D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | | | | |
| | Six Months Ended March 31, |
| | 2026 | | 2025 |
| (In millions)
(Unaudited) |
| OPERATING ACTIVITIES | | | |
| Net income | $ | 1,259.4 | | | $ | 1,671.0 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 55.8 | | | 48.7 | |
| Stock-based compensation expense | 76.0 | | | 75.2 | |
| Deferred income taxes | 53.1 | | | 93.1 | |
| Inventory and land option charges | 43.4 | | | 46.6 | |
| Changes in operating assets and liabilities: | | | |
| (Increase) decrease in construction in progress and finished homes | (884.3) | | | 229.8 | |
Decrease (increase) in residential land and lots – developed, under development, held for development and held for sale | 194.9 | | | (1,588.9) | |
| Increase in rental properties | (297.5) | | | (216.0) | |
| Increase in other assets | (26.2) | | | (122.9) | |
| (Increase) decrease in mortgage loans held for sale | (114.3) | | | 22.5 | |
| Increase (decrease) in accounts payable, accrued expenses and other liabilities | 81.2 | | | (48.6) | |
| Net cash provided by operating activities | 441.5 | | | 210.5 | |
| INVESTING ACTIVITIES | | | |
| Expenditures for property and equipment | (64.6) | | | (47.6) | |
| Payments related to business acquisitions, net of cash acquired | (87.9) | | | (53.1) | |
| Other investing activities | (7.9) | | | 6.2 | |
| Net cash used in investing activities | (160.4) | | | (94.5) | |
| FINANCING ACTIVITIES | | | |
| Proceeds from notes payable | 1,395.0 | | | 2,222.0 | |
| Repayment of notes payable | (891.8) | | | (1,566.1) | |
| Borrowings (repayment) on mortgage repurchase facilities, net | 69.9 | | | (86.4) | |
| Proceeds from stock associated with certain employee benefit plans | 8.9 | | | 8.5 | |
| Cash paid for shares withheld for taxes | (54.4) | | | (63.4) | |
| Cash dividends paid | (261.2) | | | (254.0) | |
Repurchases of common stock | (1,599.8) | | | (2,407.9) | |
| Net other financing activities | (6.8) | | | 5.4 | |
| Net cash used in financing activities | (1,340.2) | | | (2,141.9) | |
| Net decrease in cash, cash equivalents and restricted cash | (1,059.1) | | | (2,025.9) | |
| Cash, cash equivalents and restricted cash at beginning of period | 3,033.3 | | | 4,544.0 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 1,974.2 | | | $ | 2,518.1 | |
| | | |
| SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES: | | | |
| | | |
| Stock issued under employee incentive plans | $ | 111.1 | | | $ | 143.5 | |
| | | |
| | | |
See accompanying notes to consolidated financial statements. |
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2026
NOTE A – BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements include the accounts of D.R. Horton, Inc. and all of its wholly owned, majority-owned and controlled subsidiaries, which are collectively referred to as the Company, unless the context otherwise requires. Noncontrolling interests represent the proportionate equity interests in consolidated entities that are not 100% owned by the Company. As of March 31, 2026, the Company owned a 62% controlling interest in Forestar Group Inc. (Forestar) and therefore is required to consolidate 100% of Forestar within its consolidated financial statements, and the 38% interest the Company does not own is accounted for as noncontrolling interests. All intercompany accounts, transactions and balances have been eliminated in consolidation.
The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements reflect all adjustments considered necessary to fairly state the results for the interim periods shown, including normal recurring accruals and other items. These financial statements, including the consolidated balance sheet as of September 30, 2025, which was derived from audited financial statements, do not include all of the information and notes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2025.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.
Seasonality
Historically, the homebuilding industry has experienced seasonal fluctuations; therefore, the operating results for the three and six months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2026 or subsequent periods.
Business Acquisition
In October 2025, the Company acquired the homebuilding operations of SK Builders for approximately $80 million in cash. SK Builders operates in and around Greenville, South Carolina. The assets acquired included approximately 160 homes in inventory, 260 lots and a sales order backlog of 110 homes. Through the acquisition, the Company also obtained control of approximately 1,320 additional lots through land purchase contracts.
Recent Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, “Income Taxes - Improvements to Income Tax Disclosures,” which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation and modifies other income tax related disclosures. The standard became effective for the Company’s annual periods beginning in fiscal 2026. The Company is currently evaluating the impact this standard will have on its disclosures.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,” which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements. The standard is effective for the Company’s annual periods beginning in fiscal 2028 and interim periods beginning in the first quarter of fiscal 2029, with early adoption permitted. The Company is currently evaluating the impact this standard will have on its disclosures.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
NOTE B – SEGMENT INFORMATION
The Company is a national homebuilder that is primarily engaged in the acquisition and development of land and the construction and sale of residential homes, with operations in 126 markets across 36 states. The Company’s operating segments are its homebuilding divisions, its rental operations, its majority-owned Forestar residential lot development operations, its financial services operations and its other business activities. The Company’s reporting segments are its homebuilding reporting segments, its rental operations segment, its Forestar lot development segment and its financial services segment. The accounting policies of the reporting segments are described throughout Note A in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2025.
Homebuilding
The homebuilding operating segments are aggregated into six reporting segments. The reporting segments and the states in which the Company has homebuilding operations are as follows:
| | | | | | | | | | | |
| Northwest: | | Colorado, Oregon, Utah and Washington |
| Southwest: | | Arizona, California, Hawaii, Nevada and New Mexico |
| South Central: | | Arkansas, Oklahoma and Texas |
| Southeast: | | Alabama, Florida, Louisiana and Mississippi |
| East: | | Georgia, North Carolina, South Carolina and Tennessee |
| North: | | Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Minnesota, Missouri, Nebraska,
New Jersey, Ohio, Pennsylvania, Virginia, West Virginia and Wisconsin |
The Company’s homebuilding divisions design, build and sell single-family detached homes on lots they develop and on fully developed lots purchased ready for home construction. To a lesser extent, the homebuilding divisions also build and sell attached homes, such as townhomes and duplexes. Most of the revenue generated by the Company’s homebuilding operations is from the sale of completed homes and to a lesser extent from the sale of land and lots.
Rental
The Company’s rental segment consists of single-family and multi-family rental operations. Single-family rental operations construct homes within single-family rental (build-to-rent) communities and then either sell homes to an investor as they are completed or lease the homes and market the entire community for a bulk sale. Multi-family rental operations develop, construct, lease and sell residential rental properties, the substantial majority of which are apartment communities.
Forestar
The Forestar segment is a residential lot development company with operations in 64 markets across 24 states. The Company’s homebuilding divisions acquire finished lots from Forestar in accordance with the master supply agreement between the two companies. Forestar’s segment results are presented on their historical cost basis, consistent with the manner in which management evaluates segment performance.
Financial Services
The Company’s financial services segment provides mortgage financing, title agency services and title insurance to homebuyers in many of the Company’s homebuilding markets. The segment generates the substantial majority of its revenues from originating and selling mortgages, collecting premiums and fees for escrow closing services and collecting premiums for title insurance. The Company sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers, typically within 60 days of origination.
