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Item 7. Management’s Discussion and Analysis

2025-11-19 compared with 2024-11-19 · 176 added, 169 removed, 649 unchanged (35% of the section changed)

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Fiscal 2025 Operating Results

In fiscal 2024, our number of homes closed and home sales revenues increased 8% and 7%, respectively, compared to the prior year, and our consolidated revenues increased 4% to $36.8 billion compared to $35.5 billion in the prior year.

Our pre-tax income was $6.3 billion in both fiscal 2024 and 2023, and our pre-tax operating margin was 17.1% compared to 17.8%.

Net income was $4.8 billion in both years, and our diluted earnings per share was $14.34 compared to $13.82.

In fiscal 2025, our number of homes closed and our home sales revenues decreased 5% and 7%, respectively, compared to the prior year, and our consolidated revenues decreased 7% to $34.3 billion compared to $36.8 billion.

Our pre-tax income was $4.7 billion in fiscal 2025 compared to $6.3 billion in fiscal 2024, and our pre-tax operating margin was 13.8% compared to 17.1%.

Net income was $3.6 billion in fiscal 2025 compared to $4.8 billion in fiscal 2024, and our diluted earnings per share were $11.57 compared to $14.34.

Consolidated net cash provided by operating activities was $3.4 billion in fiscal 2025 and $2.2 billion in fiscal 2024, and cash provided by our homebuilding operations was $3.4 billion in fiscal 2025 compared to $2.2 billion in fiscal 2024.

In fiscal 2024, our return on equity (ROE) was 19.9% compared to 22.7% in fiscal 2023, our homebuilding pre-tax return on inventory (ROI) was 27.8% compared to 29.7%, and our return on assets (ROA) was 13.9% compared to 15.1%.

In fiscal 2025, our return on equity (ROE) was 14.6% compared to 19.9% in fiscal 2024, and our return on assets (ROA) was 10.0% compared to 13.9%.

ROE is calculated as net income attributable to D.R.

Horton for the year divided by average stockholders’ equity, where average stockholders’ equity is the sum of ending stockholders’ equity balances for the trailing five quarters divided by five.

Homebuilding ROI is calculated as homebuilding pre-tax income for the year divided by average inventory, where average inventory is the sum of ending homebuilding inventory balances for the trailing five quarters divided by five.

ROA is calculated as net income attributable to D.R.

Horton for the year divided by average consolidated assets, where average consolidated assets is the sum of total asset balances for the trailing five quarters divided by five.

Despite elevated mortgage interest rates and inflationary pressures during fiscal 2024, demand for new homes remained solid, and our net sales orders increased 10% compared to fiscal 2023.

The disruptions in the supply chain for certain building materials and tightness in the labor market we experienced in recent years have largely subsided, and our average construction cycle time has returned to historical norms.

The supply of both new and existing homes at affordable price points is still limited, and demographics supporting housing demand remain favorable;

however, we are continuing to use incentives and pricing adjustments to adapt to current market conditions.

We believe we are well-positioned to meet changing market conditions with our affordable product offerings and lot supply and will manage our home pricing, sales incentives and number of homes in inventory based on the level of homebuyer demand.

We expect our incentive levels to remain elevated, assuming similar market conditions and no significant changes in mortgage interest rates.

We remain focused on our relationships with land developers across the country in order to maximize our returns and capital efficiency .

Within our homebuilding land and lot portfolio, our lots controlled through purchase contracts represent 76% of the lots owned and controlled at September 30, 2024 compared to 75% at September 30, 2023.

We are prioritizing the purchase of finished lots from Forestar and other land developers when possible.

During fiscal 2024, 63% of the homes we closed were on lots developed by either Forestar or a third party.

We believe our strong balance sheet and liquidity provide us with the flexibility to operate effectively through changing economic conditions.

During fiscal 2025, new home demand continued to be impacted by ongoing affordability constraints and cautious consumer sentiment.

As a result, the value of our net sales orders and homebuilding revenues in fiscal 2025 decreased 6% and 7%, respectively, compared to fiscal 2024, and our home sales gross margin decreased to 21.5% as we increased sales incentives, such as buydowns of mortgage rates for our homebuyers.

We strive to remain well positioned with affordable product offerings and a flexible lot supply and will continue to manage our home pricing, sales incentives and number of homes in inventory based on the level of demand in each of our local markets.

We expect to maintain an elevated level of sales incentives to support demand and may increase them further, depending on market conditions and changes in mortgage interest rates.

We remain focused on our relationships with land developers across the country to maximize returns and capital efficiency .

Within our homebuilding land and lot portfolio, lots controlled through purchase contracts represented 75% of the lots owned and controlled at September 30, 2025 compared to 76% at September 30, 2024.

We continue to prioritize the purchase of finished lots from Forestar and other land developers when possible.

During fiscal 2025, 65% of the homes we closed were on lots developed by either Forestar or a third party compared to 63% in fiscal 2024.

We believe our strong balance sheet and liquidity provide us with flexibility to operate effectively through changing economic conditions.

We plan to generate strong cash flows from our operations and manage our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments in each of our communities based on local housing market conditions.

Our operating strategy focuses on consistently enhancing long-term value to our shareholders by leveraging our financial and competitive position to maximize the returns on our inventory investments and generate consistent, sustainable profitability and cash flows, while managing risk and maintaining financial flexibility to navigate changing economic conditions.

Our operating strategy focuses on consistently enhancing long-term value to our shareholders by leveraging our financial and competitive positions to maximize the returns on our inventory investments and generate strong profits and cash flows from operations, while managing risk and maintaining financial flexibility to navigate changing economic conditions.

Our strategy includes the following initiatives:

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• Ensuring that our financial services business provides high quality mortgage and title services to homebuyers efficiently and effectively.

• Investing in the construction and leasing of single-family and multi-family rental properties to meet rental demand in high growth suburban markets and selling these properties profitably.

• Investing in our rental operations to meet rental demand in high growth suburban markets and selling these properties profitably.

• Opportunistically evaluating potential acquisitions to enhance our operating platform.

We believe our operating strategy, which has produced positive results in recent years, will allow us to successfully operate through changing economic conditions and maintain our strong financial performance and competitive position.

However, we cannot provide any assurances that the initiatives listed above will continue to be successful, and we may need to adjust parts of our strategy to meet future market conditions.

However, we cannot provide any assurance that the initiatives listed above will continue to be successful, and we may need to adjust parts of our strategy to meet future market conditions.

Key financial results as of and for our fiscal year ended September 30, 2025, as compared to fiscal 2024, were as follows:

Consolidated Results:

• Consolidated revenues increased 4% to $36.8 billion compared to $35.5 billion.

