What changed in this filing

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Item 1. Financial Statements

2025-07-23 compared with 2025-04-22 · 89 added, 60 removed, 383 unchanged (28% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

(In millions, except share data)

15 unchanged sentences

50,823,800 and 50,653,637 shares issued and outstanding

at March 31, 2025 and September 30, 2024, respectively

at June 30, 2025 and September 30, 2024, respectively

Additional paid-in capital 669.3 665.2

7 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2025 2024 2025 2024

4 unchanged sentences

Equity in earnings of unconsolidated ventures — — ( 0.6 ) —

Gain on sale of assets — ( 5.0 ) — ( 5.0 )

Interest and other income ( 1.3 ) ( 4.4 ) ( 4.6 ) ( 15.7 )

31 unchanged sentences

$ 50.8 $ 667.8 $ 926.3 $ 1.0 $ 1,645.9

— — 32.9 — 32.9

Stock-based compensation expense

— 1.5 — — 1.5

Balances at June 30, 2025 ( 50,823,800 shares)

$ 50.8 $ 669.3 $ 959.2 $ 1.0 $ 1,680.3

Common Stock Additional Paid-in Capital Retained Earnings Non-controlling Interests Total Equity

21 unchanged sentences

$ 50.6 $ 663.3 $ 758.0 $ 1.0 $ 1,472.9

— — 38.7 — 38.7

Stock issued under employee benefit plans ( 5,273 shares)

Cash paid for shares withheld for taxes

— ( 0.1 ) — — ( 0.1 )

Stock-based compensation expense

— 1.4 — — 1.4

Balances at June 30, 2024 ( 50,607,995 shares)

$ 50.6 $ 664.6 $ 796.7 $ 1.0 $ 1,512.9

See accompanying notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended March 31,

Nine Months Ended June 30,

(In millions)

6 unchanged sentences

Impairments and land option charges 3.9 1.0

Gain on sale of assets — ( 5.0 )

Loss on extinguishment of debt 1.1 —

13 unchanged sentences

Return of investment in unconsolidated ventures 0.9 0.1

Net cash provided by (used in) investing activities 0.2 ( 0.8 )

Proceeds from sale of assets — 5.0

Net cash (used in) provided by investing activities ( 0.6 ) 3.7

FINANCING ACTIVITIES

15 unchanged sentences

Note 1 — Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S.

Generally Accepted Accounting Principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and include the accounts of Forestar Group Inc.

The accompanying unaudited consolidated financial statements include the accounts of Forestar Group Inc.

("Forestar") and all of its 100% owned, majority-owned and controlled subsidiaries, which are collectively referred to as the Company unless the context otherwise requires.

5 unchanged sentences

Thus, the Company's net income equates to comprehensive income.

The financial statements have been prepared in accordance with U.S.

Generally Accepted Accounting Principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

In the opinion of management, these financial statements reflect all adjustments considered necessary to fairly state the results for the interim periods shown, including normal recurring accruals and other items.

7 unchanged sentences

Horton is considered a related party of Forestar under GAAP.

As of March 31, 2025, D.R.

As of June 30, 2025, D.R.

Horton owned approximately 62 % of the Company's outstanding common stock.

23 unchanged sentences

Real estate consists of:

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

(In millions)

2 unchanged sentences

$ 2,823.5 $ 2,266.2

In the six months ended March 31, 2025, the Company invested $ 460.4 million for the acquisition of residential real estate and $ 564.2 million for the development of residential real estate.

At March 31, 2025 and September 30, 2024, land held for future development primarily consisted of undeveloped land which the Company has under contract to sell to D.R.

In the nine months ended June 30, 2025, the Company invested $ 532.6 million for the acquisition of residential real estate and $ 864.3 million for the development of residential real estate.

At June 30, 2025 and September 30, 2024, land held for future development primarily consisted of undeveloped land which the Company has under contract to sell to D.R.

Horton at a sales price equal to the carrying value of the land at the time of sale plus additional consideration of 12 % to 16 % per annum.

1 unchanged sentence

As a result of this process, no impairment charges were recorded for either period presented in the consolidated statements of operations.

In the three and six months ended March 31, 2025, land purchase contract deposit and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 0.9 million and $ 2.0 million, respectively, compared to $ 0.2 million and $ 0.4 million in the prior year periods.

