Forestar Group (FOR) Q1 2025 earnings summary

Executive summary

• Delivered 2,333 lots in Q1 FY2025, generating $250.4 million in revenue and $0.32 EPS, with net income of $16.5 million, down from $38.2 million year-over-year; book value per share rose to $31.84, up 13% year-over-year.

• Owned and controlled lot position increased to 106,000 at quarter end, with 25,200 owned lots under contract and 19,300 subject to right of first offer with D.R. Horton.

• Land acquisition and development investments reached $685 million in Q1, with a planned $2.0 billion investment for FY2025.

• The company operates in 62 markets across 24 states, maintains a disciplined, returns-focused approach, and is majority-owned (62%) by D.R. Horton.

• Amended revolving credit facility in December 2024, increasing commitments to $640 million and extending maturity to December 2029.

Financial highlights

• Q1 FY2025 revenue was $250.4 million, down from $305.9 million year-over-year; net income was $16.5 million, down from $38.2 million; EPS was $0.32, down from $0.76.

• Gross profit margin was 22%, down from 23.8% (or 22.8% excluding a one-time sale) in the prior year; adjusted EBITDA margin was 10.4%, down from 17.2%.

• SG&A expense rose 29% to $36 million (14.4% of revenue, up from 9.2%), driven by a 30% increase in employee count.

• Operating cash flow was negative $450 million, mainly due to increased real estate investment and lower payables.

• Book value per share increased to $31.84, up 13% year-over-year; real estate book value reached $2.7 billion, up 36%.

Outlook and guidance

• FY2025 guidance: 16,000–16,500 lot deliveries and $1.6–$1.65 billion in revenue, with higher deliveries expected in the second half.

• Revenue per lot expected to see low to mid single-digit increases, with quarterly fluctuations due to mix.

• SG&A expense expected to moderate, remaining in high single digits as a percentage of revenue for the year.

• Management targets a low net leverage ratio (≤40%) and continued disciplined capital investment.

• Planned $2.0 billion investment in land acquisition and development for FY2025.