Forestar Group Inc. (NYSE:FOR) Q3 2022 Earnings Conference Call July 19, 2022 5:00 PM ET Company Participants Katie Smith - Director, Finance and Investor Relations Dan Bartok - Chief Executive Officer Jim Allen - Chief Financial Officer Conference Call Participants Deepa Raghavan - Wells Fargo Truman Patterson - Wolfe Research Max Downey - BTIG Asher Sohnen - Citigroup Mike Rehaut - JPMorgan Operator Good afternoon. And welcome to Forestar’s Third Quarter 2022 Earnings Conference Call. At this time, all pa ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From To Commission File Number: 001-33662 FORESTAR GROUP INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction ...

Financial Data and Key Metrics Changes - Net income increased 68% year-over-year to $47.8 million, or $0.96 per diluted share, compared to $28.4 million, or $0.59 per diluted share in the prior year quarter [6][10] - Revenue increased 47% to $421.6 million, primarily driven by a 61% increase in lot deliveries to 5,788 lots sold [6][10] - Pretax income rose 68% to $63.2 million, with a pretax profit margin expanding 190 basis points year-over-year to 15% [6][11] - Gross profit margin expanded 220 basis points to 20.8%, with a non-cash real estate impairment charge of $3.8 million reducing the margin by 90 basis points [11][12] Business Line Data and Key Metrics Changes - Lots sold increased 61% year-over-year to 5,788 lots, with an average sales price of $81,900 [10] - Excluding lot sales from deferred development projects, lots sold increased 39% to 5,001 lots [10] - 39% of lots sold in the quarter were sourced by Forestar, up from 23% in the same quarter of 2021 [10][14] - 82% of second quarter lot deliveries were sold to D.R. Horton, down from 94% in the second quarter of fiscal 2021 [10] Market Data and Key Metrics Changes - Forestar's lot position at March 31 was 96,500 lots, with 64,200 lots owned and 32,300 lots controlled through purchase contracts [13] - 30% of owned lots are under contract to sell to D.R. Horton, representing approximately $1.5 billion of future revenue [15] - The market remains strong with significant demand for lots from home builders, despite supply chain constraints and rising material costs [12][19] Company Strategy and Development Direction - Forestar aims to maintain a strong balance sheet with ample liquidity and modest leverage, with approximately $580 million of liquidity at quarter end [16] - The company plans to invest approximately $1.75 billion in land and land development during fiscal 2022, subject to market conditions [15] - The strategy focuses on capital efficiency and high turnover, with a minimum 15% annual pretax return on inventory [13][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing supply chain disruptions and rising material costs but remains optimistic about demand for finished lots [17][19] - The company affirms guidance for fiscal 2022 lot deliveries of between 19,500 to 20,000 lots, generating approximately $1.7 billion of revenue [18] - Management expects pretax profit margin to be between 14% and 14.5% for the year, an increase from prior guidance [18] Other Important Information - Moody's and Standard and Poor's upgraded Forestar's corporate credit rating and senior unsecured notes rating during the quarter [16] - The company recorded a non-cash real estate impairment charge of $3.8 million, which was an isolated issue related to cost overruns in one project [11] Q&A Session Summary Question: Additional details on the SFR transaction and its scalability - Management views the SFR transaction as a successful experiment that provided insights into market demand and capital efficiency, with favorable margins compared to traditional lot sales [21][22] Question: Impact of higher interest rates on the land market - Management has not observed a fall-off in demand for lots despite rising interest rates, although there are some indications of builders potentially not closing on deals [23] Question: Scalability of the SFR business - Management believes there are opportunities to capitalize on the learnings from the SFR transaction, but it is too early to determine if it will become a trend [26] Question: Competition with land bankers - Management does not see land bankers as direct competitors, emphasizing that Forestar's efficiency in delivering lots provides a different value proposition [28] Question: Defensive measures to protect margins and ROE - Management focuses on pricing lots accurately based on known costs to protect margins, while maintaining a strong land position and customer relationships [34] Question: Deferred lot sales accounting in guidance - The 787 lots from the deferred development projects are included in the quarter's sales, with future revenues and margins recognized over time [35] Question: Supply chain constraints and their impact - Management noted that supply chain issues vary by market, with electrical transformers being a significant challenge, but overall demand remains strong [39]

Table of Contents For the Quarterly Period Ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From To Commission File Number: 001-33662 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FORESTAR GROUP INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction ...

