Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in this quarterly report and with our annual report on Form 10-K for the fiscal year ended September 30, 2023. Some of the information contained in this discussion and analysis constitutes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those described in the “Forward-Looking Statements” section following this discussion.

BUSINESS

D.R. Horton, Inc. is the largest homebuilding company in the United States as measured by number of homes closed. We construct and sell homes through our operating divisions in 121 markets across 33 states. Our common stock is included in the S&P 500 Index and listed on the New York Stock Exchange under the ticker symbol “DHI.” Unless the context otherwise requires, the terms “D.R. Horton,” the “Company,” “we” and “our” used herein refer to D.R. Horton, Inc., a Delaware corporation, and its predecessors and subsidiaries.

Our business operations consist of homebuilding, rental, a majority-owned residential lot development company, financial services and other activities. Our homebuilding operations are our core business and primarily include the construction and sale of single-family homes with sales prices generally ranging from $200,000 to more than $1,000,000, with an average closing price of $378,200 during the nine months ended June 30, 2024. Approximately 88% of our home sales revenue in the nine months ended June 30, 2024 was generated from the sale of single-family detached homes, with the remainder from the sale of attached homes, such as townhomes, duplexes and triplexes.

We have closed more than one million homes during our 45-year history, and we have been the largest volume homebuilder in the United States every year since 2002. Our product offerings include a broad range of homes for entry-level, move-up, active adult and luxury buyers.

At June 30, 2024, we owned 62% of the outstanding shares of Forestar Group Inc. (Forestar), a publicly traded residential lot development company listed on the New York Stock Exchange under the ticker symbol “FOR.” Forestar operates across many of our homebuilding operating markets and is a key part of our homebuilding strategy to maintain relationships with land developers and to control a large portion of our land and lot position through land purchase contracts.

Our financial services operations provide mortgage financing and title agency services to homebuyers in many of our homebuilding markets. DHI Mortgage, our wholly-owned subsidiary, provides mortgage financing services primarily to our homebuyers and sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers after origination. Our wholly-owned subsidiary title companies serve as title insurance agents by providing title insurance policies, examination, underwriting and closing services primarily to our homebuilding customers.

In addition to our homebuilding, rental, Forestar and financial services operations, we engage in other business activities through our subsidiaries. We conduct insurance-related operations, own water rights and other water-related assets and own 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 as other.

OVERVIEW

During the nine months ended June 30, 2024, our number of homes closed increased 10%, and our home sales revenues increased 9% compared to the prior year period. Our consolidated revenues increased 7% to $26.8 billion in the nine months ended June 30, 2024 compared to $25.0 billion in the prior year period. Our pre-tax income was $4.6 billion in the nine months ended June 30, 2024 compared to $4.3 billion in the prior year period, and our pre-tax operating margin was 17.1% compared to 17.2%. Net income was $3.5 billion in the nine months ended June 30, 2024 compared to $3.3 billion in the prior year period, and our diluted earnings per share were $10.43 compared to $9.39.

In the trailing twelve months ended June 30, 2024, our return on equity (ROE) was 21.5% compared to 24.3% in the prior year period, and our homebuilding return on inventory (ROI) was 29.5% compared to 31.8%. ROE is calculated as net income attributable to D.R. Horton for the trailing twelve months divided by average stockholders’ equity, where average stockholders’ equity is the sum of ending stockholders’ equity balances of the trailing five quarters divided by five. Homebuilding ROI is calculated as homebuilding pre-tax income for the trailing twelve months divided by average inventory, where average inventory is the sum of ending homebuilding inventory balances for the trailing five quarters divided by five.

Although inflation and mortgage interest rates remain elevated, demand for new homes has remained solid. Our net sales orders increased 1% and 14% in the three and nine months ended June 30, 2024, respectively, from the prior year periods. We are continuing to use incentives and pricing adjustments to adapt to current market conditions. The disruptions in the supply chain for certain building materials and tightness in the labor market we experienced in recent years have largely subsided, and our average construction cycle time has returned to historical norms. Although higher interest rates and economic fluctuations may persist for some time, the supply of both new and existing homes at affordable price points remains limited, and demographics supporting housing demand remain favorable. We believe we are well-positioned to meet changing market conditions with our affordable product offerings and lot supply and will manage our home pricing, sales incentives and number of homes in inventory based on the level of homebuyer demand.

We remain focused on our relationships with land developers across the country in order to maximize our returns and capital efficiency. Within our homebuilding land and lot portfolio, our lots controlled through purchase contracts represent 76% of the lots owned and controlled at June 30, 2024 compared to 75% at both September 30, 2023 and June 30, 2023. We are prioritizing the purchase of finished lots from Forestar and other land developers, when possible. During the nine months ended June 30, 2024, 63% of the homes we closed were on lots developed by either Forestar or a third party.

We believe our strong balance sheet and liquidity provide us with the flexibility to operate effectively through changing economic conditions. We plan to generate strong cash flows from our operations and manage our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments in each of our communities based on local housing market conditions.

STRATEGY

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

Developing and retaining highly experienced and productive teams of personnel throughout our company that are aligned and focused on continuous improvement in our operational execution and financial performance.
Maintaining a significant cash balance and strong overall liquidity position while controlling our level of debt.
Allocating and actively managing our inventory investments across our operating markets to diversify our geographic risk.
Offering new home communities that appeal to a broad range of entry-level, move-up, active adult and luxury homebuyers based on consumer demand in each market.
Modifying product offerings, sales pace, home prices and incentives as necessary in each of our markets to meet consumer demand and maintain affordability.
Delivering high quality homes and a positive experience to our customers both during and after the sale.
Managing our inventory of homes under construction relative to demand in each of our markets, including starting construction on unsold homes to capture new home demand and actively controlling the number of unsold, completed homes in inventory.
Investing in lots, land and land development in desirable markets, while controlling the level of land and lots we own in each market relative to the local new home demand.
Controlling a significant portion of our land and finished lot position through purchase contracts and prioritizing the purchase of finished lots from Forestar and other land developers, when possible.
Controlling the cost of labor and goods provided by subcontractors and vendors.
Improving the efficiency of our land development, construction, sales and other key operational activities.
Controlling our selling, general and administrative (SG&A) expense infrastructure to match production levels.
Ensuring that our financial services business provides high quality mortgage and title services to homebuyers efficiently and effectively.
Investing in the construction and leasing of single-family and multi-family rental properties to meet rental demand in high growth suburban markets and selling these properties profitably.
Opportunistically evaluating potential acquisitions to enhance our operating platform.

We believe our operating strategy, which has produced positive results in recent years, will allow us to successfully operate through changing economic conditions and maintain our strong financial performance and competitive position. However, we cannot provide any assurances that the initiatives listed above will continue to be successful, and we may need to adjust parts of our strategy to meet future market conditions.

KEY RESULTS

Key financial results as of and for the three months ended June 30, 2024, as compared to the same period of 2023 unless otherwise indicated, were as follows:

Homebuilding:

Homebuilding revenues increased 6% to $9.2 billion compared to $8.7 billion.
Homes closed increased 5% to 24,155 homes, and the average closing price of those homes increased 1% to $382,200.
Net sales orders increased 1% to 23,001 homes, and the value of net sales orders was essentially flat at $8.7 billion.
Sales order backlog decreased 12% to 16,792 homes, and the value of sales order backlog also decreased 12% to $6.6 billion.
Home sales gross margin was 24.0% compared to 23.3%.
Homebuilding SG&A expense was 7.1% of homebuilding revenues compared to 6.7%.
Homebuilding pre-tax income increased 7% to $1.6 billion compared to $1.5 billion.
Homebuilding pre-tax income was 17.0% of homebuilding revenues compared to 16.8%.
Homebuilding cash and cash equivalents totaled $2.2 billion compared to $2.9 billion and $2.6 billion at September 30, 2023 and June 30, 2023, respectively.
Homebuilding inventories totaled $20.5 billion compared to $18.2 billion and $18.0 billion at September 30, 2023 and June 30, 2023, respectively.
Homes in inventory totaled 42,600 compared to 42,000 and 43,800 at September 30, 2023 and June 30, 2023, respectively.
Owned lots totaled 150,900 compared to 141,100 and 137,500 at September 30, 2023 and June 30, 2023, respectively. Lots controlled through purchase contracts totaled 479,300 compared to 427,300 and 417,600 at September 30, 2023 and June 30, 2023, respectively.
Homebuilding debt was $2.26 billion compared to $2.33 billion and $2.71 billion at September 30, 2023 and June 30, 2023, respectively.

Rental:

Rental revenues were $413.7 million compared to $667.1 million.
Rental pre-tax income was $64.2 million compared to $162.1 million.
Rental inventory totaled $3.1 billion compared to $2.7 billion and $3.3 billion at September 30, 2023 and June 30, 2023, respectively.
Single-family rental homes closed totaled 790 compared to 1,754.
Multi-family rental units closed totaled 610 compared to 230.

