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Forestar Group Inc.

Forestar Group Inc.FOREarnings & Financial Report

NYSE · Real Estate · Real Estate

Forestar Group Inc. is a residential lot development company based in Arlington, Texas. The company has operations in 51 markets in 21 states and delivered 11,518 residential lots during the twelve-month period ended December 31, 2020. The company is publicly traded on the New York Stock Exchange and in October 2017 became a majority-owned subsidiary of D.R. Horton, Inc., the largest homebuilder by volume in the United States since 2002. The company primarily acquires entitled real estate and...

What changed in Forestar Group Inc.'s 10-K — 2023 vs 2024

Top changes in Forestar Group Inc.'s 2024 10-K

163 paragraphs added · 138 removed · 130 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

34 edited+4 added−4 removed35 unchanged
Horton, including the Stockholder’s Agreement and Master Supply Agreement; • beneficial ownership reports filed by officers, directors, and principal security holders under Section 16(a) of the Securities Exchange Act of 1934, as amended (or the “Exchange Act”); and • corporate governance information that includes our: – corporate governance guidelines, – audit committee charter, – compensation committee charter, – nominating and governance committee charter, – standards of business conduct and ethics, – environmental policy, – human rights policy, – code of ethics for senior financial officers, and – information on how to communicate directly with our Board of Directors.
Horton, including the Stockholder’s Agreement and Master Supply Agreement; • beneficial ownership reports filed by officers, directors, and principal security holders under Section 16(a) of the Securities Exchange Act of 1934, as amended (or the "Exchange Act"); and • corporate governance information that includes our: – corporate governance guidelines, – audit committee charter, – compensation committee charter, – nominating and governance committee charter, – standards of business conduct and ethics, – environmental policy, – human rights policy, – code of ethics for senior financial officers, and – information on how to communicate directly with our Board of Directors.
We have the right to either retain or refund customer deposits on canceled lot purchase contracts, depending upon the applicable provisions of the contract or other circumstances. The length of time between the signing of a lot sales contract and delivery of the lot to the customer (closing) is generally from three to twelve months.
We have the right to either retain or refund customer deposits on canceled lot purchase contracts, depending upon the applicable provisions of the contract or other circumstances. The length of time between the signing of a lot sales contract and delivery of the lot to the customer (closing) is generally from three to eighteen months.
Additional benefits offered include a 401(k) savings plan, employee stock purchase plan and access to professional resources to support employees with their mental and physical health, financial planning, identify theft protection and legal needs. We are committed to supporting our employees in their health, wellness and financial planning goals.
Additional benefits offered include a 401(k) savings plan, employee stock purchase plan and access to professional resources to support employees with their mental and physical health, financial planning, identity theft protection and legal needs. We are committed to supporting our employees in their health, wellness and financial planning goals.
Horton has significant influence in guiding our strategic direction and operations. In connection with the merger, we entered into certain agreements with D.R. Horton including a Stockholder’s Agreement, a Master Supply Agreement and a Shared Services Agreement. Under the terms of the Master Supply Agreement, we supply finished lots to D.R.
Horton has significant influence in guiding our strategic direction and operations. In connection with the merger, we entered into certain agreements with D.R. Horton including a Stockholder’s Agreement (as amended, the "Stockholder's Agreement"), a Master Supply Agreement and a Shared Services Agreement. Under the terms of the Master Supply Agreement, we supply finished lots to D.R.
The Master Supply Agreement continues until the earlier of (i) the date at which D.R. Horton owns less than 15% of our voting shares or (ii) June 29, 2037; however, we may terminate the agreement at any time when D.R. Horton owns less than 25% of our voting shares. We have a Stockholder's Agreement with D.R. Horton which defines D.R.
The Master Supply Agreement continues until the earlier of (i) the date at which D.R. Horton owns less than 15% of our voting shares or (ii) June 29, 2037; however, we may terminate the agreement at any time when D.R. Horton owns less than 25% of our voting shares. Our Stockholder's Agreement with D.R.
Our managers are responsible for the following activities related to our land and lot acquisition and development activities: • site selection, which involves: – a feasibility study; – soil and environmental reviews; – review of existing zoning and other governmental requirements; – review of the need for and extent of offsite work required to obtain project entitlements and to complete necessary infrastructure; and – financial analysis of the potential project; • negotiating land acquisition, lot purchase and related contracts; • obtaining all necessary land development approvals; • selecting land development subcontractors and ensuring their work meets our contracted scopes; • planning and managing land development schedules; • determining the sales pricing for each lot in a given project; • developing and implementing marketing and sales plans; and • coordinating all interactions with customers throughout the lot sale process. 5 Table of Contents Our corporate executives and corporate office personnel provide control and oversight functions to many important risk elements in our operations, including: • allocation of capital; • cash management; • review and approval of business plans and budgets; • review, approval and funding of land and lot acquisitions (Board of Directors must approve acquisitions greater than $20 million in accordance with the Stockholder's Agreement); • environmental assessments of land and lot acquisitions; • review of all business and financial analysis for potential land and lot inventory investments; • oversight of land and lot inventory levels; • monitoring and analysis of profitability, returns and costs; and • review of major personnel decisions and incentive compensation plans.
