Forestar Group Inc. ("Forestar") (NYSE: FOR), a leading national
residential lot developer, today reported financial results for its
first quarter ended December 31, 2020. Net income attributable to
Forestar for the first quarter of fiscal 2021 increased 30% to
$22.0 million, or $0.46 per diluted share, compared to $16.9
million, or $0.35 per diluted share, in the same quarter of fiscal
2020. Revenues for the first quarter of fiscal 2021 increased 24%
to $307.1 million from $247.2 million in the same quarter of fiscal
2020. Residential lots sold in the quarter increased 47% to 3,567
lots compared to 2,422 lots in the same quarter of fiscal 2020.
The Company's lot position at December 31, 2020 increased 74%
from December 31, 2019 to 77,500 lots, of which 52,300 were owned
and 25,200 were controlled through purchase contracts. Of the
Company's owned lot position, 34,900 lots, or 67%, were under
contract to sell or subject to a right of first offer to D.R.
Horton, Inc. ("D.R. Horton") at December 31, 2020. Lots owned at
December 31, 2020 included 4,900 that are fully developed, of which
approximately 1,300 are related to lot banking. At December 31,
2020, the Company had 600 lots under contract to sell to builders
other than D.R. Horton, and during the quarter ended December 31,
2020, Forestar sold 178 lots to builders other than D.R. Horton, up
from 32 lots in the prior year quarter.
The Company ended the first quarter with $237.4 million of
unrestricted cash and $339.5 million of available borrowing
capacity on its senior unsecured revolving credit facility for
total liquidity of $576.9 million. Debt at December 31, 2020
totaled $654.1 million, with no senior note maturities until fiscal
2024, and the Company's net debt to total capital ratio was 31.8%.
Net debt to total capital consists of debt net of unrestricted cash
divided by stockholders’ equity plus debt net of unrestricted
cash.
Donald J. Tomnitz, Chairman of the Board, said, "The Forestar
team is off to a great start in fiscal 2021 with over 3,500 lot
deliveries during our first fiscal quarter. Housing market
conditions remain favorable across the country, and we now expect
to deliver between 13,500 and 14,000 lots in fiscal 2021 as we
continue to consolidate market share in the fragmented and
under-capitalized U.S. lot development industry.
“Forestar's return-focused business model is centered on our
high turnover, lower risk lot manufacturing strategy. We are well
positioned to effectively operate through changing economic
conditions due to our low net leverage and strong liquidity
position, our low overhead model and our strategic relationship
with D.R. Horton, the nation’s largest homebuilder. With 77,500
lots owned and controlled at December 31, 2020, we expect continued
robust growth and increasing profitability and returns in the
coming years."
COVID-19
During March 2020, the impacts of the COVID-19 pandemic (C-19)
and the related widespread reductions in economic activity began to
temporarily affect the Company’s business operations and the demand
for its residential lots. However, residential construction is
designated an essential business as part of critical infrastructure
in almost all municipalities across the U.S. where Forestar
operates. The Company implemented operational protocols to comply
with social distancing and other health and safety standards as
required by federal, state and local government agencies, taking
into consideration guidelines of the Centers for Disease Control
and Prevention and other public health authorities.
The Company remains cautious as to the impact C-19 may have on
its operations and on the overall economy in the future. There is
significant uncertainty regarding the extent to which and how long
C-19 and its related effects will have on the U.S. economy, capital
markets and demand for the Company's lots. The extent to which C-19
impacts Forestar's operational and financial performance will
depend on future developments, including the duration and severity
of C-19 and the impact on the Company's customers, trade partners
and employees, all of which are highly uncertain and cannot be
predicted.
Conference Call and Webcast Details
The Company will host a conference call today (Thursday, January
21) at 5:00 p.m. Eastern Time. The dial-in number is 877-407-9205,
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 51 markets and 21 states and delivered 11,518
residential lots during the twelve-month period ended December 31,
2020. The Company is a majority-owned subsidiary of D.R. Horton,
the largest homebuilder by volume in the United States since
2002.
