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]

Revenue Performance - For the three months ended December 31, 2024, total revenues decreased by 18% to $250.4 million compared to $305.9 million in the prior year period[88]. - The company sold 2,333 lots at an average sales price of $105,500, a decrease of 26% in total lots closed compared to 3,150 lots in the same period last year[89]. - Revenues from lot sales to D.R. Horton decreased by 20% to $217.4 million, while revenues from other customers decreased by 6% to $28.8 million[91]. Expenses and Financial Ratios - Selling, general and administrative (SG&A) expenses increased by 29% to $36.0 million, representing 14.4% of total revenues compared to 9.2% in the prior year[97]. - The ratio of debt to total capital increased to 33.3% from 30.7% at September 30, 2024, while the ratio of net debt to total capital rose to 29.5%[104]. Cash and Liquidity - At December 31, 2024, the company reported cash and cash equivalents of $132.0 million and available borrowing capacity of $512.5 million[103]. - As of December 31, 2024, the company had $100 million of borrowings outstanding at a 5.9% annual interest rate and $27.5 million of letters of credit issued, resulting in available capacity of $512.5 million[107]. - The company reported net cash provided by financing activities of $99.9 million in the three months ended December 31, 2024, primarily due to $100 million of borrowings under the revolving credit facility[118]. Debt and Financing - The company has $400 million principal amount of 3.85% senior notes maturing on May 15, 2026, and $300 million principal amount of 5.0% senior notes maturing on March 1, 2028[110][111]. - The average annual interest rate on the outstanding borrowings of $100 million on the revolving credit facility was 5.9% as of December 31, 2024[128]. - The company has authorized the repurchase of up to $30 million of its debt securities, with the full amount remaining available as of December 31, 2024[113]. Land and Investment Strategy - The company plans to remain disciplined in land investments and focus on managing lot sales pace and pricing to optimize returns[86]. - The company aims to develop lots for homes at affordable price points despite challenges in the housing market[85]. - The company had a total of 106,000 lots owned and controlled as of December 31, 2024, an increase from 95,100 lots at September 30, 2024[102]. Compliance and Amendments - The company amended its senior unsecured revolving credit facility in December 2024, increasing its capacity from $410 million to $640 million, with a potential increase to $1 billion[107]. - The company was in compliance with all financial covenants associated with its revolving credit facility as of December 31, 2024[108]. - No impairment charges were recorded for the three months ended December 31, 2024, and land purchase contract deposit write-offs were $1.1 million[95]. Other Financial Activities - In the three months ended December 31, 2024, net cash used in operating activities was $450 million, compared to $156.7 million in the same period of 2023[116]. - The company issued a note payable of $9.9 million in December 2023 for real estate acquisition, secured by the underlying real estate, with a 4.0% interest rate[114]. - The company has an effective shelf registration statement for $750 million of equity securities, with $300 million reserved for an at-the-market equity offering program[115].

Financial Performance - Net income for Q1 fiscal 2025 decreased 57% to $16.5 million, or $0.32 per diluted share, compared to $38.2 million, or $0.76 per diluted share in Q1 fiscal 2024[4]. - Revenues totaled $250.4 million in Q1 fiscal 2025, down from $305.9 million in the same quarter of fiscal 2024, reflecting a decrease in lots sold by 26% to 2,333 lots[4][6]. Assets and Liquidity - The company's lot position at December 31, 2024, was 106,000 lots, with 68,300 owned and 37,700 controlled through contracts, including 25,200 lots under contract to be sold, representing approximately $2.2 billion of future revenue[7][8]. - The company ended the quarter with $132.0 million of unrestricted cash and $512.5 million of available borrowing capacity, totaling $644.5 million in liquidity[9]. - Debt at December 31, 2024, totaled $806.8 million, with a net debt to total capital ratio of 29.5%[10]. Investment and Growth Plans - Forestar intends to invest approximately $2.0 billion in land acquisition and development in fiscal 2025[11]. - The company plans to deliver between 16,000 and 16,500 lots in fiscal 2025, generating projected revenues of $1.6 billion to $1.65 billion[11]. - Forestar's strong balance sheet and liquidity position the company for growth opportunities in the homebuilding industry amid a shortage of finished lots[12]. Shareholder Metrics - Return on equity was 12.0% for the trailing twelve months ended December 31, 2024, with book value per share increasing 13% to $31.84[5][8]. - The average sales price per lot increased to $105,500 in Q1 fiscal 2025 from $96,400 in Q1 fiscal 2024[23].