Our managers are responsible for the following activities related to our land and lot acquisition and development activities: • site selection, which involves: – a feasibility study; – soil and environmental reviews; – review of existing zoning and other governmental requirements; – review of the need for and extent of offsite work required to obtain project entitlements and to complete necessary infrastructure; and – financial analysis of the potential project; • negotiating land acquisition, lot purchase and related contracts; • obtaining all necessary land development approvals; • selecting land development subcontractors and ensuring their work meets our contracted scopes; • planning and managing land development schedules; • determining the sales pricing for each lot in a given project; • developing and implementing marketing and sales plans; and • coordinating all interactions with customers throughout the lot sale process. 5 Table of Contents Our corporate executives and corporate office personnel provide control and oversight functions to many important risk elements in our operations, including: • allocation of capital; • cash management; • review and approval of business plans and budgets; • review, approval and funding of land and lot acquisitions (Board of Directors must approve certain acquisitions as provided in our certificate of incorporation and the Stockholder's Agreement); • environmental assessments of land and lot acquisitions; • review of all business and financial analysis for potential land and lot inventory investments; • oversight of land and lot inventory levels; • monitoring and analysis of profitability, returns and costs; and • review of major personnel decisions and incentive compensation plans.
Horton at market terms offered by Forestar and both companies identify land development opportunities to expand our portfolio of assets. 3 Table of Contents We manage our operations through our real estate segment. Our national footprint provides diversification in our real estate investments and our sources of revenues and earnings.
Horton at market terms offered by Forestar and both companies identify land development opportunities to expand our portfolio of assets. We manage our operations through our real estate segment. Our national footprint provides diversification in our real estate investments and our sources of revenues and earnings.
Horton employees provide us with certain administrative, compliance, operational and procurement services. 8 Table of Contents We believe the people who work for our company are our most important resources and are critical to our continued success. We focus significant attention toward attracting and retaining talented and experienced individuals to manage and support our operations.
Horton employees provide us with certain administrative, compliance, operational and procurement services. We believe the people who work for our company are our most important resources and are critical to our continued success. We focus significant attention toward attracting and retaining talented and experienced individuals to manage and support our operations.
We became a majority-owned subsidiary of D.R. Horton, Inc. ("D.R. Horton") in October 2017 by virtue of a merger with a wholly-owned subsidiary of D.R. Horton. Immediately following the merger, D.R. Horton owned 75% of our outstanding common stock, and as of September 30, 2023 they owned approximately 63% of our outstanding common stock. As our controlling shareholder, D.R.
We became a majority-owned subsidiary of D.R. Horton, Inc. ("D.R. Horton") in October 2017 by virtue of a merger with a wholly-owned subsidiary of D.R. Horton. Immediately following the merger, D.R. Horton owned 75% of our outstanding common stock, and as of September 30, 2024 they owned approximately 62% of our outstanding common stock. As our controlling shareholder, D.R.
Our corporate executives and office personnel are responsible for, and provide oversight and review for, the following shared services performed by D.R. Horton: • finance and treasury; • risk and insurance; • information technology; • internal audit; • investor relations; and • human resources, payroll and employee benefits. We have a Master Supply Agreement with D.R.
Our corporate executives and office personnel are responsible for, and provide oversight and review for, the following shared services performed by D.R. Horton: • finance and treasury; • information technology; • internal audit; • investor relations; and • human resources, payroll and employee benefits. We have a Master Supply Agreement with D.R. Horton which establishes our business relationship with D.R.
We believe this provides long-term focus and continuity to our operations while also providing opportunities for the growth and advancement of our employees. During fiscal 2023, 20 employees were placed into new leadership positions in our regional and divisional offices, and of those, 85% were promoted from within the organization.
We believe this provides long-term focus and continuity to our operations while also providing opportunities for the growth and advancement of our employees. During fiscal 2024, 26 employees were placed into new leadership positions in our regional and divisional offices, and of those, 54% were promoted from within the organization.
In fiscal 2022 and 2023, municipalities and other government agencies were frequently delayed in granting the proper approvals to us, which delayed our development activities in certain markets. In select situations, we contract with D.R.
In recent years, municipalities and other government agencies were frequently delayed in granting the proper approvals to us, which delayed our development activities in certain markets. In select situations, we contract with D.R.
Horton which establishes our business relationship with D.R. Horton as both companies identify residential real estate opportunities. The agreement provides D.R. Horton the right of first offer to purchase, at market prices and terms offered by Forestar, up to 100% of the lots from D.R.
Horton as both companies identify residential real estate opportunities. The agreement provides D.R. Horton the right of first offer to purchase, at market prices and terms offered by Forestar, up to 100% of the lots from D.R.
At September 30, 2023, 233 of our employees worked in our regional and divisional offices and 70 worked at our corporate office. In fiscal 2023, our total cost for employee compensation and benefits was $59.5 million. In addition to our employees, we also have a Shared Services Agreement with D.R. Horton whereby D.R.
At September 30, 2024, 305 of our employees worked in our regional and divisional offices and 88 worked at our corporate office. In fiscal 2024, our total cost for employee compensation and benefits was $77.5 million. In addition to our employees, we also have a Shared Services Agreement with D.R. Horton whereby D.R.
