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Item 1. Financial Statements

2026-01-22 compared with 2025-07-23 · 106 added, 153 removed, 319 unchanged (45% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

June 30, 2025 September 30, 2024

December 31, 2025 September 30, 2025

(In millions, except share data)

1 unchanged sentence

Real estate 2,850.5 2,645.1

Investment in unconsolidated ventures — 0.3

Property and equipment, net 7.8 8.1

11 unchanged sentences

50,885,325 and 50,833,171 shares issued and outstanding

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

at December 31, 2025 and September 30, 2025, respectively

Additional paid-in capital 673.6 671.0

7 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

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

2025 2024 2025 2024

Three Months Ended December 31,

(In millions, except per share amounts)

3 unchanged sentences

Equity in earnings of unconsolidated ventures — ( 0.6 )

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

Interest and other income ( 2.3 ) ( 2.3 )

Loss on extinguishment of debt — — 1.1 —

Income before income taxes 20.8 21.9

14 unchanged sentences

Stock issued under employee benefit plans ( 52,154 shares)

Cash paid for shares withheld for taxes

0.1 — — — 0.1

Stock-based compensation expense

— 2.6 — — 2.6

Balances at December 31, 2024 ( 50,669,946 shares)

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

— — 31.6 — 31.6

Stock issued under employee benefit plans ( 153,854 shares)

0.1 — — — 0.1

Cash paid for shares withheld for taxes

2 unchanged sentences

— 3.1 — — 3.1

Balances at March 31, 2025 ( 50,823,800 shares)

$ 50.8 $ 667.8 $ 926.3 $ 1.0 $ 1,645.9

— — 32.9 — 32.9

Stock-based compensation expense

— 1.5 — — 1.5

Balances at June 30, 2025 ( 50,823,800 shares)

Balances at December 31, 2025 ( 50,885,325 shares)

$ 50.9 $ 673.6 $ 1,061.5 $ 1.0 $ 1,787.0

11 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

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)

6 unchanged sentences

Impairments and land option charges 0.8 1.1

Gain on sale of assets — ( 5.0 )

Loss on extinguishment of debt 1.1 —

Changes in operating assets and liabilities:

1 unchanged sentence

( 206.2 ) ( 471.6 )

Increase in other assets

(Increase) decrease in other assets

Increase (decrease) in accounts payable and other accrued liabilities

12.5 ( 19.2 )

Decrease in accounts payable and other accrued liabilities

Decrease in accrued development costs

( 0.2 ) ( 13.2 )

(Decrease) increase in accrued development costs

Increase in earnest money deposits on sales contracts

4 unchanged sentences

Return of investment in unconsolidated ventures — 0.9

Proceeds from sale of assets — 5.0

Net cash (used in) provided by investing activities ( 0.1 ) 0.9

FINANCING ACTIVITIES

Issuance of common stock — 19.7

Additions to debt 780.0 —

Borrowings under revolving credit facility — 100.0

Repayment of debt ( 9.9 ) —

Deferred financing fees ( 6.3 ) —

Cash paid for shares withheld for taxes ( 0.5 ) ( 0.1 )

Net cash provided by financing activities 162.6 17.1

Net cash (used in) provided by financing activities ( 10.4 ) 99.9

Decrease in cash and cash equivalents

2 unchanged sentences

Cash and cash equivalents at end of period $ 211.7 $ 132.0

SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES

Note payable issued for real estate $ — $ 9.9

See accompanying notes to consolidated financial statements.

21 unchanged sentences

Horton is considered a related party of Forestar under GAAP.

As of June 30, 2025, D.R.

As of December 31, 2025, D.R.

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

5 unchanged sentences

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

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 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.

The guidance is effective for the Company beginning October 1, 2025, with early adoption permitted.

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

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 became effective for the Company’s annual periods beginning in fiscal 2026.

The Company is currently evaluating the impact this standard will have on its 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.

The Company is currently evaluating the impact this standard will have on its disclosures.

Note 2 — Segment Information

The Company manages its operations through its real estate segment, which is its core business and generates substantially all of its revenues.

The Company manages its operations through its real estate segment, which is its only operating and reporting segment.

The real estate segment is the Company's core business and generates substantially all of its revenues.

The real estate segment primarily acquires land and installs infrastructure for single-family residential communities, and its revenues generally come from sales of residential single-family finished lots to local, regional and national homebuilders.

The Company has other business activities for which the related assets and operating results are immaterial and therefore are included within the Company's real estate segment.