Financial Data and Key Metrics - No specific financial data or key metrics changes were provided in the content [1][2][3][4][5][6] Business Line Data and Key Metrics - No specific business line data or key metrics changes were provided in the content [1][2][3][4][5][6] Market Data and Key Metrics - No specific market data or key metrics changes were provided in the content [1][2][3][4][5][6] Company Strategy and Industry Competition - No specific details on company strategy, development direction, or industry competition were provided in the content [1][2][3][4][5][6] Management Commentary on Operating Environment and Future Outlook - The company included forward-looking statements in the call, which are based on reasonable assumptions but are subject to material differences in actual outcomes [3] - Additional information on factors that could lead to material changes in performance is contained in the company's annual and quarterly reports filed with the SEC [4] Other Important Information - The earnings release is available on the company's website, and the 10-Q filing is planned for later in the week [4] - An updated investor presentation will be posted on the Investor Relations site after the call [5] Q&A Session Summary - No Q&A session details were provided in the content [1][2][3][4][5][6]

Financial Data and Key Metrics Changes - In Q1, net income was $16.5 million or $0.32 per diluted share, down from $38.2 million or $0.76 per diluted share in the prior year quarter [6] - Revenues totaled $250.4 million compared to $305.9 million in the prior year quarter, reflecting a decrease [6][7] - Pre-tax income was $21.9 million, down from $51.2 million in the same quarter last year, with a pre-tax profit margin of 8.7% compared to 16.7% previously [6][8] - SG&A expenses increased by 29% to $36 million, primarily due to a 30% increase in employee count [8] Business Line Data and Key Metrics Changes - The company sold 2,333 lots in the quarter with an average sales price of $105,500 [7] - The owned lot position increased by 23% year-over-year, and community count rose by 25% [5] - The gross profit margin for the quarter was 22%, slightly down from 23.8% in the prior year quarter [8] Market Data and Key Metrics Changes - Demand for finished lots remains solid, with owned lots under contract doubling from a year ago [4] - The company’s total lot position increased by 29% to 106,000 lots, with 64% owned and 36% controlled through purchase contracts [13] - The backlog of contracted lots is expected to generate approximately $2.2 billion in future revenue [14] Company Strategy and Development Direction - The company is focused on investing in land acquisition and development, with a planned investment of approximately $2 billion in fiscal 2025 [12] - The strategic goal is to double market share to 5% over the intermediate term [19] - The company aims to maintain a disciplined approach to capital investment while enhancing long-term value [19] Management's Comments on Operating Environment and Future Outlook - Management noted that while home inventories have increased, affordable housing supply remains limited, with favorable demographics supporting housing demand [8] - The company expects Q1 to be the lowest delivery quarter of the fiscal year, with higher revenues anticipated in the second half [18] - Management expressed confidence in the company’s position to gain market share in the fragmented lot development industry [19] Other Important Information - The company ended the quarter with $645 million in liquidity, including $132 million in cash [14] - The corporate credit rating was upgraded from B+ to BB- [14] - The company’s capital structure provides operational flexibility and positions it to take advantage of attractive opportunities [15] Q&A Session Summary Question: Can you provide more detail on the stabilization of costs in land development? - Management indicated that development costs have stabilized over the past 12 months, with no significant price increases observed [23] Question: How do you expect employee count growth to impact cost leverage in the next year or two? - Management expects SG&A expenses to moderate for the remainder of the year, anticipating high single-digit growth [26] Question: What drove the higher revenue per lot this quarter? - The increase was attributed to a specific infill project with significant lot prices that skewed the average sales price upward [28] Question: How has builder demand been trending year to date? - Builder demand remains strong, particularly for new communities, with existing communities also seeing solid demand [32] Question: Can you elaborate on the cadence of deliveries for the rest of the year? - Management noted that Q1 is typically the lowest delivery quarter, with a majority of deliveries expected in the second half of the year [34]

