Forestar Group Inc · NYSE:FOR
Forestar — Investor Presentation (February 2014)
34 slides from Forestar's investor presentation, Feb 18, 2014
Slide 1: Forestar Investor Presentation February 2014
Forestar Investor Presentation February 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 Through Best of Class Oil and Gas and Real Estate
Maximizing Long-Term Shareholder Value Through the Development of Best of Class Oil and Gas and Real Estate Businesses
Slide 4: Maximizing Long-Term Shareholder Value
Maximizing Long-Term Shareholder Value 4
Slide 5: 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 5 Real Estate • Land - 130,000 acres, principally low basis land • Projects - 95 (10 states and 14 markets) • Significant Commercial Properties – 4 Oil and Gas • Fee and Leasehold Interests - 837
Slide 6: 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 6 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 7: Real Estate Building Momentum
Real Estate Building Momentum By Accelerating Real Estate Sales and Building a Solid Multifamily Pipeline 7
Slide 8: Delivering The Greatest Value From Every Acre of Our Real Estate
8 Delivering The Greatest Value From Every Acre of Our Real Estate Pipeline (Acres) 1 Activity – Uses Financials 2 2,000 1,122 residential acres - 3,082 lots 682 commercial acres $55K per lot $170K per acre (avg sales price) 11,000 Approved uses, ready for Development - 17,279 lots High Value Creati
Slide 9: Real Estate Capitalizing on Housing Recovery
9 * 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 9 Real Estate Capitalizing on Housing Recovery $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 2010 2011 2012 2013 2014E* Lot Sales Average Lo
Slide 10: Texas Markets Driving Lot Sales and Margins
Texas Markets Driving Lot Sales and Margins FOR Well Positioned With Lot Inventory in Texas Markets 10 Active Residential Projects Q4 13 Lot Sales Vacant Dev. Lots Lots Under Dev. Remaining Lots to be Developed 41 451 1,465 757 12,408 Forestar Texas Lot Sales & Inventory - YE 2013 • Texas – 90% of F
Slide 11: Building Solid Pipeline of Multifamily Development Opportunities
Building Solid Pipeline of Multifamily Development Opportunities (Proforma) Proforma Project Cash Flows Proforma Forestar Cash Flows Project Market % Complete Units FOR Ownership Total Development Cost Expected Project NOI FOR Equity FOR Total Cash Cash Multiple* Eleven Austin 90% 257 25% $40 – 45 $
Slide 12: Real Estate Acquisitions and Investment in Development
Real Estate Acquisitions and Investment in Development Generating Earnings & Cash Flow 12 2 Real Estate Acquisition Activity Proforma Returns ($ in millions) Capital Communities Markets Lots/Units Cash Multiple Cash Flow 2013 Acquisitions Single-Family $18.4 5 5 1,346 2.6x $47.8 Multifamily 18.5 2 2
Slide 13: Core Real Estate Business Strengthening
Note: Includes consolidated ventures. Core Real Estate Business Strengthening 13 Capitalizing on housing recovery by driving lot sales and margin Accelerating value realization through residential tract sales Selling commercial tracts - reflects broadening real estate recovery Building solid pipelin
Slide 14: Oil and Gas Building Momentum
Oil and Gas Building Momentum By Driving Leasing and Exploration to Increase Production and Reserves 14
Slide 15: Located In Prolific Oil & Gas Basins
1 5 Located In Prolific Oil & Gas Basins 15 Net Mineral Interests* State Owned Leasehold Total Texas 252,000 13,000 265,000 Louisiana 144,000 4,000 148,000 Nebraska / Kansas - 172,000 172,000 North Dakota - 7,000 7,000 Georgia / Alabama 192,000 10,000 202,000 Other** 2,000 41,000 43,000 Total 590,00
Slide 16: Production Growth Driven by Bakken / Three Forks
0 500 1,000 1,500 2,000 2011 2012 2013 B o e / D a y North Dakota Kansas/Nebraska Texas/Louisiana/Other Production Growth Driven by Bakken / Three Forks 16 16 Average Daily Production Working Interests 0 500 1,000 1,500 2,000 2,500 3,000 2011 2012 2013 Boe / D ay Working Interests Royalty Average Da
Slide 17: Delivering Proved Reserve Growth
Delivering Proved Reserve Growth 17 2.4 3.0 5.6 8.5 2010 2011 2012 2013 Excludes Probable and Possible reserves. Includes ventures. Note: MMBOE = million barrels of oil equivalent Oil and Liquids Account for 69% of 2013 Proved Reserves Oil Exploration and Development Drives 272% Reserve Replacement
Slide 18: Reserve Growth Driven by Bakken / Three Forks
Reserve Growth Driven by Bakken / Three Forks 18 Proven Reserves (MMBoe) Reserve Growth (MMBOE) Production Replaced (MMBOE) Net Reserve Increase (MMBOE) % Oil* ($ in millions) Investment 2013 8.5 4.0 1.1 2.9 69% $99 2012 5.6 3.3 0.7 2.6 57% 173** 2011 3.0 1.0 0.4 0.6 36% 4 2010 2.4 0.7 0.4 0.3 25% -
Slide 19: Bakken / Three Forks Drilling Activity Accelerating Investment and Value Realization
