What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-07-23 compared with 2025-04-23 · 154 added, 123 removed, 633 unchanged (30% of the section changed)

14 unchanged sentences

Mortgage loans held for sale 2,767.7 2,477.5

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

at March 31, 2025 and September 30, 2024

Deferred income taxes, net of valuation allowance of $ 14.8 million and $ 14.9 million

at June 30, 2025 and September 30, 2024, respectively

Property and equipment, net 559.7 531.0

9 unchanged sentences

Common stock, $ .01 par value, 1,000,000,000 shares authorized, 403,939,994 shares issued

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

and 298,945,018 shares outstanding at June 30, 2025 and 402,848,342 shares issued

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

1 unchanged sentence

Retained earnings 30,254.5 27,951.0

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

Treasury stock, 104,994,976 shares and 78,820,982 shares at June 30, 2025

and September 30, 2024, respectively, at cost

8 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

51 unchanged sentences

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

Net income — — 1,024.6 — 8.5 1,033.1

Stock issued under employee benefit plans ( 30,611 shares)

— 2.0 — — — 2.0

Cash paid for shares withheld for taxes — ( 0.8 ) — — — ( 0.8 )

Stock-based compensation expense — 25.9 — — — 25.9

Cash dividends declared ($ 0.40 per share)

— — ( 122.4 ) — — ( 122.4 )

Repurchases of common stock ( 9,714,653 shares)

— — — ( 1,203.5 ) — ( 1,203.5 )

Balances at June 30, 2025 ( 298,945,018 shares)

$ 4.0 $ 3,536.7 $ 30,254.5 $ ( 9,742.3 ) $ 540.1 $ 24,593.0

See accompanying notes to consolidated financial statements.

37 unchanged sentences

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

Net income — — 1,353.6 — 13.2 1,366.8

Stock issued under employee benefit plans ( 146,514 shares)

— 1.9 — — — 1.9

Cash paid for shares withheld for taxes — ( 1.3 ) — — — ( 1.3 )

Stock-based compensation expense — 26.8 — — — 26.8

Cash dividends declared ($ 0.30 per share)

— — ( 98.5 ) — — ( 98.5 )

Repurchases of common stock ( 2,969,378 shares)

— — — ( 441.4 ) — ( 441.4 )

Change of ownership interest in Forestar — ( 0.1 ) — — 0.1 —

Balances at June 30, 2024 ( 327,373,437 shares)

$ 4.0 $ 3,458.9 $ 26,765.3 $ ( 5,571.7 ) $ 494.2 $ 25,150.7

See accompanying notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended March 31,

Nine Months Ended June 30,

(In millions)

1 unchanged sentence

Net income $ 2,704.1 $ 3,506.2

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 73.9 63.5

3 unchanged sentences

Changes in operating assets and liabilities:

Decrease (increase) in construction in progress and finished homes 229.8 ( 709.1 )

Increase in construction in progress and finished homes ( 146.1 ) ( 863.0 )

Increase in residential land and lots –

2 unchanged sentences

Increase in rental properties ( 230.8 ) ( 375.7 )

(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 )

Increase in other assets ( 136.5 ) ( 154.4 )

Increase in mortgage loans held for sale ( 290.2 ) ( 58.9 )

Increase (decrease) in accounts payable, accrued expenses and other liabilities 152.7 ( 34.4 )

Net cash provided by operating activities 949.1 228.2

INVESTING ACTIVITIES

7 unchanged sentences

Repayment of notes payable ( 1,891.1 ) ( 640.4 )

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

Borrowings on mortgage repurchase facilities, net 170.4 21.8

Proceeds from stock associated with certain employee benefit plans 8.5 12.2

11 unchanged sentences

Notes payable issued for inventory $ 5.5 $ 43.4

Reduction of notes payable upon deconsolidation of variable interest entity $ — $ ( 127.8 )

Stock issued under employee incentive plans $ 147.2 $ 173.2

Repurchases of common stock not settled $ 23.2 $ 1.5

See accompanying notes to consolidated financial statements.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

March 31, 2025

June 30, 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 March 31, 2025, the Company owned a 62 % controlling interest in Forestar Group Inc.

As of June 30, 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 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.

therefore, the operating results for the three and nine months ended June 30, 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)

March 31, 2025

June 30, 2025

NOTE B – SEGMENT INFORMATION

13 unchanged sentences

The Company’s homebuilding divisions design, build and sell single-family detached homes on lots they develop and on fully developed lots purchased ready for home construction.

To a lesser extent, the homebuilding divisions also build and sell attached homes, such as townhomes, duplexes and triplexes.

