Q1 2024 Forestar Group Inc Earnings Call

January 23, 2024

♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪

Speaker Change: ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪

Mark Weintraub: Another 32% of our own blocks are subject to a write-up first offer to Dale Horton based on executed purchase and sale agreements. We have significant liquidity and are using modest leverage to keep our balance sheet strong. We ended the quarter with approximately $840 million of liquidity, including an unrestricted cash balance of $460 million and $380 million of available capacity on our undrawn revolving credit program. Total debt at December 31st was $705 million, with no senior note maturities until FY2026, and our net debt to capital ratio was 14.9%.

Good afternoon, and welcome to four stores first quarter 2024 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

Good afternoon and welcome to Four Star's first quarter 2024 earnings conference.

Good afternoon and welcome to 4STAR's first quarter 2024 earnings conference.

Speaker Change: Good afternoon and welcome to 4STAR's first quarter 2024 earnings conference.

At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please put star zero on your telephone key.

At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone key.

Speaker Change: At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone key.

Speaker Change: Pat Please note.

Please note, this conference is being recorded. I will now turn the conference over to Katie Smith, Director of Finance and Investment Relations for France.

Please note, this conference is being recorded. I will now turn the conference over to Katie Smith, Director of Finance and Investor Relations for.

Speaker Change: Please note, this conference is being recorded. I will now turn the conference over to Katie Smith, Director of Finance and Investor Relations for.

This conference is being recorded I will now turn the conference over to Katy Smith Director of Finance and Investor Relations for four star.

Katie Smith: Thank you, John. Good afternoon and welcome to the call to discuss Four Star's first quarter results. Thank you for joining.

Thank you, John. Good afternoon and welcome to the call to discuss 4STAR's first quarter results. Thank you for joining.

Katie Smith: Thank you, John. Good afternoon and welcome to the call to discuss 4STAR's first quarter results. Thank you for joining.

Thank you John Good afternoon, and welcome to the call to discuss four stars first quarter results. Thank you for joining US before we get started today's call includes forward looking statements as defined by the private Securities Litigation Reform Act with 1995.

Katie Smith: Before we get started, today's call includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.

Before we get started, today's call includes forward-looking statements as defined by the Private Security Litigation Reform Act of 1995.

Katie Smith: Before we get started, today's call includes forward-looking statements as defined by the Private Security Litigation Reform Act of 1995.

Katie Smith: Although Corsair believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different.

Although Forsher believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be necessarily bad.

Katie Smith: Although Forsher believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be necessarily bad.

Although Forrester believes any such statements are based on reasonable assumptions. There is no assurance that actual outcomes will not be materially different.

Katie Smith: All forward-looking statements are based upon information available to 4-Star on the date of the conference call, and we do not undertake any obligation to update or revise any forward-looking statements publicly.

All forward-looking statements are based upon information available to FORESTRAR on the date of the conference call, and we do not undertake any obligation to update or revise any forward-looking statements publicly.

Katie Smith: All forward-looking statements are based upon information available to FORESTRAR on the date of the conference call, and we do not undertake any obligation to update or revise any forward-looking statements publicly.

All forward looking statements are based upon information available to <unk> on the date of this conference call and we do not undertake any obligation to update or revise any forward looking statements publicly.

Jim Allen: We ended this quarter with $1.4 billion of stockholders' equity, and our book value per share increased to $28.21, up 15% from a year ago. Orscar's capital structure is one of our biggest competitive advantages, and it sets us apart from other land developers. Project-level land acquisition and development loans are less available today and have continued to become more expensive, impacting most of our competitors. Other developers generally use project-level development loans, which are typically more restrictive, have floating rates, and create administrative complexity, especially in a volatile rate environment.

Katie Smith: Additional information about factors that could lead to material changes in performance is contained in 4SAR's annual report on Form 10-K and its most recent quarterly report on Form 10-Q, those of which are or will be filed with the Securities Exchange.

Additional information about factors that could lead to material changes in performance is contained in FORSAR's annual report on Form 10-K and its most recent quarterly report on Form 10-Q, both of which are or will be filed with the Securities Exchange Committee.

Katie Smith: Additional information about factors that could lead to material changes in performance is contained in FORSAR's annual report on Form 10-K and its most recent quarterly report on Form 10-Q, both of which are or will be filed with the Securities Exchange Committee.

Additional information about factors that could lead to material changes in performance is contained in <unk> annual report on Form 10-K, and its most recent quarterly report on Form 10-Q, both of which are or will be filed with the Securities Exchange Commission.

Katie Smith: Our earnings release is on our website at Investor.Forshar.com and we plan to file our team fees tomorrow. After this call, we will post an updated investor presentation to our investor relations site under Events and Presentations for your reference.

Partnering for leases on our website at investor.bullshare.com, and we plan to file our same piece tomorrow. After this call, we will post an updated investor presentation to our Investor Relations site under Events and Presentations for your reference.

Katie Smith: Partnering for leases on our website at investor.bullshare.com, and we plan to file our same piece tomorrow. After this call, we will post an updated investor presentation to our Investor Relations site under Events and Presentations for your reference.

Our earnings releases on our website at Investor day, It forced our dot com and we plan to file our 10-Q tomorrow.

Speaker Change: After this call we will post an updated investor presentation to our Investor relations site under events and presentations for your reference.

Katie Smith: Now I would turn the call over to Andy Oxley, our president and CEO.

Now I will turn the call over to Andy Oxley, our President and CEO.

Katie Smith: Now I will turn the call over to Andy Oxley, our President and CEO.

Now I will turn the call over to Andy Oxley, our president and CEO.

Andy Oxley: Thanks, Katie. Good afternoon, everyone. I'm joined on the call today by Jim Allen, our Chief Financial Officer, and Mark Walker, our Chief Operating Officer.

Thanks, Katie. Good afternoon, everyone. I'm joined on the call today by Jim Allen, our Chief Financial Officer, and Mark Walker, our Chief Operating Officer.

Andy Oxley: Thanks, Katie. Good afternoon, everyone. I'm joined on the call today by Jim Allen, our Chief Financial Officer, and Mark Walker, our Chief Operating Officer.

Thanks Katie.

Good afternoon, everyone I'm joined on the call today by Jim Allen, Our Chief Financial Officer, and Mark Wallace, Our Chief operating officer.

Speaker Change: Thank you.

Sure.

Speaker Change: Before we discuss this quarter's results, I'd like to take a moment to introduce myself, since this is my first quarterly public conference call. I joined Four Star at the beginning of the calendar year, transitioning from my prior tenure at D.R. Horton.

Before we discuss this quarter's results, I'd like to take a moment to introduce myself since this is my first quarterly public conference call. I joined Forsgar at the beginning of the calendar year, transitioning from my prior tenure at D.R. Horton.

Andy Oxley: Before we discuss this quarter's results, I'd like to take a moment to introduce myself since this is my first quarterly public conference call. I joined Forsgar at the beginning of the calendar year, transitioning from my prior tenure at D.R. Horton.

Before we discuss this quarter's results I'd like to take a moment to introduce myself. Since this is my first quarterly public conference call.

<unk> <unk> at the beginning of the calendar year transitioning from my priority tenure at D. R. Horton.

Speaker Change: While there, I've served in numerous roles, the most recent being Senior Vice President of Business Development.

While there, I served in numerous roles, the most recent being Senior Vice President of Business Development.

Andy Oxley: While there, I served in numerous roles, the most recent being Senior Vice President of Business Development.

Well there are served in numerous roles most recent being senior Vice president of business development.

Speaker Change: In addition to being actively involved in D.R. Horton's relationships in strategic land banking and development, I oversaw opening new markets and M&A activity, including being involved in the D.R. Horton investment in Four Star.

In addition to being actively involved in DR Horton's relationships in strategic land banking and development.

Andy Oxley: In addition to being actively involved in DR Horton's relationships in strategic land banking and development.

In addition to being actively involved in D. R Horton relationships and strategic land banking and development I oversaw opening new markets and M&A activity, including being involved in the D. R. Horton investment in for store.

Jim Allen: Our capital structure provides us with operational flexibility while our strong liquidity positions us to take advantage of attractive opportunities when they arise, and I'll hand it back to you for closing. Thanks Jim. We are pleased with 4STAR's start to fiscal 2024. Our team maintained double-digit revenue while continuing to deliver growth with strong profitability. Elevators mortgage interest rates continue to impact affordability, but the underlying fundamentals of housing shortage remain in place.

I oversaw opening new markets and M&A activity, including being involved in the D. R. Horton investment in Forscar.

Andy Oxley: I oversaw opening new markets and M&A activity, including being involved in the D. R. Horton investment in Forscar.

I'm excited to have.

Speaker Change: I'm excited to have joined the four-star team and the opportunity to serve in my new role as CEO. I have the utmost respect and appreciation for what Dan Bartok, the company's previous CEO, and the four-star team accomplished with Dan at the helm.

I'm excited to have joined the Foursquare team and the opportunity to serve in my new role as CEO. I have the utmost respect and appreciation for what Dan Bartok, the company's previous CEO, and the Foursquare team accomplished with Dan at the helm.

Andy Oxley: I'm excited to have joined the Foursquare team and the opportunity to serve in my new role as CEO. I have the utmost respect and appreciation for what Dan Bartok, the company's previous CEO, and the Foursquare team accomplished with Dan at the helm.

Joining us for <unk> and the opportunity to serve in my new role as CEO I have the utmost respect and appreciation for what Dan Bartok, the company's previous CEO and the four star team accomplished with Dan at the helm.

Speaker Change: We thank him for his many contributions to Four Star during his six years of service.

We thank him for his many contributions to Four Star during his six years of service.

Andy Oxley: We thank him for his many contributions to Four Star during his six years of service.

We thank him for his many contributions to <unk> during his six years of service.

<unk> strong balance sheet healthy pretax margins and robust land portfolio position us well for future growth.

Speaker Change: Fourstar's strong balance sheet, healthy pre-tax margins, and robust land portfolio position us well for future growth.

Forstar's strong balance sheet, healthy pre-tax margins, and robust land portfolio position us well for future growth.

Andy Oxley: Forstar's strong balance sheet, healthy pre-tax margins, and robust land portfolio position us well for future growth.

Speaker Change: With over 25 years of experience in land acquisition, development, and home building, I'm confident we will continue to expand Force First's platform and operations to further strengthen our position as a leading lot developer.

With over 25 years of experience in land acquisition, development, and home building, I'm confident we will continue to expand Forstner's platform and operations to further strengthen our position as a leading lot developer.

Andy Oxley: With over 25 years of experience in land acquisition, development, and home building, I'm confident we will continue to expand Forstner's platform and operations to further strengthen our position as a leading lot developer.

With over 25 years of experience in land acquisition development and homebuilding I'm confident we will continue to expand the <unk> platform and operations to further strengthen our position as a leading lot developer.

Andy Oxley: We believe the low supply of existing homes will continue to drive hiring to new construction, and our strong relationship with D.R. Horton provides a clear path for growth. Our diagram for fiscal 2024 remains unchanged.

Speaker Change: We remain focused on investing for future growth, turning our inventory, maximizing returns, and consolidating market share in the highly fragmented lot development industry.

We remain focused on investing for future growth, turning our inventory, maximizing returns, and consolidating market share in the highly fragmented lot development industry.

Andy Oxley: We remain focused on investing for future growth, turning our inventory, maximizing returns, and consolidating market share in the highly fragmented lot development industry.

We remain focused on investing for future growth.

Turning our inventory maximizing returns and consolidating market share in the highly fragmented lot development industry.

Speaker Change: Now, on to our results.

Now onto our results.

Andy Oxley: Now onto our results.

Now onto our results. We are pleased with our first quarter results highlighted by net income increasing 84% to $38 two.

Speaker Change: We are pleased with our first quarter results, highlighted by net income increasing 84% to $38.2 billion.

We are pleased with our first quarter results, highlighted by net income increasing 84% to 38.2%.

Andy Oxley: We are pleased with our first quarter results, highlighted by net income increasing 84% to 38.2%.

Andy Oxley: Based on current market conditions, we expect to deliver between 14,500 and 15,500 watts and generate $1.4 to $1.5 billion in revenue. We are closely monitoring each market as we strive to balance pace and price to maximize returns on each project. We are the market leader in a highly fragmented and under-capitalized industry and uniquely positioned to take advantage of builder demand for finished lots. There is a significant opportunity to expand our presence in the markets that we operate in, and our goal remains the same, to double our market share to 5% over the intermediate term. We expect to accumulate significant market share over the next few years while maintaining a disciplined approach when investing capital to enhance a long-term value of four stars. John, at this time, we'll listen to the lines for questions. Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: Thank you for your time, and I look forward to seeing you again next week.

$25 million or 76 per diluted share. Our pre-tax income increased 84% to $51.2 million and our pre-tax profit margin improved 380 basis points to 16.7%.

Andy Oxley: $8.1 million or $76 per diluted share. Our pre-tax income increased 84% to $51.2 million and our pre-tax profit margin improved 380 basis points to 16.7%.

Millions of dollars or <unk> 76 per diluted share our pre tax income increased 84% to $51 $2 million and our pre tax profit margin improved 380 basis points to 16, 7%.

Speaker Change: Our consolidated revenues increased 41% to $305.9 million, while last sold increased 39% to $3,150.

Our consolidated revenues increased 41% to $305.9 million, while lot solds increased 39% to 3,150 lots.

Andy Oxley: Our consolidated revenues increased 41% to $305.9 million, while lot solds increased 39% to 3,150 lots.

Our consolidated revenues increased 41% to $305 $9 million while.

While lots sold increased 39% to 33150 lots.

Speaker Change: These results reflected significant improvements in demand for finished lots compared to the first fiscal quarter of 2023 when builders were reducing starts in anticipation of lower demand for new homes after mortgage interest rates rose rapidly.

These results reflected significant improvements in demand for finished lots compared to the first fiscal quarter of 2023 when builders were reducing starts in anticipation of lower demand for new homes after mortgage interest rates rose rapidly.

Andy Oxley: These results reflected significant improvements in demand for finished lots compared to the first fiscal quarter of 2023 when builders were reducing starts in anticipation of lower demand for new homes after mortgage interest rates rose rapidly.

These results reflected significant improvement in demand for finished lots compared to the first fiscal quarter of 2023.

When builders, we're reducing starts in anticipation of lower demand for new homes. After a mortgage interest rates rose rapidly.

Speaker Change: Jim will now discuss our first quarter financial results in more detail.

Jim will now discuss our first quarter financial results in more detail.

Speaker Change: Jim will now discuss our first quarter financial results in more detail.

Jim will now discuss our first quarter's financial results in more detail.

Jim Allen: Thank you, Andy.

Thank you, Andy.

Jim Allen: Thank you, Andy.

Thank you Andy in the first quarter net income increased 84% to $38 2 million or <unk> 76 per diluted share compared to $28 million or <unk> 42 per diluted share in the prior year quarter.

Jim Allen: In the first quarter, net income increased 84% to $38.2 million, or $0.76 per diluted share, compared to $20.8 million, or $0.42 per diluted share, in the prior year quarter.

In the first quarter, net income increased 84% to $38.2 million, or $0.76 per diluted share, compared to $20.8 million, or $0.42 per diluted share in the prior year quarter.

Jim Allen: In the first quarter, net income increased 84% to $38.2 million, or $0.76 per diluted share, compared to $20.8 million, or $0.42 per diluted share in the prior year quarter.

Jim Allen: Consolidated revenues for the quarter increased 41% to $305.9 million compared to $216.7 million in the prior year quarter.

Consolidated revenues for the quarter increased 41% to $305.9 million compared to $216.7 million in the prior year quarter.

Jim Allen: Consolidated revenues for the quarter increased 41% to $305.9 million compared to $216.7 million in the prior year quarter.

Consolidated revenues for the quarter increased 41% to $305 $9 million compared to $216 7 million in the prior year quarter.

Jim Allen: Lots sold in our first fiscal quarter increased 39% to 3,150 lots, with an average sale price of $96,400.

Lots sold in our first fiscal quarter increased 39% to 3,150 lots, with an average sale price of $96,400.

Jim Allen: Lots sold in our first fiscal quarter increased 39% to 3,150 lots, with an average sale price of $96,400.

Lots sold in our first fiscal quarter increased 39% to 3150 lots with an average sales price of $96400.

Jim Allen: We expect continued quarterly fluctuations in our average sales price based on the geographic location and lot size mix of our delivery.

We expect continued quarterly fluctuations in our average sales price based on the geographic location and lot size mix of our delivery.

Jim Allen: We expect continued quarterly fluctuations in our average sales price based on the geographic location and lot size mix of our delivery.