Forestar:

Forestar’s revenues decreased 14% to $318.4 million compared to $368.9 million. Revenues in the current and prior year quarters included $267.4 million and $293.8 million, respectively, of revenue from land and lot sales to our homebuilding segment.
Forestar’s lots sold decreased 15% to 3,255 compared to 3,812. Lots sold to D.R. Horton totaled 2,903 compared to 3,187.
Forestar’s pre-tax income was $51.6 million compared to $62.4 million.
Forestar’s pre-tax income was 16.2% of revenues compared to 16.9%.
Forestar’s cash and cash equivalents totaled $359.2 million compared to $616.0 million and $401.0 million at September 30, 2023 and June 30, 2023, respectively.
Forestar’s inventories totaled $2.2 billion compared to $1.8 billion and $1.9 billion at September 30, 2023 and June 30, 2023, respectively.
Forestar’s owned and controlled lots totaled 102,100 compared to 79,200 and 73,000 at September 30, 2023 and June 30, 2023, respectively. Of these lots, 36,200 were under contract to sell to or subject to a right of first offer with D.R. Horton compared to 31,400 and 30,500 at September 30, 2023 and June 30, 2023, respectively.
Forestar’s debt was $706.1 million compared to $695.0 million and $707.2 million at September 30, 2023 and June 30, 2023, respectively.

Financial Services:

Financial services revenues increased 6% to $242.3 million compared to $228.5 million.
Financial services pre-tax income was $91.3 million compared to $94.1 million.
Financial services pre-tax income was 37.7% of financial services revenues compared to 41.2%.

Consolidated Results:

Consolidated revenues increased 2% to $10.0 billion compared to $9.7 billion.
Consolidated pre-tax income increased 1% to $1.80 billion compared to $1.78 billion.
Consolidated pre-tax income was 18.1% of consolidated revenues compared to 18.3%.
Income tax expense was $432.2 million in both quarters, and our effective tax rate was 24.0% compared to 24.2%.
Net income attributable to D.R. Horton increased 1% to $1.35 billion compared to $1.34 billion.
Diluted net income per common share attributable to D.R. Horton increased 5% to $4.10 compared to $3.90.
Stockholders’ equity was $24.7 billion compared to $22.7 billion and $21.7 billion at September 30, 2023 and June 30, 2023, respectively.
Book value per common share increased to $75.32 compared to $67.78 and $64.03 at September 30, 2023 and June 30, 2023, respectively.
Debt to total capital was 18.8% compared to 18.3% and 22.0% at September 30, 2023 and June 30, 2023, respectively. Net debt to total capital was 9.9% compared to 5.1% and 11.2% at September 30, 2023 and June 30, 2023, respectively.

Key financial results for the nine months ended June 30, 2024, as compared to the same period of 2023, were as follows:

Homebuilding:

Homebuilding revenues increased 9% to $25.0 billion compared to $22.9 billion.
Homes closed increased 10% to 66,043 homes, while the average closing price of those homes decreased 1% to $378,200.
Net sales orders increased 14% to 67,526 homes, and the value of net sales orders increased 15% to $25.6 billion.
Home sales gross margin was 23.4% compared to 22.9%.
Homebuilding SG&A expense was 7.5% of homebuilding revenues compared to 7.2%.
Homebuilding pre-tax income increased 11% to $4.0 billion compared to $3.6 billion.
Homebuilding pre-tax income was 16.1% of homebuilding revenues compared to 15.8%.
Net cash provided by homebuilding operations was $971.9 million compared to $2.1 billion.

Rental:

Rental revenues were $980.2 million compared to $1.2 billion.
Rental pre-tax income was $128.8 million compared to $307.0 million.
Single-family rental homes closed totaled 2,278 compared to 3,169.
Multi-family rental units closed totaled 1,334 compared to 530.

Forestar:

Forestar’s revenues increased 8% to $958.0 million compared to $887.1 million. Revenues in the current and prior year periods included $851.3 million and $736.7 million, respectively, of revenue from land and lot sales to our homebuilding segment.
Forestar’s lots sold increased 7% to 9,694 compared to 9,054. Lots sold to D.R. Horton totaled 8,842 compared to 7,947.
Forestar’s pre-tax income increased 28% to $161.6 million compared to $126.2 million.
Forestar’s pre-tax income was 16.9% of revenues compared to 14.2%.

Financial Services:

Financial services revenues increased 13% to $660.5 million compared to $582.0 million.
Financial services pre-tax income increased 19% to $235.3 million compared to $197.9 million.
Financial services pre-tax income was 35.6% of financial services revenues compared to 34.0%.

Consolidated Results:

Consolidated revenues increased 7% to $26.8 billion compared to $25.0 billion.
Consolidated pre-tax income increased 6% to $4.6 billion compared to $4.3 billion.
Consolidated pre-tax income was 17.1% of consolidated revenues compared to 17.2%.
Income tax expense was $1.1 billion compared to $1.0 billion, and our effective tax rate was 23.4% compared to 23.9%.
Net income attributable to D.R. Horton increased 7% to $3.5 billion compared to $3.2 billion.
Diluted net income per common share attributable to D.R. Horton increased 11% to $10.43 compared to $9.39.
Net cash provided by operations was $228.2 million compared to $2.3 billion.

RESULTS OF OPERATIONS - HOMEBUILDING

We conduct our homebuilding operations in the geographic regions, states and markets listed below. Our homebuilding operating divisions are aggregated into six reporting segments, also referred to as reporting regions, which comprise the markets below. Our financial statements and the notes thereto contain additional information regarding segment performance.


State	Reporting Region/Market	State	Reporting Region/Market	State	Reporting Region/Market

	Northwest Region		Southeast Region		North Region
Colorado	Colorado Springs	Alabama	Baldwin County	Delaware	Northern Delaware
	Denver		Birmingham		Southern Delaware
	Fort Collins		Huntsville	Illinois	Chicago
Oregon	Bend		Mobile	Indiana	Fort Wayne
	Eugene/Springfield		Montgomery		Indianapolis
	Medford		Tuscaloosa		Northwest Indiana
	Portland/Salem	Florida	Fort Myers/Naples	Iowa	Des Moines
Utah	Salt Lake City		Gainesville		Iowa City/Cedar Rapids
	St. George		Jacksonville	Kentucky	Louisville
Washington	Central Washington		Lakeland	Maryland	Baltimore
	Kennewick/Pasco/Richland		Melbourne/Vero Beach		Eastern Maryland
	Seattle/Tacoma/Everett/Olympia		Miami/Fort Lauderdale		Suburban Washington, D.C.
	Spokane		Ocala		Western Maryland
	Vancouver		Orlando	Minnesota	Minneapolis/St. Paul
			Panama City	Nebraska	Omaha
	Southwest Region		Pensacola	New Jersey	Northern New Jersey
Arizona	Phoenix		Port St. Lucie		Southern New Jersey
	Tucson		Tallahassee	Ohio	Cincinnati/Dayton
California	Bakersfield		Tampa/Sarasota		Columbus
	Bay Area		Volusia County	Pennsylvania	Central Pennsylvania
	Fresno/Tulare	Louisiana	Baton Rouge		Philadelphia
	Los Angeles County		Lake Charles/Lafayette		Pittsburgh
	Modesto/Merced/Stockton	Mississippi	Gulf Coast	Virginia	Northern Virginia
	Redding/Chico/Yuba City		Hattiesburg		Richmond
	Riverside County		Jackson		Virginia Beach/Williamsburg
	Sacramento				Western Virginia
	San Bernardino County		East Region	West Virginia	Eastern West Virginia
Hawaii	Oahu	Georgia	Atlanta
Nevada	Las Vegas		Augusta
	Reno		Central Georgia
New Mexico	Albuquerque		Savannah
	Santa Fe		Valdosta
		North Carolina	Asheville
	South Central Region		Charlotte
Arkansas	Little Rock		Greensboro/Winston-Salem
	Northwest Arkansas		New Bern/Greenville
Oklahoma	Oklahoma City		Raleigh/Durham/Fayetteville
	Tulsa		Wilmington
Texas	Abilene	South Carolina	Charleston
	Austin		Columbia
	Beaumont		Greenville/Spartanburg
	Bryan/College Station		Hilton Head
	Corpus Christi		Myrtle Beach
	Dallas	Tennessee	Chattanooga
	East Texas		Knoxville
	Fort Worth		Memphis
	Houston		Nashville
	Killeen/Temple/Waco		Northeast Tennessee
	Lubbock
	Midland/Odessa
	New Braunfels/San Marcos
	San Antonio

The following tables and related discussion set forth key operating and financial data for our homebuilding operations by reporting segment as of and for the three and nine months ended June 30, 2024 and 2023.


