Form 8-K - Current report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________

FORM 8-K

______________________________

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 23, 2024

______________________________

Forestar Group Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-33662

26-1336998

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

2221 E. Lamar Blvd., Suite 790, Arlington, Texas 76006

(Address of principal executive offices)

(817) 769-1860

(Registrant’s telephone number, including area code)

______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $1.00 per share

FOR

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02. Results of Operations and Financial Condition.

On January 23, 2024, Forestar Group Inc. issued a press release announcing its results and related information for its first quarter ended December 31, 2023. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference in its entirety into this Item 2.02.

The information furnished in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.


(d)	Exhibits
	99.1	Press Release dated January 23, 2024 related to the Company's results and related information for the first quarter ended December 31, 2023.
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Forestar Group Inc.

Date:

January 23, 2024

By:

/S/ JAMES D. ALLEN

James D. Allen

Executive Vice President and

Chief Financial Officer

FORESTAR REPORTS FISCAL 2024 FIRST QUARTER RESULTS

ARLINGTON, Texas (Business Wire) - January 23, 2024 — Forestar Group Inc. (“Forestar”) (NYSE: FOR), a leading national residential lot developer, today reported financial results for its first fiscal quarter ended December 31, 2023.

Fiscal 2024 First Quarter Highlights

All comparisons are year-over-year

•Net income increased 84% to $38.2 million or $0.76 per diluted share

•Pre-tax income increased 84% to $51.2 million

•Pre-tax profit margin improved 380 basis points to 16.7%

•Consolidated revenues increased 41% to $305.9 million

•Residential lots sold increased 39% to 3,150 lots

•Owned and controlled 82,400 lots

•Return on equity of 14.1% for the trailing twelve months ended December 31, 2023

•Book value per share increased 15% to $28.21

•Net debt to total capital ratio improved to 14.9%

Financial Results

Net income for the first quarter of fiscal 2024 increased 84% to $38.2 million, or $0.76 per diluted share, compared to $20.8 million, or $0.42 per diluted share, in the same quarter of fiscal 2023. Pre-tax income for the quarter increased 84% to $51.2 million from $27.9 million in the same quarter of fiscal 2023. Revenues for the quarter increased 41% to $305.9 million from $216.7 million in the same quarter of fiscal 2023.

The Company’s return on equity was 14.1% for the trailing twelve months ended December 31, 2023. Return on equity is calculated as net income for the trailing twelve months divided by average stockholders’ equity, where average stockholders’ equity is the sum of ending stockholders’ equity balances of the trailing five quarters divided by five.

Operational Results

Lots sold during the first quarter increased 39% to 3,150 lots compared to 2,263 lots in the same quarter of fiscal 2023. During the first quarter of fiscal 2024, Forestar sold 316 lots to customers other than D.R. Horton, Inc. (“D.R. Horton”), compared to 169 lots in the prior year quarter. In the first quarter of fiscal 2024, lots sold to customers other than D.R. Horton included 124 lots that were sold to a lot banker who expects to sell those lots to D.R. Horton at a future date.

The Company’s lot position at December 31, 2023 was 82,400 lots, of which 55,400 were owned and 27,000 were controlled through land and lot purchase contracts. Lots owned at December 31, 2023 included 7,300 that were fully developed. Of the Company’s owned lot position at December 31, 2023, 16,700 lots, or 30%, were under contract to be sold, representing approximately $1.6 billion of future revenue. Another 17,500 lots, or 32%, of the Company’s owned lots were subject to a right of first offer to D.R. Horton based on executed purchase and sale agreements at December 31, 2023.

Capital Structure, Leverage and Liquidity

Forestar ended the quarter with $458.9 million of unrestricted cash and $385.7 million of available borrowing capacity on its senior unsecured revolving credit facility for total liquidity of $844.6 million. Debt at December 31, 2023 totaled $705.3 million, with no senior note maturities until fiscal 2026. The Company’s net debt to total capital ratio at the end of the quarter was 14.9%. Net debt to total capital consists of debt net of unrestricted cash divided by stockholders’ equity plus debt net of unrestricted cash.

Outlook

Donald J. Tomnitz, Chairman of the Board, said, “The Forestar team delivered solid results in the first quarter of fiscal 2024, including an 84% increase in pre-tax income to $51.2 million, a 41% increase in revenues to $305.9 million and a 39% increase in lots sold to 3,150 lots. Forestar delivered attractive double-digit returns and strong profitability, with a pre-tax profit margin of 16.7%.

“The supply of vacant developed lots, particularly at affordable price points, continues to be constrained across most of the country, and Forestar is uniquely positioned to take advantage of the shortage of finished lots in the homebuilding industry. In fiscal 2024, we still expect to deliver between 14,500 and 15,500 lots, generating $1.4 billion to $1.5 billion in revenue.