We expect continued quarterly fluctuations in our average sales price based on the geographic location and lot size mix of our deliveries.

Our pre tax income increased 84% to $51 2 million compared.

Jim Allen: Our pre-tax income increased 84% to $51.2 million compared to $27.9 million in the first quarter of last year.

Our pre-tax income increased 84% to $51.2 million compared to $27.9 million in the first quarter of last year.

Jim Allen: Our pre-tax income increased 84% to $51.2 million compared to $27.9 million in the first quarter of last year.

Compared to $27 9 million in the first quarter of last year and our pre tax profit margin. This quarter was 16, 7% compared to 12, 9% in the prior year quarter.

Jim Allen: and our pre-tax profit margin this quarter was 16.7% compared to 12.9% in the prior year quarter.

and our pre-tax profit margin this quarter was 16.7% compared to 12.9% in the prior year quarter.

Jim Allen: and our pre-tax profit margin this quarter was 16.7% compared to 12.9% in the prior year quarter.

Jim Allen: Our gross profit margin was 23.8%, up 280 basis points sequentially, and up 190 basis points from a year ago.

Our gross profit margin was 23.8%, up 280 basis points sequentially, and up 190 basis points from a year ago.

Jim Allen: Our gross profit margin was 23.8%, up 280 basis points sequentially, and up 190 basis points from a year ago.

Our gross profit margin was 23, 8% up 280 basis points sequentially and up 190 basis points from a year ago.

Operator: You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we pose for questions. Our first question comes from Truman Patterson with Wolf Research. Hey, good afternoon, everyone.

Jim Allen: Gross margin was positively impacted by the closeout of a legacy community during the

Gross margin was positively impacted by the closeout of a legacy community during the quarter.

Jim Allen: Gross margin was positively impacted by the closeout of a legacy community during the quarter.

Speaker Change: Gross margin was positively impacted by the closeout of a legacy community during the quarter.

Jim Allen: Excluding the legacy community lot sales, our first quarter gross profit margin would have been 22.8%.

Excluding the legacy community lot sales, our first quarter gross profit margin would have been $22.8 million.

Jim Allen: Excluding the legacy community lot sales, our first quarter gross profit margin would have been $22.8 million.

Excluding the legacy community lot sales, our first quarter gross profit margin would've been 22, 8%.

Jim Allen: In the first quarter, SG&A expense was 28 million dollars.

In the first quarter, SG&A expense was $28 million.

Jim Allen: In the first quarter, SG&A expense was $28 million.

In the first quarter SG&A expense was $28 million as a percentage of revenue SG&A expense improved 140 basis points to nine 2% from 10, 6% in the prior year quarter.

Jim Allen: As a percentage of revenue, SG&A expense improved 140 basis points to 9.2% from 10.6% in the prior year quarter.

As a percentage of revenue, SG&A expense improved 140 basis points to 9.2% from 10.6% in the prior year quarter.

Jim Allen: As a percentage of revenue, SG&A expense improved 140 basis points to 9.2% from 10.6% in the prior year quarter.

Jim Allen: We will continue to focus on controlling our SG&A costs while ensuring that our infrastructure supports our business. Mark? As for current market conditions, the supply of new and existing homes at affordable price points is still limited.

We will continue to focus on controlling our SG&A costs while ensuring that our infrastructure supports our business. Mark As for current market conditions, the supply of new and existing homes at affordable price points is still limited.

Jim Allen: We will continue to focus on controlling our SG&A costs while ensuring that our infrastructure supports our business. Mark As for current market conditions, the supply of new and existing homes at affordable price points is still limited.

We will continue to focus on controlling our SG&A costs, while ensuring that our infrastructure supports our business mark as well.

Speaker Change: Current market conditions, the supply of new and existing homes at affordable price points is still limited and demographic supporting housing demand remain favorable despite elevated mortgage interest rates and inflationary pressures builder incentives have helped bridge the affordability gap for many homebuyers.

Truman Patterson: And Andy, congratulations on the role. I look forward to working with you in the future. I realize you've only, you know, officially been in the role for a short time here. But now that you're officially in the seat, are there any kind of big picture initiatives shifts in how you're thinking about the business? You know, coming from the largest builder to now the largest land company? I'd love to hear, you know, just any thoughts there.

Jim Allen: and demographic support and housing demand remain favorable, despite elevated mortgage interest rates and inflationary pressure.

Demographic Support and Housing Demand remain favorable, despite elevated mortgage interest rates and inflationary pressures.

Jim Allen: Demographic Support and Housing Demand remain favorable, despite elevated mortgage interest rates and inflationary pressures.

Jim Allen: Builder incentives have helped raise the affordability gap for many homebuyers, and low retail supply continues to be a driver of buyers choosing new construction.

Builder incentives have helped bridge the affordability gap for many homebuyers, and low retail supply continues to be a driver of buyers choosing new construction.

Jim Allen: Builder incentives have helped bridge the affordability gap for many homebuyers, and low retail supply continues to be a driver of buyers choosing new construction.

Speaker Change: Retail supply continues to be a driver of buyers choosing new construction.

Supply of vacant developed lots, especially at affordable price points continues to be constrained across our footprint.

Jim Allen: and Paulie Bacon at all costs, especially at affordable price points.

Supplying vacants at all costs, especially at affordable price points.

Jim Allen: Supplying vacants at all costs, especially at affordable price points.

Jim Allen: continue to be constrained across our footprint.

continue to do consternation across our footprint.

Jim Allen: continue to do consternation across our footprint.

Jim Allen: Four stars uniquely positioned to take advantage of the shortage of finish line.

The four stars uniquely positioned to take advantage of the shortage of finish line.

Jim Allen: The four stars uniquely positioned to take advantage of the shortage of finish line.

Speaker Change: Enforced or is uniquely positioned to take advantage of the shortage of finished was our ongoing focus as it developed lots for homes at affordable price points demonstrated by our average sales price this quarter of roughly $96000 avail.

Jim Allen: Our ongoing focus is to develop blocks for homes at affordable price points.

Our ongoing focus is to develop blocks for homes at affordable price points.

Jim Allen: Our ongoing focus is to develop blocks for homes at affordable price points.

Jim Allen: demonstrated our average sales price this quarter of roughly $96,000.

demonstrated our average sales price this quarter of roughly $96,000.

Jim Allen: demonstrated our average sales price this quarter of roughly $96,000.

Andy Oxley: It seems like the Healthy Growth Initiative that 4STAR had laid out previously is largely unchanged, so any commentary there would be helpful. Thank you very much.

Jim Allen: Availability of contractors and necessary materials has improved over the past several months, but we have not seen overall reductions.

Availability of contractors and necessary materials has improved over the past several months, but we have not seen overall reductions.

Jim Allen: Availability of contractors and necessary materials has improved over the past several months, but we have not seen overall reductions.

Availability of contractors and necessary materials has improved over the past several months, but we have not seen overall reductions in the cost of developing land.

Jim Allen: and Carlson developing land.

Jim Allen: We will continue value engineering our projects and work with our trade partners to develop lots in the most efficient way possible.

We will continue value engineering our projects and work with our trade partners to develop lots in the most efficient way possible.

Jim Allen: We will continue value engineering our projects and work with our trade partners to develop lots in the most efficient way possible.

He will continue value engineering projects and work with our trade partners to develop what's the most efficient way possible.

Jim Allen: Our development cycle signs have continued to be impacted by governmental delays.

Our development cycle signs have continued to be impacted by governmental delays.

Jim Allen: Our development cycle signs have continued to be impacted by governmental delays.

Truman Patterson: I appreciate the opportunity to be here. Our goal does not change. As you said, our goal is to achieve a 5% market share as quickly and efficiently as we can. So we're looking to grow the business. Perfect.

Our development cycle times have continued to be impacted by governmental delays.

Jim Allen: Home builders continue to compete to secure land and lot positions.

Home Builders continue to compete to secure land of opposition.

Jim Allen: Home Builders continue to compete to secure land of opposition.

Homebuilders continue to compete to secure land and lot positions.

Jim Allen: and many are looking to replace current closed-off communities to position for future growth.

and many are looking to replace current closed-off communities to position for future growth.

Jim Allen: and many are looking to replace current closed-off communities to position for future growth.

When you are looking to replace current close out communities to position for future growth. As a result, we are not seeing any softening in land prices.

Speaker Change: As a result, we are not seeing any self-name from Anne Price.

As a result, we are not seeing any softening in land prices.

Jim Allen: As a result, we are not seeing any softening in land prices.

Speaker Change: However, in most markets, we have seen an adjustment back to normal contract terms. Jim?

However, in most markets, we have seen an adjustment back to normal contract terms.

Jim Allen: However, in most markets, we have seen an adjustment back to normal contract terms.

Jim Allen: And then with your gross margin. I realize it can be lumpy, kind of quarter to quarter, but I believe you all said the current quarter was about 22.8% excluding a closeout community, which is, you know, relatively elevated at the higher end of history. Could you all help us understand, you know, whether there were any other kind of items or one-time items during the quarter where this might not be repeatable at this level, or is it a little bit more sustainable given your old cost advantages versus the smaller peers where there's, you know, tighter lending conditions, higher cost of capital, et cetera? Hi Truman.

However, in most markets, we have seen an adjustment back to normal contract terms Jim.

Speaker Change: D.R. Horton is our largest and most important customer.

D.R. Horton is our largest and most important customer.

Jim Allen: D.R. Horton is our largest and most important customer.

Speaker Change: D. R. Horton is our largest and most important customer 16% of the homes D. R. Horton started in the past 12 months, we are on a four star developed lots.

Speaker Change: 16% of the homes we have Horton started in the past 12 months were on a four-star developed lot.

Sixteen percent of the homes we are hoarding started in the past 12 months were on a four-star developed lot.

Jim Allen: Sixteen percent of the homes we are hoarding started in the past 12 months were on a four-star developed lot.

Speaker Change: With a mutually stated goal of one out of every three homes D.R. Horton sells to be on a lot developed by Four Star, we have significant opportunity to grow our market share within D.R. Horton.

With a mutually stated goal of one out of every three homes D.R. Horton sells to be on a lot developed by 4 Star, we have significant opportunity to grow our market share within D.R. Horton.

Jim Allen: With a mutually stated goal of one out of every three homes D.R. Horton sells to be on a lot developed by 4 Star, we have significant opportunity to grow our market share within D.R. Horton.

With a mutually stated goal of one out of every three homes D. R. Horton sales to be on a lot developed by four star we have significant opportunity to grow our market share within D. R. Horton.

Speaker Change: We also continue to work on expanding our relationships with other home builders.

We also continue to work on expanding our relationships with other homebuilders.

Jim Allen: We also continue to work on expanding our relationships with other homebuilders.

We also continue to work on expanding our relationships with other homebuilders, 10% of our first quarter deliveries were 316 lots were sold to other homebuilders.

Speaker Change: 10% of our first quarter deliveries for 316 lots were sold to other home builders.

10% of our first quarter deliveries, or 316 lots, were sold to other home builders.

Jim Allen: 10% of our first quarter deliveries, or 316 lots, were sold to other home builders.

Speaker Change: which includes 124 lots that were sold to a lot banker who expects to sell those lots to D.R. Horton at a future date.

which includes 124 lots that were sold to a lot banker who expects to sell those lots to D.R. Horton at a future date.

Jim Allen: which includes 124 lots that were sold to a lot banker who expects to sell those lots to D.R. Horton at a future date.

Which includes 124 lots that were sold through a lot banker, who expects to sell those lots of D. R. Horton at a future date seven.

Speaker Change: 7% of our deliveries in the prior year quarter were sold to third-party companies.

7% of our deliveries in the prior year quarter were sold to third-party companies.

Jim Allen: 7% of our deliveries in the prior year quarter were sold to third-party companies.

7% of our deliveries in the prior year quarter were sold to third party customers Katy.

Speaker Change: Pete

Speaker Change: Forster's underwriting criteria for new development projects remains unchanged at a minimum 15% pre-tax return on average inventory and a return of our initial cash investment within 36 months.

Forster's underwriting criteria for new development projects remains unchanged at a minimum 15% pre-tax return on average inventories and a return of our initial cash investment within 36 months.

Jim Allen: Forster's underwriting criteria for new development projects remains unchanged at a minimum 15% pre-tax return on average inventories and a return of our initial cash investment within 36 months.

<unk> underwriting criteria for new development projects remained unchanged at a minimum 18% pre tax return on average inventory and a return of our initial cash investment.

Katie Smith: As you know, we don't provide guidance with respect to margins, and we underwrite returns, not margins, so it does create some variability in margins from quarter to quarter depending on which projects deliver lots within the quarter because we have a mix of, you know, projects with higher or lower margins. However, I mean... We can provide some historical context. And if you look at maybe the last nine quarters, adjusted for impairments and, you know, kind of an unusually high legacy. Lott or Lansell?

In 36 months.

Speaker Change: During the first quarter, we invested approximately $450 million in land and land development, split equally between land development and land equity.

During the first quarter, we invested approximately $450 million in land and land development, split equally between land development and land acquisition.

Jim Allen: During the first quarter, we invested approximately $450 million in land and land development, split equally between land development and land acquisition.

During the first quarter, we invested approximately $450 million in land and land development split equally between main development land acquisition.

Speaker Change: Given the strong demand for finished lots, this quarter's investment was almost double the priority of your quarter.

Given the strong demand for finished lots, this quarter's investment was almost double the prior year quarter.

Jim Allen: Given the strong demand for finished lots, this quarter's investment was almost double the prior year quarter.

Given the strong demand for finished lot this quarter's investment almost double the prior year quarter.

Speaker Change: We still expect our investments and main acquisition and development to total $1.5 to $1.6 billion in fiscal 2024, subject to market conditions.

We still expect our investment from land acquisition and development to total $1.5 to $1.5 billion in fiscal 2024 subject to market conditions.

Jim Allen: We still expect our investment from land acquisition and development to total $1.5 to $1.5 billion in fiscal 2024 subject to market conditions.

We still expect our investments in land acquisition and development totaled one five to $1 6 billion in fiscal 2024 subject to market condition.

Speaker Change: Our lot position at December 31st was $82,400.

Our lot position at December 31st was 82,400 square feet.

Jim Allen: Our lot position at December 31st was 82,400 square feet.

Speaker Change: Our lot position at December 31 was 82400 miles of.

Speaker Change: of which 55,400 lots were owned and 27,000 lots were controlled through purchase contracts.

of which 55,400 lots are owned and 27,000 lots are controlled through purchase contracts.

Jim Allen: of which 55,400 lots are owned and 27,000 lots are controlled through purchase contracts.

55400 lots are owned and 27000 lots are controlled through purchase contracts.

Jim Allen: Our margins have fluctuated between 18-23% for the last 9 quarters, and the last 5 quarters have been 21-23%. We should look at Last year, our fiscal year, we reported 21.2%, but if you exclude the impairment... that we recognized last fiscal year, that would have been 22.5% compared to the 22.8% for this quarter. So you can see that our margins have actually been fairly consistent for the last couple of years, kind of in the low 20s. Yeah, and Truman, this is Katie.

Speaker Change: At quarter end, we have 7,300 finished losses.

At quarter end, we have 7,300 finished lawsuits.

Jim Allen: At quarter end, we have 7,300 finished lawsuits.

At quarter end, we had 7300 finished lots on hand.

We continue to target a 3-4 year owned inventory of land and lots and remain focused on managing our development in phases to deliver finished lots at a pace that matches market demands, consistent with our emphasis on capital efficiency.

Jim Allen: We continue to target a 3-4 year owned inventory of land and lots and remain focused on managing our development in phases to deliver finished lots at a pace that matches market demands, consistent with our emphasis on capital efficiency.

We continue to target a three to four year inventory of land and lots in remain focused on managing our development to deliver finished lots at a pace that matches market demand.

With our emphasis on capital efficiency.

Speaker Change: 30% of our owned lots are under contract with Dell, representing approximately $1.6 billion of future revenue.

30% of our owned lots are under contract to sell, representing approximately $1.6 billion of future revenue.

Jim Allen: 30% of our owned lots are under contract to sell, representing approximately $1.6 billion of future revenue.

30% of our owned lots are under contract to sell representing approximately $1 $6 billion in future revenue.

Speaker Change: These contracts have $141 million of hard earnest money deposits associated with them.

These contracts have $141 million of hard-earned money deposits associated with them.

Jim Allen: These contracts have $141 million of hard-earned money deposits associated with them.

These contracts have $141 million of hard earnest money deposit.

Again.

Speaker Change: Another 32% of our owned blocks are subject to a right of first offer to deal or hoarding based on executed purchase and sale agreements. Jim?

