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Item 1. Financial Statements

2025-01-23 compared with 2024-07-22 · 105 added, 144 removed, 293 unchanged (46% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

(In millions, except share data)

13 unchanged sentences

Commitments and contingencies (Note 11)

Common stock, par value $ 1.00 per share, 200,000,000 authorized shares, 50,607,995 and 49,903,713 shares issued and outstanding

at June 30, 2024 and September 30, 2023, respectively

Common stock, par value $ 1.00 per share, 200,000,000 authorized shares,

50,669,946 and 50,653,637 shares issued and outstanding

at December 31, 2024 and September 30, 2024, respectively

Additional paid-in capital 667.7 665.2

7 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

Three Months Ended December 31,

(In millions, except per share amounts)

2 unchanged sentences

Selling, general and administrative expense 36.0 28.0

Gain on sale of assets ( 5.0 ) — ( 5.0 ) ( 1.6 )

Equity in earnings of unconsolidated ventures ( 0.6 ) —

Interest and other income ( 2.3 ) ( 6.3 )

21 unchanged sentences

$ 50.7 $ 667.7 $ 894.7 $ 1.0 $ 1,614.1

— — 45.0 — 45.0

Issuance of common stock ( 546,174 shares)

0.5 19.2 — — 19.7

Stock issued under employee benefit plans ( 146,835 shares)

0.2 — — — 0.2

Cash paid for shares withheld for taxes

— ( 2.6 ) — — ( 2.6 )

Stock-based compensation expense

— 1.8 — — 1.8

Balances at March 31, 2024 ( 50,602,722 shares)

$ 50.6 $ 663.3 $ 758.0 $ 1.0 $ 1,472.9

— — 38.7 — 38.7

Stock issued under employee benefit plans ( 5,273 shares)

Cash paid for shares withheld for taxes

— ( 0.1 ) — — ( 0.1 )

Stock-based compensation expense

— 1.4 — — 1.4

Balances at June 30, 2024 ( 50,607,995 shares)

$ 50.6 $ 664.6 $ 796.7 $ 1.0 $ 1,512.9

Common Stock Additional Paid-in Capital Retained Earnings Non-controlling Interests Total Equity

10 unchanged sentences

$ 49.9 $ 644.9 $ 713.0 $ 1.0 $ 1,408.8

— — 26.9 — 26.9

Stock issued under employee benefit plans ( 125,154 shares)

0.1 — — — 0.1

Cash paid for shares withheld for taxes

— ( 0.7 ) — — ( 0.7 )

Stock-based compensation expense

— 1.9 — — 1.9

Balances at March 31, 2023 ( 49,897,709 shares)

$ 49.9 $ 642.3 $ 555.6 $ 1.0 $ 1,248.8

— — 46.8 — 46.8

Stock issued under employee benefit plans ( 6,004 shares)

Stock-based compensation expense

— 0.9 — — 0.9

Balances at June 30, 2023 ( 49,903,713 shares)

$ 49.9 $ 643.2 $ 602.4 $ 1.0 $ 1,296.5

See accompanying notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended June 30,

Three Months Ended December 31,

(In millions)

3 unchanged sentences

Deferred income taxes ( 0.9 ) ( 0.5 )

Equity in earnings of unconsolidated ventures ( 0.6 ) —

Stock-based compensation expense 2.6 0.9

Impairments and land option charges 1.1 0.2

Gain on sale of assets ( 5.0 ) ( 1.6 )

Changes in operating assets and liabilities:

(Increase) decrease in real estate

( 439.4 ) 87.7

Increase in other assets

Increase in real estate

( 471.6 ) ( 209.8 )

Decrease (increase) in other assets

Decrease in accounts payable and other accrued liabilities

( 19.2 ) ( 0.9 )

Increase (decrease) in accrued development costs

Increase (decrease) in earnest money deposits on sales contracts

Decrease in accrued development costs

( 13.2 ) ( 4.2 )

Net cash (used in) provided by operating activities ( 277.6 ) 136.2

Increase in earnest money deposits on sales contracts

Net cash used in operating activities

( 450.0 ) ( 156.7 )