Other
In addition to its homebuilding, rental, Forestar and financial services operations, the Company engages in other business activities through its subsidiaries. The Company conducts insurance-related operations, owns water rights and other water-related assets and owns non-residential real estate including ranch land and improvements. The results of these operations are immaterial for separate reporting and therefore are grouped together and presented in the Eliminations and Other column in the tables that follow.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
The Company’s Chief Executive Officer, Chief Operating Officer and Chief Financial Officer are its Chief Operating Decision Makers (CODMs). The CODMs evaluate segment performance primarily based on revenues, pre-tax income and inventories for all reporting segments. Revenues, pre-tax income and inventories at the segment level are compared to forecasted results to evaluate the performance of each segment and assist in decision making regarding capital allocation between segments. The tables that follow present financial information pertaining to the Company’s reporting segments.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, 2026 |
| | Homebuilding | | Rental | | Forestar | | Financial Services | | Eliminations and Other (1) | | Consolidated |
| | (In millions) |
| Assets | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 1,139.3 | | | $ | 142.5 | | | $ | 362.2 | | | $ | 242.4 | | | $ | 31.5 | | | $ | 1,917.9 | |
| Restricted cash | | 26.1 | | | 3.5 | | | — | | | 26.7 | | | — | | | 56.3 | |
| Inventories: | | | | | | | | | | | | |
| Construction in progress and finished homes | | 8,682.5 | | | — | | | — | | | — | | | (130.8) | | | 8,551.7 | |
| Residential land and lots — developed and under development | | 12,209.1 | | | — | | | 2,552.7 | | | — | | | (244.9) | | | 14,516.9 | |
| Land held for development | | 38.6 | | | — | | | 157.0 | | | — | | | — | | | 195.6 | |
| Land held for sale | | 39.1 | | | — | | | — | | | — | | | — | | | 39.1 | |
| Rental properties | | — | | | 3,011.1 | | | — | | | — | | | (10.6) | | | 3,000.5 | |
| | 20,969.3 | | | 3,011.1 | | | 2,709.7 | | | — | | | (386.3) | | | 26,303.8 | |
| Mortgage loans held for sale | | — | | | — | | | — | | | 2,680.8 | | | — | | | 2,680.8 | |
| Deferred tax asset, net | | 70.8 | | | (42.2) | | | — | | | — | | | (28.6) | | | — | |
| Property and equipment, net | | 557.1 | | | 0.6 | | | 7.7 | | | 4.2 | | | 23.5 | | | 593.1 | |
| Other assets | | 3,553.5 | | | 51.7 | | | 93.0 | | | 177.7 | | | (24.4) | | | 3,851.5 | |
| Goodwill | | 134.3 | | | — | | | — | | | — | | | 29.2 | | | 163.5 | |
| | $ | 26,450.4 | | | $ | 3,167.2 | | | $ | 3,172.6 | | | $ | 3,131.8 | | | $ | (355.1) | | | $ | 35,566.9 | |
| Liabilities | | | | | | | | | | | | |
| Accounts payable | | $ | 1,153.4 | | | $ | 203.3 | | | $ | 73.3 | | | $ | 0.4 | | | $ | (106.9) | | | $ | 1,323.5 | |
| Deferred tax liability, net | | — | | | — | | | 84.3 | | | — | | | (75.9) | | | 8.4 | |
| Accrued expenses and other liabilities | | 3,038.7 | | | 41.2 | | | 401.6 | | | 414.2 | | | (423.5) | | | 3,472.2 | |
| Notes payable | | 3,427.1 | | | 865.0 | | | 793.5 | | | 1,478.2 | | | — | | | 6,563.8 | |
| | $ | 7,619.2 | | | $ | 1,109.5 | | | $ | 1,352.7 | | | $ | 1,892.8 | | | $ | (606.3) | | | $ | 11,367.9 | |
_______________
(1)Amounts include the balances of the Company’s other businesses and the elimination of intercompany transactions.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2025 |
| | Homebuilding | | Rental | | Forestar | | Financial Services | | Eliminations and Other (1) | | Consolidated |
| | (In millions) |
| Assets | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 2,210.5 | | | $ | 140.8 | | | $ | 379.2 | | | $ | 244.5 | | | $ | 10.4 | | | $ | 2,985.4 | |
| Restricted cash | | 25.5 | | | 2.5 | | | — | | | 19.9 | | | — | | | 47.9 | |
| Inventories: | | | | | | | | | | | | |
| Construction in progress and finished homes | | 7,743.7 | | | — | | | — | | | — | | | (95.2) | | | 7,648.5 | |
| Residential land and lots — developed and under development | | 12,513.1 | | | — | | | 2,465.1 | | | — | | | (282.4) | | | 14,695.8 | |
| Land held for development | | 38.3 | | | — | | | 180.0 | | | — | | | — | | | 218.3 | |
| Land held for sale | | 21.4 | | | — | | | — | | | — | | | — | | | 21.4 | |
| Rental properties | | — | | | 2,710.4 | | | — | | | — | | | (7.1) | | | 2,703.3 | |
| | 20,316.5 | | | 2,710.4 | | | 2,645.1 | | | — | | | (384.7) | | | 25,287.3 | |
| Mortgage loans held for sale | | — | | | — | | | — | | | 2,566.5 | | | — | | | 2,566.5 | |
| Deferred tax asset, net | | 125.7 | | | (42.2) | | | — | | | — | | | (39.0) | | | 44.5 | |
| Property and equipment, net | | 543.0 | | | 0.6 | | | 8.1 | | | 4.3 | | | 22.9 | | | 578.9 | |
| Other assets | | 3,344.1 | | | 38.9 | | | 104.6 | | | 220.6 | | | 89.0 | | | 3,797.2 | |
| Goodwill | | 134.3 | | | — | | | — | | | — | | | 29.2 | | | 163.5 | |
| | $ | 26,699.6 | | | $ | 2,851.0 | | | $ | 3,137.0 | | | $ | 3,055.8 | | | $ | (272.2) | | | $ | 35,471.2 | |
| Liabilities | | | | | | | | | | | | |
| Accounts payable | | $ | 1,016.8 | | | $ | 230.6 | | | $ | 71.0 | | | $ | 0.7 | | | $ | (97.2) | | | $ | 1,221.9 | |
| Accrued expenses and other liabilities | | 3,122.1 | | | 34.7 | | | 494.3 | | | 294.7 | | | (404.2) | | | 3,541.6 | |
| Notes payable | | 3,154.4 | | | 600.0 | | | 802.8 | | | 1,408.3 | | | — | | | 5,965.5 | |
| | $ | 7,293.3 | | | $ | 865.3 | | | $ | 1,368.1 | | | $ | 1,703.7 | | | $ | (501.4) | | | $ | 10,729.0 | |
_______________
(1)Amounts include the balances of the Company’s other businesses and the elimination of intercompany transactions.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2026 |
| | Homebuilding | | Rental | | Forestar | | Financial Services | | Eliminations and Other (1) | | Consolidated |
| | (In millions) |
| Revenues | | | | | | | | | | | | |
| Home sales | | $ | 7,045.5 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 7,045.5 | |
| Land/lot sales and other | | 17.7 | | | — | | | 374.3 | | | — | | | (284.0) | | | 108.0 | |
| Rental property sales | | — | | | 211.8 | | | — | | | — | | | — | | | 211.8 | |
| Financial services | | — | | | — | | | — | | | 192.8 | | | — | | | 192.8 | |
| | 7,063.2 | | | 211.8 | | | 374.3 | | | 192.8 | | | (284.0) | | | 7,558.1 | |
| Cost of sales | | | | | | | | | | | | |
| Home sales (2) | | 5,628.7 | | | — | | | — | | | — | | | (63.5) | | | 5,565.2 | |
| Land/lot sales and other | | 13.3 | | | — | | | 287.8 | | | — | | | (226.1) | | | 75.0 | |
| Rental property sales | | — | | | 182.9 | | | — | | | — | | | (0.4) | | | 182.5 | |
| Inventory and land option charges | | 25.5 | | | 0.3 | | | 6.3 | | | — | | | — | | | 32.1 | |
| | 5,667.5 | | | 183.2 | | | 294.1 | | | — | | | (290.0) | | | 5,854.8 | |
| Selling, general and administrative expense | | 648.9 | | | 52.0 | | | 37.9 | | | 159.8 | | | 4.7 | | | 903.3 | |
| Other (income) expense (3) | | (11.1) | | | (35.7) | | | (1.6) | | | (18.7) | | | (0.3) | | | (67.4) | |
| Income before income taxes | | $ | 757.9 | | | $ | 12.3 | | | $ | 43.9 | | | $ | 51.7 | | | $ | 1.6 | | | $ | 867.4 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
_______________
(1)Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.