• Consolidated pre-tax income was $6.3 billion in both years.

• Consolidated revenues decreased 7% to $34.3 billion compared to $36.8 billion.

• Consolidated pre-tax income decreased 25% to $4.7 billion compared to $6.3 billion.

• Consolidated pre-tax income was 13.8% of consolidated revenues compared to 17.1%.

• Income tax expense was $1.5 billion in both years, and our effective tax rate was 23.5% compared to 24.1%.

• Income tax expense was $1.1 billion compared to $1.5 billion, and our effective tax rate was 23.6% compared to 23.5%.

• Net income attributable to D.R.

Horton was $3.6 billion compared to $4.8 billion.

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

Horton increased 4% to $14.34 compared to $13.82.

• Net income attributable to D.R.

Horton per diluted share decreased 19% to $11.57 compared to $14.34.

• Net cash provided by operations was $3.4 billion compared to $2.2 billion.

• Stockholders’ equity was $24.2 billion compared to $25.3 billion.

• Book value per common share increased to $78.12 compared to $67.78.

• Book value per share increased to $82.15 compared to $78.12.

• Debt to total capital was 19.8% compared to 18.9%, and net debt to total capital was 11.0% compared to 5.2%.

Homebuilding:

• Homebuilding revenues increased 7% to $34.0 billion compared to $31.7 billion.

• Homes closed increased 8% to 89,690 homes, while the average closing price of those homes decreased 1% to $378,000.

• Net sales orders increased 10% to 86,561 homes, and the value of net sales orders increased 11% to $32.7 billion.

• Homebuilding revenues decreased 7% to $31.5 billion compared to $34.0 billion.

• Homes closed decreased 5% to 84,863 homes, and the average closing price of those homes decreased 2% to $370,400.

• Net sales orders decreased 4% to 83,423 homes, and the value of net sales orders decreased 6% to $30.8 billion.

• Sales order backlog decreased 11% to 10,785 homes, and the value of sales order backlog decreased 14% to $4.1 billion.

• Home sales gross margin was 23.5% in both years.

• Home sales gross margin was 21.5% compared to 23.5%.

• Homebuilding SG&A expense was 8.3% of homebuilding revenues compared to 7.5%.

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• Homebuilding pre-tax income was 13.1% of homebuilding revenues compared to 16.1%.

• Homebuilding pre-tax return on inventory was 27.8% compared to 29.7%.

• Net cash provided by homebuilding operations was $3.4 billion compared to $2.2 billion.

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Revenues in fiscal 2025 and 2024 included $1.4 billion and $1.3 billion, respectively, of revenue from land and lot sales to our homebuilding segment.

• Forestar’s lots sold increased 7% to 15,068 compared to 14,040.

• Forestar’s lots sold decreased 5% to 14,240 compared to 15,068.

Lots sold to D.R.

Horton totaled 11,751 compared to 13,267.

• Forestar’s revenue from tract acres sold increased to $103.5 million compared to $27.0 million, of which $91.2 million and $15.2 million, respectively, related to acreage sold to D.R.

• Forestar’s pre-tax income was $219.3 million compared to $270.1 million.

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Financial Services:

• Financial services revenues increased 10% to $882.5 million compared to $801.5 million.

• Financial services pre-tax income increased 10% to $311.2 million compared to $283.3 million.

• Financial services pre-tax income was 35.3% of financial services revenues in both years.

• Financial services revenues decreased 5% to $841.2 million compared to $882.5 million.

• Financial services pre-tax income was $278.7 million compared to $311.2 million.

• Financial services pre-tax income was 33.1% of financial services revenues compared to 35.3%.

Results of Operations — Homebuilding

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Net Sales Orders

The number of net sales orders increased 10% during 2024 compared to 2023, and the value of net sales orders increased 11% to $32.7 billion (86,561 homes) in 2024 from $29.5 billion (78,342 homes) in 2023.

The average selling price of net sales orders during 2024 was $377,900, up slightly from the prior year.

During fiscal 2024, the markets contributing most to the increase in sales order volume were the Portland and Salt Lake City markets in the Northwest, the Nevada markets in the Southwest, the Dallas market in the South Central, the Tampa market in the Southeast, the North Carolina markets in the East and the suburban Washington, D.C.

market in the North.

Despite elevated mortgage interest rates and inflationary pressures during fiscal 2024, demand for new homes remained solid, and our net sales orders increased 10% compared to fiscal 2023.

The supply of both new and existing homes at affordable price points is still limited, and demographics supporting housing demand remain favorable;

however, we are continuing to use incentives and pricing adjustments to adapt to current market conditions.

We expect our incentive levels to remain elevated, assuming similar market conditions and no significant changes in mortgage interest rates.

Our sales order cancellation rate (cancelled sales orders divided by gross sales orders for the period) was 18% in 2024 compared to 20% in 2023.

The value of net sales orders was $30.8 billion (83,423 homes) in fiscal 2025 compared to $32.7 billion (86,561 homes) in fiscal 2024.

The decrease in value was primarily attributable to a 4% decrease in sales order volume, along with a 2% decrease in the average selling price.

In regions where sales order volume decreased, the markets contributing most to the decrease in fiscal 2025 were the Salt Lake City market in the Northwest, the Phoenix and California markets in the Southwest, the Dallas and Fort Worth markets in the South Central and the Florida markets (particularly Tampa and Jacksonville) in the Southeast.

In regions where sales order volume increased, the markets contributing most to the increase were the North Carolina markets in the East and the New Jersey, Chicago and suburban Washington, D.C.

markets in the North.

During fiscal 2025, new home demand continued to be impacted by ongoing affordability constraints and cautious consumer sentiment.

We remain well positioned with affordable product offerings and a flexible lot supply and will continue to manage our home pricing, sales incentives and number of homes in inventory based on the level of new home demand in each of our local markets.

Sales Order Backlog

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Home Sales Revenue

Revenues from home sales increased 7% to $33.9 billion (89,690 homes closed) in 2024 from $31.6 billion (82,917 homes closed) in 2023.

The number of homes closed increased 8% compared to the prior year.

The average selling price of homes closed during 2024 was $378,000, down 1% from the prior year.

The markets contributing most to the increase in closings volume were the Portland and Salt Lake City markets in the Northwest, the California and Nevada markets in the Southwest, the North Carolina markets in the East and the suburban Washington, D.C.

market in the North.

Revenues from home sales were $31.4 billion (84,863 homes closed) in fiscal 2025 compared to $33.9 billion (89,690 homes closed) in fiscal 2024.

