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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q | | | | | |
| (Mark One) |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended June 30, 2024
or | | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period From To
Commission File Number: 1-14122
D.R. Horton, Inc.
(Exact name of registrant as specified in its charter) | | | | | | | | | | | |
| Delaware | 75-2386963 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1341 Horton Circle
Arlington, Texas 76011
(Address of principal executive offices) (Zip code)
(817) 390-8200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
| | | | | | | | | | | | | | |
| Securities registered pursuant to Section 12(b) of the Act: |
| | | | |
| Title of Each Class | | Trading Symbol | | Name of Each Exchange on Which Registered |
| Common Stock, par value $.01 per share | | DHI | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Large accelerated filer | ý | | Accelerated filer | ☐ | | Non-accelerated filer | ☐ | | Smaller reporting company | ☐ | | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý
As of July 18, 2024, there were 326,040,096 shares of the registrant’s common stock, par value $.01 per share, outstanding.
D.R. HORTON, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | |
| June 30,
2024 | | September 30,
2023 |
| (In millions)
(Unaudited) |
| ASSETS | | | |
| Cash and cash equivalents | $ | 2,992.3 | | | $ | 3,873.6 | |
| Restricted cash | 27.7 | | | 26.5 | |
| Total cash, cash equivalents and restricted cash | 3,020.0 | | | 3,900.1 | |
| Inventories: | | | |
| Construction in progress and finished homes | 9,880.5 | | | 9,001.4 | |
| Residential land and lots — developed and under development | 12,413.4 | | | 10,621.9 | |
| Land held for development | 155.8 | | | 50.0 | |
| Land held for sale | 15.8 | | | 8.7 | |
| Rental properties | 3,070.6 | | | 2,691.3 | |
| Total inventory | 25,536.1 | | | 22,373.3 | |
| Mortgage loans held for sale | 2,578.8 | | | 2,519.9 | |
Deferred income taxes, net of valuation allowance of $14.7 million and $14.8 million at June 30, 2024 and September 30, 2023, respectively | 156.6 | | | 187.2 | |
| Property and equipment, net | 520.9 | | | 445.4 | |
| Other assets | 3,175.5 | | | 2,993.0 | |
| Goodwill | 163.5 | | | 163.5 | |
| Total assets | $ | 35,151.4 | | | $ | 32,582.4 | |
| LIABILITIES | | | |
| Accounts payable | $ | 1,412.7 | | | $ | 1,246.2 | |
| Accrued expenses and other liabilities | 2,897.0 | | | 3,103.8 | |
| Notes payable | 5,691.0 | | | 5,094.5 | |
| Total liabilities | 10,000.7 | | | 9,444.5 | |
Commitments and contingencies (Note K) | | | |
| EQUITY | | | |
Preferred stock, $.10 par value, 30,000,000 shares authorized, no shares issued | — | | | — | |
Common stock, $.01 par value, 1,000,000,000 shares authorized, 402,771,463 shares issued and 327,373,437 shares outstanding at June 30, 2024 and 401,202,253 shares issued and 334,848,565 shares outstanding at September 30, 2023 | 4.0 | | | 4.0 | |
| Additional paid-in capital | 3,458.9 | | | 3,432.2 | |
| Retained earnings | 26,765.3 | | | 23,589.8 | |
Treasury stock, 75,398,026 shares and 66,353,688 shares at June 30, 2024 and September 30, 2023, respectively, at cost | (5,571.7) | | | (4,329.8) | |
| Stockholders’ equity | 24,656.5 | | | 22,696.2 | |
| Noncontrolling interests | 494.2 | | | 441.7 | |
| Total equity | 25,150.7 | | | 23,137.9 | |
| Total liabilities and equity | $ | 35,151.4 | | | $ | 32,582.4 | |
| | | |
See accompanying notes to consolidated financial statements. |
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | Nine Months Ended
June 30, |
| | 2024 | | 2023 | | 2024 | | 2023 |
| (In millions, except per share data)
(Unaudited) |
| Revenues | $ | 9,965.7 | | | $ | 9,725.6 | | | $ | 26,798.8 | | | $ | 24,956.4 | |
| Cost of sales | 7,323.7 | | | 7,141.8 | | | 19,817.7 | | | 18,429.3 | |
| Selling, general and administrative expense | 923.6 | | | 852.1 | | | 2,639.2 | | | 2,362.6 | |