In the three and nine months ended June 30, 2025, land purchase contract deposit and pre-acquisition cost write-offs related to land purchase contracts that the Company has terminated or expects to terminate were $ 1.9 million and $ 3.9 million, respectively, compared to $ 0.7 million and $ 1.0 million in the prior year periods.

These land option charges are included in cost of sales in the consolidated statements of operations.

1 unchanged sentence

Revenues consist of:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2025 2024 2025 2024

8 unchanged sentences

During periods in which the Company’s active real estate is lower than its debt level, a portion of the interest incurred is reflected as interest expense in the period incurred.

In the first six months of fiscal 2025 and fiscal 2024, the Company’s active real estate exceeded its debt level, and all interest incurred was capitalized to real estate.

The following table summarizes the Company’s interest costs incurred, capitalized and expensed in the three and six months ended March 31, 2025 and 2024.

Three Months Ended March 31, Six Months Ended March 31,

In the first nine months of fiscal 2025 and fiscal 2024, the Company’s active real estate exceeded its debt level, and all interest incurred was capitalized to real estate.

The following table summarizes the Company’s interest costs incurred, capitalized and expensed in the three and nine months ended June 30, 2025 and 2024.

Three Months Ended June 30, Nine Months Ended June 30,

2025 2024 2025 2024

5 unchanged sentences

Note 6 — Other Assets, Accrued Expenses and Other Liabilities

The Company's other assets at March 31, 2025 and September 30, 2024 were as follows:

March 31, 2025 September 30, 2024

The Company's other assets at June 30, 2025 and September 30, 2024 were as follows:

June 30, 2025 September 30, 2024

(In millions)

7 unchanged sentences

$ 100.1 $ 85.3

The Company's accrued expenses and other liabilities at March 31, 2025 and September 30, 2024 were as follows:

March 31, 2025 September 30, 2024

The Company's accrued expenses and other liabilities at June 30, 2025 and September 30, 2024 were as follows:

June 30, 2025 September 30, 2024

(In millions)

11 unchanged sentences

The Company's notes payable at their carrying amounts consist of the following:

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

(In millions)

6 unchanged sentences

______________

(1) Unamortized debt issuance costs that were deducted from the carrying amounts of the senior notes totaled $ 8.0 million and $ 3.5 million at March 31, 2025 and September 30, 2024, respectively.

(1) Unamortized debt issuance costs that were deducted from the carrying amounts of the senior notes totaled $ 7.6 million and $ 3.5 million at June 30, 2025 and September 30, 2024, respectively.

Bank Credit Facility

4 unchanged sentences

Letters of credit issued under the facility reduce the available borrowing capacity.

At March 31, 2025, there were no borrowings outstanding and $ 22.3 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 617.7 million.

At June 30, 2025, there were no borrowings outstanding and $ 37.2 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $ 602.8 million.

The revolving credit facility is guaranteed by the Company’s wholly-owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries.

3 unchanged sentences

A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.

At March 31, 2025, the Company was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

At June 30, 2025, the Company was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

The Company has outstanding senior notes as described below that were issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the "Securities Act").

11 unchanged sentences

The Company's remaining $ 70.6 million principal amount of 2026 notes mature May 15, 2026 with interest payable semiannually .

Until May 15, 2025 , the 2026 notes may be redeemed at 100.963 % of their principal amount plus any accrued and unpaid interest, and the 2026 notes can be redeemed at par on or after May 15, 2025 through maturity.

The 2026 notes can be redeemed at par after May 15, 2025 through maturity.

The annual effective interest rate of the 2026 notes after giving effect to the amortization of financing costs is 4.1 %.

13 unchanged sentences

and merge or consolidate with another company or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the Company’s assets.

At March 31, 2025, the Company was in compliance with all of the limitations and restrictions associated with its senior note obligations.

At June 30, 2025, the Company was in compliance with all of the limitations and restrictions associated with its senior note obligations.

Effective April 30, 2020, the Board of Directors authorized the repurchase of up to $ 30 million of the Company’s debt securities.

The authorization has no expiration date.

All of the $ 30 million authorization was remaining at March 31, 2025.

All of the $ 30 million authorization was remaining at June 30, 2025.

Other Note Payable

3 unchanged sentences

The computations of basic and diluted earnings per share are as follows:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2025 2024 2025 2024

7 unchanged sentences

Note 9 — Income Taxes

The Company’s income tax expense for the three and six months ended March 31, 2025 was $ 9.1 million and $ 14.5 million compared to $ 13.9 million and $ 26.9 million in the prior year periods.