The Company's Executive Chairman of the Board, the Chief Executive Officer, the Chief Operating Officer, and the Chief Financial Officer are its chief operating decision makers (CODM).

The CODM use income before income taxes as reported on the Consolidated Statements of Operations as the primary measure to allocate capital resources and assess the operating performance of the real estate segment.

The CODM analyze income before income taxes at least quarterly to review comparative period variances and to monitor performance, identify trends, and guide strategic and operational decisions.

There are no significant segment operating expenses that are reviewed by the CODM other than those included in the expense categories reported on the Company’s consolidated statements of operations.

All revenues and real estate assets are attributable to operations in the United States.

Segment assets that are reported as total assets and capital expenditures are reviewed by the CODM and are presented on the consolidated balance sheets and consolidated statements of cash flows, respectively.

For the three months ended December 31, 2025 and 2024, transactions with D.R.

Horton accounted for more than 10% of the Company's total revenues.

Horton is a related party and additional information regarding transactions with D.R.

Horton is disclosed in Note 12 - Related Party Transactions.

Note 3 — Real Estate

Real estate consists of:

June 30, 2025 September 30, 2024

December 31, 2025 September 30, 2025

(In millions)

2 unchanged sentences

$ 2,850.5 $ 2,645.1

In the nine months ended June 30, 2025, the Company invested $ 532.6 million for the acquisition of residential real estate and $ 864.3 million for the development of residential real estate.

At June 30, 2025 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.

In the three months ended December 31, 2025, the Company invested $ 110.1 million for the acquisition of residential real estate and $ 304.6 million for the development of residential real estate.

At December 31, 2025 and September 30, 2025, 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.

1 unchanged sentence

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

In the three and nine months ended June 30, 2025, 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 $ 1.9 million and $ 3.9 million, respectively, compared to $ 0.7 million and $ 1.0 million in the prior year periods.

In the three months ended December 31, 2025 and 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 $ 0.8 million and $ 1.1 million, respectively.

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

1 unchanged sentence

Revenues consist of:

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

2025 2024 2025 2024

Three Months Ended December 31,

(In millions)

Residential lot sales $ 235.2 $ 247.4

Deferred development lot sales — 0.5 — 3.5

Tract sales and other 37.8 3.0

4 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 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 and nine months ended June 30, 2025 and 2024.

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

2025 2024 2025 2024

In the first three months of fiscal 2026 and fiscal 2025, 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, 2025 and 2024.

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, 2025 and September 30, 2024 were as follows:

June 30, 2025 September 30, 2024

The Company's other assets at December 31, 2025 and September 30, 2025 were as follows:

December 31, 2025 September 30, 2025

(In millions)

4 unchanged sentences

Income taxes receivable 0.5 1.4

Contract assets 9.8 8.9

Pledged reimbursements asset (1)

Other assets 3.0 3.3

$ 106.6 $ 104.6

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

June 30, 2025 September 30, 2024

The Company's accrued expenses and other liabilities at December 31, 2025 and September 30, 2025 were as follows:

December 31, 2025 September 30, 2025

(In millions)

7 unchanged sentences

Other accrued expenses 8.7 4.3

Pledged reimbursements liability (1)

Other liabilities 6.3 8.1

$ 87.3 $ 83.1

_____________

(1) In certain projects, the Company has entered into agreements to be reimbursed for eligible infrastructure costs from municipal districts as funds are available to the district.

The Company has pledged certain of these future reimbursements as collateral to a third party, and the third party issued bonds against this collateral.

The Company received the cash proceeds from the third-party bond issuance.

The Company has no future performance obligations related to the cash proceeds received, no obligations related to any future interest or principal payments to the third-party bondholders, and the third party has no recourse against the Company for the reimbursement of these funds.

However, under the applicable accounting rules, since the Company pledged only certain reimbursements and not the entire amount, the Company recorded a non-cash transaction to increase assets and a related liability for the amount of the unpaid balance of the third-party bonds.

The asset and liability will be reduced as the third-party bonds are repaid by the municipal district.

Note 7 — Debt

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

June 30, 2025 September 30, 2024

December 31, 2025 September 30, 2025

(In millions)

2 unchanged sentences

6.5 % senior notes due 2033 (1)

Other note payable — 9.9

1 unchanged sentence

______________

(1) Unamortized debt issuance costs that were deducted from the carrying amounts of the senior notes totaled $ 7.6 million and $ 3.5 million at June 30, 2025 and September 30, 2024, respectively.