| Other (income) expense | (80.6) | | | (52.2) | | | (233.1) | | | (131.9) | |
| Income before income taxes | 1,799.0 | | | 1,783.9 | | | 4,575.0 | | | 4,296.4 | |
| Income tax expense | 432.2 | | | 432.2 | | | 1,068.8 | | | 1,026.7 | |
| Net income | 1,366.8 | | | 1,351.7 | | | 3,506.2 | | | 3,269.7 | |
| Net income attributable to noncontrolling interests | 13.2 | | | 16.6 | | | 33.2 | | | 33.7 | |
| Net income attributable to D.R. Horton, Inc. | $ | 1,353.6 | | | $ | 1,335.1 | | | $ | 3,473.0 | | | $ | 3,236.0 | |
| | | | | | | |
| Basic net income per common share attributable to D.R. Horton, Inc. | $ | 4.12 | | | $ | 3.93 | | | $ | 10.50 | | | $ | 9.46 | |
| Weighted average number of common shares | 328.4 | | | 339.9 | | | 330.9 | | | 342.1 | |
| | | | | | | |
| Diluted net income per common share attributable to D.R. Horton, Inc. | $ | 4.10 | | | $ | 3.90 | | | $ | 10.43 | | | $ | 9.39 | |
| Adjusted weighted average number of common shares | 330.1 | | | 342.3 | | | 333.0 | | | 344.7 | |
| | | | | | | |
See accompanying notes to consolidated financial statements. |
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF TOTAL EQUITY
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common
Stock | | Additional
Paid-in
Capital | | Retained
Earnings | | Treasury
Stock | | Non-controlling
Interests | | Total
Equity |
| | (In millions, except common stock share data)
(Unaudited) |
Balances at September 30, 2023 (334,848,565 shares) | $ | 4.0 | | | $ | 3,432.2 | | | $ | 23,589.8 | | | $ | (4,329.8) | | | $ | 441.7 | | | $ | 23,137.9 | |
| Net income | — | | | — | | | 947.4 | | | — | | | 8.3 | | | 955.7 | |
Exercise of stock options (68,095 shares) | — | | | 1.6 | | | — | | | — | | | — | | | 1.6 | |
Stock issued under employee benefit plans (598,824 shares) | — | | | 3.1 | | | — | | | — | | | — | | | 3.1 | |
| Cash paid for shares withheld for taxes | — | | | (37.5) | | | — | | | — | | | — | | | (37.5) | |
| Stock-based compensation expense | — | | | 40.9 | | | — | | | — | | | — | | | 40.9 | |
Cash dividends declared ($0.30 per share) | — | | | — | | | (99.9) | | | — | | | — | | | (99.9) | |
Repurchases of common stock (3,325,150 shares) | — | | | — | | | — | | | (398.3) | | | — | | | (398.3) | |
| Change of ownership interest in Forestar | — | | | (0.1) | | | — | | | — | | | 0.1 | | | — | |
Balances at December 31, 2023 (332,190,334 shares) | $ | 4.0 | | | $ | 3,440.2 | | | $ | 24,437.3 | | | $ | (4,728.1) | | | $ | 450.1 | | | $ | 23,603.5 | |
| Net income | — | | | — | | | 1,172.1 | | | — | | | 11.6 | | | 1,183.7 | |
Exercise of stock options (151,568 shares) | — | | | 3.6 | | | — | | | — | | | — | | | 3.6 | |
Stock issued under employee benefit plans (604,209 shares) | — | | | 6.9 | | | — | | | — | | | — | | | 6.9 | |
| Cash paid for shares withheld for taxes | — | | | (44.1) | | | — | | | — | | | — | | | (44.1) | |
| Stock-based compensation expense | — | | | 25.0 | | | — | | | — | | | — | | | 25.0 | |
Cash dividends declared ($0.30 per share) | — | | | — | | | (99.2) | | | — | | | — | | | (99.2) | |
Repurchases of common stock (2,749,810 shares) | — | | | — | | | — | | | (402.2) | | | — | | | (402.2) | |
| Change of ownership interest in Forestar | — | | | — | | | — | | | — | | | 19.2 | | | 19.2 | |
Balances at March 31, 2024 (330,196,301 shares) | $ | 4.0 | | | $ | 3,431.6 | | | $ | 25,510.2 | | | $ | (5,130.3) | | | $ | 480.9 | | | $ | 24,296.4 | |
| Net income | — | | | — | | | 1,353.6 | | | — | | | 13.2 | | | 1,366.8 | |
Stock issued under employee benefit plans (146,514 shares) | — | | | 1.9 | | | — | | | — | | | — | | | 1.9 | |
| Cash paid for shares withheld for taxes | — | | | (1.3) | | | — | | | — | | | — | | | (1.3) | |
| Stock-based compensation expense | — | | | 26.8 | | | — | | | — | | | — | | | 26.8 | |
Cash dividends declared ($0.30 per share) | — | | | — | | | (98.5) | | | — | | | — | | | (98.5) | |
Repurchases of common stock (2,969,378 shares) | — | | | — | | | — | | | (441.4) | | | — | | | (441.4) | |
