filings.toolsItem 1. FINANCIAL STATEMENTS
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Item 1. FINANCIAL STATEMENTS
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| June 30, 2024 | September 30, 2023 | ||||||||||
| (In millions) (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 2,992.3 | $ | 3,873.6 | |||||||
| Restricted cash | 27.7 | 26.5 | |||||||||
| Total cash, cash equivalents and restricted cash | 3,020.0 | 3,900.1 | |||||||||
| Inventories: | |||||||||||
| Construction in progress and finished homes | 9,880.5 | 9,001.4 | |||||||||
| Residential land and lots — developed and under development | 12,413.4 | 10,621.9 | |||||||||
| Land held for development | 155.8 | 50.0 | |||||||||
| Land held for sale | 15.8 | 8.7 | |||||||||
| Rental properties | 3,070.6 | 2,691.3 | |||||||||
| Total inventory | 25,536.1 | 22,373.3 | |||||||||
| Mortgage loans held for sale | 2,578.8 | 2,519.9 | |||||||||
| Deferred income taxes, net of valuation allowance of $14.7 million and $14.8 million at June 30, 2024 and September 30, 2023, respectively | 156.6 | 187.2 | |||||||||
| Property and equipment, net | 520.9 | 445.4 | |||||||||
| Other assets | 3,175.5 | 2,993.0 | |||||||||
| Goodwill | 163.5 | 163.5 | |||||||||
| Total assets | $ | 35,151.4 | $ | 32,582.4 | |||||||
| LIABILITIES | |||||||||||
| Accounts payable | $ | 1,412.7 | $ | 1,246.2 | |||||||
| Accrued expenses and other liabilities | 2,897.0 | 3,103.8 | |||||||||
| Notes payable | 5,691.0 | 5,094.5 | |||||||||
| Total liabilities | 10,000.7 | 9,444.5 | |||||||||
| Commitments and contingencies (Note K) | |||||||||||
| EQUITY | |||||||||||
| Preferred stock, $.10 par value, 30,000,000 shares authorized, no shares issued | — | — | |||||||||
| Common stock, $.01 par value, 1,000,000,000 shares authorized, 402,771,463 shares issued and 327,373,437 shares outstanding at June 30, 2024 and 401,202,253 shares issued and 334,848,565 shares outstanding at September 30, 2023 | 4.0 | 4.0 | |||||||||
| Additional paid-in capital | 3,458.9 | 3,432.2 | |||||||||
| Retained earnings | 26,765.3 | 23,589.8 | |||||||||
| Treasury stock, 75,398,026 shares and 66,353,688 shares at June 30, 2024 and September 30, 2023, respectively, at cost | (5,571.7) | (4,329.8) | |||||||||
| Stockholders’ equity | 24,656.5 | 22,696.2 | |||||||||
| Noncontrolling interests | 494.2 | 441.7 | |||||||||
| Total equity | 25,150.7 | 23,137.9 | |||||||||
| Total liabilities and equity | $ | 35,151.4 | $ | 32,582.4 | |||||||
| See accompanying notes to consolidated financial statements. |
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| (In millions, except per share data) (Unaudited) | |||||||||||||||||||||||
| Revenues | $ | 9,965.7 | $ | 9,725.6 | $ | 26,798.8 | $ | 24,956.4 | |||||||||||||||
| Cost of sales | 7,323.7 | 7,141.8 | 19,817.7 | 18,429.3 | |||||||||||||||||||
| Selling, general and administrative expense | 923.6 | 852.1 | 2,639.2 | 2,362.6 | |||||||||||||||||||
| Other (income) expense | (80.6) | (52.2) | (233.1) | (131.9) | |||||||||||||||||||
| Income before income taxes | 1,799.0 | 1,783.9 | 4,575.0 | 4,296.4 | |||||||||||||||||||
| Income tax expense | 432.2 | 432.2 | 1,068.8 | 1,026.7 | |||||||||||||||||||
| Net income | 1,366.8 | 1,351.7 | 3,506.2 | 3,269.7 | |||||||||||||||||||
| Net income attributable to noncontrolling interests | 13.2 | 16.6 | 33.2 | 33.7 | |||||||||||||||||||
| Net income attributable to D.R. Horton, Inc. | $ | 1,353.6 | $ | 1,335.1 | $ | 3,473.0 | $ | 3,236.0 | |||||||||||||||
| Basic net income per common share attributable to D.R. Horton, Inc. | $ | 4.12 | $ | 3.93 | $ | 10.50 | $ | 9.46 | |||||||||||||||
| Weighted average number of common shares | 328.4 | 339.9 | 330.9 | 342.1 | |||||||||||||||||||
| Diluted net income per common share attributable to D.R. Horton, Inc. | $ | 4.10 | $ | 3.90 | $ | 10.43 | $ | 9.39 | |||||||||||||||
| Adjusted weighted average number of common shares | 330.1 | 342.3 | 333.0 | 344.7 | |||||||||||||||||||
| See accompanying notes to consolidated financial statements. |
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF TOTAL EQUITY
| Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Non-controlling Interests | Total Equity | ||||||||||||||||||||||||||||||
| (In millions, except common stock share data) (Unaudited) | |||||||||||||||||||||||||||||||||||
| Balances at September 30, 2023 (334,848,565 shares) | $ | 4.0 | $ | 3,432.2 | $ | 23,589.8 | $ | (4,329.8) | $ | 441.7 | $ | 23,137.9 | |||||||||||||||||||||||
| Net income | — | — | 947.4 | — | 8.3 | 955.7 | |||||||||||||||||||||||||||||
| Exercise of stock options (68,095 shares) | — | 1.6 | — | — | — | 1.6 | |||||||||||||||||||||||||||||
| Stock issued under employee benefit plans (598,824 shares) | — | 3.1 | — | — | — | 3.1 | |||||||||||||||||||||||||||||
| Cash paid for shares withheld for taxes | — | (37.5) | — | — | — | (37.5) | |||||||||||||||||||||||||||||
| Stock-based compensation expense | — | 40.9 | — | — | — | 40.9 | |||||||||||||||||||||||||||||
| Cash dividends declared ($0.30 per share) | — | — | (99.9) | — | — | (99.9) | |||||||||||||||||||||||||||||
| Repurchases of common stock (3,325,150 shares) | — | — | — | (398.3) | — | (398.3) | |||||||||||||||||||||||||||||
| Change of ownership interest in Forestar | — | (0.1) | — | — | 0.1 | — | |||||||||||||||||||||||||||||
| Balances at December 31, 2023 (332,190,334 shares) | $ | 4.0 | $ | 3,440.2 | $ | 24,437.3 | $ | (4,728.1) | $ | 450.1 | $ | 23,603.5 | |||||||||||||||||||||||
| Net income | — | — | 1,172.1 | — | 11.6 | 1,183.7 | |||||||||||||||||||||||||||||
| Exercise of stock options (151,568 shares) | — | 3.6 | — | — | — | 3.6 | |||||||||||||||||||||||||||||
| Stock issued under employee benefit plans (604,209 shares) | — | 6.9 | — | — | — | 6.9 | |||||||||||||||||||||||||||||
| Cash paid for shares withheld for taxes | — | (44.1) | — | — | — | (44.1) | |||||||||||||||||||||||||||||
| Stock-based compensation expense | — | 25.0 | — | — | — | 25.0 | |||||||||||||||||||||||||||||
| Cash dividends declared ($0.30 per share) | — | — | (99.2) | — | — | (99.2) | |||||||||||||||||||||||||||||
| Repurchases of common stock (2,749,810 shares) | — | — | — | (402.2) | — | (402.2) | |||||||||||||||||||||||||||||
| Change of ownership interest in Forestar | — | — | — | — | 19.2 | 19.2 | |||||||||||||||||||||||||||||
| Balances at March 31, 2024 (330,196,301 shares) | $ | 4.0 | $ | 3,431.6 | $ | 25,510.2 | $ | (5,130.3) | $ | 480.9 | $ | 24,296.4 | |||||||||||||||||||||||
| Net income | — | — | 1,353.6 | — | 13.2 | 1,366.8 | |||||||||||||||||||||||||||||
| Stock issued under employee benefit plans (146,514 shares) | — | 1.9 | — | — | — | 1.9 | |||||||||||||||||||||||||||||
| Cash paid for shares withheld for taxes | — | (1.3) | — | — | — | (1.3) | |||||||||||||||||||||||||||||
| Stock-based compensation expense | — | 26.8 | — | — | — | 26.8 | |||||||||||||||||||||||||||||
| Cash dividends declared ($0.30 per share) | — | — | (98.5) | — | — | (98.5) | |||||||||||||||||||||||||||||
| Repurchases of common stock (2,969,378 shares) | — | — | — | (441.4) | — | (441.4) | |||||||||||||||||||||||||||||
| Change of ownership interest in Forestar | — | (0.1) | — | — | 0.1 | — | |||||||||||||||||||||||||||||
| Balances at June 30, 2024 (327,373,437 shares) | $ | 4.0 | $ | 3,458.9 | $ | 26,765.3 | $ | (5,571.7) | $ | 494.2 | $ | 25,150.7 | |||||||||||||||||||||||