To a lesser extent, the homebuilding divisions also build and sell attached homes, such as townhomes and duplexes.

Most of the revenue generated by the Company’s homebuilding operations is from the sale of completed homes and to a lesser extent from the sale of land and lots.

14 unchanged sentences

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

March 31, 2025

June 30, 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:

March 31, 2025

June 30, 2025

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

22 unchanged sentences

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

March 31, 2025

June 30, 2025

September 30, 2024

23 unchanged sentences

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

March 31, 2025

Three Months Ended March 31, 2025

June 30, 2025

Three Months Ended June 30, 2025

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

20 unchanged sentences

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

March 31, 2025

Six Months Ended March 31, 2025

June 30, 2025

Nine Months Ended June 30, 2025

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

23 unchanged sentences

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

March 31, 2025

Three Months Ended March 31, 2024

June 30, 2025

Three Months Ended June 30, 2024

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

20 unchanged sentences

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

March 31, 2025

Six Months Ended March 31, 2024

June 30, 2025

Nine Months Ended June 30, 2024

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

23 unchanged sentences

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

March 31, 2025

June 30, 2025

Homebuilding Inventories by Reporting Segment (1)

13 unchanged sentences

Homebuilding Results by Reporting Segment Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

17 unchanged sentences

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

March 31, 2025

June 30, 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 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.

As of June 30, 2025, the Company performed detailed impairment evaluations of communities and land inventories and determined that communities with a combined carrying value of $ 72.1 million were impaired on a non-recurring basis using Level 3 inputs.

As a result, impairment charges of $ 15.9 million were recorded during the three months ended June 30, 2025 to reduce the carrying value of the related inventories to fair value.

During the nine months ended June 30, 2025, impairment charges totaled $ 24.5 million.

There were no impairment charges recorded in the prior year quarter and $ 5.6 million of impairment charges recorded in the nine months ended June 30, 2024.

During the three and nine months ended June 30, 2025, earnest money and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 38.3 million and $ 76.3 million, respectively, compared to $ 14.8 million and $ 28.8 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)

March 31, 2025

June 30, 2025

NOTE D – NOTES PAYABLE

9 unchanged sentences

5.0 % senior notes due 2034 (1)

5.5 % senior notes due 2035 (1)

Other notes 179.2 146.2

16 unchanged sentences

_____________

(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.

(1) Debt issuance costs that were deducted from the carrying amounts of the homebuilding senior notes totaled $ 20.0 million and $ 11.7 million at June 30, 2025 and September 30, 2024, respectively.

(2) Debt issuance costs that were deducted from the carrying amount of Forestar’s senior notes totaled $ 7.6 million and $ 3.5 million at June 30, 2025 and September 30, 2024, respectively.

(3) The fair value of notes payable at June 30, 2025 totaled $ 7.2 billion, of which $ 4.3 billion were measured using Level 2 inputs and $ 2.9 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)

March 31, 2025

June 30, 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.

The amendment also extended the maturity date of the facility.

The facility includes bank commitments of $ 1.965 billion maturing on December 18, 2029 and $ 265 million maturing on October 28, 2027 .

The facility has an uncommitted accordion feature that could increase its size to $ 3.0 billion, subject to certain conditions and availability of additional bank commitments.

The facility includes an uncommitted accordion feature that allows for an increase in its size to $ 3.0 billion, subject to certain conditions and availability of additional bank commitments.

In June 2025, the Company utilized this accordion feature, increasing the facility’s size to $ 2.305 billion through an additional commitment.

Of the total commitments, $ 2.04 billion mature on December 18, 2029 , and $ 265 million mature on October 28, 2027 .

The facility also provides for the issuance of letters of credit with a sublimit equal to 100 % of the total revolving credit commitments.

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

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.

At June 30, 2025, there were no borrowings outstanding and $ 244.3 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 2.06 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.

6 unchanged sentences

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

In May 2025, the Company issued $ 500 million principal amount of 4.85 % senior notes due October 15, 2030 , 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 5.1 %.

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.

At June 30, 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 March 31, 2025.

All of the $ 500 million authorization was remaining at June 30, 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 $ 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.

At June 30, 2025, there were $ 1.02 billion of borrowings outstanding at a 6.4 % annual interest rate and no letters of credit issued under the facility, resulting in available capacity of $ 30 million.

AND SUBSIDIARIES

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

June 30, 2025

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

2 unchanged sentences

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.

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)

March 31, 2025

At June 30, 2025, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

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.

3 unchanged sentences

The amendment also extended the maturity date of the facility.

The facility includes bank commitments of $ 575 million maturing on December 18, 2029 and $ 65 million maturing on October 28, 2026 .