| Change of ownership interest in Forestar | — | | | (0.1) | | | — | | | — | | | 0.1 | | | — | |
Balances at June 30, 2024 (327,373,437 shares) | $ | 4.0 | | | $ | 3,458.9 | | | $ | 26,765.3 | | | $ | (5,571.7) | | | $ | 494.2 | | | $ | 25,150.7 | |
| | | | | | | | | | | |
| See accompanying notes to consolidated financial statements. |
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF TOTAL EQUITY (Continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common
Stock | | Additional
Paid-in
Capital | | Retained
Earnings | | Treasury
Stock | | Non-controlling
Interests | | Total
Equity |
| | (In millions, except common stock share data)
(Unaudited) |
Balances at September 30, 2022 (343,953,023 shares) | $ | 4.0 | | | $ | 3,349.5 | | | $ | 19,185.3 | | | $ | (3,142.5) | | | $ | 389.3 | | | $ | 19,785.6 | |
| Net income | — | | | — | | | 958.7 | | | — | | | 9.6 | | | 968.3 | |
Exercise of stock options (108,457 shares) | — | | | 2.6 | | | — | | | — | | | — | | | 2.6 | |
Stock issued under employee benefit plans (601,371 shares) | — | | | 2.9 | | | — | | | — | | | — | | | 2.9 | |
| Cash paid for shares withheld for taxes | — | | | (25.7) | | | — | | | — | | | — | | | (25.7) | |
| Stock-based compensation expense | — | | | 22.9 | | | — | | | — | | | — | | | 22.9 | |
Cash dividends declared ($0.25 per share) | — | | | — | | | (86.1) | | | — | | | — | | | (86.1) | |
Repurchases of common stock (1,384,290 shares) | — | | | — | | | — | | | (118.1) | | | — | | | (118.1) | |
| Change of ownership interest in Forestar | — | | | (0.2) | | | — | | | — | | | 0.2 | | | — | |
Balances at December 31, 2022 (343,278,561 shares) | $ | 4.0 | | | $ | 3,352.0 | | | $ | 20,057.9 | | | $ | (3,260.6) | | | $ | 399.1 | | | $ | 20,552.4 | |
| Net income | — | | | — | | | 942.2 | | | — | | | 7.4 | | | 949.6 | |
Exercise of stock options (234,796 shares) | — | | | 5.6 | | | — | | | — | | | — | | | 5.6 | |
Stock issued under employee benefit plans (713,217 shares) | — | | | 4.7 | | | — | | | — | | | — | | | 4.7 | |
| Cash paid for shares withheld for taxes | — | | | (30.1) | | | — | | | — | | | — | | | (30.1) | |
| Stock-based compensation expense | — | | | 28.4 | | | — | | | — | | | — | | | 28.4 | |
Cash dividends declared ($0.25 per share) | — | | | — | | | (85.6) | | | — | | | — | | | (85.6) | |
Repurchases of common stock (3,156,298 shares) | — | | | — | | | — | | | (303.2) | | | — | | | (303.2) | |
| Change of ownership in Forestar | — | | | (2.6) | | | — | | | — | | | 2.6 | | | — | |
Balances at March 31, 2023 (341,070,276 shares) | $ | 4.0 | | | $ | 3,358.0 | | | $ | 20,914.5 | | | $ | (3,563.8) | | | $ | 409.1 | | | $ | 21,121.8 | |
| Net income | — | | | — | | | 1,335.1 | | | — | | | 16.6 | | | 1,351.7 | |
Exercise of stock options (240,620 shares) | — | | | 5.7 | | | — | | | — | | | — | | | 5.7 | |
Stock issued under employee benefit plans (33,425 shares) | — | | | 2.0 | | | — | | | — | | | — | | | 2.0 | |
| Cash paid for shares withheld for taxes | — | | | (0.1) | | | — | | | — | | | — | | | (0.1) | |
| Stock-based compensation expense | — | | | 29.3 | | | — | | | — | | | — | | | 29.3 | |
Cash dividends declared ($0.25 per share) | — | | | — | | | (85.2) | | | — | | | — | | | (85.2) | |
Repurchases of common stock (3,121,368 shares) | — | | | — | | | — | | | (342.9) | | | — | | | (342.9) | |
| Change of ownership interest in Forestar | — | | | (0.2) | | | — | | | — | | | 0.2 | | | — | |
Balances at June 30, 2023 (338,222,953 shares) | $ | 4.0 | | | $ | 3,394.7 | | | $ | 22,164.4 | | | $ | (3,906.7) | | | $ | 425.9 | | | $ | 22,082.3 | |
| | | | | | | | | | | |
| See accompanying notes to consolidated financial statements. |
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | | | | |
| | Nine Months Ended June 30, |
| | 2024 | | 2023 |
| (In millions)
(Unaudited) |
| OPERATING ACTIVITIES | | | |
| Net income | $ | 3,506.2 | | | $ | 3,269.7 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 63.5 | | | 70.2 | |