(2)Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
(3)Other (income) expense primarily includes interest income but also consists of various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended March 31, 2026 |
| | Homebuilding | | Rental | | Forestar | | Financial Services | | Eliminations and Other (1) | | Consolidated |
| | (In millions) |
| Revenues | | | | | | | | | | | | |
| Home sales | | $ | 13,558.2 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 13,558.2 | |
| Land/lot sales and other | | 33.9 | | | — | | | 647.3 | | | — | | | (493.1) | | | 188.1 | |
| Rental property sales | | — | | | 321.3 | | | — | | | — | | | — | | | 321.3 | |
| Financial services | | — | | | — | | | — | | | 377.4 | | | — | | | 377.4 | |
| | 13,592.1 | | | 321.3 | | | 647.3 | | | 377.4 | | | (493.1) | | | 14,445.0 | |
| Cost of sales | | | | | | | | | | | | |
| Home sales (2) | | 10,810.6 | | | — | | | — | | | — | | | (116.1) | | | 10,694.5 | |
| Land/lot sales and other | | 26.7 | | | — | | | 505.0 | | | — | | | (397.7) | | | 134.0 | |
| Rental property sales | | — | | | 275.7 | | | — | | | — | | | (0.6) | | | 275.1 | |
| Inventory and land option charges | | 35.7 | | | 0.4 | | | 7.1 | | | — | | | 0.2 | | | 43.4 | |
| | 10,873.0 | | | 276.1 | | | 512.1 | | | — | | | (514.2) | | | 11,147.0 | |
| Selling, general and administrative expense | | 1,281.4 | | | 98.9 | | | 74.3 | | | 304.8 | | | 9.0 | | | 1,768.4 | |
| Other (income) expense (3) | | (28.3) | | | (66.2) | | | (3.9) | | | (37.1) | | | (0.3) | | | (135.8) | |
| Income before income taxes | | $ | 1,466.0 | | | $ | 12.5 | | | $ | 64.8 | | | $ | 109.7 | | | $ | 12.4 | | | $ | 1,665.4 | |
| Summary Cash Flow Information | | | | | | | | | | | | |
| Depreciation and amortization | | $ | 51.9 | | | $ | 0.8 | | | $ | 1.6 | | | $ | 1.0 | | | $ | 0.5 | | | $ | 55.8 | |
| Cash provided by (used in) operating activities | | $ | 618.8 | | | $ | (321.0) | | | $ | (5.1) | | | $ | 136.6 | | | $ | 12.2 | | | $ | 441.5 | |
_______________
(1)Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.
(2)Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
(3)Other (income) expense primarily includes interest income but also consists of various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2025 |
| | Homebuilding | | Rental | | Forestar | | Financial Services | | Eliminations and Other (1) | | Consolidated |
| | (In millions) |
| Revenues | | | | | | | | | | | | |
| Home sales | | $ | 7,180.9 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 7,180.9 | |
| Land/lot sales and other | | 22.0 | | | — | | | 351.0 | | | — | | | (269.4) | | | 103.6 | |
| Rental property sales | | — | | | 236.6 | | | — | | | — | | | — | | | 236.6 | |
| Financial services | | — | | | — | | | — | | | 212.9 | | | — | | | 212.9 | |
| | 7,202.9 | | | 236.6 | | | 351.0 | | | 212.9 | | | (269.4) | | | 7,734.0 | |
| Cost of sales | | | | | | | | | | | | |
| Home sales (2) | | 5,614.7 | | | — | | | — | | | — | | | (49.8) | | | 5,564.9 | |
| Land/lot sales and other | | 3.0 | | | — | | | 270.9 | | | — | | | (217.8) | | | 56.1 | |
| Rental property sales | | — | | | 182.8 | | | — | | | — | | | — | | | 182.8 | |
| Inventory and land option charges | | 29.4 | | | 0.3 | | | 0.9 | | | — | | | (0.6) | | | 30.0 | |
| | 5,647.1 | | | 183.1 | | | 271.8 | | | — | | | (268.2) | | | 5,833.8 | |
| Selling, general and administrative expense | | 637.8 | | | 58.0 | | | 38.4 | | | 160.3 | | | 4.2 | | | 898.7 | |
| Other (income) expense (3) | | (17.0) | | | (27.3) | | | 0.1 | | | (20.4) | | | (1.0) | | | (65.6) | |
| Income before income taxes | | $ | 935.0 | | | $ | 22.8 | | | $ | 40.7 | | | $ | 73.0 | | | $ | (4.4) | | | $ | 1,067.1 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
_______________
(1)Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.
(2)Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
(3)Other (income) expense primarily includes interest income but also consists of various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended March 31, 2025 |
| | Homebuilding | | Rental | | Forestar | | Financial Services | | Eliminations and Other (1) | | Consolidated |
| | (In millions) |
| Revenues | | | | | | | | | | | | |
| Home sales | | $ | 14,327.0 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 14,327.0 | |
| Land/lot sales and other | | 43.2 | | | — | | | 601.3 | | | — | | | (474.0) | | | 170.5 | |
| Rental property sales | | — | | | 454.3 | | | — | | | — | | | — | | | 454.3 | |
| Financial services | | — | | | — | | | — | | | 395.2 | | | — | | | 395.2 | |
| | 14,370.2 | | | 454.3 | | | 601.3 | | | 395.2 | | | (474.0) | | | 15,347.0 | |
| Cost of sales | | | | | | | | | | | | |
| Home sales (2) | | 11,136.7 | | | — | | | — | | | — | | | (103.1) | | | 11,033.6 | |
| Land/lot sales and other | | 16.7 | | | — | | | 465.2 | | | — | | | (387.7) | | | 94.2 | |
| Rental property sales | | — | | | 362.2 | | | — | | | — | | | — | | | 362.2 | |
| Inventory and land option charges | | 41.3 | | | 3.9 | | | 2.0 | | | — | | | (0.6) | | | 46.6 | |
| | 11,194.7 | | | 366.1 | | | 467.2 | | | — | | | (491.4) | | | 11,536.6 | |
| Selling, general and administrative expense | | 1,274.5 | | | 104.3 | | | 74.3 | | | 314.5 | | | 9.2 | | | 1,776.8 | |
| Other (income) expense (3) | | (46.9) | | | (50.8) | | | (2.8) | | | (40.9) | | | (2.0) | | | (143.4) | |
| Income before income taxes | | $ | 1,947.9 | | | $ | 34.7 | | | $ | 62.6 | | | $ | 121.6 | | | $ | 10.2 | | | $ | 2,177.0 | |
| Summary Cash Flow Information | | | | | | | | | | | | |
| Depreciation and amortization | | $ | 44.8 | | | $ | 1.0 | | | $ | 1.7 | | | $ | 0.9 | | | $ | 0.3 | | | $ | 48.7 | |
| Cash provided by (used in) operating activities | | $ | 876.0 | | | $ | (381.6) | | | $ | (469.8) | | | $ | 197.2 | | | $ | (11.3) | | | $ | 210.5 | |
_______________
(1)Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.
