to increased home construction costs and more homes in inventory that were complete or closer to completion at the end of the current year.
−Removed: Cash used to increase residential land and lots was $1.4 billion in fiscal 2022 compared to $1.7 billion in fiscal 2021.
−Removed: Of these amounts, $142.3 million and $585.6 million, respectively, related to Forestar.
−Removed: During fiscal 2022, cash used to increase our single-family and multi-family rental properties totaled $1.7 billion and is reflected as cash used in operating activities.
−Removed: During fiscal 2021, cash used to increase our single-family and multi-family rental properties totaled $477.5 million, of which $173.9 million related to the first half of the year and is presented as cash used in investing activities and $303.6 million related to the second half of the year and is presented as cash used in operating activities.
+Added: Cash provided by a decrease in construction in progress and finished home inventory was $861.8 million in fiscal 2023 compared to cash used to increase construction in progress and finished home inventory of $2.1 billion in fiscal 2022, due to a decrease in our homes in inventory.
+Added: Cash used to increase residential land and lots was $1.2 billion and $1.4 billion in fiscal 2023 and 2022, respectively.
Investing Cash Flow Activities
In fiscal 2023, net cash used in investing activities was $310.2 million compared to $414.9 million in fiscal 2022.
+Added: In fiscal 2023, uses of cash included the acquisitions of the homebuilding operations of Riggins Custom Homes for $107 million and Truland Homes for approximately $110 million and purchases of property and equipment totaling $148.6 million.
In fiscal 2022, uses of cash included the acquisition of Vidler Water Resources, Inc.
−Removed: for $271.5 million, net of the cash acquired, and purchases of property and equipment totaling $148.2 million.
−Removed: In fiscal 2021, uses of cash included expenditures related to our rental operations totaling $173.9 million, the acquisition of the homebuilding operations of Braselton Homes for $23.0 million and purchases of property and equipment totaling $93.5 million, partially offset by proceeds from the sale of a single-family rental community for $31.8 million.
+Added: for $271.5 million and purchases of property and equipment totaling $148.2 million.
Financing Cash Flow Activities
1 unchanged sentence
Long-term financing needs for our operations may be funded with the issuance of senior unsecured debt securities or equity securities through the capital markets.
−Removed: In fiscal 2022, net cash used in financing activities was $811.2 million, consisting primarily of repayments of amounts drawn on our homebuilding revolving credit facility totaling $3.5 billion, cash used to repurchase shares of our common stock of $1.1 billion, repayment of $350 million principal amount of our 4.375% homebuilding senior notes at maturity and payment of cash dividends totaling $316.5 million.
−Removed: These uses of cash were partially offset by draws on our homebuilding revolving credit facility of $3.5 billion, draws on DRH Rental’s revolving credit facility of $800 million and net advances on our mortgage repurchase facility of $123.7 million.
−Removed: In fiscal 2021, net cash used in financing activities was $85.1 million, consisting primarily of repayment of $400 million principal amount of our 2.55% homebuilding senior notes at maturity, Forestar’s redemption of its $350 million principal amount of 8.0% senior notes, cash used to repurchase shares of our common stock of $848.4 million and payment of cash dividends totaling $289.3 million.
−Removed: These uses of cash were partially offset by note proceeds from our issuance of $500 million principal amount of 1.4% homebuilding senior notes and $600 million principal amount of 1.3% homebuilding senior notes, Forestar’s issuance of $400 million principal amount of 3.85% senior notes and net advances of $362.0 million on our mortgage repurchase facility.
+Added: In fiscal 2023, net cash used in financing activities was $2.7 billion, consisting primarily of repurchases of common stock of $1.2 billion, repayment of $300 million principal amount of our 4.75% homebuilding senior notes and $400 million principal amount of our 5.75% homebuilding senior notes, net payments on our rental revolving credit facility of $400 million and payment of cash dividends totaling $341.2 million.
+Added: These uses of cash were partially offset by net advances on our mortgage repurchase facility of $51.3 million.
+Added: In fiscal 2022, net cash used in financing activities was $811.2 million, consisting primarily of repurchases of common stock of $1.1 billion, repayment of $350 million principal amount of our 4.375% homebuilding senior notes and payment of cash dividends totaling $316.5 million.
+Added: These uses of cash were partially offset by net borrowings on our rental revolving credit facility of $800 million and net advances on our mortgage repurchase facility of $123.7 million.
+Added: Sources and uses of cash also included borrowings and repayments under our homebuilding revolving credit facility totaling $3.5 billion each.
Our Board of Directors approved and paid quarterly cash dividends of $0.25 per common share in fiscal 2023 and $0.225 per common share in fiscal 2022.
−Removed: In October 2022, our Board of Directors approved a quarterly cash dividend of $0.25 per common share, payable on December 12, 2022, to stockholders of record on December 2, 2022.
+Added: In October 2023, our Board of Directors approved a quarterly cash dividend of $0.30 per common share, payable on November 28, 2023, to stockholders of record on November 21, 2023.
The declaration of future cash dividends is at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, cash flows, capital requirements, financial condition and general business conditions.
5 unchanged sentences
Each of the Guarantor Subsidiaries is 100% owned, directly or indirectly, by D.R.
−Removed: Our subsidiaries associated with the Forestar lot development operations, financial services operations, multi-family and single-family rental operations and certain other subsidiaries do not guarantee the homebuilding senior notes or the homebuilding revolving credit facility (collectively, Non-Guarantor Subsidiaries).