INVESTING ACTIVITIES

1 unchanged sentence

Return of investment in unconsolidated ventures 0.9 —

Proceeds from sale of assets 5.0 1.6

Net cash provided by investing activities 3.7 0.8

Net cash provided by (used in) investing activities 0.9 ( 0.2 )

FINANCING ACTIVITIES

Issuance of common stock 19.7 —

Borrowings under revolving credit facility 100.0 —

Cash paid for shares withheld for taxes ( 0.1 ) ( 0.2 )

Net cash provided by (used in) financing activities 99.9 ( 0.2 )

(Decrease) increase in cash and cash equivalents ( 256.8 ) 136.2

Decrease in cash and cash equivalents

( 349.2 ) ( 157.1 )

Cash and cash equivalents at beginning of period 481.2 616.0

12 unchanged sentences

Noncontrolling interests in consolidated pass-through entities are recognized before income taxes.

Net income attributable to noncontrolling interests is zero for all periods presented in the Company's statements of operations.

Net income attributable to noncontrolling interests is zero for both periods presented in the Company's statements of operations.

The transactions included in net income in the consolidated statements of operations are the same as those that would be presented in comprehensive income.

9 unchanged sentences

Horton is considered a related party of Forestar under GAAP.

As of June 30, 2024, D.R.

As of December 31, 2024, D.R.

Horton owned approximately 62 % of the Company's outstanding common stock.

3 unchanged sentences

Actual results could differ materially from those estimates.

Although the growth of our business and significant changes in market conditions have impacted our seasonal patterns in the past and could do so again in the future, we generally deliver more lots and generate greater revenues and pre-tax income in the fourth quarter of our fiscal year.

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.

Although the growth of the Company's business and significant changes in market conditions have impacted its seasonal patterns in the past and could do so again in the future, the Company generally delivers more lots and generates greater revenues and pre-tax income in the fourth quarter of its fiscal year.

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

Pending Accounting Standards

2 unchanged sentences

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 guidance is effective for the Company beginning October 1, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

The standard is effective for the Company's 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 the Company's disclosures but will not impact its 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.

1 unchanged sentence

The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures," which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements.

The standard is effective for the Company's annual periods beginning in fiscal 2028 and interim periods beginning in the first quarter of fiscal 2029, with early adoption permitted.

The Company is currently evaluating the impact on its disclosures.

Note 2 — Segment Information

4 unchanged sentences

Real estate consists of:

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

(In millions)

2 unchanged sentences

$ 2,736.8 $ 2,266.2

In the nine months ended June 30, 2024, the Company invested $ 441.4 million for the acquisition of residential real estate and $ 730.2 million for the development of residential real estate.

At June 30, 2024 and September 30, 2023, land held for future development primarily consisted of undeveloped land which the Company has the contractual right to sell to D.R.

In the three months ended December 31, 2024, the Company invested $ 387.4 million for the acquisition of residential real estate and $ 297.0 million for the development of residential real estate.

At December 31, 2024 and September 30, 2024, land held for future development primarily consisted of undeveloped land which the Company has under contract to sell to D.R.

Horton at a sales price equal to the carrying value of the land at the time of sale plus additional consideration of 12 % to 16 % per annum.

Each quarter, the Company reviews the performance and outlook for all of its real estate for indicators of potential impairment and performs detailed impairment evaluations and analyses when necessary.

As a result of this process, no impairment charges were recorded in the three and nine months ended June 30, 2024.

In the nine months ended June 30, 2023, the Company recorded non-cash impairment charges of $ 19.4 million.

In the three and nine months ended June 30, 2024, land purchase contract deposit and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 0.7 million and $ 1.0 million, respectively, compared to $ 0.9 million and $ 4.2 million in the prior year periods.

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

As a result of this process, no impairment charges were recorded for either period presented in the consolidated statements of operations.

In the three months ended December 31, 2024 and 2023, land purchase contract deposit and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 1.1 million and $ 0.2 million, respectively.

These land option charges are included in cost of sales in the consolidated statements of operations.

Note 4 — Revenues

Revenues consist of:

Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

Three Months Ended December 31,

(In millions)

3 unchanged sentences

$ 250.4 $ 305.9

In the three and nine months ended June 30, 2024, the Company recognized $ 0.5 million and $ 3.5 million of revenues as a result of its progress towards completion of its remaining unsatisfied performance obligations on deferred development projects, compared to $ 10.3 million and $ 24.6 million in the prior year periods.