The decrease in revenues was primarily attributable to a 5% decrease in closings volume, along with a 2% decrease in the average selling price.

In regions where homes closed decreased, the markets contributing most were the Salt Lake City market in the Northwest, the Phoenix and California markets in the Southwest, the Dallas and Fort Worth markets in the South Central and the Florida markets (particularly Tampa and Jacksonville) in the Southeast.

In regions where homes closed increased, the markets contributing most to the increase were the North Carolina markets in the East and the suburban Washington, D.C., Chicago and New Jersey markets in the North.

Homebuilding Operating Margin Analysis

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Home Sales Gross Profit

Gross profit from home sales increased to $8.0 billion in 2024 from $7.4 billion in 2023 and was 23.5% of home sales revenues in both years.

Gross profit from home sales decreased to $6.8 billion in fiscal 2025 from $8.0 billion in fiscal 2024 and decreased 200 basis points to 21.5% as a percentage of home sales revenues.

The percentage decrease resulted from a decrease of 170 basis points due to the average cost of our homes closed increasing along with a decrease in the average selling price of those homes, 20 basis points due to an increase in warranty and construction defect costs and 10 basis points due to an increase in the amortization of capitalized interest.

We remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the returns on our inventory investments and adjust to local market conditions and new home demand.

To adjust to changes in market conditions during fiscal 2023 and 2024, we have used a higher level of incentives and reduced home prices and sizes of our home offerings where necessary to provide better affordability to homebuyers.

We expect our incentive levels to remain elevated, assuming similar market conditions and no significant changes in mortgage interest rates.

To adjust to changes in market conditions during recent years, we have used a higher level of incentives and reduced home prices and sizes of our home offerings where necessary to provide better affordability to homebuyers.

We expect our incentive levels to stay elevated during fiscal 2026, the extent to which will depend on market conditions and changes in mortgage interest rates.

Land/Lot Sales and Other Revenues

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SG&A expense from homebuilding activities increased 3% to $2.62 billion in fiscal 2025 from $2.55 billion in fiscal 2024.

SG&A expense as a percentage of homebuilding revenues was 7.5% and 7.1% in fiscal 2024 and 2023, respectively.

As a percentage of homebuilding revenues, SG&A expense was 8.3% and 7.5% in fiscal 2025 and 2024, respectively, with the increase primarily due to the decrease in homebuilding revenues.

Employee compensation and related costs were $2.06 billion and $2.09 billion in fiscal 2025 and 2024, respectively, representing 79% and 82% of SG&A costs in those years.

These costs increased 10% in fiscal 2024 from the prior year.

Our homebuilding operations employed 9,972 and 10,071 people at September 30, 2025 and 2024, respectively.

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Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer.

Interest incurred by our homebuilding operations decreased 27% to $50.5 million in fiscal 2024 from $68.8 million in fiscal 2023, primarily due to an 11% decrease in our average homebuilding debt.

Interest incurred by our homebuilding operations increased 104% to $103.1 million in fiscal 2025 from $50.5 million in fiscal 2024, primarily due to an increase in the weighted average interest rate of homebuilding debt outstanding as well as a 33% increase in the average amount of that debt.

Interest charged to cost of sales was 0.4% of homebuilding cost of sales (excluding inventory and land option charges) in both years.

Other income, net of other expenses, included in our homebuilding operations increased to $107.6 million in fiscal 2024 compared to $78.8 million in fiscal 2023, primarily due to an increase in interest income.

Other income also consists of various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots.

Other income, net of other expenses, included in our homebuilding operations was $101.7 million in fiscal 2025 compared to $107.6 million in fiscal 2024.

Other income consists of interest income and various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots.

The activities that result in this ancillary income are not significant, either individually or in the aggregate.

Business Acquisition

In October 2025, we acquired the homebuilding operations of SK Builders for approximately $80 million in cash.

SK Builders operates in and around Greenville, South Carolina.

The assets acquired included approximately 160 homes in inventory, 260 lots and a sales order backlog of 110 homes.

We also obtained control of approximately 1,320 additional lots through land purchase contracts.

Homebuilding Results by Reporting Region

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Revenues Homebuilding

Income (1) % of

Income (1) Pre-tax Income as % of

Revenues Homebuilding

Income (1) % of

Income (1) Pre-tax Income as % of

(In millions)

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$ 31,515.5 $ 4,134.9 13.1 % $ 33,961.8 $ 5,455.1 16.1 %

_______________

(1) Expenses maintained at the corporate level consist primarily of interest and property taxes, which are capitalized and amortized to cost of sales or expensed directly, and the expenses related to operating our corporate office.

The amortization of capitalized interest and property taxes is allocated to each segment based on the segment’s cost of sales, while expenses associated with the corporate office are allocated to each segment based on the segment’s inventory balances.

Northwest Region — Homebuilding revenues increased 7% in fiscal 2024 compared to fiscal 2023, due to increases in the number of homes closed in our Portland and Salt Lake City markets, partially offset by a decrease in the average selling price of homes closed in most of the region’s markets.

The region generated pre-tax income of $420.8 million in 2024 compared to $391.1 million in 2023.

Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) increased by 50 basis points in 2024 compared to 2023 , primarily due to the average cost of homes closed decreasing by more than the average selling price of those homes .

As a percentage of homebuilding revenues, SG&A expenses increased by 60 basis points in 2024 compared to 2023 , primarily due to an increase in SG&A expenses.

Southwest Region — Homebuilding revenues increased 15% in fiscal 2024 compared to fiscal 2023, primarily due to increases in the number of homes closed, particularly in our California and Nevada markets.

The region generated pre-tax income of $703.5 million in 2024 compared to $489.3 million in 2023.

Home sales gross profit percentage increased by 270 basis points in 2024 compared to 2023, primarily due to the average selling price of homes closed increasing while the average cost of those homes decreased.

As a perc entage of homebuilding revenues, SG&A expenses decreased by 20 basis points in 2024 compared to 2023, primarily due to the increase in homebuilding revenues.

South Central Region — Homebuilding revenues increased 1% in fiscal 2024 compared to fiscal 2023.

The region generated pre-tax income of $1.3 billion in 2024 compared to $1.4 billion in 2023.

Home sales gross profit percentage decreased by 20 basis points in 2024 compared to 2023, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes .

As a percentage of homebuilding revenues, SG&A expenses increased by 70 basis points in 2024 compared to 2023, primarily due to an increase in SG&A expenses.

Southeast Region — Homebuilding revenues increased 1% in fiscal 2024 compared to fiscal 2023 .

The region generated pre-tax income of $1.4 billion in 2024 compared to $1.7 billion in 2023.