| See accompanying notes to consolidated financial statements. |
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF TOTAL EQUITY (Continued)
| Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Non-controlling Interests | Total Equity | ||||||||||||||||||||||||||||||
| (In millions, except common stock share data) (Unaudited) | |||||||||||||||||||||||||||||||||||
| Balances at September 30, 2022 (343,953,023 shares) | $ | 4.0 | $ | 3,349.5 | $ | 19,185.3 | $ | (3,142.5) | $ | 389.3 | $ | 19,785.6 | |||||||||||||||||||||||
| Net income | — | — | 958.7 | — | 9.6 | 968.3 | |||||||||||||||||||||||||||||
| Exercise of stock options (108,457 shares) | — | 2.6 | — | — | — | 2.6 | |||||||||||||||||||||||||||||
| Stock issued under employee benefit plans (601,371 shares) | — | 2.9 | — | — | — | 2.9 | |||||||||||||||||||||||||||||
| Cash paid for shares withheld for taxes | — | (25.7) | — | — | — | (25.7) | |||||||||||||||||||||||||||||
| Stock-based compensation expense | — | 22.9 | — | — | — | 22.9 | |||||||||||||||||||||||||||||
| Cash dividends declared ($0.25 per share) | — | — | (86.1) | — | — | (86.1) | |||||||||||||||||||||||||||||
| Repurchases of common stock (1,384,290 shares) | — | — | — | (118.1) | — | (118.1) | |||||||||||||||||||||||||||||
| Change of ownership interest in Forestar | — | (0.2) | — | — | 0.2 | — | |||||||||||||||||||||||||||||
| Balances at December 31, 2022 (343,278,561 shares) | $ | 4.0 | $ | 3,352.0 | $ | 20,057.9 | $ | (3,260.6) | $ | 399.1 | $ | 20,552.4 | |||||||||||||||||||||||
| Net income | — | — | 942.2 | — | 7.4 | 949.6 | |||||||||||||||||||||||||||||
| Exercise of stock options (234,796 shares) | — | 5.6 | — | — | — | 5.6 | |||||||||||||||||||||||||||||
| Stock issued under employee benefit plans (713,217 shares) | — | 4.7 | — | — | — | 4.7 | |||||||||||||||||||||||||||||
| Cash paid for shares withheld for taxes | — | (30.1) | — | — | — | (30.1) | |||||||||||||||||||||||||||||
| Stock-based compensation expense | — | 28.4 | — | — | — | 28.4 | |||||||||||||||||||||||||||||
| Cash dividends declared ($0.25 per share) | — | — | (85.6) | — | — | (85.6) | |||||||||||||||||||||||||||||
| Repurchases of common stock (3,156,298 shares) | — | — | — | (303.2) | — | (303.2) | |||||||||||||||||||||||||||||
| Change of ownership in Forestar | — | (2.6) | — | — | 2.6 | — | |||||||||||||||||||||||||||||
| Balances at March 31, 2023 (341,070,276 shares) | $ | 4.0 | $ | 3,358.0 | $ | 20,914.5 | $ | (3,563.8) | $ | 409.1 | $ | 21,121.8 | |||||||||||||||||||||||
| Net income | — | — | 1,335.1 | — | 16.6 | 1,351.7 | |||||||||||||||||||||||||||||
| Exercise of stock options (240,620 shares) | — | 5.7 | — | — | — | 5.7 | |||||||||||||||||||||||||||||
| Stock issued under employee benefit plans (33,425 shares) | — | 2.0 | — | — | — | 2.0 | |||||||||||||||||||||||||||||
| Cash paid for shares withheld for taxes | — | (0.1) | — | — | — | (0.1) | |||||||||||||||||||||||||||||
| Stock-based compensation expense | — | 29.3 | — | — | — | 29.3 | |||||||||||||||||||||||||||||
| Cash dividends declared ($0.25 per share) | — | — | (85.2) | — | — | (85.2) | |||||||||||||||||||||||||||||
| Repurchases of common stock (3,121,368 shares) | — | — | — | (342.9) | — | (342.9) | |||||||||||||||||||||||||||||
| Change of ownership interest in Forestar | — | (0.2) | — | — | 0.2 | — | |||||||||||||||||||||||||||||
| Balances at June 30, 2023 (338,222,953 shares) | $ | 4.0 | $ | 3,394.7 | $ | 22,164.4 | $ | (3,906.7) | $ | 425.9 | $ | 22,082.3 | |||||||||||||||||||||||
| See accompanying notes to consolidated financial statements. |
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended June 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| (In millions) (Unaudited) | |||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 3,506.2 | $ | 3,269.7 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 63.5 | 70.2 | |||||||||
| Stock-based compensation expense | 92.7 | 80.6 | |||||||||
| Deferred income taxes | 29.9 | 19.3 | |||||||||
| Inventory and land option charges | 34.4 | 62.2 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| (Increase) decrease in construction in progress and finished homes | (863.0) | 576.2 | |||||||||
| Increase in residential land and lots – developed, under development, held for development and held for sale | (2,012.1) | (915.0) | |||||||||
| Increase in rental properties | (375.7) | (777.3) | |||||||||
| (Increase) decrease in other assets | (154.4) | 242.1 | |||||||||
| Increase in mortgage loans held for sale | (58.9) | (28.4) | |||||||||
| Decrease in accounts payable, accrued expenses and other liabilities | (34.4) | (338.5) | |||||||||
| Net cash provided by operating activities | 228.2 | 2,261.1 | |||||||||
| INVESTING ACTIVITIES | |||||||||||
| Expenditures for property and equipment | (133.3) | (108.3) | |||||||||
| Proceeds from sale of assets | 14.9 | — | |||||||||
| Payments related to business acquisitions, net of cash acquired | (37.9) | (202.0) | |||||||||
| Other investing activities | (4.8) | 1.8 | |||||||||
| Net cash used in investing activities | (161.1) | (308.5) | |||||||||
| FINANCING ACTIVITIES | |||||||||||
| Proceeds from notes payable | 1,270.0 | 575.0 | |||||||||
| Repayment of notes payable | (640.4) | (675.4) | |||||||||
| Borrowings on mortgage repurchase facilities, net | 21.8 | 67.3 | |||||||||
| Proceeds from stock associated with certain employee benefit plans | 12.2 | 18.7 | |||||||||
| Cash paid for shares withheld for taxes | (82.9) | (55.9) | |||||||||
| Cash dividends paid | (297.5) | (256.9) | |||||||||
| Repurchases of common stock | (1,230.3) | (759.6) | |||||||||
| Net proceeds from issuance of Forestar common stock | 19.7 | — | |||||||||
| Net other financing activities | (19.8) | (30.7) | |||||||||
| Net cash used in financing activities | (947.2) | (1,117.5) | |||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (880.1) | 835.1 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 3,900.1 | 2,572.9 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 3,020.0 | $ | 3,408.0 | |||||||
| SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES: | |||||||||||
| Notes payable issued for inventory | $ | 43.4 | $ | 54.5 | |||||||
| Reduction of notes payable upon deconsolidation of variable interest entity | $ | (127.8) | $ | — | |||||||
| Stock issued under employee incentive plans | $ | 173.2 | $ | 110.8 | |||||||
| Repurchases of common stock not settled | $ | 1.5 | $ | — | |||||||
| See accompanying notes to consolidated financial statements. |
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 2024
NOTE A – BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements include the accounts of D.R. Horton, Inc. and all of its wholly-owned, majority-owned and controlled subsidiaries, which are collectively referred to as the Company, unless the context otherwise requires. Noncontrolling interests represent the proportionate equity interests in consolidated entities that are not 100% owned by the Company. As of June 30, 2024, the Company owned a 62% controlling interest in Forestar Group Inc. (Forestar) and therefore is required to consolidate 100% of Forestar within its consolidated financial statements, and the 38% interest the Company does not own is accounted for as noncontrolling interests. All intercompany accounts, transactions and balances have been eliminated in consolidation.