Financial Highlights - Forestar delivered 4,516 residential lots in Q1 FY 2022, a 27% increase compared to the prior year period[8] - Net income increased 84% to $41 million in Q1 FY 2022[8] - Pre-tax income increased 83% to $54 million in Q1 FY 2022, with pre-tax profit margin increasing by 360 bps to 131%[8] - Diluted EPS increased 76% to $081 in Q1 FY 2022[8] Growth and Strategy - Forestar expects to grow its lot deliveries 23% to 26% in fiscal year 2022, generating approximately $17 billion in revenue with a pre-tax profit margin between 135% and 140%[15] - The company aims to capture 5% market share within the US single-family residential lot industry, targeting approximately 50,000 annual lot deliveries[17] - Forestar is increasing its focus on Forestar-sourced lots, which have risen to 54% of total owned lots, up from 46% a year ago[47] Relationship with D.R. Horton - D.R Horton owns 63% of Forestar as of December 31, 2021[28] - Forestar aims to supply approximately one-third of DHI's annual lot needs[32] - DHI has the right of first offer (ROFO) to purchase up to 100% of the lots from DHI-sourced projects at market prices[76] Land and Liquidity - Forestar expects to invest at least $175 billion in land acquisition and development in fiscal year 2022[33] - The company has a strong liquidity position of approximately $500 million as of December 31, 2021[53] - Net debt to capital is 339% as of December 31, 2021[53]

Forestar Group Inc. (NYSE:FOR) Q1 2022 Earnings Conference Call January 27, 2022 5:00 PM ET Company Participants Katie Smith - Director, Finance and Investor Relations Dan Bartok - Chief Executive Officer Jim Allen - Chief Financial Officer Conference Call Participants Carl Reichardt - BTIG Deepa Raghavan - Wells Fargo Truman Patterson - Wolfe Research Doug Wardlaw - JPMorgan Asher Sohnen - Citigroup Operator Good afternoon and welcome to Forestar's First Quarter 2022 Earnings Conference Call. At this time, ...

(Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q For the Transition Period From To Commission File Number: 001-33662 FORESTAR GROUP INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdict ...

PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business.) Forestar Group Inc. is a national residential lot development company focused on selling finished single-family residential lots to homebuilders, operating in 56 markets across 23 states as a majority-owned subsidiary of D.R. Horton, Inc. - Forestar Group Inc. is a national residential lot development company, primarily selling finished single-family residential lots to homebuilders[11](index=11&type=chunk) - The company's strategy focuses on investments in land acquisition and development for short-duration, phased projects, aiming for consistent returns and market share consolidation in the fragmented U.S. lot development industry[11](index=11&type=chunk) - As of September 30, 2021, Forestar operated in **56 markets** across **23 states**, with a lot position of **97,000 residential lots** (**64,400 owned**, **32,600 controlled** via contracts)[11](index=11&type=chunk) - D.R. Horton, Inc. became a majority-owned subsidiary in October 2017, owning **63% of outstanding common stock** as of September 30, 2021, and has significant influence over Forestar's strategic direction and operations[12](index=12&type=chunk) - Approximately **21,000 owned residential lots** are under contract to sell to D.R. Horton, and D.R. Horton has a right of first offer on an additional **18,200 owned lots**[12](index=12&type=chunk) [Overview](index=4&type=section&id=Overview) [Business Operations](index=6&type=section&id=Business%20Operations) [Land/Lot Acquisition and Inventory Management](index=8&type=section&id=Land%2FLot%20Acquisition%20and%20Inventory%20Management) [Land Development](index=10&type=section&id=Land%20Development) [Lot/Land Banking](index=10&type=section&id=Lot%2FLand%20Banking) [Cost Controls](index=10&type=section&id=Cost%20Controls) [Competition](index=10&type=section&id=Competition) [Human Capital Resources](index=12&type=section&id=Human%20Capital%20Resources) [Governmental Regulation and Environmental Matters](index=13&type=section&id=Governmental%20Regulation%20and%20Environmental%20Matters) [Available Information](index=13&type=section&id=Available%20Information) [Item 1A. Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors.) This section outlines significant risks, including those related to D.R. Horton's concentrated ownership, operational challenges from cyclical industry conditions and supply chain disruptions, financial risks from substantial debt, and general risks like stock price volatility and cybersecurity threats. - D.R. Horton's **63% beneficial ownership** gives it control over stockholder matters and requires its consent for significant actions (e.g., equity issuance, debt, acquisitions >**$20 million**, executive changes) if it owns **35% or more** of voting securities[25](index=25&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) - The strategic relationship with D.R. Horton, while beneficial, may negatively affect relationships with other builder customers who might perceive favoritism[56](index=56&type=chunk) - The homebuilding and lot development industries are cyclical, highly sensitive to economic conditions (employment, consumer confidence, interest rates), and susceptible to supply chain disruptions and labor market tightness, as experienced during the COVID-19 pandemic[57](index=57&type=chunk)[59](index=59&type=chunk)[65](index=65&type=chunk) - The company faces significant competition from national, regional, and local developers and homebuilders, some with greater resources or lower cost structures[34](index=34&type=chunk)[66](index=66&type=chunk) - As of September 30, 2021, consolidated debt was **$704.5 million**, with restrictive covenants in debt agreements limiting financial flexibility and potentially impacting future operations or capital needs[82](index=82&type=chunk)[87](index=87&type=chunk)[89](index=89&type=chunk) - Operations are subject to extensive governmental regulations and environmental matters, including zoning, development requirements, and health/safety laws, which can increase costs, cause delays, or restrict activities[69](index=69&type=chunk)[70](index=70&type=chunk) [Risks Related to our Concentrated Ownership](index=14&type=section&id=Risks%20Related%20to%20our%20Concentrated%20Ownership) [Risks Related to Our Operations](index=16&type=section&id=Risks%20Related%20to%20Our%20Operations) [Risks Related to Our Indebtedness](index=21&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) [General Risk Factors](index=23&type=section&id=General%20Risk%20Factors) [Item 1B. Unresolved Staff Comments](index=25&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) There are no unresolved staff comments to report for the period. - No unresolved staff comments[100](index=100&type=chunk) [Item 2. Properties](index=25&type=section&id=Item%202.%20Properties.) The company's principal executive office is leased in Arlington, Texas, and it leases additional office spaces to support its business operations. - Principal executive office is leased in Arlington, Texas[101](index=101&type=chunk) - Additional office space is leased in other locations to support business operations[101](index=101&type=chunk) [Item 3. Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings.) The company is involved in various legal proceedings in the ordinary course of business, for which adequate reserves have been established, with management believing the outcome will not materially adversely affect financial position or long-term results. - Involved in various legal proceedings arising in the ordinary course of business[102](index=102&type=chunk) - Adequate reserves have been established for probable losses[102](index=102&type=chunk) - Outcome not expected to have a material adverse effect on financial position or long-term results, but charges could be significant in a single period[102](index=102&type=chunk) [Item 4. Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company's operations. - Not Applicable[103](index=103&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=26&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Forestar's common stock trades on the NYSE under 'FOR', with 1,167 holders of record as of November 10, 2021, and the company intends to retain future earnings, with dividend declarations at the Board's discretion. - Common stock is traded on the New York Stock Exchange (NYSE) under the trading symbol 'FOR'[106](index=106&type=chunk) - As of November 10, 2021, the closing price was **$21.51**, with approximately **1,167 holders of record**[106](index=106&type=chunk) - The company intends to retain future earnings to support its business; future dividends are at the Board's discretion[107](index=107&type=chunk) Cumulative Total Stockholder Return (December 31, 2016 - September 30, 2021) | | December 31, 2016 | 2017 | 2018 | 2019 | 2020 | September 30, 2021 | |:---|:---|:---|:---|:---|:---|:---|\ | Forestar Group Inc. | $100.00 | $165.41 | $159.40 | $137.44 | $133.08 | $140.08 | | Former Peer Group | $100.00 | $94.43 | $80.21 | $78.95 | $57.18 | $111.99 | | Russell 2000 | $100.00 | $114.65 | $127.85 | $116.48 | $116.93 | $172.69 | | New Peer Group | $100.00 | $124.56 | $109.14 | $119.80 | $112.14 | $148.37 | [Market Information](index=26&type=section&id=Market%20Information) [Dividend Policy](index=26&type=section&id=Dividend%20Policy) [Stock Performance Graph](index=27&type=section&id=Stock%20Performance%20Graph) [Item 6. [Reserved]](index=28&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information. [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Forestar's financial condition, operations, and liquidity for fiscal year 2021 compared to 2020, highlighting significant growth in lot sales and revenues driven by its strategic relationship with D.R. Horton, despite COVID-19 related disruptions. - Forestar is a residential lot development company operating in **56 markets** across **23 states**, with D.R. Horton as its majority owner and strategic partner[115](index=115&type=chunk) - The company's strategy involves investing in land acquisition and development for short-duration, phased projects, and strategic short-term lot banking[115](index=115&type=chunk) - COVID-19 caused supply chain disruptions and labor market tightness, lengthening development cycles, but strong demand for residential lots continued throughout fiscal 2021[116](index=116&type=chunk) Key Operating Results (Fiscal Years Ended September 30, In millions) | Metric | 2021 | 2020 | |:---|:---|:---|\ | Revenues | $1,325.8 | $931.8 | | Cost of sales | $1,096.6 | $813.7 | | Selling, general and administrative expense | $68.4 | $45.7 | | Income before income taxes | $146.6 | $78.1 | Residential Lots Sold (Fiscal Years Ended September 30) | Category | 2021 | 2020 | |:---|:---|:---|\ | Development projects | 14,221 | 7,316 | | Lot banking projects | 1,694 | 3,057 | | **Total lots sold** | **15,915** | **10,373** | | Average sales price per lot | $81,600 | $84,600 | Revenues Breakdown (Fiscal Years Ended September 30, In millions) | Category | 2021 | 2020 | |:---|:---|:---|\ | Residential lot sales: Development projects | $1,182.6 | $616.3 | | Residential lot sales: Lot banking projects | $116.1 | $261.7 | | (Increase) decrease in contract liabilities | ($5.6) | $2.3 | | **Total residential lot sales** | **$1,293.1** | **$880.3** | | Tract sales and other | $32.7 | $51.5 | | **Total revenues** | **$1,325.8** | **$931.8** | - In fiscal 2021, **14,839 residential lots** were sold to D.R. Horton for **$1.2 billion**, compared to **10,164 lots** for **$859.7 million** in fiscal 2020, indicating significant growth in sales to the controlling shareholder[122](index=122&type=chunk) Land and Lot Position (September 30) | Category | 2021 | 2020 | |:---|:---|:---|\ | Lots owned | 64,400 | 42,400 | | Lots controlled through land lot purchase contracts | 32,600 | 18,100 | | **Total lots owned and controlled** | **97,000** | **60,500** | - At September 30, 2021, the company had **$153.6 million** in cash and cash equivalents and **$349.7 million** in available borrowing capacity on its revolving credit facility[134](index=134&type=chunk) Debt to Total Capital Ratios (September 30) | Ratio | 2021 | 2020 | |:---|:---|:---|\ | Debt to total capital | 41.0% | 42.4% | | Net debt to total capital | 35.2% | 22.1% | - In fiscal 2021, net cash used in operating activities was **$303.1 million**, primarily due to investments in real estate acquisition and development[149](index=149&type=chunk) - In fiscal 2021, net cash provided by financing activities was **$61.4 million**, driven by the issuance of **$400 million** in **3.85% senior notes** and **$33.4 million** from