Forestar Group Inc (NYSE: FOR ) is a top idea of mine in the real estate development sector. The company essentially acquires land and develops the infrastructure need to support the growth in creating single-family residential communities, selling finished I'm an insurance Case Manager with a deep interest in investing. My investment philosophy is all about buying high quality stocks and great businesses. My favorite businesses are those led by disciplined capital allocators, earn exceptional returns on ca ...

[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section provides the unaudited consolidated financial statements for the quarter ended June 30, 2024, prepared in accordance with U.S. GAAP - The unaudited financial statements include all necessary adjustments for a fair presentation of interim period results, as per management's opinion[153](index=153&type=chunk) - These financial statements should be read in conjunction with the audited financial statements from the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023[153](index=153&type=chunk) [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2024, total assets increased to **$2,675.0 million**, driven by real estate, with total liabilities at **$1,162.1 million** and equity at **$1,512.9 million** Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2024 | September 30, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$2,675.0** | **$2,470.7** | | Cash and cash equivalents | $359.2 | $616.0 | | Real estate | $2,238.7 | $1,790.3 | | **Total Liabilities** | **$1,162.1** | **$1,100.8** | | Debt | $706.1 | $695.0 | | **Total Equity** | **$1,512.9** | **$1,369.9** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For the nine months ended June 30, 2024, net income rose to **$121.8 million** on **$958.0 million** revenue, though the third quarter saw a decline in both metrics Statement of Operations Summary (in millions, except per share data) | Metric | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $958.0 | $887.1 | $318.4 | $368.9 | | Income before income taxes | $161.6 | $126.2 | $51.6 | $62.4 | | Net income | $121.8 | $94.5 | $38.7 | $46.8 | | Diluted net income per share | $2.40 | $1.89 | $0.76 | $0.93 | [Consolidated Statements of Total Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Total%20Equity) Total equity increased to **$1,512.9 million** by June 30, 2024, primarily driven by **$121.9 million** in net income and common stock issuance proceeds Changes in Total Equity (in millions) | Description | Amount | | :--- | :--- | | Balance at September 30, 2023 | $1,369.9 | | Net income (9 months) | $121.9 | | Issuance of common stock | $19.7 | | Other adjustments | ($0.5) | | **Balance at June 30, 2024** | **$1,512.9** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$277.6 million** for the nine months ended June 30, 2024, primarily due to increased real estate investments, leading to a **$256.8 million** decrease in cash Cash Flow Summary (Nine Months Ended June 30, in millions) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(277.6) | $136.2 | | Net cash provided by investing activities | $3.7 | $0.8 | | Net cash provided by (used in) financing activities | $17.1 | $(0.8) | | **(Decrease) increase in cash** | **$(256.8)** | **$136.2** | | Cash at end of period | $359.2 | $401.0 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail accounting policies, segment operations as a single real estate entity, D.R. Horton's **62%** majority ownership, and the **$706.1 million** debt structure, including an undrawn **$410 million** credit facility - As of June 30, 2024, D.R. Horton owned approximately **62%** of the Company's outstanding common stock, classifying it as a related party under GAAP[35](index=35&type=chunk)[137](index=137&type=chunk) - The company operates as a single real estate segment, focused on acquiring land, installing infrastructure, and selling residential lots to homebuilders[156](index=156&type=chunk)[178](index=178&type=chunk) Debt Composition as of June 30, 2024 (in millions) | Debt Instrument | Carrying Amount | | :--- | :--- | | 3.85% senior notes due 2026 | $398.2 | | 5.0% senior notes due 2028 | $298.0 | | Other note payable | $9.9 | | **Total Debt** | **$706.1** | - The company maintains a **$410 million** senior unsecured revolving credit facility, with no outstanding borrowings and **$385.2 million** of available capacity as of June 30, 2024[20](index=20&type=chunk)[75](index=75&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong demand for residential lots, driving an **8%** revenue increase for the nine-month period, expanding lot position to **102,100**, and maintaining strong liquidity, despite quarterly impacts from reduced inventory - Demand for residential lots, especially at affordable price points, remained strong, contributing to an **8%** revenue increase for the nine months ended June 30, 2024[65](index=65&type=chunk) - The company's total lot position expanded to **102,100** lots by June 30, 2024, comprising **57,900** owned and **44,200** controlled lots[64](index=64&type=chunk)[240](index=240&type=chunk) - The company is well-positioned to consolidate market share, supported by low net leverage, strong liquidity, a diverse lot portfolio, and its strategic relationship with D.R. Horton[212](index=212&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) Nine-month revenues increased to **$958.0 million**, driven by a **7%** rise in lots sold and higher average sales prices, with D.R. Horton sales as a primary contributor, while SG&A expenses also increased Residential Lots Sold | Period | Lots Sold | Average Sales Price | | :--- | :--- | :--- | | Nine Months Ended June 30, 2024 | 9,694 | $96,300 | | Nine Months Ended June 30, 2023 | 9,054 | $87,300 | | Three Months Ended June 30, 2024 | 3,255 | $94,000 | | Three Months Ended June 30, 2023 | 3,812 | $87,700 | Lot Sales Revenue by Customer (Nine Months Ended June 30, in millions) | Customer | 2024 | 2023 | | :--- | :--- | :--- | | D.R. Horton | $846.6 | $677.4 | | Other Customers | $86.7 | $112.9 | | **Total** | **$933.3** | **$790.3** | - SG&A expense increased to **$86.5 million** for the nine months ended June 30, 2024, from **$71.3 million** in the prior year, primarily due to increased headcount supporting business growth[238](index=238&type=chunk) - No impairment charges were recorded in the three and nine months ended June 30, 2024, contrasting with **$19.4 million** in the nine months ended June 30, 2023[70](index=70&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$359.2 million** cash and **$385.2 million** available credit, a net debt to total capital ratio of **18.7%**, and raised **$19.7 million** from common stock issuance - As of June 30, 2024, the company held **$359.2 million** in cash and cash equivalents, with **$385.2 million** available on its revolving credit facility[99](index=99&type=chunk) - The ratio of net debt to total capital stood at **18.7%** as of June 30, 2024[241](index=241&type=chunk) - Net cash used in operating activities totaled **$277.6 million** for the nine months ended June 30, 2024, primarily due to increased real estate investment[227](index=227&type=chunk)[135](index=135&type=chunk) - The company issued **546,174** shares of common stock under its at-the-market program, generating **$19.7 million** in net proceeds during the nine months ended June 30, 2024[167](index=167&type=chunk)[228](index=228&type=chunk)[246](index=246&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure on its debt, managed through a