(2)Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
(3)Other (income) expense primarily includes interest income but also consists of various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
Revenues, expenses and pre-tax income of the Company’s homebuilding segment are disaggregated into the individual homebuilding reporting segments in the tables below. Expenses maintained at the corporate level consist primarily of homebuilding interest and property taxes, which are capitalized and amortized to cost of sales or expensed directly, and the expenses related to operating the Company’s corporate office. The amortization of capitalized interest and property taxes is allocated to each homebuilding segment based on the segment’s cost of sales, while expenses associated with the corporate office are allocated to each homebuilding segment based on the segment’s inventory balances.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Homebuilding Results by Reporting Segment | | Three Months Ended March 31, 2026 |
| Northwest | | Southwest | | South Central | | Southeast | | East | | North | | Total |
| | (In millions) |
| Revenues | | | | | | | | | | | | | | |
| Home sales | | $ | 539.6 | | | $ | 1,025.1 | | | $ | 1,511.4 | | | $ | 1,552.3 | | | $ | 1,381.9 | | | $ | 1,035.2 | | | $ | 7,045.5 | |
| Land/lot sales and other | | 0.1 | | | 10.1 | | | 0.3 | | | 6.2 | | | — | | | 1.0 | | | 17.7 | |
| | 539.7 | | | 1,035.2 | | | 1,511.7 | | | 1,558.5 | | | 1,381.9 | | | 1,036.2 | | | 7,063.2 | |
| Cost of sales | | | | | | | | | | | | | | |
| Home sales | | 432.0 | | | 822.9 | | | 1,195.9 | | | 1,245.0 | | | 1,114.4 | | | 818.5 | | | 5,628.7 | |
| Land/lot sales and other | | (0.2) | | | 8.4 | | | — | | | 5.0 | | | — | | | 0.1 | | | 13.3 | |
| Inventory and land option charges | | 0.5 | | | 3.4 | | | 14.1 | | | 4.4 | | | 1.9 | | | 1.2 | | | 25.5 | |
| | 432.3 | | | 834.7 | | | 1,210.0 | | | 1,254.4 | | | 1,116.3 | | | 819.8 | | | 5,667.5 | |
| Selling, general and administrative expense | | 53.7 | | | 88.1 | | | 137.4 | | | 141.4 | | | 132.8 | | | 95.5 | | | 648.9 | |
| Other (income) expense | | (0.9) | | | (1.8) | | | (2.0) | | | (2.7) | | | (2.0) | | | (1.7) | | | (11.1) | |
| Income before income taxes | | $ | 54.6 | | | $ | 114.2 | | | $ | 166.3 | | | $ | 165.4 | | | $ | 134.8 | | | $ | 122.6 | | | $ | 757.9 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended March 31, 2026 |
| | Northwest | | Southwest | | South Central | | Southeast | | East | | North | | Total |
| | (In millions) |
| Revenues | | | | | | | | | | | | | | |
| Home sales | | $ | 1,086.0 | | | $ | 1,915.0 | | | $ | 2,900.7 | | | $ | 3,004.6 | | | $ | 2,632.2 | | | $ | 2,019.7 | | | $ | 13,558.2 | |
| Land/lot sales and other | | 0.4 | | | 14.9 | | | 0.5 | | | 11.9 | | | 0.2 | | | 6.0 | | | 33.9 | |
| | 1,086.4 | | | 1,929.9 | | | 2,901.2 | | | 3,016.5 | | | 2,632.4 | | | 2,025.7 | | | 13,592.1 | |
| Cost of sales | | | | | | | | | | | | | | |
| Home sales | | 868.0 | | | 1,543.4 | | | 2,279.9 | | | 2,417.1 | | | 2,108.9 | | | 1,593.3 | | | 10,810.6 | |
| Land/lot sales and other | | 0.1 | | | 12.3 | | | — | | | 9.8 | | | — | | | 4.5 | | | 26.7 | |
| Inventory and land option charges | | 0.6 | | | 4.1 | | | 15.8 | | | 6.3 | | | 6.7 | | | 2.2 | | | 35.7 | |
| | 868.7 | | | 1,559.8 | | | 2,295.7 | | | 2,433.2 | | | 2,115.6 | | | 1,600.0 | | | 10,873.0 | |
| Selling, general and administrative expense | | 106.1 | | | 171.8 | | | 270.7 | | | 281.3 | | | 263.8 | | | 187.7 | | | 1,281.4 | |
| Other (income) expense | | (2.3) | | | (4.5) | | | (4.9) | | | (6.8) | | | (5.3) | | | (4.5) | | | (28.3) | |
| Income before income taxes | | $ | 113.9 | | | $ | 202.8 | | | $ | 339.7 | | | $ | 308.8 | | | $ | 258.3 | | | $ | 242.5 | | | $ | 1,466.0 | |
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Homebuilding Results by Reporting Segment | | Three Months Ended March 31, 2025 |
| Northwest | | Southwest | | South Central | | Southeast | | East | | North | | Total |
| | (In millions) |
| Revenues | | | | | | | | | | | | | | |
| Home sales | | $ | 660.4 | | | $ | 1,063.6 | | | $ | 1,530.0 | | | $ | 1,593.0 | | | $ | 1,359.8 | | | $ | 974.1 | | | $ | 7,180.9 | |
| Land/lot sales and other | | — | | | 0.1 | | | 0.7 | | | 20.8 | | | 0.2 | | | 0.2 | | | 22.0 | |
| | 660.4 | | | 1,063.7 | | | 1,530.7 | | | 1,613.8 | | | 1,360.0 | | | 974.3 | | | 7,202.9 | |
| Cost of sales | | | | | | | | | | | | | | |
| Home sales | | 508.5 | | | 845.2 | | | 1,192.9 | | | 1,256.1 | | | 1,056.0 | | | 756.0 | | | 5,614.7 | |
| Land/lot sales and other | | — | | | — | | | 0.2 | | | 2.8 | | | — | | | — | | | 3.0 | |
| Inventory and land option charges | | 2.6 | | | 5.9 | | | 4.4 | | | 7.3 | | | 8.0 | | | 1.2 | | | 29.4 | |
| | 511.1 | | | 851.1 | | | 1,197.5 | | | 1,266.2 | | | 1,064.0 | | | 757.2 | | | 5,647.1 | |
| Selling, general and administrative expense | | 57.2 | | | 92.1 | | | 128.2 | | | 140.4 | | | 127.0 | | | 92.9 | | | 637.8 | |
| Other (income) expense | | (1.6) | | | (2.8) | | | (3.4) | | | (4.1) | | | (2.8) | | | (2.3) | | | (17.0) | |
| Income before income taxes | | $ | 93.7 | | | $ | 123.3 | | | $ | 208.4 | | | $ | 211.3 | | | $ | 171.8 | | | $ | 126.5 | | | $ | 935.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended March 31, 2025 |
| | Northwest | | Southwest | | South Central | | Southeast | | East | | North | | Total |
| | (In millions) |
| Revenues | | | | | | | | | | | | | | |
| Home sales | | $ | 1,193.5 | | | $ | 2,203.6 | | | $ | 3,016.5 | | | $ | 3,332.2 | | | $ | 2,668.3 | | | $ | 1,912.9 | | | $ | 14,327.0 | |
| Land/lot sales and other | | 0.1 | | | 0.2 | | | 1.1 | | | 31.4 | | | 6.3 | | | 4.1 | | | 43.2 | |
| | 1,193.6 | | | 2,203.8 | | | 3,017.6 | | | 3,363.6 | | | 2,674.6 | | | 1,917.0 | | | 14,370.2 | |
| Cost of sales | | | | | | | | | | | | | | |
| Home sales | | 915.1 | | | 1,729.6 | | | 2,332.1 | | | 2,627.9 | | | 2,049.3 | | | 1,482.7 | | | 11,136.7 | |
| Land/lot sales and other | | — | | | — | | | 0.4 | | | 9.0 | | | 4.7 | | | 2.6 | | | 16.7 | |
| Inventory and land option charges | | 3.1 | | | 6.3 | | | 5.6 | | | 12.9 | | | 10.7 | | | 2.7 | | | 41.3 | |