Home sales gross profit percentage decreased by 260 basis points in 2024 compared to 2023 , primarily due to the average selling price of homes closed decreasing while the average cost of those homes increased .

As a percentage of homebuilding revenues, SG&A expenses increased by 60 basis points in 2024 compared to 2023, primarily due to an increase in SG&A expenses.

East Region — Homebuilding revenues increased 14% in fiscal 2024 compared to fiscal 2023, due to increases in the number of homes closed, particularly in our North Carolina markets.

The region generated pre-tax income of $1.1 billion in 2024 compared to $935.7 million in 2023.

Home sales gross profit percentage increased by 30 basis points in 2024 compared to 2023 , primarily due to the average cost of homes closed decreasing by more than the average selling price of those homes .

As a percentage of homebuilding revenues, SG&A expenses increased by 50 basis points in 2024 compared to 2023, primarily due to an increase in SG&A expenses.

North Region — Homebuilding revenues increased 16% in fiscal 2024 compared to fiscal 2023 , due to increases in the number of homes closed, particularly in our suburban Washington, D.C.

The region generated pre-tax income of $498.4 million in 2024 compared to $350.8 million in 2023.

Home sales gross profit percentage increased by 290 basis points in 2024 compared to 2023, primarily due to the average cost of homes closed decreasing while the average selling price of those homes increased.

A s a percentage of homebuilding revenues, SG&A expenses increased by 10 basis points in 2024 compared to 2023 .

Northwest Region — Homebuilding revenues decreased 3% in fiscal 2025 compared to fiscal 2024, due to a decrease in the number of homes closed, particularly in our Salt Lake City market.

The region generated pre-tax income of $395.7 million in fiscal 2025 compared to $420.8 million in fiscal 2024.

Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) was essentially flat in fiscal 2025 compared to fiscal 2024.

As a percentage of homebuilding revenues, SG&A expenses increased by 50 basis points in fiscal 2025 compared to fiscal 2024, primarily due to an increase in employee compensation costs.

Southwest Region — Homebuilding revenues decreased 6% in fiscal 2025 compared to fiscal 2024, primarily due to a decrease in the number of homes closed, particularly in our Phoenix market.

The region generated pre-tax income of $517.1 million in fiscal 2025 compared to $703.5 million in fiscal 2024.

Home sales gross profit percentage decreased by 220 basis points in fiscal 2025 compared to fiscal 2024, primarily due to an increase in construction defect costs in our Phoenix and Hawaii markets and the average selling price of homes closed decreasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 70 basis points in fiscal 2025 compared to fiscal 2024, primarily due to the decrease in homebuilding revenues.

South Central Region — Homebuilding revenues decreased 10% in fiscal 2025 compared to fiscal 2024, due to a decrease in the number of homes closed, particularly in our Fort Worth and Dallas markets, as well as a decrease in the average selling price of homes closed in most markets.

The region generated pre-tax income of $964.6 million in fiscal 2025 compared to $1.3 billion in fiscal 2024.

Home sales gross profit percentage decreased by 220 basis points in fiscal 2025 compared to fiscal 2024, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 80 basis points in fiscal 2025 compared to fiscal 2024, primarily due to the decrease in homebuilding revenues.

Southeast Region — Homebuilding revenues decreased 21% in fiscal 2025 compared to fiscal 2024, primarily due to a decrease in the number of homes closed, particularly in our Florida markets.

The region generated pre-tax income of $839.9 million in fiscal 2025 compared to $1.4 billion in fiscal 2024.

Home sales gross profit percentage decreased by 270 basis points in fiscal 2025 compared to fiscal 2024, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 130 basis points in fiscal 2025 compared to fiscal 2024 due to the decrease in homebuilding revenues.

East Region — Homebuilding revenues increased 1% in fiscal 2025 compared to fiscal 2024, due to an increase in the number of homes closed, particularly in our North Carolina markets.

The region generated pre-tax income of $834.0 million in fiscal 2025 compared to $1.1 billion in fiscal 2024.

Home sales gross profit percentage decreased by 310 basis points in fiscal 2025 compared to fiscal 2024, primarily due to the average cost of homes closed increasing while the average selling price of those homes decreased.

As a percentage of homebuilding revenues, SG&A expenses increased by 50 basis points in fiscal 2025 compared to fiscal 2024, primarily due to an increase in employee compensation costs.

North Region — Homebuilding revenues increased 15% in fiscal 2025 compared to fiscal 2024, primarily due to an increase in the number of homes closed, particularly in our Chicago, suburban Washington, D.C.

and New Jersey markets.

The region generated pre-tax income of $583.6 million in fiscal 2025 compared to $498.4 million in fiscal 2024.

Home sales gross profit percentage increased by 70 basis points in fiscal 2025 compared to fiscal 2024, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 40 basis points in fiscal 2025 compared to fiscal 2024, primarily due to an increase in employee compensation costs.

Homebuilding Inventories, Land and Lot Position and Homes in Inventory

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(3) Lots controlled at September 30, 2025 included approximately 40,400 lots owned by Forestar, 22,800 of which our homebuilding divisions had under contract to purchase and 17,600 of which our homebuilding divisions had a right of first offer to purchase.

Of these, approximately 10,600 lots were in our Southeast region, 7,400 lots were in our East region, 7,000 lots were in our North region, 6,900 lots were in our South Central region, 3,600 lots were in our Southwest region and 2,200 lots were in our Northwest region.

Of these, approximately 10,100 lots were in our East region, 9,200 lots were in our Southeast region, 8,700 lots were in our South Central region, 6,900 lots were in our North region, 3,800 lots were in our Southwest region and 1,700 lots were in our Northwest region.

Lots controlled at September 30, 2024 included approximately 37,700 lots owned by Forestar, 20,500 of which our homebuilding divisions had under contract to purchase and 17,200 of which our homebuilding divisions had a right of first offer to purchase.

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Our rental segment consists of single-family and multi-family rental operations.

The single-family rental operations construct and lease single-family homes within a community and then generally market each community for a bulk sale of rental homes.

The single-family rental operations construct and lease single-family homes within a community and market each community for a bulk sale of rental homes.

The multi-family rental operations develop, construct, lease and sell residential rental properties, with a primary focus on constructing garden style apartment communities in high growth suburban markets.

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Revenues from our rental operations decreased to $1.6 billion in fiscal 2025 from $1.7 billion in fiscal 2024, and pre-tax income decreased to $170.0 million from $228.7 million.

The decline in rental revenues and pre-tax income was primarily due to a decrease in the number of single-family homes closed and a decrease in the average selling price of multi-family units closed.