mix of fixed and variable-rate instruments, with predominantly fixed-rate debt and no outstanding variable-rate borrowings as of June 30, 2024 - The company's primary market risk is interest rate risk, which is managed through a combination of fixed and variable-rate debt[84](index=84&type=chunk)[252](index=252&type=chunk) - As of June 30, 2024, fixed-rate debt totaled **$709.9 million**, with no outstanding borrowings on the **$410 million** variable-rate revolving credit facility[116](index=116&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the reporting period[253](index=253&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2024[117](index=117&type=chunk) [PART II — OTHER INFORMATION](index=26&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, for which management believes adequate reserves are established, expecting no material adverse effect on financial position or long-term results - The company is involved in various legal proceedings arising in the ordinary course of business[86](index=86&type=chunk)[118](index=118&type=chunk) - Management believes adequate reserves are established, and the outcome of these proceedings is not expected to materially affect the company's financial position, long-term results, or cash flows[86](index=86&type=chunk)[170](index=170&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley Act Sections 302 and 906, and Inline XBRL documents - The report includes CEO and CFO certifications as required by Sections 302 and 906 of the Sarbanes-Oxley Act[255](index=255&type=chunk) - Interactive Data Files, including XBRL Instance Document and various Linkbase Documents, are electronically submitted with the report[255](index=255&type=chunk) [SIGNATURE](index=28&type=section&id=SIGNATURE) The quarterly report concludes with the formal signature of James D. Allen, Executive Vice President and Chief Financial Officer, dated July 22, 2024 - The report was formally signed by James D. Allen, Executive Vice President and Chief Financial Officer, on behalf of Forestar Group Inc[113](index=113&type=chunk)[124](index=124&type=chunk) - The signature date for the report is July 22, 2024[113](index=113&type=chunk)

[Fiscal 2024 Third Quarter and Nine Months Results](index=1&type=section&id=Fiscal%202024%20Third%20Quarter%20and%20Nine%20Months%20Results) Forestar Group Inc. reported mixed results for Q3 and the first nine months of fiscal 2024, with Q3 showing declines in net income and revenue, while the nine-month period demonstrated significant growth in both metrics and lots sold [Third Quarter Financial Performance](index=1&type=section&id=Third%20Quarter%20Financial%20Performance) Forestar Group Inc. experienced a **17% decrease in Q3 FY2024 net income** to $38.7 million and a **14% revenue decline** to $318.4 million, despite maintaining a 16.2% pre-tax profit margin and expanding return on equity to 13.8% [Q3 Key Financial Metrics](index=1&type=section&id=Q3%20Key%20Financial%20Metrics) **Q3 FY2024 vs. Q3 FY2023 Financial Performance:** | Metric | Q3 FY2024 | Q3 FY2023 | Change (YoY) | | :-------------------- | :---------- | :---------- | :----------- | | Net Income | $38.7 million | $46.8 million | -17% | | Diluted EPS | $0.76 | $0.93 | -18.3% | | Pre-tax Income | $51.6 million | $62.4 million | -17% | | Pre-tax Profit Margin | 16.2% | - | - | | Consolidated Revenues | $318.4 million | $368.9 million | -14% | | Return on Equity (TTM) | 13.8% | 11.7% | +190 bps | | Book Value per Share | $29.87 | - | +15% | [Q3 Operational Metrics](index=1&type=section&id=Q3%20Operational%20Metrics) **Q3 FY2024 Lots Sold:** | Category | Q3 FY2024 | Q3 FY2023 | Change (YoY) | | :-------------------------------- | :-------- | :-------- | :----------- | | Total Lots Sold | 3,255 | 3,812 | -15% | | Lots Sold to Other Customers (excl. D.R. Horton) | 352 | 625 | -43.7% | [Nine Months Financial Performance](index=1&type=section&id=Nine%20Months%20Financial%20Performance) For the first nine months of fiscal 2024, Forestar achieved significant growth with **net income up 29% to $121.8 million**, pre-tax income up 28% to $161.6 million, and revenues increasing 8% to $958.0 million [9M Key Financial Metrics](index=1&type=section&id=9M%20Key%20Financial%20Metrics) **Nine Months Ended June 30, 2024 vs. 2023 Financial Performance:** | Metric | 9M FY2024 | 9M FY2023 | Change (YoY) | | :-------------------- | :---------- | :---------- | :----------- | | Net Income | $121.8 million | $94.5 million | +29% | | Diluted EPS | $2.40 | $1.89 | +27% | | Pre-tax Income | $161.6 million | $126.2 million | +28% | | Revenues | $958.0 million | $887.1 million | +8% | [9M Operational Metrics](index=1&type=section&id=9M%20Operational%20Metrics) **Nine Months Ended June 30, 2024 Lots Sold:** | Category | 9M FY2024 | 9M FY2023 | Change (YoY) | | :-------------------------------- | :-------- | :-------- | :----------- | | Total Lots Sold | 9,694 | 9,054 | +7% | | Lots Sold to Other Customers (excl. D.R. Horton) | 852 | 1,107 | -23.1% | [Capital Structure and Liquidity](index=1&type=section&id=Capital%20Structure%20and%20Liquidity) Forestar maintained a strong liquidity position of **$744.4 million** at quarter-end, supported by **$359.2 million in unrestricted cash** and a healthy **18.7% net debt to total capital ratio**, with no senior note maturities until fiscal 2026 Capital Structure and Liquidity (as of June 30, 2024): | Metric | Amount | | :-------------------------------- | :------------- | | Unrestricted Cash | $359.2 million | | Available Borrowing Capacity | $385.2 million | | Total Liquidity | $744.4 million | | Total Debt | $706.1 million | | Net Debt to Total Capital Ratio | 18.7% | | Senior Note Maturities | None until FY2026 | - During the nine months ended June 30, 2024, the Company issued 546,174 shares of common stock under its at-the-market equity offering program for proceeds of **$19.7 million**, net of commissions and other issuance costs[10](index=10&type=chunk) - The Company's lot position at June 30, 2024 increased **40% to 102,100 lots**, of which **57,900 were owned** and **44,200 were controlled** through land and lot purchase contracts[6](index=6&type=chunk) - Of the Company's owned lot position at June 30, 2024, **20,400 lots (35%) were under contract to be sold**, representing approximately **$1.8 billion of future revenue**[6](index=6&type=chunk) [Management Outlook and Strategic Priorities](index=2&type=section&id=Management%20Outlook%20and%20Strategic%20Priorities) Management expressed confidence in solid demand and profitability, revising fiscal 2024 lot delivery guidance while maintaining revenue targets, and emphasizing strategic growth and market consolidation [Management Commentary](index=2&type=section&id=Management%20Commentary) Chairman Donald J. Tomnitz highlighted solid Q3 FY2024 demand for finished lots, strong profitability with a **16.2% pre-tax profit margin**, and the company's unique position to address the constrained supply of affordable vacant developed lots - Demand for finished lots remained solid during the third quarter of fiscal 2024[11](index=11&type=chunk) - Forestar maintained strong profitability with a **pre-tax profit margin of 16.2%** and delivered attractive double-digit returns[11](index=11&type=chunk) - The supply of vacant developed lots, particularly at affordable price points, continues to be constrained across most of the country, positioning Forestar uniquely to take advantage of this shortage[12](index=12&type=chunk) [Fiscal 2024 Guidance](index=2&type=section&id=Fiscal%202024%20Guidance) Forestar