The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements reflect all adjustments considered necessary to fairly state the results for the interim periods shown, including normal recurring accruals and other items. These financial statements, including the consolidated balance sheet as of September 30, 2023, which was derived from audited financial statements, do not include all of the information and notes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2023.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.
Seasonality
Historically, the homebuilding industry has experienced seasonal fluctuations; therefore, the operating results for the three and nine months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2024 or subsequent periods.
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 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.
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.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
NOTE B – SEGMENT INFORMATION
The Company is a national homebuilder that is primarily engaged in the acquisition and development of land and the construction and sale of residential homes, with operations in 121 markets across 33 states. The Company’s operating segments are its 86 homebuilding divisions, its rental operations, its majority-owned Forestar residential lot development operations, its financial services operations and its other business activities. The Company’s reporting segments are its homebuilding reporting segments, its rental operations segment, its Forestar lot development segment and its financial services segment.
Homebuilding
The homebuilding operating segments are aggregated into six reporting segments. The reporting segments and the states in which the Company has homebuilding operations are as follows:
| Northwest: | Colorado, Oregon, Utah and Washington | ||||||||||
| Southwest: | Arizona, California, Hawaii, Nevada and New Mexico | ||||||||||
| South Central: | Arkansas, Oklahoma and Texas | ||||||||||
| Southeast: | Alabama, Florida, Louisiana and Mississippi | ||||||||||
| East: | Georgia, North Carolina, South Carolina and Tennessee | ||||||||||
| North: | Delaware, Illinois, Indiana, Iowa, Kentucky, Maryland, Minnesota, Nebraska, New Jersey, Ohio, Pennsylvania, Virginia and West Virginia |
The Company’s homebuilding divisions design, build and sell single-family detached homes on lots they develop and on fully developed lots purchased ready for home construction. To a lesser extent, the homebuilding divisions also build and sell attached homes, such as townhomes, duplexes and triplexes. Most of the revenue generated by the Company’s homebuilding operations is from the sale of completed homes and to a lesser extent from the sale of land and lots.
Rental
The Company’s rental segment consists of single-family and multi-family rental operations. The single-family rental operations primarily construct and lease single-family homes within a community and then market each community for a bulk sale of rental homes. The multi-family rental operations develop, construct, lease and sell residential rental properties.
Forestar
The Forestar segment is a residential lot development company with operations in 60 markets across 24 states. The Company’s homebuilding divisions acquire finished lots from Forestar in accordance with the master supply agreement between the two companies. Forestar’s segment results are presented on their historical cost basis, consistent with the manner in which management evaluates segment performance.
Financial Services
The Company’s financial services segment provides mortgage financing, title agency services and title insurance to homebuyers in many of the Company’s homebuilding markets. The segment generates the substantial majority of its revenues from originating and selling mortgages, collecting premiums and fees for escrow closing services and collecting premiums for title insurance. The Company sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers.
Other
In addition to its homebuilding, rental, Forestar and financial services operations, the Company engages in other business activities through its subsidiaries. The Company conducts insurance-related operations, owns water rights and other water-related assets and owns non-residential real estate including ranch land and improvements. The results of these operations are immaterial for separate reporting and therefore are grouped together and presented in the Eliminations and Other column in the tables that follow.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
The accounting policies of the reporting segments are described throughout Note A included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2023. Financial information relating to the Company’s reporting segments is as follows:
| June 30, 2024 | ||||||||||||||||||||||||||||||||||||||
| Homebuilding | Rental | Forestar | Financial Services | Eliminations and Other (1) | Consolidated | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 2,174.3 | $ | 119.1 | $ | 359.2 | $ | 305.7 | $ | 34.0 | $ | 2,992.3 | ||||||||||||||||||||||||||
| Restricted cash | 6.3 | 2.2 | — | 19.2 | — | 27.7 | ||||||||||||||||||||||||||||||||
| Inventories: | ||||||||||||||||||||||||||||||||||||||
| Construction in progress and finished homes | 10,002.2 | — | — | — | (121.7) | 9,880.5 | ||||||||||||||||||||||||||||||||
| Residential land and lots — developed and under development | 10,465.8 | — | 2,103.3 | — | (155.7) | 12,413.4 | ||||||||||||||||||||||||||||||||
| Land held for development | 20.4 | — | 135.4 | — | — | 155.8 | ||||||||||||||||||||||||||||||||
| Land held for sale | 15.8 | — | — | — | — | 15.8 | ||||||||||||||||||||||||||||||||
| Rental properties | — | 3,070.3 | — | — | 0.3 | 3,070.6 | ||||||||||||||||||||||||||||||||
| 20,504.2 | 3,070.3 | 2,238.7 | — | (277.1) | 25,536.1 | |||||||||||||||||||||||||||||||||
| Mortgage loans held for sale | — | — | — | 2,578.8 | — | 2,578.8 | ||||||||||||||||||||||||||||||||
| Deferred income taxes, net | 200.7 | (19.9) | — | — | (24.2) | 156.6 | ||||||||||||||||||||||||||||||||
| Property and equipment, net | 490.9 | 1.5 | 6.5 | 3.8 | 18.2 | 520.9 | ||||||||||||||||||||||||||||||||
| Other assets | 2,732.2 | 71.7 | 70.6 | 184.9 | 116.1 | 3,175.5 | ||||||||||||||||||||||||||||||||
| Goodwill | 134.3 | — | — | — | 29.2 | 163.5 | ||||||||||||||||||||||||||||||||
| $ | 26,242.9 | $ | 3,244.9 | $ | 2,675.0 | $ | 3,092.4 | $ | (103.8) | $ | 35,151.4 | |||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||