Another 32% of our own blocks are subject to a write-up first offer to Dale Horton based on executed purchase and sale agreements.

Jim Allen: Another 32% of our own blocks are subject to a write-up first offer to Dale Horton based on executed purchase and sale agreements.

Another 32% and our owned lots are subject to a right of first offer to D. R. Horton based on based on executed purchase and sale agreements Kim.

We have significant liquidity and are using modest leverage to keep our balance sheet is strong we ended the quarter with approximately $840 million of liquidity, including unrestricted cash balance of $460 million and $380 million of available capacity on our undrawn revolving credit facility.

Jim Allen: We have significant liquidity and are using modest leverage to keep our balance sheet strong. We ended the quarter with approximately $840 million of liquidity, including an unrestricted cash balance of $460 million and $380 million of available capacity on our undrawn revolving credits.

We have significant liquidity and are using modest leverage to keep our balance sheet strong. We ended the quarter with approximately $840 million of liquidity, including an unrestricted cash balance of $460 million and $380 million of available capacity on our undrawn revolving credit program.

Katie Smith: There wasn't anything else in the quarter that was significant enough to call out. Okay, that's very helpful. And if I could sneak another one in on kind of the other sides of returns at an enterprise level, if you will, but your lot delivery guidance over the next few quarters kind of implies flattish year over year, if I'm doing the math right. Seems like perhaps given some of the growth in the industry, is that a reality, or on the flip side, you all perhaps pull forward some sales in the one queue and now you might have Well, the first quarter was a good quarter, but it's still early in the year.

Jim Allen: Total debt at December 31st was $705 million, with no senior note maturities until fiscal 2026.

Total debt at December 31st was $705 million, with no senior note maturities until FY2026.

Jim Allen: Total debt at December 31st was $705 million, with no senior note maturities until FY2026.

Speaker Change: Total debt at December 31 was $705 million with no senior note maturities until fiscal 2026, and our net debt to capital ratio was 14, 9%.

Jim Allen: and our net debt to capital ratio was 14.9%.

and our net debt to capital ratio was 14.9%.

Jim Allen: and our net debt to capital ratio was 14.9%.

Jim Allen: We ended the quarter with $1.4 billion of stockholders' equity, and our book value per share increased to $28.21, up 15% from a year ago.

We ended this quarter with $1.4 billion of stockholders' equity, and our book value per share increased to $28.21, up 15% from a year ago.

Jim Allen: We ended this quarter with $1.4 billion of stockholders' equity, and our book value per share increased to $28.21, up 15% from a year ago.

Speaker Change: We ended the quarter with $1 $4 billion of stockholders' equity and our book value per share increased to $28 21.

Speaker Change: Up 15% from a year ago.

Jim Allen: Four Star Capital Structure is one of our biggest competitive advantages and it sets us apart from other land developers.

Orscar's capital structure is one of our biggest competitive advantages, and it sets us apart from other land developers.

Jim Allen: Orscar's capital structure is one of our biggest competitive advantages, and it sets us apart from other land developers.

<unk> capital structure is one of our biggest competitive advantages and it sets us apart from other land developers.

Jim Allen: Project-level land acquisition and development loans are less available today and have continued to become more expensive, impacting most of our competitors.

Project level land acquisition and development loans are less available today and have continued to become more expensive, impacting most of our competitors.

Jim Allen: Project level land acquisition and development loans are less available today and have continued to become more expensive, impacting most of our competitors.

Speaker Change: Project level land acquisition and development loans are less available today and has continued to become more expensive impacting most of our competitors.

Jim Allen: Other developers generally use project-level development loans which are typically more restrictive, have floating rates, and create administrative complexity, especially in a volatile rate environment.

Other developers generally use project-level development loans, which are typically more restrictive, have floating rates, and create administrative complexity, especially in a volatile rate environment.

Jim Allen: Other developers generally use project-level development loans, which are typically more restrictive, have floating rates, and create administrative complexity, especially in a volatile rate environment.

Other developers generally used project level development loans, which are typically more restrictive how floating rates and create administrative complexity, especially in a volatile rate environment or.

Jim Allen: Our capital structure provides us with operational flexibility while our strong liquidity positions us to take advantage

Our capital structure provides us with operational flexibility, while our strong liquidity positions us to take advantage of.

Jim Allen: Our capital structure provides us with operational flexibility, while our strong liquidity positions us to take advantage of.

Our capital structure provides us with operational flexibility, while our strong liquidity positions us to take advantage of attractive opportunities when they arise.

Speaker Change: Thank you for watching.

attractive opportunities when they arise.

Jim Allen: attractive opportunities when they arise.

Speaker Change: Andy, I'll hand it back to you for closing remarks.

and I'll hand it back to you for closing.

Speaker Change: and I'll hand it back to you for closing.

Andrew I'll hand, it back to you for closing remarks.

Andy Oxley: Thanks, Jim. We are pleased with a four-star start to fiscal 2024. Our team maintained double-digit revenues while continuing to deliver growth with strong profitability.

Thanks Jim. We are pleased with 4STAR's start to fiscal 2024. Our team maintained double-digit revenue while continuing to deliver growth with strong profitability.

Speaker Change: Thanks Jim. We are pleased with 4STAR's start to fiscal 2024. Our team maintained double-digit revenue while continuing to deliver growth with strong profitability.

Thanks Jill.

We're pleased with four stores start to fiscal 2024, our team maintained double digit revenues, while continuing to deliver growth with strong profitability.

Andy Oxley: Elevated mortgage interest rates continue to impact affordability, but the underlying fundamentals of housing shortage remain in place.

Elevators mortgage interest rates continue to impact affordability, but the underlying fundamentals of housing shortage remain in place.

Speaker Change: Elevators mortgage interest rates continue to impact affordability, but the underlying fundamentals of housing shortage remain in place.

Elevated mortgage interest rates continue to impact affordability, but the underlying fundamentals of our housing shortage remain in place. We believe the low supply of existing homes will continue to drive buyers to new construction and our strong relationship with D. R. Horton provides a clear path for growth.

Andy Oxley: We believe the low supply of existing homes will continue to drive hires to new construction, and our strong relationship with D.R. Horton provides a clear path for growth.

We believe the low supply of existing homes will continue to drive hires to new construction, and our strong relationship with D.R. Horton provides a clear path for growth.

Speaker Change: We believe the low supply of existing homes will continue to drive hires to new construction, and our strong relationship with D.R. Horton provides a clear path for growth.

Andy Oxley: Our guidance for fiscal 2024 remains unchanged.

Our diagram for fiscal 2024 remains unchanged.

Speaker Change: Our diagram for fiscal 2024 remains unchanged.

Our guidance for fiscal 2024 remains unchanged based on current market conditions, we expect to deliver between 14000 515500 lots and generate one four to $1 $5 billion of revenue we are closely monitoring each market.

Andy Oxley: Based on current market conditions, we expect to deliver between 14,500 and 15,500 lots and generate $1.4 to $1.5 billion of revenue.

Based on current market conditions, we expect to deliver between 14,500 and 15,500 watts and generate $1.4 to $1.5 billion of revenue.

Speaker Change: Based on current market conditions, we expect to deliver between 14,500 and 15,500 watts and generate $1.4 to $1.5 billion of revenue.

Mark Weintraub: Based on the current market conditions, our current lot positions, and our development timelines, we still believe that $14,515 is a realistic range. Yeah, true. And that's Mark.

Andy Oxley: We are closely monitoring each market as we strive to balance pace and price to maximize returns in each project.

We are closely monitoring each market as we strive to balance pace and price to maximize returns in each project.

Speaker Change: We are closely monitoring each market as we strive to balance pace and price to maximize returns in each project.

As we strive to balance pace and price to maximize returns in each project.

We are the market leader in a highly fragmented and under capitalized industry and uniquely positioned to take advantage of builder demand for finished lots there.

Andy Oxley: We are the market leader in a highly fragmented and undercapitalized industry and uniquely positioned to take advantage of builder demand for finished lots.

We are the market leader in a highly fragmented and under-capitalized industry and uniquely positioned to take advantage of builder demand for finished lots.

Speaker Change: We are the market leader in a highly fragmented and under-capitalized industry and uniquely positioned to take advantage of builder demand for finished lots.

Mark Weintraub: We also expect new home starts at one of the new home sales, so if some of the homes oversell have accelerated, we could be at the higher end of our range, but we're going to monitor the spring selling season and remain flexible to capitalize on any market upside. I was saying that there could be a bottleneck in achieving that upside that could be related to finished lot deliveries, particularly related to government approval delays. Yeah, we've alluded to it in our scripted remarks, but we've continued to see delays from municipalities and land development, so that could definitely be the problem. Gotcha, understood. Thanks for your time, and good luck in the next couple of quarters. Thank you. The next question is from Carl Reichert with ETIG. Please proceed. Thanks, everybody, and the official welcome. Katie, it's good to have you back, too.

Andy Oxley: There is a significant opportunity to expand our presence in markets that we operate in, and our goal remains the same, to double our market share to 5% over the intermediate term. We expect to aggregate significant market share over the next few years, while maintaining a disciplined approach when investing capital to enhance the long-term value of Four Star.

There is a significant opportunity to expand our presence in markets that we operate in, and our goal remains the same, to double our market share to 5% over the intermediate term. We expect to aggregate significant market share over the next few years, while maintaining a disciplined approach when investing capital to enhance a long-term value of four stars.

Speaker Change: There is a significant opportunity to expand our presence in markets that we operate in, and our goal remains the same, to double our market share to 5% over the intermediate term. We expect to aggregate significant market share over the next few years, while maintaining a disciplined approach when investing capital to enhance a long-term value of four stars.

As a significant opportunity to expand our presence in markets that we operate in and our goal remains to say to double our market share to 5% over the intermediate term, we expect the aggregate significant market share over the next few years, while maintaining a disciplined approach.

Speaker Change: When investing capital to enhance long term value for store.

Speaker Change: John, at this time we'll open the lines for questions.

John, at this time we'll listen to the lines for questions.

Speaker Change: John, at this time we'll listen to the lines for questions.

John at this time well open the line for questions.

John: Thank you.

Thank you.

John: Thank you.

Thank you.

At this time we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.

John: At this time we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.

At this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.

John: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

John: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

John: One moment please while we pose for questions.

One moment please while we pose for questions.

John: One moment please while we pose for questions.

Speaker Change: Our first question comes from Truman Patterson with Wolf Research.

Our first question comes from Truman Patterson with Wolf Research.

Speaker Change: Our first question comes from Truman Patterson with Wolf Research.

Our first question comes from Truman Patterson with Wolfe Research. Please proceed.

Truman Patterson: Hey, good afternoon, everyone, and Andy, congrats on the role. Look forward to working with you in the future. I realize you've only, you know, officially been in the role a short time here, but now that you're officially in the seat, are there any kind of big picture initiatives, shifts in how you're thinking about the business, you know, coming from the largest builder to now the largest land company? I'd love to hear, you know, just any thoughts there.

Hey, good afternoon, everyone. And Andy, congrats on the role. Look forward to working with you in the future. I realize you've only, you know, officially been in the role a short time here. But now that you're officially in the seat, are there any kind of big picture initiative shifts in how you're thinking about the business? You know, coming from the largest builder to now the largest land company? I'd love to hear, you know, just any thoughts there. It seems like

Truman Patterson: Hey, good afternoon, everyone. And Andy, congrats on the role. Look forward to working with you in the future. I realize you've only, you know, officially been in the role a short time here. But now that you're officially in the seat, are there any kind of big picture initiative shifts in how you're thinking about the business? You know, coming from the largest builder to now the largest land company? I'd love to hear, you know, just any thoughts there. It seems like

Hey, good afternoon, everyone and.

Andy Congrats on the role look forward to working with him in the future.

Now that you're officially in the seed or are there any kind of big picture initiative shifts in how you're thinking about the business you know coming from the largest builder to now the largest land company I'd Love to hear you know just any thoughts there it seems like.

Carl Reichert: Can I go back to something Mark mentioned about normal contract terms and sort of a movement back that direction. Can you expand on that a little bit by what you mean by normal contract terms and what was really abnormal prior? Yeah, so we're seeing more takedown schedules than we were seeing before, bulk closings, things of that nature, so although it was increasingly difficult today, those normal contract terms, it's kind of gone back to what was historically the case for, I would tell you, a decade. So we have landfillers that are getting a little bit more realistic. I will give you an example.

Truman Patterson: The healthy growth initiatives that 4STAR laid out previously, doubling market share, seems like those are largely unchanged, so any commentary there would be helpful.

The Healthy Growth Initiative that 4STAR had laid out previously, doubling market share. It seems like those are largely unchanged, so any commentary there would be helpful.

Andy Oxley: The Healthy Growth Initiative that 4STAR had laid out previously, doubling market share. It seems like those are largely unchanged, so any commentary there would be helpful.

The healthy growth initiatives that <unk> laid out previously doubling you know market share. It seems like those are largely unchanged. So any commentary there would be helpful.

Speaker Change: Thank you very much. I appreciate the opportunity to be here. Our goal does not change, as you said. Our goal is to achieve a 5% market share as quickly and efficiently as we can. So we're looking to grow the business.

Thank you very much. I appreciate the opportunity to be here. Our goal does not change. As you said, our goal is to achieve a 5% market share as quickly and efficiently as we can. So we're looking to grow the business.

Speaker Change: Thank you very much. I appreciate the opportunity to be here. Our goal does not change. As you said, our goal is to achieve a 5% market share as quickly and efficiently as we can. So we're looking to grow the business.

Thank you very much I appreciate the opportunity to be here.

Speaker Change: Our goal doesn't.

It does not change as you said what's exactly.

Our goal is to achieve a 5% market share as quickly and efficiently as we can.

So when we're looking to grow the business.

Speaker Change: Perfect. And then with your gross margin,

Perfect. And then with your gross margin.

Speaker Change: Perfect. And then with your gross margin.

Okay, perfect and then with your gross margins.

Speaker Change: I realize they can be lumpy, kind of quarter to quarter. I believe you all said current quarter was about 22.8% excluding a closeout community, which is, you know, relatively elevated higher end of history. Could you all help us understand, you know, whether there were any other kind of items or one-time items during the quarter where this might not be repeatable at this level or is it a little bit more sustainable given your old cost advantages versus the smaller peers where there's, you know, tighter lending conditions, higher cost of capital, et cetera?

I realize they can be lumpy, kind of quarter to quarter, I believe you all said current quarter was about 22.8% excluding a closeout community, which is, you know, relatively elevated higher end of history. Could you all help us understand, you know, whether there were any other kind of items or one-time items during the quarter where this might not be repeatable at this level or is it a little bit more sustainable given your old cost advantages versus the smaller peers where there's, you know, tighter lending conditions, higher cost of capital, et cetera?

Speaker Change: I realize they can be lumpy, kind of quarter to quarter, I believe you all said current quarter was about 22.8% excluding a closeout community, which is, you know, relatively elevated higher end of history. Could you all help us understand, you know, whether there were any other kind of items or one-time items during the quarter where this might not be repeatable at this level or is it a little bit more sustainable given your old cost advantages versus the smaller peers where there's, you know, tighter lending conditions, higher cost of capital, et cetera?

I realize they can be lumpy kind of quarter to quarter.

I believe you all said the current quarter was about 22, 8%, excluding a closeout community, which is you know relatively elevated.

Higher end of history.

Could you all help us understand whether there were any other kind of items or one time items during the quarter, where this might not be repeatable at this level or is it a little bit more sustainable given year olds cost advantages versus the smaller peers, where there's tighter.

Mark Weintraub: So if you have a big project and you were going to go bulk on a large project, they're now giving you time between your takedown to take that land down over time versus having to bulk purchase that project. That's probably not the big normalization of the contract terms. We've also seen more normalized due diligence timeframes. So instead of 30 days, you're seeing 60 or 90 days.

Lending conditions hydro higher cost of capital et cetera.

Speaker Change: Hi, Truman. As you know, we don't provide guidance with respect to margins, and we underwrite returns, not margins, so it does create some variability in margins from quarter to quarter depending on which projects deliver lots within the quarter.

Hi, Truman. As you know, we don't provide guidance with respect to margins, and we underwrite returns, not margins, so it does create some variability in margins from quarter to quarter depending on which projects deliver lots within the quarter.

Hi, Truman.

So.

Speaker Change: As you know, we don't provide guidance with respect to margins and and we underwrite returns not margin. So it does create some variability in margins from quarter to quarter, depending on which projects deliver lots within the quarter.

Carl Reichert: Okay, so more efficient, takes longer but is easier to manage and more efficient for you all in terms of capital deployment and receipt of capital. Is that the way to think about it? As opposed to one year?