Financial Data and Key Metrics Changes - In Q1, net income was $16.5 million or $0.32 per diluted share, down from $38.2 million or $0.76 per diluted share in the prior year quarter [6] - Pre-tax income was $21.9 million compared to $51.2 million in Q1 of last year, with a pre-tax profit margin of 8.7% versus 16.7% in the prior year quarter due to reduced operating leverage [6] - Revenues totaled $250.4 million, down from $305.9 million in the prior year quarter [6][7] - Gross profit margin for the quarter was 22% compared to 23.8% for the same quarter last year [8] Business Line Data and Key Metrics Changes - The company sold 2,333 lots in the quarter with an average sales price of $105,500 [7] - Owned lot position increased by 23% compared to a year ago, and community count increased by 25% over the same period [5] - SG&A expenses increased by 29% from the prior year quarter to $36 million, primarily due to a 30% increase in employee count [8] Market Data and Key Metrics Changes - The total lot position increased by 29% from a year ago to 106,000 lots, with 64% owned and 36% controlled through purchase contracts [14] - Owned lots under contract increased by 51% from a year ago to 25,200 lots, representing 37% of the owned lot position [15] Company Strategy and Development Direction - The company is focused on investing in compelling land parcels, maximizing returns, and consolidating market share in the lot development industry [5] - The goal is to double market share to 5% over the intermediate term while maintaining a disciplined approach to capital investment [20] - The company expects to invest approximately $2 billion in land acquisition and development in fiscal 2025, subject to market conditions [12] Management's Comments on Operating Environment and Future Outlook - Management noted that builder demand remains strong, particularly for new communities, and there has been no softening in land prices [9][33] - The company expects Q1 to be the lowest delivery quarter of the year, with higher revenues anticipated in the second half of fiscal 2025 [19] - Management expressed confidence in the company's ability to gain market share in the fragmented lot development industry [20] Other Important Information - The company ended the quarter with $645 million of liquidity, including $132 million in unrestricted cash [15] - Total debt was $807 million with no senior note maturities until May 2026, and the net debt to capital ratio was 29.5% [15] Q&A Session Summary Question: Can you provide more detail on the stabilization of costs in land development? - Management indicated that development costs have stabilized over the past 12 months, with no significant price increases observed [23] Question: How do you foresee the growth in employee count and new markets affecting cost leverage? - Management expects SG&A expenses to moderate for the remainder of the year, anticipating high single-digit growth [26] Question: What is driving the higher revenue per lot this quarter? - The increase in revenue per lot was attributed to a specific infill project with significant lot prices that skewed the average sales price up for the quarter [28] Question: How has builder demand been trending year to date? - Builder demand remains strong, particularly for new communities, with no significant delays reported from major customers [32]

Core Viewpoint - Forestar Group (NYSE: FOR) is a residential lot supply company that primarily sells parcels of land to homebuilders, with a significant focus on D.R. Horton, the largest homebuilder in the U.S. [1] Company Overview - Forestar Group specializes in supplying residential lots, which are essential for homebuilding developments [1]. - The company has established a strong relationship with D.R. Horton, indicating its strategic positioning within the homebuilding supply chain [1]. Investment Philosophy - The investment philosophy highlighted emphasizes the importance of investing in high-quality stocks and businesses that are managed by disciplined capital allocators, generate exceptional returns on capital, and have the potential for long-term capital compounding [1].

FORESTAR Investor Presentation Q4 2024 FORWARD-LOOKING STATEMENTS Factors that may cause the actual results to be materially different from the future results expressed by the forward-looking statements include, but are not limited to: the effect of D.R. Horton's controlling level of ownership on us and the holders of our securities; our ability to realize the potential benefits of the strategic relationship with D.R. Horton; the effect of our strategic relationship with D.R. Horton on our ability to mainta ...