common stock issuance, partially offset by the redemption of **$350 million** in **8.0% senior notes**[151](index=151&type=chunk) [Our Operations](index=28&type=section&id=Our%20Operations) [COVID-19](index=28&type=section&id=COVID-19) [Business Segment](index=28&type=section&id=Business%20Segment) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) [Operating Results](index=29&type=section&id=Operating%20Results) [Lot Sales](index=29&type=section&id=Lot%20Sales) [Revenues](index=29&type=section&id=Revenues) [Selling, General and Administrative (SG&A) Expense and Other Income Statement Items](index=30&type=section&id=Selling%2C%20General%20and%20Administrative%20%28SG%26A%29%20Expense%20and%20Other%20Income%20Statement%20Items) [Income Taxes](index=30&type=section&id=Income%20Taxes) [Land and Lot Position](index=31&type=section&id=Land%20and%20Lot%20Position) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) [Liquidity](index=32&type=section&id=Liquidity) [Bank Credit Facility](index=32&type=section&id=Bank%20Credit%20Facility) [Senior Notes](index=32&type=section&id=Senior%20Notes) [Other Note Payable](index=33&type=section&id=Other%20Note%20Payable) [Issuance of Common Stock](index=33&type=section&id=Issuance%20of%20Common%20Stock) [Operating Cash Flow Activities](index=34&type=section&id=Operating%20Cash%20Flow%20Activities) [Investing Cash Flow Activities](index=34&type=section&id=Investing%20Cash%20Flow%20Activities) [Financing Cash Flow Activities](index=34&type=section&id=Financing%20Cash%20Flow%20Activities) [Contractual Obligations and Off-Balance Sheet Arrangements](index=34&type=section&id=Contractual%20Obligations%20and%20Off-Balance%20Sheet%20Arrangements) [Inflation](index=35&type=section&id=Inflation) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) [General](index=35&type=section&id=General) [Revenue Recognition](index=35&type=section&id=Revenue%20Recognition) [Real Estate and Cost of Sales](index=35&type=section&id=Real%20Estate%20and%20Cost%20of%20Sales) [Pending Accounting Standards](index=36&type=section&id=Pending%20Accounting%20Standards) [Forward-Looking Statements](index=37&type=section&id=Forward-Looking%20Statements) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, primarily interest rate risk on its senior debt and revolving credit facility, noting that Forestar uses both fixed and variable rate debt and has no significant exposure to foreign currency or commodity price risks. - The company is subject to interest rate risk on its senior debt and revolving credit facility[174](index=174&type=chunk) - Fixed rate debt includes **$400 million** of 2026 notes, **$300 million** of 2028 notes, and a **$12.5 million** note payable. Variable rate debt consists of the revolving credit facility, which had no outstanding borrowings at September 30, 2021[175](index=175&type=chunk) - No exposure to foreign currency fluctuations or significant commodity price risks[176](index=176&type=chunk)[177](index=177&type=chunk) [Interest Rate Risk](index=39&type=section&id=Interest%20Rate%20Risk) [Foreign Currency Risk](index=39&type=section&id=Foreign%20Currency%20Risk) [Commodity Price Risk](index=39&type=section&id=Commodity%20Price%20Risk) [Item 8. Financial Statements and Supplementary Data](index=40&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Forestar's consolidated financial statements for fiscal years 2021, 2020, and 2019, along with management's report on internal control and independent auditor's reports, affirming effective internal controls and fair presentation. - Management believes internal control over financial reporting is effective as of September 30, 2021, based on the COSO framework[183](index=183&type=chunk) - Ernst & Young LLP issued an unqualified opinion on the effectiveness of internal control over financial reporting and the fair presentation of consolidated financial statements[187](index=187&type=chunk)[197](index=197&type=chunk) - A critical audit matter identified was the complexity and subjectivity in auditing land development costs, particularly estimated costs to complete, due to reliance on management assumptions[203](index=203&type=chunk) Consolidated Balance Sheets (September 30, In millions) | ASSETS | 2021 | 2020 | |:---|:---|:---|\ | Cash and cash equivalents | $153.6 | $394.3 | | Real estate | $1,905.2 | $1,309.7 | | Total assets | $2,101.7 | $1,739.9 | | LIABILITIES | | | | Debt | $704.5 | $641.1 | | Total liabilities | $1,085.8 | $868.1 | | EQUITY | | | | Total equity | $1,015.9 | $871.8 | | Total liabilities and equity | $2,101.7 | $1,739.9 | Consolidated Statements of Operations (Year Ended September 30, In millions, except per share amounts) | Metric | 2021 | 2020 | 2019 | |:---|:---|:---|:---|\ | Revenues | $1,325.8 | $931.8 | $428.3 | | Cost of sales | $1,096.6 | $813.7 | $362.7 | | Selling, general and administrative expense | $68.4 | $45.7 | $28.9 | | Income before income taxes | $146.6 | $78.1 | $45.7 | | Net income attributable to Forestar Group Inc. | $110.2 | $60.8 | $33.0 | | Basic net income per common share | $2.25 | $1.26 | $0.79 | Consolidated Statements of Cash Flows (Year Ended September 30, In millions) | Activity | 2021 | 2020 | 2019 | |:---|:---|:---|:---|\ | Net cash used in operating activities | ($303.1) | ($168.4) | ($391.2) | | Net cash provided by (used in) investing activities | $1.0 | $5.0 | ($0.8) | | Net cash provided by financing activities | $61.4 | $174.9 | $439.8 | | Net (decrease) increase in cash and cash equivalents | ($240.7) | $11.5 | $47.8 | | Cash and cash equivalents at end of year | $153.6 | $394.3 | $382.8 | - Forestar's real estate segment is its core business, generating substantially all revenues from acquiring land and developing infrastructure for single-family residential communities, primarily selling finished lots to homebuilders[244](index=244&type=chunk) Real Estate Investments (September 30, In millions) | Category | 2021 | 2020 | |:---|:---|:---|\ | Developed and under development projects | $1,824.7 | $1,304.3 | | Undeveloped land | $80.5 | $5.4 | | **Total Real Estate** | **$1,905.2** | **$1,309.7** | * In fiscal 2021, the company invested **$779.7 million** for residential real estate acquisition and **$850.7 million** for development[247](index=247&type=chunk) Debt Composition (September 30, In millions) | Debt Type | 2021 | 2020 | |:---|:---|:---|\ | Revolving credit facility | $0 | $0 | | 8.0% senior notes due 2024 | $0 | $345.2 | | 3.85% senior notes due 2026 | $395.5 | $0 | | 5.0% senior notes due 2028 | $296.5 | $295.9 | | Other note payable | $12.5 | $0 | | **Total Debt** | **$704.5** | **$641.1** | * In April 2021, the company issued **$400 million** of **3.85% senior notes** due 2026 and redeemed **$350 million** of **8.0% senior notes** due 2024, incurring an **$18.1 million loss** on extinguishment of debt[259](index=259&type=chunk)[263](index=263&type=chunk)[266](index=266&type=chunk) Quarterly Results of Operations (Fiscal 2021, In millions, except per share amounts) | Metric | 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |:---|:---|:---|:---|:---|\ | Total revenues | $307.1 | $287.1 | $312.9 | $418.7 | | Income before income taxes | $29.2 | $37.6 | $21.1 | $58.8 | | Net income attributable to Forestar Group Inc. | $22.0 | $28.4 | $15.8 | $44.0 | | Net income per share — basic | $0.46 | $0.59 | $0.32 | $0.89 | [MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING](index=40&type=section&id=MANAGEMENT%27S%20ANNUAL%20REPORT%20ON%20INTERNAL%20CONTROL%20OVER%20FINANCIAL%20REPORTING) [REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Internal Control)](index=41&type=section&id=REPORT%20OF%20INDEPENDENT%20REGISTERED%20PUBLIC%20ACCOUNTING%20FIRM) [REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Financial Statements)](index=43&type=section&id=REPORT%20OF%20INDEPENDENT%20REGISTERED%20PUBLIC%20ACCOUNTING%20FIRM) [Land development costs (including estimated costs to complete)](index=44&type=section&id=Land%20development%20costs%20%28including%20estimated%20costs%20to%20complete%29) [FORESTAR GROUP INC. CONSOLIDATED BALANCE SHEETS](index=45&type=section&id=FORESTAR%20GROUP%20INC.