What changed in this filing

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Item 1. Financial Statements

2025-04-23 compared with 2025-01-23 · 211 added, 109 removed, 545 unchanged (37% of the section changed)

15 unchanged sentences

Deferred income taxes, net of valuation allowance of $ 14.9 million

at December 31, 2024 and September 30, 2024

at March 31, 2025 and September 30, 2024

Property and equipment, net 536.5 531.0

9 unchanged sentences

Common stock, $ .01 par value, 1,000,000,000 shares authorized, 403,909,383 shares issued

and 317,652,200 shares outstanding at December 31, 2024 and 402,848,342 shares issued

and 308,629,060 shares outstanding at March 31, 2025 and 402,848,342 shares issued

and 324,027,360 shares outstanding at September 30, 2024

1 unchanged sentence

Retained earnings 29,352.3 27,951.0

Treasury stock, 85,623,749 shares and 78,820,982 shares at December 31, 2024

Treasury stock, 95,280,323 shares and 78,820,982 shares at March 31, 2025

and September 30, 2024, respectively, at cost

8 unchanged sentences

Three Months Ended

March 31, Six Months Ended

2025 2024 2025 2024

(In millions, except per share data)

9 unchanged sentences

$ 810.4 $ 1,172.1 $ 1,655.3 $ 2,119.5

Basic net income per common share attributable to D.R.

$ 2.63 $ 2.84

Weighted average number of common shares 321.5 333.3

Diluted net income per common share attributable to D.R.

$ 2.61 $ 2.82

Adjusted weighted average number of common shares 323.3 335.7

Net income per share attributable to D.R.

Basic $ 2.59 $ 3.54 $ 5.22 $ 6.38

Diluted $ 2.58 $ 3.52 $ 5.19 $ 6.34

Weighted average shares outstanding

Basic 312.5 330.9 317.0 332.1

Diluted 314.0 333.3 318.7 334.5

See accompanying notes to consolidated financial statements.

21 unchanged sentences

$ 4.0 $ 3,508.2 $ 28,667.4 $ ( 7,235.7 ) $ 519.0 $ 25,462.9

Net income — — 810.4 — 8.7 819.1

Stock issued under employee benefit plans ( 633,434 shares)

— 8.4 — — — 8.4

Cash paid for shares withheld for taxes — ( 35.8 ) — — — ( 35.8 )

Stock-based compensation expense — 32.2 — — — 32.2

Cash dividends declared ($ 0.40 per share)

— — ( 125.5 ) — — ( 125.5 )

Repurchases of common stock ( 9,656,574 shares)

— — — ( 1,303.1 ) — ( 1,303.1 )

Change of ownership interest in Forestar — ( 3.4 ) — — 3.9 0.5

Balances at March 31, 2025 ( 308,629,060 shares)

$ 4.0 $ 3,509.6 $ 29,352.3 $ ( 8,538.8 ) $ 531.6 $ 24,858.7

See accompanying notes to consolidated financial statements.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF TOTAL EQUITY (Continued)

Stock Additional

20 unchanged sentences

$ 4.0 $ 3,440.2 $ 24,437.3 $ ( 4,728.1 ) $ 450.1 $ 23,603.5

Net income — — 1,172.1 — 11.6 1,183.7

Exercise of stock options ( 151,568 shares)

— 3.6 — — — 3.6

Stock issued under employee benefit plans ( 604,209 shares)

— 6.9 — — — 6.9

Cash paid for shares withheld for taxes — ( 44.1 ) — — — ( 44.1 )

Stock-based compensation expense — 25.0 — — — 25.0

Cash dividends declared ($ 0.30 per share)

— — ( 99.2 ) — — ( 99.2 )

Repurchases of common stock ( 2,749,810 shares)

— — — ( 402.2 ) — ( 402.2 )

Change of ownership in Forestar — — — — 19.2 19.2

Balances at March 31, 2024 ( 330,196,301 shares)

$ 4.0 $ 3,431.6 $ 25,510.2 $ ( 5,130.3 ) $ 480.9 $ 24,296.4

See accompanying notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended December 31,

Six Months Ended March 31,

(In millions)

12 unchanged sentences

Increase in rental properties ( 216.0 ) ( 386.9 )

Decrease (increase) in other assets 65.2 ( 130.0 )

Decrease in mortgage loans held for sale 683.1 475.8

Increase in accounts payable, accrued expenses and other liabilities 71.0 127.5

(Increase) decrease in other assets ( 122.9 ) 27.6

Decrease (increase) in mortgage loans held for sale 22.5 ( 152.5 )

Decrease in accounts payable, accrued expenses and other liabilities ( 48.6 ) ( 164.0 )

Net cash provided by (used in) operating activities 210.5 ( 470.1 )

8 unchanged sentences

Repayment of notes payable ( 1,566.1 ) ( 400.0 )

Repayment on mortgage repurchase facilities, net ( 746.9 ) ( 389.9 )