Note 5 — Capitalized Interest

2 unchanged sentences

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

In the first nine months of fiscal 2024 and fiscal 2023, the Company’s active real estate exceeded its debt level, and all interest incurred was capitalized to real estate.

The following table summarizes the Company’s interest costs incurred, capitalized and expensed in the three and nine months ended June 30, 2024 and 2023.

Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

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

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

Three Months Ended December 31,

(In millions)

4 unchanged sentences

Note 6 — Other Assets, Accrued Expenses and Other Liabilities

The Company's other assets at June 30, 2024 and September 30, 2023 were as follows:

June 30, 2024 September 30, 2023

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

December 31, 2024 September 30, 2024

(In millions)

3 unchanged sentences

Land purchase contract deposits 23.6 23.4

Contract assets 9.4 8.9

Other assets 3.8 1.8

$ 85.0 $ 85.3

The Company's accrued expenses and other liabilities at June 30, 2024 and September 30, 2023 were as follows:

June 30, 2024 September 30, 2023

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

December 31, 2024 September 30, 2024

(In millions)

9 unchanged sentences

$ 56.4 $ 68.3

Contract liabilities at June 30, 2024 and September 30, 2023 include $ 1.9 million and $ 3.5 million, respectively, related to the Company's remaining unsatisfied performance obligations on deferred development lot sales.

Note 7 — Debt

The Company's notes payable at their carrying amounts consist of the following:

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

(In millions)

5 unchanged sentences

______________

(1) Unamortized debt issuance costs that were deducted from the carrying amounts of the senior notes totaled $ 3.8 million and $ 5.0 million at June 30, 2024 and September 30, 2023, respectively.

(1) Unamortized debt issuance costs that were deducted from the carrying amounts of the senior notes totaled $ 3.1 million and $ 3.5 million at December 31, 2024 and September 30, 2024, respectively.

Bank Credit Facility

The Company 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.

The Company has 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 billion, subject to certain conditions and availability of additional bank commitments.

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.

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.

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

At June 30, 2024, there were no borrowings outstanding and $ 24.8 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 385.2 million.

The revolving credit facility is guaranteed by the Company’s wholly-owned subsidiaries that are not immaterial subsidiaries or have not been designated as unrestricted subsidiaries.

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

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

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

1 unchanged sentence

These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly.

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 June 30, 2024, the Company was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

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

The Company has outstanding senior notes as described below that were issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the "Securities Act").

17 unchanged sentences

and allow to exist certain restrictions on the ability of subsidiaries to pay dividends or make other payments.

At June 30, 2024, the Company was in compliance with all of the limitations and restrictions associated with its senior note obligations.

At December 31, 2024, the Company was in compliance with all of the limitations and restrictions associated with its senior note obligations.

Effective April 30, 2020, the Board of Directors authorized the repurchase of up to $ 30 million of the Company’s debt securities.

The authorization has no expiration date.

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

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

Other Note Payable

3 unchanged sentences

The computations of basic and diluted earnings per share are as follows:

Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

Three Months Ended December 31,

(In millions, except share and per share amounts)

6 unchanged sentences

Note 9 — Income Taxes

The Company’s income tax expense for the three and nine months ended June 30, 2024 was $ 12.9 million and $ 39.8 million compared to $ 15.6 million and $ 31.7 million in the prior year periods.

The effective tax rate was 25.0 % and 24.6 % for the three and nine months ended June 30, 2024 compared to 25.0 % and 25.1 % in the prior year periods.

The effective tax rate for all periods included an expense for state income taxes and nondeductible expenses.

The effective tax rate for the three and nine months ended June 30, 2024 also included a benefit for stock-based compensation.

At June 30, 2024, the Company had deferred tax liabilities, net of deferred tax assets , of $ 52.0 million.

The Company’s income tax expense for the three months ended December 31, 2024 was $ 5.4 million compared to $ 13.0 million in the prior year period.

The effective tax rate was 24.7 % for the three months ended December 31, 2024 compared to 25.4 % in the prior year period.

The effective tax rate for both periods included an expense for state income taxes and nondeductible expenses.

At December 31, 2024, the Company had deferred tax liabilities, net of deferred tax assets , of $ 65.8 million.