	Net Sales Orders (1)
	Three Months Ended June 30,
	Net Homes Sold				Value (In millions)						Average Selling Price
	2024	2023	% Change		2024		2023		% Change		2024		2023		% Change
Northwest	1,458	1,208	21	%	$	729.5	$	647.2	13	%	$	500,300	$	535,800	(7)	%
Southwest	2,488	2,815	(12)	%	1,215.3		1,345.6		(10)	%	488,500		478,000		2	%
South Central	5,880	6,078	(3)	%	1,917.8		2,029.6		(6)	%	326,200		333,900		(2)	%
Southeast	6,089	6,021	1	%	2,165.1		2,182.9		(1)	%	355,600		362,500		(2)	%
East	4,546	4,547	—	%	1,614.6		1,615.0		—	%	355,200		355,200		—	%
North	2,540	2,210	15	%	1,073.4		899.7		19	%	422,600		407,100		4	%
	23,001	22,879	1	%	$	8,715.7	$	8,720.0	—	%	$	378,900	$	381,100	(1)	%

	Nine Months Ended June 30,
	Net Homes Sold				Value (In millions)						Average Selling Price
	2024	2023	% Change		2024		2023		% Change		2024		2023		% Change
Northwest	4,254	3,491	22	%	$	2,158.4	$	1,831.0	18	%	$	507,400	$	524,500	(3)	%
Southwest	7,719	6,064	27	%	3,762.5		2,879.8		31	%	487,400		474,900		3	%
South Central	17,733	15,905	11	%	5,759.6		5,145.2		12	%	324,800		323,500		—	%
Southeast	17,875	16,617	8	%	6,360.1		5,972.9		6	%	355,800		359,400		(1)	%
East	12,825	11,342	13	%	4,574.9		4,031.3		13	%	356,700		355,400		—	%
North	7,120	5,984	19	%	2,952.9		2,413.0		22	%	414,700		403,200		3	%
	67,526	59,403	14	%	$	25,568.4	$	22,273.2	15	%	$	378,600	$	375,000	1	%


	Sales Order Cancellations
	Three Months Ended June 30,
	Cancelled Sales Orders		Value (In millions)				Cancellation Rate (2)
	2024	2023	2024		2023		2024		2023
Northwest	223	211	$	122.0	$	115.8	13	%	15	%
Southwest	449	487	214.6		241.7		15	%	15	%
South Central	1,188	1,427	399.7		491.9		17	%	19	%
Southeast	1,530	1,404	554.9		500.6		20	%	19	%
East	1,010	910	358.0		321.8		18	%	17	%
North	623	476	256.5		191.1		20	%	18	%
	5,023	4,915	$	1,905.7	$	1,862.9	18	%	18	%

	Nine Months Ended June 30,
	Cancelled Sales Orders		Value (In millions)				Cancellation Rate (2)
	2024	2023	2024		2023		2024		2023
Northwest	656	693	$	344.3	$	381.3	13	%	17	%
Southwest	1,326	1,440	637.7		720.6		15	%	19	%
South Central	3,456	4,605	1,158.4		1,594.4		16	%	22	%
Southeast	4,111	4,371	1,492.0		1,605.5		19	%	21	%
East	2,759	2,418	979.3		886.8		18	%	18	%
North	1,574	1,309	643.7		532.1		18	%	18	%
	13,882	14,836	$	5,255.4	$	5,720.7	17	%	20	%

(1)Net sales orders represent the number and dollar value of new sales contracts executed with customers (gross sales orders), net of cancelled sales orders.

(2)Cancellation rate represents the number of cancelled sales orders divided by gross sales orders.

Net Sales Orders

The number of net sales orders increased 1% and 14% in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods. The value of net sales orders was essentially flat at $8.7 billion (23,001 homes and 22,879 homes, respectively) for the three months ended June 30, 2024 and 2023. The value of net sales orders increased 15% to $25.6 billion (67,526 homes) for the nine months ended June 30, 2024 compared to $22.3 billion (59,403 homes) in the prior year period. The average selling price of net sales orders during the three and nine months ended June 30, 2024 was $378,900 and $378,600, respectively, down 1% and up 1% from the prior year periods.

During the three months ended June 30, 2024, the markets contributing most to the increases in sales order volume were the Portland and Salt Lake City markets in the Northwest and the suburban Washington, D.C. market in the North. The markets contributing most to the decrease in sales order volume in the Southwest region were the Phoenix and Northern California markets.

During the nine months ended June 30, 2024, the markets contributing most to the increases in sales order volume were the Portland and Salt Lake City markets in the Northwest, the California and Phoenix markets in the Southwest, the Dallas and San Antonio markets in the South Central, the North Carolina markets in the East and the suburban Washington, D.C. market in the North.

Despite continued inflationary pressures and elevated mortgage interest rates, demand for new homes remained solid during the third quarter. Our net sales orders increased 1% and 14% in the three and nine months ended June 30, 2024, respectively, from the prior year periods. We are continuing to use incentives and pricing adjustments to adapt to current market conditions. Although higher interest rates and economic fluctuations may persist for some time, the supply of both new and existing homes at affordable price points remains limited, and demographics supporting housing demand remain favorable. We believe we are well-positioned to meet changing market conditions with our affordable product offerings and lot supply.


	Sales Order Backlog
	As of June 30,
	Homes in Backlog				Value (In millions)						Average Selling Price
	2024	2023	% Change		2024		2023		% Change		2024		2023		% Change
Northwest	764	744	3	%	$	402.2	$	393.7	2	%	$	526,400	$	529,200	(1)	%
Southwest	1,570	1,928	(19)	%	795.9		956.5		(17)	%	506,900		496,100		2	%
South Central	4,037	4,807	(16)	%	1,354.8		1,617.6		(16)	%	335,600		336,500		—	%
Southeast	4,410	6,001	(27)	%	1,642.4		2,308.0		(29)	%	372,400		384,600		(3)	%
East	3,817	3,959	(4)	%	1,409.2		1,432.2		(2)	%	369,200		361,800		2	%
North	2,194	1,747	26	%	949.5		739.7		28	%	432,800		423,400		2	%
	16,792	19,186	(12)	%	$	6,554.0	$	7,447.7	(12)	%	$	390,300	$	388,200	1	%

Sales Order Backlog

Sales order backlog represents homes under contract but not yet closed at the end of the period. Many of the contracts in our sales order backlog are subject to contingencies, including mortgage loan approval and buyers selling their existing homes, which can result in cancellations. A portion of the contracts in backlog will not result in closings due to cancellations.


	Homes Closed and Home Sales Revenue
	Three Months Ended June 30,
	Homes Closed				Value (In millions)						Average Selling Price
	2024	2023	% Change		2024		2023		% Change		2024		2023		% Change
Northwest	1,427	1,209	18	%	$	720.7	$	653.6	10	%	$	505,000	$	540,600	(7)	%
Southwest	2,673	2,316	15	%	1,313.7		1,120.1		17	%	491,500		483,600		2	%
South Central	6,104	6,477	(6)	%	2,009.0		2,169.7		(7)	%	329,100		335,000		(2)	%
Southeast	6,669	6,616	1	%	2,415.9		2,384.0		1	%	362,300		360,300		1	%
East	4,748	4,102	16	%	1,709.0		1,464.2		17	%	359,900		356,900		1	%
North	2,534	2,265	12	%	1,062.9		911.5		17	%	419,500		402,400		4	%
	24,155	22,985	5	%	$	9,231.2	$	8,703.1	6	%	$	382,200	$	378,600	1	%

	Nine Months Ended June 30,
	Homes Closed				Value (In millions)						Average Selling Price
	2024	2023	% Change		2024		2023		% Change		2024		2023		% Change
Northwest	4,037	3,471	16	%	$	2,034.3	$	1,864.4	9	%	$	503,900	$	537,100	(6)	%
Southwest	7,556	5,896	28	%	3,647.8		2,828.2		29	%	482,800		479,700		1	%
South Central	17,323	16,893	3	%	5,631.4		5,609.9		—	%	325,100		332,100		(2)	%
Southeast	18,281	17,654	4	%	6,591.3		6,483.1		2	%	360,600		367,200		(2)	%
East	12,389	10,469	18	%	4,418.1		3,814.0		16	%	356,600		364,300		(2)	%
North	6,457	5,606	15	%	2,651.3		2,262.4		17	%	410,600		403,600		2	%
	66,043	59,989	10	%	$	24,974.2	$	22,862.0	9	%	$	378,200	$	381,100	(1)	%

Home Sales Revenue

Revenues from home sales were $9.2 billion (24,155 homes closed) for the three months ended June 30, 2024 compared to $8.7 billion (22,985 homes closed) in the prior year period. Revenues from home sales were $25.0 billion (66,043 homes closed) for the nine months ended June 30, 2024 compared to $22.9 billion (59,989 homes closed) in the prior year period.

The number of homes closed increased 5% and 10% in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods. The average selling price of homes closed during the three and nine months ended June 30, 2024 was $382,200 and $378,200, respectively, up 1% and down 1%, respectively, from the prior year periods.

The markets contributing most to the increases in closings volume in both periods were the Portland market in the Northwest, the California and Nevada markets in the Southwest, the North Carolina markets in the East and the suburban Washington, D.C. market in the North.