(Repayment) borrowings on mortgage repurchase facilities, net ( 86.4 ) 214.4

Proceeds from stock associated with certain employee benefit plans 8.5 12.2

3 unchanged sentences

( 2,407.9 ) ( 794.5 )

Net proceeds from issuance of Forestar common stock — 19.7

Net other financing activities 5.4 ( 26.7 )

6 unchanged sentences

Stock issued under employee incentive plans $ 143.5 $ 151.3

Repurchases of common stock not settled $ 45.5 $ 18.3

See accompanying notes to consolidated financial statements.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

December 31, 2024

March 31, 2025

NOTE A – BASIS OF PRESENTATION

2 unchanged sentences

Noncontrolling interests represent the proportionate equity interests in consolidated entities that are not 100% owned by the Company.

As of December 31, 2024, the Company owned a 62 % controlling interest in Forestar Group Inc.

As of March 31, 2025, the Company owned a 62 % controlling interest in Forestar Group Inc.

(Forestar) and therefore is required to consolidate 100% of Forestar within its consolidated financial statements, and the 38 % interest the Company does not own is accounted for as noncontrolling interests.

9 unchanged sentences

Historically, the homebuilding industry has experienced seasonal fluctuations;

therefore, the operating results for the three months ended December 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2025 or subsequent periods.

therefore, the operating results for the three and six months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2025 or subsequent periods.

Pending Accounting Standards

12 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

NOTE B – SEGMENT INFORMATION

30 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

The accounting policies of the reporting segments are described throughout Note A included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2024.

Financial information relating to the Company’s reporting segments is as follows:

December 31, 2024

March 31, 2025

Homebuilding Rental Forestar Financial Services Eliminations and Other (1) Consolidated

22 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

September 30, 2024

23 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

Three Months Ended December 31, 2024

March 31, 2025

Three Months Ended March 31, 2025

Homebuilding Rental Forestar Financial Services Eliminations and Other (1) Consolidated

14 unchanged sentences

Income before income taxes $ 935.0 $ 22.8 $ 40.7 $ 73.0 $ ( 4.4 ) $ 1,067.1

______________

(1) Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.

(2) Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment.

Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2025

Six Months Ended March 31, 2025

Homebuilding Rental Forestar Financial Services Eliminations and Other (1) Consolidated

(In millions)

Home sales $ 14,327.0 $ — $ — $ — $ — $ 14,327.0

Land/lot sales and other 43.2 — 601.3 — ( 474.0 ) 170.5

Rental property sales — 454.3 — — — 454.3

Financial services — — — 395.2 — 395.2

14,370.2 454.3 601.3 395.2 ( 474.0 ) 15,347.0

Cost of sales

Home sales (2) 11,136.7 — — — ( 103.1 ) 11,033.6

Land/lot sales and other 16.7 — 465.2 — ( 387.7 ) 94.2

Rental property sales — 362.2 — — — 362.2

Inventory and land option charges 41.3 3.9 2.0 — ( 0.6 ) 46.6

11,194.7 366.1 467.2 — ( 491.4 ) 11,536.6

Selling, general and administrative expense 1,274.5 104.3 74.3 314.5 9.2 1,776.8

Other (income) expense ( 46.9 ) ( 50.8 ) ( 2.8 ) ( 40.9 ) ( 2.0 ) ( 143.4 )

Income before income taxes $ 1,947.9 $ 34.7 $ 62.6 $ 121.6 $ 10.2 $ 2,177.0

Summary Cash Flow Information

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

Three Months Ended December 31, 2023

March 31, 2025

Three Months Ended March 31, 2024

Homebuilding Rental Forestar Financial Services Eliminations and Other (1) Consolidated

14 unchanged sentences

Income before income taxes $ 1,357.6 $ 33.3 $ 58.9 $ 78.0 $ 0.7 $ 1,528.5

______________

(1) Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.

(2) Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

March 31, 2025

Six Months Ended March 31, 2024

Homebuilding Rental Forestar Financial Services Eliminations and Other (1) Consolidated

(In millions)

Home sales $ 15,743.1 $ — $ — $ — $ — $ 15,743.1

Land/lot sales and other 27.2 — 639.7 — ( 561.6 ) 105.3

Rental property sales — 566.5 — — — 566.5

Financial services — — — 418.2 — 418.2

15,770.3 566.5 639.7 418.2 ( 561.6 ) 16,833.1

Cost of sales

Home sales (2) 12,113.6 — — — ( 122.5 ) 11,991.1

Land/lot sales and other 17.3 — 483.4 — ( 456.7 ) 44.0

Rental property sales — 444.1 — — ( 4.8 ) 439.3

Inventory and land option charges 18.6 0.6 0.4 — — 19.6

12,149.5 444.7 483.8 — ( 584.0 ) 12,494.0

Selling, general and administrative expense 1,217.5 108.8 57.2 322.7 9.4 1,715.6

Other (income) expense ( 50.4 ) ( 51.6 ) ( 11.4 ) ( 48.5 ) 9.4 ( 152.5 )