| | 918.2 | | | 1,735.9 | | | 2,338.1 | | | 2,649.8 | | | 2,064.7 | | | 1,488.0 | | | 11,194.7 | |
| Selling, general and administrative expense | | 109.8 | | | 183.2 | | | 260.3 | | | 289.7 | | | 252.1 | | | 179.4 | | | 1,274.5 | |
| Other (income) expense | | (4.3) | | | (7.0) | | | (10.5) | | | (10.0) | | | (8.4) | | | (6.7) | | | (46.9) | |
| Income before income taxes | | $ | 169.9 | | | $ | 291.7 | | | $ | 429.7 | | | $ | 434.1 | | | $ | 366.2 | | | $ | 256.3 | | | $ | 1,947.9 | |
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
The Company’s total inventories are disaggregated into the individual reporting segments in the table below. Inventories are the only assets included in the measure of segment assets used by the Company’s chief operating decision makers.
| | | | | | | | | | | | | | |
| Inventories by Reporting Segment | | March 31,
2026 | | September 30,
2025 |
| | (In millions) |
| Homebuilding | | | | |
| Northwest | | $ | 1,947.5 | | | $ | 1,891.8 | |
| Southwest | | 3,055.9 | | | 3,068.5 | |
| South Central | | 4,033.7 | | | 3,931.9 | |
| Southeast | | 4,189.9 | | | 4,061.8 | |
| East | | 4,599.3 | | | 4,397.7 | |
| North | | 2,783.7 | | | 2,637.6 | |
| Corporate and unallocated (1) | | 359.3 | | | 327.2 | |
| Total Homebuilding | | 20,969.3 | | | 20,316.5 | |
| Rental | | 3,011.1 | | | 2,710.4 | |
| Forestar | | 2,709.7 | | | 2,645.1 | |
| Eliminations and other (2) | | (386.3) | | | (384.7) | |
| Consolidated inventories | | $ | 26,303.8 | | | $ | 25,287.3 | |
____________________________
(1)Corporate and unallocated consists primarily of homebuilding capitalized interest and property taxes.
(2)Amounts include the balances of the Company’s other businesses and the elimination of intercompany transactions.
NOTE C – INVENTORIES
At the end of each quarter, the Company reviews the performance and outlook for all of its communities and land inventories for indicators of potential impairment and performs detailed impairment evaluations and analyses when necessary. As of March 31, 2026, the Company performed detailed impairment evaluations of communities and land inventories and determined that communities with a combined carrying value of $33.1 million were impaired on a non-recurring basis using Level 3 inputs. As a result, impairment charges of $3.0 million were recorded during the three and six months ended March 31, 2026 to reduce the carrying value of the related inventories to fair value. There were $5.4 million and $8.6 million of impairment charges recorded in the three and six months ended March 31, 2025, respectively.
During the three and six months ended March 31, 2026, earnest money and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $29.1 million and $40.4 million, respectively, compared to $24.6 million and $38.0 million in the prior year periods. Inventory impairments and land option charges are included in cost of sales in the consolidated statements of operations.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
NOTE D – NOTES PAYABLE
The Company’s notes payable at their carrying amounts consist of the following:
| | | | | | | | | | | | | | |
| | March 31,
2026 | | September 30,
2025 |
| | | (In millions) |
| Homebuilding | | | | |
| Revolving credit facility | | $ | 250.0 | | | $ | — | |
1.3% senior notes due 2026 (1) | | 599.4 | | | 598.8 | |
1.4% senior notes due 2027 (1) | | 498.6 | | | 498.2 | |
4.85% senior notes due 2030 (1) | | 495.9 | | | 495.5 | |
5.0% senior notes due 2034 (1) | | 688.3 | | | 687.7 | |
5.5% senior notes due 2035 (1) | | 693.8 | | | 693.6 | |
| Other notes | | 201.1 | | | 180.6 | |
| | 3,427.1 | | | 3,154.4 | |
| Rental | | | | |
| Revolving credit facility | | 865.0 | | | 600.0 | |
| | | | |
| Forestar | | | | |
| Revolving credit facility | | — | | | — | |
5.0% senior notes due 2028 (2) | | 298.9 | | | 298.7 | |
6.5% senior notes due 2033 (2) | | 494.6 | | | 494.2 | |
| Other notes | | — | | | 9.9 | |
| | 793.5 | | | 802.8 | |
| Financial Services | | | | |
| Mortgage repurchase facilities: | | | | |
| Committed facility | | 1,062.1 | | | 1,103.5 | |
| Uncommitted facility | | 416.1 | | | 304.8 | |
| | 1,478.2 | | | 1,408.3 | |
Total notes payable (3) | | $ | 6,563.8 | | | $ | 5,965.5 | |
_____________
(1)Debt issuance costs that were deducted from the carrying amounts of the homebuilding senior notes totaled $17.2 million and $18.9 million at March 31, 2026 and September 30, 2025, respectively.
(2)Debt issuance costs that were deducted from the carrying amount of Forestar’s senior notes totaled $6.5 million and $7.2 million at March 31, 2026 and September 30, 2025, respectively.
(3)The fair value of notes payable at March 31, 2026 totaled $6.6 billion, of which $3.8 billion were measured using Level 2 inputs and $2.8 billion were measured using Level 3 inputs. The fair value of notes payable at September 30, 2025 totaled $6.0 billion, of which $3.8 billion were measured using Level 2 inputs and $2.2 billion were measured using Level 3 inputs. The Level 2 inputs primarily relate to senior notes, and the Level 3 inputs primarily relate to the revolving credit and mortgage repurchase facilities and approximate carrying value due to their short-term nature and/or floating interest rate terms.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
Homebuilding
The Company has a senior unsecured homebuilding revolving credit facility that was amended in March 2026 to increase its capacity from $2.305 billion to $3.295 billion. The amendment also extended the maturity dates of the facility. Of the total commitments, $265 million matures on October 28, 2027, $1,012.5 million matures on March 27, 2029 and $2,017.5 million matures on March 27, 2031. The facility has an uncommitted accordion feature that allows for an increase in its size to $4.0 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. At March 31, 2026, there were $250 million of borrowings outstanding at a 4.5% annual interest rate and $219.8 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $2.825 billion.
