Forestar Group Inc. has recently released its 10-Q report, providing a detailed insight into the company's operations and financial performance. Forestar operates as a residential lot development company, primarily focused on acquiring land and developing infrastructure for single-family residential communities, with its common stock listed on the New York Stock Exchange under the ticker symbol "FOR." As of March 31, 2025, D.R. Horton owned approximately 62% of Forestar's outstanding common stock, exerting significant influence on its strategic direction and operations.
In the six months ended March 31, 2025, Forestar sold 5,744 lots with an average sales price of $103,200. The company's lot position at March 31, 2025, consisted of 105,900 residential lots, of which approximately 68,400 were owned and 37,500 were controlled through purchase contracts. Forestar has expanded and diversified its lot development operations across 65 markets in 24 states, aiming to consolidate market share in the highly fragmented lot development industry.
The company faced a challenging market environment in the six months ended March 31, 2025, with total lots sold and total residential lot sales revenue decreasing 11% and 6%, respectively, compared to the prior year period. The 2025 spring selling season experienced slower-than-expected new home demand, attributed to affordability constraints, elevated mortgage interest rates, and declining consumer confidence. Despite these conditions, total lots sold and total residential lot sales revenue in the three months ended March 31, 2025, increased 4% and 6%, respectively, compared to the prior year period, partly due to mortgage rate buy-down incentives offered by homebuilders.
In the three months ended March 31, 2025, Forestar reported revenues of $351.0 million, with residential lot sales contributing significantly. The company's cost of sales in the same period amounted to $271.8 million. Forestar's selling, general, and administrative expense (SG&A) was $38.4 million, representing 10.9% of revenues. The company also incurred a loss on extinguishment of debt of $1.1 million during the same period.
Forestar's liquidity position at March 31, 2025, was strong, with $174.3 million of cash and cash equivalents and $617.7 million of available borrowing capacity on its revolving credit facility. The company's ratio of debt to total capital was 34.7%, and its ratio of net debt to total capital was 29.8%. Forestar aims to maintain its net debt to total capital at approximately 40% or less over the long term.
The market has reacted to these announcements by moving the company's shares 4.3% to a price of $19.25. Check out the company's full 10-Q submission here.