We also make short-term strategic investments in finished lots (lot banking) and undeveloped land (land banking) with the intent to sell these assets within a short time period to utilize available capital prior to its deployment into longer-term lot development projects. For the year ended September 30, 2023, we sold 14,040 lots with an average sales price of $90,900.
We also make short-term strategic investments in finished lots (lot banking) and undeveloped land (land banking) with the intent to sell these assets within a short time period to utilize available capital prior to its deployment into longer-term lot development projects. For the year ended September 30, 2024, we sold 15,068 lots with an average sales price of $96,600.
Our common stock is listed on the New York Stock Exchange (NYSE) under the ticker symbol “FOR.” The terms “Forestar,” the “Company,” “we” and “our” used herein refer to Forestar Group Inc., a Delaware corporation, and its predecessors and subsidiaries.
Our common stock is listed on the New York Stock Exchange (NYSE) under the ticker symbol "FOR." The terms "Forestar," the "Company," "we" and "our" used herein refer to Forestar Group Inc., a Delaware corporation, and its predecessors and subsidiaries.
We have expanded and diversified our lot development operations across 54 markets in 22 states by investing available capital into our existing markets and by entering new markets. We believe our geographically diverse operations provide a strong platform for us to consolidate market share in the highly fragmented lot development industry.
We have expanded and diversified our lot development operations across 59 markets in 24 states. We believe our geographically diverse operations provide a strong platform for us to consolidate market share in the highly fragmented lot development industry.
We also offer our employees a broad range of benefits, including paid vacation, holidays, sick time and parental leave; medical, dental and vision healthcare insurance and life insurance and disability coverage. We are committed to supporting our employees in their health, wellness and financial planning goals.
We also offer our employees a broad range of benefits, including paid vacation, holidays, sick time and parental leave; medical, dental and vision healthcare insurance; and life insurance and disability coverage.
At September 30, 2023, our lots owned included approximately 15,000 lots (29%) that were under contract to be sold, of which approximately 14,400 lots are under contract to D.R. Horton.
At September 30, 2024, our lots owned included approximately 21,000 lots (36%) that were under contract to be sold, of which approximately 20,500 lots are under contract to D.R. Horton.
At September 30, 2023, our lot position consisted of 79,200 residential lots, of which approximately 52,400 were owned and 26,800 were controlled through purchase contracts. Of our 52,400 owned lots, approximately 15,000 lots are under contract to be sold for an aggregate remaining sales price of approximately $1.3 billion.
At September 30, 2024, our lot position consisted of 95,100 residential lots, of which approximately 57,800 were owned and 37,300 were controlled through purchase contracts. Of our 57,800 owned lots, approximately 21,000 lots are under contract to be sold for an aggregate remaining sales price of approximately $1.9 billion.
We also require certain personal protective equipment, such as hard hats, high visibility safety wear and hearing and eye protection to be worn in certain circumstances at our active development sites. Additionally, because substantially all of our land development work is performed by subcontractors, we require that our subcontractors maintain safety programs.
We also require personal protective equipment, such as hard hats, high visibility safety wear and hearing and eye protection to be worn in certain circumstances at our active development sites.
We provide certification training to our field personnel through an Occupational Safety and Health Administration authorized third-party vendor; we provide our teams with an abundance of safety resources, including safety checklists, policies, procedures, and best practices; and we communicate with all of our employees through a monthly safety newsletter to inform and reinforce our commitment to and concern for their well-being.
We also provide our teams with many safety resources, including safety checklists, policies, procedures, and best practices, and we communicate with all of our employees through a monthly safety newsletter to inform and reinforce our commitment to and concern for their well-being.
In fiscal 2023, these supply chain constraints have eased in the majority of our markets. The cost and availability of certain materials, especially steel, transformers, concrete, and petroleum-based materials, is influenced by changes in local and global commodity prices and capacity as well as government regulation, such as government-imposed tariffs or trade restrictions on supplies such as steel.
Generally, the materials used in our operations have been readily available from numerous sources. The cost and availability of certain materials, especially steel, transformers, concrete, and petroleum-based materials, is influenced by changes in local and global commodity prices and capacity as well as government regulation, such as government-imposed tariffs or trade restrictions on supplies such as steel.
Horton’s consent to (i) issue any new class of equity or shares of our common stock in excess of certain amounts; (ii) incur, assume, refinance or guarantee debt that would increase our total leverage to greater than 40%; (iii) select, terminate, remove or change compensation arrangements for the Executive Chairman, Chief Executive Officer, Chief Financial Officer and other key senior management; and (iv) make an acquisition or investment greater than $20 million.
Horton’s consent to (i) issue any new class of equity or shares of our common stock in excess of certain amounts; (ii) incur, assume, refinance or guarantee debt that would increase our total leverage to greater than 40%; (iii) select, terminate, remove or change compensation arrangements for the Executive Chairman, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and other key senior management; and (iv) make certain acquisitions or investments. 6 Table of Contents Land/Lot Acquisition and Inventory Management We acquire land for use in our development operations after we have completed due diligence and obtained the development rights (known as entitlements).
Horton’s right to nominate members to our Board, requires D.R. Horton’s consent for certain transactions and establishes an investment committee. D.R. Horton has the right to nominate our Board members commensurate with its equity ownership. As long as D.R.