The deferred tax assets were partially offset by a valuation allowance of $ 0.8 million, resulting in a net deferred tax liability of $ 66.6 million.

6 unchanged sentences

Stockholders' Equity

The Company has an effective shelf registration statement, filed with the Securities and Exchange Commission in October 2021, registering $ 750 million of equity securities, of which $ 300 million was reserved for sales under the at-the-market equity offering program that became effective in November 2021.

In the nine months ended June 30, 2024, the Company issued 546,174 shares of common stock under its at-the-market equity offering program for proceeds of $ 19.7 million, net of commissions and other issuance costs totaling $ 0.4 million.

At June 30, 2024, $ 728.1 million remained available for issuance under the shelf registration statement, of which $ 278.1 million was reserved for sales under the at-the-market equity offering program.

Restricted Stock Units (RSUs)

The Company’s Stock Incentive Plan provides for the granting of stock options and restricted stock units to executive officers, other key employees and non-management directors.

Restricted stock unit awards may be based on performance (performance-based) or on service over a requisite time period (time-based).

RSU equity awards represent the contingent right to receive one share of the Company’s common stock per RSU if the vesting conditions and/or performance criteria are satisfied.

The RSUs have no voting rights until vested.

In the nine months ended June 30, 2024, a total of 178,034 time-based RSUs were granted.

The Company has an effective shelf registration statement, filed with the Securities and Exchange Commission in September 2024, registering $ 750 million of equity securities, of which $ 300 million is reserved for sales under the at-the-market equity offering program that the Company entered into in November 2024.

During the three months ended December 31, 2024, the Company did not issue any shares under its at-the-market equity offering program.

At December 31, 2024, the full $ 750 million remained available for issuance under the Company's shelf registration statement, with $ 300 million reserved for sales under the at-the-market equity offering program.

Stock-Based Compensation

The Company’s Stock Incentive Plan provides for the granting of equity awards, such as performance stock units (PSUs) and restricted stock units (RSUs), to executive officers, other key employees and non-management directors.

PSUs are earned by achieving key performance criteria and RSUs are earned through continued employment with the Company over a requisite time period.

Each stock unit represents the contingent right to receive one share of the Company’s common stock if the performance criteria and/or vesting conditions are satisfied.

The stock units have no dividend or voting rights until vested.

In the three months ended December 31, 2024 , the Company granted 99,097 PSUs to its executive officers.

The number of units that ultimately vest depends on the achievement of three performance criteria which are (i) relative total stockholder return, (ii) return on inventory and (iii) market share goals, and can range from 0 % to 200 % of the number of units granted.

The three performance criteria are weighted equally.

These awards vest at the end of a three-year performance period ending September 30, 2027.

The grant date fair value of these equity awards was $ 35.20 per unit.

Compensation expense related to this grant was $ 0.3 million in the three months ended December 31, 2024, based on an estimate of the Company’s achievement of the three performance criteria, the elapsed portion of the performance period and the grant date fair value of the award.

In the three months ended December 31, 2024, a total of 306,300 RSUs were granted.

The weighted average grant date fair value of these equity awards was $ 29.00 per unit, and they vest annually in equal installments over periods of three to five years.

Total stock-based compensation expense related to the Company's RSUs for the three and nine months ended June 30, 2024 was $ 1.4 million and $ 4.1 million compared to $ 0.9 million and $ 3.4 million in the prior year periods.

Compensation expense related to these grants was $ 2.3 million in the three months ended December 31, 2024, which included $ 1.1 million of expense recognized for employees that were retirement eligible on the date of the grant.

Total stock-based compensation expense related to the Company's equity awards for the three months ended December 31, 2024 was $ 2.6 million compared to $ 0.9 million in the prior year period.

Note 11 — Commitments and Contingencies

1 unchanged sentence

In support of the Company's residential lot development business, it issues letters of credit under the revolving credit facility and has a surety bond program that provides financial assurance to beneficiaries related to the execution and performance of certain development obligations.

At June 30, 2024, the Company had outstanding letters of credit of $ 24.8 million under the revolving credit facility and surety bonds of $ 727.8 million issued by third parties to secure performance under various contracts.