revised its fiscal 2024 lot delivery guidance to **14,600-15,100 lots** (from 14,500-15,500) while maintaining revenue guidance of **$1.4 billion to $1.5 billion**, reflecting current year-to-date results Revised Fiscal 2024 Guidance: | Metric | New Guidance | Prior Guidance | | :---------------- | :------------------- | :------------------- | | Lot Deliveries | 14,600 to 15,100 lots | 14,500 to 15,500 lots | | Revenue | $1.4 billion to $1.5 billion | $1.4 billion to $1.5 billion | [Strategic Focus](index=2&type=section&id=Strategic%20Focus) The company remains focused on growing its platform, optimizing inventory turnover, maximizing returns, and consolidating market share, supported by a strong balance sheet, ample liquidity, and a disciplined capital allocation approach - Forestar remains focused on growing its platform, turning inventory, maximizing returns, and consolidating market share in the highly fragmented lot development industry[13](index=13&type=chunk) - The company's contracted backlog, strong balance sheet, and ample liquidity position it to continue gaining market share and invest in land opportunities for future growth[13](index=13&type=chunk) - Forestar will maintain a disciplined approach to capital allocation to enhance long-term value[13](index=13&type=chunk) [Company Information and Disclosures](index=2&type=section&id=Company%20Information%20and%20Disclosures) This section provides an overview of Forestar Group Inc. as a leading residential lot developer and a D.R. Horton subsidiary, alongside important forward-looking statements and associated risk factors [About Forestar Group Inc.](index=2&type=section&id=About%20Forestar%20Group%20Inc.) Forestar Group Inc. is a leading national residential lot development company operating in **60 markets across 24 states**, a majority-owned subsidiary of D.R. Horton, having delivered over **14,600 residential lots** in the trailing twelve months - Forestar Group Inc. is a residential lot development company with operations in **60 markets and 24 states**[14](index=14&type=chunk) - The Company delivered more than **14,600 residential lots** during the twelve-month period ended June 30, 2024[14](index=14&type=chunk) - Forestar is a majority-owned subsidiary of D.R. Horton, the largest homebuilder by volume in the United States since 2002[14](index=14&type=chunk) [Forward-Looking Statements and Risk Factors](index=3&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section addresses forward-looking statements, highlighting key risks such as D.R. Horton's ownership, cyclical industry conditions, economic factors like inflation and interest rates, supply chain issues, and governmental policies - Portions of this document may constitute 'forward-looking statements' as defined by the Private Securities Litigation Reform Act of 1995, and actual outcomes may be materially different[15](index=15&type=chunk) - Key risk factors include the effect of D.R. Horton's controlling ownership, cyclical nature of the homebuilding and lot development industries, impact of inflation and higher interest rates, supply shortages, and governmental policies[16](index=16&type=chunk) - Other factors include the cost and availability of property, dependence on relationships with homebuilders, competitive conditions, and the ability to manage debt and retain key personnel[16](index=16&type=chunk) [Detailed Financial Statements and Operational Data](index=4&type=section&id=Detailed%20Financial%20Statements%20and%20Operational%20Data) This section provides comprehensive financial statements, including balance sheets and statements of operations, along with detailed operational data on revenues, residential lots sold, and the company's overall lot position [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2024, Forestar's total assets increased to **$2,675.0 million**, driven by real estate assets, with total liabilities rising to **$1,162.1 million** and stockholders' equity growing to **$1,511.9 million** Consolidated Balance Sheets (in millions): | Item | June 30, 2024 | September 30, 2023 | | :-------------------------------- | :-------------- | :----------------- | | **ASSETS** | | | | Cash and cash equivalents | $359.2 | $616.0 | | Real estate | $2,238.7 | $1,790.3 | | Total assets | $2,675.0 | $2,470.7 | | **LIABILITIES** | | | | Debt | $706.1 | $695.0 | | Total liabilities | $1,162.1 | $1,100.8 | | **EQUITY** | | | | Stockholders' equity | $1,511.9 | $1,368.9 | | Total liabilities and equity | $2,675.0 | $2,470.7 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For Q3 FY2024, revenues were **$318.4 million** with **net income of $38.7 million**, while for the nine months, revenues reached **$958.0 million** and net income was **$121.8 million**, detailing key operational expenses Consolidated Statements of Operations (in millions, except per share amounts): | Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenues | $318.4 | $368.9 | $958.0 | $887.1 | | Cost of sales | $246.9 | $283.9 | $730.6 | $698.7 | | Selling, general and administrative expense | $29.3 | $26.4 | $86.5 | $71.3 | | Income before income taxes | $51.6 | $62.4 | $161.6 | $126.2 | | Income tax expense | $12.9 | $15.6 | $39.8 | $31.7 | | Net income | $38.7 | $46.8 | $121.8 | $94.5 | | Diluted net income per common share | $0.76 | $0.93 | $2.40 | $1.89 | [Revenues, Residential Lots Sold and Lot Position](index=6&type=section&id=Revenues%2C%20Residential%20Lots%20Sold%20and%20Lot%20Position) This section details revenues by project type and residential lots sold for both the three and nine months, alongside a comprehensive overview of the company's lot position, distinguishing between owned, controlled, and contracted lots Revenues by Type (in millions): | Revenue Type | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Development projects | $295.7 | $334.2 | $922.3 | $790.3 | | Lot banking projects | $10.3 | — | $11.0 | — | | Tract sales and other | $12.1 | $23.8 | $18.6 | $68.2 | | Total revenues | $318.4 | $368.9 | $958.0 | $887.1 | Residential Lots Sold: | Lot Type | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Development projects | 3,163 | 3,812 | 9,593 | 9,054 | | Lot banking projects | 92 | — | 101 | — | | Total lots sold | 3,255 | 3,812 | 9,694 | 9,054 | | Average sales price per lot | $94,000 | $87,700 | $96,300 | $87,300 | Lot Position (as of June 30, 2024 vs. September 30, 2023): | Lot Category | June 30, 2024 | September 30, 2023 | | :-------------------------------------------------- | :-------------- | :----------------- | | Lots owned | 57,900 | 52,400 | | Lots controlled under land and lot purchase contracts | 44,200 | 26,800 | | Total lots owned and controlled | 102,100 | 79,200 | | Owned lots under contract to sell to D.R. Horton | 19,500 | 14,400 | | Owned lots under contract to other customers | 900 | 600 | | Total owned lots under contract | 20,400 | 15,000 | | Owned lots subject to right of first offer with D.R. Horton | 16,700 | 17,000 | | Owned lots fully developed | 5,900 | 6,400 |

Earnings fall short as the housing market slows. Wall Street is taking note, sending Forestar shares down 15% as of 11:15 a.m. ET. Forestar earned $0.76 per share on revenue of $318.4 million in its fiscal third quarter ending June 30, shy of the $0.88 per share in earnings on sales of $380 million that analysts had expected. The company sold 3,255 lots in the quarter, including 352 sold to customers other than D.R. Horton. That total was down 15% year over year. Is Forestar a buy? The company has a contrac ...