Income before income taxes $ 2,453.7 $ 64.6 $ 110.1 $ 144.0 $ 3.6 $ 2,776.0

Summary Cash Flow Information

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

Homebuilding Inventories by Reporting Segment (1)

13 unchanged sentences

Homebuilding Results by Reporting Segment Three Months Ended

March 31, Six Months Ended

2025 2024 2025 2024

(In millions)

16 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

NOTE C – INVENTORIES

At the end of each quarter, the Company reviews the performance and outlook for all of its communities and land inventories for indicators of potential impairment and performs detailed impairment evaluations and analyses when necessary.

As of December 31, 2024, the Company performed detailed impairment evaluations of communities and land inventories and determined that communities with a combined carrying value of $ 40.2 million were impaired on a non-recurring basis using Level 3 inputs.

As a result, impairment charges of $ 3.2 million were recorded during the three months ended December 31, 2024 to reduce the carrying value of the related inventories to fair value.

There were no impairment charges recorded in the prior year quarter.

During the three months ended December 31, 2024, earnest money and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 13.4 million compared to $ 6.1 million in the prior year quarter.

As of March 31, 2025, the Company performed detailed impairment evaluations of communities and land inventories and determined that communities with a combined carrying value of $ 38.4 million were impaired on a non-recurring basis using Level 3 inputs.

As a result, impairment charges of $ 5.4 million were recorded during the three months ended March 31, 2025 to reduce the carrying value of the related inventories to fair value.

During the six months ended March 31, 2025, impairment charges totaled $ 8.6 million.

There were $ 5.6 million of impairment charges recorded during the three and six months ended March 31, 2024.

During the three and six months ended March 31, 2025, earnest money and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 24.6 million and $ 38.0 million, respectively, compared to $ 8.0 million and $ 14.0 million in the prior year periods.

Inventory impairments and land option charges are included in cost of sales in the consolidated statements of operations.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

NOTE D – NOTES PAYABLE

8 unchanged sentences

5.0 % senior notes due 2034 (1)

5.5 % senior notes due 2035 (1)

Other notes 172.6 146.2

6 unchanged sentences

5.0 % senior notes due 2028 (2)

6.5 % senior notes due 2033 (2)

Other notes 9.9 9.9

7 unchanged sentences

_____________

(1) Debt issuance costs that were deducted from the carrying amounts of the homebuilding senior notes totaled $ 10.9 million and $ 11.7 million at December 31, 2024 and September 30, 2024, respectively.

(2) Debt issuance costs that were deducted from the carrying amount of Forestar’s senior notes totaled $ 3.1 million and $ 3.5 million at December 31, 2024 and September 30, 2024, respectively.

(3) The fair value of notes payable at December 31, 2024 totaled $ 5.0 billion, of which $ 2.9 billion were measured using Level 2 inputs and $ 2.1 billion were measured using Level 3 inputs.

(1) Debt issuance costs that were deducted from the carrying amounts of the homebuilding senior notes totaled $ 16.6 million and $ 11.7 million at March 31, 2025 and September 30, 2024, respectively.

(2) Debt issuance costs that were deducted from the carrying amount of Forestar’s senior notes totaled $ 8.0 million and $ 3.5 million at March 31, 2025 and September 30, 2024, respectively.

(3) The fair value of notes payable at March 31, 2025 totaled $ 6.5 billion, of which $ 3.8 billion were measured using Level 2 inputs and $ 2.7 billion were measured using Level 3 inputs.

The fair value of notes payable at September 30, 2024 totaled $ 5.9 billion, of which $ 3.4 billion were measured using Level 2 inputs and $ 2.5 billion were measured using Level 3 inputs.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

Horton has an automatically effective universal shelf registration statement filed with the Securities and Exchange Commission (SEC) in July 2024, registering debt and equity securities that the Company may issue from time to time in amounts to be determined.

In October 2024, the Company repaid $ 500 million principal amount of its 2.5 % senior notes at maturity.

March 31, 2025

The Company has a senior unsecured homebuilding revolving credit facility that was amended in December 2024 to increase its capacity from $ 2.19 billion to $ 2.23 billion.

4 unchanged sentences

Letters of credit issued under the facility reduce the available borrowing capacity.

At December 31, 2024, there were no borrowings outstanding and $ 221.1 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 2.01 billion.

At March 31, 2025, there were no borrowings outstanding and $ 211.9 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 2.02 billion.

The Company’s homebuilding revolving credit facility imposes restrictions on its operations and activities, including requiring the maintenance of a maximum allowable leverage ratio and a borrowing base restriction if the leverage ratio exceeds a certain level.

1 unchanged sentence

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.

The credit agreement governing the facility and the indenture governing the senior notes also impose restrictions on the creation of secured debt and liens.

