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 ...

ARLINGTON, Texas--(BUSINESS WIRE)--Forestar Group Inc. (NYSE: FOR) announced today that the Company will release financial results for its second quarter ended March 31, 2024 on Thursday, April 18, 2024 before the market opens. The Company will host a conference call that afternoon at 5:00 p.m. Eastern Time (ET). The dial-in number is 888-506-0062. When calling, please reference access code 585201. Participants are encouraged to call in five minutes before the call begins (4:55 p.m. ET). The call will also ...

Forestar Group (FOR) shares rallied 6.1% in the last trading session to close at $37.07. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 11.4% gain over the past four weeks.The increased investor optimism in the stock can be attributed to the favorable operating environment.This real estate and natural resources developer is expected to post quarterly earnings of $0.84 per share in its upcoming report, which ...

[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section provides the company's unaudited financial information, including statements, notes, management's discussion, market risk disclosures, and controls [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for the quarter ended December 31, 2023, detailing balance sheets, operations, equity, and cash flows with explanatory notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of December 31, 2023, and September 30, 2023 Consolidated Balance Sheet Highlights (In millions) | Account | Dec 31, 2023 | Sep 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $458.9 | $616.0 | | Real estate | $2,009.8 | $1,790.3 | | **Total Assets** | **$2,533.8** | **$2,470.7** | | Debt | $705.3 | $695.0 | | **Total Liabilities** | **$1,125.0** | **$1,100.8** | | **Total Equity** | **$1,408.8** | **$1,369.9** | - Total assets increased to **$2.53 billion** as of December 31, 2023, primarily driven by a **$219.5 million** increase in real estate holdings compared to September 30, 2023[10](index=10&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's financial performance for the quarter, including revenues, income, and earnings per share Quarterly Statement of Operations Highlights (In millions, except per share data) | Metric | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | | :--- | :--- | :--- | | Revenues | $305.9 | $216.7 | | Income before income taxes | $51.2 | $27.9 | | Net Income | $38.2 | $20.8 | | Diluted EPS | $0.76 | $0.42 | - Revenues for the quarter increased by **41.2%** year-over-year, leading to an **83.7%** increase in net income and diluted EPS[13](index=13&type=chunk) [Consolidated Statements of Total Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Total%20Equity) This section outlines changes in the company's total equity, primarily driven by net income, for the quarter ended December 31, 2023 - Total equity increased from **$1,369.9 million** at September 30, 2023, to **$1,408.8 million** at December 31, 2023[17](index=17&type=chunk) - The primary driver for the increase in equity during the quarter was the net income of **$38.2 million**[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities for the quarter Quarterly Cash Flow Summary (In millions) | Activity | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($156.7) | ($49.8) | | Net cash (used in) provided by investing activities | ($0.2) | $1.5 | | Net cash used in financing activities | ($0.2) | ($0.1) | | **Decrease in cash** | **($157.1)** | **($48.4)** | | **Cash at end of period** | **$458.9** | **$216.4** | - The significant use of cash in operating activities was primarily due to a **$209.8 million** increase in real estate investments, reflecting the company's growth strategy[21](index=21&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies, significant transactions, and related party disclosures supporting the financial statements - As of December 31, 2023, D.R. Horton, a related party, owned approximately **63%** of the Company's outstanding common stock[26](index=26&type=chunk) - During the quarter, the company invested **$228.0 million** in acquiring residential real estate and **$226.5 million** in development[31](index=31&type=chunk) - Residential lot sales to D.R. Horton were **$272.8 million** from **2,834 lots** in Q1 FY2024, a substantial increase from **$187.1 million** from **2,094 lots** in the prior year period[60](index=60&type=chunk) - Total debt stood at **$705.3 million**, primarily composed of senior notes due in 2026 and 2028. The company had **$385.7 million** of available capacity under its revolving credit facility[39](index=39&type=chunk)[40](index=40&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strong operational performance, revenue growth, improved profitability, and expanding land position, highlighting robust demand and liquidity - Demand for residential lots remained strong, particularly at affordable price points, leading to a **39%** increase in lot sales compared to the prior year period[75](index=75&type=chunk) Key Operating Metrics (Q1 FY2024 vs Q1 FY2023) | Metric | Q1 FY2024 | Q1 FY2023 | | :--- | :--- | :--- | | Revenues | $305.9M | $216.7M | | Income before taxes | $51.2M | $27.9M | | Lots Sold | 3,150 | 2,263 | | Average Sales Price/Lot | $96,400 | $90,100 | Land and Lot Position | Metric | Dec 31, 2023 | Sep 30, 2023 | | :--- | :--- | :--- | | Lots owned | 55,400 | 52,400 | | Lots controlled | 27,000 | 26,800 | | **Total lots owned and controlled** | **82,400** | **79,200** | - The company maintained a strong liquidity position with **$458.9 million** in cash and **$385.7 million** available on its revolving credit facility. The ratio of net debt to total capital was a low **14.9%** at quarter-end[89](index=89&type=chunk)[90](index=90&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, primarily interest rate fluctuations, and its strategy of using fixed-rate debt to mitigate these risks - The company's main market risk is interest rate risk on its debt[110](index=110&type=chunk) - As of December 31, 2023, debt consisted of **$700 million** in fixed-rate senior notes and a **$9.9 million** fixed-rate note payable. There were no outstanding borrowings under the variable-rate revolving credit facility[111](index=111&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting - Based on an evaluation by the CEO and CFO, the company's disclosure controls and procedures were deemed effective as of the end of the period covered by the report[112](index=112&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[113](index=113&type=chunk) [PART II — OTHER INFORMATION](index=30&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This section covers additional information including legal proceedings, insider trading arrangements, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, with management anticipating no material adverse financial impact - The company is involved in various legal proceedings arising from the ordinary course of business and believes it has adequate reserves for any probable losses[115](index=115&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) This section reports on insider trading plans, confirming no directors or Section 16 officers adopted or terminated Rule 10b5-1 arrangements during the quarter - During the quarter ended December 31, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements[116](index=116&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists all exhibits accompanying the Form 10-Q, including agreements, certifications, and interactive data files - The exhibits filed with this report include a Separation Agreement, a Consulting Agreement, and certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002[118](index=118&type=chunk)