Segment Information

12 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

The Company’s operating segments are its 56 homebuilding divisions, its majority-owned Forestar residential lot development operations, its financial services operations, its rental 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. During the fourth quarter of fiscal 2021, the Company changed its internal organization and reporting of its operating segments and reportable segments to combine its single-family rental operations and its multi-family rental operations into a new reporting segment to reflect the method by which the chief operating decision makers manage the business, evaluate internal results and allocate financial resources. The Company’s single-family rental operations had previously been reported in its homebuilding segment and its multi-family rental operations had previously been reported in its other segment. Additionally, the Company realigned the aggregation of its homebuilding operating segments into six new reportable segments to better allocate its homebuilding operating segments across geographic reporting regions. Segment information reported in prior year periods has been reclassified to conform to the 2021 presentation.

Homebuilding

Based on the new aggregation described above, the six 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:	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 and Virginia

Homebuilding is the Company’s core business, generating 96% of consolidated revenues in fiscal 2021 and 97% of consolidated revenues in fiscal 2020 and 2019. 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 98 markets across 31 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.

Forestar

The Forestar segment is a residential lot development company with operations in 56 markets across 23 states. Forestar has made significant investments in land acquisition and development to expand its business across the United States. The 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 and title agency services to homebuyers in many of the Company’s homebuilding markets. The segment generates the substantial majority of its revenues from originating and selling mortgages and collecting fees for title insurance agency and closing services. The Company sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers.

Rental

The Company’s rental segment consists of multi-family and single-family rental operations. The multi-family rental operations develop, construct, lease, own and ultimately sell the residential properties. The single-family rental operations construct single-family rental homes with the intent to later market the community for a bulk sale of homes.

Other

In addition to its homebuilding, Forestar, financial services and rental operations, the Company engages in other business activities through its subsidiaries. The Company conducts insurance-related operations, owns non-residential real estate including ranch land and improvements and owns and operates energy related assets. The results of these operations are immaterial for separate reporting and therefore are grouped together and presented as other within the Eliminations and Other column in the tables that follow.

The accounting policies of the reporting segments are described throughout Note A. Financial information relating to the Company’s reporting segments is as follows:

	September 30, 2021
	Homebuilding		Forestar (1)		Financial Services		Rental		Eliminations and Other (2)		Consolidated
	(In millions)
Assets
Cash and cash equivalents	$	2,950.1	$	153.6	$	79.0	$	16.8	$	10.9	$	3,210.4
Restricted cash	8.4		—		18.0		0.4		—		26.8
Inventories:
Construction in progress and finished homes	7,848.0		—		—		—		(108.8)		7,739.2
Residential land and lots — developed and under development	6,004.0		1,824.7		—		—		(46.9)		7,781.8
Land held for development	30.4		80.5		—		—		—		110.9
Land held for sale	25.4		—		—		—		—		25.4
Rental properties	—		—		—		840.9		(19.1)		821.8
	13,907.8		1,905.2		—		840.9		(174.8)		16,479.1
Mortgage loans held for sale	—		—		2,027.3		—		—		2,027.3
Deferred income taxes, net	159.2		—		—		—		(3.9)		155.3
Property and equipment, net	303.3		2.9		3.5		0.6		82.6		392.9
Other assets	1,468.7		40.0		107.6		6.3		(62.0)		1,560.6
Goodwill	134.3		—		—		—		29.2		163.5
	$	18,931.8	$	2,101.7	$	2,235.4	$	865.0	$	(118.0)	$	24,015.9
Liabilities
Accounts payable	$	1,073.7	$	47.4	$	—	$	55.9	$	—	$	1,177.0
Accrued expenses and other liabilities	1,941.3		333.9		88.6		15.0		(168.5)		2,210.3
Notes payable	3,214.0		704.5		1,494.6		—		(0.7)		5,412.4
	$	6,229.0	$	1,085.8	$	1,583.2	$	70.9	$	(169.2)	$	8,799.7

_____________

(1)Amounts are presented on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance.

(2)Amounts include the balances of the Company’s other businesses, reconciling amounts between segment and consolidated balances, the elimination of intercompany transactions and, to a lesser extent, purchase accounting adjustments related to the Forestar acquisition.