Homebuilding Operating Margin Analysis
	Percentages of Related Revenues
	Three Months Ended June 30,				Nine Months Ended June 30,
	2024		2023		2024		2023
Gross profit – home sales	24.0	%	23.3	%	23.4	%	22.9	%
Gross profit – land/lot sales and other	45.6	%	14.4	%	38.8	%	47.9	%
Inventory and land option charges	(0.1)	%	(0.1)	%	(0.1)	%	(0.2)	%
Gross profit – total homebuilding	23.9	%	23.2	%	23.3	%	22.8	%
Selling, general and administrative expense	7.1	%	6.7	%	7.5	%	7.2	%
Other (income) expense	(0.2)	%	(0.3)	%	(0.3)	%	(0.2)	%
Homebuilding pre-tax income	17.0	%	16.8	%	16.1	%	15.8	%

Home Sales Gross Profit

Gross profit from home sales increased to $2.2 billion in the three months ended June 30, 2024 from $2.0 billion in the prior year period and increased 70 basis points to 24.0% as a percentage of home sales revenues. The percentage increase resulted from an increase of 70 basis points due to the average cost of our homes closed decreasing while the average selling price of those homes increased slightly, 10 basis points due to a decrease in the amortization of capitalized interest and 10 basis points due to a decrease in warranty and construction defect costs, partially offset by a decrease of 20 basis points due to an increase in the amount of purchase accounting adjustments related to prior year acquisitions.

Gross profit from home sales increased to $5.8 billion in the nine months ended June 30, 2024 from $5.2 billion in the prior year period and increased 50 basis points to 23.4% as a percentage of home sales revenues. The percentage increase resulted from an increase of 60 basis points due to the average cost of our homes closed decreasing by more than the decrease in the average selling price of those homes, partially offset by a decrease of 10 basis points due to an increase in the amount of purchase accounting adjustments related to prior year acquisitions.

We remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the returns on our inventory investments and adjust to local market conditions and new home demand. To adjust to changes in market conditions during fiscal 2023 and the first nine months of fiscal 2024, we have used a higher level of incentives and reduced home prices and sizes of our home offerings where necessary to provide better affordability to homebuyers. We expect our incentive levels to remain elevated, assuming similar market conditions and no significant changes in mortgage interest rates.

Land/Lot Sales and Other Revenues

Land/lot sales and other revenues from our homebuilding operations were $10.3 million and $37.6 million in the three and nine months ended June 30, 2024, respectively, and $30.5 million and $85.2 million in the prior year periods.

We continually evaluate our land and lot supply, and fluctuations in revenues and profitability from land sales occur based on how we manage our inventory levels in various markets. We generally purchase land and lots with the intent to build and sell homes on them. However, some of the land that we purchase includes commercially zoned parcels that we may sell to commercial developers. We may also sell residential lots or land parcels to manage our supply or for other strategic reasons. As of June 30, 2024, our homebuilding operations had $15.8 million of land held for sale that we expect to sell in the next twelve months.

Inventory and Land Option Charges

At the end of each quarter, we review the performance and outlook for all of our communities and land inventories for indicators of potential impairment and perform detailed impairment evaluations and analyses when necessary. As a result of these reviews, there were no impairment charges recorded in our homebuilding segment during the current and prior year quarters and $5.6 million and $5.7 million recorded in the nine month periods ended June 30, 2024 and 2023, respectively.

As we manage our inventory investments across our operating markets to optimize returns and cash flows, we may modify our pricing and incentives, construction and development plans or land sale strategies in individual active communities and land held for development, which could result in the affected communities being evaluated for potential impairment. If the housing market or economic conditions are adversely affected for a prolonged period, we may be required to evaluate additional communities for potential impairment. These evaluations could result in impairment charges, which could be significant.

During the three and nine months ended June 30, 2024, earnest money and pre-acquisition cost write-offs related to our homebuilding segment’s land purchase contracts that we have terminated or expect to terminate were $12.6 million and $25.6 million, respectively, compared to $9.0 million and $41.7 million in the prior year periods.

Selling, General and Administrative (SG&A) Expense

SG&A expense from homebuilding activities increased 12% to $656.5 million and 13% to $1.9 billion in the three and nine months ended June 30, 2024, respectively, from $584.9 million and $1.7 billion in the prior year periods. SG&A expense as a percentage of homebuilding revenues was 7.1% and 7.5% in the three and nine months ended June 30, 2024, respectively, compared to 6.7% and 7.2% in the prior year periods.

Employee compensation and related costs were $538.6 million and $1.5 billion in the three and nine months ended June 30, 2024, respectively, compared to $502.3 million and $1.4 billion in the prior year periods. These costs increased 7% and 11% in the three and nine months ended June 30, 2024, respectively, from the prior year periods. Employee compensation and related costs represented 82% of SG&A costs in both the three and nine months ended June 30, 2024 compared to 86% and 83%, respectively, in the prior year periods. Our homebuilding operations employed 10,099 and 9,040 people at June 30, 2024 and 2023, respectively.

We attempt to control our homebuilding SG&A costs while ensuring that our infrastructure adequately supports our operations; however, we cannot make assurances that we will be able to maintain or improve upon the current SG&A expense as a percentage of revenues.

Interest Incurred

We capitalize 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. Interest incurred by our homebuilding operations decreased 33% to $11.5 million and 40% to $34.2 million in the three and nine months ended June 30, 2024, respectively, compared to $17.2 million and $57.1 million in the prior year periods, primarily due to decreases of 14% and 19% in our average homebuilding debt. Interest charged to cost of sales was 0.3% and 0.4% of homebuilding cost of sales (excluding inventory and land option charges) in the three and nine months ended June 30, 2024, respectively, compared to 0.4% in both prior year periods.

Other Income

Other income, net of other expenses, included in our homebuilding operations decreased to $22.7 million and increased to $73.2 million in the three and nine months ended June 30, 2024, respectively, from $26.4 million and $54.1 million in the prior year periods. Other income consists of interest income and various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots. The activities that result in this ancillary income are not significant, either individually or in the aggregate.

Homebuilding Results by Reporting Region


	Three Months Ended June 30,
	2024						2023
	Homebuilding Revenues		Homebuilding Pre-tax Income (1)		% of Revenues		Homebuilding Revenues		Homebuilding Pre-tax Income (1)		% of Revenues
	(In millions)
Northwest	$	725.0	$	121.2	16.7	%	$	661.1	$	105.6	16.0	%
Southwest	1,313.7		209.4		15.9	%	1,134.3		131.2		11.6	%
South Central	2,013.0		368.7		18.3	%	2,175.0		407.2		18.7	%
Southeast	2,417.2		404.1		16.7	%	2,384.5		459.8		19.3	%
East	1,709.6		314.9		18.4	%	1,464.4		262.0		17.9	%
North	1,063.0		153.9		14.5	%	914.3		98.6		10.8	%
	$	9,241.5	$	1,572.2	17.0	%	$	8,733.6	$	1,464.4	16.8	%

	Nine Months Ended June 30,
	2024						2023
	Homebuilding Revenues		Homebuilding Pre-tax Income (1)		% of Revenues		Homebuilding Revenues		Homebuilding Pre-tax Income (1)		% of Revenues
	(In millions)
Northwest	$	2,045.0	$	300.0	14.7	%	$	1,872.6	$	260.6	13.9	%
Southwest	3,648.5		515.3		14.1	%	2,858.3		296.9		10.4	%
South Central	5,643.3		986.9		17.5	%	5,622.8		956.8		17.0	%
Southeast	6,602.6		1,095.0		16.6	%	6,486.9		1,252.8		19.3	%
East	4,419.7		774.0		17.5	%	3,815.2		634.9		16.6	%
North	2,652.7		354.7		13.4	%	2,291.4		224.7		9.8	%
	$	25,011.8	$	4,025.9	16.1	%	$	22,947.2	$	3,626.7	15.8	%

(1)Expenses maintained at the corporate level consist primarily of interest and property taxes, which are capitalized and amortized to cost of sales or expensed directly, and the expenses related to operating our corporate office. The amortization of capitalized interest and property taxes is allocated to each segment based on the segment’s cost of sales, while expenses associated with the corporate office are allocated to each segment based on the segment’s inventory balances.

Northwest Region — Homebuilding revenues increased 10% and 9% in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods due to increases in the number of homes closed, particularly in our Portland market. The region generated pre-tax income of $121.2 million and $300.0 million in the three and nine months ended June 30, 2024, respectively, compared to $105.6 million and $260.6 million in the prior year periods. Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) increased by 70 and 60 basis points in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods, primarily due to the average cost of homes closed decreasing by more than the average selling price of those homes. As a percentage of homebuilding revenues, SG&A expenses decreased by 10 basis points and increased by 10 basis points in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods.

Southwest Region — Homebuilding revenues increased 16% and 28% in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods, primarily due to increases in the number of homes closed, particularly in our California and Nevada markets. The region generated pre-tax income of $209.4 million and $515.3 million in the three and nine months ended June 30, 2024, respectively, compared to $131.2 million and $296.9 million in the prior year periods. Home sales gross profit percentage increased by 380 and 250 basis points in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods, primarily due to decreases in the average costs of homes closed. As a percentage of homebuilding revenues, SG&A expenses decreased by 40 and 110 basis points in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods, primarily due to the increase in homebuilding revenues.

South Central Region — Homebuilding revenues decreased 7% and were essentially flat in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods. The region generated pre-tax income of $368.7 million and $986.9 million in the three and nine months ended June 30, 2024, respectively, compared to $407.2 million and $956.8 million in the prior year periods. Home sales gross profit percentage increased by 20 and 90 basis points in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods, primarily due to the average cost of homes closed decreasing by more than the average selling price of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 60 basis points in both the three and nine months ended June 30, 2024 compared to the prior year periods.