| Accounts payable | $ | 1,134.6 | $ | 314.6 | $ | 70.9 | $ | 0.1 | $ | (107.5) | $ | 1,412.7 | ||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 2,487.8 | 66.7 | 385.1 | 244.1 | (286.7) | 2,897.0 | ||||||||||||||||||||||||||||||||
| Notes payable | 2,257.8 | 1,035.7 | 706.1 | 1,691.4 | — | 5,691.0 | ||||||||||||||||||||||||||||||||
| $ | 5,880.2 | $ | 1,417.0 | $ | 1,162.1 | $ | 1,935.6 | $ | (394.2) | $ | 10,000.7 |
(1)Amounts include the balances of the Company’s other businesses and the elimination of intercompany transactions.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
| September 30, 2023 | ||||||||||||||||||||||||||||||||||||||
| Homebuilding | Rental | Forestar | Financial Services | Eliminations and Other (1) | Consolidated | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 2,920.2 | $ | 136.1 | $ | 616.0 | $ | 189.1 | $ | 12.2 | $ | 3,873.6 | ||||||||||||||||||||||||||
| Restricted cash | 6.5 | 3.3 | — | 16.7 | — | 26.5 | ||||||||||||||||||||||||||||||||
| Inventories: | ||||||||||||||||||||||||||||||||||||||
| Construction in progress and finished homes | 9,134.3 | — | — | — | (132.9) | 9,001.4 | ||||||||||||||||||||||||||||||||
| Residential land and lots — developed and under development | 8,992.3 | — | 1,760.8 | — | (131.2) | 10,621.9 | ||||||||||||||||||||||||||||||||
| Land held for development | 20.5 | — | 29.5 | — | — | 50.0 | ||||||||||||||||||||||||||||||||
| Land held for sale | 8.7 | — | — | — | — | 8.7 | ||||||||||||||||||||||||||||||||
| Rental properties | — | 2,708.4 | — | — | (17.1) | 2,691.3 | ||||||||||||||||||||||||||||||||
| 18,155.8 | 2,708.4 | 1,790.3 | — | (281.2) | 22,373.3 | |||||||||||||||||||||||||||||||||
| Mortgage loans held for sale | — | — | — | 2,519.9 | — | 2,519.9 | ||||||||||||||||||||||||||||||||
| Deferred income taxes, net | 229.8 | (19.9) | — | — | (22.7) | 187.2 | ||||||||||||||||||||||||||||||||
| Property and equipment, net | 415.0 | 2.4 | 5.9 | 4.1 | 18.0 | 445.4 | ||||||||||||||||||||||||||||||||
| Other assets | 2,838.5 | 29.8 | 58.5 | 250.3 | (184.1) | 2,993.0 | ||||||||||||||||||||||||||||||||
| Goodwill | 134.3 | — | — | — | 29.2 | 163.5 | ||||||||||||||||||||||||||||||||
| $ | 24,700.1 | $ | 2,860.1 | $ | 2,470.7 | $ | 2,980.1 | $ | (428.6) | $ | 32,582.4 | |||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||
| Accounts payable | $ | 1,033.7 | $ | 698.6 | $ | 68.4 | $ | 0.1 | $ | (554.6) | $ | 1,246.2 | ||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 2,585.5 | 43.2 | 337.4 | 280.4 | (142.7) | 3,103.8 | ||||||||||||||||||||||||||||||||
| Notes payable | 2,329.9 | 400.0 | 695.0 | 1,669.6 | — | 5,094.5 | ||||||||||||||||||||||||||||||||
| $ | 5,949.1 | $ | 1,141.8 | $ | 1,100.8 | $ | 1,950.1 | $ | (697.3) | $ | 9,444.5 |
(1)Amounts include the balances of the Company’s other businesses and the elimination of intercompany transactions.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
| Three Months Ended June 30, 2024 | ||||||||||||||||||||||||||||||||||||||
| Homebuilding | Rental | Forestar | Financial Services | Eliminations and Other (1) | Consolidated | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||||||
| Home sales | $ | 9,231.2 | $ | — | $ | — | $ | — | $ | — | $ | 9,231.2 | ||||||||||||||||||||||||||
| Land/lot sales and other | 10.3 | — | 318.4 | — | (250.2) | 78.5 | ||||||||||||||||||||||||||||||||
| Rental property sales | — | 413.7 | — | — | — | 413.7 | ||||||||||||||||||||||||||||||||
| Financial services | — | — | — | 242.3 | — | 242.3 | ||||||||||||||||||||||||||||||||
| 9,241.5 | 413.7 | 318.4 | 242.3 | (250.2) | 9,965.7 | |||||||||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||||||||
| Home sales (2) | 7,017.3 | — | — | — | (72.5) | 6,944.8 | ||||||||||||||||||||||||||||||||
| Land/lot sales and other | 5.6 | — | 246.2 | — | (201.1) | 50.7 | ||||||||||||||||||||||||||||||||
| Rental property sales | — | 319.3 | — | — | (5.9) | 313.4 | ||||||||||||||||||||||||||||||||
| Inventory and land option charges | 12.6 | 1.5 | 0.7 | — | — | 14.8 | ||||||||||||||||||||||||||||||||
| 7,035.5 | 320.8 | 246.9 | — | (279.5) | 7,323.7 | |||||||||||||||||||||||||||||||||
| Selling, general and administrative expense | 656.5 | 55.0 | 29.3 | 178.0 | 4.8 | 923.6 | ||||||||||||||||||||||||||||||||
| Other (income) expense | (22.7) | (26.3) | (9.4) | (27.0) | 4.8 | (80.6) | ||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 1,572.2 | $ | 64.2 | $ | 51.6 | $ | 91.3 | $ | 19.7 | $ | 1,799.0 | ||||||||||||||||||||||||||
(1)Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.
(2)Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
| Nine Months Ended June 30, 2024 | ||||||||||||||||||||||||||||||||||||||
| Homebuilding | Rental | Forestar | Financial Services | Eliminations and Other (1) | Consolidated | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||||||
| Home sales | $ | 24,974.2 | $ | — | $ | — | $ | — | $ | — | $ | 24,974.2 | ||||||||||||||||||||||||||
| Land/lot sales and other | 37.6 | — | 958.0 | — | (811.7) | 183.9 | ||||||||||||||||||||||||||||||||
| Rental property sales | — | 980.2 | — | — | — | 980.2 | ||||||||||||||||||||||||||||||||
| Financial services | — | — | — | 660.5 | — | 660.5 | ||||||||||||||||||||||||||||||||
| 25,011.8 | 980.2 | 958.0 | 660.5 | (811.7) | 26,798.8 | |||||||||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||||||||
| Home sales (2) | 19,130.8 | — | — | — | (195.0) | 18,935.8 | ||||||||||||||||||||||||||||||||
| Land/lot sales and other | 23.0 | — | 729.6 | — | (657.8) | 94.8 | ||||||||||||||||||||||||||||||||
| Rental property sales | — | 763.4 | — | — | (10.7) | 752.7 | ||||||||||||||||||||||||||||||||
| Inventory and land option charges | 31.2 | 2.2 | 1.0 | — | — | 34.4 | ||||||||||||||||||||||||||||||||
| 19,185.0 | 765.6 | 730.6 | — | (863.5) | 19,817.7 | |||||||||||||||||||||||||||||||||
| Selling, general and administrative expense | 1,874.1 | 163.8 | 86.5 | 500.6 | 14.2 | 2,639.2 | ||||||||||||||||||||||||||||||||
| Other (income) expense | (73.2) | (78.0) | (20.7) | (75.4) | 14.2 | (233.1) | ||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 4,025.9 | $ | 128.8 | $ | 161.6 | $ | 235.3 | $ | 23.4 | $ | 4,575.0 | ||||||||||||||||||||||||||
| Summary Cash Flow Information | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | $ | 57.6 | $ | 1.9 | $ | 2.3 | $ | 1.4 | $ | 0.3 | $ | 63.5 | ||||||||||||||||||||||||||
| Cash provided by (used in) operating activities | $ | 971.9 | $ | (656.8) | $ | (277.6) | $ | 156.9 | $ | 33.8 | $ | 228.2 |
(1)Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.