At December 31, 2024, the Company was in compliance with all of the covenants, limitations and restrictions of its homebuilding revolving credit facility and public debt obligations.

The credit agreement governing the facility imposes restrictions on the creation of secured debt and liens.

In October 2024, the Company repaid $ 500 million principal amount of its 2.5 % senior notes at maturity.

In February 2025, the Company issued $ 700 million principal amount of 5.5 % senior notes due October 15, 2035 , with interest payable semi-annually.

The annual effective interest rate of these notes after giving effect to the amortization of the discount and financing costs is 5.6 %.

The indenture governing the senior notes imposes restrictions on the creation of secured debt and liens.

At March 31, 2025, the Company was in compliance with all of the covenants, limitations and restrictions of its homebuilding revolving credit facility and public debt obligations.

The Company’s homebuilding revolving credit facility and homebuilding senior notes are guaranteed by D.R.

2 unchanged sentences

The authorization has no expiration date.

All of the $ 500 million authorization was remaining at December 31, 2024.

All of the $ 500 million authorization was remaining at March 31, 2025.

The Company’s rental subsidiary, DRH Rental, has a $ 1.05 billion senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $ 2.0 billion, subject to certain conditions and availability of additional bank commitments.

2 unchanged sentences

The maturity date of the facility is October 10, 2027 .

Borrowings and repayments under the facility totaled $ 560 million and $ 255 million, respectively, during the three months ended December 31, 2024.

At December 31, 2024, there were $ 1.05 billion of borrowings outstanding at a 6.2 % annual interest rate and no letters of credit issued under the facility, resulting in no available capacity.

Borrowings and repayments under the facility totaled $ 790 million and $ 485 million, respectively, during the six months ended March 31, 2025.

At March 31, 2025, there were $ 1.05 billion of borrowings outstanding at a 6.4 % annual interest rate and no letters of credit issued under the facility, resulting in no available capacity.

The rental revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants.

2 unchanged sentences

At December 31, 2024, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

At March 31, 2025, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

The rental revolving credit facility is guaranteed by DRH Rental’s wholly-owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries.

7 unchanged sentences

Letters of credit issued under the facility reduce the available borrowing capacity.

At December 31, 2024, there were $ 100 million of borrowings outstanding at a 5.9 % annual interest rate and $ 27.5 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 512.5 million.

At March 31, 2025, there were no borrowings outstanding and $ 22.3 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 617.7 million.

Forestar’s revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants.

2 unchanged sentences

At December 31, 2024, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations.

In March 2025, Forestar issued $ 500 million principal amount of 6.5 % senior notes due March 15, 2033, with interest payable semi-annually.

The annual effective interest rate of these notes after giving effect to the amortization of financing costs is 6.7 %.

The net proceeds from this issuance were primarily used to fund Forestar’s tender offer to purchase any and all of its outstanding $ 400 million principal amount of 3.85 % senior notes due 2026 (of which $ 329.4 million aggregate principal amount was tendered).

The repurchase price of $ 333.4 million included accrued and unpaid interest of $ 4.2 million.

Forestar recognized a $ 1.1 million loss on extinguishment of debt upon repurchase of the notes.

At March 31, 2025, 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 and have not been designated as unrestricted subsidiaries.

3 unchanged sentences

The authorization has no expiration date.

All of the $ 30 million authorization was remaining at December 31, 2024.

All of the $ 30 million authorization was remaining at March 31, 2025.

Financial Services

1 unchanged sentence

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.

The committed mortgage repurchase facility has a total capacity of $ 1.6 billion and a maturity date of May 9, 2025.

The capacity of the facility can be increased to $ 2.0 billion subject to the availability of additional commitments.

At December 31, 2024, DHI Mortgage had an obligation of $ 669.8 million under the committed mortgage repurchase facility at a 6.0 % annual interest rate.

At December 31, 2024, the uncommitted mortgage repurchase facility had a borrowing capacity of $ 500 million, of which DHI Mortgage had an obligation of $ 117.1 million at a 5.7 % annual interest rate.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

At December 31, 2024, $ 1.67 billion of mortgage loans held for sale with a collateral value of $ 1.64 billion were pledged under the committed mortgage repurchase facility, and $ 129.2 million of mortgage loans held for sale with a collateral value of $ 120.4 million were pledged under the uncommitted mortgage repurchase facility.

March 31, 2025

The committed mortgage repurchase facility has a total capacity of $ 1.6 billion and a maturity date of May 9, 2025 .

The capacity of the facility can be increased to $ 2.0 billion subject to the availability of additional commitments.

At March 31, 2025, DHI Mortgage had an obligation of $ 1.4 billion under the committed mortgage repurchase facility at a 6.0 % annual interest rate.

At March 31, 2025, the uncommitted mortgage repurchase facility had a borrowing capacity of $ 500 million, of which DHI Mortgage had an obligation of $ 82.5 million at a 5.6 % annual interest rate.