	September 30, 2020
	Homebuilding		Forestar (1)		Financial Services		Rental		Eliminations and Other (2)		Consolidated
	(In millions)
Assets
Cash and cash equivalents	$	2,551.0	$	394.3	$	55.6	$	12.7	$	4.9	$	3,018.5
Restricted cash	9.4		—		11.9		0.3		—		21.6
Inventories:
Construction in progress and finished homes	6,037.5		—		—		—		(53.4)		5,984.1
Residential land and lots — developed and under development	4,901.4		1,304.3		—		—		(33.9)		6,171.8
Land held for development	47.8		5.4		—		—		—		53.2
Land held for sale	28.3		—		—		—		—		28.3
Rental properties	—		—		—		316.0		(316.0)		—
	11,015.0		1,309.7		—		316.0		(403.3)		12,237.4
Mortgage loans held for sale	—		—		1,529.0		—		—		1,529.0
Deferred income taxes, net	142.3		—		—		—		2.6		144.9
Property and equipment, net	286.7		1.1		3.9		—		392.0		683.7
Other assets	996.3		34.8		125.8		4.5		(47.7)		1,113.7
Goodwill	134.3		—		—		—		29.2		163.5
	$	15,135.0	$	1,739.9	$	1,726.2	$	333.5	$	(22.3)	$	18,912.3
Liabilities
Accounts payable	$	858.1	$	29.2	$	—	$	13.2	$	—	$	900.5
Accrued expenses and other liabilities	1,437.5		197.8		86.8		6.4		(121.5)		1,607.0
Notes payable	2,514.4		641.1		1,132.6		—		(4.8)		4,283.3
	$	4,810.0	$	868.1	$	1,219.4	$	19.6	$	(126.3)	$	6,790.8

_____________

(1)Amounts are presented on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance.

(2)Amounts include the balances of the Company’s other businesses, reconciling amounts between segment and consolidated balances, the elimination of intercompany transactions and, to a lesser extent, purchase accounting adjustments related to the Forestar acquisition.

	Year Ended September 30, 2021
	Homebuilding		Forestar (1)		Financial Services		Rental		Eliminations and Other (2)		Consolidated
	(In millions)
Revenues
Home sales	$	26,502.6	$	—	$	—	$	—	$	—	$	26,502.6
Land/lot sales and other	75.0		1,325.8		—		—		(1,188.8)		212.0
Rental property sales	—		—		—		267.8		(31.8)		236.0
Financial services	—		—		823.6		—		—		823.6
	26,577.6		1,325.8		823.6		267.8		(1,220.6)		27,774.2
Cost of sales
Home sales (3)	19,748.4		—		—		—		(140.1)		19,608.3
Land/lot sales and other	56.2		1,093.6		—		—		(1,030.5)		119.3
Rental property sales	—		—		—		160.8		(17.8)		143.0
Inventory and land option charges	24.9		3.0		—		0.7		—		28.6
	19,829.5		1,096.6		—		161.5		(1,188.4)		19,899.2
Selling, general and administrative expense	1,945.6		68.4		488.3		44.6		9.3		2,556.2
Gain on sale of assets	—		(2.5)		—		—		(11.5)		(14.0)
Loss on extinguishment of debt	—		18.1		—		—		—		18.1
Other (income) expense	(10.3)		(1.4)		(29.3)		(24.8)		24.2		(41.6)
Income before income taxes	$	4,812.8	$	146.6	$	364.6	$	86.5	$	(54.2)	$	5,356.3
Summary Cash Flow Information
Depreciation and amortization	$	56.7	$	0.4	$	1.7	$	5.1	$	10.0	$	73.9
Cash provided by (used in) operating activities	$	1,239.8	$	(303.1)	$	(195.8)	$	(410.0)	$	203.5	$	534.4

_____________

(1)Results are presented on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance.

(2)Amounts include the results of the Company’s other businesses, reconciling amounts between segment and consolidated balances, the elimination of intercompany transactions and, to a lesser extent, purchase accounting adjustments related to the Forestar acquisition.

(3)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.

	Year Ended September 30, 2020
	Homebuilding		Forestar (1)		Financial Services		Rental		Eliminations and Other (2)		Consolidated
	(In millions)
Revenues
Home sales	$	19,560.8	$	—	$	—	$	—	$	—	$	19,560.8
Land/lot sales and other	80.7		931.8		—		—		(847.1)		165.4
Rental property sales	—		—		—		128.5		(128.5)		—
Financial services	—		—		584.9		—		—		584.9
	19,641.5		931.8		584.9		128.5		(975.6)		20,311.1
Cost of sales
Home sales (3)	15,305.8		—		—		—		(58.6)		15,247.2
Land/lot sales and other	58.3		812.8		—		—		(768.9)		102.2
Rental property sales	—		—		—		69.0		(69.0)		—
Inventory and land option charges	22.9		0.9		—		—		—		23.8
	15,387.0		813.7		—		69.0		(896.5)		15,373.2
Selling, general and administrative expense	1,600.7		45.7		364.7		27.8		8.9		2,047.8
Gain on sale of assets	—		(0.1)		—		—		(59.4)		(59.5)
Other (income) expense	(11.7)		(5.6)		(25.0)		(8.1)		17.0		(33.4)
Income before income taxes	$	2,665.5	$	78.1	$	245.2	$	39.8	$	(45.6)	$	2,983.0
Summary Cash Flow Information
Depreciation and amortization	$	67.0	$	0.3	$	1.6	$	5.0	$	6.5	$	80.4
Cash provided by (used in) operating activities	$	1,888.4	$	(168.5)	$	(292.8)	$	(71.8)	$	66.3	$	1,421.6

_____________

(1)Results are presented on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance.