At December 31, 2024, the Company had outstanding letters of credit of $ 27.5 million under the revolving credit facility and surety bonds of $ 799.4 million issued by third parties to secure performance under various contracts.

The Company expects that its performance obligations secured by these letters of credit and bonds will generally be completed in the ordinary course of business and in accordance with the applicable contractual terms.

1 unchanged sentence

The Company has no material third-party guarantees.

The Company is involved in various legal proceedings that arise from time to time in the ordinary course of business and believes that adequate reserves have been established for any probable losses.

On September 6, 2024, the Maryland Department of Environment (MDE) filed suit in the Circuit Court for Harford County, Maryland against the Company regarding various alleged stormwater compliance issues and violations at a project in Maryland dating from 2022 through 2024, seeking injunctive relief and civil penalties.

Since the Company's first discovery of these issues, it has enhanced its practices and procedures related to stormwater compliance at the project in question, and is seeking to resolve these matters through further discussions with MDE.

The Company does not believe it is reasonably possible that this matter would result in a loss that would have a material effect on its consolidated financial position, results of operations or cash flows.

In addition, the Company is involved in various other legal proceedings that arise from time to time in the ordinary course of business and believes that adequate reserves have been established for any probable losses.

The Company does not believe that the outcome of any of these proceedings will have a significant adverse effect on its financial position, long-term results of operations or cash flows.

5 unchanged sentences

Land purchase contract deposits and capitalized pre-acquisition costs are expensed to cost of sales 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 June 30, 2024, the Company had total deposits of $ 14.2 million related to contracts to purchase land with a total remaining purchase price of approximately $ 861.1 million.

At June 30, 2024, none of the land purchase contracts were subject to specific performance provisions.

At December 31, 2024, the Company had total deposits of $ 23.6 million related to contracts to purchase land with a total remaining purchase price of approximately $ 796.1 million.

The majority of land and lots under contract are currently expected to be purchased within 3 years.

None of the land purchase contracts were subject to specific performance provisions at December 31, 2024.

Note 12 — Related Party Transactions

2 unchanged sentences

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

In the nine months ended June 30, 2024 and 2023, selling, general and administrative expense in the consolidated statements of operations included $ 4.1 million and $ 2.8 million for these shared services, $ 7.0 million and $ 6.6 million reimbursed to D.R.

In the three months ended December 31, 2024 and 2023, selling, general and administrative expense in the consolidated statements of operations included $ 1.8 million and $ 1.3 million for these shared services, $ 3.5 million and $ 2.4 million reimbursed to D.R.

Horton for the cost of health insurance and other employee benefits and $ 0.2 million and $ 0.3 million for other corporate and administrative expenses paid by D.R.

2 unchanged sentences

Horton, both companies identify land development opportunities to expand Forestar's portfolio of assets.

At June 30, 2024 and September 30, 2023, the Company owned approximately 57,900 and 52,400 residential lots, respectively, of which D.R.

At December 31, 2024 and September 30, 2024, the Company owned approximately 68,300 and 57,800 residential lots, respectively, of which D.R.

Horton had the following involvement.

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

(Dollars in millions)

8 unchanged sentences

Lot and land sales to D.R.

Horton in the three and nine months ended June 30, 2024 and 2023 were as follows:

Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

Horton in the three months ended December 31, 2024 and 2023 were as follows:

Three Months Ended December 31,

(Dollars in millions)

3 unchanged sentences

Horton $ 217.4 $ 272.8

(Increase) decrease in contract liabilities on lot sales to D.R.

Horton $ ( 0.2 ) $ 0.6 $ 2.6 $ 4.0

Tract acres sold to D.R.

Horton 32 45 32 424

Tract sales revenues from sales to D.R.

Horton $ 2.1 $ 22.8 $ 2.1 $ 55.3

Other revenues from D.R.

Horton $ 1.2 $ 0.8 $ 2.5 $ 1.0

In the three and nine months ended June 30, 2024, the Company reimbursed D.R.

Horton approximately $ 4.4 million and $ 15.1 million for pre-acquisition and other due diligence and development costs related to land purchase contracts identified by D.R.

Horton that the Company independently underwrote and closed compared to reimbursements of $ 6.7 million and $ 17.1 million in the prior year periods.

In the three and nine months ended June 30, 2024, the Company reimbursed D.R.

