Slide 1: Second Quarter 2015 Financial Results
Second Quarter 2015 Financial Results August 5, 2015
Slide 2: Notice to Investors
Notice to Investors This presentation contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are typically identified by words or phrases such as “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,”
Slide 3: Focused On Increasing Net Asset Value By Growing Core Real Estate Business
Focused On Increasing Net Asset Value By Growing Core Real Estate Business and Executing Strategic Initiatives 3 • Strategic and Disciplined Investment in Residential and Mixed-Use Communities • Developing Portfolio of Core Multifamily Properties That Generate Recurring Cash Flow • Harvesting Cash F
Slide 4: Second Quarter 2015 Financial Results Impacted By Non-Cash Charges
Second Quarter 2015 Financial Results Impacted By Non- Cash Charges Related To Non-Core Oil and Gas Assets 4 ($ in Millions, except per share data) Q2 2015 Q2 2014 Net Income (Loss) - As Reported ($34.5) $14.8 Earnings (Loss) Per Share - As Reported ($1.01) $0.34 Special Items After-Tax: Proved Prop
Slide 5: Oil and Gas Segment Results Adversely Impacted By Non-Cash Charges
Oil and Gas Segment Results Adversely Impacted By Non- Cash Charges Related to Non-Core Assets 5 ($ in Millions, except per share data) Q2 2015 As Reported Q2 2015 Excluding Special Items* Q2 2014 As Reported Segment Earnings (Loss) Real Estate $15.5 $15.5 $27.3 Oil and Gas (56.9) (0.4) 9.5 Other Na
Slide 6: Real Estate
Real Estate Second Quarter 2015 Midtown — Cedar Hill; Texas
Slide 7: Real Estate Segment Results Reflect Stable Market Demand
Excluding Second Quarter 2014 Non-Cash Gains – Real Estate Segment Results Reflect Stable Market Demand ($3.2) ($2.9) $27.3 $3.6 $1.4 ($9.3) ($0.8) ($0.6) $15.5 $0 $10 $20 $30 $40 Q2 2014 Lot Sales Multifamily and Income Producing Properties Gains* Mitigation Sales and Interest Income Undeveloped La
Slide 8: Stable Market Demand in Texas Supported By Low Inventories and Favorable Job Growth
Stable Market Demand in Texas Supported By Low Inventories and Favorable Job Growth 8 Texas New Home Inventory Below Equilibrium 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 0 5,000 10,000 15,000 20,000 25,000 30,000 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 Housing Inven
Slide 9: Lot Sales Activity Supported By Stable Market Demand and Low Housing Inventories
9Note: Includes Ventures Lots Under Option Contracts Highest Since Q1 2014 0 500 1,000 1,500 2,000 Q 11 2 Q 21 2 Q 31 2 Q 41 2 Q 11 3 Q 21 3 Q 31 3 Q 41 3 Q 11 4 Q 21 4 Q 31 4 Q 41 4 Q 11 5 Q 21 5 Re sid en tia l L ot s Developed Lots Lots Under Development 2015 total lot sales expected to be in the
Slide 10: Multifamily Markets Remain Undersupplied Following Housing Downturn
Multifamily Markets Remain Undersupplied Following Housing Downturn, Driving Demand In Our Target Markets 10 0 300 600 900 1,200 1,500 1,800 Jun 1959 Jun 1966 Jun 1973 Jun 1980 Jun 1987 Jun 1994 Jun 2001 Jun 2008 Jun 2015 Single-Family Starts Multifamily Starts U.S. Housing Starts Recessions Multifa
Slide 11: Growing Net Asset Value By Developing Solid Portfolio of Class A Multifamily Projects
Growing Net Asset Value By Developing Solid Portfolio of Well Located Class A Multifamily Projects Multifamily Development Projects – Q2 2015 ($ in millions) Project Market FOR Ownership Units % Complete Projected Total Development Cost* Projected Total FOR Contribution* Co m pl et ed Eleven Austin
Slide 12: Music Row – Nashville, Tennessee
