Slide 1: Investor Presentation Q1 2025
Investor Presentation Q1 2025
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 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
Slide 3: Forestar Overview
FORESTAR OVERVIEW RETURNS Track record of solid operational results FOCUSED Forestar Group Inc. (“Forestar” or “FOR”) is a highly differentiated, pure-play, PRUDENT Fully-entitled projects with short durations residential lot developer for the affordably- priced single-family home market Investing c
Slide 4: Q1 FY 2025 Highlights
Q1 FY 2025 HIGHLIGHTS • Earnings per diluted share of $0.32 on net income of $16.5 million • Pre-tax income of $21.9 million • Revenues of $250 million on 2,333 lots sold • Invested $684 million in land acquisition and development • Real estate book value increased 36% from a year ago to $2.7 billio
Slide 5: Returns Focused Execution
RETURNS FOCUSED EXECUTION Forestar is driving shareholder value creation through the execution of its clear, strategic plan and a disciplined, returns- focused approach to capital allocation Talented Team + Solid Profitability + Strong Customer Relationship = Industry Leading Residential Lot Develop
Slide 6: Solid Performance While Positioning for Future Growth
SOLID PERFORMANCE WHILE POSITIONING FOR FUTURE GROWTH Forestar expects to grow its lot deliveries ~6% to 10% in fiscal 2025, generating between $1.6 billion and $1.65 billion of revenue Lot Deliveries Revenue $1.6$1.6 - $1.65 16,000 - 16,500 16,250 15,068 $1.5 14,040 $1.4 FY 2023 FY 2024 FY 2025E FY
Slide 7: Delivering Profitable Growth
DELIVERING PROFITABLE GROWTH Forestar is creating long-term value for shareholders by generating strong profitability and returns Pre-Tax Income and Margin Net Income and ROE Pre-Tax Income Pre-Tax Profit Margin Net Income ROE 17.9% 16.2% 15.5% 15.4% 13.8% 13.2% $270.1 11.7% 11.1% $235.8 $203.4 8.4%
Slide 8: Constrained Lot Supply
CONSTRAINED LOT SUPPLY • Availability of lots is improving from historic lows; however, calendar 3Q 2024 data still reflects a significantly undersupplied market nationally • New home construction has been constrained by the availability of lots, labor and materials shortages, increased regulation a
Slide 9: Uniquely Positioned to Provide Finished Lots
UNIQUELY POSITIONED TO PROVIDE FINISHED LOTS Builders' preference for ‘land lighter’ models enhances opportunity, and in times of economic uncertainty, many homebuilders shift their land strategies to slow raw land purchases and focus on purchasing finished lots Optioned Land/Lot Position as a Numbe
Slide 10: Project-Level Land Development Financing Snapshot
PROJECT-LEVEL LAND DEVELOPMENT FINANCING SNAPSHOT According to the NAHB’s Survey on Acquisition, Development & Construction Financing, land development loan availability continues to be expensive and hard to secure Effective Interest Rate of Financing NAHB AD&C Financing Survey Index Land Developmen
Slide 11: Intermediate Term Growth Goals
INTERMEDIATE TERM GROWTH GOALS Forestar has a visible path to capturing 5% market share within the highly-fragmented U.S. single-family residential lot development industry* Organic Inorganic Maximize Annual Lot Deliveries Growth Growth Returns • Gain market share within • Expand into new markets •
Slide 12: Manufacturing Approach to Land Development
MANUFACTURING APPROACH TO LAND DEVELOPMENT Forestar has built a unique lot manufacturing model that enables it to be a dependable supplier of lots to homebuilders, while producing strong risk-adjusted returns Short duration, fully- Large scale with Returns-focused, with strict Predictable operating
Slide 13: Unique Approach to Lot Development — DuPont Analysis
UNIQUE APPROACH TO LOT DEVELOPMENT — DUPONT ANALYSIS Forestar’s lot manufacturing strategy has positioned the Company closer to a building products manufacturer than a traditional land developer Return on Equity(1) Pre-Tax Profit Margin(2) 60.8% 12.1% 12.0% 11.6% 9.8% 7.6% 3.4% 23.4% 16.6% 8.4% 7.7%
Slide 14: Diversified National Footprint
DIVERSIFIED NATIONAL FOOTPRINT 62 MARKETS | 24 STATES Portfolio of 106,000 lots as of December 31, 2024 / FOR markets / states DHI states where FOR does not currently operate Of total lot position at 12/31/24, 68,300 are owned and 37,700 are controlled through purchase contracts 14
Slide 15: Highly Strategic Alignment with DHI
HIGHLY STRATEGIC ALIGNMENT WITH DHI BENEFITS TO FOR BENEFITS TO DHI • Supports Forestar’s national platform • Long-term consistent supplier of finished lots SYMBIOTIC across DHI’s national footprint (126 markets in • Significant built-in demand for lots RELATIONSHIP 36 states) • Improved access to c
Slide 16: Master Supply Agreement