Southeast Region — Homebuilding revenues increased 1% and 2% in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods. The region generated pre-tax income of $404.1 million and $1.1 billion in the three and nine months ended June 30, 2024, respectively, compared to $459.8 million and $1.3 billion in the prior year periods. Home sales gross profit percentage decreased by 170 and 230 basis points in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods, primarily due to the average cost of homes closed increasing with only minor fluctuations in the average sales price, as well as an increase in purchase accounting adjustments related to a prior year acquisition. As a percentage of homebuilding revenues, SG&A expenses increased by 80 and 50 basis points in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods.

East Region — Homebuilding revenues increased 17% and 16% in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods, due to increases in the number of homes closed, particularly in our North Carolina markets. The region generated pre-tax income of $314.9 million and $774.0 million in the three and nine months ended June 30, 2024, respectively, compared to $262.0 million and $634.9 million in the prior year periods. Home sales gross profit percentage increased by 110 and 130 basis points in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods, primarily due to the average cost of homes closed decreasing with only minor fluctuations in the average sales price. As a percentage of homebuilding revenues, SG&A expenses increased by 40 and 50 basis points in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods.

North Region — Homebuilding revenues increased 16% in both the three and nine months ended June 30, 2024 compared to the prior year periods, primarily due to increases in the number of homes closed, particularly in our suburban Washington, D.C. market. The region generated pre-tax income of $153.9 million and $354.7 million in the three and nine months ended June 30, 2024, respectively, compared to $98.6 million and $224.7 million in the prior year periods. Home sales gross profit percentage increased by 380 and 390 basis points in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods, primarily due to the average cost of homes closed decreasing while the average selling price of those homes increased. As a percentage of homebuilding revenues, SG&A expenses were essentially flat in the three months ended June 30, 2024 and decreased by 10 basis points in the nine months ended June 30, 2024 compared to the prior year periods.

HOMEBUILDING INVENTORIES, LAND AND LOT POSITION AND HOMES IN INVENTORY

We routinely enter into contracts to purchase land or developed residential lots at predetermined prices on a defined schedule commensurate with planned development or anticipated new home demand. At the time of purchase, the undeveloped land is generally vested with the rights to begin development or construction work, and we plan and coordinate the development of our land into residential lots for use in our homebuilding business. We manage our inventory of owned land and lots and homes under construction relative to demand in each of our markets, including starting construction on unsold homes to capture new home demand and actively controlling the number of unsold, completed homes in inventory.

Our homebuilding segment’s inventories at June 30, 2024 and September 30, 2023 are summarized as follows:


	June 30, 2024
	Construction in Progress and Finished Homes		Residential Land/Lots Developed and Under Development		Land Held for Development		Land Held for Sale		Total Inventory
	(In millions)
Northwest	$	808.3	$	1,163.5	$	—	$	4.0	$	1,975.8
Southwest	1,445.4		1,858.8		6.7		5.1		3,316.0
South Central	2,123.0		2,009.6		0.3		2.2		4,135.1
Southeast	2,490.4		2,001.4		13.1		—		4,504.9
East	1,713.7		2,105.7		—		4.2		3,823.6
North	1,289.5		1,194.9		—		0.1		2,484.5
Corporate and unallocated (1)	131.9		131.9		0.3		0.2		264.3
	$	10,002.2	$	10,465.8	$	20.4	$	15.8	$	20,504.2


	September 30, 2023
	Construction in Progress and Finished Homes		Residential Land/Lots Developed and Under Development		Land Held for Development		Land Held for Sale		Total Inventory
	(In millions)
Northwest	$	819.5	$	1,087.5	$	—	$	0.5	$	1,907.5
Southwest	1,280.0		1,845.0		6.7		1.3		3,133.0
South Central	2,040.2		1,769.6		0.3		0.4		3,810.5
Southeast	2,390.5		1,549.8		13.2		5.0		3,958.5
East	1,393.5		1,630.4		—		0.8		3,024.7
North	1,083.7		993.7		—		0.6		2,078.0
Corporate and unallocated (1)	126.9		116.3		0.3		0.1		243.6
	$	9,134.3	$	8,992.3	$	20.5	$	8.7	$	18,155.8

(1)Corporate and unallocated inventory consists primarily of capitalized interest and property taxes.

Our land and lot position and homes in inventory at June 30, 2024 and September 30, 2023 are summarized as follows:


	June 30, 2024
	Land/Lots Owned (1)		Lots Controlled Through Land and Lot Purchase Contracts (2)(3)		Total Land/Lots Owned and Controlled		Homes in Inventory (4)
Northwest	13,100		19,300		32,400		2,500
Southwest	22,600		27,000		49,600		4,500
South Central	38,100		108,400		146,500		10,700
Southeast	28,600		139,000		167,600		11,500
East	31,900		128,900		160,800		8,300
North	16,600		56,700		73,300		5,100
	150,900		479,300		630,200		42,600
	24	%	76	%	100	%


	September 30, 2023
	Land/Lots Owned (1)		Lots Controlled Through Land and Lot Purchase Contracts (2)(3)		Total Land/Lots Owned and Controlled		Homes in Inventory (4)
Northwest	14,100		20,300		34,400		2,800
Southwest	22,600		30,500		53,100		4,700
South Central	36,700		69,500		106,200		10,800
Southeast	24,700		132,900		157,600		12,100
East	27,700		118,400		146,100		7,100
North	15,300		55,700		71,000		4,500
	141,100		427,300		568,400		42,000
	25	%	75	%	100	%

(1)Land/lots owned included approximately 58,500 and 50,300 owned lots that are fully developed and ready for home construction at June 30, 2024 and September 30, 2023, respectively.

(2)The total remaining purchase price of lots controlled through land and lot purchase contracts at June 30, 2024 and September 30, 2023 was $24.5 billion and $21.1 billion, respectively, secured by earnest money deposits of $2.1 billion and $1.8 billion, respectively. The total remaining purchase price of lots controlled through land and lot purchase contracts at June 30, 2024 and September 30, 2023 included $1.8 billion and $1.3 billion, respectively, related to land and lot purchase contracts with Forestar, secured by $181.1 million and $139.1 million, respectively, of earnest money.

(3)Lots controlled at June 30, 2024 included approximately 36,200 lots owned or controlled by Forestar, 19,500 of which our homebuilding divisions had under contract to purchase and 16,700 of which our homebuilding divisions had a right of first offer to purchase. Of these, approximately 11,400 lots were in our Southeast region, 8,100 lots were in our East region, 6,000 lots were in our North region, 5,100 lots were in our South Central region, 3,900 lots were in our Southwest region and 1,700 lots were in our Northwest region. Lots controlled at September 30, 2023 included approximately 31,400 lots owned or controlled by Forestar, 14,400 of which our homebuilding divisions had under contract to purchase and 17,000 of which our homebuilding divisions had a right of first offer to purchase.

(4)Approximately 26,200 and 27,000 of our homes in inventory were unsold at June 30, 2024 and September 30, 2023, respectively. At June 30, 2024, approximately 8,800 of our unsold homes were completed, of which approximately 990 homes had been completed for more than six months. At September 30, 2023, approximately 7,000 of our unsold homes were completed, of which approximately 620 homes had been completed for more than six months. Homes in inventory exclude approximately 2,400 and 2,100 model homes at June 30, 2024 and September 30, 2023, respectively.

RESULTS OF OPERATIONS - RENTAL

Our 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, with a primary focus on constructing garden style apartment communities in high growth suburban markets. Single-family and multi-family rental property sales are recognized as revenues, and rental income is recognized as other income. The following tables provide further information regarding our rental operations as of and for the three and nine months ended June 30, 2024 and 2023.


	Rental Homes/Units Closed
	Three Months Ended June 30,		Nine Months Ended June 30,
	2024	2023	2024	2023
Single-family rental homes	790	1,754	2,278	3,169
Multi-family rental units	610	230	1,334	530
	1,400	1,984	3,612	3,699


	Results of Operations
	(In millions)
Revenues
Single-family rental	$	258.5	$	589.6	$	675.9	$	1,041.6
Multi-family rental and other	155.2		77.5		304.3		177.0
Total revenues	413.7		667.1		980.2		1,218.6
Cost of sales
Single-family rental	201.0		411.1		532.6		705.5
Multi-family rental and other	118.3		46.9		230.8		93.7
Inventory and land option charges	1.5		0.9		2.2		2.3
Total cost of sales	320.8		458.9		765.6		801.5
Selling, general and administrative expense	55.0		80.0		163.8		181.0
Other (income) expense	(26.3)		(33.9)		(78.0)		(70.9)
Income before income taxes	$	64.2	$	162.1	$	128.8	$	307.0

Revenues from our rental operations decreased to $413.7 million and $980.2 million during the three and nine months ended June 30, 2024, respectively, from $667.1 million and $1.2 billion in the prior year periods. Pre-tax income was $64.2 million and $128.8 million during the three and nine months ended June 30, 2024, respectively, compared to $162.1 million and $307.0 million in the prior year periods. The decrease in pre-tax income was due to a decrease in home closings and lower gross margins on home and unit closings during the current year periods compared to the prior year periods.