Investing In Solid Multifamily Development Opportunities Expected To Generate Recurring Cash Flows 12 Music Row – Nashville, Tennessee • 230-unit Class A luxury multifamily project with extensive amenities • Construction commenced Q2 2015 • Expected completion date Q3 2017 • Expected cost = $47 - 48
Slide 13: Music Row Project Located in Strong Nashville Submarket
Music Row Project Located in Strong Nashville Submarket With Strong Employment, Occupancy and Rent Growth 13 Nashville Growth Above U.S. Average June 2015 Nashville U.S. Avg. Job Growth 3.6% 2.1% Occupancy 96.3% 95.2% Rent Growth 5.1% 5.0%
Slide 14: Dillon – Charlotte, North Carolina
Investing In Solid Multifamily Development Opportunities Expected To Generate Recurring Cash Flows 14 Dillon – Charlotte, North Carolina • 379-unit Class A luxury multifamily project with extensive amenities and 12,000 sq. ft. ground floor retail • Expected cost = $81 - 83 million • 60 - 65% project
Slide 15: Dillon Project Located in Strong Charlotte Submarket
15 Charlotte Job Growth Well Above U.S. Avg. June 2015 Charlotte U.S. Avg. Job Growth 3.3% 2.1% Occupancy 95% 95% Rent Growth 5.3% 5.0% Dillon Project Located in Strong Charlotte Submarket With Strong Employment, Occupancy and Rent Growth
Slide 16: Focused On Increasing Net Asset Value By Growing Core Real Estate Business
Focused On Increasing Net Asset Value By Growing Core Real Estate Business Growing Net Asset Value Capitalizing on housing markets • Increasing lot margins • ~1,400 residential lots under option contracts Investing in multifamily opportunities • Started construction on two new projects with > 600 un
Slide 17: East Texas
East Texas
Slide 18: Harvesting Value From Timberland
Harvesting Value From Timberland Segment Earnings (Loss) Reconciliation Q2 2014 vs. Q2 2015 ($ in millions) $2.1 ($1.0) ($0.7) ($0.6) $0.2 ($0.0) $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 Q2 2014 Operating Costs Fiber Earnings Gain on Timber Lease Termination Water Earnings Q2 2015 Se gm en t E ar ni ng s (L os
Slide 19: Bakken / Three Forks - North Dakota
Bakken / Three Forks - North Dakota
Slide 20: Well Results, Lower Oil Price Forecasts Drive Non-Cash Charges
Well Results, Lower Oil Price Forecasts and Execution of Strategic Initiatives Drive Non-Cash Charges Related To Non-Core Oil and Gas Assets $9.5 ($51.0) $1.2 ($2.2) ($1.9) ($11.1) ($56.9) ($70) ($50) ($30) ($10) $10 $30 Q2 2014 Working Interest Volume Operating Expenses Impairment and Exploratroy D
Slide 21: Harvesting Cash Flow From Oil and Gas Business
Harvesting Cash Flow From Oil and Gas Business By Significantly Lowering Capital Investments and Operating Costs Execution of Strategic Initiatives: 21 Note: Actual results may vary * Excludes $0.5 million in restructuring costs ** 2015 estimate based on current expected operator plans, and excludes
Slide 22: Strategic Initiatives Update
Strategic Initiatives Update 22
Slide 23: Strategic Initiatives YTD 2015 Results
Initiatives YTD 2015 Results Strategic and Disciplined Investments • Acquired five community development sites for $24 million = >640 future residential lots Generating Recurring Cash Flow • Started construction of two new multifamily projects in Nashville and Charlotte = >600 units Harvesting Cash
Slide 24: Forestar Investor Conference in Nashville - November 18-19