Horton and our certificate of incorporation define D.R. Horton’s right to nominate members to our Board, require D.R. Horton’s consent for certain transactions and establish an investment committee, which is authorized to approve certain new investments. D.R. Horton has the right to nominate a number of our Board members commensurate with its equity ownership. As long as D .R.
Additionally, our compliance with such regulations has not had, nor is it expected to have, a material adverse effect on our consolidated financial position, results of operations or cash flows. However, changes in regulations could increase our costs to comply with such regulations, as discussed in “Item 1A.
We believe that we are in compliance in all material respects with existing environmental regulations applicable to our business. Additionally, our compliance with such regulations has not had, nor is it expected to have, a material adverse effect on our consolidated financial position, results of operations or cash flows.
We take workplace safety seriously at our construction sites and in our offices. Our organization strives for a zero-incident safety culture and full compliance with safety regulations.
We take workplace safety seriously at our development sites and in our offices. Our organization strives for a zero-incident safety culture and full compliance with safety regulations. We provide certification training to our field personnel through an Occupational Safety and Health Administration authorized third-party vendor.
Lucie Greenville/Spartanburg Tampa/Sarasota Hilton Head Volusia County West Palm Beach Tennessee Nashville Georgia Atlanta Texas Austin Augusta Dallas Savannah Fort Worth Houston Illinois Chicago San Antonio Indiana Indianapolis Washington Seattle/Tacoma/Everett Iowa Des Moines West Virginia Eastern West Virginia Maryland Suburban Washington, D.C. 4 Table of Contents When evaluating new or existing markets for purposes of capital allocation, we consider local, market-specific factors, including, among others: • economic conditions; • employment levels and job growth; • housing demand and affordability; • availability of land and lots in desirable locations on acceptable terms; • land entitlement and development processes; • availability of qualified subcontractors; • new and secondary home sales activity; • competition; and • performance capabilities of our local management teams.
Paul West Virginia Eastern West Virginia Nevada Las Vegas Reno 4 Table of Contents When evaluating new or existing markets for purposes of capital allocation, we consider local, market-specific factors, including, among others: • economic conditions; • employment levels and job growth; • housing demand and affordability; • availability of land and lots in desirable locations at acceptable terms; • land entitlement and development processes; • availability of qualified subcontractors; • new and secondary home sales activity; • competition; and • performance capabilities of our local management teams.
Human Capital Resources People and Culture We have increased our number of employees from 291 at September 30, 2022 to 303 at September 30, 2023 to support the growth of our residential lot development business across a geographically diversified platform.
As a result of seasonal activity, our quarterly results of operations and financial position at the end of a particular fiscal quarter are not necessarily representative of the balance of our fiscal year. 8 Table of Contents Human Capital Resources People and Culture We have increased our number of employees from 303 at September 30, 2023 to 393 at September 30, 2024 to support the growth of our residential lot development business across a geographically diversified platform.
Paul Huntsville Mobile/Baldwin County Nevada Las Vegas Tuscaloosa Reno Arizona Phoenix New Jersey Southern New Jersey Tucson New Mexico Santa Fe California Riverside County North Carolina Asheville Colorado Denver Charlotte Fort Collins Greensboro Greenville Florida Fort Myers/Naples Raleigh-Durham Gainesville Wilmington Jacksonville Lakeland Ohio Columbus Melbourne Cincinnati Miami/Fort Lauderdale Ocala Pennsylvania Philadelphia Orlando Pensacola South Carolina Charleston Port St.
At September 30, 2024, we conducted our operations in the states and markets listed below. 3 Table of Contents State Market State Market Alabama Baldwin County New Jersey Southern New Jersey Birmingham Huntsville New Mexico Albuquerque Mobile Tuscaloosa North Carolina Asheville Charlotte Arizona Phoenix Greensboro Tucson Greenville Raleigh-Durham California Riverside County Wilmington Sacramento Ohio Columbus Colorado Denver Fort Collins Oregon Bend Florida Fort Myers/Naples Pennsylvania Philadelphia Gainesville Jacksonville South Carolina Charleston Lakeland Greenville/Spartanburg Melbourne Hilton Head Miami/Fort Lauderdale Myrtle Beach Ocala Orlando Tennessee Nashville Pensacola Port St.
Risk Factors.” Available Information Our principal executive offices are located at 2221 E. Lamar Blvd., Suite 790, Arlington, Texas 76006. Our telephone number is (817) 769-1860.
Lamar Blvd., Suite 790, Arlington, Texas 76006. Our telephone number is (817) 769-1860.
These regulations and requirements substantially affect all aspects of our land development and sales processes in varying degrees across our markets. Our properties are subject to inspection and approval by local authorities where required and may be subject to various assessments for schools, parks, streets, utilities and other public improvements.
Our properties are subject to inspection and approval by local authorities where required and may be subject to various assessments for schools, parks, streets, utilities and other public improvements. We may experience delays in receiving the proper approvals from local authorities that could delay our anticipated development activities in certain projects.
The particular compliance requirements for each site vary greatly according to location, environmental condition and the present and former uses of the site and adjoining properties. We believe that we are in compliance in all material respects with existing environmental regulations applicable to our business.