(2)Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
| Three Months Ended June 30, 2023 | ||||||||||||||||||||||||||||||||||||||
| Homebuilding | Rental | Forestar | Financial Services | Eliminations and Other (1) | Consolidated | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||||||
| Home sales | $ | 8,703.1 | $ | — | $ | — | $ | — | $ | — | $ | 8,703.1 | ||||||||||||||||||||||||||
| Land/lot sales and other | 30.5 | — | 368.9 | — | (272.5) | 126.9 | ||||||||||||||||||||||||||||||||
| Rental property sales | — | 667.1 | — | — | — | 667.1 | ||||||||||||||||||||||||||||||||
| Financial services | — | — | — | 228.5 | — | 228.5 | ||||||||||||||||||||||||||||||||
| 8,733.6 | 667.1 | 368.9 | 228.5 | (272.5) | 9,725.6 | |||||||||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||||||||
| Home sales (2) | 6,675.6 | — | — | — | (69.6) | 6,606.0 | ||||||||||||||||||||||||||||||||
| Land/lot sales and other | 26.1 | — | 283.0 | — | (238.2) | 70.9 | ||||||||||||||||||||||||||||||||
| Rental property sales | — | 458.0 | — | — | (3.9) | 454.1 | ||||||||||||||||||||||||||||||||
| Inventory and land option charges | 9.0 | 0.9 | 0.9 | — | — | 10.8 | ||||||||||||||||||||||||||||||||
| 6,710.7 | 458.9 | 283.9 | — | (311.7) | 7,141.8 | |||||||||||||||||||||||||||||||||
| Selling, general and administrative expense | 584.9 | 80.0 | 26.4 | 154.7 | 6.1 | 852.1 | ||||||||||||||||||||||||||||||||
| Other (income) expense | (26.4) | (33.9) | (3.8) | (20.3) | 32.2 | (52.2) | ||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 1,464.4 | $ | 162.1 | $ | 62.4 | $ | 94.1 | $ | 0.9 | $ | 1,783.9 | ||||||||||||||||||||||||||
(1)Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.
(2)Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
| Nine Months Ended June 30, 2023 | ||||||||||||||||||||||||||||||||||||||
| Homebuilding | Rental | Forestar | Financial Services | Eliminations and Other (1) | Consolidated | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||||||
| Home sales | $ | 22,862.0 | $ | — | $ | — | $ | — | $ | — | $ | 22,862.0 | ||||||||||||||||||||||||||
| Land/lot sales and other | 85.2 | — | 887.1 | — | (678.5) | 293.8 | ||||||||||||||||||||||||||||||||
| Rental property sales | — | 1,218.6 | — | — | — | 1,218.6 | ||||||||||||||||||||||||||||||||
| Financial services | — | — | — | 582.0 | — | 582.0 | ||||||||||||||||||||||||||||||||
| 22,947.2 | 1,218.6 | 887.1 | 582.0 | (678.5) | 24,956.4 | |||||||||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||||||||
| Home sales (2) | 17,625.3 | — | — | — | (180.4) | 17,444.9 | ||||||||||||||||||||||||||||||||
| Land/lot sales and other | 44.4 | — | 675.1 | — | (590.1) | 129.4 | ||||||||||||||||||||||||||||||||
| Rental property sales | — | 799.2 | — | — | (6.4) | 792.8 | ||||||||||||||||||||||||||||||||
| Inventory and land option charges | 47.4 | 2.3 | 23.6 | — | (11.1) | 62.2 | ||||||||||||||||||||||||||||||||
| 17,717.1 | 801.5 | 698.7 | — | (788.0) | 18,429.3 | |||||||||||||||||||||||||||||||||
| Selling, general and administrative expense | 1,657.5 | 181.0 | 71.3 | 435.7 | 17.1 | 2,362.6 | ||||||||||||||||||||||||||||||||
| Other (income) expense | (54.1) | (70.9) | (9.1) | (51.6) | 53.8 | (131.9) | ||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 3,626.7 | $ | 307.0 | $ | 126.2 | $ | 197.9 | $ | 38.6 | $ | 4,296.4 | ||||||||||||||||||||||||||
| Summary Cash Flow Information | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | $ | 47.1 | $ | 1.7 | $ | 2.2 | $ | 1.6 | $ | 17.6 | $ | 70.2 | ||||||||||||||||||||||||||
| Cash provided by (used in) operating activities | $ | 2,133.1 | $ | (78.1) | $ | 136.1 | $ | 13.9 | $ | 56.1 | $ | 2,261.1 |
(1)Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.
(2)Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
| Homebuilding Inventories by Reporting Segment (1) | June 30, 2024 | September 30, 2023 | ||||||||||||
| (In millions) | ||||||||||||||
| Northwest | $ | 1,975.8 | $ | 1,907.5 | ||||||||||
| Southwest | 3,316.0 | 3,133.0 | ||||||||||||
| South Central | 4,135.1 | 3,810.5 | ||||||||||||
| Southeast | 4,504.9 | 3,958.5 | ||||||||||||
| East | 3,823.6 | 3,024.7 | ||||||||||||
| North | 2,484.5 | 2,078.0 | ||||||||||||
| Corporate and unallocated (2) | 264.3 | 243.6 | ||||||||||||
| $ | 20,504.2 | $ | 18,155.8 |
(1)Homebuilding inventories are the only assets included in the measure of homebuilding segment assets used by the Company’s chief operating decision makers.
(2)Corporate and unallocated consists primarily of homebuilding capitalized interest and property taxes.
| Homebuilding Results by Reporting Segment | Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||
| Northwest | $ | 725.0 | $ | 661.1 | $ | 2,045.0 | $ | 1,872.6 | ||||||||||||||||||
| Southwest | 1,313.7 | 1,134.3 | 3,648.5 | 2,858.3 | ||||||||||||||||||||||
| South Central | 2,013.0 | 2,175.0 | 5,643.3 | 5,622.8 | ||||||||||||||||||||||
| Southeast | 2,417.2 | 2,384.5 | 6,602.6 | 6,486.9 | ||||||||||||||||||||||
| East | 1,709.6 | 1,464.4 | 4,419.7 | 3,815.2 | ||||||||||||||||||||||
| North | 1,063.0 | 914.3 | 2,652.7 | 2,291.4 | ||||||||||||||||||||||
| $ | 9,241.5 | $ | 8,733.6 | $ | 25,011.8 | $ | 22,947.2 | |||||||||||||||||||
| Income before Income Taxes | ||||||||||||||||||||||||||
| Northwest | $ | 121.2 | $ | 105.6 | $ | 300.0 | $ | 260.6 | ||||||||||||||||||
| Southwest | 209.4 | 131.2 | 515.3 | 296.9 | ||||||||||||||||||||||
| South Central | 368.7 | 407.2 | 986.9 | 956.8 | ||||||||||||||||||||||
| Southeast | 404.1 | 459.8 | 1,095.0 | 1,252.8 | ||||||||||||||||||||||
| East | 314.9 | 262.0 | 774.0 | 634.9 | ||||||||||||||||||||||
| North | 153.9 | 98.6 | 354.7 | 224.7 | ||||||||||||||||||||||
| $ | 1,572.2 | $ | 1,464.4 | $ | 4,025.9 | $ | 3,626.7 |
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
NOTE C – INVENTORIES
At the end of each quarter, the Company reviews the performance and outlook for all of its communities and land inventories for indicators of potential impairment and performs detailed impairment evaluations and analyses when necessary. As of June 30, 2024, the Company determined that no communities were impaired, and no impairment charges were recorded during the three months ended June 30, 2024. During the nine months ended June 30, 2024, impairment charges totaled $5.6 million. There were no impairment charges recorded in the prior year quarter and $14.0 million of impairment charges recorded in the nine months ended June 30, 2023.
