Forestar Group Inc (FOR) Q4 2024 Earnings Call Highlights: Strong Financial Growth Amid ...

GuruFocus News
4 min read

In This Article:

  • Diluted Earnings Per Share: Increased 20% to $4.

  • Pretax Income: Increased 22% to $270.1 million.

  • Return on Equity: Improved 60 basis points to 13.8%.

  • Book Value Per Share: Increased 15% to $31.47.

  • Net Income (Q4): Increased 13% to $81.6 million or $1.60 per diluted share.

  • Net Income (Fiscal Year): Increased 22% to $203.4 million or $4 per diluted share.

  • Revenue (Q4): $551.4 million, flat with the prior year quarter.

  • Revenue (Fiscal Year): Totaled $1.5 billion.

  • Lots Sold (Q4): Increased 8% to 5,374 lots.

  • Lots Sold (Fiscal Year): Increased 7% to 15,068 lots.

  • Average Lot Sales Price (Q4): $97,300.

  • Average Lot Sales Price (Fiscal Year): $96,600.

  • Gross Profit Margin (Q4): 23.9%, up 290 basis points.

  • Gross Profit Margin (Fiscal Year): 23.8%, up 260 basis points.

  • Pretax Profit Margin (Q4): Improved 230 basis points to 19.7%.

  • Pretax Profit Margin (Fiscal Year): Improved 250 basis points to 17.9%.

  • SG&A Expense (Q4): Increased 21% to $32 million.

  • SG&A Expense (Fiscal Year): $118.5 million or 7.9% of revenues.

  • Liquidity: Approximately $860 million, including $480 million in unrestricted cash.

  • Total Debt: $706 million with no senior note maturities until fiscal 2026.

  • Net Debt-to-Capital Ratio: 12.4%.

  • Stockholders' Equity: $1.6 billion.

Release Date: October 29, 2024

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

Positive Points

  • Forestar Group Inc (NYSE:FOR) delivered over 5,300 lots in the fourth quarter and more than 15,000 lots for the full fiscal year, showcasing strong operational performance.

  • Fiscal 2024 diluted earnings per share increased by 20% to $4, and pretax income rose by 22% to $270.1 million, indicating robust financial growth.

  • The company's return on equity improved by 60 basis points to 13.8%, and book value per share increased by 15% from the previous year to $31.47.

  • Forestar Group Inc (NYSE:FOR) has invested approximately $6.7 billion in land acquisition and development over the last five years, delivering over 70,000 finished lots.

  • The company ended the quarter with significant liquidity of approximately $860 million, including $480 million in unrestricted cash, providing a strong financial position for future opportunities.

Negative Points

  • SG&A expenses increased by 21% from the prior year quarter to $32 million, with SG&A as a percentage of revenues rising to 5.8% from 4.8%.

  • The company faces challenges in the entitlement and permitting processes, resulting in lengthening development timelines.

  • Despite improvements, governmental delays continue to extend cycle times above historical norms, impacting project timelines.

  • Forestar Group Inc (NYSE:FOR) has not seen any softening in land prices, which could impact future profitability if costs continue to rise.

  • The company's reliance on D.R. Horton as a major customer remains high, with 85% to 90% of lots expected to be delivered to them in the near term, limiting diversification.

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