Financial Performance - Net income for fiscal 2024 increased 22% to $203.4 million, or $4.00 per diluted share, compared to $166.9 million, or $3.33 per diluted share, in fiscal 2023[3] - Revenues for fiscal 2024 increased 5% to $1.5 billion from $1.4 billion in fiscal 2023, with 15,068 lots sold[3] - Net income for the three months ended September 30, 2024, was $81.6 million, compared to $72.4 million in the same period of 2023, reflecting a year-over-year increase of 12.5%[18] - Basic net income per common share increased to $1.61 for the three months ended September 30, 2024, up from $1.45 in the same period of 2023, marking an increase of 11.0%[18] - The income before income taxes for the three months ended September 30, 2024, was $108.5 million, compared to $95.4 million in the same period of 2023, showing an increase of 13.6%[18] Sales and Lots - Lots sold during fiscal 2024 increased 7% to 15,068 lots compared to 14,040 lots in fiscal 2023[6] - The company delivered over 15,000 finished lots in fiscal 2024, exceeding the high end of its recent guidance range[10] - Residential lot sales from development projects totaled $496.4 million for the three months ended September 30, 2024, compared to $485.4 million in the same period of 2023, indicating a growth of 2.1%[19] - The average sales price per lot was $97,300 for the three months ended September 30, 2024, slightly down from $97,400 in the same period of 2023[20] - The company owned 20,500 lots under contract to sell to D.R. Horton, an increase from 14,400 lots in the previous year, reflecting a growth of 42.4%[20] Assets and Liquidity - The company ended fiscal 2024 with $481.2 million of unrestricted cash and $377.2 million of available borrowing capacity, totaling $858.4 million in liquidity[9] - Debt at September 30, 2024, totaled $706.4 million, with no senior note maturities until fiscal 2026[9] - The total lots owned and controlled increased to 95,100 as of September 30, 2024, compared to 79,200 as of September 30, 2023, representing a growth of 20.1%[20] - The company owned and controlled 95,100 lots as of September 30, 2024, with 21,000 lots under contract to be sold, representing approximately $1.9 billion of future revenue[7] Expenses - Selling, general and administrative expenses rose to $32.0 million for the three months ended September 30, 2024, compared to $26.4 million in the same period of 2023, an increase of 21.3%[18] Investment - Over the last five years, the company invested approximately $6.7 billion in land acquisition and development, delivering over 70,000 finished lots[11] Future Outlook - The company expects to deliver between 16,000 and 16,500 lots in fiscal 2025, generating $1.6 billion to $1.65 billion of revenue[12] Quarterly Revenue - Total revenues for the three months ended September 30, 2024, were $551.4 million, a slight increase from $549.7 million in the same period of 2023, representing a growth of 0.3%[19] Asset Sales - The company reported a gain on the sale of assets of $(4.5) million for the three months ended September 30, 2024, compared to no gain in the same period of 2023[18]

Industry Overview - The Zacks Real Estate – Development industry includes companies involved in owning, developing, and managing various real estate properties, such as commercial, residential, and mixed-use parcels [3] - Companies in this sector often engage in strategic activities like infrastructure improvement and land planning to enhance economic development and attract job creators [3] Current Market Conditions - Recent interest rate cuts by the Federal Reserve have improved buyer sentiment for 2024 and 2025, encouraging real estate development due to lower borrowing costs [4] - The industry is experiencing a significant shortage of new homes due to over a decade of under-building, which is contributing to favorable industry fundamentals [5] - Demand for specific real estate categories, including retail, industrial, logistics, and office spaces, is witnessing healthy growth, driven by post-pandemic consumer preferences and e-commerce trends [6] Economic Challenges - Despite improved investor sentiment, macroeconomic uncertainty and geopolitical tensions are causing supply-chain constraints and inflated material costs, which keep real estate prices high [2][7] - The volume of U.S. commercial real estate transactions decreased by 3% year over year in Q2 2024, totaling $86 billion, indicating subdued sales activity [7] Industry Performance - The Zacks Real Estate Development industry ranks 87, placing it in the top 35% of 252 Zacks industries, indicating bright near-term prospects [8] - Aggregate earnings estimates for the industry have increased by 10.6% and 7.8% for 2024 and 2025, respectively, reflecting growing confidence in earnings growth potential [9] Stock Performance - Over the past year, the industry has gained 28%, underperforming the S&P 500's growth of 33.7% and the broader Finance sector's increase of 31.9% [11] - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 6.73X, significantly lower than the S&P 500's 21.57X and the Finance sector's 16.2X [12] Company Highlights - **Howard Hughes Holdings Inc. (HHH)**: Engaged in the ownership, management, and development of various real estate types, with a Zacks Rank 1 (Strong Buy) and a projected 2024 EPS of $3.28, indicating a significant year-over-year increase [14][16] - **Green Brick Partners, Inc. (GRBK)**: A diversified homebuilding and land development company with a Zacks Rank 3 (Hold) and a projected 2024 EPS of $8.35, suggesting a 36% year-over-year increase [17][19] - **Forestar Group Inc. (FOR)**: Focuses on land acquisition and development for residential lots, with a Zacks Rank 3 and a projected fiscal 2024 EPS of $3.72, indicating an 11.7% year-over-year increase [19][23]