%20CONSOLIDATED%20BALANCE%20SHEETS) [FORESTAR GROUP INC. CONSOLIDATED STATEMENTS OF OPERATIONS](index=46&type=section&id=FORESTAR%20GROUP%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) [FORESTAR GROUP INC. CONSOLIDATED STATEMENTS OF TOTAL EQUITY](index=47&type=section&id=FORESTAR%20GROUP%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20TOTAL%20EQUITY) [FORESTAR GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS](index=48&type=section&id=FORESTAR%20GROUP%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) [Note 1 — Summary of Significant Accounting Policies](index=49&type=section&id=Note%201%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) [Basis of Presentation](index=49&type=section&id=Basis%20of%20Presentation) [Changes in Presentation and Reclassifications](index=49&type=section&id=Changes%20in%20Presentation%20and%20Reclassifications) [Use of Estimates](index=49&type=section&id=Use%20of%20Estimates) [Revenue Recognition](index=49&type=section&id=Revenue%20Recognition) [Cash and Cash Equivalents](index=49&type=section&id=Cash%20and%20Cash%20Equivalents) [Real Estate and Cost of Sales](index=50&type=section&id=Real%20Estate%20and%20Cost%20of%20Sales) [Capitalized Interest](index=50&type=section&id=Capitalized%20Interest) [Land Purchase Contract Deposits and Pre-Acquisition Costs](index=50&type=section&id=Land%20Purchase%20Contract%20Deposits%20and%20Pre-Acquisition%20Costs) [Variable Interests](index=51&type=section&id=Variable%20Interests) [Property and Equipment](index=51&type=section&id=Property%20and%20Equipment) [Income Taxes](index=51&type=section&id=Income%20Taxes) [Stock-Based Compensation](index=52&type=section&id=Stock-Based%20Compensation) [Fair Value Measurements](index=52&type=section&id=Fair%20Value%20Measurements) [Pending Accounting Standards](index=52&type=section&id=Pending%20Accounting%20Standards) [Note 2 — Segment Information](index=52&type=section&id=Note%202%20%E2%80%94%20Segment%20Information) [Note 3 — Real Estate](index=53&type=section&id=Note%203%20%E2%80%94%20Real%20Estate) [Note 4 — Revenues](index=53&type=section&id=Note%204%20%E2%80%94%20Revenues) [Note 5 — Capitalized Interest](index=54&type=section&id=Note%205%20%E2%80%94%20Capitalized%20Interest) [Note 6 — Other Assets, Accrued Expenses and Other Liabilities](index=54&type=section&id=Note%206%20%E2%80%94%20Other%20Assets%2C%20Accrued%20Expenses%20and%20Other%20Liabilities) [Note 7 — Debt](index=55&type=section&id=Note%207%20%E2%80%94%20Debt) [Note 8 — Earnings per Share](index=56&type=section&id=Note%208%20%E2%80%94%20Earnings%20per%20Share) [Note 9 — Income Taxes](index=57&type=section&id=Note%209%20%E2%80%94%20Income%20Taxes) [Note 10 — Stockholders' Equity](index=59&type=section&id=Note%2010%20%E2%80%94%20Stockholders%27%20Equity) [Note 11 — Employee Benefit Plans](index=59&type=section&id=Note%2011%20%E2%80%94%20Employee%20Benefit%20Plans) [Retirement Plans](index=59&type=section&id=Retirement%20Plans) [Restricted Stock Units (RSUs)](index=59&type=section&id=Restricted%20Stock%20Units%20%28RSUs%29) [Note 12 — Commitments and Contingencies](index=60&type=section&id=Note%2012%20%E2%80%94%20Commitments%20and%20Contingencies) [Contractual Obligations and Off-Balance Sheet Arrangements](index=60&type=section&id=Contractual%20Obligations%20and%20Of%20-Balance%20Sheet%20Arrangements) [Litigation](index=60&type=section&id=Litigation) [Land Purchase Contracts](index=60&type=section&id=Land%20Purchase%20Contracts) [Other Commitments](index=61&type=section&id=Other%20Commitments) [Note 13 — Related Party Transactions](index=61&type=section&id=Note%2013%20%E2%80%94%20Related%20Party%20Transactions) [Note 14 — Fair Value Measurements](index=63&type=section&id=Note%2014%20%E2%80%94%20Fair%20Value%20Measurements) [Note 15 — Quarterly Results of Operations (Unaudited)](index=64&type=section&id=Note%2015%20%E2%80%94%20Quarterly%20Results%20of%20Operations%20%28Unaudited%29) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=65&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) There have been no changes in or disagreements with accountants on accounting and financial disclosure matters. - No changes in or disagreements with accountants on accounting and financial disclosure[323](index=323&type=chunk) [Item 9A. Controls and Procedures](index=65&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of September 30, 2021, concluding they were effective, with no material changes in internal control over financial reporting during the quarter. - Disclosure controls and procedures were effective as of September 30, 2021[324](index=324&type=chunk) - No material changes in internal control over financial reporting during the quarter ended September 30, 2021[326](index=326&type=chunk) [Item 9B. Other Information](index=65&type=section&id=Item%209B.