The decline in rental revenues and pre-tax income was primarily due to a decrease in the number and average selling price of single-family rental homes closed, combined with lower gross margins on single-family home and multi-family unit closings.

At September 30, 2025, our rental property inventory of $2.7 billion included $378.3 million of inventory related to our single-family rental operations and $2.3 billion of inventory related to our multi-family rental operations.

At September 30, 2023, our rental property inventory of $2.7 billion included $1.3 billion of inventory related to our single-family rental operations and $1.4 billion of inventory related to our multi-family rental operations.

At September 30, 2024, our rental property inventory of $2.9 billion included $800.3 million of inventory related to our single-family rental operations and $2.1 billion of inventory related to our multi-family rental operations.

Single-family rental homes and lots and multi-family rental units at September 30, 2025 and 2024 consisted of the following:

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Total lots sold 14,240 15,068 $ 1,544.3 $ 1,459.3

Tract acres sold

Tract acres sold to D.R.

Horton 414 32 $ 91.2 $ 15.2

Total tract acres sold 504 96 $ 103.5 $ 27.0

September 30,

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At September 30, 2025 and 2024, Forestar’s inventory, which includes land and lots developed, under development and held for development, totaled $2.6 billion and $2.3 billion, respectively.

Forestar’s inventory and land option charges consisted of $4.1 million of earnest money and pre-acquisition cost write-offs in fiscal 2024 and $19.4 million of impairment charges and $4.6 million of earnest money and pre-acquisition cost write-offs in fiscal 2023.

Forestar’s inventory and land option charges consisted of $7.2 million and $4.1 million of earnest money and pre-acquisition cost write-offs in fiscal 2025 and 2024, respectively.

No impairment charges were recorded in the current or prior year.

SG&A expense for fiscal 2025 and 2024 included charges of $7.3 million and $5.6 million, respectively, related to the shared services agreement between Forestar and D.R.

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Horton provides Forestar with certain administrative, compliance, operational and procurement services.

The decline in Forestar’s pre-tax income was primarily due to lower gross margins on lot sales and higher SG&A costs.

Results of Operations — Financial Services

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2025 2024 % Change

Number of first-lien loans originated or brokered by DHI Mortgage for D.R.

Number of first-lien loans originated or brokered by

DHI Mortgage for D.R.

Horton homebuyers

68,609 70,308 (2) %

Number of homes closed by D.R.

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Horton homes financed by DHI Mortgage 81 % 78 %

Total number of loans originated or brokered by DHI Mortgage 68,982 70,693 (2) %

Loans sold by DHI Mortgage to third parties 68,529 70,877 (3) %

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Mortgage Loan Activity

DHI Mortgage’s primary focus is to originate loans for our homebuilding operations, and those loan originations account for virtually all of its total loan volume.

In fiscal 2024, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers increased 12%, primarily due to the 8% increase in the number of homes closed by our homebuilding operations, as well as an increase in the percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing.

DHI Mortgage’s primary focus is to originate loans for our homebuilding operations, and those loan originations account for substantially all of its total loan volume.

In fiscal 2025, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers decreased 2%, primarily due to the 5% decrease in the number of homes closed by our homebuilding operations, partially offset by an increase in the percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing.

The percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing was 81% in fiscal 2025, up from 78% in fiscal 2024.

This increase reflects DHI Mortgage’s ongoing efforts to align their business with our homebuilding operations by offering competitive products and pricing.

The number of loans sold increased 14% in fiscal 2024 compared to the prior year.

Virtually all of the mortgage loans held for sale on September 30, 2024 were eligible for sale to Fannie Mae, Freddie Mac or Ginnie Mae.

The number of loans sold decreased 3% in fiscal 2025 compared to the prior year.

Substantially all mortgage loans held for sale on September 30, 2025 were eligible for sale to Fannie Mae, Freddie Mac or Ginnie Mae.

During fiscal 2025, approximately 71% of our mortgage loans were sold directly to Fannie Mae, Freddie Mac or into securities backed by Ginnie Mae, and 27% were sold to one other major financial entity.

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Financial Services Revenues and Expenses

Total loan origination volume increased 12% during fiscal 2024, and revenues from our mortgage operations increased 11% to $681.6 million from $616.3 million in fiscal 2023.

Revenues from our title operations increased 8% to $200.9 million in fiscal 2024 from $185.2 million in fiscal 2023.

General and administrative (G&A) expense related to our financial services operations increased 13% to $672.4 million in fiscal 2024 from $594.9 million in the prior year.

G&A expenses increased in fiscal 2024 due to increased loan origination volume.

Total loan origination volume decreased 2% during fiscal 2025, and revenues from our mortgage operations decreased 4% to $655.3 million from $681.6 million in fiscal 2024.

Revenues from our title operations decreased 7% to $185.9 million in fiscal 2025 from $200.9 million in fiscal 2024, due to a decrease in transactions closed through our title operations.

General and administrative (G&A) expense related to our financial services operations decreased 3% to $651.4 million in fiscal 2025 from $672.4 million in the prior year.

As a percentage of financial services revenues, G&A expense was 77.4% in fiscal 2025 compared to 76.2% in the prior year.

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Other income, net of other expense, included in our financial services operations consists primarily of the interest income of our mortgage subsidiary.

Other income increased 32% to $101.1 million in fiscal 2024 from $76.7 million in the prior year, primarily due to an increase in interest income on our loan origination volume.

Other income decreased 12% to $88.9 million in fiscal 2025 from $101.1 million in the prior year, primarily due to a decrease in interest income on our loan origination volume.

Results of Operations — Other Businesses

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Income before Income Taxes

Pre-tax income was $6.3 billion in both fiscal 2024 and 2023.

Pre-tax income was $4.7 billion in fiscal 2025 compared to $6.3 billion in fiscal 2024.

In fiscal 2025, our homebuilding, rental, financial services and Forestar businesses generated pre-tax income of $4.1 billion, $170.0 million, $278.7 million and $219.3 million, respectively, compared to $5.5 billion, $228.7 million, $311.2 million and $270.1 million, respectively, in fiscal 2024.

Our income tax expense was $1.5 billion in both fiscal 2024 and 2023, and our effective tax rate was 23.5% and 24.1%, respectively, in those years.

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

Our income tax expense was $1.1 billion and $1.5 billion in fiscal 2025 and 2024, respectively, and our effective tax rate was 23.6% and 23.5% in those years.

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

Our deferred tax assets, net of deferred tax liabilities, were $59.1 million at September 30, 2025 compared to $182.4 million at September 30, 2024.

