Forestar Group Inc · NYSE:FOR
Forestar — Investor Presentation (November 2014)
33 slides from Forestar's investor presentation, Nov 19, 2014
Slide 1: Forestar Investor Presentation November 2014
Forestar Investor Presentation November 2014 Growing Forward Through Strategic and Disciplined Investments and Increasing Returns
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: Maximizing Long-Term Shareholder Value
Maximizing Long-Term Shareholder Value 3 Maximizing Long-Term Shareholder Value Through the Development of Best of Class Real Estate and Oil and Gas Businesses
Slide 4: Execution of Initiatives and Strategic Acquisitions Positions Forestar with Stronger Portfolio of Assets
Execution of Initiatives and Strategic Acquisitions Positions Forestar with Stronger Portfolio of Assets 4 Real Estate • Land - 120,000 acres, principally low basis land • Projects - 95 (10 states and 13 markets) • Significant Commercial Properties - 5 Oil and Gas • Fee and Leasehold Interests - 948
Slide 5: Triple in FOR Initiatives Focus on Accelerating Value Realization
Triple in FOR Initiatives Focus on Accelerating Value Realization Optimize Transparency & Disclosure Raise NAV Through Strategic and Disciplined Investments 5 Triple Residential Lot Sales Triple Oil and Gas Production 0 500 1,000 1,500 2,000 2,500 2008-2011 Average 2012 2013 Lo ts S o ld Triple in F
Slide 6: Growing FORward Through Disciplined Investments Focused on Increasing Returns
Growing FORward Through Disciplined Investments Focused on Increasing Returns 1) Real Estate Acquisition and Development 2) Oil and Gas Exploration and Development 3) Strategic Investments 6 Increasing Return on Assets Growing Real Estate Segment EBITDA ($ in millions) Growing Oil and Gas Segment EB
Slide 7: Improving Financial Strength and Liquidity While Executing Growth Strategy
Improving Financial Strength and Liquidity While Executing Growth Strategy Execution of Strategic Initiatives Positions Forestar with Strong Balance Sheet, Ample Liquidity and Assets Well Positioned to Generate Earnings and Cash Flow Going Forward 1 Fair value of convertible notes as of Q3 2014 is $
Slide 8: Real Estate
Real Estate Building Momentum By Accelerating Real Estate Sales and Building a Solid Multifamily Pipeline 8
Slide 9: Delivering The Greatest Value From Every Acre of Our Real Estate Pipeline
9 Delivering The Greatest Value From Every Acre of Our Real Estate Pipeline (Acres) 1 Activity – Uses Financials 2 2,000 763 residential acres - 2,349 lots 646 commercial acres $58K per lot $197K per acre (avg sales price) 10,000 Approved uses, ready for Development - 15,400 lots High Value Creation
Slide 10: Real Estate Assets Located in Stronger Residential Markets
Denver 6 - $34 Salt Lake City 1 - $- Los Angeles 2 - $22 Kansas City 1 - $3 Atlanta 29- $89 TEXAS 49 - $435 Nashville 4 - $24 Charlotte 2 - $19 Austin 14 - $160 Dallas/Ft. Worth 16 - $109 Gulf Coast 4 - $35 Houston 11 - $49 San Antonio 4 - $82 Note: MSA performance based on Employment, Gross Metropo
Slide 11: Capitalizing on Well Located Communities, Low Inventories and Solid Job Growth
* Actual results may vary A n n u al Lo t Sal e s 2006 Peak Sales = 3,600 lots Annual Lot Sales & Avg. Lot Margin 11 Real Estate Capitalizing on Well Located Communities, Low Inventories and Solid Job Growth $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 0 500 1,000 1,500 2,000 2,500 2008 2009 20
Slide 12: Texas Markets Driving Lot Sales and Margins
Texas Markets Driving Lot Sales and Margins FOR Well Positioned With Lot Inventory in Texas Markets 12 Active Residential Projects Q3 14 Lot Sales Vacant Dev. Lots Lots Under Dev. Remaining Lots to be Developed 42 285 1,046 895 9,216 Forestar Texas Lot Sales & Inventory – Q3 2014 • 2013 total lot gr
Slide 13: Cibolo Canyons - Accelerating Value Realization
Cibolo Canyons - Accelerating Value Realization 13 CCSID Annual Hotel Occupancy Tax & Sales Tax Collections Cibolo Canyons Special Improvement District (CCSID) Payments to Forestar ($ in millions) Investment Received Future 2014 – 2034 Infrastructure Reimbursement $66 $25 $41* HOT & Sales and Use Ta
Slide 14: Building Solid Pipeline of Multifamily Development Opportunities
Building Solid Pipeline of Multifamily Development Opportunities (Proforma) Proforma Project Cash Flows Expected Forestar Cash Flows Project Market % Complete Units FOR Ownership Total Development Cost Expected Project NOI FOR Cash Contribution FOR Cash Distribution* Cash Multiple** Eleven Austin 10
Slide 15: Forestar Real Estate Revenues
Note: Includes consolidated ventures Forestar Real Estate Revenues (Excluding Timberland, Mitigation & Multifamily Revenues) Capitalizing on Well Located Communities, Low Inventories and Forestar’s Ability to Deliver 15 • Driving residential lot and tract sales in good locations and healthy markets
Slide 16: Oil and Gas
Oil and Gas Building Momentum By Driving Leasing and Exploration to Increase Production and Reserves 16
Slide 17: Delivering the Greatest Value From Our Oil and Gas Resources