During the three and nine months ended June 30, 2024, earnest money and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $14.8 million and $28.8 million, respectively, compared to $10.8 million and $48.2 million in the prior year periods. Inventory impairments and land option charges are included in cost of sales in the consolidated statements of operations.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
NOTE D – NOTES PAYABLE
The Company’s notes payable at their carrying amounts consist of the following:
| June 30, 2024 | September 30, 2023 | |||||||||||||
| (In millions) | ||||||||||||||
| Homebuilding | ||||||||||||||
| Unsecured: | ||||||||||||||
| Revolving credit facility | $ | — | $ | — | ||||||||||
| 2.5% senior notes due 2024 (1) | 499.7 | 499.0 | ||||||||||||
| 2.6% senior notes due 2025 (1) | 498.8 | 498.0 | ||||||||||||
| 1.3% senior notes due 2026 (1) | 597.4 | 596.6 | ||||||||||||
| 1.4% senior notes due 2027 (1) | 497.2 | 496.5 | ||||||||||||
| Secured notes | 164.7 | 239.8 | ||||||||||||
| 2,257.8 | 2,329.9 | |||||||||||||
| Rental | ||||||||||||||
| Unsecured revolving credit facility | 1,030.0 | 400.0 | ||||||||||||
| Secured notes | 5.7 | — | ||||||||||||
| 1,035.7 | 400.0 | |||||||||||||
| Forestar | ||||||||||||||
| Unsecured: | ||||||||||||||
| Revolving credit facility | — | — | ||||||||||||
| 3.85% senior notes due 2026 (2) | 398.2 | 397.4 | ||||||||||||
| 5.0% senior notes due 2028 (2) | 298.0 | 297.6 | ||||||||||||
| Secured notes | 9.9 | — | ||||||||||||
| 706.1 | 695.0 | |||||||||||||
| Financial Services | ||||||||||||||
| Mortgage repurchase facilities: | ||||||||||||||
| Committed facility | 1,194.5 | 1,373.3 | ||||||||||||
| Uncommitted facility | 496.9 | 296.3 | ||||||||||||
| 1,691.4 | 1,669.6 | |||||||||||||
| Total notes payable (3) | $ | 5,691.0 | $ | 5,094.5 |
(1)Debt issuance costs that were deducted from the carrying amounts of the homebuilding senior notes totaled $5.9 million and $8.4 million at June 30, 2024 and September 30, 2023, respectively.
(2)Debt issuance costs that were deducted from the carrying amount of Forestar’s senior notes totaled $3.8 million and $5.0 million at June 30, 2024 and September 30, 2023, respectively.
(3)The fair value of notes payable at June 30, 2024 totaled $5.5 billion, of which $2.6 billion were measured using Level 2 inputs and $2.9 billion were measured using Level 3 inputs. The fair value of notes payable at September 30, 2023 totaled $4.8 billion, of which $2.5 billion were measured using Level 2 inputs and $2.3 billion were measured using Level 3 inputs.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
Homebuilding
The Company has 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. 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 June 30, 2024, there were no borrowings outstanding and $217.3 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $1.97 billion.
The Company’s homebuilding revolving credit facility imposes restrictions on its operations and activities, including requiring the maintenance of a maximum allowable leverage ratio and a borrowing base restriction if the leverage ratio exceeds a certain level. 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. The credit agreement governing the facility and the indentures governing the senior notes also impose restrictions on the creation of secured debt and liens. At June 30, 2024, the Company was in compliance with all of the covenants, limitations and restrictions of its homebuilding revolving credit facility and public debt obligations.
The Company’s homebuilding revolving credit facility and homebuilding senior notes are guaranteed by D.R. Horton, Inc.’s significant wholly-owned homebuilding subsidiaries.
D.R. Horton has an automatically effective universal shelf registration statement filed with the Securities and Exchange Commission (SEC) in July 2021, registering debt and equity securities that the Company may issue from time to time in amounts to be determined.
In July 2024, the Board of Directors authorized the repurchase of up to $500 million of the Company’s debt securities, with no expiration date. This authorization replaced the previous authorization, under which no debt securities were repurchased.
Rental
The Company’s rental subsidiary, DRH Rental, has a $1.05 billion senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $2.0 billion, subject to certain conditions and availability of additional bank commitments. Availability under the rental revolving credit facility is subject to a borrowing base calculation based on the book value of DRH Rental’s real estate assets and unrestricted cash. 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. The maturity date of the facility is October 10, 2027. Borrowings and repayments under the facility totaled $1.27 billion and $640 million, respectively, during the nine months ended June 30, 2024. At June 30, 2024, there were $1.03 billion of borrowings outstanding at a 7.4% annual interest rate and no letters of credit issued under the facility, resulting in available capacity of $20 million.
The rental revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require DRH Rental to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. 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, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
The rental revolving credit facility is guaranteed by DRH Rental’s wholly-owned subsidiaries that are not immaterial subsidiaries or have not been designated as unrestricted subsidiaries. The rental revolving credit facility is not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, Forestar or financial services operations.
Forestar
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. 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. Borrowings under the revolving credit facility are subject to a borrowing base calculation based on the book value of Forestar’s real estate assets and unrestricted cash. 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 Forestar revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require Forestar to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. 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, 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 or have not been designated as unrestricted subsidiaries. They are not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, rental or financial services operations.
In April 2020, Forestar’s Board of Directors authorized the repurchase of up to $30 million of Forestar’s debt securities. The authorization has no expiration date. All of the $30 million authorization was remaining at June 30, 2024.
Financial Services
The Company’s mortgage subsidiary, DHI Mortgage, has two mortgage repurchase facilities, one of which is committed and the other of which is uncommitted, that provide financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to counterparties upon receipt of funds from the counterparties. DHI Mortgage then has the right and obligation to repurchase the purchased loans upon their sale to third-party purchasers in the secondary market or within specified time frames in accordance with the terms of the mortgage repurchase facilities.
In February 2024, the committed mortgage repurchase facility was amended to reduce its capacity to $1.6 billion and extend its maturity date to February 13, 2025. The capacity of the facility can be increased to $2.0 billion subject to the availability of additional commitments. At June 30, 2024, DHI Mortgage had an obligation of $1.2 billion under the committed mortgage repurchase facility at a 7.0% annual interest rate.
At June 30, 2024, the uncommitted mortgage repurchase facility had a borrowing capacity of $500 million, of which DHI Mortgage had an obligation of $496.9 million at a 6.5% annual interest rate.
At June 30, 2024, $1.95 billion of mortgage loans held for sale with a collateral value of $1.91 billion were pledged under the committed mortgage repurchase facility, and $532.6 million of mortgage loans held for sale with a collateral value of $511.0 million were pledged under the uncommitted mortgage repurchase facility.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
The facilities contain financial covenants as to the mortgage subsidiary’s minimum required tangible net worth, its maximum allowable indebtedness to tangible net worth ratio and its minimum required liquidity. At June 30, 2024, 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. Horton, Inc. or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, rental or Forestar operations.
NOTE E – CAPITALIZED INTEREST
The Company capitalizes interest costs incurred to inventory during active development and construction (active inventory). Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. During periods in which the Company’s active inventory is lower than its debt level, a portion of the interest incurred is reflected as interest expense in the period incurred. During the first nine months of fiscal 2024 and fiscal 2023, the Company’s active inventory exceeded its debt level, and all interest incurred was capitalized to inventory.