(1) Unamortized debt issuance costs that were deducted from the carrying amounts of the senior notes totaled $ 6.8 million and $ 7.2 million at December 31, 2025 and September 30, 2025, respectively.

Bank Credit Facility

The Company has a $ 665 million senior unsecured revolving credit facility with an 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 facility includes bank commitments of $ 575 million maturing on December 18, 2029 and $ 65 million maturing on October 28, 2026.

Of the total commitments, $ 600 million matures on December 18, 2029 and $ 65 million matures on October 28, 2026.

The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $ 100 million and 50 % of the total revolving credit commitments.

1 unchanged sentence

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

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

At December 31, 2025, there were no borrowings outstanding and $ 57.4 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 607.6 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.

3 unchanged sentences

A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.

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

At December 31, 2025, 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").

1 unchanged sentence

The notes are guaranteed by each of the Company's subsidiaries to the extent such subsidiaries guarantee the Company's revolving credit facility.

In March 2025, the Company issued $ 500 million principal amount of 6.5 % senior notes due March 15, 2033 (the "2033 notes"), with interest payable semiannually .

The Company's $ 300 million principal amount of 5.0 % senior notes (the "2028 notes") mature March 1, 2028 with interest payable semiannually.

Until March 1, 2026 , the 2028 notes may be redeemed at 100.833 % of their principal amount plus any accrued and unpaid interest, and the 2028 notes can be redeemed at par on or after March 1, 2026 through maturity.

The annual effective interest rate of the 2028 notes after giving effect to the amortization of financing costs is 5.2 %.

The net proceeds from this issuance were primarily used to fund the Company's tender offer to purchase any and all of its outstanding $ 400 million principal amount of 3.85 % senior notes due 2026 (the "2026 notes"), 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.

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

The Company's $ 500 million principal amount of 6.5 % senior notes (the "2033 notes") mature March 15, 2033 , with interest payable semiannually .

At any time prior to March 15, 2028 , the Company may, on one or more occasions, redeem up to 40 % of the aggregate principal amount of the 2033 notes with the net cash proceeds from certain equity offerings at a redemption price of 106.5 % of the principal amount of the 2033 notes being redeemed.

2 unchanged sentences

In accordance with the indenture, the redemption price decreases annually thereafter and the 2033 notes can be redeemed at par on or after March 15, 2030 through maturity.

The Company's remaining $ 70.6 million principal amount of 2026 notes mature May 15, 2026 with interest payable semiannually .

The 2026 notes can be redeemed at par after May 15, 2025 through maturity.

The annual effective interest rate of the 2033 notes after giving effect to the amortization of financing costs is 6.7 %.

The Company's $ 300 million principal amount of 5.0 % senior notes (the "2028 notes") mature March 1, 2028 with interest payable semiannually .

The annual effective interest rate of the 2028 notes after giving effect to the amortization of financing costs is 5.2 %.

The indentures governing the senior notes require that, upon the occurrence of both a change of control and a rating decline (as defined in each indenture), the Company offer to purchase the applicable series of notes at 101% of their principal amount, plus accrued and unpaid interest.

Under the indentures governing the 2026 notes and 2028 notes, if the Company or its restricted subsidiaries dispose of assets, under certain circumstances, the Company will be required to either invest the net cash proceeds from such asset sales in its business within a specified period of time, repay certain senior secured debt or debt of its non-guarantor subsidiaries, or make an offer to purchase a principal amount of such notes equal to the excess net cash proceeds at a purchase price of 100% of their principal amount.

The indentures governing the 2026 notes and 2028 notes contain covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to pay dividends or distributions, repurchase equity, prepay subordinated debt and make certain investments;

Under the indenture governing the 2028 notes, if the Company or its restricted subsidiaries dispose of assets, under certain circumstances, the Company will be required to either invest the net cash proceeds from such asset sales in its business within a specified period of time, repay certain senior secured debt or debt of its non-guarantor subsidiaries, or make an offer to purchase a principal amount of such notes equal to the excess net cash proceeds at a purchase price of 100% of their principal amount.

The indenture governing the 2028 notes contains covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to pay dividends or distributions, repurchase equity, prepay subordinated debt and make certain investments;

incur additional debt or issue mandatorily redeemable equity;

incur liens on assets;

merge or consolidate with another company or sell or otherwise dispose of all or substantially all of the Company’s assets;

merge or consolidate with another company or sell or otherwise dispose of all or substantially all of the assets of the Company and its restricted subsidiaries (taken as a whole);

enter into transactions with affiliates;

2 unchanged sentences

engage in certain sale and leaseback transactions;

and merge or consolidate with another company or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the Company’s assets.