This quarterly report represents an earnings surprise of -14.61%. A quarter ago, it was expected that this real estate and natural resources developer would post earnings of $0.84 per share when it actually produced earnings of $0.89, delivering a surprise of 5.95%. Forestar Group, which belongs to the Zacks Real Estate - Development industry, posted revenues of $318.4 million for the quarter ended June 2024, missing the Zacks Consensus Estimate by 14.06%. This compares to year-ago revenues of $368.9 millio ...

[PART I — FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and related notes for Forestar Group Inc. for the quarter ended March 31, 2024 [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Presents Forestar Group Inc.'s unaudited consolidated financial statements for Q1 2024, including balance sheets, operations, equity, cash flows, and explanatory notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) | Metric | March 31, 2024 (Millions) | September 30, 2023 (Millions) | Change (Millions) | % Change | | :-------------------------- | :------------------------ | :-------------------------- | :---------------- | :------- | | **ASSETS** | | | | | | Cash and cash equivalents | $416.2 | $616.0 | $(199.8) | -32.44% | | Real estate | $2,115.9 | $1,790.3 | $325.6 | 18.19% | | Total assets | $2,598.7 | $2,470.7 | $128.0 | 5.18% | | **LIABILITIES** | | | | | | Debt | $705.7 | $695.0 | $10.7 | 1.54% | | Total liabilities | $1,125.8 | $1,100.8 | $25.0 | 2.27% | | **EQUITY** | | | | | | Stockholders' equity | $1,471.9 | $1,368.9 | $103.0 | 7.52% | | Total equity | $1,472.9 | $1,369.9 | $103.0 | 7.52% | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | % Change (YoY) | Six Months Ended March 31, 2024 (Millions) | Six Months Ended March 31, 2023 (Millions) | % Change (YoY) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :--------------- | :---------------------------------------- | :---------------------------------------- | :--------------- | | Revenues | $333.8 | $301.5 | 10.71% | $639.7 | $518.2 | 23.44% | | Cost of sales | $250.7 | $245.6 | 2.08% | $483.7 | $414.8 | 16.61% | | Selling, general and administrative expense | $29.2 | $22.0 | 32.73% | $57.2 | $44.9 | 27.40% | | Income before income taxes | $58.9 | $35.9 | 64.07% | $110.1 | $63.8 | 72.57% | | Income tax expense | $13.9 | $9.0 | 54.44% | $26.9 | $16.1 | 67.08% | | Net income | $45.0 | $26.9 | 67.29% | $83.2 | $47.7 | 74.42% | | Basic net income per common share | $0.90 | $0.54 | 66.67% | $1.66 | $0.95 | 74.74% | | Diluted net income per common share | $0.89 | $0.54 | 64.81% | $1.65 | $0.95 | 73.68% | [Consolidated Statements of Total Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Total%20Equity) | Equity Component | Balances at September 30, 2023 (Millions) | Balances at March 31, 2024 (Millions) | Change (Millions) | | :------------------------------------ | :---------------------------------------- | :------------------------------------ | :---------------- | | Common Stock | $49.9 | $50.6 | $0.7 | | Additional Paid-in Capital | $644.2 | $663.3 | $19.1 | | Retained Earnings | $674.8 | $758.0 | $83.2 | | Noncontrolling Interests | $1.0 | $1.0 | $0.0 | | **Total Equity** | **$1,369.9** | **$1,472.9** | **$103.0** | - Total equity increased by **$103.0 million** from September 30, 2023, to March 31, 2024, primarily driven by net income of **$83.2 million** and issuance of common stock for **$19.7 million**[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | Six Months Ended March 31, 2024 (Millions) | Six Months Ended March 31, 2023 (Millions) | Change (Millions) | | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | :---------------- | | Net cash (used in) provided by operating activities | $(215.9) | $21.3 | $(237.2) | | Net cash (used in) provided by investing activities | $(0.8) | $1.3 | $(2.1) | | Net cash provided by (used in) financing activities | $16.9 | $(0.7) | $17.6 | | (Decrease) increase in cash and cash equivalents | $(199.8) | $21.9 | $(221.7) | | Cash and cash equivalents at end of period | $416.2 | $286.7 | $129.5 | - Net cash used in operating activities significantly increased to **$(215.9) million** in the six months ended March 31, 2024, primarily due to a substantial increase in real estate investments[19](index=19&type=chunk) - Financing activities provided **$16.9 million** in cash, mainly from the issuance of common stock, a reversal from cash used in the prior year[19](index=19&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note 1 — Basis of Presentation](index=9&type=section&id=Note%201%20%E2%80%94%20Basis%20of%20Presentation) - The financial statements are prepared in accordance with U.S. GAAP for interim financial information and include Forestar Group Inc. and its 100% owned, majority-owned, and controlled subsidiaries[22](index=22&type=chunk) - D.R. Horton, Inc. became a majority-owned subsidiary of Forestar in October 2017 and owned approximately **62%** of the Company's outstanding common stock as of March 31, 2024, making it a related party[24](index=24&type=chunk) - The Company is evaluating the impact of new FASB ASUs 2023-07 (Segment Reporting) and 2023-09 (Income Taxes) which are effective for fiscal years beginning October 1, 2024, and October 1, 2025, respectively[26](index=26&type=chunk)[27](index=27&type=chunk) [Note 2 — Segment Information](index=10&type=section&id=Note%202%20%E2%80%94%20Segment%20Information) - The Company operates through a single real estate segment, its core business, generating substantially all revenues from acquiring land and developing single-family residential lots for homebuilders[28](index=28&type=chunk) [Note 3 — Real Estate](index=10&type=section&id=Note%203%20%E2%80%94%20Real%20Estate) | Real Estate Component | March 31, 2024 (Millions) | September 30, 2023 (Millions) | Change (Millions) | % Change | | :-------------------------- | :------------------------ | :-------------------------- | :---------------- | :------- | | Developed and under development projects | $1,981.1 | $1,760.8 | $220.3 | 12.51% | | Land held for future development | $134.8 | $29.5 | $105.3 | 356.95% | | **Total Real Estate** | **$2,115.9** | **$1,790.3** | **$325.6** | **18.19%** | - In the six months ended March 31, 2024, the Company invested **$350.0 million** in residential real estate acquisition and **$450.3 million** in development[29](index=29&type=chunk) - No impairment charges were recorded in the three and six months ended March 31, 2024, compared to **$19.4 million** in