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]

分组1 - Forestar Group reported quarterly earnings of $0.65 per share, missing the Zacks Consensus Estimate of $0.78 per share, and down from $0.76 per share a year ago, representing an earnings surprise of -16.67% [1] - The company posted revenues of $390.5 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 2.38%, and up from $318.4 million year-over-year [2] - Over the last four quarters, Forestar Group has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2] 分组2 - Forestar Group shares have declined approximately 14.8% since the beginning of the year, contrasting with the S&P 500's gain of 7.2% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the upcoming quarter is $1.24 on revenues of $540 million, and for the current fiscal year, it is $2.96 on revenues of $1.54 billion [7] 分组3 - The Zacks Industry Rank indicates that the Real Estate - Development sector is currently in the top 25% of over 250 Zacks industries, suggesting a favorable outlook for stocks in this sector [8] - The estimate revisions trend for Forestar Group was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]

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]

Financial Data and Key Metrics Changes - In Q2 2025, the company generated 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 for the quarter was 16.6% compared to 22.9% for 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 company entered 10 new markets in the last year and increased community count by 21% [8][16] - The home building industry is facing headwinds from home affordability constraints and declining consumer confidence, leading to a slower than expected start to the spring selling season [9][32] - Demand in Florida is weaker compared to Texas, with some strength noted in markets like Las Vegas and the Carolinas [57] Company Strategy and Development Direction - The company aims to consolidate market share in the highly 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 the long-term demand for finished lots and its ability to gain market share [34] - Management has updated guidance for fiscal 2025, expecting to deliver between 15,000 and 15,500 lots, generating between $1.5 billion and $1.55 billion of revenue [33] Other Important Information - The company ended the quarter with $792 million of liquidity, including an unrestricted cash balance of $174 million [28] - Total debt at March 31 was $873 million, with no senior note maturities until May 2026 [29] - The capital structure provides operational flexibility and positions the company to take advantage of attractive opportunities [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 from raw land sellers, but prices remain firm [44] Question: Lot banker deal specifics - The company allows home builders to assign contracts to lot bankers, maintaining the same pricing as contracted with builders [45][47] Question: Balancing increased costs with weak market - SG&A increase is tied to headcount growth to support active projects, with expectations for SG&A as a percentage of revenues to decrease in the second half of the year [50][53] 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 in Florida is weaker compared to Texas, with strong activity in sales centers despite affordability challenges [57] Question: Sensitivity of land development spend to demand - The company can moderate spend based on demand changes, with a robust pipeline of projects available [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 outlook - Margins have remained stable over the past few years, with expectations for continued stability subject to market conditions [77]

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].