%20Other%20Information.) There is no other information to report under this item. - No other information to report[327](index=327&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=66&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive Proxy Statement for the 2022 Annual Meeting of Stockholders. - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2022 Proxy Statement[330](index=330&type=chunk) [Item 11. Executive Compensation](index=66&type=section&id=Item%2011.%20Executive%20Compensation.) Information on executive compensation is incorporated by reference from the company's definitive Proxy Statement for the 2022 Annual Meeting of Stockholders. - Information on executive compensation is incorporated by reference from the 2022 Proxy Statement[331](index=331&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=66&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) Information regarding security ownership of certain beneficial owners and management, along with related stockholder matters, is incorporated by reference from the company's definitive Proxy Statement for the 2022 Annual Meeting of Stockholders. - Information on security ownership and related stockholder matters is incorporated by reference from the 2022 Proxy Statement[332](index=332&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=66&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) Information concerning certain relationships, related party transactions, and director independence is incorporated by reference from the company's definitive Proxy Statement for the 2022 Annual Meeting of Stockholders. - Information on certain relationships, related party transactions, and director independence is incorporated by reference from the 2022 Proxy Statement[333](index=333&type=chunk) [Item 14. Principal Accountant Fees and Services](index=66&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services.) Information regarding principal accountant fees and services is incorporated by reference from the company's definitive Proxy Statement for the 2022 Annual Meeting of Stockholders. - Information on principal accountant fees and services is incorporated by reference from the 2022 Proxy Statement[334](index=334&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=67&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules.) This section lists all exhibits and financial statement schedules filed as part of the Annual Report on Form 10-K, with financial statements included in Part II, Item 8, and other schedules omitted as not applicable or included elsewhere. - Consolidated financial statements are included in Part II, Item 8[337](index=337&type=chunk) - All financial statement schedules are omitted because they are not applicable or the required information is included in the consolidated financial statements or notes[337](index=337&type=chunk) - A comprehensive list of exhibits, including merger agreements, bylaws, indentures, credit agreements, and stock incentive plans, is provided[337](index=337&type=chunk)[340](index=340&type=chunk)[342](index=342&type=chunk) [Item 16. 10-K Summary](index=69&type=section&id=Item%2016.%2010-K%20Summary.) This item indicates that no 10-K summary is provided. - No 10-K Summary is provided[343](index=343&type=chunk)

Forestar Group Inc. (NYSE:FOR) Q4 2021 Earnings Conference Call November 4, 2021 5:00 PM ET Company Participants Katie Smith – Director-Finance and Investor Relations Dan Bartok – Chief Executive Officer Jim Allen – Chief Financial Officer Conference Call Participants Paul Przybylski – Wolfe Research Asher Sohnen – Citigroup Deepa Raghavan – Wells Fargo Securities Mike Rehaut – JPMorgan Max Downey – BTIG Operator Good afternoon, and welcome to Forestar’s Fourth Quarter 2021 Earnings Conference Call. I will ...

1 Investor Presentation Q4 21 FORWARD‑LOOKING STATEMENTS This presentation may include "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. Although Forestar believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Factors that may cause the actual results to be materially different from the future results expressed by the forward-looking statements include, but are not limited t ...