the prior year periods[30](index=30&type=chunk) [Note 4 — Revenues](index=10&type=section&id=Note%204%20%E2%80%94%20Revenues) | Revenue Type | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | % Change (YoY) | Six Months Ended March 31, 2024 (Millions) | Six Months Ended March 31, 2023 (Millions) | % Change (YoY) | | :----------------------- | :----------------------------------------- | :----------------------------------------- | :--------------- | :---------------------------------------- | :---------------------------------------- | :--------------- | | Residential lot sales | $325.9 | $252.9 | 28.86% | $630.1 | $459.5 | 37.13% | | Deferred development lot sales | $1.7 | $7.5 | -77.33% | $3.0 | $14.3 | -79.02% | | Tract sales and other | $6.2 | $41.1 | -84.91% | $6.6 | $44.4 | -85.13% | | **Total Revenues** | **$333.8** | **$301.5** | **10.71%** | **$639.7** | **$518.2** | **23.44%** | - Residential lot sales significantly increased by **28.86%** for the three months and **37.13%** for the six months ended March 31, 2024, compared to the prior year periods[32](index=32&type=chunk) - Deferred development lot sales and tract sales and other revenues saw substantial decreases, indicating a shift in revenue composition[32](index=32&type=chunk) [Note 5 — Capitalized Interest](index=11&type=section&id=Note%205%20%E2%80%94%20Capitalized%20Interest) - All interest incurred in the first six months of fiscal 2024 and 2023 was capitalized to real estate, as active real estate exceeded debt levels[34](index=34&type=chunk) | Interest Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | Six Months Ended March 31, 2024 (Millions) | Six Months Ended March 31, 2023 (Millions) | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Interest incurred | $8.2 | $8.2 | $16.3 | $16.4 | | Interest charged to cost of sales | $(6.5) | $(5.1) | $(12.6) | $(10.1) | | Capitalized interest, end of period | $62.2 | $58.8 | $62.2 | $58.8 | [Note 6 — Other Assets, Accrued Expenses and Other Liabilities](index=11&type=section&id=Note%206%20%E2%80%94%20Other%20Assets%2C%20Accrued%20Expenses%20and%20Other%20Liabilities) | Other Assets Component | March 31, 2024 (Millions) | September 30, 2023 (Millions) | Change (Millions) | | :-------------------------- | :------------------------ | :-------------------------- | :---------------- | | Receivables, net | $28.5 | $25.7 | $2.8 | | Land purchase contract deposits | $11.7 | $7.0 | $4.7 | | **Total Other Assets** | **$60.0** | **$58.0** | **$2.0** | | Accrued Expenses & Other Liabilities Component | March 31, 2024 (Millions) | September 30, 2023 (Millions) | Change (Millions) | | :--------------------------------------------- | :------------------------ | :-------------------------- | :---------------- | | Accrued employee compensation and benefits | $10.9 | $11.2 | $(0.3) | | Contract liabilities | $5.7 | $10.0 | $(4.3) | | Income taxes payable | $8.2 | $4.4 | $3.8 | | **Total Accrued Expenses and Other Liabilities** | **$55.8** | **$61.2** | **$(5.4)** | [Note 7 — Debt](index=12&type=section&id=Note%207%20%E2%80%94%20Debt) | Debt Type | March 31, 2024 (Millions) | September 30, 2023 (Millions) | Change (Millions) | | :------------------------ | :------------------------ | :-------------------------- | :---------------- | | 3.85% senior notes due 2026 | $397.9 | $397.4 | $0.5 | | 5.0% senior notes due 2028 | $297.9 | $297.6 | $0.3 | | Other note payable | $9.9 | $0.0 | $9.9 | | **Total Debt** | **$705.7** | **$695.0** | **$10.7** | - The Company has a **$410 million** senior unsecured revolving credit facility with **$382.0 million** available capacity at March 31, 2024, and no outstanding borrowings[39](index=39&type=chunk) - The Company was in compliance with all covenants of its revolving credit facility and senior note obligations as of March 31, 2024[40](index=40&type=chunk)[45](index=45&type=chunk) - A **$9.9 million** non-recourse note payable was issued in December 2023 for real estate acquisition, accruing interest at **4.0%** and maturing in December 2025[47](index=47&type=chunk) [Note 8 — Earnings per Share](index=13&type=section&id=Note%208%20%E2%80%94%20Earnings%20per%20Share) | EPS Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Net income (Millions) | $45.0 | $26.9 | $83.2 | $47.7 | | Weighted average common shares outstanding — basic | 50,147,639 | 49,943,373 | 50,106,735 | 49,916,927 | | Dilutive effect of stock-based compensation | 479,318 | 67,166 | 437,784 | 37,854 | | Total weighted average shares outstanding — diluted | 50,626,957 | 50,010,539 | 50,544,519 | 49,954,781 | | Basic net income per common share | $0.90 | $0.54 | $1.66 | $0.95 | | Diluted net income per common share | $0.89 | $0.54 | $1.65 | $0.95 | [Note 9 — Income Taxes](index=14&type=section&id=Note%209%20%E2%80%94%20Income%20Taxes) | Income Tax Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | Six Months Ended March 31, 2024 (Millions) | Six Months Ended March 31, 2023 (Millions) | | :------------------ | :----------------------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Income tax expense | $13.9 | $9.0 | $26.9 | $16.1 | | Effective tax rate | 23.6% | 25.1% | 24.4% | 25.2% | - The effective tax rate for the three and six months ended March 31, 2024, included a benefit for stock-based compensation[49](index=49&type=chunk) - Net deferred tax liabilities were **$50.8 million** at March 31, 2024, with a valuation allowance of **$0.8 million** primarily for state net operating loss carryforwards[50](index=50&type=chunk) [Note 10 — Stockholders' Equity and Stock-Based Compensation](index=14&type=section&id=Note%2010%20%E2%80%94%20Stockholders%27%20Equity%20and%20Stock-Based%20Compensation) - In the three months ended March 31, 2024, the Company issued **546,174** shares of common stock under its at-the-market equity offering program for net proceeds of **$19.7 million**[51](index=51&type=chunk) - Total stock-based compensation expense related to RSUs was **$1.8 million** for the three months and **$2.7 million** for the six months ended March 31, 2024[53](index=53&type=chunk) - **154,034** time-based RSUs were granted in the three months ended March 31, 2024, with a weighted average grant date fair value of **$40.19** per unit[53](index=53&type=chunk) [Note 11 — Commitments and Contingencies](index=15&type=section&id=Note%2011%20%E2%80%94%20Commitments%20and%20Contingencies) - At March 31, 2024, the Company had **$28.0 million** in outstanding letters of credit and **$660.9 million** in surety bonds to