ARLINGTON, Texas - Forestar Group Inc . (NYSE: NYSE:FOR), a prominent national residential lot developer, exceeded market expectations with its financial results for the second fiscal quarter ended March 31, 2024. The stock traded flat, up 0.09% premarket.
The company reported a significant 67% increase in net income, reaching $45.0 million, or $0.89 per diluted share, surpassing the analyst estimate of $0.73. Revenue also rose to $333.8 million, beating the consensus estimate of $325.91 million and marking an 11% increase compared to the same quarter last year.
Forestar's strong performance this quarter is attributed to a 10% increase in residential lots sold, totaling 3,289 lots. The company also saw a substantial 26% growth in owned and controlled lots, which now stands at 96,100. These operational achievements contributed to a 320-basis-point expansion in return on equity, which now sits at 14.9% for the trailing twelve months.
Donald J. Tomnitz, Chairman of the Board, highlighted the demand for finished lots and the company's strategic positioning to take advantage of the current market conditions. "The Forestar team achieved strong results, including a 64% increase in pre-tax income to $58.9 million on an 11% increase in revenues to $333.8 million. Lots sold increased 10% to 3,289 lots," Tomnitz said. He also emphasized the company's focus on growing its platform and maximizing returns, underpinned by a strong balance sheet and ample liquidity.
Looking ahead, Forestar anticipates delivering between 14,500 and 15,500 lots in fiscal 2024, aiming to generate revenue between $1.4 billion and $1.5 billion. This expectation aligns with the company's strategy to enhance long-term value through disciplined capital investment and leveraging its market position in the lot development industry.
Forestar's financial health is further underscored by its solid capital structure. With $416.2 million in unrestricted cash and an additional $382.0 million in available borrowing capacity, the company maintains robust liquidity to support its growth initiatives. Moreover, the net debt to total capital ratio remains low at 16.4%, positioning Forestar favorably for future investments.
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