The effective tax rate was 22.4 % and 23.2 % for the three and six months ended March 31, 2025 compared to 23.6 % and 24.4 % in the prior year periods.

The Company’s income tax expense for the three and nine months ended June 30, 2025 was $ 10.7 million and $ 25.2 million compared to $ 12.9 million and $ 39.8 million in the prior year periods.

The effective tax rate was 24.5 % and 23.7 % for the three and nine months ended June 30, 2025 compared to 25.0 % and 24.6 % in the prior year periods.

The effective tax rate for all periods included an expense for state income taxes and nondeductible expenses and a benefit for stock-based compensation.

The effective tax rate for the three and six months ended March 31, 2025 also included a benefit for nontaxable income.

At March 31, 2025, the Company had deferred tax liabilities, net of deferred tax assets , of $ 74.2 million.

The effective tax rate for the three and nine months ended June 30, 2025 also included a benefit for nontaxable income.

At June 30, 2025, the Company had deferred tax liabilities, net of deferred tax assets , of $ 77.2 million.

The deferred tax assets were partially offset by a valuation allowance of $ 0.7 million, resulting in a net deferred tax liability of $ 77.9 million.

4 unchanged sentences

Any reversal of the valuation allowance in future periods will impact the effective tax rate.

On July 4, 2025, the President signed the One Big Beautiful Bill Act into law (the "new law").

The Company is evaluating the impact of the new law;

however, none of the tax provisions are expected to have a significant impact on the Company’s financial statements.

Note 10 — Stockholders' Equity and Stock-Based Compensation

1 unchanged sentence

The Company has an effective shelf registration statement, filed with the Securities and Exchange Commission in September 2024, registering $ 750 million of equity securities, of which $ 300 million is reserved for sales under the at-the-market equity offering program that the Company entered into in November 2024.

During the three and six months ended March 31, 2025, the Company did not issue any shares under its at-the-market equity offering program.

At March 31, 2025, the full $ 750 million remained available for issuance under the Company's shelf registration statement, with $ 300 million reserved for sales under the at-the-market equity offering program.

During the three and nine months ended June 30, 2025, the Company did not issue any shares under its at-the-market equity offering program.

At June 30, 2025, the full $ 750 million remained available for issuance under the Company's shelf registration statement, with $ 300 million reserved for sales under the at-the-market equity offering program.

Stock-Based Compensation

3 unchanged sentences

The stock units have no dividend or voting rights until vested.

In the six months ended March 31, 2025 , the Company granted 99,097 PSUs to its executive officers.

In the nine months ended June 30, 2025 , the Company granted 99,097 PSUs to its executive officers.

The number of units that ultimately vest depends on the achievement of three performance criteria which are (i) relative total stockholder return, (ii) return on inventory and (iii) market share goals, and can range from 0 % to 200 % of the number of units granted.

2 unchanged sentences

The grant date fair value of these equity awards was $ 35.20 per unit.

Compensation expense related to the Company's PSUs was $ 0.3 million and $ 0.6 million in the three and six months ended March 31, 2025, based on an estimate of the Company’s achievement of the three performance criteria, the elapsed portion of the performance period and the grant date fair value of the award.

In the six months ended March 31, 2025, a total of 306,300 RSUs were granted.

Compensation expense related to the Company's PSUs was $ 0.3 million and $ 0.9 million in the three and nine months ended June 30, 2025, based on an estimate of the Company’s achievement of the three performance criteria, the elapsed portion of the performance period and the grant date fair value of the award.

In the nine months ended June 30, 2025, a total of 306,300 RSUs were granted.

The weighted average grant date fair value of these equity awards was $ 29.00 per unit, and they vest annually in equal installments over periods of three to five years.

Compensation expense related to the Company's RSUs was $ 1.4 million and $ 3.7 million in the three and six months ended March 31, 2025.

Stock-based compensation expense in the six months ended March 31, 2025 included $ 1.1 million of expense recognized for employees that were retirement eligible on the date of the grant compared to $ 0.7 million in the prior year period.

Total stock-based compensation expense related to the Company's equity awards for the three and six months ended March 31, 2025 was $ 1.7 million and $ 4.3 million compared to $ 1.8 million and $ 2.7 million in the prior year periods.