At June 30, 2025, the Company was in compliance with all of the limitations and restrictions associated with its senior note obligations.

and merge or consolidate with another company or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the assets of the Company and its restricted subsidiaries (taken as a whole).

At December 31, 2025, 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, 2025.

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

Other Note Payable

In December 2023, the Company issued a note payable of $ 9.9 million as part of a transaction to acquire real estate for development.

The note is non-recourse and is secured by the underlying real estate, accrues interest at 4.0 % per annum and matures in December 2025.

In December 2025, the Company repaid the $ 9.9 million principal amount of a note payable that was issued as part of a transaction to acquire real estate for development.

The note was non-recourse, was secured by the underlying real estate, and accrued interest at 4.0 % per annum.

Note 8 — Earnings per Share

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

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

2025 2024 2025 2024

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, 2025 was $ 10.7 million and $ 25.2 million compared to $ 12.9 million and $ 39.8 million in the prior year periods.

The effective tax rate was 24.5 % and 23.7 % for the three and nine months ended June 30, 2025 compared to 25.0 % and 24.6 % in the prior year periods.

The effective tax rate for all periods included an expense for state income taxes and nondeductible expenses and a benefit for stock-based compensation.

The effective tax rate for the three and nine months ended June 30, 2025 also included a benefit for nontaxable income.

At June 30, 2025, the Company had deferred tax liabilities, net of deferred tax assets , of $ 77.2 million.

The Company’s income tax expense for both the three months ended December 31, 2025 and 2024 was $ 5.4 million.

The effective tax rate was 26.0 % for the three months ended December 31, 2025 compared to 24.7 % in the prior year period.

The effective tax rate for both periods included an expense for state income taxes and nondeductible expenses as well as a benefit for nontaxable income.

At December 31, 2025, the Company had deferred tax liabilities, net of deferred tax assets , of $ 86.8 million.

The deferred tax assets were partially offset by a valuation allowance of $ 0.6 million, resulting in a net deferred tax liability of $ 87.4 million.

4 unchanged sentences

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

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

The Company is evaluating the impact of the new law;

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

Note 10 — Stockholders' Equity and Stock-Based Compensation

1 unchanged sentence

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 and nine months ended June 30, 2025, the Company did not issue any shares under its at-the-market equity offering program.

At June 30, 2025, 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.

During the three months ended December 31, 2025, the Company did not issue any shares under its at-the-market equity offering program.

At December 31, 2025, 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

3 unchanged sentences

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

In the nine months ended June 30, 2025 , 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.

In the three months ended December 31, 2025 , the Company granted 114,565 PSUs to its executive officers.

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

The four performance criteria are weighted equally.

These awards vest at the end of a three year performance period ending September 30, 2028.

The grant date fair value of these equity awards was $ 26.06 per unit.

Compensation expense related to the Company's PSUs was $ 0.3 million and $ 0.9 million in the three and nine months ended June 30, 2025, 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 nine months ended June 30, 2025, 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.

Compensation expense related to the Company's RSUs was $ 1.2 million and $ 4.9 million in the three and nine months ended June 30, 2025.

Stock-based compensation expense in the nine months ended June 30, 2025 included $ 1.1 million of expense recognized for employees that were retirement eligible on the date of the grant compared to $ 0.7 million in the prior year period.

Total stock-based compensation expense related to the Company's equity awards for the three and nine months ended June 30, 2025 was $ 1.5 million and $ 5.8 million compared to $ 1.4 million and $ 4.1 million in the prior year periods.

Compensation expense related to this grant was $ 0.2 million in the three months ended December 31, 2025, based on an estimate of the Company’s achievement of the four 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, 2025, a total of 321,285 RSUs were granted.

The weighted average grant date fair value of these equity awards w as $ 27.07 p er unit, and they vest annually in equal installments over periods of three to five years.

Compensation expense related to this grant was $ 1.4 million in the three months ended December 31, 2025.

Stock-based compensation expense in the three months ended December 31, 2025 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, 2025 was $ 3.1 million compared to $ 2.6 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, 2025, the Company had outstanding letters of credit of $ 37.2 million under the revolving credit facility and surety bonds of $ 808.5 million issued by third parties to secure performance under various contracts.

At December 31, 2025, the Company had outstanding letters of credit of $ 57.4 million under the revolving credit facility and surety bonds of $ 811.4 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.