Our land development activities are also subject to an extensive array of local, state and federal statutes, ordinances, rules and regulations concerning the protection of health, safety and the environment. The particular compliance requirements for each site vary greatly according to location, environmental condition and the present and former uses of the site and adjoining properties.
Governmental Regulation and Environmental Matters Our operations are subject to extensive and complex regulations. We, and the subcontractors we use, must comply with many federal, state and local laws and regulations. These include zoning, permitting, density and development requirements, and building, environmental, advertising, labor and real estate sales rules and regulations.
Additionally, because substantially all of our land development work is performed by subcontractors, we require that our subcontractors maintain safety programs as well. 9 Table of Contents Governmental Regulation and Environmental Matters Our operations are subject to extensive and complex regulations. We, and the subcontractors we use, must comply with many federal, state and local laws and regulations.
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At September 30, 2023, we conducted our operations in the states and markets listed below. State Market State Market Alabama Birmingham Minnesota Minneapolis/St.
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Lucie Texas Austin Tampa/Sarasota Dallas Volusia County Fort Worth Houston Georgia Atlanta San Antonio Augusta Savannah Utah Salt Lake City Illinois Chicago Virginia Northern Virginia Richmond Indiana Indianapolis Virginia Beach Maryland Suburban Washington, D.C. Washington Seattle/Tacoma/Everett Minnesota Minneapolis/St.
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The Stockholder’s Agreement also establishes an investment committee to approve new investments up to $20 million. 6 Table of Contents Land/Lot Acquisition and Inventory Management We acquire land for use in our development operations after we have completed due diligence and obtained the development rights (known as entitlements).
Added
Seasonality Although the growth of our business and significant changes in market conditions have impacted our seasonal patterns in the past and could do so again in the future, we generally deliver more lots and generate greater revenues and pre-tax income in the fourth quarter of our fiscal year.
Removed
Generally, the materials used in our operations have been readily available from numerous sources. In fiscal 2022, we experienced supply chain constraints including increases in the prices of materials, shortages of skilled labor and delays in municipal approvals and inspections, which caused delays in developing and the realization of revenues and increases in cost of revenues.
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These include zoning, permitting, density and development requirements, and building, environmental, advertising, labor and real estate sales rules and regulations. These regulations and requirements affect substantially all aspects of our land development and sales processes in varying degrees across our markets.
Removed
We may experience delays in receiving the proper approvals from local authorities that could delay our anticipated development activities in certain projects. 9 Table of Contents Our land development activities are also subject to an extensive array of local, state and federal statutes, ordinances, rules and regulations concerning protecting health, safety and the environment.
Added
However, changes in regulations, such as the climate-related disclosure legislation recently enacted by the State of California and the climate-related disclosure rules adopted by the SEC, which are currently under judicial review, could increase our costs to comply with such regulations, as discussed in "Item 1A. Risk Factors." Available Information Our principal executive offices are located at 2221 E.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

45 edited+8 added−0 removed112 unchanged
The homebuilding and lot development industries are cyclical and are significantly affected by changes in general and local economic and real estate conditions, such as: • employment levels; • consumer confidence and spending; • demand for residential lots; • availability of financing for homebuyers; • availability of financing for companies that purchase our residential lots; • interest rates; • inflation; and • demographic trends.
The homebuilding and lot development industries are cyclical and are significantly affected by changes in general and local economic and real estate conditions, such as: • employment levels; • consumer confidence and spending; • housing demand; • demand for residential lots; • availability of financing for homebuyers; • availability of financing for companies that purchase our residential lots; • interest rates; • inflation; and • demographic trends.
In addition, we have in the past relied on builder referrals as a source for land development opportunities, and there is a risk that builders may refer such opportunities to land developers other than us as a result of our close alignment with D.R.
In addition, we have in the past relied on builder referrals as a source for land development opportunities, and there is a risk that builders may refer such opportunities to land developers other than us as a result of our close alignment with D.R. Horton.
These information technology systems are dependent upon global communications providers, web browsers, third-party software and data storage providers and other aspects of the Internet infrastructure that have experienced security breaches, cyber-attacks, ransomware attacks, significant systems failures and service outages in the past.
These information technology systems are dependent upon global communications providers, web browsers, third-party software and data storage providers and other aspects of the Internet infrastructure that have experienced security breaches, cyber incidents, ransomware attacks, significant systems failures and service outages in the past.
Our revolving credit facility and the indentures governing the senior notes impose restrictions on our and our restricted subsidiaries’ ability to incur secured and unsecured debt, but still permit us and our restricted subsidiaries to incur a substantial amount of future secured and unsecured debt, and do not restrict the incurrence of future secured and unsecured debt by our unrestricted subsidiaries.
Our revolving credit facility and the indentures governing the senior notes impose restrictions on our ability, and our restricted subsidiaries’ abilities, to incur secured and unsecured debt, but still permit us and our restricted subsidiaries to incur a substantial amount of future secured and unsecured debt, and do not restrict the incurrence of future secured and unsecured debt by our unrestricted subsidiaries.
We cannot provide assurances that a security breach, cyber-attack, data theft or other significant systems or security failures will not occur in the future, and such occurrences could have a material and adverse effect on our consolidated results of operations or financial position. 16 Table of Contents Governmental regulations and environmental matters could increase the cost and limit the availability of property suitable for residential lot development and could adversely affect our business and financial results.