Speaker Change: because we have a mix of projects with higher or lower margins.

because we have a mix of, you know, projects with higher or lower margins.

Speaker Change: because we have a mix of, you know, projects with higher or lower margins.

Because we have a mix of.

Projects with higher or lower margins.

Speaker Change: However, I mean...

However, I mean...

Speaker Change: However, I mean...

However, I mean.

Speaker Change: We can provide some historical context.

We can provide some historical context.

Speaker Change: We can provide some historical context.

Speaker Change: We can provide some historical context, and if you look at maybe the last nine quarters.

Speaker Change: And if you look at maybe the last nine quarters, adjusted for impairments and, you know, kind of unusually high legacy.

And if you look at maybe the last nine quarters, adjusted for impairments and, you know, kind of unusually high legacy.

Speaker Change: And if you look at maybe the last nine quarters, adjusted for impairments and, you know, kind of unusually high legacy.

Adjusted for impairments and kind of unusually high legacy.

Speaker Change: Lot or land sales.

Speaker Change: Lott, or Lynn Feld.

Lott or Lansell.

Speaker Change: Lott or Lansell.

Speaker Change: Our margins have fluctuated between 18% to 23% for the last nine quarters. In the last five quarters, it's been 21% to 23%.

Our margins have fluctuated between 18-23% for the last 9 quarters and the last 5 quarters have been 21-23%.

Speaker Change: Our margins have fluctuated between 18-23% for the last 9 quarters and the last 5 quarters have been 21-23%.

Our margins have fluctuated between 18% to 23% for the last nine quarters in the last five quarters, it's been 21% to 23% if you will.

Katie Smith: Okay, great. Thank you. And then, on Truman's question about the guide for the year, do you have lots that you think right now you'd anticipate finishing in the next two quarters that would be available for sale that don't have a buyer or contract yet? And if so, what's that number?

Speaker Change: If you look at

should look at

Speaker Change: should look at

Look at <unk>.

Speaker Change: Last year, our fiscal year, we reported 21.2%, but it excludes the impairment.

Last year, our fiscal year, we reported 21.2%, but if you exclude the impairment...

Speaker Change: Last year, our fiscal year, we reported 21.2%, but if you exclude the impairment...

Last year, our fiscal year.

Reported 21, 2%, but if you exclude the impairments.

Speaker Change: That we recognized last fiscal year, that would have been 22.5% compared to the 22.8% for this quarter. So you can see that our margins have actually been fairly consistent for the last couple years.

that we recognized last fiscal year, that would have been 22.5% compared to the 22.8% for this quarter. So you can see that our margins have actually been fairly consistent for the last couple years.

Speaker Change: that we recognized last fiscal year, that would have been 22.5% compared to the 22.8% for this quarter. So you can see that our margins have actually been fairly consistent for the last couple years.

That we recognized last fiscal year.

That would have been 22, 5% compared to the 22, 8% for this quarter. So you can see that our margins have actually been fairly consistent for the last couple of years.

Speaker Change: You know, kind of in that low 20s.

you know, kind of in that low 20s.

Speaker Change: you know, kind of in that low 20s.

Speaker Change: Kind of in that low <unk> range.

Speaker Change: Yeah, and Truman, this is Katie. There wasn't anything else in the quarter that was significant enough to call out.

Yeah, and Truman, this is Katie. There wasn't anything else in the quarter that was significant enough to call out.

Speaker Change: Yeah, and Truman, this is Katie. There wasn't anything else in the quarter that was significant enough to call out.

Yeah. Jeremy this is Katie there wasn't anything else in the quarter that was significant enough to call out.

Jeremy: Okay. That's that's a very helpful and if I could sneak another one in on kind of the other sides of return so the EDA.

Truman Patterson: Okay, that's very helpful, and if I could sneak another one in on kind of the other sides of returns at an enterprise level, if you will, but your lot delivery guidance over the next few quarters?

Okay, that's very helpful. And if I could sneak another one in on kind of the other sides of returns at an enterprise level, if you will, but your lot delivery guidance over the next few quarters.

Truman Patterson: Okay, that's very helpful. And if I could sneak another one in on kind of the other sides of returns at an enterprise level, if you will, but your lot delivery guidance over the next few quarters.

Katie Smith: I don't have the specific number of lots that are going to be finished that aren't under contract right now, but I can probably get that for you. I'd have to check.

Enterprise level, if you will but youre lot delivery guidance over the next few quarters kind of implies flattish year over year, if I'm doing the math right. It seems like perhaps given some of the growth in the industry is is that you know a reality or on the flip side did you all perhaps.

Truman Patterson: kind of implies flattish year over year if I'm doing the math right. It seems like perhaps given some of the growth in the industry is that a reality or on the flip side that you all perhaps pull forward some sales in the one queue and now you might have a little bit of a developed lot shortage, if you will, or a gap, if you will, just hoping to understand kind of the puts and takes of the guidance.

kind of implies flattish year over year, if I'm doing the math right, seems like perhaps given some of the growth in the industry is that a reality or on the flip side that you all perhaps pull forward some sales in the one queue and now you might have a little bit of a developed shortage, if you will, or a gap, if you will, just hoping to understand kind of the puts and takes of the guidance.

Truman Patterson: kind of implies flattish year over year, if I'm doing the math right, seems like perhaps given some of the growth in the industry is that a reality or on the flip side that you all perhaps pull forward some sales in the one queue and now you might have a little bit of a developed shortage, if you will, or a gap, if you will, just hoping to understand kind of the puts and takes of the guidance.

Mark Weintraub: But we definitely do have stuff that's under development that hasn't been put under contract yet. In a four-source project, we aim to have those under contract anywhere from three to six months before delivery. And so there's definitely still opportunity to put stuff under contract that's going to close in the back half of the year. Okay, all right, great. Thank you, Katie.

All forward some sales into one Q and now you might have a little bit of a.

<unk> plot.

Shortage, if you will or a gap if you will just hoping to understand kind of the puts and takes of the guidance.

Well we.

Speaker Change: Well, you know, first quarter was a good quarter, but, you know, it's still early in the year. Based on, you know, the current market conditions, our current loss positions, our development timelines, you know, we still believe that $14,500 to $15,500 is a realistic range. Yeah, Truman, that's Mark. We also expect, you know, new homes start to align with new home sales. So if homeowner sales accelerate, we could be at the higher end of our range. But we're going to monitor the spring selling season, remain flexible to capitalize on any market upside. I was saying that there could be a bottleneck in achieving that upside that could be related to finished lot deliveries, particularly related to government approval delays.

Well, the first quarter was a good quarter, but it's still early in the year. Based on the current market conditions, our current lot positions, our development timelines, we still believe that $14,515 is a realistic range. Yeah, true. And that's Mark. We also expect a new home starts at one of the new home sales, so if some of the homes oversell have accelerated, we could be at the higher end of our range, but we're going to monitor the spring selling season, remain flexible to capitalize on any market upside. I was saying that there could be a bottleneck in achieving that upside that could be related to finished lot deliveries, particularly related to government approval delays.

Speaker Change: Well, the first quarter was a good quarter, but it's still early in the year. Based on the current market conditions, our current lot positions, our development timelines, we still believe that $14,515 is a realistic range. Yeah, true. And that's Mark. We also expect a new home starts at one of the new home sales, so if some of the homes oversell have accelerated, we could be at the higher end of our range, but we're going to monitor the spring selling season, remain flexible to capitalize on any market upside. I was saying that there could be a bottleneck in achieving that upside that could be related to finished lot deliveries, particularly related to government approval delays.

First quarter was a good quarter, but it's still early in the year based on the current market conditions, our current lot positions our development timelines.

Carl Reichert: And then last question, you did another deal with a lot banker who's working with your largest customer, and I'm curious about whether or not that's a potential growth area for you, whether or not a lot banker will be working with Horton. You've certainly talked to plenty who are trying to deploy more capital and looking for opportunities. Can you talk about what that opportunity might be?

We still believe that $14 515, five is a realistic range yeah. Truman. It's mark. We also expect you know new home starts to align with new home sales.

Although homebuilder sales accelerated we can be at the higher end of our range, but we're going to monitor the spring selling season remain flexible to capitalize on any market upside that was saying that there could be a bottleneck in achieving that upside it could be related to finished lot deliveries, particularly related to government approval delays.

Speaker Change: Yeah, we alluded to it in our scripted remarks, but we continue to see delays from municipalities, land development, so that could definitely be the problem.

Yeah, we've alluded to it in our scripted remarks, but we've continued to see delays from municipalities and land development, so that could definitely be the problem.

Speaker Change: Yeah, we've alluded to it in our scripted remarks, but we've continued to see delays from municipalities and land development, so that could definitely be the problem.

Yes.

Lee sitting in our scripted remarks that we've continued to see delays friends.

<unk> maintenance elements of that that could definitely be the bottleneck.

Katie Smith: And then I should sidecar onto that also, because I always ask about single-family rental and how that business looks, if it looks interesting at all, or is that still sort of a one-off? I'll start and I'll let somebody else chime in if they need to, but as far as the opportunity with land bankers is concerned, it's not really our decision. We're not marketing our lots to land bankers, but if one of our customers wants to use a land banker to step in as an intermediary, we're completely fine with that.

Speaker Change: Gotcha. Understood. Thanks for your time and good luck in the next couple quarters.

Gotcha, understood. Thanks for your time and good luck in the next couple quarters.

Speaker Change: Gotcha, understood. Thanks for your time and good luck in the next couple quarters.

Gotcha understood. Thanks for your time and good luck in the next couple of quarters.

Speaker Change: Thank you. Thank you.

Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you. Thank you.

Speaker Change: The next question is from Carl Reichert with BTIG. Please proceed.

The next question is from Carl Reichert with ETIG, please proceed.

Speaker Change: The next question is from Carl Reichert with ETIG, please proceed.

The next question is from Carl Reichardt with BP I G. Please proceed Carl.

Carl Reichert: Thanks, everybody. Andy, special welcome. Katie, good to have you back, too. Can I go back to something Mark mentioned about normal contract terms and sort of a movement back that direction. Can you expand on that a little bit by what you mean by normal contract terms and what was really abnormal prior?

Thanks, everybody, and the official welcome. Katie, good to have you back too. Can I go back to something Mark mentioned about normal contract terms and sort of a movement back that direction. Can you expand on that a little bit by what you mean by normal contract terms and what was really abnormal prior?

Carl Reichert: Thanks, everybody, and the official welcome. Katie, good to have you back too. Can I go back to something Mark mentioned about normal contract terms and sort of a movement back that direction. Can you expand on that a little bit by what you mean by normal contract terms and what was really abnormal prior?

So everybody's Andy official welcome Katie good to have you back too.

Can I go back to make Mark mentioned about normal contract terms, and then sort of a move in that direction, but can you expand on that a little bit, but what do you mean by normal contract terms and in what was was really abnormal prior.

Mark Weintraub: Yeah, so we're seeing more takedown schedules than we were seeing before, like bulk closing, things of that nature. So, you know, although it was increasingly difficult today, those normal contract terms have kind of gone back to what was historically the case for, I would tell you, a decade.

Yeah, so we're seeing more takedown schedules than we were seeing before, bulk closings, things of that nature, so although it was increasingly difficult today, there's no more contract terms. It's kind of gone back to what was historically the case for, I would tell you, a decade.

Katie Smith: Yeah, so we're seeing more takedown schedules than we were seeing before, bulk closings, things of that nature, so although it was increasingly difficult today, there's no more contract terms. It's kind of gone back to what was historically the case for, I would tell you, a decade.

So we're seeing more.

Takedown schedules than we were seeing before less bulk closings things of that nature. So.

Although this wasn't traditionally difficult today, there's no more contract terms have kind of gone back to what was historically the case for I would tell you a decade.

Speaker Change:

Mark Weintraub: So we're getting land sellers that are getting a little bit more realistic. I'll give you an example. So if you had a big project and you were going to go bulk a large project, they're now giving you time between your takedown to take that land down over time versus having to bulk purchase that project. That's probably one of the big normalizations in contractors. We've also seen more normalized due diligence timeframes. So instead of 30 days, you're seeing 60 or 90 days.

So we're getting landfillers that are getting a little bit more realistic. I gave you an example. So if you had a big project and you were going to go bulk a large project, they're now giving you time between your takedown to take that land down over time versus having to bulk purchase that project. That's probably not the big normalization of the contract terms. We've also seen more normalized due diligence timeframes. So instead of 30 days, you're seeing 60 or 90 days.

Katie Smith: So we're getting landfillers that are getting a little bit more realistic. I gave you an example. So if you had a big project and you were going to go bulk a large project, they're now giving you time between your takedown to take that land down over time versus having to bulk purchase that project. That's probably not the big normalization of the contract terms. We've also seen more normalized due diligence timeframes. So instead of 30 days, you're seeing 60 or 90 days.

Katie Smith: It just enhances our capital efficiency and gets that inventory off of our balance sheet. We're pretty indifferent if there's a land banker that's stepping in on behalf of the builder as long as we have all the checks and balances in place. And as it relates to the part of your question on build-for-rent, yes, we do think that that is a sustainable part of our business. If we can have portions of a larger community which would... We could improve our pace through selling to a customer that has built-for-rent components or multi-family components, you know, that's something that we would absolutely entertain. I appreciate it all. Thanks very much.

And so we're getting land sellers that are getting a little bit more realistic I'll give you. An example, so if you had a big project and you were going to book a large project are now, giving you time between your take downs to.

Take that land down over time versus having the bulk purchase of that project is probably one of the big normalization and contractors. We have also seen.

Speaker Change: More normalized due diligence time frame since end of 30 days.

Speaker Change: Youre getting 60 or 90 days.

Speaker Change: Okay, so more efficient. It takes longer but easier to manage and more efficient for you all in terms of capital deployment and receiving capital. Is that the way to think about it as opposed to one year? Okay, great. Thank you. And then if I can get to Truman's question in a different way on the guide for the year. So do you have lots that you think right now you'd anticipate finishing in the next two quarters that would be available for sale? That don't have a buyer or contract yet? And if so, what's that number?

Okay, so more efficient, takes longer, but easier to manage and more efficient for you all in terms of capital deployment and receipt of capital. Is that the way to think about it? As opposed to one year? Okay, great. Thank you. And then if I can get to Truman's question a different way on the guide for the year. So, do you have lots that you think right now you'd anticipate finishing in the next two quarters that would be available for sale that don't have a buyer or contract yet? And if so, what's that number?

Speaker Change: Okay, so more efficient, takes longer, but easier to manage and more efficient for you all in terms of capital deployment and receipt of capital. Is that the way to think about it? As opposed to one year? Okay, great. Thank you. And then if I can get to Truman's question a different way on the guide for the year. So, do you have lots that you think right now you'd anticipate finishing in the next two quarters that would be available for sale that don't have a buyer or contract yet? And if so, what's that number?

Okay, so more efficient, but it takes longer but easier to manage and more efficient for you. All in terms of capital deployment and receipt of capital is that the way to think about it as opposed to lumpier.

Thank you.

And then if I can get the treatments question a different way on on the guide for the year. So.

Do you have lots that you think right now you would anticipate finishing in the next two quarters that would be available for sale that don't have a buyer contract yet and if so what's that number.

Carl Reichert: Thanks, Carl. The next question comes from Anthony Pantinari with Citigroup. Hi, this is Asher Sonnen from France, and thanks for taking my question.

Speaker Change: I don't have the specific number of lots that are going to be finished that aren't under contract right now. I can probably get that for you. I'd have to check. But we definitely do have stuff that's under development that's not been put under contract yet. In a four-star resource project, we aim to have those under contract anywhere from three to six months before delivery. And so there's definitely still opportunity to put stuff under contract that's going to close in the back half of the year.

I don't have the specific number of lots that are going to be finished that aren't under contract right now. I can probably get that for you. I'd have to check. But we definitely do have stuff that's under development that's not been put under contract yet. In a four-source project, we aim to have those under contract anywhere from three to six months before delivery. And so there's definitely still opportunity to put stuff under contract that's going to close in the back half of the year.

Speaker Change: I don't have the specific number of lots that are going to be finished that aren't under contract right now. I can probably get that for you. I'd have to check. But we definitely do have stuff that's under development that's not been put under contract yet. In a four-source project, we aim to have those under contract anywhere from three to six months before delivery. And so there's definitely still opportunity to put stuff under contract that's going to close in the back half of the year.

And I don't have the specific number of lots that are going to be finished that aren't under contract.

Now I can probably get that for you I'd have to check.

But we definitely do ask Catherine under development, that's not under contract yet enforced our source project. We aim to have those under contract anywhere from three to six months before delivery.