At March 31, 2025, $ 2.35 billion of mortgage loans held for sale with a collateral value of $ 2.31 billion were pledged under the committed mortgage repurchase facility, and $ 90.5 million of mortgage loans held for sale with a collateral value of $ 85.8 million were pledged under the uncommitted mortgage repurchase facility.

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.

At December 31, 2024, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities.

At March 31, 2025, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities.

These mortgage repurchase facilities are not guaranteed by D.R.

4 unchanged sentences

During periods in which the Company’s active inventory is lower than its debt level, a portion of the interest incurred is reflected as interest expense in the period incurred.

During the first three months of fiscal 2025 and fiscal 2024, the Company’s active inventory exceeded its debt level, and all interest incurred was capitalized to inventory.

The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three months ended December 31, 2024 and 2023:

During the first six months of fiscal 2025 and fiscal 2024, the Company’s active inventory exceeded its debt level, and all interest incurred was capitalized to inventory.

The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three and six months ended March 31, 2025 and 2024:

Three Months Ended

March 31, Six Months Ended

2025 2024 2025 2024

(In millions)

4 unchanged sentences

__________________

(1) Interest incurred in the three months ended December 31, 2024 and 2023 includes (a) interest on the Company’s mortgage repurchase facilities of $ 8.1 million and $ 14.9 million, respectively;

(b) Forestar interest of $ 8.3 million and $ 8.1 million, respectively;

and (c) interest on the rental revolving credit facility of $ 12.4 million and $ 8.2 million, respectively.

(1) Interest incurred includes (a) interest on the Company’s mortgage repurchase facilities of $ 7.4 million and $ 15.5 million in the three and six months ended March 31, 2025, respectively, and $ 13.4 million and $ 28.3 million in the prior year periods;

(b) Forestar interest of $ 10.6 million and $ 18.8 million in the three and six months ended March 31, 2025, respectively, and $ 8.2 million and $ 16.3 million in the prior year periods;

and (c) interest on the rental revolving credit facility of $ 16.4 million and $ 28.8 million in the three and six months ended March 31, 2025, respectively, and $ 17.6 million and $ 25.8 million in the prior year periods.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

NOTE F – MORTGAGE LOANS

2 unchanged sentences

Servicing rights retained are typically sold within six months of loan origination.

At December 31, 2024, mortgage loans held for sale of $ 1.8 billion had an aggregate outstanding principal balance of $ 1.9 billion.

At March 31, 2025, mortgage loans held for sale of $ 2.46 billion had an aggregate outstanding principal balance of $ 2.50 billion.

At September 30, 2024, mortgage loans held for sale of $ 2.48 billion had an aggregate outstanding principal balance of $ 2.49 billion.

Mortgage loans held for sale at both dates were primarily composed of mortgage loans measured at fair value on a recurring basis using Level 2 inputs.

During the three months ended December 31, 2024 and 2023, mortgage loans originated totaled $ 5.15 billion and $ 5.12 billion, respectively, and mortgage loans sold totaled $ 5.74 billion and $ 5.69 billion, respectively.

The Company had gains on sales of loans and servicing rights of $ 120.1 million during the three months ended December 31, 2024 compared to $ 128.7 million in the prior year period.

During the six months ended March 31, 2025 and 2024, mortgage loans originated totaled $ 10.52 billion and $ 11.29 billion, respectively, and mortgage loans sold totaled $ 10.48 billion and $ 11.13 billion, respectively.

The Company had gains on sales of loans and servicing rights of $ 151.1 million and $ 271.1 million during the three and six months ended March 31, 2025, respectively, compared to $ 152.7 million and $ 281.5 million in the prior year periods.

Net gains on sales of loans and servicing rights are included in revenues in the consolidated statements of operations.

During the three months ended December 31, 2024, approximately 69 % of the Company’s mortgage loans were sold directly to Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) or into securities backed by Government National Mortgage Association (Ginnie Mae), and 30 % were sold to one other major financial entity.

During the six months ended March 31, 2025, approximately 69 % of the Company’s mortgage loans were sold directly to Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) or into securities backed by Government National Mortgage Association (Ginnie Mae), and 29 % were sold to one other major financial entity.

The Company also uses hedging instruments as part of a program to offer below market interest rate financing to its homebuyers.

At December 31, 2024 and September 30, 2024, the Company had mortgage-backed securities (MBS) totaling $ 673.5 million and $ 637.9 million, respectively, that did not yet have interest rate lock commitments (IRLCs) or closed loans created or assigned.

The Company recorded an asset of $ 3.4 million and $ 2.4 million at December 31, 2024 and September 30, 2024, respectively, for the fair value of such MBS position, which is measured using Level 2 inputs.