We cannot provide assurances that a security breach, cyber incident, data theft or other significant systems or security failures will not occur in the future, and such occurrences could have a material and adverse effect on our consolidated results of operations or financial position. 16 Table of Contents Governmental regulations and environmental matters could increase the cost and limit the availability of property suitable for residential lot development and could adversely affect our business and financial results.
Horton controls us, our other stockholders will have limited ability to influence matters requiring stockholder approval, and D.R. Horton's interest may conflict with the interests of other current or potential holders of our securities. D.R. Horton beneficially owns approximately 63% of our common stock. As a result, until such time as D.R.
Horton controls us, our other stockholders will have limited ability to influence matters requiring stockholder approval, and D.R. Horton's interest may conflict with the interests of other current or potential holders of our securities. D.R. Horton beneficially owns approximately 62% of our common stock. As a result, until such time as D.R.
During the past two years, the economy has experienced significant inflationary pressures. Inflation can adversely affect us by increasing costs of land, materials, labor and our cost of capital. In addition, significant inflation is often accompanied by higher interest rates, which have a negative impact on housing affordability.
During the past three years, the economy has experienced significant inflationary pressures. Inflation can adversely affect us by increasing costs of land, materials, labor and our cost of capital. In addition, significant inflation is often accompanied by higher interest rates, which have a negative impact on housing affordability.
Horton is able to designate a certain number of the members of our Board. Our Nominating and Governance Committee has the right to designate the remaining number of individuals to the Board, and in any event not less than one. Currently, D.R. Horton has the right to designate four out of five members of our Board.
Horton is able to designate a certain number of the members of our Board. Our Nominating and Governance Committee has the right to designate the remaining number of individuals to the Board, and in any event not less than one. Currently, D.R. Horton has the right to designate four out of six members of our Board.
During the last few years, we experienced multiple disruptions in our supply chain, which resulted in shortages of certain building materials and tightness in the labor market. This caused our construction cycle to lengthen and costs of building materials to increase.
During the last few years, we experienced multiple disruptions in our supply chain, which resulted in shortages of certain construction materials and tightness in the labor market. This caused our construction cycle times to lengthen and costs of construction materials to increase.
The U.S. and other countries have experienced, and may experience in the future, outbreaks of contagious diseases that affect public health and public perception of health risk. In the event of a resurgence of COVID-19, or a widespread, prolonged actual or perceived outbreak of any contagious disease, our operations could be negatively impacted.
The U.S. and other countries have experienced, and may experience in the future, outbreaks of contagious diseases that affect public health and public perception of health risk. In the event of a widespread, prolonged actual or perceived outbreak of any contagious disease, such as COVID-19, our operations could be negatively impacted.
Horton is able to designate a certain number of the members of our Board of Directors. Currently, D.R. Horton has the right to designate four out of five members of our Board, subject to a requirement that we and D.R.
Horton is able to designate a certain number of the members of our Board of Directors. Currently, D.R. Horton has the right to designate four out of six members of our Board, subject to a requirement that we and D.R.
Our business, financial condition and results of operations may be negatively affected by any of these factors. 19 Table of Contents Risks Related to Our Indebtedness We have significant amounts of consolidated debt and may incur additional debt; our debt obligations and our ability to comply with related covenants, restrictions or limitations could adversely affect our financial condition.
Our business, financial condition and results of operations may be negatively affected by any of these factors. Risks Related to Our Indebtedness We have significant amounts of consolidated debt and may incur additional debt; our debt obligations and our ability to comply with related covenants, restrictions or limitations could adversely affect our financial condition.
Our future results are subject to the risks and uncertainties described in this “Risk Factors” section. Our revenues and earnings vary with the level of general economic activity in the markets we serve. Our business is also affected by financial, political, business and other factors, many of which are beyond our control.
Our future results are subject to the risks and uncertainties described in this "Risk Factors" section. Our revenues and earnings vary with the level of general economic activity in the markets we serve. Our business is also affected by financial, political, business and other factors, many of which are beyond our control.
If we are unable to obtain surety bonds when required, our results of operations and cash flows could be adversely affected. Information technology failures, data security breaches and the failure to satisfy privacy and data protection laws and regulations could harm our business.
If we are unable to obtain surety bonds when required, our results of operations and cash flows could be adversely affected. 15 Table of Contents Information technology failures, data security breaches, and the failure to satisfy privacy and data protection laws and regulations could harm our business.
Competitive conditions in the real estate development industry may result in difficulties acquiring suitable land at acceptable prices, lower sales volumes and prices, increased development or construction costs and delays in construction. We compete with numerous regional and local developers for the acquisition of land suitable for development.
We operate in a highly competitive industry. Competitive conditions in the real estate development industry may result in difficulties acquiring suitable land at acceptable prices, lower sales volumes and prices, increased development or construction costs and delays in construction. We compete with numerous regional and local developers for the acquisition of land suitable for development.
Horton use reasonable best efforts to cause at least three directors to qualify as “independent directors,” as such term is defined in the New York Stock Exchange ("NYSE") listing rules, and applicable law. The directors designated by D.R.