Compensation expense related to the Company's RSUs was $ 1.2 million and $ 4.9 million in the three and nine months ended June 30, 2025.

Stock-based compensation expense in the nine months ended June 30, 2025 included $ 1.1 million of expense recognized for employees that were retirement eligible on the date of the grant compared to $ 0.7 million in the prior year period.

Total stock-based compensation expense related to the Company's equity awards for the three and nine months ended June 30, 2025 was $ 1.5 million and $ 5.8 million compared to $ 1.4 million and $ 4.1 million in the prior year periods.

Note 11 — Commitments and Contingencies

1 unchanged sentence

In support of the Company's residential lot development business, it issues letters of credit under the revolving credit facility and has a surety bond program that provides financial assurance to beneficiaries related to the execution and performance of certain development obligations.

At March 31, 2025, the Company had outstanding letters of credit of $ 22.3 million under the revolving credit facility and surety bonds of $ 804.4 million issued by third parties to secure performance under various contracts.

At June 30, 2025, the Company had outstanding letters of credit of $ 37.2 million under the revolving credit facility and surety bonds of $ 808.5 million issued by third parties to secure performance under various contracts.

The Company expects that its performance obligations secured by these letters of credit and bonds will generally be completed in the ordinary course of business and in accordance with the applicable contractual terms.

1 unchanged sentence

The Company has no material third-party guarantees.

On April 29, 2025, a purported stockholder of the Company filed a derivative complaint in the Delaware Court of Chancery, purportedly on behalf of the Company, against D.R.

Horton, Inc., the Company’s Executive Chairman, and certain of the Company’s directors.

The complaint, which is captioned Mississippi Public Employees’ Retirement System v.

Horton, Inc., C.A.

2025-0465-MTZ, asserts claims for breach of fiduciary duty arising out of lot sale transactions between the Company and D.R.

The complaint seeks judgment awarding the Company damages against the defendants and awarding the plaintiff the costs and disbursements of the action, including reasonable attorneys’ and experts’ fees.

The Company disputes the allegations of wrongdoing in this matter.

Nevertheless, the outcome of this lawsuit is uncertain and cannot be predicted with any certainty.

Accordingly, at this time, the Company is not able to estimate a possible loss or range of loss that may result from this lawsuit or to determine whether such loss, if any, would have a material adverse effect on its business, financial condition, results of operations or liquidity.

On September 6, 2024, the Maryland Department of Environment (MDE) filed suit in the Circuit Court for Harford County, Maryland against the Company regarding various alleged stormwater compliance issues and violations at a project in Maryland dating from 2022 through 2024, seeking injunctive relief and civil penalties.

9 unchanged sentences

Land purchase contract deposits and capitalized pre-acquisition costs are expensed to cost of sales when the Company believes it is probable that it will not acquire the property under contract and will not be able to recover these costs through other means.

At March 31, 2025, the Company had total deposits of $ 36.2 million related to contracts to purchase land with a total remaining purchase price of approximately $ 783.7 million.

At June 30, 2025, the Company had total deposits of $ 32.8 million related to contracts to purchase land with a total remaining purchase price of approximately $ 854.6 million.

The majority of land and lots under contract are currently expected to be purchased within 3 years.

Non e of the land purchase contracts were subject to specific performance provisions at March 31, 2025.

Non e of the land purchase contracts were subject to specific performance provisions at June 30, 2025.

Note 12 — Related Party Transactions

2 unchanged sentences

Horton provides the Company with certain administrative, compliance, operational and procurement services.

In the six months ended March 31, 2025 and 2024, selling, general and administrative expense in the consolidated statements of operations included $ 3.6 million and $ 2.6 million for these shared services, $ 6.9 million and $ 4.0 million reimbursed to D.R.

Horton for the cost of health insurance and other employee benefits and $ 0.5 million and $ 3.1 million for other corporate and administrative expenses paid by D.R.

In the nine months ended June 30, 2025 and 2024, selling, general and administrative expense in the consolidated statements of operations included $ 5.4 million and $ 4.1 million for these shared services, $ 10.8 million and $ 7.0 million reimbursed to D.R.

Horton for the cost of health insurance and other employee benefits and $ 0.7 million for both periods for other corporate and administrative expenses paid by D.R.

Horton on behalf of the Company.

1 unchanged sentence

Horton, both companies identify land development opportunities to expand Forestar's portfolio of assets.

