Table of Contents 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, 2025 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: 001-33662 FORESTAR GROUP INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction ...

Financial Results Exhibit 99.1 FORESTAR REPORTS FISCAL 2025 THIRD QUARTER RESULTS ARLINGTON, Texas (Business Wire) - July 22, 2025 — Forestar Group Inc. ("Forestar") (NYSE: FOR), a leading national residential lot developer, today reported financial results for its third fiscal quarter ended June 30, 2025. Fiscal 2025 Third Quarter Highlights All comparisons to the prior year quarter Net income for the third quarter of fiscal 2025 decreased 15% to $32.9 million, or $0.65 per diluted share, compared to $38.7 ...

Financial Data and Key Metrics Changes - In the third quarter, net income was $32.9 million or $0.65 per diluted share, compared to $38.7 million or $0.76 per diluted share in the prior year quarter [4][7] - Revenues for the third quarter increased 23% to $390.5 million compared to $318.4 million in the prior year quarter [7] - Gross profit margin for the quarter was 20.4%, down from 22.5% in the same quarter last year; excluding the impact of a low-margin community closeout, the gross margin would have been approximately 21.1% [7][8] Business Line Data and Key Metrics Changes - Lots sold increased 11% year over year and 6% sequentially to 3,605 lots, with an average sales price of $106,600 [4][9] - Lots under contract to sell increased 26% from a year ago to 25,700 lots, representing 38% of the owned lot position and $2.3 billion of future revenue, marking the highest contracted backlog in five years [5][13] Market Data and Key Metrics Changes - The company noted that new home sales have been slower than last year due to affordability constraints and weaker consumer confidence, but mortgage rate buy-down incentives are helping to spur demand [11] - The availability of contractors and necessary materials remains solid, and land development costs have stabilized [11] Company Strategy and Development Direction - The company is focused on turning inventory, maximizing returns, and consolidating market share in a highly fragmented industry [5] - The strategic goal includes increasing market share within D.R. Horton, which currently accounts for 15% of their lots, with a target to double that in the intermediate term [12][42] Management's Comments on Operating Environment and Future Outlook - Management expects home affordability constraints and cautious home buyers to continue to be a near-term headwind for new home demand, but remains confident in long-term demand for finished lots [17] - The company is maintaining its fiscal 2025 revenue guidance of $1.5 billion to $1.55 billion while lowering lot delivery guidance to 14,500 to 15,000 lots [17] Other Important Information - The company ended the quarter with $792 million of liquidity, including an unrestricted cash balance of $189 million [15] - Total debt at June 30 was $873 million, with a net debt to capital ratio of 28.9% [15] Q&A Session Summary Question: Regarding gross margins and their future outlook - Management indicated that the gross margin for the quarter was at the lower end of the historical range of 21% to 23%, but sees no indication of significantly lower margins going forward [20][25] Question: On development costs and their stability - Development costs have stabilized and are classified as flattish quarter over quarter, with no significant declines observed [26] Question: Clarification on revenue guidance and pricing - The company reiterated revenue guidance while trimming volume guidance, attributing this to a higher average selling price driven by lot price increases and community mix [31][32] Question: Insights on new market entries - The company has entered new markets in the Pacific Northwest, Northern California, Salt Lake, and Reno, with teams actively building support in these regions [35] Question: Consideration of conversion to a REIT structure - Management clarified that there is no consideration for conversion to a REIT, as the focus remains on being a developer rather than a land banker [37] Question: Impact of D.R. Horton's slower growth on future plans - The company sees significant growth opportunities within D.R. Horton and is also expanding its customer base with other builders [42]