At June 30, 2024, our rental property inventory of $3.1 billion included $1.1 billion of inventory related to our single-family rental operations and $2.0 billion of inventory related to our multi-family rental operations. At September 30, 2023, our rental property inventory of $2.7 billion included $1.3 billion of inventory related to our single-family rental operations and $1.4 billion of inventory related to our multi-family rental operations. Single-family rental homes and lots and multi-family rental units at June 30, 2024 and September 30, 2023 consisted of the following:


	Rental Inventory
	June 30, 2024	September 30, 2023
Single-family rental homes (1)	4,540	5,630
Single-family rental lots (2)	1,900	3,380
Multi-family rental units (3)	11,380	9,150

(1)Single-family rental homes at June 30, 2024 consist of 520 homes under construction and 4,020 completed homes. Single-family rental homes at September 30, 2023 consist of 1,260 homes under construction and 4,370 completed homes.

(2)Single-family rental lots at June 30, 2024 consist of 1,125 undeveloped lots and 775 finished lots. Single-family rental lots at September 30, 2023 consist of 2,210 undeveloped lots and 1,170 finished lots.

(3)Multi-family rental units at June 30, 2024 consist of 7,810 units under construction and 3,570 units that were substantially complete and in the lease-up phase. Multi-family rental units at September 30, 2023 consist of 7,200 units under construction and 1,950 units that were substantially complete and in the lease-up phase.

RESULTS OF OPERATIONS – FORESTAR

At June 30, 2024, we owned 62% of the outstanding shares of Forestar. Forestar is a publicly traded residential lot development company with operations in 60 markets across 24 states as of June 30, 2024. (See Note B to the accompanying financial statements for additional Forestar segment information.)

Results of operations for the Forestar segment for 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)
Total revenues	$	318.4	$	368.9	$	958.0	$	887.1
Cost of land/lot sales and other	246.2		283.0		729.6		675.1
Inventory and land option charges	0.7		0.9		1.0		23.6
Total cost of sales	246.9		283.9		730.6		698.7
Selling, general and administrative expense	29.3		26.4		86.5		71.3
Other (income) expense	(9.4)		(3.8)		(20.7)		(9.1)
Income before income taxes	$	51.6	$	62.4	$	161.6	$	126.2

Forestar’s revenues are primarily derived from sales of single-family residential lots to local, regional and national homebuilders and land bankers for homebuilders. The following tables provide further information regarding Forestar’s revenues and lot position as of and for the three and nine months ended June 30, 2024 and 2023:


	Three Months Ended June 30,
	Lots Sold		Value (In millions)
	2024	2023	2024		2023
Residential single-family lots sold
Lots sold to D.R. Horton	2,903	3,187	$	265.3	$	271.0
Total lots sold	3,255	3,812	$	305.8	$	334.8
Tract acres sold to D.R. Horton	32	45	$	2.1	$	22.8

	Nine Months Ended June 30,
	Lots Closed		Value (In millions)
	2024	2023	2024		2023
Residential single-family lots sold
Lots sold to D.R. Horton	8,842	7,947	$	849.2	$	681.4
Total lots sold	9,694	9,054	$	935.9	$	794.3
Tract acres sold to D.R. Horton	32	424	$	2.1	$	55.3


	June 30, 2024	September 30, 2023
Residential single-family lots in inventory and under contract
Lots owned	57,900	52,400
Lots controlled through land purchase contracts	44,200	26,800
Total lots owned and controlled	102,100	79,200

Owned lots under contract to sell to D.R. Horton	19,500	14,400
Owned lots under contract to customers other than D.R. Horton	900	600
Total owned lots under contract	20,400	15,000

Owned lots subject to right of first offer with D.R. Horton	16,700	17,000
Owned lots fully developed	5,900	6,400

At June 30, 2024 and September 30, 2023, Forestar’s inventory, which includes land and lots developed, under development and held for development, totaled $2.2 billion and $1.8 billion, respectively.

There were no impairment charges recorded in either current year period or during the prior year quarter. Impairment charges included in inventory and land option charges during the nine months ended June 30, 2023 were $19.4 million.

SG&A expense for the three and nine months ended June 30, 2024 included charges of $1.4 million and $4.1 million, respectively, related to the shared services agreement between Forestar and D.R. Horton whereby D.R. Horton provides Forestar with certain administrative, compliance, operational and procurement services. Shared services charges were $0.9 million and $2.8 million, respectively, in the prior year periods.

RESULTS OF OPERATIONS – FINANCIAL SERVICES

The following tables and related discussion set forth key operating and financial data for our financial services operations, comprising DHI Mortgage and our subsidiary title companies, for the three and nine months ended June 30, 2024 and 2023.


	Three Months Ended June 30,						Nine Months Ended June 30,
	2024		2023		% Change		2024		2023		% Change
Number of first-lien loans originated or brokered by DHI Mortgage for D.R. Horton homebuyers	18,807		17,011		11	%	51,990		45,172		15	%
Number of homes closed by D.R. Horton	24,155		22,985		5	%	66,043		59,989		10	%
Percentage of D.R. Horton homes financed by DHI Mortgage	78	%	74	%			79	%	75	%

Loans sold by DHI Mortgage to third parties	19,203		16,091		19	%	52,159		45,242		15	%


	Three Months Ended June 30,						Nine Months Ended June 30,
	2024		2023		% Change		2024		2023		% Change
	(In millions)
Loan origination and other fees	$	26.5	$	19.9	33	%	$	65.4	$	51.5	27	%
Gains on sale of mortgage loans and mortgage servicing rights	162.6		157.9		3	%	444.0		391.6		13	%
Servicing income	0.2		1.0		(80)	%	3.0		4.0		(25)	%
Total mortgage operations revenues	189.3		178.8		6	%	512.4		447.1		15	%
Title policy premiums	53.0		49.7		7	%	148.1		134.9		10	%
Total revenues	242.3		228.5		6	%	660.5		582.0		13	%
General and administrative expense	178.0		154.7		15	%	500.6		435.7		15	%
Other (income) expense	(27.0)		(20.3)		33	%	(75.4)		(51.6)		46	%
Financial services pre-tax income	$	91.3	$	94.1	(3)	%	$	235.3	$	197.9	19	%

Financial Services Operating Margin Analysis


	Percentages of Financial Services Revenues
	Three Months Ended June 30,				Nine Months Ended June 30,
	2024		2023		2024		2023
General and administrative expense	73.5	%	67.7	%	75.8	%	74.9	%
Other (income) expense	(11.1)	%	(8.9)	%	(11.4)	%	(8.9)	%
Financial services pre-tax income	37.7	%	41.2	%	35.6	%	34.0	%

Mortgage Loan Activity

DHI Mortgage’s primary focus is to originate loans for our homebuilding operations, and those loan originations account for virtually all of its total loan volume. In the three and nine months ended June 30, 2024, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers increased 11% and 15%, respectively, primarily due to increases of 5% and 10%, respectively, in the number of homes closed by our homebuilding operations, as well as an increase in the percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing. The percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing was 78% and 79% in the three and nine months ended June 30, 2024, respectively, up from 74% and 75% in the prior year periods.

The number of loans sold increased 19% and 15% in the three and nine months ended June 30, 2024, respectively, compared to the prior year periods. Virtually all of the mortgage loans held for sale on June 30, 2024 were eligible for sale to the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Government National Mortgage Association (Ginnie Mae). During the nine months ended June 30, 2024, approximately 73% of our mortgage loans were sold directly to Fannie Mae, Freddie Mac or into securities backed by Ginnie Mae, and 26% were sold to one other major financial entity. Changes in market conditions could result in a greater concentration of our mortgage sales in future periods to fewer financial entities and directly to Fannie Mae, Freddie Mac or Ginnie Mae, and we may need to make other adjustments to our mortgage operations.

Financial Services Revenues and Expenses

Total loan origination volume increased 10% and 15% in the three and nine months ended June 30, 2024, respectively, and revenues from our mortgage operations increased 6% to $189.3 million and 15% to $512.4 million in the three and nine months ended June 30, 2024, respectively, from $178.8 million and $447.1 million in the prior year periods. In the three month period, the revenue increase was less than the volume increase due to a more competitive market. Revenues from our title operations increased 7% to $53.0 million and 10% to $148.1 million in the three and nine months ended June 30, 2024, respectively, from $49.7 million and $134.9 million in the prior year periods.

General and administrative (G&A) expense related to our financial services operations increased 15% to $178.0 million and $500.6 million in the three and nine months ended June 30, 2024, respectively, from $154.7 million and $435.7 million in the prior year periods. The increases were primarily due to the increases in loan origination volume and related title closing services. As a percentage of financial services revenues, G&A expense was 73.5% and 75.8% in the three and nine months ended June 30, 2024, respectively, compared to 67.7% and 74.9% in the prior year periods. Fluctuations in financial services G&A expense as a percentage of revenues can occur because some components of revenue fluctuate differently than loan volumes, and some expenses are not directly related to mortgage loan volume or to changes in the amount of revenue earned. Our financial services operations employed 3,112 and 2,845 people at June 30, 2024 and 2023, respectively.