At March 31, 2025 and September 30, 2024, the Company had mortgage-backed securities (MBS) totaling $ 1.1 billion and $ 637.9 million, respectively, that did not yet have interest rate lock commitments (IRLCs) or closed loans created or assigned.

The Company recorded a liability of $ 2.6 million and an asset of $ 2.4 million at March 31, 2025 and September 30, 2024, respectively, for the fair value of such MBS position, which is measured using Level 2 inputs.

The Company is party to IRLCs, which are extended to borrowers who have applied for loan funding and meet defined credit and underwriting criteria.

At December 31, 2024 and September 30, 2024, the notional amount of IRLCs, which are accounted for as derivative instruments recorded at fair value using Level 3 inputs, totaled $ 1.99 billion and $ 2.05 billion, respectively.

At March 31, 2025 and September 30, 2024, the notional amount of IRLCs, which are accounted for as derivative instruments recorded at fair value using Level 3 inputs, totaled $ 2.7 billion and $ 2.0 billion, respectively.

NOTE G – INCOME TAXES

The Company’s income tax expense for the three months ended December 31, 2024 and 2023 was $ 258.0 million and $ 291.8 million, respectively.

The effective tax rate was 23.2 % for the three months ended December 31, 2024 compared to 23.4 % in the prior year period.

The effective tax rates for both periods include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient homes tax credits.

The Company’s deferred tax assets, net of deferred tax liabilities, were $ 142.3 million at December 31, 2024 compared to $ 182.4 million at September 30, 2024.

The Company has a valuation allowance of $ 14.9 million at December 31, 2024 and September 30, 2024 related to deferred tax assets for state net operating loss (NOL) and tax credit carryforwards that are expected to expire before being realized.

The Company’s income tax expense for the three and six months ended March 31, 2025 was $ 248.0 million and $ 506.0 million, respectively, compared to $ 344.8 million and $ 636.6 million in the prior year periods.

The effective tax rate was 23.2 % for both the three and six months ended March 31, 2025 compared to 22.6 % and 22.9 % in the prior year periods.

The effective tax rates for all periods include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient homes tax credits.

The Company’s deferred tax assets, net of deferred tax liabilities, were $ 89.5 million at March 31, 2025 compared to $ 182.4 million at September 30, 2024.

The Company has a valuation allowance of $ 14.9 million at March 31, 2025 and September 30, 2024 related to deferred tax assets for state net operating loss (NOL) and tax credit carryforwards that are expected to expire before being realized.

The Company will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to the remaining state NOL and tax credit carryforwards.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

NOTE H – EARNINGS PER SHARE

1 unchanged sentence

Three Months Ended

March 31, Six Months Ended

2025 2024 2025 2024

(In millions)

1 unchanged sentence

$ 810.4 $ 1,172.1 $ 1,655.3 $ 2,119.5

Denominator for basic earnings per share — weighted average common shares 321.5 333.3

Denominator for basic earnings per share — weighted average shares 312.5 330.9 317.0 332.1

Effect of dilutive securities:

Employee stock awards 1.5 2.4 1.7 2.4

Denominator for diluted earnings per share — adjusted weighted average common shares 323.3 335.7

Basic net income per common share attributable to D.R.

Denominator for diluted earnings per share — adjusted weighted average shares 314.0 333.3 318.7 334.5

Basic net income per share attributable to D.R.

$ 2.59 $ 3.54 $ 5.22 $ 6.38

Diluted net income per common share attributable to D.R.

Diluted net income per share attributable to D.R.

$ 2.58 $ 3.52 $ 5.19 $ 6.34

2 unchanged sentences

In July 2024, the Board of Directors authorized the repurchase of up to $ 4.0 billion of the Company’s common stock, replacing the previous authorization.

During the three months ended December 31, 2024, the Company repurchased 6.8 million shares of its common stock at a total cost, including commissions and excise taxes, of $ 1.1 billion.

At December 31, 2024, there was $ 2.5 billion remaining on the repurchase authorization.

During the six months ended March 31, 2025, the Company repurchased 16.5 million shares of its common stock at a total cost, including commissions and excise taxes, of $ 2.4 billion.

At March 31, 2025, there was $ 1.2 billion remaining on the repurchase authorization.

In April 2025, the Board of Directors authorized the repurchase of up to $ 5.0 billion of the Company’s common stock, replacing the previous authorization, which at that time had $ 1.1 billion remaining due to repurchases made subsequent to quarter end.

The authorization has no expiration date.

During the three months ended December 31, 2024, the Board of Directors approved a quarterly cash dividend of $ 0.40 per common share totaling $ 128.5 million, which was paid on November 19, 2024 to stockholders of record on November 12, 2024.

In January 2025, the Board of Directors approved a quarterly cash dividend of $ 0.40 per common share, payable on February 14, 2025 to stockholders of record on February 7, 2025.

During each of the first two quarters of fiscal 2025, the Board of Directors approved a quarterly cash dividend of $ 0.40 per common share, the most recent of which was paid on February 14, 2025 to stockholders of record on February 7, 2025.

