D.R. Horton DHI · USD

SEGMENT INFORMATIONThe Company’s operating segments are its 92 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 Forestar lot development segment, its financial services segment and its rental operations segment. The accounting policies of the reporting segments are described throughout Note A.HomebuildingThe 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 WashingtonSouthwest:Arizona, California, Hawaii, Nevada and New MexicoSouth Central:Arkansas, Oklahoma and TexasSoutheast:Alabama, Florida, Louisiana and MississippiEast:Georgia, North Carolina, South Carolina and TennesseeNorth:Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Minnesota, Missouri, Nebraska, New Jersey, Ohio, Pennsylvania, Virginia, West Virginia and WisconsinHomebuilding is the Company’s core business, generating 92% of consolidated revenues in fiscal 2025 and 2024 and 90% of consolidated revenues in fiscal 2023. The Company’s homebuilding divisions are 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. 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.RentalThe Company’s rental segment consists of single-family and multi-family rental operations. The single-family rental operations construct and lease single-family homes within a community and market each community for a bulk sale of rental homes. The multi-family rental operations develop, construct, lease and sell residential rental properties, the majority of which are apartment communities.ForestarThe Forestar segment is a residential lot development company with operations in 64 markets across 23 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.

COMMITMENTS AND CONTINGENCIESWarranty ClaimsThe Company typically provides its homebuyers with warranties for defects in structural elements, mechanical systems and other construction components of the home. Warranty liabilities are established by charging cost of sales for each home delivered based on management’s estimate of expected warranty-related costs and by accruing for existing warranty claims. The Company’s warranty liability is based upon historical warranty cost experience in each market in which it operates. The estimation of these costs is subject to variability due to uncertainties related to these factors. Due to the judgment required in establishing the liability for warranty claims, actual future costs could differ 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 warranty liability.Changes in the Company’s warranty liability during fiscal 2025 and 2024 were as follows: September 30, 20252024 (In millions)Warranty liability, beginning of year$566.9 $512.4 Warranties issued188.8 210.6 Changes in liability for pre-existing warranties(68.5)(36.0)Settlements made(121.0)(120.1)Warranty liability, end of year$566.2 $566.9 Legal Claims and InsuranceThe 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 and $949.6 million at September 30, 2025 and 2024, respectively, and are included in accrued expenses and other liabilities in the consolidated balance sheets. Approximately 98% and 97% of these reserves related to construction defect matters at September 30, 2025 and 2024, respectively. Expenses related to the Company’s legal contingencies were $240.1 million, $164.0 million and $139.7 million in fiscal 2025, 2024 and 2023, respectively.The Company’s reserves for construction defect claims include the estimated costs of both known claims and anticipated future claims.

INCOME TAXESIncome Tax ExpenseThe components of the Company’s income tax expense are as follows: Year Ended September 30, 202520242023 (In millions)Current tax expense: Federal$821.4 $1,200.9 $1,293.0 State174.4 258.8 272.4 995.8 1,459.7 1,565.4 Deferred tax expense (benefit): Federal104.8 15.5 (39.0)State18.4 3.5 (6.9) 123.2 19.0 (45.9)Total income tax expense$1,119.0 $1,478.7 $1,519.5 The Company’s effective tax rate was 23.6%, 23.5% and 24.1% in fiscal 2025, 2024 and 2023, respectively. The effective tax rates for all years include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient home tax credits.Reconciliation of Expected Income Tax ExpenseDifferences between income tax expense and tax computed by applying the federal statutory rate of 21% to income before income taxes during each year is due to the following: Year Ended September 30, 202520242023 (In millions)Income taxes at federal statutory rate$995.4 $1,319.8 $1,326.1 Increase (decrease) in tax resulting from:State income taxes, net of federal benefit154.1 205.8 208.1 Valuation allowance(0.3)0.1 (3.1)Tax credits(39.5)(70.4)(44.4)Excess tax benefit from stock-based compensation(16.0)(42.7)(25.6)Tax contingencies— (1.4)(1.5)Other25.3 67.5 59.9 Total income tax expense$1,119.0 $1,478.7 $1,519.5 Deferred Income TaxesDeferred tax assets and liabilities reflect the tax consequences of temporary differences between the financial statement bases of assets and liabilities and their tax bases, tax losses and credit carryforwards. Components of deferred income taxes are summarized as follows: September 30, 20252024 (In millions)Deferred tax assets: Inventory costs$39.6 $87.3 Inventory impairments13.4 8.7 Warranty and construction defect costs356.2 316.2 Net operating loss carryforwards36.5 38.9 Tax credit carryforwards22.1 6.9 Incentive compensation plans105.0 93.7 Other21.2 14.0 Total deferred tax assets594.0 565.7 Valuation allowance(14.6)(14.9)Total deferred tax assets, net of valuation allowance579.4 550.8 Deferred tax liabilities:Deferral of profit on home closings327.6 226.4 Depreciation of fixed assets76.7 44.8 Deferral of income31.9 29.3 Undistributed earnings of subsidiary90.7 77.4 Other8.0 5.4 Total deferred tax liabilities534.9 383.3 Deferred income taxes, net$44.5 $167.5 The Company has $25.4 million of tax benefits for a federal net operating loss (NOL) carryforward.