Forestar Investor Conference in Nashville - November 18-19 24 CONFERENCE AGENDA November 18 • Dinner – Market Outlook Presentation • Accommodations Available at Omni Hotel November 19 • Presentations by Forestar Senior Management • Tour of Multifamily and Master-Planned Communities Please RSVP with
Slide 25: For questions, please contact
For questions, please contact: Anna Torma SVP Corporate Affairs Forestar Group Inc 6300 Bee Cave Road Building Two, Suite SOO Austin, TX 78746 512-433-5312 annatorma@forestargroup.com FORESTAR
Slide 26: Second Quarter 2015 Appendix
Second Quarter 2015 - Segment KPI's - Earnings Reconciliations - Reconciliation of Non-GAAP Financial Measures FORESTAR
Slide 27: Real Estate Segment KPI's
Real Estate Segment KPI’s Q2 2015 Q2 2014 YTD Q2 2015 YTD Q2 2014 Residential Lot Sales Lots Sold 519 537 808 1,511 Average Price / Lot* $73,400 $64,100 $74,400 $50,200 Gross Profit / Lot* $34,400 $27,400 $35,500 $20,200 Commercial Tract Sales Acres Sold 21 3 54 3 Average Price / Acre $82,700 $96,80
Slide 28: Other Natural Resources Segment KPI's
Other Natural Resources Segment KPI’s Q2 2015 Q1 2014 YTD Q2 2015 YTD Q2 2014 Fiber Sales Pulpwood Tons Sold 36,000 58,200 63,500 86,400 Average Pulpwood Price / Ton $9.39 $11.42 $9.06 $10.85 Sawtimber Tons Sold 19,300 49,600 39,400 78,500 Average Sawtimber Price / Ton $21.54 $23.23 $21.52 $22.67 To
Slide 29: Oil and Gas Segment KPI's
Oil and Gas Segment KPI’s Q2 2015 ** Q2 2014 YTD Q2 2015 ** YTD Q2 2014 Fee Leasing Activity Net Fee Acres Leased 800 1,380 1,623 3,121 Average Bonus / Acre $254 $352 $297 $347 Total Oil and Gas Interests * Oil Produced (Barrels) 262,000 225,300 531,900 382,300 Average Price / Barrel $53.37 $95.38 $
Slide 30: Second Quarter 2015 Real Estate Pipeline
Second Quarter 2015 Real Estate Pipeline 30 Real Estate Undeveloped In Entitlement Entitled Developed & Under Development Total Acres Undeveloped Land Owned 71,044 75,402 Ventures 4,358 Residential Owned 21,762 7,160 626 30,569 Ventures 900 121 Commercial Owned 2,668 1,073 529 4,583 Ventures 210 103
Slide 31: Second Quarter 2015 Earnings Reconciliation
Second Quarter 2015 Earnings Reconciliation $14.8 ($34.5) $0.6$2.1 $0.3 ($43.2) ($7.7) ($1.4) ($40.0) ($20.0) $0.0 $20.0 Q2 2014 Share Based Comp Interest, Taxes & Other Expenses G&A Oil & Gas Real Estate Other Natural Resources Q2 2015 N et In co m e (L os s) Earnings Reconciliation Q2 2014 vs. Q2
Slide 32: Reconciliation of Non-GAAP Financial Measures (Unaudited)
Reconciliation of Non-GAAP Financial Measures (Unaudited) Forestar’s Segment EBITDA is a non-GAAP financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, U.S. Generally Accepted Acco
Slide 33: Reconciliation of Non-GAAP Financial Measures (Unaudited)
Reconciliation of Non-GAAP Financial Measures (Unaudited) 33 In our second quarter and first six month 2015 earnings release and conference call presentation materials furnished to the Securities and Exchange Commission on Form 8-K on August 5, 2015, we used certain non-GAAP financial measures. The
Slide 34: Reconciliation of Non-GAAP Financial Measures (Unaudited)
Reconciliation of Non-GAAP Financial Measures (Unaudited) 34 In our second quarter and first six month 2015 earnings release and conference call presentation materials furnished to the Securities and Exchange Commission on Form 8-K on August 5, 2015, we used certain non-GAAP financial measures. The
Slide 35: For questions, please contact
For questions, please contact: Anna Torma SVP Corporate Affairs Forestar Group Inc 6300 Bee Cave Road Building Two, Suite SOO Austin, TX 78746 512-433-5312 annatorma@forestargroup.com FORESTAR