Of the total commitments, $ 575 million mature on December 18, 2029 , and $ 65 million mature on October 28, 2026 .

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.

1 unchanged sentence

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

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.

At June 30, 2025, there were no borrowings outstanding and $ 37.2 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 602.8 million.

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

7 unchanged sentences

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.

At June 30, 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 March 31, 2025.

Financial Services

The Company’s 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.

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.

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

AND SUBSIDIARIES

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

March 31, 2025

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

June 30, 2025

Financial Services

DHI Mortgage then has the right and obligation to repurchase the 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.

In May 2025, the committed mortgage repurchase facility was amended to reduce its capacity to $ 1.4 billion and extend its maturity date to May 6, 2026 .

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.

At June 30, 2025, DHI Mortgage had an obligation of $ 1.3 billion under the committed mortgage repurchase facility at a 6.0 % annual interest rate.

At June 30, 2025, the uncommitted mortgage repurchase facility had a borrowing capacity of $ 500 million, of which DHI Mortgage had an obligation of $ 451.7 million at a 5.6 % annual interest rate.

At June 30, 2025, $ 2.22 billion of mortgage loans held for sale with a collateral value of $ 2.17 billion were pledged under the committed mortgage repurchase facility, and $ 535.9 million of mortgage loans held for sale with a collateral value of $ 501.1 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 March 31, 2025, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities.

At June 30, 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 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:

During the first nine 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 nine months ended June 30, 2025 and 2024:

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

5 unchanged sentences

__________________

(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.

(1) Interest incurred includes (a) interest on the Company’s mortgage repurchase facilities of $ 10.3 million and $ 25.8 million in the three and nine months ended June 30, 2025, respectively, and $ 16.0 million and $ 44.3 million in the prior year periods;

(b) Forestar interest of $ 13.4 million and $ 32.3 million in the three and nine months ended June 30, 2025, respectively, and $ 8.2 million and $ 24.5 million in the prior year periods;

and (c) interest on the rental revolving credit facility of $ 16.6 million and $ 45.3 million in the three and nine months ended June 30, 2025, respectively, and $ 18.8 million and $ 44.6 million in the prior year periods.

AND SUBSIDIARIES

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

March 31, 2025

June 30, 2025

NOTE F – MORTGAGE LOANS

2 unchanged sentences

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

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

At June 30, 2025, mortgage loans held for sale of $ 2.77 billion had an aggregate outstanding principal balance of $ 2.86 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 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.

During the nine months ended June 30, 2025 and 2024, mortgage loans originated totaled $ 17.08 billion and $ 17.73 billion, respectively, and mortgage loans sold totaled $ 16.68 billion and $ 17.68 billion, respectively.

The Company had gains on sales of loans and servicing rights of $ 152.8 million and $ 423.9 million during the three and nine months ended June 30, 2025, respectively, compared to $ 162.6 million and $ 444.0 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 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.

During the nine months ended June 30, 2025, approximately 72 % of the Company’s mortgage loans were sold directly to the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or into securities backed by the Government National Mortgage Association (Ginnie Mae), and 26 % 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 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.

At June 30, 2025 and September 30, 2024, the Company had mortgage-backed securities (MBS) totaling $ 880.5 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 a liability of $ 6.8 million and an asset of $ 2.4 million at June 30, 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 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.

At June 30, 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 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’s income tax expense for the three and nine months ended June 30, 2025 was $ 325.0 million and $ 831.0 million, respectively, compared to $ 432.2 million and $ 1.1 billion in the prior year periods.

The effective tax rate was 23.9 % and 23.5 % for the three and nine months ended June 30, 2025, respectively, compared to 24.0 % and 23.4 % 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 home tax credits.

The Company’s deferred tax assets, net of deferred tax liabilities, were $ 81.3 million at June 30, 2025 compared to $ 182.4 million at September 30, 2024.

The Company has a valuation allowance of $ 14.8 million and $ 14.9 million at June 30, 2025 and September 30, 2024, respectively, 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.

Any reversal of the valuation allowance in future periods will impact the Company’s effective tax rate.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law (the new law).

The new law terminates the energy efficient home tax credit for homes closing after June 30, 2026 and enacts certain other tax provisions that will impact the Company’s financial statements.

The termination of the energy efficient home tax credit will result in a reduced tax benefit beginning in fiscal 2026.

The Company recognized a tax benefit related to the energy efficient home tax credit of $ 70.4 million in fiscal 2024 and $ 30.8 million in the nine months ended June 30, 2025.

The Company is evaluating the impact of other tax provisions within the new law;

however, none of the other tax provisions are expected to have a significant impact on the Company’s financial statements.

