Financial Data and Key Metrics Changes - In the fourth quarter, net income increased by 7% to $87 million or $1.7 per diluted share [7] - For the full year, net income totaled $167.9 million or $3.29 per diluted share [8] - Revenues for the fourth quarter increased by 22% to $670.5 million, while annual revenues grew by 10% to $1.7 billion [8][4] - Book value per share increased by 11% to $34.78, reflecting a 92% increase over the last five years [5][17] Business Line Data and Key Metrics Changes - In the fourth quarter, the company sold 4,891 lots with an average sales price of $115,700, while for the year, 14,240 lots were sold at an average price of $108,400 [8] - The gross profit margin for the fourth quarter was 22.3%, down 160 basis points from the previous year [9] - The pretax income for the fourth quarter increased by 4% to $113.1 million, with a pretax profit margin of 16.9% [10] Market Data and Key Metrics Changes - The company noted slower new home sales due to affordability constraints and cautious consumer sentiment, but builder incentives are helping to bridge the affordability gap [12] - The availability of contractors and materials remains solid, with stable land development costs [12] Company Strategy and Development Direction - The company plans to continue executing its strategic plan by investing for future growth, maximizing returns, and consolidating market share in the lot development industry [6] - Forestar aims to maintain a minimum 15% pretax return on average inventory and a return of initial cash investment within 36 months [15] - The company expects to invest approximately $1.4 billion in land acquisition and development in fiscal 2026 [15] 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 [21] - The company anticipates delivering between 14,000 to 15,000 lots and generating $1.6 billion to $1.7 billion in revenue for fiscal 2026 [20] Other Important Information - The company ended the quarter with $968 million in liquidity, including $379 million in unrestricted cash [17] - Total debt was $803 million with no senior note maturities until fiscal 2028, resulting in a net debt to capital ratio of 19.3% [17] Q&A Session Summary Question: Why is growth expected to be in line with Horton? - Management indicated that growth is tied to the size of Horton and their market entry, with the potential for mid-single-digit growth depending on market conditions [25] Question: What is the outlook for headcount and SG&A leverage? - The company expects headcount to remain flat or slightly decrease in fiscal 2026, following a significant increase in fiscal 2025 [26] Question: Are there any pushbacks on lot prices or extended takedown schedules? - Management confirmed successful renegotiation of terms but noted minimal pushback on lot pricing, managing it project by project [29] Question: What trends are observed in Texas and Florida? - Management noted some pressure in Texas and Florida markets but still sees good absorption at affordable price points [32] Question: What is the expected cadence of deliveries in 2026? - The company projects a similar delivery cadence to 2025, with larger deliveries expected in the second half of the year [33]

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]