MASTER SUPPLY AGREEMENT The Master Supply Agreement formalizes the business relationship with DHI as both companies identify real estate opportunities and protects FOR's interests via the Right of First Offer process A Right of First Offer (ROFO) is very 1 Lots Sourced by DHI different than a Right
Slide 17: DHI Track Record Provides Roadmap to FOR
DHI TRACK RECORD PROVIDES ROADMAP TO FOR DHI’s 30-year public track record provides a blueprint to FOR to achieve its own growth, consolidation and market share gains Total New U.S. Single-Family Houses Sold ('000s) DHI’s Homes Closed as a Percentage of New U.S. Single-Family Houses Sold Represents
Slide 18: FOR Is an Essential Lot Supplier to DHI
FOR IS AN ESSENTIAL LOT SUPPLIER TO DHI FOR maintains solid market share within DHI and has a goal to supply approximately one third of DHI's annual lot needs DHI Homes Started FOR Lots Sold to DHI as a % of Homes Started 100,000 30% 90,000 80,000 25% 70,000 60,000 19% 50,000 20% 40,000 16% 16% 16%
Slide 19: Land and Development Investments
LAND AND DEVELOPMENT INVESTMENTS • Accelerating investing in new projects while maintaining a disciplined and conservative approach to underwriting • Continuing to focus on phased development to deliver finished lots at a pace that matches market demand, consistent with its focus on capital efficien
Slide 20: Lot Position
LOT POSITION • Owned and controlled lot position is increasing to support future growth; targeting a 3- to 4-year owned inventory of lots • Consistent with Forestar's focus on capital efficiency, its land and lot supply that is controlled via purchase contracts remains robust • Balance sheet and liq
Slide 21: Solid Balance Sheet and Liquidity Position
SOLID BALANCE SHEET AND LIQUIDITY POSITION • Forestar is well-positioned with net leverage(1) of 2.7x, net debt to capital(2) of 29.5% and a strong liquidity position of $645 million at 12/31/24 • Corporate credit rating recently upgraded by S&P to BB- • Balanced financing plan includes both debt an
Slide 22: Committed Leadership with Decades of Experience
COMMITTED LEADERSHIP WITH DECADES OF EXPERIENCE Management team includes land development veterans experienced in consolidating market share and navigating through industry and economic cycles DON TOMNITZ ANDY OXLEY Executive Chairman CEO Formerly President & CEO of DHI for over Joined FOR in Januar
Slide 23: Appendix
APPENDIX bey FORESTAR
Slide 24: Forestar Supplies the First Input to Building a Home
FORESTAR SUPPLIES THE FIRST INPUT TO BUILDING A HOME Key Components to Building a Home: • Finished Lot (~20-30% of ASP) • Concrete • Lumber • Roofing materials • Siding / Brick • Windows • Insulation • HVAC / Plumbing / Electrical • Cabinets / Flooring / Paint • Appliances Note: ASP refers to the av
Slide 25: Business Overview
BUSINESS OVERVIEW Forestar Capital Deployment and Cash Generation Source land Place land under Close acquisition Lot development Deliver finished acquisition contract and complete of entitled land (~70% finished lot cost) lots to builders opportunities due diligence (~30% finished lot cost) • Phased
Slide 26: Income Statement
INCOME STATEMENT 3 MONTHS ENDED 12/31/24 12/31/23 Residential lots sold: 2,333 3,150 Development projects 2,291 3,150 Lot banking projects 42 — Average sales price per lot(1) $ 105,500 $ 96,400 Revenues(2) $ 250.4 $ 305.9 Gross profit 55.0 72.9 Selling, general and administrative expense 36.0 28.0 I
Slide 27: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION Reconciliation of Adjusted Non-GAAP Financial Measures to their GAAP equivalents 3 MONTHS ENDED 12 MONTHS ENDED 12/31/24 12/31/23 12/31/24 12/31/23 Net income $ 16.5 $ 38.2 $ 181.8 $ 184.3 Income tax expense 5.4 13.0 59.1 60.6 Interest charged to cost of sales 3.5 6.1
Slide 28: Balance Sheet
BALANCE SHEET 12/31/24 9/30/24 12/31/23 Cash and cash equivalents $ 132.0 $ 481.2 $ 458.9 Real estate 2,736.8 2,266.2 2,009.8 Investment in unconsolidated ventures — 0.3 0.5 Other assets 91.8 92.4 64.6 Total assets $ 2,960.6 $ 2,840.1 $ 2,533.8 Debt $ 806.8 $ 706.4 $ 705.3 Accrued development costs
Slide 29: Stockholder's Agreement
STOCKHOLDER’S AGREEMENT • FOR Board of Directors must include at least three independent directors (currently has five) • As long as DHI owns at least 20% of FOR’s outstanding equity: – DHI has the right to designate individuals to FOR’s Board based on DHI’s ownership percentage – DHI has the right
Slide 30: Shared Services Agreement
SHARED SERVICES AGREEMENT • Shared Services Agreement between FOR and DHI defines the terms under which DHI may provide administrative, compliance, operational and procurement services to FOR • Scope and cost of services provided to FOR are mutually agreed upon by FOR and DHI management teams and ar