Horton approximately $ 4.0 million and $ 22.7 million for previously paid earnest money related to those land purchase contracts.

In the nine months ended June 30, 2023, the Company reimbursed D.R.

Horton approximately $ 0.1 million for previously paid earnest money related to those land purchase contracts.

In the three and nine months ended June 30, 2024, the Company paid D.R.

Horton $ 0.1 million and $ 0.8 million for land development services compared to $ 0.1 million and $ 0.6 million for these services in the prior year periods.

Decrease in contract liabilities on lot sales to D.R.

Tract sales and other revenues from D.R.

In the three months ended December 31, 2024, the Company reimbursed D.R.

Horton approximately $ 4.2 million for pre-acquisition and other due diligence and development costs related to land purchase contracts identified by D.R.

Horton that the Company independently underwrote and closed compared to reimbursements of $ 4.6 million in the prior year period.

In the three months ended December 31, 2024, the Company reimbursed D.R.

Horton approximately $ 10.0 million for previously paid earnest money related to those land purchase contracts compared to reimbursements of $ 13.3 million in the prior year period.

In the three months ended December 31, 2024, the Company purchased $ 2.1 million of water rights from D.R.

In the three months ended December 31, 2024, the Company paid D.R.

Horton $ 0.1 million for land development services compared to $ 0.5 million for these services in the prior year period.

These amounts are included in cost of sales in the Company’s consolidated statements of operations.

At June 30, 2024 and September 30, 2023, land held for future development primarily consisted of undeveloped land which the Company has the contractual right to sell to D.R.

At December 31, 2024 and September 30, 2024, land held for future development primarily consisted of undeveloped land which the Company has under contract to sell to D.R.

Horton at a sales price equal to the carrying value of the land at the time of sale plus additional consideration of 12 % to 16 % per annum.

At June 30, 2024 and September 30, 2023, accrued expenses and other liabilities on the Company's consolidated balance sheets included $ 1.8 million and $ 3.2 million owed to D.R.

Horton for any accrued and unpaid shared service charges, land purchase contract deposits and due diligence and other development cost reimbursements.

In the nine months ended June 30, 2024, the Company acquired a tract of residential real estate from Double R DevCo, LLC (“R&R”) for $ 11.3 million and simultaneously entered into a finished lot purchase agreement with D.R.

The tract was originally under contract with D.R.

The Company independently underwrote the transaction and chose to close in place of D.R.

R&R is owned and controlled by Ryan and Reagan Horton, the adult sons of Donald R.

Horton, former Chairman of D.R.

At December 31, 2024, accrued expenses and other liabilities on the Company's consolidated balance sheets included $ 2.1 million owed to D.R.

Horton for any accrued and unpaid shared service charges, land purchase contract deposits and due diligence and other development cost reimbursements compared to $ 5.2 million at September 30, 2024.

Note 13 — Fair Value Measurements

8 unchanged sentences

The Company elected not to use the fair value option for cash and cash equivalents and debt.

For the financial assets and liabilities that the Company does not reflect at fair value, the following tables present both their respective carrying value and fair value at June 30, 2024 and September 30, 2023.

Fair Value at June 30, 2024

For the financial assets and liabilities that the Company does not reflect at fair value, the following tables present both their respective carrying value and fair value at December 31, 2024 and September 30, 2024.

Fair Value at December 31, 2024

Carrying Value Level 1 Level 2 Level 3 Total

11 unchanged sentences

(a) The fair values of cash and cash equivalents approximate their carrying values due to their short-term nature and are classified as Level 1 within the fair value hierarchy.

(b) At June 30, 2024 and September 30, 2023, debt primarily consisted of the Company's senior notes.

(b) At December 31, 2024 and September 30, 2024, debt primarily consisted of the Company's senior notes.

The fair value of the senior notes is determined based on quoted market prices in markets that are not active, which is classified as Level 2 within the fair value hierarchy.

(c) The fair value of the Company's other note payable approximates its carrying value due to its short-term nature and is classified as Level 3 within the fair value hierarchy.

(c) The fair value of the Company's other note payable and borrowings on the revolving credit facility approximate carrying value due to their short-term nature or floating interest rate terms, as applicable, and are classified as Level 3 within the fair value hierarchy.

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