secure performance under various development contracts[55](index=55&type=chunk) - The Company had total deposits of **$11.7 million** related to land purchase contracts with a remaining purchase price of approximately **$752.0 million** at March 31, 2024[58](index=58&type=chunk) - The Company is involved in various legal proceedings but does not believe their outcome will have a significant adverse effect on its financial position, long-term results, or cash flows[56](index=56&type=chunk) [Note 12 — Related Party Transactions](index=15&type=section&id=Note%2012%20%E2%80%94%20Related%20Party%20Transactions) - D.R. Horton, a majority shareholder, provides administrative, compliance, operational, and procurement services under a Shared Services Agreement[59](index=59&type=chunk) | Metric | March 31, 2024 | September 30, 2023 | | :---------------------------------------------------------------- | :------------- | :----------------- | | Residential lots under contract to sell to D.R. Horton | 17,300 | 14,400 | | Owned lots subject to right of first offer with D.R. Horton | 17,000 | 17,000 | | Earnest money deposits from D.R. Horton for lots under contract (Millions) | $138.6 | $117.1 | | Remaining sales price of lots under contract with D.R. Horton (Millions) | $1,473.8 | $1,319.2 | | Sales to D.R. Horton | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | Six Months Ended March 31, 2024 (Millions) | Six Months Ended March 31, 2023 (Millions) | | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Residential lots sold to D.R. Horton | 3,105 | 2,666 | 5,939 | 4,760 | | Residential lot sales revenues from sales to D.R. Horton | $308.2 | $219.9 | $581.1 | $407.0 | | Tract sales revenues from sales to D.R. Horton | $0.0 | $32.5 | $0.0 | $32.5 | [Note 13 — Fair Value Measurements](index=17&type=section&id=Note%2013%20%E2%80%94%20Fair%20Value%20Measurements) - The Company uses a fair value hierarchy (Level 1, 2, 3) for financial assets and liabilities[68](index=68&type=chunk)[72](index=72&type=chunk) | Financial Instrument | Carrying Value (March 31, 2024, Millions) | Fair Value (March 31, 2024, Millions) | Fair Value Level | | :----------------------- | :---------------------------------------- | :------------------------------------ | :--------------- | | Cash and cash equivalents | $416.2 | $416.2 | Level 1 | | Debt | $705.7 | $681.6 | Level 2/3 | - The fair value of senior notes is determined based on quoted market prices in inactive markets (Level 2), while the other note payable approximates its carrying value due to its short-term nature (Level 3)[71](index=71&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses financial condition and operations, highlighting revenue growth drivers, expense changes, liquidity, capital resources, strong lot demand, D.R. Horton relationship, and market share consolidation [Our Operations](index=18&type=section&id=Our%20Operations) - Forestar is a national residential lot development company, primarily focused on acquiring land and developing single-family residential lots for homebuilders[74](index=74&type=chunk) - D.R. Horton, as a controlling shareholder (approximately **62%** ownership), significantly influences Forestar's strategic direction and operations[75](index=75&type=chunk) - At March 31, 2024, the Company's lot position consisted of **96,100** residential lots (**57,400** owned, **38,700** controlled), with **18,000** owned lots under contract to be sold for approximately **$1.6 billion**[77](index=77&type=chunk) - The Company expanded its operations across **57** markets in **23** states, aiming to consolidate market share and mitigate operational risks through geographic diversification[78](index=78&type=chunk) - Demand for affordable residential lots remained strong in the six months ended March 31, 2024, leading to a **23%** increase in revenues year-over-year[80](index=80&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) [Lot Sales](index=19&type=section&id=Lot%20Sales) | Lot Sales Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Development projects | 3,280 | 2,979 | 6,430 | 5,242 | | Lot banking projects | 9 | — | 9 | — | | **Total Lots Sold** | **3,289** | **2,979** | **6,439** | **5,242** | | Average sales price per lot | $98,400 | $84,700 | $97,400 | $87,000 | - Total residential lots sold increased by **10.4%** for the three months and **22.8%** for the six months ended March 31, 2024, compared to the prior year periods[85](index=85&type=chunk) - The average sales price per lot increased to **$98,400** for the three months and **$97,400** for the six months ended March 31, 2024[85](index=85&type=chunk) [Revenues](index=20&type=section&id=Revenues) | Revenue Type | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | Six Months Ended March 31, 2024 (Millions) | Six Months Ended March 31, 2023 (Millions) | | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Residential lot sales (Development projects) | $323.1 | $252.2 | $626.6 | $456.1 | | Residential lot sales (Lot banking projects) | $0.7 | — | $0.7 | — | | Decrease in contract liabilities | $2.1 | $0.7 | $2.8 | $3.4 | | **Total Residential lot sales** | **$325.9** | **$252.9** | **$630.1** | **$459.5** | | Deferred development projects | $1.7 | $7.5 | $3.0 | $14.3 | | Tract sales and other | $6.2 | $41.1 | $6.6 | $44.4 | | **Total Revenues** | **$333.8** | **$301.5** | **$639.7** | **$518.2** | - Residential lot sales revenues increased due to improved demand for finished lots and homebuilders increasing new home starts[86](index=86&type=chunk) | Customer Type | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | Six Months Ended March 31, 2024 (Millions) | Six Months Ended March 31, 2023 (Millions) | | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Revenues from lot sales to D.R. Horton | $308.2 | $219.9 | $581.1 | $407.0 | | Revenues from lot sales to customers other than D.R. Horton | $15.6 | $32.3 | $46.2 | $49.1 | [Cost of Sales, Real Estate Impairment and Land Option Charges and Interest Incurred](index=21&type=section&id=Cost%20of%20Sales%2C%20Real%20Estate%20Impairment%20and%20Land%20Option%20Charges%20and%20Interest%20Incurred) - Cost of sales increased in the three and six months ended March 31, 2024, primarily due to the higher number of lots sold[90](index=90&type=chunk) - No impairment charges were recorded in the current periods, a significant improvement from **$19.4 million** in the prior year periods[91](index=91&type=chunk) - Land purchase contract deposit and pre-acquisition