The Company’s homebuilding revolving credit facility imposes restrictions on its operations and activities, including requiring the maintenance of a maximum allowable leverage ratio and a borrowing base restriction if the leverage ratio exceeds a certain level. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity. The credit agreement governing the facility imposes restrictions on the creation of secured debt and liens.
At March 31, 2026, the Company had $3.0 billion principal amount of homebuilding senior notes outstanding that mature from October 2026 through October 2035. The indenture governing the senior notes imposes restrictions on the creation of secured debt and liens.
D.R. Horton has an automatically effective universal shelf registration statement filed with the Securities and Exchange Commission (SEC) in July 2024, registering debt and equity securities that the Company may issue from time to time in amounts to be determined.
At March 31, 2026, the Company was in compliance with all of the covenants, limitations and restrictions of its homebuilding revolving credit facility and public debt obligations. The Company’s homebuilding revolving credit facility and homebuilding senior notes are guaranteed by D.R. Horton, Inc.’s significant wholly owned homebuilding subsidiaries.
In July 2024, the Board of Directors authorized the repurchase of up to $500 million of the Company’s debt securities. The authorization has no expiration date. All of the $500 million authorization was remaining at March 31, 2026.
Rental
The Company’s rental subsidiary, DRH Rental, has a $1.05 billion senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $2.0 billion, subject to certain conditions and availability of additional bank commitments. Availability under the rental revolving credit facility is subject to a borrowing base calculation based on the book value of DRH Rental’s real estate assets and unrestricted cash. The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments. The facility was amended in March 2026 to extend its maturity date to March 27, 2030. At March 31, 2026, there were $865 million of borrowings outstanding at a 5.4% annual interest rate and no letters of credit issued under the facility, resulting in available capacity of $185 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 March 31, 2026, 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 and have not been designated as unrestricted subsidiaries. The rental revolving credit facility is not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, Forestar or financial services operations.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
Forestar
Forestar has a $715 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $1.0 billion, subject to certain conditions and availability of additional bank commitments. The current capacity of the facility reflects additional bank commitments of $25 million and $50 million obtained in October 2025 and March 2026, respectively. Of the total commitments, $650 million matures on December 18, 2029, and $65 million matures on October 28, 2026. The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments. 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. At March 31, 2026, there were no borrowings outstanding and $42.9 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $672.1 million.
Forestar’s revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require Forestar to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.
At March 31, 2026, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations. Forestar’s revolving credit facility and its senior notes are guaranteed by Forestar’s wholly owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries. They are not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, rental or financial services operations.
In April 2020, Forestar’s Board of Directors authorized the repurchase of up to $30 million of Forestar’s debt securities. The authorization has no expiration date. All of the $30 million authorization was remaining at March 31, 2026.
Financial Services
The Company’s mortgage subsidiary, DHI Mortgage, has two mortgage repurchase facilities, one of which is committed and the other of which is uncommitted, that provide financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to counterparties upon receipt of funds from the counterparties. DHI Mortgage then has the right and obligation to repurchase the 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.
The committed mortgage repurchase facility has a total capacity of $1.4 billion and a maturity date of May 6, 2026. The capacity of the facility can be increased to $2.0 billion subject to the availability of additional commitments. At March 31, 2026, DHI Mortgage had an obligation of $1.1 billion under the committed mortgage repurchase facility at a 5.4% annual interest rate.
At March 31, 2026, the uncommitted mortgage repurchase facility had a borrowing capacity of $500 million, of which DHI Mortgage had an obligation of $416.1 million at a 4.9% annual interest rate.
At March 31, 2026, $2.31 billion of mortgage loans held for sale with a collateral value of $2.26 billion were pledged under the committed mortgage repurchase facility, and $464.6 million of mortgage loans held for sale with a collateral value of $430.7 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 March 31, 2026, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities. The mortgage repurchase facilities are not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, rental or Forestar operations.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
NOTE E – CAPITALIZED INTEREST
The Company capitalizes interest costs incurred to inventory during active development and construction (active inventory). Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. During periods in which the Company’s active inventory is lower than its debt level, a portion of the interest incurred is reflected as interest expense in the period incurred. During the first six months of fiscal 2026 and fiscal 2025, the Company’s active inventory exceeded its debt level, and all interest incurred was capitalized to inventory.
The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three and six months ended March 31, 2026 and 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
March 31, | | Six Months Ended
March 31, |
| | | 2026 | | 2025 | | 2026 | | 2025 |
| | | (In millions) |
| Capitalized interest, beginning of period | | $ | 463.9 | | | $ | 371.5 | | | $ | 438.7 | | | $ | 355.1 | |
| Interest incurred (1) | | 60.0 | | | 55.2 | | | 116.5 | | | 101.9 | |
| Interest charged to cost of sales | | (38.1) | | | (32.2) | | | (69.4) | | | (62.5) | |
| Capitalized interest, end of period | | $ | 485.8 | | | $ | 394.5 | | | $ | 485.8 | | | $ | 394.5 | |
__________________
(1) Interest incurred includes (a) interest on the Company’s mortgage repurchase facilities of $4.2 million and $8.9 million in the three and six months ended March 31, 2026, respectively, and $7.4 million and $15.5 million in the prior year periods; (b) Forestar interest of $12.4 million and $25.0 million in the three and six months ended March 31, 2026, respectively, and $10.6 million and $18.8 million in the prior year periods; and (c) interest on the rental revolving credit facility of $10.3 million and $19.4 million in the three and six months ended March 31, 2026, respectively, and $16.4 million and $28.8 million in the prior year periods.
NOTE F – MORTGAGE LOANS
Mortgage loans held for sale consist primarily of single-family residential loans collateralized by the underlying property. The Company typically sells the servicing rights for the majority of loans when the loans are sold. Servicing rights retained are typically sold within six months of loan origination. At March 31, 2026, mortgage loans held for sale of $2.7 billion had an aggregate outstanding principal balance of $2.8 billion. At September 30, 2025, mortgage loans held for sale of $2.6 billion had an aggregate outstanding principal balance of $2.7 billion. Mortgage loans held for sale at both dates were primarily composed of mortgage loans measured at fair value on a recurring basis using Level 2 inputs.
During the six months ended March 31, 2026 and 2025, mortgage loans originated totaled $10.3 billion and $10.5 billion, respectively, and mortgage loans sold totaled $10.2 billion and $10.5 billion, respectively. The Company had gains on sales of loans and servicing rights of $127.8 million and $251.8 million during the three and six months ended March 31, 2026, respectively, compared to $151.1 million and $271.1 million in the prior year periods. Net gains on sales of loans and servicing rights are included in revenues in the consolidated statements of operations. During the six months ended March 31, 2026, approximately 72% of the Company’s mortgage loans were sold directly to the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or into securities backed by the Government National Mortgage Association (Ginnie Mae), and 19% were sold to one other major financial entity.