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Any reversal of the valuation allowance in future periods will impact our 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 our financial statements.

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

Our tax benefits related to the energy efficient home tax credit were $39.5 million and $70.4 million in fiscal 2025 and 2024, respectively.

None of the other tax provisions enacted by the new law have a significant impact on our financial statements.

Capital Resources and Liquidity

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Our current levels of cash, borrowing capacity and balance sheet leverage provide us with the operational flexibility to adjust to changes in economic and market conditions.

We are making investments in our homebuilding and rental inventories to expand our operations and consolidate market share.

We are also returning capital to our shareholders through repurchases of our common stock and dividend payments.

We are maintaining significant homebuilding cash balances and liquidity to support the increased scale and level of activity in our business and to provide flexibility to adjust to changing conditions and opportunities.

We continue to invest in our homebuilding and rental inventories to expand our operations and consolidate market share.

We are also returning capital to shareholders through repurchases of our common stock and dividend payments.

We are maintaining significant homebuilding cash balances and liquidity to support the scale and level of activity in our business and to provide flexibility to adjust to changing market conditions and opportunities.

At September 30, 2025, we had outstanding notes payable with varying maturities totaling an aggregate principal amount of $6.0 billion.

$2.2 billion was payable within 12 months, including $1.5 billion which is outstanding under our mortgage repurchase facilities and $500 million principal amount of 2.5% homebuilding senior notes that were repaid at maturity in October 2024.

Future interest payments associated with the outstanding notes total $745.5 million, of which $251.7 million is payable within 12 months.

$1.6 billion was payable within 12 months, which includes $1.4 billion outstanding under our mortgage repurchase facilities.

Future interest payments associated with our notes payable total $1.3 billion, of which $287.4 million is payable within 12 months.

At September 30, 2025, our ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 19.8% compared to 18.9% at September 30, 2024.

Our net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 11.0% at September 30, 2025 compared to 5.2% at September 30, 2024.

Over the long term, we intend to maintain our ratio of debt to total capital around or slightly below 20%.

Over the long term, we intend to maintain our ratio of debt to total capital around 20%.

At September 30, 2025, we had outstanding letters of credit of $282.3 million and surety bonds of $3.5 billion, issued by third parties to secure performance under various contracts.

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

Forestar also has an effective shelf registration statement filed with the SEC in September 2024, registering $750 million of equity securities.

Forestar also 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.

As market conditions permit, we may issue new debt or equity securities through the capital markets or obtain additional bank financing to fund our projected capital requirements or provide additional liquidity.

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Cash and Cash Equivalents — At September 30, 2025, cash and cash equivalents of our homebuilding segment totaled $2.2 billion.

Bank Credit Facility — We have a $2.19 billion senior unsecured homebuilding revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $3.0 billion, subject to certain conditions and availability of additional bank commitments.

Bank Credit Facility — We have 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 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, we 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.

The maturity date of the facility is October 28, 2027.

At September 30, 2025, there were no borrowings outstanding and $231.2 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $2.07 billion.

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

At September 30, 2024, we were in compliance with all of the covenants, limitations and restrictions of our homebuilding revolving credit facility.

Public Unsecured Debt — At September 30, 2024, we had $2.8 billion principal amount of homebuilding senior notes outstanding that were scheduled to mature from October 2024 through October 2034.

In August 2024, we issued $700 million principal amount of 5.0% senior notes due October 15, 2034, 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 5.2%.

In October 2024, we repaid $500 million principal amount of our 2.5% senior notes at maturity.

Public Unsecured Debt — At September 30, 2025, we had $3.0 billion principal amount of homebuilding senior notes outstanding that mature from October 2026 through October 2035.

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

At September 30, 2024, we were in compliance with all of the limitations and restrictions associated with our public debt obligations.

Our homebuilding revolving credit facility and homebuilding senior unsecured notes are guaranteed by D.R.

Issuances — In February 2025, we issued $700 million principal amount of 5.5% senior notes due October 15, 2035.

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, we issued $500 million principal amount of 4.85% senior notes due October 15, 2030.

The annual effective interest rate of these notes after giving effect to the amortization of the discount and financing costs is 5.1%.

Interest on our senior notes is payable semi-annually.

Redemptions — In October 2024, we repaid $500 million principal amount of our 2.5% senior notes at maturity.

In September 2025, we redeemed $500 million principal amount of our 2.6% senior notes due October 15, 2025 for $505.9 million, which included $5.9 million of accrued and unpaid interest.

Compliance and Guarantors — At September 30, 2025, we were in compliance with all of the covenants, limitations and restrictions of our homebuilding revolving credit facility and public debt obligations.

Our homebuilding revolving credit facility and homebuilding senior notes are guaranteed by D.R.

Horton, Inc.’s significant wholly owned homebuilding subsidiaries.

Debt and Stock Repurchase Authorizations — In July 2024, our Board of Directors authorized the repurchase of up to $500 million of our debt securities.

Effective July 18, 2024, our Board authorized the repurchase of up to $4.0 billion of our common stock, replacing the previous authorization that was effective as of October 31, 2023.

During fiscal 2024, we repurchased 12.5 million shares at a total cost, including commissions and excise taxes, of $1.8 billion, of which $1.4 billion was repurchased under previous authorizations.

In April 2025, the Board authorized the repurchase of up to $5.0 billion of our common stock, replacing the previous authorization.

During fiscal 2025, we repurchased 30.7 million shares at a total cost, including commissions and excise taxes, of $4.3 billion, of which $2.6 billion was repurchased under the previous authorization.

At September 30, 2025, the full amount of the debt repurchase authorization was remaining, and $3.3 billion of the stock repurchase authorization was remaining.

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

Borrowings and repayments under the facility totaled $1.4 billion and $1.1 billion, respectively, during fiscal 2024.

At September 30, 2025, there were $600 million of borrowings outstanding at a 6.2% annual interest rate and no letters of credit issued under the facility, resulting in available capacity of $450 million.

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Capital Resources - Forestar

The achievement of Forestar’s long-term growth objectives will depend on its ability to obtain financing and generate sufficient cash flows from operations.

Forestar’s achievement of its long-term growth objectives will depend on its ability to obtain financing and generate sufficient cash flows from operations.

As market conditions permit, Forestar may issue new debt or equity securities through the capital markets or obtain additional bank financing to provide capital for future growth and additional liquidity.

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Cash and Cash Equivalents — At September 30, 2025, Forestar had cash and cash equivalents of $379.2 million.

Bank Credit Facility — Forestar has a $410 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $600 million, subject to certain conditions and availability of additional bank commitments.