Horton use reasonable best efforts to cause at least three directors to qualify as "independent directors," as such term is defined in the New York Stock Exchange ("NYSE") listing rules, and applicable law. The directors designated by D.R.
The revolving credit facility is guaranteed by our wholly-owned subsidiaries that are not immaterial subsidiaries or have not been designated as unrestricted subsidiaries.
The revolving credit facility is guaranteed by our wholly-owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries.
Any lowering of our debt ratings could make accessing the capital markets or obtaining additional credit from banks more difficult and/or more expensive. 20 Table of Contents Change of Control Purchase Option and Change of Control Default .
Any lowering of our debt ratings could make accessing the capital markets or obtaining additional credit from banks more difficult and/or more expensive. Change of Control Purchase Option and Change of Control Default .
There can be no assurance that our unique model will continue to succeed as intended or that we will be able to continue to execute it effectively because of the risks described elsewhere in this “Risk Factors” section, or other unforeseen issues or problems that arise.
There can be no assurance that our unique model will continue to succeed as intended or that we will be able to continue to execute it effectively because of the risks described elsewhere in this "Risk Factors" section, or other unforeseen issues or problems that arise.
Although our construction cycle times have decreased more recently, if shortages and cost increases in building materials and tightness in the labor market increase, our construction cycle time and profit margins could be adversely impacted. Public health issues such as a major epidemic or pandemic could adversely affect our business and financial results.
Although our construction cycle times have decreased more recently, if shortages and cost increases in construction materials and tightness in the labor market increase, our construction cycle time and profit margins could be adversely impacted. 14 Table of Contents Public health issues such as a major epidemic or pandemic could adversely affect our business and financial results.
Our business strategy is focused on expanding our unique residential lot development business across a geographically diversified national platform while consolidating market share in the fragmented U.S. lot development industry, primarily through our strategic relationship with D.R. Horton.
Our business strategy is focused on expanding our unique residential lot manufacturing business across a geographically diverse platform while consolidating market share in the fragmented U.S. lot development industry, primarily through our strategic relationship with D.R. Horton.
These factors may alter the environment in which we do business and may increase the ongoing costs of compliance, and adversely impact our results of operations and cash flows.
Any of the above factors may alter the environment in which we do business and may increase the ongoing costs of compliance and adversely impact our results of operations and cash flows.
At September 30, 2023, we had an effective shelf registration statement filed with the SEC in October 2021 registering $750 million of equity securities, of which $300 million was reserved for sales under our at-the-market equity offering program that became effective November 2021.
We had an effective shelf registration statement filed with the SEC in October 2021, registering $750 million of equity securities, of which $300 million was reserved for sales under our at-the-market equity offering program.
Horton. 13 Table of Contents Risks Related to Our Business Operations The homebuilding and lot development industries are cyclical and significantly affected by changes in economic, real estate or other conditions that could adversely affect our business and financial results.
Risks Related to Our Business Operations The homebuilding and lot development industries are cyclical and affected by changes in economic, real estate or other conditions that could adversely affect our business and financial results.
As of September 30, 2023, our consolidated debt was $695.0 million, including $400 million principal amount of 3.85% senior notes due 2026 and $300 million principal amount of 5.0% senior notes due 2028.
As of September 30, 2024, our consolidated debt was $706.4 million, including $400 million principal amount of 3.85% senior notes due 2026 and $300 million principal amount of 5.0% senior notes due 2028.
Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, human capital, labor, cybersecurity and risk oversight, could expand the nature, scope, and complexity of matters that we are required to control, assess and report.
Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, human capital, labor, cybersecurity and risk oversight, could expand the nature, scope, and complexity of matters that we are required to control, assess and report. In March 2024, the SEC adopted new rules regarding climate-related disclosures.
Risks of Variable Rate Debt Changes in prevailing interest rates may affect the cost of our debt service obligations, because borrowings under our revolving credit facility bear interest at floating rates. Borrowings under our revolving credit facility primarily bear interest based on the Secured Overnight Financing Rate ("SOFR").
Risks of Variable Rate Debt Changes in prevailing interest rates may affect the cost of our debt service obligations, because borrowings under our revolving credit facility bear interest at floating rates.
Any such events can temporarily delay our development work and lot sales, unfavorably affect the cost or availability of materials or labor, damage residential lots under construction, lead to changing customer preferences and/or negatively impact demand for residential lots in affected areas.
Any such events can temporarily delay our development work and lot sales, unfavorably affect the cost or availability of materials or labor, damage residential lots under construction, lead to changing customer preferences and/or negatively impact demand for residential lots in affected areas. We have experienced short-term impacts on our lot sales from weather events in recent years.
A material breach in the security of our information technology systems or other data security controls could include the theft or release of this information.
A material breach in the security of our information technology systems or other data security controls, or those of the third parties we work with, could include the theft or release of this information.
We have incurred costs in an effort to comply with these requirements, but our costs may increase significantly if new requirements are enacted and based on how individuals exercise their rights. Any noncompliance could result in substantial penalties, reputational damage or litigation.
We have incurred costs in an effort to comply with these requirements, but our costs may increase significantly if new requirements are enacted and based on how individuals exercise their rights.
