8-K
Forestar Group Inc. (FOR)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 8-K
______________________________
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 23, 2020
______________________________
Forestar Group Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-33662 | 26-1336998 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
2221 E. Lamar Blvd., Suite 790, Arlington, Texas 76006
(Address of principal executive offices)
(817) 769-1860
(Registrant’s telephone number, including area code)
______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- | | Securities registered pursuant to Section 12(b) of the Act: | | | | --- | --- | --- | | Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | | Common Stock, par value $1.00 per share | FOR | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Condition.
On January 23, 2020, Forestar Group Inc. issued a press release announcing its results and related information for its first quarter ended December 31, 2019. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference in its entirety into this Item 2.02.
The information furnished in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibit |
|---|---|
| 99.1 | Press Release dated January 23, 2020 related to the Company’s results and related information for the first quarter ended December 31, 2019. |
| --- | --- |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Forestar Group Inc. | |||
|---|---|---|---|
| Date: | January 23, 2020 | By: | /S/ DANIEL C. BARTOK |
| Daniel C. Bartok | |||
| Chief Executive Officer |
Exhibit
Exhibit 99.1
FORESTAR REPORTS FISCAL 2020 FIRST QUARTER EARNINGS OF $0.35 PER DILUTED SHARE
ARLINGTON, Texas (Business Wire) - January 23, 2020
Forestar Group Inc. ("Forestar") (NYSE: FOR), a leading national residential lot developer, today reported financial results for its first quarter ended December 31, 2019. Net income attributable to Forestar for the first quarter of fiscal 2020 increased 412% to $16.9 million, or $0.35 per diluted share, compared to $3.3 million, or $0.08 per diluted share in the same quarter of fiscal 2019. Revenues for the first quarter of fiscal 2020 increased 542% to $247.2 million from $38.5 million in the same quarter of fiscal 2019. Residential lots sold in the quarter increased 368% to 2,422 lots compared to 518 lots in the same quarter of fiscal 2019.
The Company's lot position at December 31, 2019 consisted of 44,500 lots, of which 32,200 were owned and 12,300 were controlled through purchase contracts. Of the Company's owned lot position, 25,600 lots, or 80%, were under contract to sell or subject to a right of first offer to D.R. Horton, Inc. ("D.R. Horton") at December 31, 2019.
The Company ended the first quarter with $373.3 million of unrestricted cash, $351.3 million of available borrowing capacity on its unsecured revolving credit facility and a net debt to total capital ratio of 9.7%. Net debt to total capital consists of debt net of unrestricted cash divided by stockholders’ equity plus debt net of unrestricted cash.
Donald J. Tomnitz, Chairman of the Board, said, “Forestar is a highly differentiated, national residential lot manufacturer operating in over 50 markets across the United States. Our team delivered a solid first quarter and made significant progress toward executing on our plans for fiscal 2020. Our strategic relationship with D.R. Horton, the nation’s largest homebuilder, continues to support the rapid expansion of our operating platform and de-risks our significant growth expectations. Forestar's returns-focused business model is centered on our high turnover, lower risk lot manufacturing strategy, and we are well-positioned to consolidate market share in the under-served lot development market that lacks well-capitalized and national participants. We are excited about the opportunities ahead and continue to expect to deliver 10,000 lots during fiscal 2020 and 12,000 lots in fiscal 2021."
Conference Call and Webcast Details
The Company will host a conference call today (Thursday, January 23) at 5:00 p.m. Eastern Time. The dial-in number is 877-407-9205, and the call will also be webcast from the Company’s website at investor.forestar.com.
About Forestar Group Inc.
Forestar Group Inc. is a residential lot development company with operations in 51 markets and 20 states at December 31, 2019 and is a majority-owned subsidiary of D.R. Horton, the largest homebuilder by volume in the United States since 2002.
Forward-Looking Statements
Portions of this document may constitute “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Although Forestar believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. All forward-looking statements are based upon information available to Forestar on the date this release was issued. Forestar does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements in this release include that our strategic relationship with D.R. Horton, the nation’s largest homebuilder, continues to support the rapid expansion of our operating platform and de-risks our significant growth expectations and that Forestar's returns-focused business model is centered on our high turnover, lower risk lot manufacturing strategy, and we are well-positioned to consolidate market share in the under-served lot development market that lacks well-capitalized and national participants. Forward-looking statements also include that we are excited about the opportunities ahead and continue to expect to deliver 10,000 lots during fiscal 2020 and 12,000 lots in fiscal 2021.
Factors that may cause the actual results to be materially different from the future results expressed by the forward-looking statements include, but are not limited to: the effect of D.R. Horton's controlling level of ownership on us and the holders of our securities; our ability to realize the potential benefits of the strategic relationship with D.R. Horton; the effect of our strategic relationship with D.R. Horton on our ability to maintain relationships with our vendors and customers; demand for new housing, which can be affected by a number of factors including the availability of mortgage credit, job growth and fluctuations in interest rates; competitive actions by other companies; accuracy of estimates and other assumptions related to investment in and development of real estate, the expected timing and pricing of land and lot sales and related cost of real estate sales; our ability to comply with our debt covenants, restrictions and limitations; our ability to hire and retain key personnel; changes in governmental policies, laws or regulations and actions or restrictions of regulatory agencies; general economic, market or business conditions where our real estate activities are concentrated; our ability to achieve our strategic initiatives; our ability to obtain future entitlement and development approvals; our ability to obtain or the availability of surety bonds to secure our performance related to construction and development activities and the pricing of bonds; obtaining reimbursements and other payments from governmental districts and other agencies and timing of such payments; the levels of resale housing inventory in our projects and the regions in which they are located; fluctuations in costs and expenses, including impacts from shortages in materials or labor; the opportunities (or lack thereof) that may be presented to us and that we may pursue; the strength of our information technology systems and the risk of cybersecurity breaches; and the conditions of the capital markets and our ability to raise capital to fund expected growth. Additional information about issues that could lead to material changes in performance is contained in Forestar's annual report on Form 10-K, which is filed with the Securities and Exchange Commission.
