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• Revenue: $351 million, a 5% increase from the prior-year quarter.

• Net Income: $31.6 million, or $0.62 per diluted share.

• Gross Profit Margin: 22.6%, compared to 24.9% in the prior-year quarter.

• Pre-Tax Income: $40.7 million, down from $58.9 million in the prior-year quarter.

• Pre-Tax Profit Margin: 11.6%, compared to 17.6% in the prior-year quarter.

• Lots Sold: 3,411 lots, a 4% increase from the prior-year quarter.

• Average Sales Price per Lot: $101,700.

• SG&A Expense: $38.4 million, a 32% increase from the prior-year quarter.

• Liquidity Position: $792 million, including $174 million in unrestricted cash.

• Total Debt: $873 million, with a net debt to capital ratio of 29.8%.

• Book Value per Share: $32.36, an 11% increase from a year ago.

• Future Revenue Backlog: $2.3 billion.

• Guidance for Fiscal 2025: Expected delivery of 15,000 to 15,500 lots, generating $1.5 billion to $1.55 billion in revenue.

• Warning! GuruFocus has detected 5 Warning Signs with FOR.

Release Date: April 17, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Forestar Group Inc (NYSE:FOR) reported a solid second quarter with a net income of $31.6 million, or $0.62 per diluted share, on revenues of $351 million.

• The company saw a 46% sequential increase in lots sold to 3,411 lots, and lots under contract to sell increased 41% from a year ago to 25,400 lots.

• Forestar Group Inc (NYSE:FOR) strengthened its balance sheet by increasing liquidity to approximately $800 million and extending its debt maturity profile.

• The company expanded its operations by entering 10 new markets and increasing its community count by 21%, aligning with D.R. Horton's footprint.

• Forestar Group Inc (NYSE:FOR) maintained a strong capital structure, providing operational flexibility and positioning the company to take advantage of attractive opportunities.

Negative Points

• The home-building industry is facing headwinds from home affordability constraints and declining consumer confidence, leading to a slower than expected start to the spring selling season.

• Net income decreased from $45 million or $0.89 per diluted share in the prior-year quarter to $31.6 million or $0.62 per diluted share.

• The gross profit margin for the quarter was 22.6%, down from 24.9% in the same quarter last year, partly due to non-recurring high-margin items in the prior year.

• SG&A expenses increased 32% from the prior-year quarter to $38.4 million, primarily due to a 29% increase in employee count.

• Forestar Group Inc (NYSE:FOR) adjusted its guidance for fiscal 2025, expecting to deliver between 15,000 and 15,500 lots, generating between $1.5 billion and $1.55 billion of revenue, reflecting a cautious outlook.