AND SUBSIDIARIES

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

March 31, 2025

June 30, 2025

NOTE H – EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share.

For the three and nine months ended June 30, 2025, the Company excluded 1.2 million and 0.8 million employee stock awards, respectively, from the calculation of diluted earnings per share as the impact of these awards was anti-dilutive.

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

12 unchanged sentences

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

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 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.

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.

The authorization has no expiration date.

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.

During the nine months ended June 30, 2025, the Company repurchased 26.2 million shares of its common stock at a total cost, including commissions and excise taxes, of $ 3.6 billion, of which $ 2.6 billion was repurchased under the previous authorization.

At June 30, 2025, there was $ 4.0 billion remaining on the repurchase authorization.

During each of the first three 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 May 9, 2025 to stockholders of record on May 2, 2025.

Cash dividends declared and paid in the three and nine months ended June 30, 2025 totaled $ 122.4 million and $ 376.4 million, respectively.

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

During the nine months ended June 30, 2025, there were no shares issued under the ATM program.

At June 30, 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)

March 31, 2025

June 30, 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 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.

Compensation expense related to this grant was $ 4.8 million and $ 14.5 million in the three and nine months ended June 30, 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 nine months ended June 30, 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 $ 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.

Compensation expense related to these grants was $ 4.6 million and $ 20.2 million in the three and nine months ended June 30, 2025, respectively.

Compensation expense in the nine 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 $ 23.4 million and $ 93.2 million during the three and nine months ended June 30, 2025, respectively, compared to $ 25.0 million and $ 84.4 million during the three and nine months ended June 30, 2024.

AND SUBSIDIARIES

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

March 31, 2025

June 30, 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 and six months ended March 31, 2025 and 2024 were as follows:

Changes in the Company’s warranty liability during the three and nine months ended June 30, 2025 and 2024 were as follows:

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

9 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 $ 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

The estimated liabilities for these contingencies were $ 1.0 billion and $ 949.6 million at June 30, 2025 and September 30, 2024, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets.

Approximately 98 % and 97 % of these reserves related to construction defect matters at June 30, 2025 and September 30, 2024, respectively.

Expenses related to the Company’s legal contingencies were $ 142.5 million and $ 107.9 million in the nine months ended June 30, 2025 and 2024, respectively.

Changes in the Company’s legal claims reserves during the nine months ended June 30, 2025 and 2024 were as follows:

Nine Months Ended

(In millions)

5 unchanged sentences

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

March 31, 2025

June 30, 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 $ 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’s estimated insurance receivables from estimated losses for pending legal claims and anticipated future claims related to previously closed homes totaled $ 138.5 million, $ 156.8 million and $ 158.6 million at June 30, 2025, September 30, 2024 and June 30, 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 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.

At June 30, 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 $ 154.9 million, related to contracts to purchase land and lots with a total remaining purchase price of approximately $ 25.7 billion.

Of these amounts, $ 223.2 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 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.

A limited number of the homebuilding land and lot purchase contracts at June 30, 2025, representing $ 206.7 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 $ 206.7 million remaining purchase price subject to specific performance provisions, $ 169.2 million related to contracts between the homebuilding segment and 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.

During the three and nine months ended June 30, 2025, Forestar reimbursed the homebuilding segment $ 4.2 million and $ 18.8 million, respectively, for previously paid earnest money and $ 9.5 million and $ 17.7 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 nine months ended June 30, 2024, Forestar reimbursed the homebuilding segment $ 4.0 million and $ 22.7 million, respectively, for previously paid earnest money and $ 4.4 million and $ 15.1 million, respectively, for such pre-acquisition and due diligence costs.

Other Commitments

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.

At June 30, 2025, the Company had outstanding surety bonds of $ 3.4 billion and letters of credit of $ 281.5 million to secure performance under various contracts.

Of the total letters of credit, $ 244.3 million were issued under the homebuilding revolving credit facility and $ 37.2 million were issued under Forestar’s revolving credit facility.

1 unchanged sentence

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

March 31, 2025

June 30, 2025

NOTE L – OTHER ASSETS, ACCRUED EXPENSES AND OTHER LIABILITIES

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

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

2025 September 30,

6 unchanged sentences

Contract assets - insurance agency commissions 127.0 117.5

Federal and state income tax receivable 60.1 —

Margin deposits related to hedging instruments 47.9 71.3

5 unchanged sentences

$ 3,447.5 $ 3,317.6

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

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

2025 September 30,

10 unchanged sentences

Federal and state income tax liabilities 54.0 27.7

Interest rate lock commitments 0.3 —

Other 137.0 123.2

1 unchanged sentence

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