Contact
Investor Relations:
Jessica Hansen, 817-390-8195
InvestorRelations@forestar.com
FORESTAR GROUP INC.
Consolidated Balance Sheets
(Unaudited)
| December 31, <br>2019 | September 30, <br>2019 | |||
|---|---|---|---|---|
| (In millions, except share data) | ||||
| ASSETS | ||||
| Cash and cash equivalents | $ | 373.3 | $ | 382.8 |
| Real estate | 1,066.8 | 1,028.9 | ||
| Investment in unconsolidated ventures | 5.9 | 7.3 | ||
| Income taxes receivable | 3.8 | 3.2 | ||
| Property and equipment, net | 0.9 | 2.4 | ||
| Deferred tax asset, net | 11.8 | 17.4 | ||
| Other assets | 17.4 | 13.7 | ||
| Total assets | $ | 1,479.9 | $ | 1,455.7 |
| LIABILITIES | ||||
| Accounts payable | $ | 19.8 | $ | 16.8 |
| Earnest money deposits on sales contracts | 89.7 | 89.9 | ||
| Accrued expenses and other liabilities | 82.7 | 79.6 | ||
| Debt | 462.1 | 460.5 | ||
| Total liabilities | 654.3 | 646.8 | ||
| EQUITY | ||||
| Common stock, par value $1.00 per share, 200,000,000 authorized shares, 48,025,359 and<br><br>47,997,366 shares issued and outstanding at December 31, 2019 and September 30, 2019, respectively | 48.0 | 48.0 | ||
| Additional paid-in capital | 602.5 | 602.2 | ||
| Retained earnings | 175.0 | 158.1 | ||
| Stockholders' equity | 825.5 | 808.3 | ||
| Noncontrolling interests | 0.1 | 0.6 | ||
| Total equity | 825.6 | 808.9 | ||
| Total liabilities and equity | $ | 1,479.9 | $ | 1,455.7 |
FORESTAR GROUP INC.
Consolidated Statements of Operations
(Unaudited)
| Three Months Ended <br>December 31, | ||||||
|---|---|---|---|---|---|---|
| 2019 | 2018 | |||||
| (In millions, except per share amounts) | ||||||
| Revenues | $ | 247.2 | $ | 38.5 | ||
| Cost of sales | 216.6 | 30.7 | ||||
| Selling, general and administrative expense | 10.5 | 5.7 | ||||
| Equity in earnings of unconsolidated ventures | (0.5 | ) | (0.6 | ) | ||
| Loss (gain) on sale of assets | 0.1 | (0.9 | ) | |||
| Interest and other income | (1.7 | ) | (1.3 | ) | ||
| Income before income taxes | 22.2 | 4.9 | ||||
| Income tax expense | 5.4 | 1.0 | ||||
| Net income | 16.8 | 3.9 | ||||
| Net income (loss) attributable to noncontrolling interests | (0.1 | ) | 0.6 | |||
| Net income attributable to Forestar Group Inc. | $ | 16.9 | $ | 3.3 | ||
| Basic net income per common share attributable to Forestar Group Inc. | $ | 0.35 | $ | 0.08 | ||
| Weighted average number of common shares | 48.0 | 42.0 | ||||
| Diluted net income per common share attributable to Forestar Group Inc. | $ | 0.35 | $ | 0.08 | ||
| Adjusted weighted average number of common shares | 48.1 | 42.0 |
FORESTAR GROUP INC.
Revenues, Residential Lots Sold and Lot Position
(Unaudited)
| REVENUES | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, | ||||||
| 2019 | 2018 | |||||
| (In millions) | ||||||
| Residential lot sales: | ||||||
| Development projects | $ | 117.7 | $ | 36.1 | ||
| Lot banking projects | 100.9 | 2.2 | ||||
| Change in contract liabilities | (1.5 | ) | (3.6 | ) | ||
| 217.1 | 34.7 | |||||
| Residential tract sales | 30.0 | — | ||||
| Commercial tract sales | — | 3.5 | ||||
| Other | 0.1 | 0.3 | ||||
| $ | 247.2 | $ | 38.5 | |||
| RESIDENTIAL LOTS SOLD | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended December 31, | ||||||
| 2019 | 2018 | |||||
| Development projects | 1,406 | 462 | ||||
| Lot banking projects | 1,016 | 56 | ||||
| 2,422 | 518 | |||||
| Average sales price per lot ^(1)^ | $ | 90,300 | $ | 74,000 | ||
| LOT POSITION | ||||||
| December 31, <br>2019 | September 30, <br>2019 | |||||
| Lots owned | 32,200 | ^(2)^ | 29,700 | ^(3)^ | ||
| Lots controlled under land and lot purchase contracts | 12,300 | 8,600 | ||||
| Total lots owned and controlled | 44,500 | 38,300 |
_____________
| (1) | Excludes any impact from change in contract liabilities. |
|---|---|
| (2) | Lots owned at December 31, 2019 include approximately 12,700 under contract to sell to D.R. Horton and 12,900 of which D.R. Horton has a right of first offer to purchase. |
| --- | --- |
| (3) | Lots owned at September 30, 2019 include approximately 12,800 under contract to sell to D.R. Horton and 10,600 of which D.R. Horton has a right of first offer to purchase. |
| --- | --- |