Risk Management and StrategyWe have processes in place for assessing, identifying, and managing risks from cybersecurity threats that may result in material adverse effects to the confidentiality, integrity and availability of our systems, operations and data. These processes are a part of our overall risk assessment process. Risks from cybersecurity threats include, among other things, unauthorized access, data theft, computer viruses, ransomware, malicious software and other disruptions. We have implemented systems and processes utilizing a multilayered, proactive approach to identify, evaluate, mitigate and prevent potential cybersecurity threats. Each of these layers contain multiple levels of protection and leverage industry standard framework including the National Institute of Standards and Technology (NIST) Cybersecurity Framework. At the management level, these systems and processes are overseen primarily by our Chief Information Officer (CIO) and our Cyber Security Risk Officer (CSRO).We have implemented processes to assess, identify, and manage risks from cybersecurity threats, including the following:•Muti-factor Authentication: We secure access to our network and systems through multi-factor authentication.•Layered Email Protection: We have adopted a layered approach to email protection.•Zero-Trust Security Model: We are working towards a zero-trust security model, utilizing group-based access controls to manage network resources.•Continuous Monitoring: We continuously monitor our systems for security anomalies, to help enable early detection of issues and facilitating a rapid response.•Regular Scans: We conduct weekly and monthly scans to identify and prioritize the mitigation of the most critical vulnerabilities.•Quarterly Penetration Testing: We engage third-party consultants to perform quarterly penetration testing, examining our environment from various perspectives, including end-user and employee use cases, to thoroughly assess system vulnerabilities.•Collaborative Evaluation and Remediation: In collaboration with our third-party consultants, we evaluate the outcomes of our testing, address and remediate any identified issues, and subsequently re-test the environment to confirm that the mitigations have effectively resolved the vulnerabilities.

INVENTORIESAt 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 September 30, 2025, the Company performed detailed impairment evaluations of communities and land inventories and determined that communities with a combined carrying value of $74.8 million were impaired. As a result, impairment charges of $8.5 million were recorded during the three months ended September 30, 2025 to reduce the carrying value of the related inventories to fair value. During fiscal 2025, impairment charges totaled $33.0 million compared to $14.0 million and $19.0 million in fiscal 2024 and 2023, respectively.During fiscal 2025, 2024 and 2023, earnest money and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $125.1 million, $64.8 million and $61.3 million, respectively. Inventory impairments and land option charges are included in cost of sales in the consolidated statements of operations.