I think you've talked in the past about, you know, the capital structure offering competitive advantages, but I'm just wondering, have you seen any concrete, kind of like, opportunities in the land market come about, or any sort of, like, concrete evidence? Maybe that will take a little bit longer. We're not seeing any really concrete evidence, but we do think it does give us a little bit more of a competitive advantage having the liquidity and competing against another developer. And at times, too, other builders are using that developer in a much smaller fashion than they're using us. They know that we have the liquidity, and they'd rather look to us and make the loss versus the other, what's called a local or regional developer.

Speaker Change: So there was definitely scale opportunity to place that's under contract that's going to close in the back half of the year.

Okay, Alright, great. Thank you Katie and then last question.

Speaker Change: Okay. All right. Great. Thank you, Kate. And then last question, you did another deal with a lot banker who's working with your largest customer. And I'm curious about whether or not that's a potential growth area for you, whether a lot banker will be working with Horton or not. We've certainly talked to plenty who are trying to deploy more capital and looking for opportunities. Can you talk about what that opportunity might be? And then I should sidecar onto that also because I always ask about single-family rental and how that business looks, if it looks interesting at all, or is that still sort of a one-off?

Okay, all right, great. Thank you, Katie. And then last question, you did another deal with a lot banker who's working with your largest customer, and I'm curious about whether or not that's a potential growth area for you, whether a lot banker will be working with Horton or not. You've certainly talked to plenty who are trying to deploy more capital and looking for opportunities. Can you talk about what that opportunity might be? And then I should sidecar onto that also, because I always ask about single family rental and how that business looks, if it looks interesting at all, or is that still sort of a one-off?

Speaker Change: Okay, all right, great. Thank you, Katie. And then last question, you did another deal with a lot banker who's working with your largest customer, and I'm curious about whether or not that's a potential growth area for you, whether a lot banker will be working with Horton or not. You've certainly talked to plenty who are trying to deploy more capital and looking for opportunities. Can you talk about what that opportunity might be? And then I should sidecar onto that also, because I always ask about single family rental and how that business looks, if it looks interesting at all, or is that still sort of a one-off?

Speaker Change: You did another deal with a lot banker who's who's working with your largest customer and I'm curious about whether or not that's a potential growth area for you whether whether a lot banker will be working with <unk> or not we certainly talked to plenty who are trying to deploy more capital and looking for.

<unk> can you talk about what that what that opportunity might be and then I should say car onto that also because I always ask you about single family rental and how that business looks if it if it looks interesting at all or is that still sort of a one off.

Speaker Change: I'll start and I'll let somebody else chime in if they need to. But, I mean, as far as the opportunity with land bankers, it's not really our decision. You know, we're not marketing our lots to land bankers. But if one of our customers wants to use a land banker to step in as an intermediary, we're completely fine with that. It just, you know, enhances our capital efficiency and gets that inventory off of our balance sheet. So, we're pretty indifferent if there's a land banker that's stepping in on behalf of a builder. As long as, you know, we have all the success and balances in place.

I'll start and I'll let somebody else chime in if they need to, but as far as the opportunity with land bankers, it's not really our decision. We're not marketing our lots to land bankers, but if one of our customers wants to use a land banker to step in as an intermediary, we're completely fine with that. It just enhances our capital efficiency and gets that inventory off of our balance sheet. We're pretty indifferent if there's a land banker that's stepping in on behalf of the builder as long as we have all the checks and balances in place.

Speaker Change: I'll start and I'll let somebody else chime in if they need to, but as far as the opportunity with land bankers, it's not really our decision. We're not marketing our lots to land bankers, but if one of our customers wants to use a land banker to step in as an intermediary, we're completely fine with that. It just enhances our capital efficiency and gets that inventory off of our balance sheet. We're pretty indifferent if there's a land banker that's stepping in on behalf of the builder as long as we have all the checks and balances in place.

Speaker Change: I'll start and I'll, let somebody else chime in if it's a me too, but I mean as far as the opportunity with land bankers, it's not really our decision you know, we're not marketing our allot to land bankers, but it's one of our customers wants to use the land banker to step out as an intermediary and we're completely fine with that.

It enhances our capital efficiency and get that inventory off of our balance sheet.

So we are pretty different if there is a land banker thats stepping in on behalf of the builder as long as you know we have all of the checks and balances in place.

There have been times too where maybe that developer gets into a capital constraint on the following phase and says some builders will look to us to see if we can step in and purchase that additional phase to keep, prevent them from gapping on their home sales. And then just separately, obviously, you know, you're not guiding to our growth margins for the year, but I'm just wondering, you know, I think, you know, previously we've talked about increased force loss driving kind of a growth margin headwind. Are you sort of seeing that drive, that's why I ask another question, are you seeing that tail end kind of materialize in 2024? Or is that maybe more of a 2025 story?

Speaker Change: And as it relates to the part of your question on build for rent, yes, we do think that that is a sustainable part of our business. If we can have portions of a larger community, which would

And as it relates to the part of your question on build for rent, yes, we do think that that is a sustainable part of our business. If we can have portions of a larger community which would...

And as it relates to the part of your question on our build for rent.

Yes, we do think that that is a sustainable part of our business.

Speaker Change: We can have portions of a larger community which would.

Speaker Change: We could improve our pace through selling to a customer that has built-for-rent components or multifamily components. That's something that we would absolutely entertain.

We could improve our pace through selling to a customer that has built-for-rent components or multi-family components, you know, that's something that we would absolutely entertain.

Speaker Change: We could improve our pace through selling to a customer that has built-for-rent components or multi-family components, you know, that's something that we would absolutely entertain.

We could.

Speaker Change: Improve our pace through selling to a customer that has built for rent components or multifamily components.

That's something that we would absolutely entertain it.

Okay I appreciate it all thanks very much.

Speaker Change: I appreciate it all. Thanks very much.

I appreciate it all. Thanks very much.

Speaker Change: I appreciate it all. Thanks very much.

Speaker Change: Thanks, Carl.

Thanks, Carl.

Speaker Change: Thanks, Carl.

Speaker Change: Carl.

Speaker Change: The next question comes from Anthony Pettinari with Citigroup.

The next question comes from Anthony Pantinari with Citigroup.

Speaker Change: The next question comes from Anthony Pantinari with Citigroup.

Speaker Change: The next question comes from Anthony Pettinari with Citigroup. Please proceed.

Speaker Change: Hi, this is Asher Sonnen on for Anthony. Thanks for taking my question. I think you've talked, you know, in the past about, you know, the capital structure offering competitive advantages, but I'm just wondering, you know, have you seen any concrete kind of like maybe opportunities in the land market come about or any sort of like concrete evidence?

Hi, this is Asher Sonnen on France, and thanks for taking my question. I think you've talked, you know, in the past about, you know, the capital structure offering competitive advantages, but I'm just wondering, you know, have you seen any concrete, kind of like, maybe opportunities in the land market come about, or any sort of, like, concrete evidence?

Speaker Change: Hi, this is Asher Sonnen on France, and thanks for taking my question. I think you've talked, you know, in the past about, you know, the capital structure offering competitive advantages, but I'm just wondering, you know, have you seen any concrete, kind of like, maybe opportunities in the land market come about, or any sort of, like, concrete evidence?

Hi, This is asher sonnen on France, and thanks for taking my question I think you've talked about.

Asher Sonnen: How about you know the capital structure offering competitive advantages, but I was just wondering you know have you seen any concrete kind of like maybe opportunities in the land market.

Asher Sonnen: Come on come about or any sort of like concrete evidence.

Asher Sonnen: maybe that will take a little bit longer

and others who have come into the session. Maybe that will take a little bit longer.

Asher Sonnen: maybe that's been coming to fruition or maybe that will take a little bit longer.

Does it sort of coming to fruition or maybe that that'll take a little bit longer.

Anthony Pettinari: We're not seeing any really concrete evidence, but what we do think is it does give us a little bit more of a competitive advantage having the liquidity at hand competing against another developer. And at times, too, the other builders are using that developer in a much smaller fashion than they're using us. They know that we have the liquidity, and they'd rather look to us to develop the loss versus the other what's called local or regional developer. There has been times, too, where maybe that developer gets into a capital constraint on the following phase and says some builders will look to us to see if we can step in and purchase that additional phase to prevent them from gapping on their home sales.

We're not seeing any really concrete evidence, but we do think it does give us a little bit more of a competitive advantage having the liquidity and competing against another developer and at times too, the other builders are using that developer in a much smaller fashion than they're using us. They know that we have the liquidity and they'd rather look to us and develop the loss versus the other, what's called local or regional developer. There has been times too where maybe that developer gets into a capital constraint on the following phase and says some builders will look to us to see if we can step in and purchase that additional phase to keep, prevent them from gapping on their home sales.

Asher Sonnen: We're not seeing any really concrete evidence, but we do think it does give us a little bit more of a competitive advantage having the liquidity and competing against another developer and at times too, the other builders are using that developer in a much smaller fashion than they're using us. They know that we have the liquidity and they'd rather look to us and develop the loss versus the other, what's called local or regional developer. There has been times too where maybe that developer gets into a capital constraint on the following phase and says some builders will look to us to see if we can step in and purchase that additional phase to keep, prevent them from gapping on their home sales.

Yeah, we're not seeing any really.

Concrete evidence what would you say it does give us a little bit more of a competitive advantage of having the liquidity at hand.

Jim Allen: Well, we could see in 24 definitely, you know, we're, of course, our source block does give us, does give us more. Optionality, I guess, for the project. I don't know that we'll see, I mean, we have seen significant increases in development costs as well, and I don't know that we're going to continue to see increased margins as a result of that because we're always trying to match price and pace or balance price and pace to improve our returns. So it's really not just about, you know, the sales price or margin. It's really more about our returns. Great, that's helpful. I'll turn it over to you.

Beating against another developer and at times too you know the other builders are using that developer and a much smaller version that we're using as they know that we have the liquidity and they'd rather look to us to develop a loss versus the other let's call local or regional developer.

Asher Sonnen: There has been times to where maybe that developer gets into.

Good afternoon, and welcome to Forestar's First Quarter 2024 Earnings Conference Call.

That developer gets into a capital constraint on the following phase and says some builders will look to us to see if we can step in and purchase that additional phase to prevent them from gapping on their home sales.

Speaker Change: [Operator Instructions] Please note this conference is being recorded.

Speaker Change: I will now turn the conference over to Katie Smith, Director of Finance and Investor Relations for Forestar.

Our capital constraint on the following phase and system builders, who look to us to see if we can step in and purchase that additional days to keep.

Katie Smith: Good afternoon, and welcome to Four Star's first quarter 2024 earnings conference.

Katie Smith: At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Prevent them from Gabbing on their home sales.

Katie Smith: If anyone should require operator assistance during the conference, please put a star zero on your telephone key.

Speaker Change: Great. And then just separately, obviously, you know, you're not guiding to growth margins for the year, but I'm just wondering, you know, I think, you know, previously you talked about increased force, force loss, driving kind of that growth margin head. Are you sort of seeing that drive, sorry, that tail end, are you seeing that tail end kind of materialize in 2024? Is that maybe more of a 2025 story?

Great. And then just separately, obviously, you know, you're not, you're not guiding to our growth margins for the year, but I'm just wondering, you know, I think, you know, previously we've talked about increased force, force loss, driving kind of a growth margin headwind. Are you sort of seeing that drive, that's why I tell them, are you seeing that tail end kind of materialize in 2024? Is that maybe more of a 2025 story?

Speaker Change: Great. And then just separately, obviously, you know, you're not, you're not guiding to our growth margins for the year, but I'm just wondering, you know, I think, you know, previously we've talked about increased force, force loss, driving kind of a growth margin headwind. Are you sort of seeing that drive, that's why I tell them, are you seeing that tail end kind of materialize in 2024? Is that maybe more of a 2025 story?

Great.

And then just.

Speaker Change: Thank you, John.

Asher Sonnen: Separately I'm, obviously, you know you're not you're not guiding to a gross margins for the year, but I'm. Just wondering you know I think you know previously.

John: Good afternoon, and welcome to the call to discuss Forestar's first quarter results.

John: Thank you for joining us. Please note, this conference is being recorded. I will now turn the conference over to Katie Smith, Director of Finance and Investment Relations for France.

Asher Sonnen: Previously you talked about increased four sorts, what's driving kind of a gross margin headwind are you sort of seeing that drop.

Katie Smith: Before we get started, today's call includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.

Drive that's why I tell them, rather are you seeing that tailwind kind of materialize in 2024 or is that maybe.

Katie Smith: Although Forestar believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. All forward-looking statements are based upon information available to Forestar on the date of this conference call, and we do not undertake any obligation to update or revise any forward-looking statements publicly. Additional information about factors that could lead to material changes in performance is contained in Forestar's annual report on Form 10-K and its most recent quarterly report on Form 10-Q, both of which are or will be filed with the Securities and Exchange Commission.

More of a 2025 sorry.

Speaker Change: Well...

Well,

Speaker Change: Well,

Asher Sonnen: Well.

Speaker Change: You could see in 24, definitely, you know, we're, of course our source lot does give us, does give us more.

We could see in 24, definitely, you know, we're, of course our source block does give us, does give us more.

Speaker Change: We could see in 24, definitely, you know, we're, of course our source block does give us, does give us more.

We could see in 'twenty four definitely.

First our source lots does gives us does give us.

Speaker Change: Thank you, John.

Speaker Change: Good afternoon, and welcome to the call to discuss Four Star's first quarter results.

Asher Sonnen: More.

John: Thank you for joining us. Before we get started, today's call includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Although Corsair believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different.

Speaker Change: Optionality, I guess, for the project.

Optionality, I guess, for the project.

Speaker Change: Optionality, I guess, for the project.

<unk> I guess with the project.

Speaker Change: um,

Speaker Change: I don't know that we'll see. I mean, we have seen significant increases in development costs as well, so I don't know that we're going to continue to see increased margins as a result of that because we're always trying to...

Speaker Change: I don't know that we'll see. I mean, we have seen significant increases in development costs as well. So, I don't know that we're going to continue to see increased margins as a result of that because we're always trying to

I don't know that we'll see, I mean, we have seen significant increases in development costs as well, so, and I don't know that we're going to continue to see increased margins as a result of that, because we're always trying to...

Speaker Change: I don't know that we'll see, I mean, we have seen significant increases in development costs as well, so, and I don't know that we're going to continue to see increased margins as a result of that, because we're always trying to...

I don't know that I don't know that well see I mean, we have seen significant increases in development costs as well. So I don't know that we're going to continue to see increased margins as a result of that because we're always trying to.

John: All forward-looking statements are based upon information available to 4-Star on the date of the conference call, and we do not undertake any obligation to update or revise any forward-looking statements publicly. Additional information about factors that could lead to material changes in performance is contained in 4SAR's annual report on Form 10-K and its most recent quarterly report on Form 10-Q, both of which are or will be filed with the Securities Exchange. Our earnings release is on our website at Investor. Forshar.com, and we plan to file our team fees tomorrow. After this call, we will post an updated investor presentation on our investor relations site under Events and Presentations for your reference. Our earnings release is on our website at investor.forestar.com, and we plan to file our 10-Q tomorrow. After this call, we will post an updated investor presentation on our Investor Relations site under Events and Presentations for your reference.

Speaker Change: trying to match price and pace or balance price and pace to improve our returns. So it's really not just about, you know, the sales price or margin. It's really more about our returns.

Speaker Change: trying to match price and pace or balance price and pace to improve our returns. So it's really not just about the sales price or margin. It's really more about our returns.

trying to match price and pace, or balance price and pace to improve our returns. So it's really not just about, you know, the sales price or margin. It's really more about our returns.

Speaker Change: trying to match price and pace, or balance price and pace to improve our returns. So it's really not just about, you know, the sales price or margin. It's really more about our returns.

Trying to match price and pace, our balance price and pace to improve our returns. So it's really not just about.

The sales price or margin, it's really more about our returns.

Once again, if you have a question or a comment, please indicate so by pressing star 1. The next question comes from Mike Rehaut with J.P. Morgan. Hi guys, Doug Wardlaw out for Mike.

Speaker Change: Great, that's helpful. I'll turn it over.

Great, that's helpful. I'll turn it over.

Speaker Change: Great, that's helpful. I'll turn it over.

Great that's helpful I'll turn it over.

Once again, if you have a question or a comment please indicate so by pressing star one. The next question comes from Mike Rehaut with Jpmorgan. Please proceed.

Speaker Change: Once again, if you have a question or a comment, please indicate so by pressing star 1. The next question comes from Mike Rehaut with J.P. Morgan.

