Forestar Group Inc. — Fiscal 2026 Earnings Summary

Financial Performance:

• Consolidated revenues for the fourth quarter of fiscal 2026 decreased 13% to $580.8 million from $670.5 million in the same quarter of fiscal 2025.
• Net income attributable to Forestar for the fourth quarter decreased 32% to $59.2 million ($1.15 per diluted share) from $87.0 million ($1.70 per diluted share) in the prior year quarter.
• Pre-tax income for the fourth quarter decreased 31% to $78.6 million from $113.1 million in the prior year quarter, with a pre-tax profit margin of 13.5%.
• Consolidated revenues for fiscal 2026 decreased 2% to $1.6 billion ($1,635.1 million) from $1.7 billion ($1,662.4 million) in fiscal 2025.
• Net income attributable to Forestar for fiscal 2026 decreased 15% to $142.6 million ($2.78 per diluted share) from $167.9 million ($3.29 per diluted share) in fiscal 2025.
• Pre-tax income for fiscal 2026 decreased 12% to $192.1 million from $219.3 million in fiscal 2025, with a pre-tax profit margin of 11.7%.
• Return on equity for fiscal 2026 was 7.8%.
• Book value per share increased 8% year-over-year to $37.56.
• Total debt at September 30, 2026, was $794.2 million, down from $802.7 million at September 30, 2025.
• Net debt to total capital ratio was 6.7% at September 30, 2026.
• Real estate assets totaled $2.5 billion ($2,530.8 million) at September 30, 2026, compared to $2.6 billion ($2,645.1 million) in the prior year.
• Unrestricted cash was $657.0 million at September 30, 2026, compared to $379.2 million in the prior year.
• Total liquidity was $1.3 billion at September 30, 2026, consisting of unrestricted cash and available borrowing capacity on the senior unsecured revolving credit facility.

Guidance and Future Outlook:

• For fiscal 2027, Forestar expects to deliver between 12,000 and 13,000 lots.
• Forestar projects fiscal 2027 revenue to be between $1.4 billion and $1.5 billion.
• Management indicated new home demand is impacted by ongoing affordability constraints, cautious consumer sentiment, and rising mortgage rates.
• The company plans to balance the pace and price of lot sales with the timing of investments to meet demand and maximize returns.

Business Segments and Product Lines:

• Lots sold during the fourth quarter of fiscal 2026 increased 2% to 5,004 lots compared to 4,891 lots in the same quarter of fiscal 2025.
• Lots sold during fiscal 2026 decreased 5% to 13,545 lots compared to 14,240 lots in fiscal 2025.
• Average sales price per lot for the fourth quarter of fiscal 2026 was $108,300, down from $115,700 in the prior year quarter.
• Average sales price per lot for fiscal 2026 was $111,200, up from $108,400 in fiscal 2025.
• Lots sold to customers other than D.R. Horton in the fourth quarter were 822, compared to 828 in the prior year quarter.
• Lots sold to customers other than D.R. Horton for fiscal 2026 were 1,916, compared to 2,489 in fiscal 2025.
• The lot position at September 30, 2026, was 84,400 lots, comprising 58,200 owned lots and 26,200 controlled lots.
• Of the owned lot position, 8,100 lots were fully developed.
• 21,500 owned lots (37% of owned lots) were under contract to be sold, representing approximately $2.2 billion of future revenue.
• 18,600 owned lots (32% of owned lots) were subject to a right of first offer to D.R. Horton.
• Revenue from development projects in the fourth quarter was $540.2 million, and for fiscal 2026 was $1,496.7 million.
• Revenue from lot banking projects in the fourth quarter was $2.0 million, and for fiscal 2026 was $10.0 million.
• Revenue from tract sales and other in the fourth quarter was $38.7 million, and for fiscal 2026 was $129.1 million.

Market and Competitive Landscape:

• Forestar is a majority-owned subsidiary of D.R. Horton, the largest homebuilder by volume in the United States since 2002.
• The company operates in 65 markets across 24 states.
• Over the last five years, Forestar invested more than $7.0 billion in land acquisition and development and delivered approximately 75,000 finished lots.
• Over the same five-year period, book value per share increased 83%.
• Management stated the company is positioned to capture market share through its strategic relationship with D.R. Horton and its broad platform.

Risks and Challenges:

• Financial results included a pre-tax gain on sale of assets of $10.0 million and real estate impairment charges of $7.6 million in fiscal 2026, compared to a gain of $4.5 million and no impairment charges in fiscal 2025.
• Risks include the cyclical nature of the homebuilding industry, inflation, higher interest rates, supply shortages, and regulatory changes.
• Dependence on relationships with homebuilders, particularly D.R. Horton, presents a risk to maintaining customer relationships.
• Potential impacts from public health issues, weather conditions, natural disasters, and cybersecurity incidents are noted.

Management Commentary and Tone:

• Donald J. Tomnitz, Chairman of the Board, described the fiscal 2026 results as "solid," citing the delivery of 13,545 lots and over $1.6 billion in revenue.
• Management highlighted the team's discipline in managing the pace of investments and strengthening the balance sheet to end the year with $1.3 billion of liquidity.
• Tomnitz emphasized that the company's strong balance sheet, experienced teams, and strategic relationship with D.R. Horton provide significant financial and operational flexibility.
• The tone reflected a focus on disciplined capital allocation while positioning the company for long-term shareholder value.

Other Key Points:

• No senior note maturities are due until fiscal 2028.
• The company has 51,017,627 shares issued and outstanding as of September 30, 2026.
• The next financial results release is scheduled for January 19, 2027, for the first quarter ended December 31, 2026.
• A conference call was held on October 29, 2026, at 11:00 a.m. Eastern Time.