NOTES PAYABLEThe Company’s notes payable at their carrying amounts consist of the following: September 30, 20252024 (In millions)Homebuilding Revolving credit facility$— $— 2.5% senior notes due 2024— 500.0 2.6% senior notes due 2025— 499.0 1.3% senior notes due 2026 (1)598.8 597.7 1.4% senior notes due 2027 (1)498.2 497.4 4.85% senior notes due 2030 (1)495.5 — 5.0% senior notes due 2034 (1)687.7 686.5 5.5% senior notes due 2035 (1)693.6 — Other notes180.6 146.2 3,154.4 2,926.8 RentalRevolving credit facility600.0 745.0 Other notes— 5.7 600.0 750.7 Forestar Revolving credit facility— — 3.85% senior notes due 2026— 398.4 5.0% senior notes due 2028 (2)298.7 298.1 6.5% senior notes due 2033 (2)494.2 — Other notes9.9 9.9 802.8 706.4 Financial ServicesMortgage repurchase facilities:Committed facility1,103.5 1,229.3 Uncommitted facility304.8 304.5 1,408.3 1,533.8 Total notes payable$5,965.5 $5,917.7 _______________(1)Debt issuance costs that were deducted from the carrying amounts of the homebuilding senior notes totaled $18.9 million and $11.7 million at September 30, 2025 and 2024, respectively.(2)Debt issuance costs that were deducted from the carrying amount of Forestar’s senior notes totaled $7.2 million and $3.5 million at September 30, 2025 and 2024, respectively.As of September 30, 2025, maturities of consolidated notes payable, assuming the mortgage repurchase facility is not extended or renewed, are $1.6 billion in fiscal 2026, $604.7 million in fiscal 2027, $1.4 billion in fiscal 2028, $17.5 million in fiscal 2029, none in fiscal 2030 and $2.4 billion thereafter.HomebuildingThe Company has a senior unsecured homebuilding revolving credit facility that was amended in December 2024 to increase its capacity from $2.19 billion to $2.23 billion. The facility includes an uncommitted accordion feature that allows for an increase in its size to $3.0 billion, subject to certain conditions and availability of additional bank commitments. In June 2025, the Company utilized this accordion feature, increasing the facility’s size to $2.305 billion through an additional commitment. Of the total commitments, $2.04 billion mature on December 18, 2029, and $265 million mature on October 28, 2027. 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.

MORTGAGE LOANSMortgage Loans Held for Sale and Related DerivativesMortgage 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 September 30, 2025, mortgage loans held for sale of $2.57 billion had an aggregate outstanding principal balance of $2.67 billion. At September 30, 2024, mortgage loans held for sale of $2.48 billion had an aggregate outstanding principal balance of $2.49 billion.During the years ended September 30, 2025, 2024 and 2023, mortgage loans originated totaled $23.7 billion, $24.0 billion and $21.2 billion, respectively, and mortgage loans sold totaled $23.5 billion, $24.0 billion and $21.0 billion, respectively. The Company had gains on sales of loans and servicing rights of $566.3 million, $589.9 million and $538.4 million during the years ended September 30, 2025, 2024 and 2023, respectively. Net gains on sales of loans and servicing rights are included in revenues in the consolidated statements of operations. During fiscal 2025, approximately 71% of the Company’s mortgage loans were sold directly to Fannie Mae, Freddie Mac or into securities backed by Ginnie Mae, and 27% were sold to one other major financial entity.To manage the interest rate risk inherent in its mortgage operations, the Company hedges its risk using derivative instruments, generally forward sales of mortgage-backed securities (MBS), which are referred to as “hedging instruments” in the following discussion. The Company does not enter into or hold derivatives for trading or speculative purposes.Newly originated loans that have been closed but not committed to third-party purchasers are hedged to mitigate the risk of changes in their fair value. Hedged loans are committed to third-party purchasers typically within three days after origination. The notional amounts of the hedging instruments used to hedge mortgage loans held for sale may vary in relationship to the underlying loan amounts, depending on the movements in the value of each hedging instrument relative to the value of the underlying mortgage loans. The fair value change related to hedging instruments generally offsets the fair value change in the mortgage loans held for sale.

EARNINGS PER SHAREThe following table sets forth the computation of basic and diluted earnings per share.Year Ended September 30, 202520242023 (In millions, except per share data)Numerator:Net income attributable to D.R. Horton, Inc.$3,585.2 $4,756.4 $4,745.7 Denominator:Denominator for basic earnings per share — weighted average shares308.5 329.5 340.7 Effect of dilutive securities:Employee stock awards1.4 2.1 2.6 Denominator for diluted earnings per share — adjusted weighted average shares309.9 331.6 343.3 Basic net income per share attributable to D.R. Horton, Inc.$11.62 $14.44 $13.93 Diluted net income per share attributable to D.R. Horton, Inc.$11.57 $14.34 $13.