19 19 0 200 400 600 800 1,000 1,200 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014E Bakken/Three Forks Production (Boe/Day) 0 50 100 150 200 2010 2011 2012 2013 2014E P ro d u ci n g W e lls Bakken/Three Forks Producing Wells Actual Wells Planned Wells +44 +25 +7 +4 +85 * Producing or capable of production
Slide 20: Kansas / Nebraska Drilling Activity Accelerating Production and Value Growth
0 20 40 60 80 100 120 140 160 2012 2013 2014E P ro d u ci n g W e lls +36 +52*** Kansas / Nebraska Drilling Activity Accelerating Production and Value Growth 20 20 +19 Kansas / Nebraska Production (Boe/Day) 0 100 200 300 400 500 600 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014E B O E /Da y Kansas / Nebra
Slide 21: 2014 Capital Investment Plan
2014 Capital Investment Plan Generating Production and Reserve Growth By Accelerating Investment 21 Total Oil & Gas 2014 Capital Investment: ~ $175 - $200 million Drilling &Completion N. Dakota 41% Drilling &Completion KS/NE 17% Drilling & Completion Other 15% Land Acquisition N. Dakota 6% Land Acqu
Slide 22: Accelerating Value Realization and Growing Net Asset Value
Accelerating Value Realization and Growing Net Asset Value Building Momentum By Accelerating Value Realization and Growing Net Asset Value Capitalizing on investments to accelerate earnings and cash flow Increasing oil production and proven reserves Expected investment returns above cost of capital
Slide 23: Strategic Initiatives Update February 2014
Strategic Initiatives Update February 2014 Growing Forward Through Strategic and Disciplined Investments and Increasing Returns
Slide 24: Establishing New Strategic Initiatives Growing Long-Term Shareholder Value
Establishing New Strategic Initiatives Growing Long-Term Shareholder Value Growing Through Strategic and Disciplined Investment 2014 Capital Investment = ~$400MM 2013 Capital Investment = ~$200MM Increasing Returns 2016 Target ROA =10.0% 2013 ROA = 6.1% 2008 – 2011 Avg. ROA = (0.1%)* 24 * Excludes g
Slide 25: Growing Through Disciplined Investment and Increasing Returns
(0.1%) 6.1% 2008-2011 Average 2013 2016 Target Growing $29 $38 $72 2008-2011 Average 2013 2016 Target Oil & Gas Real Estate Growing Real Estate and Oil and Gas Segment EBITDA Increasing Return on Assets * 25 • Real estate acquisition and development • Oil and gas exploration and development • Strate
Slide 26: Delivering Shareholder Value Through Execution of Strategic Initiatives
Delivering Shareholder Value Through Execution of Strategic Initiatives Delivering Value Through Execution of Strategic Initiatives 2009 Strategic Initiatives • Monetize 175,000 acres of timberland and reduce debt $150 million 2012 Triple in FOR • Triple total segment EBITDA, oil and gas production
Slide 27: Forestar Contact
Forestar Investor Presentation February 2014 For questions, please contact: Anna Torma SVP Corporate Affairs Forestar Group Inc. 6300 Bee Cave Road Building Two, Suite 500 Austin, TX 78746 512-433-5312 annatorma@forestargroup.com 27
Slide 28: Financial Tools and Additional Disclosures Available on our Website
28 Financial Tools and Additional Disclosures Available on our Website • Historical Financials • Segment Disclosures • At-A-Glance • Corporate • Oil and Gas • Real Estate • Multifamily • Water • Videos • 101 Learning Tools 2008-Q 2 2013 2008-Q 2 2013 Assets State Market Ownership Total Remaining Acr
Slide 29: Total Segment EBITDA Reconciliation
29 Forestar’s Total Segment EBITDA is a non-GAAP financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, U.S. Generally Accepted Accounting Principles (GAAP). The company believes pr
Slide 30: Segment EBITDA Reconciliation
30 Forestar’s Segment EBITDA is a non-GAAP financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, U.S. Generally Accepted Accounting Principles (GAAP). The company believes presenti
Slide 31: Oil and Gas Segment EBITDAX Reconciliation
31 Forestar’s Oil and Gas Segment EBITDAX is a non-GAAP financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, U.S. Generally Accepted Accounting Principles (GAAP). The company beli
Slide 32: YE 2013 Net Proved Reserves
YE 2013 Net Proved Reserves ($ in millions) 2013 2012 2011 2012-2013 % Change 2011-2012 % Change Proved Developed Producing Reserves1 Oil and NGL Reserves MBBL 3,224.6 2,105.2 1,053.7 53% 100% Gas Reserves BCF 13.3 12.2 11.4 9% 7% Future Net Revenues* $222.6 $162.2 $132.7 37% 22% PV-10 3* $140.5 $10
Slide 33: Reconciliation of Non-GAAP Financial Measures
($ in 000’s) Est. 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 Reconciliatio
Slide 34: Forestar Contact
Forestar Investor Presentation February 2014 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 34
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