The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three and nine months ended June 30, 2024 and 2023:
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Capitalized interest, beginning of period | $ | 318.7 | $ | 271.7 | $ | 286.4 | $ | 237.4 | ||||||||||||||||||
| Interest incurred (1) | 54.5 | 57.4 | 147.6 | 154.2 | ||||||||||||||||||||||
| Interest charged to cost of sales | (35.3) | (41.3) | (96.1) | (103.8) | ||||||||||||||||||||||
| Capitalized interest, end of period | $ | 337.9 | $ | 287.8 | $ | 337.9 | $ | 287.8 |
(1) Interest incurred includes (a) interest on the Company’s mortgage repurchase facilities of $16.0 million and $44.3 million in the three and nine months ended June 30, 2024, respectively, and $12.7 million and $30.5 million in the prior year periods; (b) Forestar interest of $8.2 million and $24.5 million in the three and nine months ended June 30, 2024, respectively, and $8.2 million and $24.6 million in the prior year periods; and (c) interest on the rental revolving credit facility of $18.8 million and $44.6 million in the three and nine months ended June 30, 2024, respectively, and $19.3 million and $42.0 million in the prior year periods.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
NOTE F – MORTGAGE LOANS
Mortgage loans held for sale consist primarily of single-family residential loans collateralized by the underlying property. The Company typically sells the servicing rights for the majority of loans when the loans are sold. Servicing rights retained are typically sold within six months of loan origination. At June 30, 2024, mortgage loans held for sale of $2.6 billion had an aggregate outstanding principal balance of $2.6 billion. At September 30, 2023, mortgage loans held for sale of $2.5 billion had an aggregate outstanding principal balance of $2.6 billion. Mortgage loans held for sale at both dates were primarily composed of mortgage loans measured at fair value on a recurring basis using Level 2 inputs.
During the nine months ended June 30, 2024 and 2023, mortgage loans originated totaled $17.7 billion and $15.3 billion, respectively, and mortgage loans sold totaled $17.7 billion and $15.3 billion, respectively. The Company had gains on sales of loans and servicing rights of $162.6 million and $444.0 million during the three and nine months ended June 30, 2024, respectively, compared to $157.9 million and $391.6 million in the prior year periods. Net gains on sales of loans and servicing rights are included in revenues in the consolidated statements of operations. During the nine months ended June 30, 2024, approximately 73% of the Company’s mortgage loans were sold directly to the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or into securities backed by the Government National Mortgage Association (Ginnie Mae), and 26% were sold to one other major financial entity.
The Company also uses hedging instruments as part of a program to offer below market interest rate financing to its homebuyers. At June 30, 2024 and September 30, 2023, the Company had mortgage-backed securities (MBS) totaling $748.4 million and $1.1 billion, respectively, that did not yet have interest rate lock commitments (IRLCs) or closed loans created or assigned. The Company recorded an asset of $4.8 million and $15.7 million at June 30, 2024 and September 30, 2023, respectively, for the fair value of such MBS position, which is measured using Level 2 inputs.
The Company is party to IRLCs, which are extended to borrowers who have applied for loan funding and meet defined credit and underwriting criteria. At June 30, 2024 and September 30, 2023, the notional amount of IRLCs, which are accounted for as derivative instruments recorded at fair value using Level 3 inputs, totaled $2.9 billion and $2.7 billion, respectively.
NOTE G – INCOME TAXES
The Company’s income tax expense was $432.2 million for each of the three month periods ended June 30, 2024 and 2023 and $1.1 billion and $1.0 billion in the nine months ended June 30, 2024 and 2023, respectively. The effective tax rate was 24.0% and 23.4% for the three and nine months ended June 30, 2024, respectively, compared to 24.2% and 23.9% in the prior year periods. The effective tax rates for all periods include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient homes tax credits.
The Company’s deferred tax assets, net of deferred tax liabilities, were $171.3 million at June 30, 2024 compared to $202.0 million at September 30, 2023. The Company had a valuation allowance of $14.7 million and $14.8 million at June 30, 2024 and September 30, 2023, respectively, related to deferred tax assets for state net operating loss (NOL) and tax credit carryforwards that are expected to expire before being realized. The Company will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to the remaining state NOL and tax credit carryforwards. Any reversal of the valuation allowance in future periods will impact the Company’s effective tax rate.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
NOTE H – EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share.
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||
| Net income attributable to D.R. Horton, Inc. | $ | 1,353.6 | $ | 1,335.1 | $ | 3,473.0 | $ | 3,236.0 | ||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||
| Denominator for basic earnings per share — weighted average common shares | 328.4 | 339.9 | 330.9 | 342.1 | ||||||||||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||||
| Employee stock awards | 1.7 | 2.4 | 2.1 | 2.6 | ||||||||||||||||||||||
| Denominator for diluted earnings per share — adjusted weighted average common shares | 330.1 | 342.3 | 333.0 | 344.7 | ||||||||||||||||||||||
| Basic net income per common share attributable to D.R. Horton, Inc. | $ | 4.12 | $ | 3.93 | $ | 10.50 | $ | 9.46 | ||||||||||||||||||
| Diluted net income per common share attributable to D.R. Horton, Inc. | $ | 4.10 | $ | 3.90 | $ | 10.43 | $ | 9.39 |
NOTE I – STOCKHOLDERS’ EQUITY
D.R. Horton has an automatically effective universal shelf registration statement, filed with the SEC in July 2021, registering debt and equity securities that it may issue from time to time in amounts to be determined.
Effective October 31, 2023, the Board of Directors authorized the repurchase of up to $1.5 billion of the Company’s common stock, replacing the previous authorization that was effective as of April 18, 2023. During the nine months ended June 30, 2024, the Company repurchased 9.0 million shares of its common stock at a total cost, including commissions and excise taxes, of $1.2 billion, of which $201.6 million was repurchased under the previous authorization. At June 30, 2024, there was $459.7 million remaining on the repurchase authorization. In July 2024, the Board of Directors authorized the repurchase of up to $4.0 billion of the Company’s common stock, replacing the previous authorization, which at that time had $261.9 million remaining due to repurchases made subsequent to quarter end. The authorization has no expiration date.
During each of the first three quarters of fiscal 2024, the Board of Directors approved a quarterly cash dividend of $0.30 per common share, the most recent of which was paid on May 9, 2024 to stockholders of record on May 2, 2024. In July 2024, the Board of Directors approved a quarterly cash dividend of $0.30 per common share, payable on August 8, 2024 to stockholders of record on August 1, 2024. Cash dividends declared and paid in the three and nine months ended June 30, 2024 totaled $98.5 million and $297.5 million, respectively.
Forestar has an effective shelf registration statement, filed with the SEC in October 2021, registering $750 million of equity securities, of which $300 million was reserved for sales under its at-the-market equity offering (ATM) program that became effective in November 2021. During the nine months ended June 30, 2024, Forestar issued 546,174 shares of common stock under its ATM 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 Forestar’s shelf registration statement, of which $278.1 million was reserved for sales under its ATM program.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
NOTE J – EMPLOYEE BENEFIT PLANS
Stock-Based Compensation
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 (RSU) 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 dividend or voting rights until vested.
In October 2023, the Company granted 277,779 performance-based RSUs to its executive officers. This grant was subsequently modified in December 2023 to change the performance criteria to total shareholder return, return on assets and operating margin. The number of units that ultimately vest depends on the Company’s relative position as compared to its peers in achieving each of the performance criteria and can range from 0% to 200% of the number of units granted. These awards vest at the end of a three-year performance period ending September 30, 2026. The grant date fair value of these equity awards was $146.72 per unit. Compensation expense related to this grant was $3.4 million and $10.2 million in the three and nine months ended June 30, 2024, respectively, based on an estimate of the Company’s performance against its peer group, the elapsed portion of the performance period and the grant date fair value of the award.
During the nine months ended June 30, 2024, the Company granted approximately 660,000 time-based RSUs to approximately 1,460 recipients, including executive officers, other key employees and non-management directors. The weighted average grant date fair value of these equity awards was $147.58 per unit, and they vest annually in equal installments over periods of three to five years. Compensation expense related to these grants was $4.7 million and $22.0 million in the three and nine months ended June 30, 2024, respectively. Compensation expense in the nine month period included $16.4 million of expense recognized for employees that were retirement eligible on the date of grant.