+Added: Our subsidiaries associated with the single-family and multi-family rental operations, Forestar lot development operations, financial services operations and certain other subsidiaries do not guarantee the homebuilding senior notes or the homebuilding revolving credit facility (collectively, Non-Guarantor Subsidiaries).
The guarantees are senior unsecured obligations of each Guarantor and rank equal with all existing and future senior debt of such Guarantor and senior to all subordinated debt of such Guarantor.
38 unchanged sentences
These risks, uncertainties and other factors include, but are not limited to:
−Removed: • the cyclical nature of the homebuilding, lot development and rental housing industries and changes in economic, real estate or other conditions;
−Removed: • constriction of the credit and public capital markets, which could limit our ability to access capital and increase our costs of capital;
+Added: • the cyclical nature of the homebuilding, rental and lot development industries and changes in economic, real estate or other conditions;
+Added: • adverse developments affecting the capital markets and financial institutions, which could limit our ability to access capital and increase our cost of capital and impact our liquidity and capital resources;
• reductions in the availability of mortgage financing provided by government agencies, changes in government financing programs, a decrease in our ability to sell mortgage loans on attractive terms or an increase in mortgage interest rates;
• the risks associated with our land, lot and rental inventory;
−Removed: • our ability to effect our growth strategies, acquisitions or investments successfully;
+Added: • our ability to effect our growth strategies, acquisitions, investments or other strategic initiatives successfully;
• the impact of an inflationary, deflationary or higher interest rate environment;
−Removed: • supply shortages and other risks of acquiring land, building materials and skilled labor;
−Removed: • the effects of public health issues such as a major epidemic or pandemic, including the impact of COVID-19 on the economy and our businesses;
+Added: • supply shortages and other risks of acquiring land, building materials and skilled labor and obtaining regulatory approvals;
+Added: • the effects of public health issues such as a major epidemic or pandemic on the economy and our businesses;
• the effects of weather conditions and natural disasters on our business and financial results;
3 unchanged sentences
• increases in the costs of owning a home;
+Added: • the effects of information technology failures, data security breaches, and the failure to satisfy privacy and data protection laws and regulations;
• the effects of governmental regulations and environmental matters on our homebuilding and land development operations;
5 unchanged sentences
• actions by activist stockholders.
−Removed: • information technology failures, data security breaches and our ability to satisfy privacy and data protection laws and regulations.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
14 unchanged sentences
We either retain or refund to the homebuyer deposits on cancelled sales contracts, depending upon the applicable provisions of the contract or other circumstances.
−Removed: Forestar’s land and lot sales revenue and related profit are generally recognized at the time of the closing of a sale, when title to and possession of the property are transferred to a third-party buyer.
−Removed: Forestar’s revenues from land and lot sales to D.R.
−Removed: Horton are eliminated in the consolidated financial statements.
−Removed: We rarely purchase unimproved land for resale, but periodically may elect to sell parcels of land that do not fit into our strategic operating plans.
−Removed: Revenue from land sales is typically recognized on the closing date, which is generally when performance obligations are satisfied.
−Removed: We recognize financial services revenues associated with our title operations as closing services are rendered and title insurance policies are issued, both of which generally occur simultaneously as each home is closed.
Revenues associated with our mortgage operations primarily include net gains on the sale of mortgage loans and servicing rights.
55 unchanged sentences
The amounts charged are based on management’s estimate of expected warranty-related costs under all unexpired warranty obligation periods.
−Removed: Our warranty liability is based upon historical warranty cost experience in each market in which we operate and is adjusted to reflect qualitative risks associated with the types of homes we build and the geographic areas in which we build them.
+Added: Our warranty liability is based upon historical warranty cost experience in each market in which we operate.
Actual future warranty costs could differ from our currently estimated amounts.
4 unchanged sentences
We have established reserves for these contingencies based on the estimated costs of pending claims and the estimated costs of anticipated future claims related to previously closed homes.
−Removed: Approximately 99% of these reserves related to construction defect matters at both September 30, 2022 and 2021.
+Added: Approximately 97% and 99% of these reserves related to construction defect matters at September 30, 2023 and 2022, respectively.
Our reserves for construction defect claims include the estimated costs of both known claims and anticipated future claims.
18 unchanged sentences
For additional information regarding our legal claims reserves, see Note L, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this report.
−Removed: Pending Accounting Standards
−Removed: In March 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-04, “Reference Rate Reform,” which provides optional expedients and exceptions for applying U.S.
−Removed: GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued.
−Removed: The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2022.
−Removed: In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform - Scope,” which clarified the scope and application of the original guidance.
−Removed: We will adopt these standards when LIBOR is discontinued and do not expect them to have a material impact on our consolidated financial statements or related disclosures.
−Removed: In October 2021, the FASB issued ASU 2021-08, which requires application of ASC 606, “Revenue from Contracts with Customers,” to recognize and measure contract assets and liabilities from contracts with customers acquired in a business combination.
−Removed: ASU 2021-08 creates an exception to the general recognition and measurement principle in ASC 805 and will result in recognition of contract assets and contract liabilities consistent with those recorded by the acquiree immediately before the acquisition date.
−Removed: The guidance is effective for us beginning October 1, 2023, with early adoption permitted.
−Removed: We are currently evaluating the impact of this guidance, and it is not expected to have a material impact on our consolidated financial position, results of operations or cash flows.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.