At March 31, 2025 and September 30, 2024, the Company owned approximately 68,400 and 57,800 residential lots, respectively, of which D.R.

At June 30, 2025 and September 30, 2024, the Company owned approximately 68,300 and 57,800 residential lots, respectively, of which D.R.

Horton had the following involvement.

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

(Dollars in millions)

8 unchanged sentences

Lot and land sales to D.R.

Horton in the three and six months ended March 31, 2025 and 2024 were as follows:

Three Months Ended March 31, Six Months Ended March 31,

Horton in the three and nine months ended June 30, 2025 and 2024 were as follows:

Three Months Ended June 30, Nine Months Ended June 30,

2025 2024 2025 2024

4 unchanged sentences

Horton $ 325.0 $ 265.6 $ 810.2 $ 846.6

Decrease in contract liabilities on lot sales to D.R.

(Increase) decrease in contract liabilities

$ ( 1.3 ) $ ( 0.2 ) $ ( 0.1 ) $ 2.6

1 unchanged sentence

$ 3.8 $ 3.3 $ 7.7 $ 4.6

In the three and six months ended March 31, 2025, the Company reimbursed D.R.

In the three and nine months ended June 30, 2025, the Company reimbursed D.R.

Horton approximately $ 9.5 million and $ 17.7 million for pre-acquisition and other due diligence and development costs related to land purchase contracts identified by D.R.

Horton that the Company independently underwrote and closed compared to reimbursements of $ 4.4 million and $ 15.1 million in the prior year periods.

In the three and six months ended March 31, 2025, the Company reimbursed D.R.

In the three and nine months ended June 30, 2025, the Company reimbursed D.R.

Horton approximately $ 4.2 million and $ 18.8 million for previously paid earnest money related to those land purchase contracts compared to reimbursements of $ 4.0 million and $ 22.7 million in the prior year periods.

In the six months ended March 31, 2025, the Company purchased $ 2.1 million of water rights from D.R.

In both the three and six months ended March 31, 2025, the Company paid D.R.

Horton $ 0.1 million for land development services compared to $ 0.2 million and $ 0.7 million for these services in the prior year periods.

In the nine months ended June 30, 2025, the Company purchased $ 2.1 million of water rights from D.R.

In the three and nine months ended June 30, 2025, the Company paid D.R.

Horton $ 0.1 million and $ 0.3 million for land development services compared to $ 0.1 million and $ 0.8 million for these services in the prior year periods.

These amounts are included in cost of sales in the Company’s consolidated statements of operations.

At March 31, 2025 and September 30, 2024, land held for future development primarily consisted of undeveloped land which the Company has under contract to sell to D.R.

At June 30, 2025 and September 30, 2024, land held for future development primarily consisted of undeveloped land which the Company has under contract to sell to D.R.

Horton at a sales price equal to the carrying value of the land at the time of sale plus additional consideration of 12 % to 16 % per annum.

At March 31, 2025, accrued expenses and other liabilities on the Company's consolidated balance sheets included $ 3.4 million owed to D.R.

At June 30, 2025, accrued expenses and other liabilities on the Company's consolidated balance sheets included $ 3.0 million owed to D.R.

Horton for any accrued and unpaid shared service charges, land purchase contract deposits and due diligence and other development cost reimbursements compared to $ 5.2 million at September 30, 2024.

9 unchanged sentences

The Company elected not to use the fair value option for cash and cash equivalents and debt.

For the financial assets and liabilities that the Company does not reflect at fair value, the following tables present both their respective carrying value and fair value at March 31, 2025 and September 30, 2024.

Fair Value at March 31, 2025

For the financial assets and liabilities that the Company does not reflect at fair value, the following tables present both their respective carrying value and fair value at June 30, 2025 and September 30, 2024.

Fair Value at June 30, 2025

Carrying Value Level 1 Level 2 Level 3 Total

11 unchanged sentences

(a) The fair values of cash and cash equivalents approximate their carrying values due to their short-term nature and are classified as Level 1 within the fair value hierarchy.

(b) At March 31, 2025 and September 30, 2024, debt primarily consisted of the Company's senior notes.

(b) At June 30, 2025 and September 30, 2024, debt primarily consisted of the Company's senior notes.

The fair value of the senior notes is determined based on quoted market prices in markets that are not active, which is classified as Level 2 within the fair value hierarchy.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements