FOR · Forestar Group Inc.

Forestar Group Inc. delivered solid Q2 fiscal 2026 results amid affordability constraints and cautious consumer sentiment, as noted by Chairman Donald J. Tomnitz. Revenues grew 7% to $374.3 million, driven by a higher average sales price per lot of $112,800 (up from $101,700), despite a 14% drop in lots sold to 2,938. This pricing strength offset lower volume, particularly sales to non-D.R. Horton customers, which fell to 488 lots from 910, partly due to prior-year lot banker transactions expected to cycle to D.R. Horton. Pre-tax income rose 8% to $43.9 million, reflecting improved margins from lot pricing aligned with demand timing. Net income increased 2% to $32.1 million or $0.63 per diluted share. For the six-month period, revenues were up 8% to $647.3 million, though net income dipped 1% to $47.5 million. Balance sheet remains strong with $362.2 million unrestricted cash, $672.1 million revolver capacity for $1.0 billion total liquidity, and a low 19.2% net debt to total capital ratio. Debt stood at $793.5 million with no maturities in the next year. Lot position of 94,400 (63,500 owned, 30,900 controlled) includes 24,100 under contract for $2.2 billion future revenue and 18,100 with D.R. Horton right of first offer. Management updated FY2026 lot guidance lower to 14,000-14,500 from 14,000-15,000 due to market conditions but maintained revenue outlook at $1.6-$1.7 billion, emphasizing financial discipline, D.R. Horton relationship, and market share gains for long-term value.