Forestar Reports Fiscal 2023 Third Quarter Results
- Net income increased 18% to $46.8 million
- Consolidated revenues increased 20% to $368.9 million
- Owned and controlled 73,000 lots
- Book value per share increased 13% to $25.96
- Return on equity of 11.9% for the trailing twelve months ended June 30, 2023
- Net income for the nine months ended June 30, 2023 decreased 26% to $94.5 million
- Revenues for the nine months ended June 30, 2023 decreased 22% to $887.1 million
Fiscal 2023 Third Quarter Highlights
All comparisons are year-over-year
-
Net income increased
18% to or$46.8 million per diluted share$0.93 -
Pre-tax income increased
18% to , with a pre-tax profit margin of$62.4 million 16.9% -
Consolidated revenues increased
20% to on 3,812 lots sold$368.9 million - Owned and controlled 73,000 lots
-
Return on equity of
11.9% for the trailing twelve months ended June 30, 2023 -
Book value per share increased
13% to$25.96 -
Net debt to total capital ratio improved to
19.1%
Daniel Bartok, CEO, said, “Builder incentives have helped bridge the affordability gap for many new homebuyers, and the supply of both new and existing homes remains limited. As a result, builder sentiment has improved, and housing starts have increased. Stronger demand for finished residential lots helped to drive solid third quarter results, highlighted by net income increasing
“The supply of vacant developed lots, particularly at affordable price points, continues to be constrained across our footprint. Forestar is the market leader in a highly fragmented and under-capitalized industry and is well-positioned as a key lot supplier to the homebuilding industry. We are confident about Forestar’s ability to capitalize on opportunities that build shareholder value with our broad geographic footprint, attractive land positions, strong balance sheet, relationship with the nation’s largest homebuilder, and most importantly, our experienced team.”
Financial Results
Net income for the third quarter of fiscal 2023 increased
Net income for the nine months ended June 30, 2023 decreased
The Company’s return on equity was
Operational Results
Lots sold during the third quarter increased
Lots sold during the nine months ended June 30, 2023 decreased
The Company’s lot position at June 30, 2023 was 73,000 lots, of which 53,700 were owned and 19,300 were controlled through land and lot purchase contracts. Lots owned at June 30, 2023 included 7,800 that were fully developed. Of the Company’s owned lot position at June 30, 2023, 14,900 lots, or
Capital Structure, Leverage and Liquidity
Forestar ended the quarter with
Outlook
Donald J. Tomnitz, Chairman of the Board, said, “Our commitment to operational excellence and a relentless focus on execution enabled us to deliver solid third quarter results. The Forestar team sold 3,812 lots generating
“Forestar is uniquely positioned to take advantage of the shortage of finished lots in the homebuilding industry. Our strong balance sheet and ample liquidity give us the flexibility to invest in land opportunities that will drive our future growth and maintain an appropriate level of finished lots in inventory to meet builder demand. We will continue to aggregate significant market share over the next few years, while we maintain our disciplined approach when investing capital to enhance the long-term value of Forestar.”
Conference Call and Webcast Details
The Company will host a conference call today (Thursday, July 20) at 5:00 p.m. Eastern Time. The dial-in number is 888-506-0062, the entry code is 130193 and the call will also be webcast from the Company’s website at investor.forestar.com.
About Forestar Group Inc.
Forestar Group Inc. is a residential lot development company with operations in 52 markets and 20 states. Based in
Forward-Looking Statements
Portions of this document may constitute “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. All forward-looking statements are based upon information available to Forestar on the date this release was issued. Forestar does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements in this release include the supply of vacant developed lots, particularly at affordable price points, continues to be constrained across our footprint; Forestar is the market leader in a highly fragmented and under-capitalized industry and is well-positioned as a key lot supplier to the homebuilding industry; we are confident about Forestar’s ability to capitalize on opportunities that build shareholder value with our broad geographic footprint, attractive land positions, strong balance sheet, relationship with the nation’s largest homebuilder, and most importantly, our experienced team. Forward-looking statement also include we will continue to strive to maximize returns by balancing our pace of sales and lot pricing; Forestar is uniquely positioned to take advantage of the shortage of finished lots in the homebuilding industry; our strong balance sheet and ample liquidity give us the flexibility to invest in land opportunities that will drive our future growth and maintain an appropriate level of finished lots in inventory to meet builder demand; and we will continue to aggregate significant market share over the next few years, while we maintain our disciplined approach when investing capital to enhance the long-term value of Forestar.
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 to: the effect of D.R. Horton’s controlling level of ownership on us and the holders of our securities; our ability to realize the potential benefits of the strategic relationship with D.R. Horton; the effect of our strategic relationship with D.R. Horton on our ability to maintain relationships with our customers; the impact of COVID-19 on the economy and our business; the cyclical nature of the homebuilding and lot development industries and changes in economic, real estate and other conditions; the impacts of weather conditions and natural disasters; health and safety incidents relating to our operations; supply shortages and other risks of acquiring land, construction materials and skilled labor; competitive conditions in our industry; our ability to achieve our strategic initiatives; continuing liabilities related to assets that have been sold; the impact of governmental policies, laws or regulations and actions or restrictions of regulatory agencies; the cost and availability of property suitable for residential lot development; general economic, market or business conditions where our real estate activities are concentrated; our dependence on relationships with national, regional and local homebuilders; our ability to obtain or the availability of surety bonds to secure our performance related to construction and development activities and the pricing of bonds; obtaining reimbursements and other payments from governmental districts and other agencies and timing of such payments; our ability to succeed in new markets; the conditions of the capital markets and our ability to raise capital to fund expected growth; our ability to manage and service our debt and comply with our debt covenants, restrictions and limitations; the volatility of the market price and trading volume of our common stock; our ability to hire and retain key personnel; the impact of significant inflation, higher interest rates or deflation; and the strength of our information technology systems and the risk of cybersecurity breaches and our ability to satisfy privacy and data protection laws and regulations. Additional information about issues that could lead to material changes in performance is contained in Forestar’s annual report on Form 10-K and its most recent quarterly report on Form 10-Q, both of which are or will be filed with the Securities and Exchange Commission.
FORESTAR GROUP INC. Consolidated Balance Sheets (Unaudited) |
|||||
|
June 30,
|
|
September 30,
|
||
|
(In millions, except share data) |
||||
ASSETS |
|
|
|
||
Cash and cash equivalents |
$ |
401.0 |
|
$ |
264.8 |
Real estate |
|
1,909.1 |
|
|
2,022.4 |
Investment in unconsolidated ventures |
|
0.5 |
|
|
0.5 |
Property and equipment, net |
|
5.7 |
|
|
5.7 |
Other assets |
|
59.1 |
|
|
49.6 |
Total assets |
$ |
2,375.4 |
|
$ |
2,343.0 |
LIABILITIES |
|
|
|
||
Accounts payable |
$ |
68.6 |
|
$ |
72.2 |
Accrued development costs |
|
91.1 |
|
|
122.3 |
Earnest money on sales contracts |
|
123.8 |
|
|
136.2 |
Deferred tax liability, net |
|
34.1 |
|
|
36.9 |
Accrued expenses and other liabilities |
|
54.1 |
|
|
70.1 |
Debt |
|
707.2 |
|
|
706.0 |
Total liabilities |
|
1,078.9 |
|
|
1,143.7 |
EQUITY |
|
|
|
||
Common stock, par value |
|
|
|
|
|
49,903,713 and 49,761,480 shares issued and outstanding |
|||||
at June 30, 2023 and September 30, 2022, respectively |
49.9 |
49.8 |
|||
Additional paid-in capital |
|
643.2 |
|
|
640.6 |
Retained earnings |
|
602.4 |
|
|
507.9 |
Stockholders' equity |
|
1,295.5 |
|
|
1,198.3 |
Noncontrolling interests |
|
1.0 |
|
|
1.0 |
Total equity |
|
1,296.5 |
|
|
1,199.3 |
Total liabilities and equity |
$ |
2,375.4 |
|
$ |
2,343.0 |
FORESTAR GROUP INC. Consolidated Statements of Operations (Unaudited) |