Once again, if you have a question or a comment, please indicate so by pressing star 1. The next question comes from Mike Rehaut with J.P. Morgan.

John: Now, I will turn the call over to Andy Oxley, our President and CEO.

John: Now, I would turn the call over to Andy Oxley, our president and CEO.

Andy Oxley: Thanks, Katie.

Andy Oxley: Good afternoon, everyone. I'm joined on the call today by Jim Allen, our Chief Financial Officer, and Mark Walker, our Chief Operating Officer.

Michael Jason Rehaut: Hi, guys. Doug Wardlaw from Mike. I was wondering if you could kind of speak to any potential regional trends you've seen over the recent months, especially with the kind of rate volatility that we've experienced. Have there been any particular reasons where you've seen strength or a particular weakness?

Hi guys, Doug Wardlaw out for Mike. I was wondering if you could kind of speak to any potential regional trends you've seen over the recent months, especially with the kind of rate volatility that we've experienced. If there's been any particular reasons where you've seen strength or a particular weakness.

Speaker Change: Hi guys, Doug Wardlaw out for Mike. I was wondering if you could kind of speak to any potential regional trends you've seen over the recent months, especially with the kind of rate volatility that we've experienced. If there's been any particular reasons where you've seen strength or a particular weakness.

Hi, guys, Doug Wardlaw for Mike.

Michael Jason Rehaut: I was wondering if you could kind of speak to any potential regional trends you've seen over the recent months, especially with the kind of rate volatility that we've experienced. If there's been any particular reasons where you've seen strength or a particular weakness. Although we've seen a particular weakness, Texas and Florida remain strong for us. It's been a stronghold for a long time.

Speaker Change: Thanks, Katie.

I was wondering if you could kind of speak to any potential regional trends you've seen.

Speaker Change: Good afternoon, everyone.

Speaker Change: I'm joined on the call today by Jim Allen, our Chief Financial Officer; and Mark Walker, our Chief Operating Officer.

Speaker Change: Before we discuss this quarter's results, I'd like to take a moment to introduce myself since this is my first quarterly public conference call. Thank you.

Over the recent months, especially with the kind of rate volatility that we've experienced so theres been any particular regions, where you've seen strength or particular weakness.

Speaker Change: Texas and Florida remain strong for us. It's been a stronghold for a long time.

Although we've seen a particular weakness, Texas and Florida remain strong for us. It's been a stronghold for a long time.

Speaker Change: Although we've seen a particular weakness, Texas and Florida remain strong for us. It's been a stronghold for a long time.

Although we've seen a particular weakness, Texas and Florida remained strong for US it has been a stronghold for a long time.

Speaker Change: Horton. I joined Forestar at the beginning of the calendar year, transitioning from my prior tenure at D.R. Horton.

Horton: While there, I served in numerous roles, the most recent being Senior Vice President of Business Development. In addition to being actively involved in D.R. Horton's relationships in strategic land banking and development, I oversaw opening new markets and M&A activity, including being involved in the D.R. Horton investment in Forestar.

Speaker Change: Great. And then in terms of you guys touched on, you know, difficulty with municipalities and getting approval there. Is there any kind of vision moving forward when you see that easing up a tad or is that something that you expect to be a problem for the business moving forward, I guess, for the foreseeable future in 2024?

Great. And then in terms of you guys touched on, you know, difficulty with municipalities and getting approval there. Is there any kind of vision moving forward when you see that easing up a tad? Or is that something that you expect to be a problem for the business moving forward, I guess, for the foreseeable future in 2024?

Speaker Change: Great. And then in terms of you guys touched on, you know, difficulty with municipalities and getting approval there. Is there any kind of vision moving forward when you see that easing up a tad? Or is that something that you expect to be a problem for the business moving forward, I guess, for the foreseeable future in 2024?

Mark Weintraub: Great. And then in terms of what you guys touched on, you know, difficulty with municipalities and getting approval there, is there any kind of vision moving forward when you see that easing up a tad? Or is that something that you expect to be a problem for business moving forward, I guess, for the foreseeable future in 2024? That's a great question. Historically, it's always been a challenge.

Great and then in terms of you guys touched on you know the default cookie with municipalities in getting approval there.

Is there any kind of vision moving forward when you see that easing up.

With that or is that something that you expect to be a problem for the business moving forward I guess for the foreseeable future in 2024.

Horton: I'm excited to have joined the Forestar team and the opportunity to serve in my new role as CEO.

Speaker Change: That's a great question. Historically, it's always been a challenge. It's been delayed even further, I would say, in the past 12 to 24 months. A lot of it's turnover within those departments themselves. You get some folks with less experience that are now in that role versus more folks with seasoned experience. It's a daily battle out in the field with our folks.

That's a great question. Historically, it's always been a challenge. It's been delayed even further, I would say, in the past 12 to 24 months. A lot of it's turnover within those departments as well. So you get some folks with less experience that are now in that role versus more folks with season experience. It's a daily battle. I help the field with our folks.

Speaker Change: That's a great question. Historically, it's always been a challenge. It's been delayed even further, I would say, in the past 12 to 24 months. A lot of it's turnover within those departments as well. So you get some folks with less experience that are now in that role versus more folks with season experience. It's a daily battle. I help the field with our folks.

It's a great question historically has always been a challenge its been delayed even further I would tell you in the past 12 months to 24 months a lot of its turnover within those departments themselves. He got some social.

Horton: I have the utmost respect and appreciation for what Dan Bartok, the company's previous CEO, and the Forestar team accomplished with Dan at the helm. While there, I've served in numerous roles, the most recent being Senior Vice President of Business Development. In addition to being actively involved in D.R.

Doug Wardlaw: It's been delayed even further, I would say, in the past 12 to 24 months. A lot of it is turnover within those departments as well. So you get some folks with less experience that are now in that role versus more folks with seasonal experience.

Horton: Horton's relationships in strategic land banking and development, I oversaw opening new markets and M&A activity, including being involved in the D.R. Horton investment in Four Star. I'm excited to have joined the Four Star team and the opportunity to serve in my new role as CEO.

Those with less experience and are now in that role versus more of a season experience is a daily battle out in the field with our folks.

Horton: I have the utmost respect and appreciation for what Dan Bartok, the company's previous CEO, and the four-star team accomplished with Dan at the helm. We thank him for his many contributions to Four Star during his six years of service.

But like.

Mark Weintraub: It's a daily battle. I help in the field with our folks. I don't know if it's going to ease up any time in the foreseeable future, but again, I think it's market to market in terms of where we're seeing those governmental delays. Some areas we see it, some we don't, so it really fluctuates across the United States.

Speaker Change: Anyway, I'll refrain from saying that, but I don't know that it's going to ease up any time in the foreseeable future. But, again, I think it's market to market in terms of where we're seeing those governmental delays. Some areas we see it, some we don't. So it really is a watchful watch for us in the United States. We've been accounting for those delays in our underwriting. So we've been looking at extended timelines in the underwriting to make sure that we're still going to be able to achieve our return.

Speaker Change: Anyway, I'll refrain from saying that, but I don't know that it's going to ease up any time in the foreseeable future. But, again, I think it's market to market in terms of where we're seeing those governmental delays. Some areas we see it, some we don't, so it really is a watchful watch across the United States. We've been accounting for those delays in our underwriting, so we've been looking at extended timelines in the underwriting to make sure that we're still going to be able to achieve our results.

I don't know if it's going to ease up any time in the foreseeable future, but again, I think it's market to market in terms of where we're seeing those governmental delays. Some areas we see it, some we don't, so it really fluctuates across the United States. Can we at least any accounting for those delays in our underwriting? So we've been looking at extended timelines in the underwriting to make sure that we're still going to be able to achieve our return.

Speaker Change: I don't know if it's going to ease up any time in the foreseeable future, but again, I think it's market to market in terms of where we're seeing those governmental delays. Some areas we see it, some we don't, so it really fluctuates across the United States. Can we at least any accounting for those delays in our underwriting? So we've been looking at extended timelines in the underwriting to make sure that we're still going to be able to achieve our return.

Anyway of refunds in there, but it's I don't know if that's going to ease up anytime in the foreseeable future, but again I think it's market to market in terms of where we're seeing those governmental delays some areas. We see it's something we don't so it really fluctuation across United States and we've been accounting for those delays and art.

Horton: We thank him for his many contributions to Forestar during his 6 years of service. Forestar's strong balance sheet, healthy pretax margins, and robust land portfolio position us well for future growth.

Horton: With over 25 years of experience in land acquisition, development, and home building, I'm confident we will continue to expand Forestar's platform and operations to further strengthen our position as a leading lot developer. We remain focused on investing for future growth, turning our inventory, maximizing returns, and consolidating market share in the highly fragmented lot development industry. Fourstar's strong balance sheet, healthy pre-tax margins, and robust land portfolio position us well for future

Katie Smith: Can we at least account for those delays in our underwriting? So we've been looking at extended timelines in underwriting to make sure that we're still going to be able to achieve our return.

Underwriting so we've been looking at it you know extended timelines and underwriting to make sure that we're still buying scale and achieve our returns.

Speaker Change: Got it. Thank you, guys.

Got it. Thank you, guys.

Speaker Change: Got it. Thank you, guys.

Doug Wardlaw: Thank you, guys. We have reached the end of the question and answer session. I will now turn the call over to Andy Oxley for our closing remarks. Thank you, John, and thank you to everyone on the ForgeColor team for your focus and hard work. We will stay disciplined and opportunistic as we continue to consolidate market share. We appreciate everyone's time on the call today and look forward to speaking with you again in April to share our second quarter results. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Got it thank you guys.

We have reached the end of the question and answer session I will now turn the call over to Andy actually for closing remarks.

Speaker Change: We have reached the end of the question and answer session. I will now turn the call over to Andy Otte for our closing remarks.

We have reached the end of the question and answer session. I will now turn the call over to Andy Oxley for our closing remarks.

Speaker Change: We have reached the end of the question and answer session. I will now turn the call over to Andy Oxley for our closing remarks.

Horton: With over 25 years of experience in land acquisition, development, and home building, I'm confident we will continue to expand Force First's platform and operations to further strengthen our position as a leading lot developer. We remain focused on investing for future growth, turning our inventory, maximizing returns, and consolidating market share in the highly fragmented lot development industry. Now on to our results.

Andy Otte: Thank you, John, and thank you to everyone on the four-star team for your focus and hard work. We will stay disciplined and opportunistic as we continue to consolidate market share. We appreciate everyone's time on the call today and look forward to speaking with you again in April to share our second quarter results.

Thank you, John, and thank you to everyone on the ForgeColor team for your focus and hard work. We will stay disciplined and opportunistic as we continue to consolidate market share. We appreciate everyone's time on the call today and look forward to speaking with you again in April to share our second quarter results.

Andy Oxley: Thank you, John, and thank you to everyone on the ForgeColor team for your focus and hard work. We will stay disciplined and opportunistic as we continue to consolidate market share. We appreciate everyone's time on the call today and look forward to speaking with you again in April to share our second quarter results.

Thank you John and thank you to everyone on the four star team for your focus and hard work, we will stay disciplined and opportunistic as we continue to consolidate market share.

We appreciate everyone's time on the call today and look forward to speaking with you again in April to share our second quarter results.

Horton: We are pleased with our first quarter results, highlighted by net income increasing 84% to $38.2 million or [ $0.76 ] per diluted share. Our pretax income increased 84% to $51.2 million, and our pretax profit margin improved 380 basis points to 16.7%.

This concludes today's conference and you may disconnect your lines at this time.

Speaker Change: This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

You for your participation.

Horton: Our consolidated revenues increased 41% to $305.9 million, while lots sold increased 39% to 3,150 lots. These results reflected a significant improvement in demand for finished lots compared to the first fiscal quarter of 2023 when builders were reducing starts in anticipation of lower demand for new homes after mortgage interest rates rose rapidly.

Speaker Change: Jim will now discuss our first quarter's financial results in more detail.

Jim Allen: Now, on to our results. We are pleased with our first quarter results, highlighted by net income increasing 84% to $38.2 billion.

Speaker Change: Thank you for your time, and I look forward to seeing you again next week. Our consolidated revenues increased 41% to $305.9 million, while last sold increased 39% to $3,150. These results reflected significant improvements in demand for finished lots compared to the first fiscal quarter of 2023 when builders were reducing starts in anticipation of lower demand for new homes after mortgage interest rates rose rapidly.

Speaker Change: Thank you, Andy. In the first quarter, net income increased 84% to $38.2 million, or $0.76 per diluted share, compared to $20.8 million, or $0.42 per diluted share, in the prior year quarter.

Speaker Change: Consolidated revenues for the quarter increased 41% to $305.9 million compared to $216.7 million in the prior year quarter.

Speaker Change: Lots sold in our first fiscal quarter increased 39% to 3,150 lots with an average sales price of $96,400. We expect continued quarterly fluctuations in our average sales price based on the geographic location and lot size mix of our deliveries. Jim will now discuss our first quarter financial results in more detail.

Jim Allen: Thank you, Andy.

Jim Allen: In the first quarter, net income increased 84% to $38.2 million, or $0.76 per diluted share, compared to $20.8 million, or $0.42 per diluted share, in the prior year quarter.

Jim Allen: Consolidated revenues for the quarter increased 41% to $305.9 million compared to $216.7 million in the prior year quarter. Our pretax income increased 84% to $51.2 million compared to $27.9 million in the first quarter of last year. And our pretax profit margin this quarter was 16.7%, compared to 12.9% in the prior year quarter.

Jim Allen: Our gross profit margin was 23.8%, up 280 basis points sequentially and up 190 basis points from a year ago. Gross margin was positively impacted by the closeout of a legacy community during the quarter.

Jim Allen: Excluding the legacy community lot sales, our first quarter gross profit margin would have been 22.8%. In the first quarter, SG&A expense was $28 million. As a percentage of revenue, SG&A expense improved 140 basis points to 9.2% from 10.6% in the prior year quarter. Lots sold in our first fiscal quarter increased 39% to 3,150 lots, with an average sale price of $96,400. We expect continued quarterly fluctuations in our average sales price based on the geographic location and lot size mix of our delivery. Our pre-tax income increased 84% to $51.2 million compared to $27.9 million in the first quarter of last year, and our pre-tax profit margin this quarter was 16.7% compared to 12.9% in the prior year quarter.

Jim Allen: Our gross profit margin was 23.8%, up 280 basis points sequentially and up 190 basis points from a year ago.

Jim Allen: We will continue to focus on controlling our SG&A costs while ensuring that our infrastructure supports our business.

Jim Allen: Mark? Gross margin was positively impacted by the closeout of a legacy community during the. As for current market conditions, the supply of new and existing homes at affordable price points is still limited. Demographics supporting housing demand have remained favorable, despite elevated mortgage interest rates and inflationary pressures. Builder incentives have helped bridge the affordability gap for many homebuyers, and low resale supply continues to be a driver of buyers choosing new construction.

Jim Allen: Supply of vacant developed lots, especially at affordable price points, continues to be constrained across our footprint, and Forestar is uniquely positioned to take advantage of the shortage of finished lots. Our ongoing focus on developing lots for homes at affordable price points demonstrated our average sales price this quarter of roughly $96,000. Excluding the legacy community lot sales, our first quarter gross profit margin would have been 22.8%. In the first quarter, SG&A expense was 28 million dollars. As a percentage of revenue, SG&A expense improved 140 basis points to 9.2% from 10.6% in the prior year quarter. We will continue to focus on controlling our SG&A costs while ensuring that our infrastructure supports our business. Mark? As for current market conditions, the supply of new and existing homes at affordable price points is still limited, and demographic support and housing demand remain favorable, despite elevated mortgage interest rates and inflationary pressure. Builder incentives have helped bridge the affordability gap for many homebuyers, and low retail supply continues to be a driver of buyers choosing new construction.

Jim Allen: Availability of contractors and necessary materials has improved over the past several months, though we have not seen overall reductions in the cost of developing land. We will continue to value engineer our projects and work with our trade partners to develop lots in the most efficient way possible. Our development cycle times have continued to be impacted by governmental delays. Homebuilders continue to compete to secure [ land and lot ] positions, and many are looking to replace current closeout communities to position for future growth. As a result, we are not seeing any softening in land prices. However, in most markets, we have seen an adjustment back to normal contract terms.

Jim Allen: Jim?

Jim Allen: and Paulie Bacon at all costs, especially at affordable price points, continue to be constrained across our footprint. Four stars uniquely positioned to take advantage of the shortage of finish lines. Our ongoing focus is to develop blocks for homes at affordable price points, as demonstrated by our average sales price this quarter of roughly $96,000. Availability of contractors and necessary materials has improved over the past several months, but we have not seen overall reductions, and Carlson is developing land. We will continue to value engineering our projects and work with our trade partners to develop lots in the most efficient way possible. D.R.