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
that we now expect to deliver between 13,500 and 14,000 lots in
fiscal 2021 as we continue to consolidate market share in the
fragmented and under-capitalized U.S. lot development industry; we
are well positioned to effectively operate through changing
economic conditions due to our low net leverage and strong
liquidity position, our low overhead model and our strategic
relationship with D.R. Horton, the nation’s largest homebuilder;
and that with 77,500 lots owned and controlled at December 31,
2020, we expect continued robust growth and increasing
profitability and returns in the coming years. The forward-looking
statements also include all commentary in the C-19 section.
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 C-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; competitive conditions in our industry; changes
in our business strategy and 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; 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 which is filed
with the Securities and Exchange Commission.
FORESTAR GROUP INC.
Consolidated Balance
Sheets
(Unaudited)
December 31,
2020
September 30,
2020
(In millions, except share
data)
ASSETS
Cash and cash equivalents
$
237.4
$
394.3
Real estate
1,540.5
1,309.7
Investment in unconsolidated ventures
1.0
3.6
Income taxes receivable
2.1
6.3
Property and equipment, net
1.9
1.1
Other assets
26.3
24.9
Total assets
$
1,809.2
$
1,739.9
LIABILITIES
Accounts payable
$
42.2
$
29.2
Earnest money on sales contracts
118.5
98.3
Deferred tax liability, net
7.9
5.7
Accrued expenses and other liabilities
92.4
93.8
Debt
654.1
641.1
Total liabilities
915.1
868.1
EQUITY
Common stock, par value $1.00 per share,
200,000,000 authorized shares, 48,076,643 and 48,061,921 shares
issued and outstanding at December 31, 2020 and September 30, 2020,
respectively
48.1
48.1
Additional paid-in capital
604.1
603.9
Retained earnings
240.9
218.9
Stockholders' equity
893.1
870.9
Noncontrolling interests
1.0
0.9
Total equity
894.1
871.8
Total liabilities and equity
$
1,809.2
$
1,739.9
FORESTAR GROUP INC.
Consolidated Statements of
Operations
(Unaudited)
Three Months Ended
December 31,
2020
2019
(In millions, except per share
amounts)
Revenues
$
307.1
$
247.2
Cost of sales
262.9
216.6
Selling, general and administrative
expense
15.5
10.5
Equity in earnings of unconsolidated
ventures
(0.2
)
(0.5
)
Loss on sale of assets
—
0.1
Interest and other income
(0.3
)
(1.7
)
Income before income taxes
29.2
22.2
Income tax expense
7.1
5.4
Net income
22.1
16.8
Net income (loss) attributable to
noncontrolling interests
0.1
(0.1
)
Net income attributable to Forestar Group
Inc.
$
22.0
$
16.9
Basic net income per common share
attributable to Forestar Group Inc.
$
0.46
$
0.35
Weighted average number of common
shares
48.1
48.0
Diluted net income per common share
attributable to Forestar Group Inc.
$
0.46
$
0.35
Adjusted weighted average number of common
shares
48.2
48.1
FORESTAR GROUP INC.
Revenues, Residential Lots
Sold and Lot Position
(Unaudited)
REVENUES
Three Months Ended December
31,
2020
2019
(In millions)
Residential lot sales:
Development projects
$
271.1
$
117.7
Lot banking projects
35.7
100.9
Decrease (increase) in contract
liabilities
0.2
(1.5
)
307.0
217.1
Residential tract sales
—
30.0
Other
0.1
0.1
$
307.1
$
247.2
RESIDENTIAL LOTS SOLD
Three Months Ended December
31,
2020
2019
Development projects
3,102
1,406
Lot banking projects
465
1,016
3,567
2,422
Average sales price per lot (1)
$
86,000
$
90,300
LOT POSITION
December 31,
2020
September 30,
2020
Lots owned
52,300
(2)
42,400
(3)
Lots controlled under land and lot
purchase contracts
25,200
18,100
Total lots owned and controlled
77,500
60,500
____________
(1)
Excludes impact from change in contract
liabilities.
(2)
Lots owned at December 31, 2020 included
approximately 18,300 under contract to sell to D.R. Horton and
16,600 of which D.R. Horton had a right of first offer to
purchase.
(3)
Lots owned at September 30, 2020 included
approximately 14,000 under contract to sell to D.R. Horton and
16,400 of which D.R. Horton had a right of first offer to
purchase.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210121005740/en/
Investor Relations: Jessica Hansen, 817-390-8195
InvestorRelations@forestar.com
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