Bank Credit Facility — As of September 30, 2025, Forestar had a senior unsecured revolving credit facility that was amended in December 2024 to increase its capacity from $410 million to $640 million and to raise the uncommitted accordion feature that could increase the size of the facility to $1.0 billion, subject to certain conditions and availability of additional bank commitments.

The amendment also extended the maturity date of the facility.

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

In October 2025, Forestar utilized the accordion feature and increased the size of its revolving credit facility to $665 million through an additional $25 million commitment that matures on December 18, 2029.

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.

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

The maturity date of the facility is October 28, 2026.

At September 30, 2025, there were no borrowings outstanding and $51.1 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $588.9 million.

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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.

Unsecured Debt — As of September 30, 2024, Forestar had $700 million principal amount of senior notes issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, which represent unsecured obligations of Forestar.

These notes include $400 million principal amount of 3.85% senior notes that mature in May 2026 and $300 million principal amount of 5.0% senior notes that mature in March 2028.

At September 30, 2024, 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 unsecured notes are guaranteed by Forestar’s wholly-owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries.

Unsecured Debt — As of September 30, 2025, Forestar had $800 million principal amount of senior notes issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, that mature from March 2028 through March 2033 and represent unsecured obligations of Forestar.

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.

In September 2025, Forestar redeemed the remaining $70.6 million principal amount of its 3.85% senior notes for $71.6 million, which included $1.0 million of accrued and unpaid interest.

In fiscal 2025, Forestar recognized a $1.2 million loss on extinguishment of debt related to the repurchase and redemption of the notes.

Compliance and Guarantors — At September 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.

They are not guaranteed by D.R.

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All of the $30 million authorization was remaining at September 30, 2025, and the authorization has no expiration date.

Issuance of Common Stock — During fiscal 2024, Forestar issued 546,174 shares of common stock under its at-the-market equity offering (ATM) program for proceeds of $19.7 million, net of commissions and other issuance costs totaling $0.4 million.

In September 2024, Forestar filed a new shelf registration statement, which became effective in October 2024, registering $750 million of equity securities.

At the time of filing the new registration statement, $728.1 million of equity securities remained available for issuance under Forestar’s prior shelf registration statement, which has since expired.

Forestar’s ATM program expired in October 2024, and Forestar anticipates entering into a new ATM program under its September 2024 shelf registration statement.

Issuance of Common Stock — During fiscal 2025, there were no shares issued under Forestar’s ATM program.

At September 30, 2025, $750 million remained available for issuance under Forestar’s shelf registration statement, with $300 million reserved for sales under the ATM program.

Capital Resources - Financial Services

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Mortgage Repurchase Facilities — Our mortgage subsidiary, DHI Mortgage, has two mortgage repurchase facilities, one of which is committed and the other of which is uncommitted, that provide financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to counterparties upon receipt of funds from the counterparties.

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.

In August 2024, the committed mortgage repurchase facility was amended to extend its maturity date to May 9, 2025.

The facility has a total capacity of $1.6 billion, which can be increased to $2.0 billion subject to the availability of additional commitments.

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 September 30, 2025, DHI Mortgage had an obligation of $1.1 billion under the committed mortgage repurchase facility at a 5.8% annual interest rate.

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At September 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.

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

or any of the subsidiaries that guarantee the debt of our homebuilding, rental or Forestar operations.

In the past, DHI Mortgage has been able to renew or extend its committed mortgage repurchase facility at a sufficient capacity and on satisfactory terms prior to its maturity and obtain temporary additional commitments through amendments to the facility during periods of higher-than-normal volumes of mortgages held for sale.

The liquidity of our financial services business depends upon its continued ability to renew and extend the committed mortgage repurchase facility or to obtain other additional financing in sufficient capacities.

The liquidity of our financial services business depends upon its continued ability to renew and extend the committed mortgage repurchase facility, utilize the uncommitted mortgage repurchase facility or obtain other additional financing in sufficient capacities.

Operating Cash Flow Activities

In fiscal 2025, net cash provided by operating activities was $3.4 billion compared to $2.2 billion in fiscal 2024.

Cash provided by operating activities in the current year primarily consisted of cash provided by our homebuilding segment.

Cash provided by operating activities in the current year primarily consisted of $3.4 billion, $173.2 million and $105.5 million of cash provided by our homebuilding, financial services and rental segments, partially offset by $197.7 million of cash used in our Forestar segment.

The most significant source of cash provided by operating activities in both years was net income.

Cash provided by a decrease in construction in progress and finished home inventory was $141.3 million in fiscal 2024 compared to $861.8 million in fiscal 2023, due to a decrease in our homes in inventory.

Cash provided by a decrease in construction in progress and finished home inventory was $1.2 billion in fiscal 2025 compared to $141.3 million in fiscal 2024, due to a decrease in our homes in inventory.

Cash used to increase residential land and lots was $1.9 billion and $2.6 billion in fiscal 2025 and 2024, respectively.

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In fiscal 2025, net cash used in investing activities was $168.7 million compared to $190.6 million in fiscal 2024.

In fiscal 2025, uses of cash included purchases of property and equipment totaling $137.4 million and the payment of $53.1 million related to a business acquisition in our South Central region.

In fiscal 2024, uses of cash included purchases of property and equipment totaling $165.3 million.

In fiscal 2023, uses of cash included the acquisitions of the homebuilding operations of Riggins Custom Homes for $107 million and Truland Homes for $110 million and purchases of property and equipment totaling $148.6 million.

Financing Cash Flow Activities

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Long-term financing needs for our operations may be funded with the issuance of senior unsecured debt securities or equity securities through the capital markets.

In fiscal 2025, net cash used in financing activities was $4.8 billion, consisting primarily of cash used to repurchase shares of our common stock of $4.3 billion, repayment of $1.0 billion principal amount of homebuilding senior notes, Forestar’s repayment of $400 million principal amount of senior notes, payment of cash dividends totaling $494.8 million and net payments on our rental revolving credit facility and mortgage repurchase facilities of $145 million and $125.5 million, respectively.

These uses of cash were partially offset by note proceeds from our issuances of $700 million principal amount of 5.5% homebuilding senior notes and $500 million principal amount of 4.85% homebuilding senior notes and Forestar’s issuance of $500 million principal amount of 6.5% senior notes.

In fiscal 2024, net cash used in financing activities was $1.4 billion, consisting primarily of cash used to repurchase shares of our common stock of $1.8 billion, payment of cash dividends totaling $395.2 million and net payments on our mortgage repurchase facilities of $135.8 million.