Other income, net of other expense, included in our financial services operations consists primarily of the interest income of our mortgage subsidiary. Other income increased 33% to $27.0 million and 46% to $75.4 million in the three and nine months ended June 30, 2024, respectively, from $20.3 million and $51.6 million in the prior year periods, primarily due to an increase in interest income on our loan origination volume.

RESULTS OF OPERATIONS - OTHER BUSINESSES

In addition to our homebuilding, rental, Forestar and financial services operations, we engage in other business activities through our subsidiaries. We conduct insurance-related operations, own water rights and other water-related assets and own non-residential real estate including ranch land and improvements. The pre-tax income of all of our subsidiaries engaged in other business activities was $13.7 million and $32.8 million in the three and nine months ended June 30, 2024, respectively, compared to $0.2 million and $22.1 million in the prior year periods.

RESULTS OF OPERATIONS - CONSOLIDATED

Income before Income Taxes

Pre-tax income for the three and nine months ended June 30, 2024 was $1.8 billion and $4.6 billion, respectively, compared to $1.8 billion and $4.3 billion in the prior year periods. The increase in both periods was primarily due to an increase in the pre-tax income of our homebuilding operations as a result of higher revenues from an increase in home closings, largely offset by a decrease in the pre-tax income of our rental operations due to lower home and unit closings.

Income Taxes

Our 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. Our 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.

Our 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. We 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. We will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to our remaining state NOL and tax credit carryforwards. Any reversal of the valuation allowance in future periods will impact our effective tax rate.

CAPITAL RESOURCES AND LIQUIDITY

We have historically funded our operations with cash flows from operating activities, borrowings under bank credit facilities and the issuance of new debt securities. Our current levels of cash, borrowing capacity and balance sheet leverage provide us with the operational flexibility to adjust to changes in economic and market conditions.

We are making investments in our homebuilding and rental inventories to expand our operations and consolidate market share. We are also returning capital to our shareholders through repurchases of our common stock and dividend payments. We are maintaining significant homebuilding cash balances and liquidity to support the increased scale and level of activity in our business and to provide flexibility to adjust to changing conditions and opportunities.

At June 30, 2024, we had outstanding notes payable with varying maturities totaling an aggregate principal amount of $5.7 billion. $2.3 billion is payable within 12 months, including $1.7 billion which is outstanding under our mortgage repurchase facilities and $500 million principal amount of 2.5% homebuilding senior notes maturing in October 2024. At June 30, 2024, our ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 18.8% compared to 18.3% at September 30, 2023 and 22.0% at June 30, 2023. Our net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 9.9% at June 30, 2024 compared to 5.1% at September 30, 2023 and 11.2% at June 30, 2023. Over the long term, we intend to maintain our ratio of debt to total capital around or slightly below 20%.

At June 30, 2024, we had outstanding letters of credit of $242.1 million and surety bonds of $3.4 billion issued by third parties to secure performance under various contracts. We expect that our 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. When we complete our performance obligations, the related letters of credit and bonds are generally released shortly thereafter, leaving us with no continuing obligations. We have no material third-party guarantees.

We regularly assess our projected capital requirements to fund growth in our business, repay debt obligations, pay dividends, repurchase our common stock and maintain sufficient cash and liquidity levels to support our other operational needs, and we regularly evaluate our opportunities to raise additional capital. 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 may be issued from time to time in amounts to be determined. Forestar also has an effective shelf registration statement filed with the SEC in 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. 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. As market conditions permit, we may issue new debt or equity securities through the capital markets or obtain additional bank financing to fund our projected capital requirements or provide additional liquidity. We believe that our existing cash resources, revolving credit facilities, mortgage repurchase facilities and ability to access the capital markets or obtain additional bank financing will provide sufficient liquidity to fund our near-term working capital needs and debt obligations for the next 12 months and for the foreseeable future thereafter.

Capital Resources - Homebuilding

Cash and Cash Equivalents — At June 30, 2024, cash and cash equivalents of our homebuilding segment totaled $2.2 billion.

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

Our homebuilding revolving credit facility imposes restrictions on our operations and activities, including requiring the maintenance of a maximum allowable leverage ratio and a borrowing base restriction if our 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 imposes restrictions on the creation of secured debt and liens. At June 30, 2024, we were in compliance with all of the covenants, limitations and restrictions of our homebuilding revolving credit facility.

Public Unsecured Debt — At June 30, 2024, we had $2.1 billion principal amount of homebuilding senior notes outstanding that mature from October 2024 through October 2027.

The indentures governing our senior notes impose restrictions on the creation of secured debt and liens. At June 30, 2024, we were in compliance with all of the limitations and restrictions associated with our public debt obligations.

Our homebuilding revolving credit facility and homebuilding senior notes are guaranteed by D.R. Horton, Inc.’s significant wholly-owned homebuilding subsidiaries.

Debt and Stock Repurchase Authorizations — In July 2024, our Board of Directors authorized the repurchase of up to $500 million of our debt securities, replacing the previous authorization, under which no debt securities were repurchased. In October 2023, our Board of Directors authorized the repurchase of up to $1.5 billion of our common stock, which replaced the previous authorization. During the nine months ended June 30, 2024, we repurchased 9.0 million shares at a total cost, including commissions and excise taxes, of $1.2 billion. At June 30, 2024, the full amount of the debt repurchase authorization was remaining, and $459.7 million of the stock repurchase authorization was remaining. In July 2024, our Board of Directors authorized the repurchase of up to $4.0 billion of our common stock, replacing the previous authorization, which at that time had $261.9 million remaining due to repurchases made subsequent to quarter end. The debt and stock repurchase authorizations have no expiration date.

Capital Resources - Rental

During the past few years, we have made significant investments in our rental operations. The inventory in our rental segment totaled $3.1 billion at June 30, 2024 compared to $2.7 billion at September 30, 2023 and $3.3 billion at June 30, 2023.

Cash and Cash Equivalents — At June 30, 2024, cash and cash equivalents of our rental segment totaled $119.1 million.

Bank Credit Facility — Our 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.

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 our homebuilding, Forestar or financial services operations.

Capital Resources - Forestar

The achievement of Forestar’s long-term growth objectives will depend on its ability to obtain financing and generate sufficient cash flows from operations. As market conditions permit, Forestar may issue new debt or equity securities through the capital markets or obtain additional bank financing to provide capital for future growth and additional liquidity. At June 30, 2024, Forestar’s ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 31.8% compared to 33.7% at September 30, 2023 and 35.3% at June 30, 2023. Forestar’s ratio of net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 18.7% compared to 5.5% at September 30, 2023 and 19.1% at June 30, 2023.

Cash and Cash Equivalents — At June 30, 2024, Forestar had cash and cash equivalents of $359.2 million.

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

Unsecured Debt — As of June 30, 2024, Forestar had $700 million principal amount of senior notes issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, which represent unsecured obligations of Forestar. These notes include $400 million principal amount of 3.85% senior notes that mature in May 2026 and $300 million principal amount of 5.0% senior notes that mature in March 2028.

At 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 our homebuilding, rental or financial services operations.

Debt Repurchase Authorization — In April 2020, Forestar’s Board of Directors authorized the repurchase of up to $30 million of Forestar’s debt securities. All of the $30 million authorization was remaining at June 30, 2024, and the authorization has no expiration date.

Issuance of Common Stock — 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.

Capital Resources - Financial Services

Cash and Cash Equivalents — At June 30, 2024, cash and cash equivalents of our financial services segment totaled $305.7 million.

Mortgage Repurchase Facilities — Our mortgage subsidiary, DHI Mortgage, has two mortgage repurchase facilities, one of which is committed and the other of which is uncommitted, that provide financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to counterparties upon receipt of funds from the counterparties. DHI Mortgage then has the right and obligation to repurchase the purchased loans upon their sale to third-party purchasers in the secondary market or within specified time frames in accordance with the terms of the mortgage repurchase facilities.

In 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.

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 our homebuilding, rental or Forestar operations.

In the past, DHI Mortgage has been able to renew or extend its committed mortgage repurchase facility at a sufficient capacity and on satisfactory terms prior to its maturity and obtain temporary additional commitments through amendments to the facility during periods of higher than normal volumes of mortgages held for sale. The liquidity of our financial services business depends upon its continued ability to renew and extend the committed mortgage repurchase facility or to obtain other additional financing in sufficient capacities.

Operating Cash Flow Activities

In the nine months ended June 30, 2024, net cash provided by operating activities was $228.2 million compared to $2.3 billion in the prior year period. Cash provided by operating activities in the current year period primarily consisted of $971.9 million and $156.9 million of cash provided by our homebuilding and financial services segments, respectively, partially offset by $656.8 million and $277.6 million of cash used in our rental and Forestar segments.

Cash used to increase construction in progress and finished home inventory was $863.0 million in the current year period, reflecting an increase in our completed homes in inventory in the current period. Cash used to increase residential land and lots was $2.0 billion in the current year period compared to $915.0 million in the prior year period.