Cash dividends declared and paid in the three and six months ended March 31, 2025 totaled $ 125.5 million and $ 254.0 million, respectively.

In April 2025, the Board of Directors approved a quarterly cash dividend of $ 0.40 per common share, payable on May 9, 2025 to stockholders of record on May 2, 2025.

Forestar has an effective shelf registration statement, filed with the SEC in September 2024, registering $ 750 million of equity securities, of which $ 300 million is reserved for sales under its at-the-market equity offering (ATM) program that was entered into in November 2024.

During the three months ended December 31, 2024, there were no shares issued under the ATM program.

At December 31, 2024, the full $ 750 million remained available for issuance under Forestar’s shelf registration statement, with $ 300 million reserved for sales under the ATM program.

During the six months ended March 31, 2025, there were no shares issued under the ATM program.

At March 31, 2025, the full $ 750 million remained available for issuance under Forestar’s shelf registration statement, with $ 300 million reserved for sales under the ATM program.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

NOTE J – EMPLOYEE BENEFIT PLANS

8 unchanged sentences

The grant date fair value of these equity awards was $ 176.39 per unit.

Compensation expense related to this grant was $ 4.8 million in the three months ended December 31, 2024, based on an estimate of the Company’s performance against a market index or its peer group, the elapsed portion of the performance period and the grant date fair value of the award.

During the three months ended December 31, 2024, the Company granted approximately 610,000 RSUs to approximately 1,600 recipients, including executive officers, other key employees and non-management directors.

Compensation expense related to this grant was $ 4.8 million and $ 9.6 million in the three and six months ended March 31, 2025, respectively, based on an estimate of the Company’s performance against a market index or its peer group, the elapsed portion of the performance period and the grant date fair value of the award.

During the six months ended March 31, 2025, the Company granted approximately 610,000 RSUs to approximately 1,600 recipients, including executive officers, other key employees and non-management directors.

The weighted average grant date fair value of these equity awards was $ 156.12 per unit, and they vest annually in equal installments over periods of three to five years.

Compensation expense related to these grants was $ 10.8 million in the three months ended December 31, 2024, which included $ 8.3 million of expense recognized for employees that were retirement eligible on the date of grant.

Total stock-based compensation expense related to the Company’s equity awards was $ 40.1 million during the three months ended December 31, 2024 compared to $ 37.3 million during the three months ended December 31, 2023.

Compensation expense related to these grants was $ 4.7 million and $ 15.5 million in the three and six months ended March 31, 2025, respectively.

Compensation expense in the six month period included $ 8.3 million of expense recognized for employees that were retirement eligible on the date of grant.

Total stock-based compensation expense related to the Company’s equity awards was $ 29.8 million and $ 69.8 million during the three and six months ended March 31, 2025, respectively, compared to $ 22.1 million and $ 59.4 million during the three and six months ended March 31, 2024.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

NOTE K – COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

The Company’s warranty liability is based upon historical warranty cost experience in each market in which it operates.

Changes in the Company’s warranty liability during the three months ended December 31, 2024 and 2023 were as follows:

Changes in the Company’s warranty liability during the three and six months ended March 31, 2025 and 2024 were as follows:

Three Months Ended

March 31, Six Months Ended

2025 2024 2025 2024

(In millions)

8 unchanged sentences

The Company has 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.

The estimated liabilities for these contingencies were $ 939.1 million and $ 949.6 million at December 31, 2024 and September 30, 2024, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets.

Approximately 97 % of these reserves related to construction defect matters at both December 31, 2024 and September 30, 2024.

Expenses related to the Company’s legal contingencies were $ 40.0 million and $ 26.4 million in the three months ended December 31, 2024 and 2023, respectively.

Changes in the Company’s legal claims reserves during the three months ended December 31, 2024 and 2023 were as follows:

Three Months Ended

The estimated liabilities for these contingencies were $ 991.3 million and $ 949.6 million at March 31, 2025 and September 30, 2024, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets.

Approximately 97 % of these reserves related to construction defect matters at both March 31, 2025 and September 30, 2024.

Expenses related to the Company’s legal contingencies were $ 97.3 million and $ 63.6 million in the six months ended March 31, 2025 and 2024, respectively.

Changes in the Company’s legal claims reserves during the six months ended March 31, 2025 and 2024 were as follows:

Six Months Ended

(In millions)

Reserves for legal claims, beginning of period $ 949.6 $ 858.9

Increase (decrease) in reserves 5.8 ( 4.7 )

Increase in reserves 72.5 39.8

Payments ( 30.8 ) ( 49.4 )

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

The Company estimates and records receivables under its applicable insurance policies related to its estimated contingencies for known claims and anticipated future construction defect claims on previously closed homes and other legal claims and lawsuits incurred in the ordinary course of business when recovery is probable.