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(In millions, except per share amounts) |
||||||||||||||
Revenues |
$ |
368.9 |
|
|
$ |
308.5 |
|
|
$ |
887.1 |
|
|
$ |
1,137.7 |
|
Cost of sales |
|
283.9 |
|
|
|
234.6 |
|
|
|
698.7 |
|
|
|
902.9 |
|
Selling, general and administrative expense |
|
26.4 |
|
|
|
24.1 |
|
|
|
71.3 |
|
|
|
69.9 |
|
Equity in earnings of unconsolidated ventures |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.1 |
) |
Gain on sale of assets |
|
— |
|
|
|
(2.7 |
) |
|
|
(1.6 |
) |
|
|
(3.2 |
) |
Interest and other income |
|
(3.8 |
) |
|
|
(0.2 |
) |
|
|
(7.5 |
) |
|
|
(0.2 |
) |
Income before income taxes |
|
62.4 |
|
|
|
52.7 |
|
|
|
126.2 |
|
|
|
169.4 |
|
Income tax expense |
|
15.6 |
|
|
|
13.0 |
|
|
|
31.7 |
|
|
|
41.4 |
|
Net income |
$ |
46.8 |
|
|
$ |
39.7 |
|
|
$ |
94.5 |
|
|
$ |
128.0 |
|
|
|
|
|
|
|
|
|
||||||||
Basic net income per common share |
$ |
0.94 |
|
|
$ |
0.80 |
|
|
$ |
1.89 |
|
|
$ |
2.57 |
|
Weighted average number of common shares |
|
50.1 |
|
|
|
49.9 |
|
|
|
50.0 |
|
|
|
49.8 |
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income per common share |
$ |
0.93 |
|
|
$ |
0.80 |
|
|
$ |
1.89 |
|
|
$ |
2.57 |
|
Adjusted weighted average number of common shares |
|
50.2 |
|
|
|
49.9 |
|
|
|
50.0 |
|
|
|
49.8 |
|
FORESTAR GROUP INC. Revenues, Residential Lots Sold and Lot Position |
|||||||||||
|
REVENUES |
||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
|
(In millions) |
||||||||||
Residential lot sales: |
|
|
|
|
|
|
|
||||
Development projects |
$ |
334.2 |
|
$ |
294.6 |
|
$ |
790.3 |
|
$ |
1,078.8 |
Lot banking projects |
|
— |
|
|
— |
|
|
— |
|
|
27.3 |
Decrease in contract liabilities |
|
0.6 |
|
|
0.5 |
|
|
4.0 |
|
|
2.1 |
|
|
334.8 |
|
|
295.1 |
|
|
794.3 |
|
|
1,108.2 |
Deferred development projects |
|
10.3 |
|
|
7.9 |
|
|
24.6 |
|
|
20.4 |
|
|
345.1 |
|
|
303.0 |
|
|
818.9 |
|
|
1,128.6 |
Tract sales and other |
|
23.8 |
|
|
5.5 |
|
|
68.2 |
|
|
9.1 |
Total revenues |
$ |
368.9 |
|
$ |
308.5 |
|
$ |
887.1 |
|
$ |
1,137.7 |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
|
RESIDENTIAL LOTS SOLD |
||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
Development projects |
|
3,812 |
|
|
3,406 |
|
|
9,054 |
|
|
12,593 |
Lot banking projects |
|
— |
|
|
— |
|
|
— |
|
|
330 |
|
|
3,812 |
|
|
3,406 |
|
|
9,054 |
|
|
12,923 |
Deferred development projects |
|
— |
|
|
67 |
|
|
— |
|
|
854 |
|
|
3,812 |
|
|
3,473 |
|
|
9,054 |
|
|
13,777 |
|
|
|
|
|
|
|
|
||||
Average sales price per lot (1) |
$ |
87,700 |
|
$ |
86,500 |
|
$ |
87,300 |
|
$ |
85,600 |
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
||||
|
|
|
|
|
LOT POSITION |
||||||
|
|
|
|
|
June 30,
|
|
September 30,
|
||||
Lots owned |
|
|
53,700 |
|
|
61,800 |
|||||
Lots controlled under land and lot purchase contracts |
|
|
19,300 |
|
|
28,300 |
|||||
Total lots owned and controlled |
|
|
73,000 |
|
|
90,100 |
|||||
|
|
|
|
|
|
|
|
||||
Owned lots under contract to sell to D.R. Horton |
|
|
13,600 |
|
|
17,800 |
|||||
Owned lots under contract to customers other than D.R. Horton |
|
|
1,300 |
|
|
1,400 |
|||||
Total owned lots under contract |
|
|
14,900 |
|
|
19,200 |
|||||
|
|
|
|
|
|
|
|
||||
Owned lots subject to right of first offer with D.R. Horton based on executed purchase and sale agreements |
|
|
16,900 |
|
|
18,900 |
|||||
Owned lots fully developed |
|
|
7,800 |
|
|
5,500 |
|||||
_____________
(1) Excludes lots sold from deferred development projects and any impact from change in contract liabilities. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230720448431/en/
Katie Smith, 817-769-1860
Director of Finance & Investor Relations
InvestorRelations@forestar.com
Source: Forestar Group Inc.
FAQ
What were Forestar's financial results for Q3 2023?
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