| Stock-based compensation expense | 92.7 | | | 80.6 | |
| Deferred income taxes | 29.9 | | | 19.3 | |
| Inventory and land option charges | 34.4 | | | 62.2 | |
| Changes in operating assets and liabilities: | | | |
| (Increase) decrease in construction in progress and finished homes | (863.0) | | | 576.2 | |
Increase in residential land and lots – developed, under development, held for development and held for sale | (2,012.1) | | | (915.0) | |
| Increase in rental properties | (375.7) | | | (777.3) | |
| (Increase) decrease in other assets | (154.4) | | | 242.1 | |
| Increase in mortgage loans held for sale | (58.9) | | | (28.4) | |
| Decrease in accounts payable, accrued expenses and other liabilities | (34.4) | | | (338.5) | |
| Net cash provided by operating activities | 228.2 | | | 2,261.1 | |
| INVESTING ACTIVITIES | | | |
| Expenditures for property and equipment | (133.3) | | | (108.3) | |
| Proceeds from sale of assets | 14.9 | | | — | |
| Payments related to business acquisitions, net of cash acquired | (37.9) | | | (202.0) | |
| Other investing activities | (4.8) | | | 1.8 | |
| Net cash used in investing activities | (161.1) | | | (308.5) | |
| FINANCING ACTIVITIES | | | |
| Proceeds from notes payable | 1,270.0 | | | 575.0 | |
| Repayment of notes payable | (640.4) | | | (675.4) | |
| Borrowings on mortgage repurchase facilities, net | 21.8 | | | 67.3 | |
| Proceeds from stock associated with certain employee benefit plans | 12.2 | | | 18.7 | |
| Cash paid for shares withheld for taxes | (82.9) | | | (55.9) | |
| Cash dividends paid | (297.5) | | | (256.9) | |
Repurchases of common stock | (1,230.3) | | | (759.6) | |
| Net proceeds from issuance of Forestar common stock | 19.7 | | | — | |
| Net other financing activities | (19.8) | | | (30.7) | |
| Net cash used in financing activities | (947.2) | | | (1,117.5) | |
| Net (decrease) increase in cash, cash equivalents and restricted cash | (880.1) | | | 835.1 | |
| Cash, cash equivalents and restricted cash at beginning of period | 3,900.1 | | | 2,572.9 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 3,020.0 | | | $ | 3,408.0 | |
| | | |
| SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES: | | | |
| Notes payable issued for inventory | $ | 43.4 | | | $ | 54.5 | |
| Reduction of notes payable upon deconsolidation of variable interest entity | $ | (127.8) | | | $ | — | |
| Stock issued under employee incentive plans | $ | 173.2 | | | $ | 110.8 | |
| Repurchases of common stock not settled | $ | 1.5 | | | $ | — | |
| | | |
See accompanying notes to consolidated financial statements. |
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 2024
NOTE A – BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements include the accounts of D.R. Horton, Inc. and all of its wholly-owned, majority-owned and controlled subsidiaries, which are collectively referred to as the Company, unless the context otherwise requires. Noncontrolling interests represent the proportionate equity interests in consolidated entities that are not 100% owned by the Company. As of June 30, 2024, the Company owned a 62% controlling interest in Forestar Group Inc. (Forestar) and therefore is required to consolidate 100% of Forestar within its consolidated financial statements, and the 38% interest the Company does not own is accounted for as noncontrolling interests. All intercompany accounts, transactions and balances have been eliminated in consolidation.
The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements reflect all adjustments considered necessary to fairly state the results for the interim periods shown, including normal recurring accruals and other items. These financial statements, including the consolidated balance sheet as of September 30, 2023, which was derived from audited financial statements, do not include all of the information and notes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2023.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.