Total stock-based compensation expense related to the Company’s performance-based and time-based RSUs was $25.0 million and $84.4 million during the three and nine months ended June 30, 2024, respectively, compared to $26.3 million and $73.4 million during the three and nine months ended June 30, 2023.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
NOTE K – COMMITMENTS AND CONTINGENCIES
Warranty Claims
The Company provides its 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. The Company’s warranty liability is based upon historical warranty cost experience in each market in which it operates.
Changes in the Company’s warranty liability during the three and 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 | |||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Warranty liability, beginning of period | $ | 544.6 | $ | 474.7 | $ | 512.4 | $ | 454.3 | ||||||||||||||||||
| Warranties issued | 58.1 | 52.6 | 156.6 | 136.5 | ||||||||||||||||||||||
| Changes in liability for pre-existing warranties | (4.9) | (1.7) | (12.5) | (4.5) | ||||||||||||||||||||||
| Settlements made | (30.2) | (32.2) | (88.9) | (92.9) | ||||||||||||||||||||||
| Warranty liability, end of period | $ | 567.6 | $ | 493.4 | $ | 567.6 | $ | 493.4 |
Legal Claims and Insurance
The Company is named as a defendant in various claims, complaints and other legal actions in the ordinary course of business. At any point in time, the Company is managing several hundred individual claims related to construction defect matters, personal injury claims, employment matters, land development issues, contract disputes and other matters. The Company has established reserves for these contingencies based on the estimated costs of pending claims and the estimated costs of anticipated future claims related to previously closed homes. The estimated liabilities for these contingencies were $911.1 million and $858.9 million at June 30, 2024 and September 30, 2023, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets. Approximately 97% of these reserves related to construction defect matters at both June 30, 2024 and September 30, 2023. Expenses related to the Company’s legal contingencies were $107.9 million and $92.6 million in the nine months ended June 30, 2024 and 2023, respectively.
Changes in the Company’s legal claims reserves during the nine months ended June 30, 2024 and 2023 were as follows:
| Nine Months Ended June 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| (In millions) | |||||||||||
| Reserves for legal claims, beginning of period | $ | 858.9 | $ | 729.1 | |||||||
| Increase in reserves | 112.1 | 101.8 | |||||||||
| Payments | (59.9) | (34.7) | |||||||||
| Reserves for legal claims, end of period | $ | 911.1 | $ | 796.2 |
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
The Company estimates and records receivables under its applicable insurance policies related to its estimated contingencies for known claims and anticipated future construction defect claims on previously closed homes and other legal claims and lawsuits incurred in the ordinary course of business when recovery is probable. However, because the self-insured retentions under these policies are significant, and the limits of the policies are finite, the Company anticipates it may be in large part self-insured. Since June 1, 2021, except for contractual risk transfer, the Company is almost exclusively self-insured for construction defect exposures. The Company’s estimated insurance receivables from estimated losses for pending legal claims and anticipated future claims related to previously closed homes totaled $158.6 million, $165.8 million and $139.0 million at June 30, 2024, September 30, 2023 and June 30, 2023, respectively, and are included in other assets in the consolidated balance sheets. The Company also contractually requires major subcontractors in most markets to have general liability insurance, which includes construction defect coverage.
The estimation of losses related to these reserves and the related estimates of recoveries from insurance policies are subject to a high degree of variability due to uncertainties such as trends in construction defect claims relative to the Company’s markets and the types of products built, claim frequency, claim settlement costs and patterns, insurance industry practices and legal interpretations, among others. Due to the high degree of judgment required in establishing reserves for these contingencies, actual future costs and recoveries from insurance could differ significantly from current estimated amounts, and it is not possible for the Company to make a reasonable estimate of the possible loss or range of loss in excess of its reserves.
Land and Lot Purchase Contracts
The Company enters into land and lot purchase contracts to acquire land or lots for the construction of homes. Under these contracts, the Company will fund a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time with predetermined terms. Under the terms of many of the purchase contracts, the deposits are not refundable in the event the Company elects to terminate the contract. Land purchase contract deposits and capitalized pre-acquisition costs are expensed to inventory and land option charges when the Company believes it is probable that it will not acquire the property under contract and will not be able to recover these costs through other means.
At June 30, 2024, the Company had total deposits of $2.1 billion, consisting of cash deposits of $1.9 billion and promissory notes and surety bonds of $144.8 million, related to contracts to purchase land and lots with a total remaining purchase price of approximately $24.5 billion. Of these amounts, $181.1 million of the deposits related to contracts with Forestar to purchase land and lots with a remaining purchase price of $1.8 billion. A limited number of the homebuilding land and lot purchase contracts at June 30, 2024, representing $273.5 million of remaining purchase price, were subject to specific performance provisions that may require the Company to purchase the land or lots upon the land sellers meeting their respective contractual obligations. Of the $273.5 million remaining purchase price subject to specific performance provisions, $243.9 million related to contracts between the homebuilding segment and Forestar.
During the three and nine months ended June 30, 2024, Forestar reimbursed the homebuilding segment $4.0 million and $22.7 million, respectively, for previously paid earnest money and $4.4 million and $15.1 million, respectively, for pre-acquisition and other due diligence costs related to land purchase contracts whereby the homebuilding segment assigned its rights under contract to Forestar. During the three and nine months ended June 30, 2023, Forestar reimbursed the homebuilding segment $6.7 million and $17.1 million, respectively, for such pre-acquisition and due diligence costs.
Other Commitments
At June 30, 2024, the Company had outstanding surety bonds of $3.4 billion and letters of credit of $242.1 million to secure performance under various contracts. Of the total letters of credit, $217.3 million were issued under the homebuilding revolving credit facility and $24.8 million were issued under Forestar’s revolving credit facility.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
NOTE L – 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 | |||||||||||||
| (In millions) | ||||||||||||||
| Earnest money and refundable deposits | $ | 2,108.5 | $ | 1,859.6 | ||||||||||
| Mortgage hedging instruments and commitments | 10.1 | 153.6 | ||||||||||||
| Water rights and other water-related assets | 320.9 | 319.6 | ||||||||||||
| Margin deposits related to hedging instruments | 36.8 | — | ||||||||||||
| Other receivables | 161.5 | 167.2 | ||||||||||||
| Insurance receivables | 158.6 | 165.8 | ||||||||||||
| Prepaid assets | 96.3 | 93.0 | ||||||||||||
| Contract assets - insurance agency commissions | 110.9 | 93.9 | ||||||||||||
| Interest rate lock commitments | 39.9 | 2.3 | ||||||||||||
| Lease right of use assets | 50.4 | 46.6 | ||||||||||||
| Mortgage servicing rights | 5.0 | 11.1 | ||||||||||||
| Other | 76.6 | 80.3 | ||||||||||||
| $ | 3,175.5 | $ | 2,993.0 |
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 | |||||||||||||
| (In millions) | ||||||||||||||
| Reserves for legal claims | $ | 911.1 | $ | 858.9 | ||||||||||
| Employee compensation and related liabilities | 525.3 | 531.0 | ||||||||||||
| Warranty liability | 567.6 | 512.4 | ||||||||||||
| Inventory related accruals | 403.9 | 353.6 | ||||||||||||
| Broker deposits related to hedging instruments | — | 118.9 | ||||||||||||
| Customer deposits | 136.8 | 147.1 | ||||||||||||
| Interest rate lock commitments | 0.1 | 33.9 | ||||||||||||
| Federal and state income tax liabilities | 64.2 | 233.8 | ||||||||||||
| Accrued property taxes | 56.2 | 69.2 | ||||||||||||
| Lease liabilities | 51.2 | 48.1 | ||||||||||||
| Accrued interest | 21.4 | 33.6 | ||||||||||||
| Mortgage hedging instruments and commitments | 20.5 | 15.7 | ||||||||||||
| Other | 138.7 | 147.6 | ||||||||||||
| $ | 2,897.0 | $ | 3,103.8 |
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