Financial Data and Key Metrics Changes - In Q3 2025, the company reported net income of $32.9 million, or $0.65 per diluted share, compared to $38.7 million, or $0.76 per diluted share in the prior year quarter [4][7] - Revenues increased by 23% to $390.5 million from $318.4 million in the prior year quarter [7] - Gross profit margin for the quarter was 20.4%, down from 22.5% in the same quarter last year, primarily impacted by the closeout of a low-margin community [7][8] - Pre-tax income was $43.6 million, down from $51.6 million in the third quarter of last year, with a pre-tax profit margin of 11.2% compared to 16.2% in the prior year quarter [8] Business Line Data and Key Metrics Changes - Lots sold increased by 11% year-over-year and 6% sequentially to 3,605 lots, with an average sales price of $106,600 [4][9] - Lots under contract to sell increased by 26% from a year ago to 25,700 lots, representing 38% of the owned lot position and $2.3 billion of future revenue, marking the highest contracted backlog in five years [5][14] Market Data and Key Metrics Changes - The company noted that new home sales have been slower due to affordability constraints and weaker consumer confidence, but mortgage rate buy-down incentives are helping to stimulate demand [12] - The availability of contractors and necessary materials remains solid, and land development costs have stabilized [12] Company Strategy and Development Direction - The company is focused on developing lots for new homes targeting entry-level and first-time buyers, which is the largest segment of the new home market [12] - The company aims to consolidate market share in the highly fragmented lot development industry, leveraging its financial strength and operational expertise [5][6] - The company is maintaining its fiscal 2025 revenue guidance of $1.5 billion to $1.55 billion while lowering lot delivery guidance to 14,500 to 15,000 lots [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term demand for finished lots despite near-term headwinds from home affordability constraints and cautious home buyers [19] - The company is well-positioned to take advantage of attractive opportunities due to its strong liquidity and capital structure [17][18] Other Important Information - The company ended the quarter with $792 million of liquidity, including an unrestricted cash balance of $189 million [17] - Total debt was $873 million, with a net debt to capital ratio of 28.9% [17] Q&A Session Summary Question: Impact of gross margins and future expectations - Management indicated that the gross margin for the quarter was at the lower end of the historical range of 21% to 23%, with no significant indicators of reduced margins going forward [22][25][28] Question: Development costs stabilization - Management confirmed that development costs have stabilized and are flattish quarter over quarter, with no significant declines observed [29] Question: Guidance clarification on volume and pricing - Management explained that the higher average selling price (ASP) is due to a mix of communities and lot price increases, leading to maintained revenue guidance [34][35] Question: New market entry and regional focus - The company is expanding into new markets such as the Pacific Northwest and Northern California, with teams on the ground to support growth [38] Question: Consideration of REIT structure - Management clarified that the company is focused on being a developer rather than converting to a REIT structure [40] Question: Growth opportunities with D.R. Horton - Management expressed optimism about growth opportunities within D.R. Horton, aiming to double their market share in the intermediate term [44]

Q2 2025 Highlights - Lots Contracted for Sale increased by 41% from Q2 FY 2024 to 25,400 lots[14] - Lot Position increased by 11% from Q2 FY 2024 to 105,900 lots[14] - Book Value Per Share increased by 10% from Q2 FY 2024 to $3236[14] - Revenues increased 5% to $351 million on 3,411 lots sold[17] - Real estate book value increased 30% year-over-year to $28 billion at March 31, 2025[17] Financial Position - Earnings per diluted share of $062 on net income of $316 million[17] - Pre-tax income of $407 million[17] - Net debt to capital of 298%, with total liquidity of $792 million[17] - The company issued $500 million of 650% senior unsecured notes due 2033[17] - The company completed a tender offer to purchase $3294 million of existing 385% senior unsecured notes due 2026[17] Strategic Goals and Market Position - Forestar targets a return on average inventory of >15% and return of phase 1 investment within 36 months[21] - Pre-tax profit margin of 151% for Q2 TTM FY 2025[22] - Forestar is targeting 5% market share within the US single-family residential lot development industry[49] - Owned lots under contract to sell increased 41% year-over-year to 25,400 lots, representing 37% of the owned lot position[84]

Q2 2025 Highlights - Lots contracted for sale increased by 41% from Q2 FY 2024 to 25,400 lots[14] - Lot position increased by 11% from Q2 FY 2024 to 105,900 lots[14] - Book value per share increased by 10% from Q2 FY 2024 to $3236[14] - Revenues increased 5% to $351 million on 3,411 lots sold[17] - Real estate book value increased 30% year-over-year to $28 billion at March 31, 2025[17] Financial Position - Earnings per diluted share of $062 on net income of $316 million[17] - Pre-tax income of $407 million[17] - Net debt to capital of 298% with total liquidity of $792 million[17] Strategic Initiatives - Forestar targets a minimum 15% return on average inventory and return of phase 1 investment within 36 months[21, 55, 99] - Forestar is targeting 5% market share within the US single-family residential lot development industry[49] - Expect to invest approximately $19 billion in land acquisition and development in fiscal 2025[74]

Sales Performance - For the six months ended March 31, 2025, the company sold 5,744 lots with an average sales price of $103,200, compared to 6,439 lots sold in the prior year period[83]. - Residential lot sales to D.R. Horton decreased to 2,501 lots in the three months ended March 31, 2025, compared to 3,105 lots in the prior year period[92]. Revenue and Expenses - Total revenues for the three months ended March 31, 2025 were $351.0 million, an increase of 5% compared to $333.8 million in the prior year period[89]. - The cost of sales for the three months ended March 31, 2025 was $271.8 million, up from $250.7 million in the prior year period, primarily due to an increase in the number of lots sold[89][95]. - Selling, general and administrative (SG&A) expenses for the three months ended March 31, 2025 were $38.4 million, representing 10.9% of revenues, compared to 8.7% in the prior year period[98]. - Income before income taxes for the three months ended March 31, 2025 was $40.7 million, down from $58.9 million in the prior year period[89]. Tax and Liabilities - The effective tax rate for the three months ended March 31, 2025 was 22.4%, compared to 23.6% in the prior year period[101]. - As of March 31, 2025, the company had deferred tax liabilities of $74.9 million, an increase from $67.5 million at September 30, 2024[102]. Market Operations - The company has expanded its lot development operations across 65 markets in 24 states, enhancing its market share and reducing operational risks[84]. Debt and Financing - Interest incurred for the three months ended March 31, 2025 was $10.6 million, compared to $8.2 million in the prior year period[97]. - The company issued $500 million principal amount of 6.5% senior notes due March 15, 2033, with net proceeds primarily used to repurchase $329.4 million of 3.85% senior notes due 2026[110]. - The company has a $640 million senior unsecured revolving credit facility, which can be increased to $1 billion under certain conditions[107]. - As of March 31, 2025, the company had $70.6 million remaining principal amount of 2026 notes maturing on May 15, 2026[112]. - The company is in compliance with all financial covenants associated with its revolving credit facility as of March 31, 2025[108]. - As of March 31, 2025, the company has fixed rate debt totaling $880.5 million, which includes $70.6 million of 3.85% senior notes due May 2026, $300 million of 5.0% senior notes due March 2028, and $500 million of 6.5% senior notes due March 2033[128]. - The company also has $9.9 million in other note payable at a 4.0% interest rate due in December 2025[128]. - The company’s variable rate debt consists of a $640 million senior unsecured revolving credit facility, with no outstanding borrowings as of March 31, 2025[128]. Cash Flow and Investments - The total lots owned and controlled increased to 105,900 as of March 31, 2025, up from 95,100 at September 30, 2024[103]. - The company reported cash and cash equivalents of $174.3 million and available borrowing capacity of $617.7 million as of March 31, 2025[104]. - The debt to total capital ratio rose to 34.7% as of March 31, 2025, compared to 30.7% at September 30, 2024[105]. - In the six months ended March 31, 2025, net cash used in operating activities was $469.8 million, compared to $215.9 million in the same period of the previous year[119]. - The company did not issue any shares of common stock under its at-the-market equity offering program in the six months ended March 31, 2025, with $750 million remaining available for issuance[118]. Interest Rate Management - The company monitors its exposure to interest rate risk and utilizes both fixed and variable rate debt to manage this risk[127]. - Changes in interest rates affect the fair value of fixed rate debt but do not impact earnings or cash flows[127]. - For variable rate debt, changes in interest rates may affect future earnings and cash flows but not the fair value of the debt instrument[127]. - The company does not have an obligation to prepay fixed-rate debt prior to maturity, minimizing cash flow impact from interest rate changes until refinancing is required[127].

Financial Performance - Net income for Q2 fiscal 2025 decreased 30% to $31.6 million, or $0.62 per diluted share, compared to $45.0 million, or $0.89 per diluted share in Q2 fiscal 2024[2] - For the first six months of fiscal 2025, net income decreased 42% to $48.1 million, with revenues decreasing 6% to $601.3 million compared to the same period in fiscal 2024[3] - The company expects to deliver between 15,000 and 15,500 lots generating $1.5 billion to $1.55 billion of revenue for fiscal 2025, down from previous guidance of 16,000 to 16,500 lots generating $1.6 billion to $1.65 billion[12] Revenue and Sales - Revenues for Q2 fiscal 2025 increased 5% to $351.0 million from $333.8 million in the same quarter of fiscal 2024[2] - Total revenues for Q1 2025 reached $351.0 million, a 5.1% increase from $333.8 million in Q1 2024[25] - Lot banking projects generated $8.0 million in revenue for Q1 2025, significantly up from $0.7 million in Q1 2024[25] Lot Sales and Position - Lots sold during Q2 fiscal 2025 increased 4% to 3,411 lots compared to 3,289 lots in the same quarter of fiscal 2024[5] - Residential lots sold in Q1 2025 totaled 3,411, up from 3,289 in Q1 2024, representing a 3.7% increase[25] - The total lots owned as of March 31, 2025, increased to 68,400, up from 57,800 on September 30, 2024, marking a 18.0% growth[26] - Total lots owned and controlled reached 105,900 as of March 31, 2025, compared to 95,100 on September 30, 2024, indicating a 11.3% increase[26] - Owned lots under contract to sell to D.R. Horton rose to 24,700, up from 20,500, which is a 20.0% increase[26] - Owned lots fully developed increased to 9,500 as of March 31, 2025, compared to 6,300 on September 30, 2024, representing a 50.8% growth[26] Financial Position and Liquidity - The company ended the quarter with $174.3 million of unrestricted cash and $617.7 million of available borrowing capacity, totaling $792.0 million in liquidity[9] - Debt at March 31, 2025, totaled $872.5 million, with a net debt to total capital ratio of 29.8%[10] - Return on equity was 10.7% for the trailing twelve months ended March 31, 2025[4] - Book value per share increased 11% to $32.36[8] Future Outlook - The company anticipates continued growth in residential lot sales and is focused on expanding its development projects[25] - The company reported a decrease in contract liabilities, with a reduction of $2.1 million in Q1 2024[25]

Forestar Group Inc. (FOR) Q2 2025 Earnings Conference Call April 17, 2025 11:00 AM ET Company Participants Jenny - Conference ModeratorChris Hibbitts - Vice President of Finance and Investor RelationsAndy Oxley - President and CEOJim Allen - Chief Operating OfficerMark - Executive (Exact title not specified) Conference Call Participants Anthony Petinari - Citi AnalystTrevor Allenson - Wolf Research AnalystCarl Reichart - BTIG AnalystAlex Isaac - JP Morgan Analyst (on behalf of Mike) Jenny Good morning and w ...

Financial Data and Key Metrics Changes - The company reported net income of $31.6 million or $0.62 per diluted share on revenues of $351 million, compared to $45 million or $0.89 per diluted share in the prior year quarter [7][12] - Revenues increased by 5% from $333.8 million in the prior year quarter [12] - Gross profit margin decreased to 16.6% from 19.9% in the same quarter last year, primarily due to nonrecurring high-margin items in the prior year [12][13] - Pre-tax income was $40.7 million compared to $58.9 million in the second quarter of last year [13] Business Line Data and Key Metrics Changes - Lots sold increased by 4% to 3,411 lots with an average sales price of $101,700 [14] - Lots under contract to sell increased by 41% from a year ago to 25,400 lots, representing 37% of the company's own lot position [7][24] - The current backlog represents $2.3 billion of future revenue [8][24] Market Data and Key Metrics Changes - The home building industry is facing headwinds from affordability constraints and declining consumer confidence, leading to a slower than expected start to the spring selling season [9][32] - The company has entered 10 new markets in the last year and increased community count by 21% [8][16] Company Strategy and Development Direction - The company aims to consolidate market share in the fragmented lot development industry while moderating the pace of land acquisition [10][34] - The focus remains on developing lots for new homes at affordable price points, with 79% of investments this quarter directed towards land development [10][26] - The company expects to invest approximately $1.9 billion in land acquisition and development in fiscal 2025, subject to market conditions [27] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued headwinds from homeowner affordability constraints and cautious homebuyers affecting lot deliveries [32] - The company is confident in long-term demand for finished lots and its ability to gain market share [34] - Management noted that the availability of contractors and necessary materials remains positive, with stabilized land development costs [19] Other Important Information - The company ended the quarter with approximately $800 million in liquidity, including $174 million in unrestricted cash [28] - Total debt was $873 million, with no senior note maturities until May 2026, and a net debt to capital ratio of 29.8% [29][30] Q&A Session Summary Question: Guidance change context - The guidance change is mostly prospective, reflecting community-level inventory buildup, with no anticipated margin changes [38][40] Question: Flexibility of raw land sellers - There is more flexibility on terms but not much on price, as sellers are holding firm [44] Question: Impact of tariffs on land development costs - Currently, there are no significant cost increases from trade partners, and it is too early to assess tariff impacts [55] Question: Demand characterization in Texas and Florida - Demand is weaker in Florida and stable in Texas, with strong activity in sales centers despite affordability challenges [56][57] Question: Sensitivity of land development spend to demand - The company can moderate spend based on demand changes and has a robust pipeline of projects [64] Question: Competitors' pullback and market share - The company sees opportunities to consolidate market share as competitors pull back [66] Question: Federal deregulation impact on lot supply - It is too early to determine the impact of federal deregulation on lot supply [75] Question: Long-term margin expectations - Margins have been stable in the 21% to 23% range, with no significant pressure anticipated [77]