1 unchanged sentence

Since June 1, 2021, except for contractual risk transfer, the Company is almost exclusively self-insured for construction defect exposures.

The Company’s estimated insurance receivables from estimated losses for pending legal claims and anticipated future claims related to previously closed homes totaled $ 120.0 million, $ 156.8 million and $ 131.5 million at December 31, 2024, September 30, 2024 and December 31, 2023, respectively, and are included in other assets in the consolidated balance sheets.

The Company’s estimated insurance receivables from estimated losses for pending legal claims and anticipated future claims related to previously closed homes totaled $ 126.7 million, $ 156.8 million and $ 134.8 million at March 31, 2025, September 30, 2024 and March 31, 2024, respectively, and are included in other assets in the consolidated balance sheets.

The Company also contractually requires major subcontractors in most markets to have general liability insurance, which includes construction defect coverage.

6 unchanged sentences

Land purchase contract deposits and capitalized pre-acquisition costs are expensed to inventory and land option charges when the Company believes it is probable that it will not acquire the property under contract and will not be able to recover these costs through other means.

At December 31, 2024, the Company had total deposits of $ 2.2 billion, consisting of cash deposits of $ 2.1 billion and promissory notes and surety bonds of $ 147.4 million, related to contracts to purchase land and lots with a total remaining purchase price of approximately $ 25.8 billion.

At March 31, 2025, the Company had total deposits of $ 2.3 billion, consisting of cash deposits of $ 2.1 billion and promissory notes and surety bonds of $ 154.0 million, related to contracts to purchase land and lots with a total remaining purchase price of approximately $ 25.6 billion.

Of these amounts, $ 223.8 million of the deposits related to contracts with Forestar to purchase land and lots with a remaining purchase price of $ 2.2 billion.

A limited number of the homebuilding land and lot purchase contracts at December 31, 2024, representing $ 209.0 million of remaining purchase price, were subject to specific performance provisions that may require the Company to purchase the land or lots upon the land sellers meeting their respective contractual obligations.

A limited number of the homebuilding land and lot purchase contracts at March 31, 2025, representing $ 201.4 million of remaining purchase price, were subject to specific performance provisions that may require the Company to purchase the land or lots upon the land sellers meeting their respective contractual obligations.

Of the $ 201.4 million remaining purchase price subject to specific performance provisions, $ 181.9 million related to contracts between the homebuilding segment and Forestar.

During the three months ended December 31, 2024 and 2023, Forestar reimbursed the homebuilding segment $ 10.0 million and $ 13.3 million, respectively, for previously paid earnest money and $ 4.2 million and $ 4.6 million, respectively, for pre-acquisition and other due diligence costs related to land purchase contracts whereby the homebuilding segment assigned its rights under contract to Forestar.

During the three and six months ended March 31, 2025, Forestar reimbursed the homebuilding segment $ 4.6 million and $ 14.6 million, respectively, for previously paid earnest money and $ 4.0 million and $ 8.2 million, respectively, for pre-acquisition and other due diligence costs related to land purchase contracts whereby the homebuilding segment assigned its rights under contract to Forestar.

During the three and six months ended March 31, 2024, Forestar reimbursed the homebuilding segment $ 5.4 million and $ 18.7 million, respectively, for previously paid earnest money and $ 6.1 million and $ 10.7 million, respectively, for such pre-acquisition and due diligence costs.

Other Commitments

At December 31, 2024, the Company had outstanding surety bonds of $ 3.4 billion and letters of credit of $ 248.6 million to secure performance under various contracts.

At March 31, 2025, the Company had outstanding surety bonds of $ 3.4 billion and letters of credit of $ 234.2 million to secure performance under various contracts.

Of the total letters of credit, $ 211.9 million were issued under the homebuilding revolving credit facility and $ 22.3 million were issued under Forestar’s revolving credit facility.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)

December 31, 2024

March 31, 2025

NOTE L – OTHER ASSETS, ACCRUED EXPENSES AND OTHER LIABILITIES

The Company’s other assets at December 31, 2024 and September 30, 2024 were as follows:

The Company’s other assets at March 31, 2025 and September 30, 2024 were as follows:

2025 September 30,

6 unchanged sentences

Contract assets - insurance agency commissions 126.0 117.5

Federal and state income tax receivable 60.1 —

Margin deposits related to hedging instruments 57.3 71.3

5 unchanged sentences

$ 3,459.9 $ 3,317.6

The Company’s accrued expenses and other liabilities at December 31, 2024 and September 30, 2024 were as follows:

The Company’s accrued expenses and other liabilities at March 31, 2025 and September 30, 2024 were as follows:

2025 September 30,

10 unchanged sentences

Federal and state income tax liabilities — 27.7

Broker deposits related to hedging instruments 43.2 —

Interest rate lock commitments 0.3 —

2 unchanged sentences

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.

What changed 10-Q

Item 1. Financial Statements