Jim Allen: Horton is our largest and most important customer.

Jim Allen: 16% of the homes D.R. Horton started in the past 12 months were on a 4-star developed lot. With a mutually stated goal of 1 out of every 3 homes D.R. Horton sells being on a lot developed by Forestar, we have a significant opportunity to grow our market share within D.R. Horton. We also continue to work on expanding our relationships with other homebuilders. 10% of our first quarter deliveries were 316 lots sold to other homebuilders, which included 124 lots that were sold to a lot banker who expects to sell those lots to D.R. Horton at a future date. 7% of our deliveries in the prior year quarter resulted from third-party customers.

Jim Allen: Katie?

Speaker Change: Our development cycle signs have continued to be impacted by governmental delays. Home builders continue to compete to secure land and lot positions, and many are looking to replace current closed-off communities to position for future growth. As a result, we are not seeing any self-name from Anne Price.

Speaker Change: However, in most markets, we have seen an adjustment back to normal contract terms.

Speaker Change: Jim?

Speaker Change: D.R. Horton is our largest and most important customer. 16% of the homes we have Horton started in the past 12 months were on a four-star developed lot. With a mutually stated goal of one out of every three homes D.R. Horton sells to be on a lot developed by Four Star, we have a significant opportunity to grow our market share within D.R. Horton. We also continue to work on expanding our relationships with other home builders. 10% of our first quarter deliveries for 316 lots were sold to other home builders.

Speaker Change: Forestar's underwriting criteria for new development projects remains unchanged at a minimum 15% pretax return on average inventory and a return of our initial cash investment within 36 months.

Speaker Change: During the first quarter, we invested approximately $450 million in land and land development, split equally between land development and land acquisition.

Speaker Change: Given the strong demand for finished lots, this quarter's investment was almost double the prior year's quarter.

Speaker Change: We still expect our investments in land acquisition and development to total $1.5 billion to $1.6 billion in fiscal 2024, subject to market conditions, which includes 124 lots that were sold to a lot banker who expects to sell those lots to D.R. Horton at a future date. 7% of our deliveries in the prior year quarter were sold to third-party companies. Pete, Forster's underwriting criteria for new development projects remains unchanged at a minimum 15% pre-tax return on average inventory and a return of our initial cash investment within 36 months. During the first quarter, we invested approximately $450 million in land and land development, split equally between land development and land equity. Given the strong demand for finished lots, this quarter's investment was almost double the priority of your quarter.

Speaker Change: Our lot position at December 31 was 82,400 lots, of which 55,400 lots are owned, and 27,000 lots are controlled for purchase contracts.

Speaker Change: At quarter end, we had 7,300 finished lots on hand. We continue to target a 3- to 4-year owned inventory of land and lots and remain focused on managing our development in phases to deliver finished lots at a pace that matches market demand consistent with our emphasis on capital efficiency. We still expect our investments and main acquisitions and development to total $1.5 to $1.6 billion in fiscal 2024, subject to market conditions. Our lot position at December 31st was $82,400, of which 55,400 lots were owned, and 27,000 lots were controlled through purchase contracts. At quarter end, we have 7,300 finished losses. 30% of our owned lots are under contract to sell, representing approximately $1.6 billion of future revenue. These contracts have $141 million of hard earnest money deposits associated with them. Additionally, another 32% of our owned lots are subject to a right of first offer to D.R. Horton based on executed purchase and sale agreements.

Speaker Change: Jim?

Speaker Change: We continue to target a three- to four-year-owned inventory of lands and lots and remain focused on managing our development in phases to deliver finished lots at a pace that matches market demand, consistent with our emphasis on capital efficiency. 30% of our owned lots are under contract with Dell, representing approximately $1.6 billion of future revenue. These contracts have $141 million of hard earnest money deposits associated with them.

Speaker Change: Total debt at December 31 was $705 million with no senior note maturities until fiscal 2026, and our net debt-to-capital ratio was 14.9%. We ended the quarter with $1.4 billion of stockholders' equity, and our book value per share increased to $28.21, up 15% from a year ago. Additionally, another 32% of our owned blocks are subject to a right of first offer to deal or hoarding based on executed purchase and

Speaker Change: Jim?

Speaker Change: We have significant liquidity and are using modest leverage to keep our balance sheet strong. We ended the quarter with approximately $840 million of liquidity, including an unrestricted cash balance of $460 million and $380 million of available capacity on our undrawn revolving credit facilities. Total debt at December 31st was $705 million, with no senior note maturities until fiscal 2026. Forestar's capital structure is one of our biggest competitive advantages, and it sets us apart from other land developers. Project-level land acquisition and development loans are less available today and have continued to become more expensive, impacting most of our competitors. Other developers generally use project-level development loans, which are typically more restrictive, have floating rates, and create administrative complexity, especially in a volatile rate environment. Our capital structure provides us with operational flexibility, while our strong liquidity positions us to take advantage of attractive opportunities when they arise.

Jim Allen: Andy, I'll hand it back to you for closing remarks, and our net debt to capital ratio was 14.9%.

Andy Oxley: We ended the quarter with $1.4 billion of stockholders' equity, and our book value per share increased to $28.21, up 15% from a year ago.

Andy Oxley: Four Star Capital Structure is one of our biggest competitive advantages, and it sets us apart from other land developers.

Andy Oxley: Project-level land acquisition and development loans are less available today and have continued to become more expensive, impacting most of our competitors. Other developers generally use project-level development loans, which are typically more restrictive, have floating rates, and create administrative complexity, especially in a volatile rate environment.

Speaker Change: Thanks, Jim.

Jim Allen: We are pleased with Forestar's start to fiscal 2024.

Jim Allen: Our team maintained double-digit revenues while continuing to deliver growth with strong profitability. Elevated mortgage interest rates continue to impact affordability, but the underlying fundamentals of housing shortage remain in place. We believe the low supply of existing homes will continue to drive buyers to new construction and our strong relationship with D.R.

Jim Allen: Horton provides a clear path for growth. Our guidance for fiscal 2024 remains unchanged.

Jim Allen: Our capital structure provides us with operational flexibility, while our strong liquidity positions us to take advantage of, Thank you for watching. Andy, I'll hand it back to you for closing remarks. Thanks, Jim.

Andy Oxley: We are pleased with a four-star start to fiscal 2024. Our team maintained double-digit revenues while continuing to deliver growth with strong profitability.

Andy Oxley: Elevated mortgage interest rates continue to impact affordability, but the underlying fundamentals of the housing shortage remain in place. Based on current market conditions, we expect to deliver between 14,500 and 15,500 lots and generate $1.4 billion to $1.5 billion of revenue. We are closely monitoring each market as we strive to balance pace and price to maximize returns on each project. We are the market leader in a highly fragmented and undercapitalized industry and uniquely positioned to take advantage of builder demand for finished lots.

Andy Oxley: There is a significant opportunity to expand our presence in the markets that we operate in, and our goal remains the same, to double our market share to 5% over the intermediate term. We expect to gain significant market share over the next few years while maintaining a disciplined approach with investing capital to enhance the long-term value of Forestar.

Speaker Change: John, at this time, we'll open the line for questions.

Speaker Change: We believe the low supply of existing homes will continue to drive hiring to new construction, and our strong relationship with D.R. Horton provides a clear path for growth. Our guidance for fiscal 2024 remains unchanged. Based on current market conditions, we expect to deliver between 14,500 and 15,500 lots and generate $1.4 to $1.5 billion of revenue. We are closely monitoring each market as we strive to balance pace and price to maximize returns on each project. We are the market leader in a highly fragmented and undercapitalized industry and uniquely positioned to take advantage of builder demand for finished lots. There is a significant opportunity to expand our presence in the markets that we operate in, and our goal remains the same, to double our market share to 5% over the intermediate term. We expect to gain significant market share over the next few years, while maintaining a disciplined approach when investing capital to enhance the long-term value of Four Star.

Speaker Change: [Operator Instructions] Our first question comes from Truman Patterson with Wolf Research.

Truman Patterson: Andy, congrats on the role. I look forward to working with you in the future. I realize you've only officially been in the role for a short time here.

Truman Patterson: But now that you're officially in the seat, are there any kind of big picture initiative shifts and how you're thinking about the business coming from the largest builder to now the largest land company? I'd love to hear just any thoughts there. It seems like the healthy growth initiatives that Forestar laid out previously doubling market share, but it seems like those are largely unchanged. So any commentary there would be helpful.

Speaker Change: John, at this time, we'll open the lines for questions.

John: Thank you.

John: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we pose for questions. Thank you very much.

Speaker Change: I appreciate the opportunity to be here.

Speaker Change: Our goal does not change, as you said, which exactly it is, our goal is to achieve a 5% market share as quickly and efficiently as we can.

Speaker Change: So we're looking to grow the business.

Speaker Change: Our first question comes from Truman Patterson with Wolf Research. Hey, good afternoon, everyone, and Andy, congrats on the role. I look forward to working with you in the future.

Truman Patterson: I realize you've only, you know, officially been in the role for a short time here, but now that you're officially in the seat, are there any kind of big picture initiatives, shifts in how you're thinking about the business, you know, coming from the largest builder to now the largest land company? I'd love to hear, you know, just any thoughts there. Perfect. And then with your gross margins, I realize they can be a lumpy kind of quarter-to-quarter. I believe you all said the current quarter was about 22.8%, excluding the closeout community, which is relatively elevated higher end of history. Could you all help us understand whether there were any other kind of items or onetime items during the quarter where this might not be repeatable at this level? Or, is it a little bit more sustainable given [ your] all-cost advantages versus the smaller peers where there's tighter lending conditions, higher cost of capital, et cetera? The healthy growth initiatives that 4STAR laid out previously, doubling market share, seems like those are largely unchanged, so any commentary there would be helpful. Thank you very much.

Speaker Change: I appreciate the opportunity to be here.

Speaker Change: Our goal does not change, as you said.

Speaker Change: Our goal is to achieve a 5% market share as quickly and efficiently as we can. So we're looking to grow the business. Truman, as you know, we don't provide guidance with respect to margins.

Speaker Change: And we underwrite returns, not margins.

Speaker Change: So it does create some variability in margins from quarter-to-quarter depending on which projects deliver lots within the quarter because we have a mix of projects with higher or lower margins.

Speaker Change: However, I mean, we can provide some historical context, and if you look at maybe the last 9 quarters, adjusted for impairments and kind of unusually high legacy lot or land sales, our margins have fluctuated between 18% to 23% for the last 9 quarters. And then with your gross margin, I realize it can be lumpy, kind of quarter to quarter. I believe you all said the current quarter was about 22.8% excluding the closeout community, which is, you know, relatively elevated at the higher end of history. Could you all help us understand, you know, whether there were any other kind of items or one-time items during the quarter where this might not be repeatable at this level, or is it a little bit more sustainable given your old cost advantages versus the smaller peers where there's, you know, tighter lending conditions, higher cost of capital, et cetera?

Speaker Change: In the last 5 quarters, it's been 21% to 23%. If you look at last year's fiscal year, we reported 21.2%. But if you exclude the impairments that we recognized in last fiscal year, that would have been 22.5% compared to the 22.8% for this quarter. So you can see that our margins have actually been fairly consistent for the last couple of years, kind of in that low 20s% range.

Speaker Change: Hi Truman.

Speaker Change: As you know, we don't provide guidance with respect to margins, and we underwrite returns, not margins, so it does create some variability in margins from quarter to quarter depending on which projects deliver lots within the quarter.

Katie Smith: Truman, this is Katie.

Katie Smith: There wasn't anything else in the quarter that was significant enough to call out. Okay. That's very helpful. And if I could sneak another one in on kind of the other sides of returns at enterprise level, if you will, but your lot delivery guidance over the next few quarters kind of implies flattish year-over-year, if I'm doing the math right. It seems like perhaps given some of the growth in the industry, is that a reality, or, on the flip side, if you all perhaps pull forward some sales into 1Q and now you might have a little bit of a developed lot shortage, if you will, or a gap, if you will, just hoping to understand kind of the puts and takes of the guidance because we have a mix of projects with higher or lower margins. However, I mean...

Speaker Change: We can provide some historical context. And if you look at maybe the last nine quarters, adjusted for impairments and, you know, kind of an unusually high legacy. Lott or Lynn Feld. Our margins have fluctuated between 18% to 23% for the last nine quarters. In the last five quarters, it's been 21% to 23%. If you look at last year, our fiscal year, we reported 21.2%, but that excludes impairment. That we recognized last fiscal year, that would have been 22.5% compared to the 22.8% for this quarter.

Speaker Change: So you can see that our margins have actually been fairly consistent for the last couple of years.

Speaker Change: Well, we had a first quarter that was a good quarter, but it's still early in the year.

Speaker Change: Based on the current market conditions, our current lot positions, and our development time lines, we still believe that 14,500 to 15,500 is a realistic range. You know, kind of in the low 20s.

Speaker Change: Yeah, and Truman, this is Katie.

Katie Smith: There wasn't anything else in the quarter that was significant enough to call out.

Mark Weintraub: Truman, it's Mark.

Mark: We also expect new home starts to align with new home sales. So if [ home dollar ] sales accelerate, we could be at the higher end of our range. But we're going to monitor the spring selling season and remain flexible to capitalize on any market upside. I was saying that there could be a bottleneck and achieving that upside that could be related to finished lot deliveries, particularly related to government approval delays. Okay, that's very helpful, and if I could sneak another one in on kind of the other sides of returns at an enterprise level, if you will, but your lot delivery guidance over the next few quarters kind of implies flattish year over year if I'm doing the math right. It seems like perhaps given some of the growth in the industry, is that a reality, or on the flip side, that you all perhaps pull forward some sales in the one queue, and now you might have a little bit of a developed lot shortage, if you will, or a gap, if you will. Just hoping to understand kind of the puts and takes of the guidance. We alluded to it in our scripted remarks, but we've continued to see delays from municipalities and government development. So that could definitely be the bottleneck.

Speaker Change: The next question is from Carl Reichardt with BTIG.

Carl Reichardt: Thanks, everybody, Andy.

Carl Reichardt: Katie, good to have you back too. Can I go back to something Mark mentioned about normal contract terms and sort of a movement back that direction? Can you expand on that a little bit about what you mean by normal contract terms? And what was really abnormal prior?

Katie Smith: Well, you know, the first quarter was a good quarter, but, you know, it's still early in the year.

Katie Smith: Based on, you know, the current market conditions, our current loss positions, and our development timelines, we still believe that $14,500 to $15,500 is a realistic range.

Speaker Change: Yeah, Truman, that's Mark.

Mark: We also expect new homes to start to align with new home sales. So if home sales accelerate, we could be at the higher end of our range. But we're going to monitor the spring selling season and remain flexible to capitalize on any market upside. I was saying that there could be a bottleneck in achieving that upside that could be related to finished lot deliveries, particularly related to government approval delays. Yes. So we're seeing more takedown schedules than we were seeing before, fewer bulk closings, things of that nature. So although that was increasingly difficult today, normal contract terms have kind of gone back to what was historically the case for, I would tell you, a decade. And so we're getting land sellers that are getting a little bit more realistic.

Speaker Change: Yeah, we alluded to it in our scripted remarks, but we continue to see delays from municipalities and land development, so that could definitely be the problem. I'll give you an example. So if you had a big project and you were going to go bulk on a large project, you're now giving yourself time between your takedowns to take that land down over time versus having to bulk purchase that project. That's probably one of the big normalizations in contract terms.

Speaker Change: Gotcha. Understood. Thanks for your time and good luck in the next couple quarters.

Speaker Change: Thank you.

Speaker Change: The next question is from Carl Reichert with BTIG.

Carl Reichert: Please proceed.

Carl Reichert: Thanks, everybody.

Carl Reichert: Andy, a special welcome.

Carl Reichert: Katie, it's good to have you back, too.

Speaker Change: Can I go back to something Mark mentioned about normal contract terms and sort of a movement back that direction. Can you expand on that a little bit by what you mean by normal contract terms and what was really abnormal prior?

Speaker Change: We've also seen a more normalized due diligence time frame. Instead of 30 days, you're getting 60 or 90 days? Okay.

Speaker Change: So more efficient; it takes longer but is easier to manage and more efficient for you all in terms of capital deployment and receipted capital? Is that the way to think about it as opposed to lumpier? And then I can get to the treatments question a different way on the guide for the year. So do you have lots that you think, right now, you'd anticipate finishing in the next 2 quarters that would be available for sale that don't have a buyer or a contract yet?