Seasonality
Historically, the homebuilding industry has experienced seasonal fluctuations; therefore, the operating results for the three and nine months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2024 or subsequent periods.
Pending Accounting Standards
In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. It also requires disclosure of the amount and description of the composition of other segment items and interim disclosures of a reportable segment’s profit or loss and assets. The guidance is effective for the Company beginning October 1, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes - Improvements to Income Tax Disclosures,” which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation and modifies other income tax related disclosures. The guidance is effective for the Company beginning October 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
NOTE B – SEGMENT INFORMATION
The Company is a national homebuilder that is primarily engaged in the acquisition and development of land and the construction and sale of residential homes, with operations in 121 markets across 33 states. The Company’s operating segments are its 86 homebuilding divisions, its rental operations, its majority-owned Forestar residential lot development operations, its financial services operations and its other business activities. The Company’s reporting segments are its homebuilding reporting segments, its rental operations segment, its Forestar lot development segment and its financial services segment.
Homebuilding
The homebuilding operating segments are aggregated into six reporting segments. The reporting segments and the states in which the Company has homebuilding operations are as follows:
| | | | | | | | | | | |
| Northwest: | | Colorado, Oregon, Utah and Washington |
| Southwest: | | Arizona, California, Hawaii, Nevada and New Mexico |
| South Central: | | Arkansas, Oklahoma and Texas |
| Southeast: | | Alabama, Florida, Louisiana and Mississippi |
| East: | | Georgia, North Carolina, South Carolina and Tennessee |
| North: | | Delaware, Illinois, Indiana, Iowa, Kentucky, Maryland, Minnesota, Nebraska,
New Jersey, Ohio, Pennsylvania, Virginia and West Virginia |
The Company’s homebuilding divisions design, build and sell single-family detached homes on lots they develop and on fully developed lots purchased ready for home construction. To a lesser extent, the homebuilding divisions also build and sell attached homes, such as townhomes, duplexes and triplexes. Most of the revenue generated by the Company’s homebuilding operations is from the sale of completed homes and to a lesser extent from the sale of land and lots.
Rental
The Company’s rental segment consists of single-family and multi-family rental operations. The single-family rental operations primarily construct and lease single-family homes within a community and then market each community for a bulk sale of rental homes. The multi-family rental operations develop, construct, lease and sell residential rental properties.
Forestar
The Forestar segment is a residential lot development company with operations in 60 markets across 24 states. The Company’s homebuilding divisions acquire finished lots from Forestar in accordance with the master supply agreement between the two companies. Forestar’s segment results are presented on their historical cost basis, consistent with the manner in which management evaluates segment performance.
Financial Services
The Company’s financial services segment provides mortgage financing, title agency services and title insurance to homebuyers in many of the Company’s homebuilding markets. The segment generates the substantial majority of its revenues from originating and selling mortgages, collecting premiums and fees for escrow closing services and collecting premiums for title insurance. The Company sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers.
Other
In addition to its homebuilding, rental, Forestar and financial services operations, the Company engages in other business activities through its subsidiaries. The Company conducts insurance-related operations, owns water rights and other water-related assets and owns non-residential real estate including ranch land and improvements. The results of these operations are immaterial for separate reporting and therefore are grouped together and presented in the Eliminations and Other column in the tables that follow.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