cost write-offs decreased to **$0.2 million** and **$0.4 million** for the three and six months, respectively, from **$0.9 million** and **$3.3 million** in prior periods[91](index=91&type=chunk) - Interest charged to cost of sales was **2.6%** of total cost of sales (excluding impairments and land option charges) for both the three and six months ended March 31, 2024[92](index=92&type=chunk) [Selling, General and Administrative (SG&A) Expense and Other Income Statement Items](index=21&type=section&id=Selling%2C%20General%20and%20Administrative%20%28SG%26A%29%20Expense%20and%20Other%20Income%20Statement%20Items) | SG&A Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | Six Months Ended March 31, 2024 (Millions) | Six Months Ended March 31, 2023 (Millions) | | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | | SG&A expense | $29.2 | $22.0 | $57.2 | $44.9 | | SG&A expense as a percentage of revenues | 8.7% | 7.3% | 8.9% | 8.7% | - The increase in SG&A expense is partly attributed to an increase in employees, from **271** at March 31, 2023, to **340** at March 31, 2024[93](index=93&type=chunk) [Income Taxes](index=21&type=section&id=Income%20Taxes) | Income Tax Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | Six Months Ended March 31, 2024 (Millions) | Six Months Ended March 31, 2023 (Millions) | | :------------------ | :----------------------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Income tax expense | $13.9 | $9.0 | $26.9 | $16.1 | | Effective tax rate | 23.6% | 25.1% | 24.4% | 25.2% | - The effective tax rate for the current periods included a benefit from stock-based compensation, contributing to a slight decrease in the rate compared to the prior year[94](index=94&type=chunk) - Deferred tax liabilities, net of deferred tax assets, were **$50.8 million** at March 31, 2024, with a valuation allowance of **$0.8 million** for state NOL carryforwards[95](index=95&type=chunk) [Land and Lot Position](index=22&type=section&id=Land%20and%20Lot%20Position) | Lot Position | March 31, 2024 | September 30, 2023 | Change | % Change | | :------------------------------------------ | :------------- | :----------------- | :----- | :------- | | Lots owned | 57,400 | 52,400 | 5,000 | 9.54% | | Lots controlled through land and lot purchase contracts | 38,700 | 26,800 | 11,900 | 44.40% | | **Total lots owned and controlled** | **96,100** | **79,200** | **16,900** | **21.34%** | | Owned lots under contract to sell to D.R. Horton | 17,300 | 14,400 | 2,900 | 20.14% | | Owned lots under contract to customers other than D.R. Horton | 700 | 600 | 100 | 16.67% | | **Total owned lots under contract** | **18,000** | **15,000** | **3,000** | **20.00%** | - The total number of lots owned and controlled increased by **21.34%** to **96,100** at March 31, 2024, reflecting significant growth in controlled lots[97](index=97&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) [Liquidity](index=22&type=section&id=Liquidity) - At March 31, 2024, the Company had **$416.2 million** in cash and cash equivalents and **$382.0 million** in available borrowing capacity on its revolving credit facility[98](index=98&type=chunk) | Liquidity Metric | March 31, 2024 | September 30, 2023 | March 31, 2023 | | :-------------------------- | :------------- | :----------------- | :------------- | | Ratio of debt to total capital | 32.4% | 33.7% | 36.2% | | Ratio of net debt to total capital | 16.4% | 5.5% | 25.2% | - The Company aims to maintain its ratio of net debt to total capital at approximately **40%** or less, indicating a conservative leverage strategy[99](index=99&type=chunk) [Bank Credit Facility](index=22&type=section&id=Bank%20Credit%20Facility) - The Company has a **$410 million** senior unsecured revolving credit facility, with an uncommitted accordion feature to increase it to **$600 million**[101](index=101&type=chunk) - At March 31, 2024, there were no outstanding borrowings and **$28.0 million** in letters of credit, leaving **$382.0 million** in available capacity[101](index=101&type=chunk) - The Company was in compliance with all financial covenants, limitations, and restrictions of its revolving credit facility[102](index=102&type=chunk) [Senior Notes](index=23&type=section&id=Senior%20Notes) - Outstanding senior notes include **$400 million** of **3.85%** notes due May 2026 and **$300 million** of **5.0%** notes due March 2028[104](index=104&type=chunk)[105](index=105&type=chunk) - The notes are senior unsecured obligations, guaranteed by certain subsidiaries, and contain customary covenants and redemption provisions[103](index=103&type=chunk)[106](index=106&type=chunk) - The Board authorized a **$30 million** debt securities repurchase program, with the full amount remaining available at March 31, 2024[107](index=107&type=chunk) [Other Note Payable](index=23&type=section&id=Other%20Note%20Payable) - A **$9.9 million** non-recourse note payable was issued in December 2023 for real estate acquisition, secured by the underlying real estate, with a **4.0%** interest rate and December 2025 maturity[108](index=108&type=chunk) [Issuance of Common Stock](index=23&type=section&id=Issuance%20of%20Common%20Stock) - In the three months ended March 31, 2024, **546,174** shares of common stock were issued under an at-the-market equity offering program, generating **$19.7 million** in net proceeds[109](index=109&type=chunk) - **$728.1 million** remained available for issuance under the shelf registration statement at March 31, 2024, including **$278.1 million** reserved for the at-the-market program[109](index=109&type=chunk) [Operating Cash Flow Activities](index=25&type=section&id=Operating%20Cash%20Flow%20Activities) - Net cash used in operating activities was **$215.9 million** for the six months ended March 31, 2024, primarily due to an increase in real estate investments[110](index=110&type=chunk) - This contrasts with **$21.3 million** in net cash provided by operating activities in the prior year period[110](index=110&type=chunk) [Investing Cash Flow Activities](index=25&type=section&id=Investing%20Cash%20Flow%20Activities) - Net cash used in investing activities was **$0.8 million** for the six months ended March 31, 2024, compared to **$1.3 million** provided in the prior year[111](index=111&type=chunk) [Financing Cash Flow Activities](index=25&type=section&id=Financing%20Cash%20Flow%20Activities) - Net cash provided by financing activities was **$16.9 million** for the six months ended March 31, 2024, primarily from the issuance