Forestar Group (FOR) Q2 2025 earnings summary

Executive summary

• Q2 FY 2025 net income was $31.6 million ($0.62 per diluted share), down 30% year-over-year, on $351 million revenue, with 3,411 lots sold, up 4% year-over-year.

• Lots under contract to sell rose 41% year-over-year to 25,400, representing $2.3 billion in future revenue and the highest contracted backlog in four years.

• Book value per share increased 11% year-over-year to $32.36; return on equity was 10.7% for the trailing twelve months.

• Forestar operates in 65 markets across 24 states, with a strategic relationship with D.R. Horton, which owns 62%.

• Expanded into 10 new markets and increased community count by 21% over the past year.

Financial highlights

• Revenue increased 5% year-over-year to $351 million; net income declined from $45 million to $31.6 million.

• Gross profit margin was 22.6% (vs. 24.9% prior year); adjusted EBITDA for Q2 was $49.8 million, with a margin of 14.2%.

• Pre-tax income was $40.7 million (down from $58.9 million); pre-tax profit margin at 11.6% (vs. 17.6%).

• SG&A expense rose 32% to $38.4 million, mainly due to a 29% increase in headcount supporting expansion; SG&A as a percentage of revenue rose to 10.9%.

• Cash and cash equivalents at quarter-end were $174.3 million, with $617.7 million available on the revolving credit facility.

Outlook and guidance

• FY2025 guidance updated: expected lot deliveries lowered to 15,000–15,500 and revenue to $1.5–$1.55 billion.

• Management expects continued headwinds from affordability constraints and cautious buyers, with a slower spring selling season impacting lot deliveries.

• Margin environment expected to remain stable; no significant margin changes anticipated.

• Targeting $1.9 billion investment in land acquisition and development for fiscal 2025.

• Intermediate-term goal to capture 5% market share in the U.S. single-family residential lot development industry.