“We remain focused on growing our platform, turning our inventory, maximizing returns and consolidating market share in the highly fragmented lot development industry. Our strong balance sheet and ample liquidity give us the flexibility to invest in land opportunities that will drive our future growth. We will 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 (Tuesday, January 23) at 5:00 p.m. Eastern Time. The dial-in number is 888-506-0062, the entry code is 156201 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 57 markets and 23 states. Based in Arlington, Texas, the Company delivered more than 14,900 residential lots during the twelve-month period ended December 31, 2023. Forestar 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 the supply of vacant developed lots, particularly at affordable price points, continues to be constrained across most of the country; Forestar is uniquely positioned to take advantage of the shortage of finished lots in the homebuilding industry; and in fiscal 2024, we still expect to deliver between 14,500 and 15,500 lots, generating $1.4 billion to $1.5 billion in revenue. Forward-looking statements also include we remain focused on growing our platform, turning our inventory, maximizing returns and consolidating market share in the highly fragmented lot development industry; our strong balance sheet and ample liquidity give us the flexibility to invest in land opportunities that will drive our future growth; and we will 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 cyclical nature of the homebuilding and lot development industries and changes in economic, real estate and other conditions; the impact of significant inflation, higher interest rates or deflation; supply shortages and other risks of acquiring land, construction materials and skilled labor; the effects of public health issues such as a major epidemic or pandemic, on the economy and our business; the impacts of weather conditions and natural disasters; health and safety incidents relating to our operations; 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; 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; the impact of governmental policies, laws or regulations and actions or restrictions of regulatory agencies; our ability to achieve our strategic initiatives; continuing liabilities related to assets that have been sold; 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; competitive conditions in our industry; 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; and our ability to hire and retain key personnel. 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.

Contact

Katie Smith, 817-769-1860

Director of Finance & Investor Relations

InvestorRelations@forestar.com

FORESTAR GROUP INC.

Consolidated Balance Sheets

(Unaudited)


	December 31, 2023		September 30, 2023
	(In millions, except share data)
ASSETS
Cash and cash equivalents	$	458.9	$	616.0
Real estate	2,009.8		1,790.3
Investment in unconsolidated ventures	0.5		0.5
Property and equipment, net	5.8		5.9
Other assets	58.8		58.0
Total assets	$	2,533.8	$	2,470.7
LIABILITIES
Accounts payable	$	65.3	$	68.4
Accrued development costs	99.9		104.1
Earnest money on sales contracts	140.9		121.4
Deferred tax liability, net	50.2		50.7
Accrued expenses and other liabilities	63.4		61.2
Debt	705.3		695.0
Total liabilities	1,125.0		1,100.8
EQUITY
Common stock, par value $1.00 per share, 200,000,000 authorized shares, 49,909,713 and 49,903,713 shares issued and outstanding at December 31, 2023 and September 30, 2023, respectively	49.9		49.9
Additional paid-in capital	644.9		644.2
Retained earnings	713.0		674.8
Stockholders' equity	1,407.8		1,368.9
Noncontrolling interests	1.0		1.0
Total equity	1,408.8		1,369.9
Total liabilities and equity	$	2,533.8	$	2,470.7

FORESTAR GROUP INC.

Consolidated Statements of Operations

(Unaudited)


	Three Months Ended December 31,
	2023		2022
	(In millions, except per share amounts)
Revenues	$	305.9	$	216.7
Cost of sales	233.0		169.2
Selling, general and administrative expense	28.0		22.9

Gain on sale of assets	—		(1.6)
Interest and other income	(6.3)		(1.7)
Income before income taxes	51.2		27.9
Income tax expense	13.0		7.1


Net income	$	38.2	$	20.8

Basic net income per common share	$	0.76	$	0.42
Weighted average number of common shares	50.1		49.9

Diluted net income per common share	$	0.76	$	0.42
Adjusted weighted average number of common shares	50.5		49.9

FORESTAR GROUP INC.

Revenues, Residential Lots Sold and Lot Position


	REVENUES
	Three Months Ended December 31,
	2023		2022
	(In millions)
Residential lot sales:
Development projects	$	303.5	$	204.0

Decrease in contract liabilities	0.7		2.7
	304.2		206.7
Deferred development projects	1.3		6.7
	305.5		213.4
Tract sales and other	0.4		3.3
Total revenues	$	305.9	$	216.7


	RESIDENTIAL LOTS SOLD
	Three Months Ended December 31,
	2023		2022
Development projects	3,150		2,263





Average sales price per lot (1)	$	96,400	$	90,100


	LOT POSITION
	December 31, 2023		September 30, 2023
Lots owned	55,400		52,400
Lots controlled under land and lot purchase contracts	27,000		26,800
Total lots owned and controlled	82,400		79,200

Owned lots under contract to sell to D.R. Horton	16,200		14,400
Owned lots under contract to customers other than D.R. Horton	500		600
Total owned lots under contract	16,700		15,000

Owned lots subject to right of first offer with D.R. Horton based on executed purchase and sale agreements	17,500		17,000
Owned lots fully developed	7,300		6,400

_____________

(1)Excludes lots sold from deferred development projects and any impact from change in contract liabilities.

Cover	Jan. 23, 2024
Entity Information [Line Items]
Document Type	8-K
Document Period End Date	Jan. 23, 2024
Entity Registrant Name	Forestar Group Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-33662
Entity Tax Identification Number	26-1336998
Entity Address, Address Line One	2221 E. Lamar Blvd.
Entity Address, Address Line Two	Suite 790
Entity Address, City or Town	Arlington
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	76006
City Area Code	817
Local Phone Number	769-1860
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $1.00 per share
Trading Symbol	FOR
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0001406587
Amendment Flag	false