of common stock[112](index=112&type=chunk) - This represents a shift from **$0.7 million** net cash used in financing activities in the prior year period[112](index=112&type=chunk) [Critical Accounting Policies and Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There have been no material changes in the Company's critical accounting policies or estimates from those disclosed in its 2023 Annual Report on Form 10-K[113](index=113&type=chunk) [New and Pending Accounting Pronouncements](index=25&type=section&id=New%20and%20Pending%20Accounting%20Pronouncements) - Refer to Note 1—Basis of Presentation for information on new and pending accounting pronouncements[114](index=114&type=chunk) [Forward-Looking Statements](index=26&type=section&id=Forward-Looking%20Statements) - This section identifies forward-looking statements and outlines various factors and uncertainties that could cause actual results to differ materially from those projected[116](index=116&type=chunk) - Key risk factors include the effect of D.R. Horton's controlling ownership, cyclical nature of the industry, inflation, interest rates, supply shortages, and governmental policies[117](index=117&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses the Company's market risk exposure, primarily interest rate risk on its debt portfolio, encompassing fixed and variable rate instruments [Interest Rate Risk](index=28&type=section&id=Interest%20Rate%20Risk) - The Company is subject to interest rate risk on its senior debt, revolving credit facility, and other note payable, utilizing both fixed and variable rate debt[120](index=120&type=chunk) - Fixed rate debt includes **$400 million** of **3.85%** senior notes (2026), **$300 million** of **5.0%** senior notes (2028), and a **$9.9 million 4.0%** other note payable (2025)[121](index=121&type=chunk) - Variable rate debt consists of the **$410 million** revolving credit facility, which had no outstanding borrowings at March 31, 2024[121](index=121&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures, reporting no material changes in internal control over financial reporting during the quarter [Disclosure controls and procedures](index=28&type=section&id=Disclosure%20controls%20and%20procedures) - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of March 31, 2024[122](index=122&type=chunk) [Changes in internal control over financial reporting](index=28&type=section&id=Changes%20in%20internal%20control%20over%20financial%20reporting) - There were no material changes in internal control over financial reporting during the quarter ended March 31, 2024[123](index=123&type=chunk) [PART II — OTHER INFORMATION](index=29&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This section provides additional information beyond financial statements, covering legal proceedings, trading plans, exhibits, and the official signature for the report [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in ordinary course legal proceedings, with adequate reserves established, and outcomes not expected to materially affect financial position or results - The Company is involved in various legal proceedings arising in the ordinary course of business[125](index=125&type=chunk) - Adequate reserves have been established for probable losses, and the outcomes are not expected to materially adversely affect financial position, long-term results, or cash flows[125](index=125&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20Other%20Information) Reports no director or Section 16 officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2024 [Trading Plans](index=29&type=section&id=Trading%20Plans) - No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2024[126](index=126&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications, XBRL documents, and other agreements - The exhibits include certifications from the CEO and CFO (Sections 302 and 906 of Sarbanes-Oxley Act) and various XBRL documents[128](index=128&type=chunk) - Other exhibits include a Separation Agreement and General Release, and a Consulting Agreement, both incorporated by reference[128](index=128&type=chunk) [SIGNATURE](index=31&type=section&id=SIGNATURE) Contains the signature of James D. Allen, Executive Vice President and Chief Financial Officer, certifying the report filing for Forestar Group Inc - The report is signed by James D. Allen, Executive Vice President and Chief Financial Officer, on behalf of Forestar Group Inc. on April 23, 2024[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk)

The Zacks Real Estate – Development industry is likely to face challenges due to the current high interest rates and stringent credit conditions, with investors continuing to delay the timeline of their transactions in anticipation of better price discovery. Supply chain constraints, macroeconomic uncertainty and geopolitical tensions are projected to inflate material expenses, consequently impeding the speed of new project completions.However, recovery in demand for certain real-estate property types and a ...

The company easily topped analyst estimates in its fiscal second quarter, but its immediate future might not be so rosy.The stock of Forestar Group (FOR 0.99%), a publicly traded subsidiary of big home builder D.R. Horton that concentrates on developing real estate lots, hasn't built much wealth for investors in recent days.According to data compiled by S&P Global Market Intelligence, Forestar's share price was down by nearly 17% week to date as of early Friday morning. It seems the market wasn't impressed ...

Financial Results The Company will host a conference call today (Thursday, April 18) at 5:00 p.m. Eastern Time. The dial-in number is 888-506-0062, the entry code is 585201 and the call will also be webcast from the Company's website at investor.forestar.com. (1) Excludes any impact from change in contract liabilities. Exhibit 99.1 Capital Structure, Leverage and Liquidity | --- | --- | --- | --- | |------------------------------------------------------------------------------------------------------------- ...

Forestar Group (FOR) came out with quarterly earnings of $0.89 per share, beating the Zacks Consensus Estimate of $0.84 per share. This compares to earnings of $0.54 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 5.95%. A quarter ago, it was expected that this real estate and natural resources developer would post earnings of $0.56 per share when it actually produced earnings of $0.76, delivering a surprise of 35.71%.Over the ...