Investing Cash Flow Activities

In the nine months ended June 30, 2024, net cash used in investing activities was $161.1 million compared to $308.5 million in the prior year period. In the current year period, uses of cash included purchases of property and equipment totaling $133.3 million. In the prior year period, uses of cash included payments totaling $202.0 million related to the acquisitions of Riggins Custom Homes and Truland Homes and purchases of property and equipment totaling $108.3 million.

Financing Cash Flow Activities

We expect the short-term financing needs of our operations will be funded with existing cash, cash generated from operations and borrowings under our credit facilities. Long-term financing needs for our operations may be funded with the issuance of senior unsecured debt securities or equity securities through the capital markets.

During the nine months ended June 30, 2024, net cash used in financing activities was $947.2 million, primarily consisting of cash used to repurchase shares of our common stock of $1.2 billion and payment of cash dividends totaling $297.5 million. These uses of cash were partially offset by net borrowings on our rental revolving credit facility of $630 million.

During the nine months ended June 30, 2023, net cash used in financing activities was $1.1 billion, primarily consisting of cash used to repurchase shares of our common stock of $759.6 million, repayment of $300 million principal amount of our 4.75% homebuilding senior notes and payment of cash dividends totaling $256.9 million. These uses of cash were partially offset by net borrowings on our rental revolving credit facility of $200 million and net advances on our mortgage repurchase facilities of $67.3 million.

During each of the first three quarters of fiscal 2024, our 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, our 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 of $0.25 per common share were approved and paid in each quarter of fiscal 2023. The declaration of future cash dividends is at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, cash flows, capital requirements, financial condition and general business conditions.

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

As of June 30, 2024, D.R. Horton, Inc. had $2.1 billion principal amount of homebuilding senior notes outstanding due through October 2027 and no amounts outstanding on its homebuilding revolving credit facility.

All of the homebuilding senior notes and the homebuilding revolving credit facility are fully and unconditionally guaranteed, on a joint and several basis, by certain subsidiaries of D.R. Horton, Inc. (Guarantors or Guarantor Subsidiaries). Each of the Guarantor Subsidiaries is 100% owned, directly or indirectly, by D.R. Horton, Inc. Our subsidiaries associated with the single-family and multi-family rental operations, Forestar lot development operations, financial services operations and certain other subsidiaries do not guarantee the homebuilding senior notes or the homebuilding revolving credit facility (collectively, Non-Guarantor Subsidiaries). The guarantees are senior unsecured obligations of each Guarantor and rank equal with all existing and future senior debt of such Guarantor and senior to all subordinated debt of such Guarantor. The guarantees are effectively subordinated to any secured debt of such Guarantor to the extent of the value of the assets securing such debt. The guarantees will be structurally subordinated to indebtedness and other liabilities of Non-Guarantor Subsidiaries of the Guarantors.

The guarantees by a Guarantor Subsidiary will be automatically and unconditionally released and discharged upon: (1) the sale or other disposition of its common stock whereby it is no longer a subsidiary of ours; (2) the sale or other disposition of all or substantially all of its assets (other than to us or another Guarantor); (3) its merger or consolidation with an entity other than us or another Guarantor; or (4) its ceasing to guarantee any of our publicly traded debt securities and ceasing to guarantee any of our obligations under our homebuilding revolving credit facility.

The enforceability of the obligations of the Guarantor Subsidiaries under their guarantees may be subject to review under applicable federal or state laws relating to fraudulent conveyance or transfer, voidable preference and similar laws affecting the rights of creditors generally. In certain circumstances, a court could void the guarantees, subordinate amounts owing under the guarantees or order other relief detrimental to the holders of our guaranteed obligations. The indentures governing our homebuilding senior notes contain a “savings clause,” which limits the liability of each Guarantor on its guarantee to the maximum amount that such Guarantor can incur without risk that its guarantee will be subject to avoidance as a fraudulent transfer. This provision may not be effective to protect such guarantees from fraudulent transfer challenges or, if it does, it may reduce such Guarantor’s obligation such that the remaining amount due and collectible under the guarantees would not suffice, if necessary, to pay the notes in full when due.

The following tables present summarized financial information for D.R. Horton, Inc. and the Guarantor Subsidiaries on a combined basis after intercompany transactions and balances have been eliminated among D.R. Horton, Inc. and the Guarantor Subsidiaries, as well as their investment in, and equity in earnings from the Non-Guarantor Subsidiaries.


D.R. Horton, Inc. and Guarantor Subsidiaries

Summarized Balance Sheet Data	June 30, 2024		September 30, 2023
	(In millions)
Assets
Cash	$	2,097.1	$	2,848.3
Inventories	20,720.1		18,331.6
Amount due from Non-Guarantor Subsidiaries	1,326.9		1,314.3
Total assets	27,666.4		26,081.4
Liabilities & Stockholders’ Equity
Notes payable	$	2,257.8	$	2,211.1
Total liabilities	5,818.0		5,785.4
Stockholders’ equity	21,848.4		20,296.0

Summarized Statement of Operations Data	Nine Months Ended June 30, 2024		Year Ended September 30, 2023
	(In millions)
Revenues	$	24,869.4	$	31,661.8
Cost of sales	19,069.5		24,264.9
Selling, general and administrative expense	1,834.8		2,192.0
Income before income taxes	4,000.7		5,245.5
Net income	3,068.1		3,984.2

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

As disclosed in our annual report on Form 10-K for the fiscal year ended September 30, 2023, our most critical accounting policies relate to revenue recognition, inventories and cost of sales, warranty and legal claims and insurance. Since September 30, 2023, there have been no significant changes to those critical accounting policies.

As disclosed in our critical accounting policies in our Form 10-K for the fiscal year ended September 30, 2023, our reserves for construction defect claims include the estimated costs of both known claims and anticipated future claims. At June 30, 2024 and September 30, 2023, we had reserves for approximately 570 and 600 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements. During the nine months ended June 30, 2024, we were notified of approximately 240 new construction defect claims and resolved 270 construction defect claims for a total cost of $49.6 million. At June 30, 2023 and September 30, 2022, we had reserves for approximately 625 and 560 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements. During the nine months ended June 30, 2023, we were notified of approximately 240 new construction defect claims and resolved 175 construction defect claims for a total cost of $25.5 million.

SEASONALITY

Although significant changes in market conditions have impacted our seasonal patterns in the past and could do so again in the future, we generally close more homes and generate greater revenues and pre-tax income in the third and fourth quarters of our fiscal year. The seasonal nature of our business can also cause significant variations in the working capital requirements for our homebuilding, rental, lot development and financial services operations. As a result of seasonal activity, our quarterly results of operations and financial position at the end of a particular fiscal quarter are not necessarily representative of the balance of our fiscal year.

Forward-Looking Statements

Some of the statements contained in this report, as well as in other materials we have filed or will file with the Securities and Exchange Commission, statements made by us in periodic press releases and oral statements we make to analysts, stockholders and the press in the course of presentations about us, may be construed as “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s beliefs as well as assumptions made by, and information currently available to, management. These forward-looking statements typically include the words “anticipate,” “believe,” “consider,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “likely,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “projection,” “seek,” “should,” “strategy,” “target,” “will,” “would” or other words of similar meaning. Any or all of the forward-looking statements included in this report and in any other of our reports or public statements may not approximate actual experience, and the expectations derived from them may not be realized, due to risks, uncertainties and other factors. As a result, actual results may differ materially from the expectations or results we discuss in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to:

the cyclical nature of the homebuilding, rental and lot development industries and changes in economic, real estate or other conditions;
adverse developments affecting the capital markets and financial institutions, which could limit our ability to access capital, increase our cost of capital and impact our liquidity and capital resources;
reductions in the availability of mortgage financing provided by government agencies, changes in government financing programs, a decrease in our ability to sell mortgage loans on attractive terms or an increase in mortgage interest rates;
the risks associated with our land, lot and rental inventory;
our ability to effect our growth strategies, acquisitions, investments or other strategic initiatives successfully;
the impact of an inflationary, deflationary or higher interest rate environment;
risks of acquiring land, building materials and skilled labor and challenges obtaining regulatory approvals;
the effects of public health issues such as a major epidemic or pandemic on the economy and our businesses;
the effects of weather conditions and natural disasters on our business and financial results;
home warranty and construction defect claims;
the effects of health and safety incidents;
reductions in the availability of performance bonds;
increases in the costs of owning a home;
the effects of information technology failures, data security breaches, and the failure to satisfy privacy and data protection laws and regulations;
the effects of governmental regulations and environmental matters on our homebuilding and land development operations;
the effects of governmental regulations on our financial services operations;
competitive conditions within the industries in which we operate;
our ability to manage and service our debt and comply with related debt covenants, restrictions and limitations;
the effects of negative publicity;
the effects of the loss of key personnel; and
actions by activist stockholders.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted. Additional information about issues that could lead to material changes in performance and risk factors that have the potential to affect us is contained in our annual report on Form 10-K for the fiscal year ended September 30, 2023, including the section entitled “Risk Factors,” which is filed with the SEC.

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