On April 29, 2025, a purported stockholder of the Company filed a derivative complaint in the Delaware Court of Chancery, purportedly on behalf of the Company, against D.R.

On April 29, 2025, a verified stockholder of the Company filed a derivative complaint in the Delaware Court of Chancery, on behalf of the Company, against D.R.

Horton, Inc., the Company’s Executive Chairman, and certain of the Company’s directors.

17 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, 2025, the Company had total deposits of $ 32.8 million related to contracts to purchase land with a total remaining purchase price of approximately $ 854.6 million.

At December 31, 2025, the Company had total deposits of $ 34.1 million related to contracts to purchase land with a total remaining purchase price of approximately $ 695.4 million.

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

Non e of the land purchase contracts were subject to specific performance provisions at June 30, 2025.

Non e of the land purchase contracts were subject to specific performance provisions at December 31, 2025.

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, 2025 and 2024, selling, general and administrative expense in the consolidated statements of operations included $ 5.4 million and $ 4.1 million for these shared services, $ 10.8 million and $ 7.0 million reimbursed to D.R.

Horton for the cost of health insurance and other employee benefits and $ 0.7 million for both periods for other corporate and administrative expenses paid by D.R.

In the three months ended December 31, 2025 and 2024, selling, general and administrative expense in the consolidated statements of operations included $ 1.8 million for these shared services, $ 4.2 million and $ 3.5 million reimbursed to D.R.

Horton for the cost of health insurance and other employee benefits and $ 0.5 million and $ 0.2 million for other corporate and administrative expenses paid by D.R.

Horton on behalf of the Company.

1 unchanged sentence

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

At June 30, 2025 and September 30, 2024, the Company owned approximately 68,300 and 57,800 residential lots, respectively, of which D.R.

At December 31, 2025 and September 30, 2025, the Company owned approximately 65,600 and 65,100 residential lots, respectively, of which D.R.

Horton had the following involvement.

June 30, 2025 September 30, 2024

December 31, 2025 September 30, 2025

(Dollars in millions)

8 unchanged sentences

Lot and land sales to D.R.

Horton in the three and nine months ended June 30, 2025 and 2024 were as follows:

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

2025 2024 2025 2024

Horton in the three months ended December 31, 2025 and 2024 were as follows:

Three Months Ended December 31,

(Dollars in millions)

3 unchanged sentences

Horton $ 183.8 $ 217.4

(Increase) decrease in contract liabilities

$ ( 1.3 ) $ ( 0.2 ) $ ( 0.1 ) $ 2.6

Decrease in contract liabilities

Tract sales and other revenues from D.R.

$ 3.8 $ 3.3 $ 7.7 $ 4.6

In the three and nine months ended June 30, 2025, the Company reimbursed D.R.

Horton approximately $ 9.5 million and $ 17.7 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 $ 4.4 million and $ 15.1 million in the prior year periods.

In the three and nine months ended June 30, 2025, the Company reimbursed D.R.

Horton approximately $ 4.2 million and $ 18.8 million for previously paid earnest money related to those land purchase contracts compared to reimbursements of $ 4.0 million and $ 22.7 million in the prior year periods.

In the nine months ended June 30, 2025, the Company purchased $ 2.1 million of water rights from D.R.

In the three and nine months ended June 30, 2025, the Company paid D.R.

Horton $ 0.1 million and $ 0.3 million for land development services compared to $ 0.1 million and $ 0.8 million for these services in the prior year periods.

In the three months ended December 31, 2025, the Company reimbursed D.R.

Horton approximately $ 7.8 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 $ 4.2 million in the prior year period.

In the three months ended December 31, 2025, the Company reimbursed D.R.

Horton approximately $ 1.7 million for previously paid earnest money related to those land purchase contracts compared to reimbursements of $ 10.0 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, 2025 and 2024, the Company paid D.R.

Horton $ 0.2 million and $ 0.1 million for land development services.

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

At June 30, 2025 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.

At December 31, 2025 and September 30, 2025, 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, 2025, accrued expenses and other liabilities on the Company's consolidated balance sheets included $ 3.0 million owed to D.R.

At December 31, 2025, accrued expenses and other liabilities on the Company's consolidated balance sheets included $ 6.3 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 $ 2.2 million at September 30, 2025.

9 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, 2025 and September 30, 2024.

Fair Value at June 30, 2025

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, 2025 and September 30, 2025.

Fair Value at December 31, 2025

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, 2025 and September 30, 2024, debt primarily consisted of the Company's senior notes.

(b) At December 31, 2025 and September 30, 2025, 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 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.

(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.

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