(2)Amounts include the results of the Company’s other businesses, reconciling amounts between segment and consolidated balances, the elimination of intercompany transactions and, to a lesser extent, purchase accounting adjustments related to the Forestar acquisition.

(3)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.

	Year Ended September 30, 2019
	Homebuilding		Forestar (1)		Financial Services		Rental		Eliminations and Other (2)		Consolidated
	(In millions)
Revenues
Home sales	$	16,925.0	$	—	$	—	$	—	$	—	$	16,925.0
Land/lot sales and other	91.9		428.3		—		—		(294.0)		226.2
Rental property sales	—		—		—		133.4		(133.4)		—
Financial services	—		—		441.7		—		—		441.7
	17,016.9		428.3		441.7		133.4		(427.4)		17,592.9
Cost of sales
Home sales (3)	13,507.1		—		—		—		(8.3)		13,498.8
Land/lot sales and other	75.1		361.9		—		—		(268.9)		168.1
Rental property sales	—		—		—		81.8		(81.8)		—
Inventory and land option charges	53.2		0.8		—		—		—		54.0
	13,635.4		362.7		—		81.8		(359.0)		13,720.9
Selling, general and administrative expense	1,482.3		28.9		293.0		20.3		8.0		1,832.5
Gain on sale of assets	(2.0)		(3.0)		—		—		(48.9)		(53.9)
Other (income) expense	(9.5)		(6.0)		(17.6)		(10.0)		11.2		(31.9)
Income before income taxes	$	1,910.7	$	45.7	$	166.3	$	41.3	$	(38.7)	$	2,125.3
Summary Cash Flow Information
Depreciation and amortization	$	63.7	$	0.2	$	1.5	$	4.1	$	2.5	$	72.0
Cash provided by (used in) operating activities	$	1,452.5	$	(391.3)	$	(150.2)	$	17.4	$	(36.3)	$	892.1

_____________

(1)Results are presented on Forestar’s historical cost basis, consistent with the manner in which management evaluates segment performance.

(2)Amounts include the results of the Company’s other businesses, reconciling amounts between segment and consolidated balances, the elimination of intercompany transactions and, to a lesser extent, purchase accounting adjustments related to the Forestar acquisition.

(3)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.

Homebuilding Inventories by Reporting Segment (1)	September 30,
	2021		2020
	(In millions)
Northwest	$	1,307.5	$	984.6
Southwest	2,445.6		2,063.3
South Central	3,479.3		2,577.6
Southeast	3,178.6		2,648.9
East	1,919.6		1,540.2
North	1,368.9		976.9
Corporate and unallocated (2)	208.3		223.5
	$	13,907.8	$	11,015.0

________________________

(1)Homebuilding inventories are the only assets included in the measure of homebuilding segment assets used by the Company’s chief operating decision makers.

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

Homebuilding Results by Reporting Segment	Year Ended September 30,
	2021		2020		2019
	(In millions)
Revenues
Northwest	$	2,516.6	$	1,953.4	$	1,721.5
Southwest	4,071.0		3,230.3		3,050.8
South Central	6,111.2		4,625.9		3,944.0
Southeast	7,079.6		4,871.5		4,023.5
East	4,459.0		3,410.1		3,081.2
North	2,340.2		1,550.3		1,195.9
	$	26,577.6	$	19,641.5	$	17,016.9
Inventory and Land Option Charges
Northwest	$	0.6	$	1.3	$	6.3
Southwest	3.0		3.5		18.6
South Central	5.3		6.4		11.2
Southeast	10.2		5.9		8.3
East	2.4		3.0		3.9
North	3.4		2.8		4.9
	$	24.9	$	22.9	$	53.2
Income Before Income Taxes (1)
Northwest	$	510.8	$	264.5	$	222.9
Southwest	653.1		366.1		284.5
South Central	1,150.2		714.9		527.6
Southeast	1,371.9		709.5		477.8
East	795.1		484.3		361.9
North	331.7		126.2		36.0
	$	4,812.8	$	2,665.5	$	1,910.7

________________________

(1)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.