On July 18, 2024, Forestar Group Inc (FOR, Financial) released its 8-K filing reporting financial results for its third fiscal quarter ended June 30, 2024. Forestar Group Inc is a residential lot development company with operations across the United States. The core business segment for the company is real estate, which generates all of its revenues. The firm fundamentally acquires entitled real estate and develops it into finished residential lots for sale to homebuilders with a strategic focus on asset turns and efficiency. Single-family residential communities account for the majority of their real estate projects. The company utilizes a lower-risk business model mainly by investing in short-duration, phased development projects.
Performance Overview
Forestar Group Inc (FOR, Financial) reported a net income of $38.7 million or $0.76 per diluted share for the third quarter of fiscal 2024, a 17% decrease from $46.8 million or $0.93 per diluted share in the same quarter of fiscal 2023. This result fell short of the analyst estimate of $0.93 per share. The company's pre-tax income also decreased by 17% to $51.6 million from $62.4 million in the same quarter of the previous year. Consolidated revenues for the quarter were $318.4 million, down 14% from $368.9 million in the same quarter of fiscal 2023, missing the estimated revenue of $379.20 million.
Financial Achievements and Challenges
Despite the decline in quarterly performance, Forestar Group Inc (FOR, Financial) achieved several notable financial milestones. The company’s return on equity expanded by 190 basis points to 13.8% for the trailing twelve months ended June 30, 2024. Additionally, the book value per share increased by 15% to $29.87. The company also reported a net debt to total capital ratio of 18.7%, indicating a strong balance sheet with manageable leverage.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income | $38.7 million | $46.8 million |
| Earnings Per Share (Diluted) | $0.76 | $0.93 |
| Revenue | $318.4 million | $368.9 million |
| Return on Equity | 13.8% | 11.7% |
| Book Value Per Share | $29.87 | $25.97 |
| Net Debt to Total Capital Ratio | 18.7% | Not Reported |
Operational Insights
Forestar Group Inc (FOR, Financial) sold 3,255 lots during the third quarter, a 15% decrease from 3,812 lots in the same quarter of fiscal 2023. The company’s lot position at June 30, 2024, increased by 40% to 102,100 lots, of which 57,900 were owned and 44,200 were controlled through land and lot purchase contracts. This increase in lot position is significant as it positions the company to capitalize on future demand for residential lots.
Capital Structure and Liquidity
Forestar ended the quarter with $359.2 million of unrestricted cash and $385.2 million of available borrowing capacity on its senior unsecured revolving credit facility, totaling $744.4 million in liquidity. The company’s debt totaled $706.1 million, with no senior note maturities until fiscal 2026. This strong liquidity position allows Forestar to continue investing in land opportunities and drive future growth.
Management Commentary
"Demand for finished lots remained solid during the third quarter of fiscal 2024. The team delivered 3,255 lots generating $318.4 million of revenue during the quarter, which was in line with our expectations. Forestar maintained strong profitability with a pre-tax profit margin of 16.2% and delivered attractive double-digit returns," said Donald J. Tomnitz, Chairman of the Board.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Forestar Group Inc for further details.