The Company also uses hedging instruments as part of a program to offer below market interest rate financing to its homebuyers. At March 31, 2026 and September 30, 2025, the Company had mortgage-backed securities (MBS) totaling $1.1 billion and $677.5 million, respectively, that did not yet have interest rate lock commitments (IRLCs) or closed loans created or assigned. The Company recorded a liability of $0.1 million and an asset of $1.9 million at March 31, 2026 and September 30, 2025, respectively, for the fair value of such MBS position, which is measured using Level 2 inputs.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
The Company is party to IRLCs, which are extended to borrowers who have applied for loan funding and meet defined credit and underwriting criteria. At March 31, 2026 and September 30, 2025, the notional amount of IRLCs, which are accounted for as derivative instruments recorded at fair value using Level 3 inputs, totaled $3.4 billion and $2.1 billion, respectively.
NOTE G – INCOME TAXES
The Company’s income tax expense for the three and six months ended March 31, 2026 was $209.4 million and $406.0 million, respectively, compared to $248.0 million and $506.0 million in the prior year periods. The effective tax rate was 24.1% and 24.4% for the three and six months ended March 31, 2026, respectively, compared to 23.2% in both 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 home tax credits.
At March 31, 2026, the Company had deferred tax liabilities, net of deferred tax assets, of $8.4 million, after consideration of a valuation allowance of $14.6 million recorded against certain deferred tax assets. At September 30, 2025, the Company had deferred tax assets, net of deferred tax liabilities, of $44.5 million, after consideration of a valuation allowance of $14.6 million recorded against certain deferred tax assets. The valuation allowance for both periods relates to deferred tax assets for state net operating loss (NOL) and tax credit carryforwards that are expected to expire before being realized. The Company will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to the remaining state NOL and tax credit carryforwards. Reversal of any portion of the valuation allowance in future periods would impact the Company’s effective tax rate.
NOTE H – EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
March 31, | | Six Months Ended
March 31, |
| | | 2026 | | 2025 | | 2026 | | 2025 |
| | | (In millions, except per share data) |
| Numerator: | | | | | | | | |
| Net income attributable to D.R. Horton, Inc. | | $ | 647.9 | | | $ | 810.4 | | | $ | 1,242.7 | | | $ | 1,655.3 | |
| Denominator: | | | | | | | | |
| Denominator for basic earnings per share — weighted average shares | | 287.9 | | | 312.5 | | | 290.1 | | | 317.0 | |
| Effect of dilutive securities: | | | | | | | | |
| Employee stock awards | | 1.1 | | | 1.5 | | | 1.1 | | | 1.7 | |
| Denominator for diluted earnings per share — adjusted weighted average shares | | 289.0 | | | 314.0 | | | 291.2 | | | 318.7 | |
| Basic net income per share attributable to D.R. Horton, Inc. | | $ | 2.25 | | | $ | 2.59 | | | $ | 4.28 | | | $ | 5.22 | |
| Diluted net income per share attributable to D.R. Horton, Inc. | | $ | 2.24 | | | $ | 2.58 | | | $ | 4.27 | | | $ | 5.19 | |
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
NOTE I – STOCKHOLDERS’ EQUITY
D.R. Horton has an automatically effective universal shelf registration statement, filed with the SEC in July 2024, registering debt and equity securities that it may issue from time to time in amounts to be determined.
In April 2025, the Board of Directors authorized the repurchase of up to $5.0 billion of the Company’s common stock. The authorization has no expiration date. During the six months ended March 31, 2026, the Company repurchased 10.4 million shares of its common stock at a total cost including commissions and excise taxes of $1.6 billion. At March 31, 2026, there was $1.7 billion remaining on the repurchase authorization.
During each of the first two quarters of fiscal 2026, the Board of Directors approved a quarterly cash dividend of $0.45 per share, the most recent of which was paid on February 12, 2026 to stockholders of record on February 5, 2026. Cash dividends declared and paid in the three and six months ended March 31, 2026 totaled $129.7 million and $261.2 million, respectively. In April 2026, the Board of Directors approved a quarterly cash dividend of $0.45 per share, payable on May 14, 2026 to stockholders of record on May 7, 2026.
Forestar has an effective shelf registration statement, filed with the SEC in September 2024, registering $750 million of equity securities, of which $300 million is reserved for sales under its at-the-market equity offering (ATM) program that was entered into in November 2024. During the six months ended March 31, 2026, there were no shares issued under the ATM program. At March 31, 2026, the full $750 million remained available for issuance under Forestar’s shelf registration statement, with $300 million reserved for sales under the ATM program.
NOTE J – EMPLOYEE BENEFIT PLANS
Stock-Based Compensation
The Company’s Stock Incentive Plan provides for the granting of equity awards, such as performance stock units (PSUs) and restricted stock units (RSUs), to executive officers, other key employees and non-management directors. PSUs are earned by achieving key performance goals, and RSUs are earned through continued employment with the Company over a requisite time period. Each stock unit represents the contingent right to receive one share of the Company’s common stock if the performance criteria and/or vesting conditions are satisfied. The stock units have no dividend or voting rights until vested.
In October 2025, the Company granted 374,025 PSUs to its executive officers and other key employees. The number of units that ultimately vest depends on the Company’s relative position compared to its peers in achieving each of the performance criteria and can range from 0% to 300% of the number of units granted. These awards vest at the end of a three-year performance period ending September 30, 2028. The grant date fair value of these equity awards was $157.79 per unit. Compensation expense related to this grant was $5.1 million and $8.9 million in the three and six months ended March 31, 2026, respectively, based on an estimate of the Company’s performance against a market index or its peer group, the elapsed portion of the performance period and the grant date fair value of the award.
During the six months ended March 31, 2026, the Company granted approximately 670,000 RSUs to approximately 1,600 recipients, including executive officers, other key employees and non-management directors. The weighted average grant date fair value of these equity awards was $143.05 per unit, and they vest annually in equal installments over periods of three to five years. Compensation expense related to these grants was $5.0 million and $16.8 million in the three and six months ended March 31, 2026, respectively. Compensation expense in the six month period included $8.1 million of expense recognized for employees that were retirement eligible on the date of grant.
Total stock-based compensation expense related to the Company’s equity awards was $31.9 million and $69.5 million during the three and six months ended March 31, 2026, respectively, compared to $29.8 million and $69.8 million during the three and six months ended March 31, 2025.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
NOTE K – COMMITMENTS AND CONTINGENCIES
Warranty Claims
The Company typically provides its homebuyers with a ten-year limited warranty for major defects in structural elements such as framing components and foundation systems, a two-year limited warranty on major mechanical systems and a one-year limited warranty on other construction components of the home. The Company’s warranty liability is based upon historical warranty cost experience in each market in which it operates.
Changes in the Company’s warranty liability during the three and six months ended March 31, 2026 and 2025 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
March 31, | | Six Months Ended
March 31, |
| | | 2026 | | 2025 | | 2026 | | 2025 |
| | | (In millions) |
| Warranty liability, beginning of period | | $ | 560.8 | | | $ | 570.4 | | | $ | 566.2 | | | $ | 566.9 | |
| Warranties issued | | 40.7 | | | 43.0 | | | 79.9 | | | 87.0 | |
| Changes in liability for pre-existing warranties | | (37.4) | | | (27.0) | | | (59.6) | | | (38.0) | |
| Settlements made | | (17.6) | | | (29.1) | | | (40.0) | | | (58.6) | |
| Warranty liability, end of period | | $ | 546.5 | | | $ | 557.3 | | | $ | 546.5 | | | $ | 557.3 | |
Legal Claims and Insurance
The Company is named as a defendant in various claims, complaints and other legal actions in the ordinary course of business. At any point in time, the Company is managing several hundred individual claims related to construction defect matters, personal injury claims, employment matters, land development issues, contract disputes and other matters. The Company has established reserves for these contingencies based on the estimated costs of pending claims and the estimated costs of anticipated future claims related to previously closed homes. The estimated liabilities for these contingencies were $1.1 billion at both March 31, 2026 and September 30, 2025 and are included in accrued expenses and other liabilities in the consolidated balance sheets. Approximately 99% and 98% of these reserves related to construction defect matters at March 31, 2026 and September 30, 2025, respectively. Expenses related to the Company’s legal contingencies were $58.0 million and $97.3 million in the six months ended March 31, 2026 and 2025, respectively.