These uses of cash were partially offset by note proceeds from our issuance of $700 million principal amount of 5.0% homebuilding senior notes and net borrowings on our rental revolving credit facility of $345 million.

In fiscal 2023, net cash used in financing activities was $2.7 billion, consisting primarily of cash used to repurchase shares of our common stock of $1.2 billion, repayment of $300 million principal amount of our 4.75% homebuilding senior notes and $400 million principal amount of our 5.75% homebuilding senior notes, net payments on our rental revolving credit facility of $400 million and payment of cash dividends totaling $341.2 million.

These uses of cash were partially offset by net advances on our mortgage repurchase facilities of $51.3 million.

Our Board of Directors approved and we paid quarterly cash dividends of $0.30 per common share in fiscal 2024 and $0.25 per common share in fiscal 2023.

In October 2024, our Board approved a quarterly cash dividend of $0.40 per common share, payable on November 19, 2024 to stockholders of record on November 12, 2024.

Our Board of Directors approved and we paid quarterly cash dividends of $0.40 per share in fiscal 2025 and $0.30 per share in fiscal 2024.

In October 2025, our Board approved a quarterly cash dividend of $0.45 per share, payable on November 20, 2025 to stockholders of record on November 13, 2025.

The declaration of future cash dividends is at the discretion of our Board and will depend upon, among other things, our future earnings, cash flows, capital requirements, financial condition and general business conditions.

Although significant changes in market conditions have impacted our seasonal patterns in the past and could do so again in the future, we generally close more homes and generate greater revenues and pre-tax income in the third and fourth quarters of our fiscal year.

The seasonal nature of our business can also cause significant variations in the working capital requirements for our homebuilding, rental, lot development and financial services operations.

As a result of seasonal activity, our quarterly results of operations and financial position at the end of a particular fiscal quarter are not necessarily representative of the balance of our fiscal year.

Supplemental Guarantor Financial Information

As of September 30, 2025, D.R.

had $2.8 billion principal amount of homebuilding senior unsecured notes outstanding due through October 2034 and no amounts outstanding on its homebuilding revolving credit facility.

had $3.0 billion principal amount of homebuilding senior notes outstanding due through October 2035 and no amounts outstanding on its homebuilding revolving credit facility.

All of the homebuilding senior notes and the homebuilding revolving credit facility are fully and unconditionally guaranteed, on a joint and several basis, by certain subsidiaries of D.R.

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Net income 3,154.8

The seasonal nature of our business can also cause significant variations in the working capital requirements for our homebuilding, lot development, financial services and rental operations.

Forward-Looking Statements

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• increases in the costs of owning a home;

• the effects of information technology failures, data security breaches, and the failure to satisfy privacy and data protection laws and regulations;

• the effects of information technology failures, cybersecurity incidents, and the failure to satisfy privacy and data protection laws and regulations;

• the effects of governmental regulations and environmental matters on our land development and housing operations;

• the effects of changes in income tax and securities laws;

• the effects of governmental regulations on our financial services operations;

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We typically elect the fair value option for our mortgage loan originations whereby mortgage loans held for sale are recorded at fair value based on either sale commitments or current market quotes and loan values are adjusted through revenues for subsequent changes in fair value until the loans are sold.

Expected gains and losses from the sale of servicing rights are included in the measurement of all written loan commitments that are accounted for at fair value through revenues at the time of commitment.

Expected gains and losses from the sale of loans, adjusted for (i) estimated costs to complete and originate the loan and (ii) the estimated percentage of written loan commitments that will result in a closed mortgage loan, are included in the measurement of all written loan commitments that are accounted for at fair value through revenues at the time of commitment.

We sell substantially all of the mortgages we originate and the related servicing rights to third-party purchasers.

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Cost of sales for lots sold includes all applicable land acquisition, land development and related costs (both incurred and estimated to be incurred) allocated to each residential lot in the community.

Any changes to the estimated total development costs subsequent to the initial home or lot closings in a community are generally allocated on a pro-rata basis to the remaining homes or lots in the community associated with the relevant development activity.

When a home is closed, we generally have not paid all incurred costs necessary to complete the home.

Any changes to the estimated total development costs after the initial home or lot closings in a community are generally allocated on a pro-rata basis to the remaining homes or lots in the community associated with the relevant development activity.

When a home is closed, we generally have not paid all of the incurred costs necessary to complete the home.

We record a liability and a corresponding charge to cost of sales for the amount estimated to ultimately be paid related to completed homes that have been closed.

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Although our quarterly assessments reflect management’s best estimates, due to uncertainties in the estimation process, actual results could differ from such estimates.

Warranty Claims — We typically provide our homebuyers with a ten-year limited warranty for major defects in structural elements such as framing components and foundation systems, a two-year limited warranty on major mechanical systems and a one-year limited warranty on other construction components.

Since we subcontract our construction work to subcontractors who typically provide us with an indemnity and a certificate of insurance prior to receiving payments for their work, claims relating to workmanship and materials are generally the primary responsibility of the subcontractors.

Warranty liabilities have been established by charging cost of sales for each home delivered.

The amounts charged are based on management’s estimate of expected warranty-related costs under all unexpired warranty obligation periods.

Our warranty liability is based upon historical warranty cost experience in each market in which we operate.

Actual future warranty costs could differ from our currently estimated amounts.

A 10% change in the historical warranty rates used to estimate our warranty accrual would not result in a material change in our accrual.

For additional information regarding our warranty liability, see Note L, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this report.

Legal Claims and Insurance — We are named as a defendant in various claims, complaints and other legal actions in the ordinary course of business.

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We have established reserves for these contingencies based on the estimated costs of pending claims and the estimated costs of anticipated future claims related to previously closed homes.

Approximately 97% of these reserves related to construction defect matters at both September 30, 2024 and 2023.

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

Our reserves for construction defect claims include the estimated costs of both known claims and anticipated future claims.

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For additional information regarding our legal claims reserves, see Note L, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this report.

Pending Accounting Standards

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosures.

The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.

It also requires disclosure of the amount and description of the composition of other segment items and interim disclosures of a reportable segment’s profit or loss and assets.

The standard is effective for our annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026 on a retrospective basis to all periods presented.

This standard will impact our disclosures but will not impact our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes - Improvements to Income Tax Disclosures,” which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation and modifies other income tax related disclosures.

The standard is effective for us beginning October 1, 2025, with early adoption permitted.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, “Income Taxes - Improvements to Income Tax Disclosures,” which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation and modifies other income tax related disclosures.

The standard is effective for our annual periods beginning in fiscal 2026.

We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

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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-K

Item 7. Management’s Discussion and Analysis