Recognizing and Responsibly Delivering the Greatest Value From Our Oil and Gas Resources 1. Acres as of Q3 2014. Includes approximately 590,000 owned net mineral acres and 358,000 net acres of leasehold mineral interests 17 V A L U E C R E A T I O N & R E A L I Z A T I O N Minerals Greatest Value Ac
Slide 18: Mineral Interests Located In Prolific Oil & Gas Basins
Williston (Bakken / Three Forks) Denver – Julesburg Basin Central Uplift Appalachian Basin Black Warrior Anadarko Basin Fort Worth Basin East Texas Basin Gulf Coast Basin Texas, Louisiana, Mississippi Salt Basin South Extension Appalachian Basin 18 Mineral Interests Located In Prolific Oil & Gas Bas
Slide 19: Drilling and Completion Investments Driving Production Growth and Improved EBITDAX
19 Drilling and Completion Investments Driving Production Growth and Improved EBITDAX 50,000 100,000 150,000 200,000 250,000 300,000 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 B O E Working Interest Legacy Minerals Quarterly Oil & Gas Production Quarterly Oil & Gas EBITDAX $0 $5
Slide 20: Production Growth Driven by Bakken / Three Forks
0 500 1,000 1,500 2,000 2,500 3,000 2011 2012 2013 Q3 2014 B o e / D a y North Dakota Kansas/Nebraska Texas/Louisiana/Other Production Growth Driven by Bakken / Three Forks 20 20 Average Daily Production Working Interests 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2011 2012 2013 Q3 2014 Boe / D
Slide 21: Core Bakken Locations Provide Significant Value Creation Potential
Core Bakken Locations Provide Significant Value Creation Potential 7,800 net mineral acres - Bakken / Three Forks *Major operators in Core Acreage Position 21 Bakken Operators* *Wells and acreage are approximate Bakken / Three Forks Percentile Ranked Production (60-90 Days) Bakken / Three Forks Leas
Slide 22: Bakken / Three Forks Drilling Activity and Value Realization
0% 10% 20% 30% 40% 50% $70 Strip $90 IR R WTI Oil Price 22 2 Bakken / Three Forks Drilling Activity Investment and Value Realization Note: Based on current plans from operators, subject to change 0 20 40 60 80 100 120 140 2010 2011 2012 2013 2014E P ro d u ci n g W e lls Bakken/Three Forks Producing
Slide 23: Kansas / Nebraska Working Interest Investment Return Sensitivity
Kansas / Nebraska Working Interest Investment Return Sensitivity 23 23 0 20 40 60 80 100 120 140 2012 2013 2014E P ro d u ci n g W e lls Kansas/Nebraska Producing Wells** **Represents gross wells; and assumes 40% drilling success rate in 2014 * Includes 1.5 dry hole costs @ $230,000 + 1.0 completed
Slide 24: Increased Cash Flow through Proved Reserve Growth in Bakken / Three Forks
Increased Cash Flow through Proved Reserve Growth in Bakken / Three Forks 24 Proved Reserves (MMBoe): Average Annual Growth of 54% Reserves Growth Production Replaced Net Reserves Increase % Oil2 Investment 2013 8.5 4.0 1.1 2.9 69% $99 2012 5.6 3.3 0.7 2.6 57% $1733 2011 3.0 1.0 0.4 0.6 36% $4 2010
Slide 25: Accelerating Value Realization and Growing Net Asset Value
Accelerating Value Realization and Growing Net Asset Value 25 0 200 400 600 800 1,000 $0 $5 $10 $15 $20 $25 $30 $35 $40 YTD 2011 YTD 2012 YTD 2013 YTD 2014 To tal P ro d u ctio n ( M b o e ) EB IT D A Forestar Oil and Gas EBITDA ($ in millions) Lease Bonus / Delay Rentals Royalties Working Interests
Slide 26: Strategic Initiatives Update
Strategic Initiatives Update Growing Forward Through Strategic and Disciplined Investments and Increasing Returns
Slide 27: Growing FORward Initiatives
Growing FORward Initiatives Growing Long-Term Shareholder Value Growing Through Strategic and Disciplined Investment Increasing Returns 27 • Development of Existing Locations • Acquisitions and Extensions 2016 Targets: • Total Segment EBITDA of $200 million • Return on Assets of 10.0% • Reposition $
Slide 28: Forestar
Forestar Investor Presentation 28
Slide 29: Financial Tools and Additional Disclosures Available on our Website
29 Financial Tools and Additional Disclosures Available on our Website • Historical Financials • Segment Disclosures • At-A-Glance • Corporate • Oil and Gas • Real Estate • Multifamily • Water • Videos • 101 Learning Tools www.ForestarGroup.com 2008-Q 2 2014 2008-Q 2 2014 Assets State Market Ownersh
Slide 30: Reconciliation of Non-GAAP Financial Measures: Segment EBITDA
30 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 Accounting Principles (GAAP). The company believes presenti
Slide 31: Oil and Gas Segment EBITDAX Reconciliation
31 Forestar’s Oil and Gas Segment EBITDAX 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 Accounting Principles (GAAP). The company beli
Slide 32: Reconciliation of Non-GAAP Financial Measures: Future Net Cash Flows
($ in 000’s) Actual YE 2013* Actual YE 2012* Actual YE 2011* Undiscounted future net cash flows before income taxes $316,550 $222,231 $133,729 Less: undiscounted future income taxes (78,977) (52,088) (41,835) Undiscounted future net cash flows after income taxes $237,573 $170,143 $91,894 Reconciliat
Slide 33: For questions, please contact
Forestar Investor Presentation For questions, please contact: Anna Torma SVP Corporate Affairs Forestar Group Inc. 6300 Bee Cave Road Building Two, Suite 500 Austin, TX 78746 512-433-5312 annatorma@forestargroup.com 33
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