Changes in the Company’s legal claims reserves during the three and six months ended March 31, 2026 and 2025 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
March 31, | | Six Months Ended
March 31, |
| | 2026 | | 2025 | | 2026 | | 2025 |
| | (In millions) |
| Reserves for legal claims, beginning of period | | $ | 1,122.8 | | | $ | 939.1 | | | $ | 1,143.6 | | | $ | 949.6 | |
| Increase in reserves | | 27.0 | | | 66.7 | | | 50.3 | | | 72.5 | |
| Payments | | (13.1) | | | (14.5) | | | (57.2) | | | (30.8) | |
| Reserves for legal claims, end of period | | $ | 1,136.7 | | | $ | 991.3 | | | $ | 1,136.7 | | | $ | 991.3 | |
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
The Company estimates and records receivables under its applicable insurance policies related to its estimated contingencies for known claims and anticipated future construction defect claims on previously closed homes and other legal claims and lawsuits incurred in the ordinary course of business when recovery is probable. However, because the self-insured retentions under these policies are significant, and the limits of the policies are finite, the Company anticipates it may be in large part self-insured. Since June 1, 2021, except for contractual risk transfer, the Company is almost exclusively self-insured for construction defect exposures. The Company’s estimated insurance receivables from estimated losses for pending legal claims and anticipated future claims related to previously closed homes totaled $152.3 million, $167.0 million and $126.7 million at March 31, 2026, September 30, 2025 and March 31, 2025, respectively, and are included in other assets in the consolidated balance sheets. The Company also contractually requires major subcontractors in most markets to have general liability insurance, which includes construction defect coverage.
The estimation of losses related to these reserves and the related estimates of recoveries from insurance policies are subject to a high degree of variability due to uncertainties such as trends in construction defect claims relative to the Company’s markets and the types of products built, claim frequency, claim settlement costs and patterns, insurance industry practices and legal interpretations, among others. Due to the high degree of judgment required in establishing reserves for these contingencies, actual future costs and recoveries from insurance could differ significantly from current estimated amounts, and it is not possible for the Company to make a reasonable estimate of the possible loss or range of loss in excess of its reserves.
Land and Lot Purchase Contracts
The Company enters into land and lot purchase contracts to acquire land or lots for the construction of homes. Under these contracts, the Company will fund a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time with predetermined terms. Under the terms of many of the purchase contracts, the deposits are not refundable in the event the Company elects to terminate the contract. Land purchase contract deposits and capitalized pre-acquisition costs are expensed to inventory and land option charges when the Company believes it is probable that it will not acquire the property under contract and will not be able to recover these costs through other means.
At March 31, 2026, the Company had total deposits of $2.5 billion, consisting of cash deposits of $2.3 billion and promissory notes and surety bonds of $180.1 million, related to contracts to purchase land and lots with a total remaining purchase price of approximately $26.7 billion. Of these amounts, $211.9 million of the deposits related to contracts with Forestar to purchase land and lots with a remaining purchase price of $2.1 billion. A limited number of the homebuilding land and lot purchase contracts at March 31, 2026, representing $76.8 million of remaining purchase price, were subject to specific performance provisions that may require the Company to purchase the land or lots upon the land sellers meeting their respective contractual obligations. Of the $76.8 million remaining purchase price subject to specific performance provisions, $26.1 million related to contracts between the homebuilding segment and Forestar.
During the three and six months ended March 31, 2026, Forestar reimbursed the homebuilding segment $1.8 million and $3.5 million, respectively, for previously paid earnest money and $12.2 million and $20.1 million, respectively, for pre-acquisition and other due diligence costs related to land purchase contracts whereby the homebuilding segment assigned its rights under contract to Forestar. During the three and six months ended March 31, 2025, Forestar reimbursed the homebuilding segment $4.6 million and $14.6 million, respectively, for previously paid earnest money and $4.0 million and $8.2 million, respectively, for such pre-acquisition and due diligence costs.
Other Commitments
At March 31, 2026, the Company had outstanding surety bonds of $3.3 billion and letters of credit of $262.7 million to secure performance under various contracts. Of the total letters of credit, $219.8 million were issued under the homebuilding revolving credit facility and $42.9 million were issued under Forestar’s revolving credit facility.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
March 31, 2026
NOTE L – OTHER ASSETS, ACCRUED EXPENSES AND OTHER LIABILITIES
The Company’s other assets at March 31, 2026 and September 30, 2025 were as follows:
| | | | | | | | | | | | | | |
| | March 31,
2026 | | September 30,
2025 |
| | | (In millions) |
| Earnest money and refundable deposits | | $ | 2,475.6 | | | $ | 2,362.9 | |
| Water rights and other water-related assets | | 332.0 | | | 333.0 | |
| Pledged reimbursements asset | | 237.8 | | | 251.4 | |
| Insurance receivables | | 152.3 | | | 167.0 | |
| Other receivables | | 144.2 | | | 164.0 | |
| Prepaid assets | | 147.9 | | | 134.5 | |
| Contract assets - insurance agency commissions | | 133.9 | | | 127.9 | |
| Lease right of use assets | | 67.1 | | | 63.0 | |
| Margin deposits related to hedging instruments | | 0.3 | | | 47.9 | |
| Interest rate lock commitments | | 15.5 | | | 42.7 | |
| Mortgage servicing rights | | 20.1 | | | 27.1 | |
| Mortgage hedging instruments and commitments | | 44.5 | | | 0.6 | |
| Other | | 80.3 | | | 75.2 | |
| | $ | 3,851.5 | | | $ | 3,797.2 | |
The Company’s accrued expenses and other liabilities at March 31, 2026 and September 30, 2025 were as follows:
| | | | | | | | | | | | | | |
| | March 31,
2026 | | September 30,
2025 |
| | | (In millions) |
| Reserves for legal claims | | $ | 1,136.7 | | | $ | 1,143.6 | |
| Employee compensation and related liabilities | | 565.5 | | | 598.7 | |
| Warranty liability | | 546.5 | | | 566.2 | |
| Inventory related accruals | | 506.7 | | | 497.3 | |
| Pledged reimbursements liability | | 237.8 | | | 251.4 | |
| Accrued property taxes | | 48.8 | | | 82.7 | |
| Customer deposits | | 113.1 | | | 81.5 | |
| Lease liabilities | | 70.0 | | | 65.6 | |
| Accrued interest | | 55.8 | | | 60.5 | |
| Mortgage hedging instruments and commitments | | — | | | 34.1 | |
| Federal and state income tax liabilities | | 16.2 | | | 19.0 | |
| Broker deposits related to hedging instruments | | 48.0 | | | — | |
| Interest rate lock commitments | | 9.6 | | | — | |
| Other | | 117.5 | | | 141.0 | |
| | $ | 3,472.2 | | | $ | 3,541.6 | |