Speaker Change: And if so, what is that number? Yeah, so we're seeing more takedown schedules than we were seeing before, like bulk closing, things of that nature. So, you know, although it was increasingly difficult today, those normal contract terms have kind of gone back to what was historically the case for, I would tell you, a decade. So we have land sellers that are getting a little bit more realistic. I'll give you an example.

Speaker Change: So if you had a big project and you were going to go bulk on a large project, they're now giving you time between your takedown to take that land down over time versus having to bulk purchase that project. That's probably one of the big normalizations in contractors. We've also seen more normalized due diligence timeframes. So instead of 30 days, you're seeing 60 or 90 days. I don't have the specific number of lots that are going to be finished that aren't under contract right now, but I can probably get that for you. I have to check, but we definitely do have stuff that's under development that hasn't been put under contract yet. For the Forestar source project, we aim to have those under contract anywhere from 3 to 6 months before delivery.

Speaker Change: And so there's definitely still opportunity to put stuff under contract that's going to close in the back half of the year.

Speaker Change: Okay, so more efficient. It takes longer but is easier to manage and more efficient for you all in terms of capital deployment and receiving capital.

Speaker Change: Is that the way to think about it as opposed to one year? Okay, great.

Speaker Change: Thank you. And then I can get to Truman's question in a different way on the guide for the year.

Speaker Change: So do you have lots that you think right now you'd anticipate finishing in the next two quarters that would be available for sale? That don't have a buyer or contract yet? And if so, what's the number?

Speaker Change: Okay. All right. Great.

Speaker Change: And then last question.

Speaker Change: You did another deal with a lot banker who's working with your largest customer.

Speaker Change: And I'm curious about whether or not that's a potential growth area for you, whether a lot of bankers would be working with Horton or not.

Speaker Change: We certainly talked to plenty who are trying to deploy more capital and looking for opportunities.

Speaker Change: Can you talk about what that opportunity might be? And then I should move on to that also because I always ask about single-family rental and how that business looks if it looks interesting at all.

Speaker Change: Or is that still sort of a one-off? I don't have the specific number of lots that are going to be finished that aren't under contract right now. I can probably get that for you. I'd have to check. But we definitely do have stuff that's under development that hasn't been put under contract yet. In a four-star resource project, we aim to have those under contract anywhere from three to six months before delivery. And so there's definitely still opportunity to put stuff under contract that's going to close in the back half of the year. Okay.

Speaker Change: All right.

Speaker Change: Great. Thank you, Kate. And then last question, you did another deal with a lot banker who's working with your largest customer. And I'm curious about whether or not that's a potential growth area for you, whether or not the lot banker will be working with Horton or not. We've certainly talked to plenty who are trying to deploy more capital and looking for opportunities. Can you talk about what that opportunity might be? And then I should sidecar onto that also because I always ask about single-family rental properties and how that business looks, if it looks interesting at all, or is that still sort of a one-off?

Speaker Change: I'll start, and I'll let somebody else chime in if they need to.

Speaker Change: But I mean, as far as the opportunity with land bankers is concerned, it's not really our decision.

Speaker Change: We're not marketing our loss to land bankers.

Speaker Change: But if one of our customers wants to use the land banker to step in as an intermediary, we're completely fine with that. It just enhances our capital efficiency and gets that inventory off of our balance sheet.

Speaker Change: So we're pretty indifferent if there's a land banker that's stepping in on behalf of the builder as long as we have all the suggested balances in place. I'll start, and I'll let somebody else chime in if they need to. But, I mean, as far as the opportunity with land bankers, it's not really our decision. You know, we're not marketing our lots to land bank

Speaker Change: But if one of our customers wants to use a land banker to step in as an intermediary, we're completely fine with that.

Speaker Change: It just, you know, enhances our capital efficiency and gets that inventory off of our balance sheet. So, we're pretty indifferent if there's a land banker that's stepping in on behalf of a builder. As long as, you know, we have all the success and balances in place. And as it relates to the part of your question on building for rent, yes, we do think that that is a sustainable part of our business. If we can have portions of a larger community, which could improve our pace through selling to a customer that has built components for rent or multifamily components, that's something that we would absolutely entertain.

Speaker Change: And as it relates to the part of your question on building for rent, yes, we do think that that is a sustainable part of our business. If we can have portions of a larger community, which would, The next question comes from Anthony Pettinari with Citigroup.

Speaker Change: This is Asher Sohnen on for Anthony.

Asher Sohnen: I think you talked in the past about the capital structure offering a competitive advantage. But I'm just wondering, have you seen any concrete kind of, like, opportunities in the land market come about?

Asher Sohnen: Or any sort of concrete evidence, does that sort of come into friction, or maybe that will take a little bit longer? We could improve our pace by selling to a customer that has built-for-rent components or multifamily components.

Speaker Change: That's something that we would absolutely entertain. I appreciate it all.

Speaker Change: Thanks very much.

Speaker Change: Thanks, Carl.

Speaker Change: The next question comes from Anthony Pettinari with Citigroup.

Anthony Pettinari: We're not seeing any really concrete evidence.

Anthony Pettinari: What we do see is it does give us a little bit more of a competitive advantage, having the liquidity at hand, competing against another developer.

Anthony Pettinari: And at times, other builders are using that developer in a much smaller fashion than they're using us.

Anthony Pettinari: They know that we have the liquidity, and they'd rather look to us to develop the lots versus the other, let's call it, local or regional developer. There have been times where maybe that developer gets into a capital constraint on the following phase, and so some builders will look to us to see if we can step in and purchase that additional phase to keep them from gapping on their home sales.

Speaker Change: Hi, this is Asher Sonnen on behalf of Anthony.

Asher Sonnen: Thanks for taking my question. I think you've talked in the past about, you know, the capital structure offering competitive advantages, but I'm just wondering, have you seen any concrete kind of, maybe opportunities in the land market come about, or any sort of concrete evidence?

Speaker Change: Maybe that will take a little bit longer. We're not seeing any really concrete evidence, but what we do think is it does give us a little bit more of a competitive advantage having the liquidity at hand when competing against another developer.

Speaker Change: And at times, too, the other builders are using that developer in a much smaller fashion than they're using us.

Speaker Change: They know that we have the liquidity, and they'd rather look to us to develop the loss versus the other, what's called, local or regional developer.

Speaker Change: There have been times, too, where maybe that developer gets into a capital constraint on the following phase and says some builders will look to us to see if we can step in and purchase that additional phase to prevent them from gapping on their home sales. And then just separately, obviously, you're not guiding to gross margins for the year. But I'm just wondering, I think you talked about increased Forestar source lots driving kind of a gross margin headwind. Are you sort of seeing that drive, sorry, tailwind, rather, do you see that tailwind kind of materialize in 2024? Or is that maybe more of a 2025 story? Great. And then just separately, obviously, you're not guiding to growth margins for the year, but I'm just wondering, you know, I think, you know, previously you talked about increased force, force loss, driving kind of that growth margin head.

Speaker Change: Are you sort of seeing that drive, sorry, that tail end, do you see that tail end kind of materialize in 2024? Or is that maybe more of a 2025 story? Well, we could see in '24, definitely, we are. The 4-star sourced lots do give us more optionality, I guess, with the project. I don't know that, I don't know that we'll see. I mean, we have seen significant increases in development costs as well. So I don't know that we're going to continue to see increased margins as a result of that because we're always trying to match price and pace or balance price and pace to improve our returns. So it's really not just about the sales price or margin. It's really more about our returns.

Speaker Change: Well... You'll see in 24, definitely, you know, we're, of course, our source lot does give us, does give us more. Optionality, I guess, for the project, um, I don't know that we'll see. I mean, we have seen significant increases in development costs as well, so I don't know that we're going to continue to see increased margins as a result of that because we're always trying to match price and pace or balance price and pace to improve our returns. So it's really not just about, you know, the sales price or margin. It's really more about our returns. [Operator Instructions] The next question comes from Mike Rehaut with JPMorgan.

Speaker Change: Douglas Wardlaw came in for Mike.

Douglas Wardlaw: If there's been any particular regions where you've seen strength or particular weakness?

Speaker Change: Great, that's very helpful.

Speaker Change: I'll turn it over to you. Once again, if you have a question or a comment, please indicate so by pressing star 1.

Speaker Change: The next question comes from Mike Rehaut with J.P. Morgan.

Michael Jason Rehaut: Hi guys.

Michael Jason Rehaut: Doug Wardlaw from Mike. I was wondering if you could kind of speak to any potential regional trends you've seen over the recent months, especially with the kind of rate volatility that we've experienced.

Doug Wardlaw: Have there been any particular reasons where you've seen strength or a particular weakness? Not that we've seen any particular weakness. Texas and Florida remain strong for us. It's been a strong hold for a long time. Great. And then in terms of dealing with municipalities and getting approval there, you guys touched on the difficulty. Is there any kind of vision moving forward where you see that easing up? Or is that something that you expect to be a problem for business moving forward, I guess, for the foreseeable future in 2024? Texas and Florida remain strong for us. It's been a stronghold for a long time. Great. And then, in terms of what you guys touched on, you know, difficulty with municipalities and getting approval there.

Speaker Change: Is there any kind of vision moving forward when you see that easing up a tad, or is that something that you expect to be a problem for the business moving forward, I guess, for the foreseeable future in 2024? That's a great question. Historically, it's always been a challenge. It's been delayed even further, in the past 12 to 24 months, a lot of it due to turnover within those departments themselves. You get some [indiscernible] experience that is now in that role versus more fosiseason experience. It's a daily battle. I help them feel with our folks, but, anyway, I'll refrain from saying that. But it's, I don't know if that's going to ease up anytime in the foreseeable future. But again, I think it's market-to-market in terms of where we're seeing those governmental delays; some areas, we see it; some we don't.

Speaker Change: So it really fluctuates across the United States. That's a great question. Historically, it's always been a challenge. It's been delayed even further, I would say, in the past 12 to 24 months. A lot of it's turnover within those departments themselves. You get some folks with less experience that are now in that role versus more folks with seasoned experience. It's a daily battle out in the field with our folks. Anyway, I'll refrain from saying that, but I don't know that it's going to ease up any time in the foreseeable future. But, again, I think it's market to market in terms of where we're seeing those governmental delays. Some areas we see it, some we don't. So it really is a watchful wait for us in the United States.

Speaker Change: We've been accounting for those delays in our underwriting. So we've been looking at extended timelines in underwriting to make sure that we're still going to be able to achieve our return. And we've been accounting for those delays in our underwriting. So we've been looking at extended time lines in underwriting to make sure that we're still going to be able to achieve our returns.

Speaker Change: We have reached the end of the question-and-answer session.

Speaker Change: I will now turn the call over to Andy Oxley for his closing remarks.

Andy Oxley: Got it.

Andy Oxley: Thank you, guys.

Andy Oxley: We have reached the end of the question and answer session.

Andy Oxley: I will now turn the call over to Andy Otte for our closing remarks.

Andy Otte: Thank you, John, and thank you to everyone on the Forestar team for your focus and hard work.

Andy Otte: We will stay disciplined and opportunistic as we continue to consolidate market share.

Speaker Change: We appreciate everyone's time on the call today and look forward to speaking with you again in April to share our second quarter results.

Speaker Change: Thank you, John, and thank you to everyone on the four-star team for your focus and hard work.

Speaker Change: We will stay disciplined and opportunistic as we continue to consolidate market share.

Speaker Change: We appreciate everyone's time on the call today and look forward to speaking with you again in April to share our second quarter results.

Speaker Change: This concludes today's conference, and you may disconnect your lines at this time.

Speaker Change: Thank you for your participation.

Speaker Change: This concludes today's conference, and you may disconnect your lines at this time.

Speaker Change: Thank you for your participation.

Unnamed Speaker: That developer gets into a capital constraint on the following phase and says some builders will look to us to see if we can step in and purchase that additional phase to prevent them from gapping on their home sales. Great

Unnamed Speaker: And then just separately, obviously, you're not guiding to gross margins for the year. But I'm just wondering, I think we talked about increased Forestar source lots driving kind of a gross margin headwind. Are you sort of seeing that drive, sorry, tailwind rather, kind of materialize in 2024? Is that maybe more of a 2025 story?

Unnamed Speaker: And then just separately, obviously, you know, you're not guiding to growth margins for the year, but I'm just wondering, you know, I think, you know, previously you talked about increased force, force loss, driving kind of that growth margin head. Are you sort of seeing that drive, sorry, that tail end, kind of materialize in 2024? Is that maybe more of a 2025 story?

Unnamed Speaker: Well, we could see in '24, definitely, we are. The 4-star sourced lots do give us more optionality, I guess, with the project. I don't know that, I don't know that we'll see. I mean, we have seen significant increases in development costs as well. So I don't know that we're going to continue to see increased margins as a result of that because we're always trying to match price and pace or balance price and pace to improve our returns. So it's really not just about the sales price or margin.

Unnamed Speaker: It's really more about our returns. Well... You could see in 24, definitely, you know, we're, of course, our source lot does give us, does give us more. Optionality, I guess, for the project, um, I don't know that we'll see.

Unnamed Speaker: I mean, we have seen significant increases in development costs as well. So, I don't know that we're going to continue to see increased margins as a result of that because we're always trying to match price and pace or balance price and pace to improve our returns. So it's really not just about the sales price or margin.

Operator: It's really more about our returns. [Operator Instructions] Next question comes from Mike Rehaut with JPMorgan. Douglas Wardlaw on for Mike.

Operator: Once again, if you have a question or a comment, please indicate so by pressing star 1. The next question comes from Mike Rehaut with J.P. Morgan. Hi, guys. Doug Wardlaw from JP Morgan.

Douglas Wardlaw: I was wondering if you could kind of speak to any potential regional trends you've seen over the recent months, especially with the kind of rate volatility that we've experienced. Have there been any particular reasons where you've seen strength or a particular weakness? Not that we've seen any particular weakness. Texas and Florida remain strong for us. It's been a strong hold for a long time. Great And then in terms of, you guys touched on difficulty with municipalities and getting approval there. Is there any kind of vision moving forward where you see that easing up?

Unnamed Speaker: Or is that something that you expect to be a problem for business moving forward, I guess, for the foreseeable future in 2024? Texas and Florida remain strong for us. It's been a stronghold for a long time.

Unnamed Speaker: And then in terms of what you guys touched on, the difficulty with municipalities and getting approval there, is there any kind of vision moving forward when you see that easing up a tad, or is that something that you expect to be a problem for business moving forward, I guess, for the foreseeable future in 2024? That's a great question.

Unnamed Speaker: Historically, it's always been a challenge. It's been delayed even further, in the past 12 to 24 months, a lot of it's turnover within those departments themselves. You get some [indiscernible] experience that are now in that role versus more fosiseason experience. It's a daily battle. I help the feel with our folks, but, anyway, I'll refrain from saying that.

Unnamed Speaker: But it's, I don't know that's going to ease up anytime in the foreseeable future. But again, I think it's market-to-market in terms of where we're seeing those governmental delays. Some areas, we see it, some we don't. So it really fluctuates across the United States. That's a great question. Historically, it's always been a challenge.

Unnamed Speaker: It's been delayed even further, I would say, in the past 12 to 24 months. A lot of it is turnover within those departments themselves. You get some folks with less experience that are now in that role versus more folks with seasoned experience.

Unnamed Speaker: It's a daily battle out in the field with our folks. Anyway, I'll refrain from saying that, but I don't know that it's going to ease up any time in the foreseeable future. But, again, I think it's market to market in terms of where we're seeing those governmental delays. Some areas we see it, some we don't, so it really is a watchful watch across the United States.

Unnamed Speaker: We've been accounting for those delays in our underwriting, so we've been looking at extended timelines in underwriting to make sure that we're still going to be able to achieve our results. So we've been looking at extended time lines in underwriting to make sure that we're still going to be able to achieve our returns.

Unnamed Speaker: We have reached the end of the question-and-answer session. I will now turn the call over to Andy Oxley for her closing remarks.

Andy Otte: Thank you, guys. We have reached the end of the question and answer session. I will now turn the call over to Andy Otte for our closing remarks. Thank you, John, and thank you to everyone on the Forestar team for your focus and hard work. We will stay disciplined and opportunistic as we continue to consolidate market share. We appreciate everyone's time on the call today and look forward to speaking with you again in April to share our second quarter results. Thank you, John, and thank you to everyone on the four-star team for your focus and hard work. We will stay disciplined and opportunistic as we continue to consolidate market share.

Unnamed Speaker: We appreciate everyone's time on the call today and look forward to speaking with you again in April to share our second quarter results. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Q1 2024 Forestar Group Inc Earnings Call

Request a DemoDemo

FOR

Forestar Group

Earnings