The accounting policies of the reporting segments are described throughout Note A included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2023. Financial information relating to the Company’s reporting segments is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2024 |
| | Homebuilding | | Rental | | Forestar | | Financial Services | | Eliminations and Other (1) | | Consolidated |
| | (In millions) |
| Assets | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 2,174.3 | | | $ | 119.1 | | | $ | 359.2 | | | $ | 305.7 | | | $ | 34.0 | | | $ | 2,992.3 | |
| Restricted cash | | 6.3 | | | 2.2 | | | — | | | 19.2 | | | — | | | 27.7 | |
| Inventories: | | | | | | | | | | | | |
| Construction in progress and finished homes | | 10,002.2 | | | — | | | — | | | — | | | (121.7) | | | 9,880.5 | |
| Residential land and lots — developed and under development | | 10,465.8 | | | — | | | 2,103.3 | | | — | | | (155.7) | | | 12,413.4 | |
| Land held for development | | 20.4 | | | — | | | 135.4 | | | — | | | — | | | 155.8 | |
| Land held for sale | | 15.8 | | | — | | | — | | | — | | | — | | | 15.8 | |
| Rental properties | | — | | | 3,070.3 | | | — | | | — | | | 0.3 | | | 3,070.6 | |
| | 20,504.2 | | | 3,070.3 | | | 2,238.7 | | | — | | | (277.1) | | | 25,536.1 | |
| Mortgage loans held for sale | | — | | | — | | | — | | | 2,578.8 | | | — | | | 2,578.8 | |
| Deferred income taxes, net | | 200.7 | | | (19.9) | | | — | | | — | | | (24.2) | | | 156.6 | |
| Property and equipment, net | | 490.9 | | | 1.5 | | | 6.5 | | | 3.8 | | | 18.2 | | | 520.9 | |
| Other assets | | 2,732.2 | | | 71.7 | | | 70.6 | | | 184.9 | | | 116.1 | | | 3,175.5 | |
| Goodwill | | 134.3 | | | — | | | — | | | — | | | 29.2 | | | 163.5 | |
| | $ | 26,242.9 | | | $ | 3,244.9 | | | $ | 2,675.0 | | | $ | 3,092.4 | | | $ | (103.8) | | | $ | 35,151.4 | |
| Liabilities | | | | | | | | | | | | |
| Accounts payable | | $ | 1,134.6 | | | $ | 314.6 | | | $ | 70.9 | | | $ | 0.1 | | | $ | (107.5) | | | $ | 1,412.7 | |
| Accrued expenses and other liabilities | | 2,487.8 | | | 66.7 | | | 385.1 | | | 244.1 | | | (286.7) | | | 2,897.0 | |
| Notes payable | | 2,257.8 | | | 1,035.7 | | | 706.1 | | | 1,691.4 | | | — | | | 5,691.0 | |
| | $ | 5,880.2 | | | $ | 1,417.0 | | | $ | 1,162.1 | | | $ | 1,935.6 | | | $ | (394.2) | | | $ | 10,000.7 | |
______________
(1)Amounts include the balances of the Company’s other businesses and the elimination of intercompany transactions.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2023 |
| | Homebuilding | | Rental | | Forestar | | Financial Services | | Eliminations and Other (1) | | Consolidated |
| | (In millions) |
| Assets | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 2,920.2 | | | $ | 136.1 | | | $ | 616.0 | | | $ | 189.1 | | | $ | 12.2 | | | $ | 3,873.6 | |
| Restricted cash | | 6.5 | | | 3.3 | | | — | | | 16.7 | | | — | | | 26.5 | |
| Inventories: | | | | | | | | | | | | |
| Construction in progress and finished homes | | 9,134.3 | | | — | | | — | | | — | | | (132.9) | | | 9,001.4 | |
| Residential land and lots — developed and under development | | 8,992.3 | | | — | | | 1,760.8 | | | — | | | (131.2) | | | 10,621.9 | |
| Land held for development | | 20.5 | | | — | | | 29.5 | | | — | | | — | | | 50.0 | |
| Land held for sale | | 8.7 | | | — | | | — | | | — | | | — | | | 8.7 | |
| Rental properties | | — | | | 2,708.4 | | | — | | | — | | | (17.1) | | | 2,691.3 | |
| | 18,155.8 | | | 2,708.4 | | | 1,790.3 | | | — | | | (281.2) | | | 22,373.3 | |
| Mortgage loans held for sale | | — | | | — | | | — | | | 2,519.9 | | | — | | | 2,519.9 | |
| Deferred income taxes, net | | 229.8 | | | (19.9) | | | — | | | — | | | (22.7) | | | 187.2 | |
| Property and equipment, net | | 415.0 | | | 2.4 | | | 5.9 | | | 4.1 | | | 18.0 | | | 445.4 | |
| Other assets | | 2,838.5 | | | 29.8 | | | 58.5 | | | 250.3 | | | (184.1) | | | 2,993.0 | |
| Goodwill | | 134.3 | | | — | | | — | | | — | | | 29.2 | | | 163.5 | |
| | $ | 24,700.1 | | | $ | 2,860.1 | | | $ | 2,470.7 | | | $ | 2,980.1 | | | $ | (428.6) | | | $ | 32,582.4 | |
| Liabilities | | | | | | | | | | | | |
| Accounts payable | | $ | 1,033.7 | | | $ | 698.6 | | | $ | 68.4 | | | $ | 0.1 | | | $ | (554.6) | | | $ | 1,246.2 | |
| Accrued expenses and other liabilities | | 2,585.5 | | | 43.2 | | | 337.4 | | | 280.4 | | | (142.7) | | | 3,103.8 | |
| Notes payable | | 2,329.9 | | | 400.0 | | | 695.0 | | | 1,669.6 | | | — | | | 5,094.5 | |
| | $ | 5,949.1 | | | $ | 1,141.8 | | | $ | 1,100.8 | | | $ | 1,950.1 | | | $ | (697.3) | | | $ | 9,444.5 | |
______________
(1)Amounts include the balances of the Company’s other businesses and the elimination of intercompany transactions.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2024 |
| | Homebuilding | | Rental | | Forestar | | Financial Services | | Eliminations and Other (1) | | Consolidated |
| | (In millions) |
| Revenues | | | | | | | | | | | | |
| Home sales | | $ | 9,231.2 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 9,231.2 | |
| Land/lot sales and other | | 10.3 | | | — | | | 318.4 | | | — | | | (250.2) | | | 78.5 | |
| Rental property sales | | — | | | 413.7 | | | — | | | — | | | — | | | 413.7 | |
| Financial services | | — | | | — | | | — | | | 242.3 | | | — | | | 242.3 | |
| | 9,241.5 | | | 413.7 | | | 318.4 | | | 242.3 | | | (250.2) | | | 9,965.7 | |
| Cost of sales | | | | | | | | | | | | |
| Home sales (2) | | 7,017.3 | | | — | | | — | | | — | | | (72.5) | | | 6,944.8 | |
| Land/lot sales and other | | 5.6 | | | — | | | 246.2 | | | — | | | (201.1) | | | 50.7 | |
| Rental property sales | | — | | | 319.3 | | | — | | | — | | | (5.9) | | | 313.4 | |
| Inventory and land option charges | | 12.6 | | | 1.5 | | | 0.7 | | | — | | | — | | | 14.8 | |
| | 7,035.5 | | | 320.8 | | | 246.9 | | | — | | | (279.5) | | | 7,323.7 | |
| Selling, general and administrative expense | | 656.5 | | | 55.0 | | | 29.3 | | | 178.0 | | | 4.8 | | | 923.6 | |
| Other (income) expense | | (22.7) | | | (26.3) | | | (9.4) | | | (27.0) | | | 4.8 | | | (80.6) | |
| Income before income taxes | | $ | 1,572.2 | | | $ | 64.2 | | | $ | 51.6 | | | $ | 91.3 | | | $ | 19.7 | | | $ | 1,799.0 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
______________
(1)Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.
(2)Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended June 30, 2024 |
| | Homebuilding | | Rental | | Forestar | | Financial Services | | Eliminations and Other (1) | | Consolidated |
| | (In millions) |
| Revenues | | | | | | | | | | | | |
| Home sales | | $ | 24,974.2 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 24,974.2 | |
| Land/lot sales and other | | 37.6 | | | — | | | 958.0 | | | — | | | (811.7) | | | 183.9 | |
| Rental property sales | | — | | | 980.2 | | | — | | | — | | | — | | | 980.2 | |
| Financial services | | — | | | — | | | — | | | 660.5 | | | — | | | 660.5 | |
| | 25,011.8 | | | 980.2 | | | 958.0 | | | 660.5 | | | (811.7) | | | 26,798.8 | |
| Cost of sales | | | | | | | | | | | | |
| Home sales (2) | | 19,130.8 | | | — | | | — | | | — | | | (195.0) | | | 18,935.8 | |
| Land/lot sales and other | | 23.0 | | | — | | | 729.6 | | | — | | | (657.8) | | | 94.8 | |
| Rental property sales | | — | | | 763.4 | | | — | | | — | | | (10.7) | | | 752.7 | |
| Inventory and land option charges | | 31.2 | | | 2.2 | | | 1.0 | | | — | | | — | | | 34.4 | |
| | 19,185.0 | | | 765.6 | | | 730.6 | | | — | | | (863.5) | | | 19,817.7 | |
| Selling, general and administrative expense | | 1,874.1 | | | 163.8 | | | 86.5 | | | 500.6 | | | 14.2 | | | 2,639.2 | |
| Other (income) expense | | (73.2) | | | (78.0) | | | (20.7) | | | (75.4) | | | 14.2 | | | (233.1) | |
| Income before income taxes | | $ | 4,025.9 | | | $ | 128.8 | | | $ | 161.6 | | | $ | 235.3 | | | $ | 23.4 | | | $ | 4,575.0 | |
| | | | | | | | | | | | |
| Summary Cash Flow Information | | | | | | | | | | | | |
| Depreciation and amortization | | $ | 57.6 | | | $ | 1.9 | | | $ | 2.3 | | | $ | 1.4 | | | $ | 0.3 | | | $ | 63.5 | |
| Cash provided by (used in) operating activities | | $ | 971.9 | | | $ | (656.8) | | | $ | (277.6) | | | $ | 156.9 | | | $ | 33.8 | | | $ | 228.2 | |
______________
(1)Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.
(2)Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2023 |
| | Homebuilding | | Rental | | Forestar | | Financial Services | | Eliminations and Other (1) | | Consolidated |
| | (In millions) |
| Revenues | | | | | | | | | | | | |
| Home sales | | $ | 8,703.1 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 8,703.1 | |
| Land/lot sales and other | | 30.5 | | | — | | | 368.9 | | | — | | | (272.5) | | | 126.9 | |
| Rental property sales | | — | | | 667.1 | | | — | | | — | | | — | | | 667.1 | |
| Financial services | | — | | | — | | | — | | | 228.5 | | | — | | | 228.5 | |
| | 8,733.6 | | | 667.1 | | | 368.9 | | | 228.5 | | | (272.5) | | | 9,725.6 | |
| Cost of sales | | | | | | | | | | | | |
| Home sales (2) | | 6,675.6 | | | — | | | — | | | — | | | (69.6) | | | 6,606.0 | |
| Land/lot sales and other | | 26.1 | | | — | | | 283.0 | | | — | | | (238.2) | | | 70.9 | |
| Rental property sales | | — | | | 458.0 | | | — | | | — | | | (3.9) | | | 454.1 | |
| Inventory and land option charges | | 9.0 | | | 0.9 | | | 0.9 | | | — | | | — | | | 10.8 | |
| | 6,710.7 | | | 458.9 | | | 283.9 | | | — | | | (311.7) | | | 7,141.8 | |
| Selling, general and administrative expense | | 584.9 | | | 80.0 | | | 26.4 | | | 154.7 | | | 6.1 | | | 852.1 | |
| Other (income) expense | | (26.4) | | | (33.9) | | | (3.8) | | | (20.3) | | | 32.2 | | | (52.2) | |
| Income before income taxes | | $ | 1,464.4 | | | $ | 162.1 | | | $ | 62.4 | | | $ | 94.1 | | | $ | 0.9 | | | $ | 1,783.9 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
______________
(1)Amounts include the results of the Company’s other businesses and the elimination of intercompany transactions.
(2)Amount in the Eliminations and Other column represents the recognition of profit on lots sold from Forestar to the homebuilding segment. Intercompany profit is eliminated in the consolidated financial statements when Forestar sells lots to the homebuilding segment and is recognized in the consolidated financial statements when the homebuilding segment closes homes on the lots to homebuyers.
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)
June 30, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended June 30, 2023 |
| | Homebuilding | | Rental | | Forestar | | Financial Services | | Eliminations and Other (1) | | Consolidated |
| | (In millions) |
| Revenues | | | | | | | | | | | | |
| Home sales | | $ | 22,862.0 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 22,862.0 | |
| Land/lot sales and other | | 85.2 | | | — | | | 887.1 | | | — | | | (678.5) | | | 293.8 | |
| Rental property sales | | — | | | 1,218.6 | | | — | | | — | | | — | | | 1,218.6 | |
| Financial services | | — | | | — | | | — | | | 582.0 | | | — | | | 582.0 | |
| | 22,947.2 | | | 1,218.6 | | | 887.1 | | | 582.0 | | | (678.5) | | | 24,956.4 | |
| Cost of sales | | | | | | | | | | | | |
| Home sales (2) | | 17,625.3 | | | — | | | — | | | — | | | (180.4) | | | 17,444.9 | |
| Land/lot sales and other | | 44.4 | | | — | | | 675.1 | | | — | | | (590.1) | | | 129.4 | |
| Rental property sales | | — | | | 799.2 | | | — | | | — | | | (6.4) | | | 792.8 | |
| Inventory and land option charges | | 47.4 | | | 2.3 | | | 23.6 | | | — | | | (11.1) | | | 62.2 | |
| | 17,717.1 | | | 801.5 | | | 698.7 | | | — | | | (788.0) | | | 18,429.3 | |
| Selling, general and administrative expense | | 1,657.5 | | | 181.0 | | | 71.3 | | | 435.7 | | | 17.1 | | | 2,362.6 | |
| Other (income) expense | | (54.1) | | | (70.9) | | | (9.1) | | | (51.6) | | | 53.8 | | | (131.9) | |
| Income before income taxes | | $ | 3,626.7 | | | $ | 307.0 | | | $ | 126.2 | | | $ | 197.9 | | | $ | 38.6 | | | $ | 4,296.4 | |
| | | | | | | | | | | | |
| Summary Cash Flow Information | | | | | | | | | | | | |
| Depreciation and amortization | | $ | 47.1 |