Deployments of U.S. military personnel to foreign regions, terrorist attacks, other acts of violence or threats to national security and any corresponding response by the United States or others, domestic or international instability or social or political unrest may cause an economic slowdown in the markets where we operate, which could adversely affect our business.
Prolonged periods of elevated mortgage interest rates or further increases in mortgage interest rates could have an adverse impact on our business and financial results. 13 Table of Contents Deployments of U.S. military personnel to foreign regions, terrorist attacks, other acts of violence or threats to national security and any corresponding response by the United States or others, domestic or international instability or social or political unrest may cause an economic slowdown in the markets where we operate, which could adversely affect our business.
We have not elected to utilize the “controlled company” exemptions at this time.
We have not elected to utilize the "controlled company" exemptions at this time.
Such an incident could generate significant negative publicity and have a corresponding impact on our reputation, our relationships with relevant regulatory agencies or governmental authorities, and our ability to attract customers and employees, which in turn could have a material adverse effect on our financial results and liquidity. 15 Table of Contents From time to time, we obtain performance bonds, the unavailability of which could adversely affect our results of operations and cash flows.
Such an incident could generate significant negative publicity and have a corresponding impact on our reputation, our relationships with relevant regulatory agencies or governmental authorities, and our ability to attract customers and employees, which in turn could have a material adverse effect on our financial results and liquidity.
In an effort to lower the current rate of inflation, the Federal Reserve has raised interest rates significantly, which has resulted in higher mortgage rates. The increase in mortgage rates has reduced the affordability of our lots and has required us to use pricing adjustments and incentives to adapt to current market conditions.
The increase in mortgage interest rates has reduced the affordability of our lots and has required us to use pricing adjustments and incentives to adapt to current market conditions, which result in lower gross margins.
We have experienced temporary delays in production and short-term impacts on our lot sales from weather events in recent years. However, there has been no material impact on our business from these events or material operational challenges resulting from these events, but they could adversely affect our business in the future.
However, there has been no material impact on our business from these events or material operational challenges resulting from these events, but they could adversely affect our business in the future.
Further, geopolitical tensions or conflicts may create a heightened risk of cyber-attacks or other data security breaches. Our normal business activities involve collecting and storing information specific to our customers, employees, vendors and suppliers and maintaining operational and financial information related to our business, both in an office setting and remote locations as needed.
Our normal business activities involve collecting and storing information specific to our customers, employees, vendors and suppliers and maintaining operational and financial information related to our business, both in an office setting and remote locations as needed.
This could lead to deterioration in economic conditions, including an increase in the rate of unemployment. Deflation could also cause the value of our real estate to decline.
This could lead to deterioration in economic conditions, including an increase in the rate of unemployment. Deflation could also cause the value of our real estate to decline. These, or other factors related to deflation, could have a negative impact on our business and financial results.
From time to time, we provide surety bonds to secure our performance or obligations under construction contracts, development agreements and other arrangements. At September 30, 2023, we had $632.3 million of outstanding surety bonds.
From time to time, we obtain performance bonds, the unavailability of which could adversely affect our results of operations and cash flows. From time to time, we provide surety bonds to secure our performance or obligations under construction contracts, development agreements and other arrangements. At September 30, 2024, we had $809.0 million of outstanding surety bonds.
The real estate development industry is highly competitive and a number of entities with which we compete are larger and have greater resources or are smaller and have lower cost structures, and competitive conditions may adversely affect our results of operations. We operate in a highly competitive industry.
An inability to raise additional capital on acceptable terms when needed could have a material adverse effect on our business, financial condition and results of operations. 19 Table of Contents The real estate development industry is highly competitive and a number of entities with which we compete are larger and have greater resources or are smaller and have lower cost structures, and competitive conditions may adversely affect our results of operations.
Further, we may need to raise capital in the future when other real estate-related companies are also seeking to raise capital and would then have to compete with those companies for investors. An inability to raise additional capital on acceptable terms when needed could have a material adverse effect on our business, financial condition and results of operations.
Further, we may need to raise capital in the future when other real estate-related companies are also seeking to raise capital and would then have to compete with those companies for investors.
These, or other factors related to deflation, could have a negative impact on our business and financial results. 14 Table of Contents Supply shortages and other risks related to acquiring land, materials and skilled labor and obtaining regulatory approval could increase our costs and delay lot deliveries.
Supply shortages and other risks related to acquiring land, materials and skilled labor and obtaining regulatory approval could increase our costs and delay lot deliveries.
Changes in Debt Ratings There can be no assurance that we will be able to maintain the credit ratings on our senior unsecured debt.
Borrowings under our revolving credit facility primarily bear interest based on the Secured Overnight Financing Rate ("SOFR"). 20 Table of Contents Changes in Debt Ratings There can be no assurance that we will be able to maintain the credit ratings on our senior unsecured debt.
Additionally, phishing attacks, whereby perpetrators attempt to fraudulently induce employees, customers, vendors or other users of a company’s systems to disclose sensitive information to gain access to its data, have become more prevalent in recent years. The use of remote work environments and virtual platforms may increase our risk of cyber-attack or data security breaches.
Additionally, phishing attacks, whereby perpetrators attempt to fraudulently induce employees, customers, vendors or other users of a company’s systems to disclose sensitive information to gain access to its data, have increased significantly in recent years. With the use of artificial intelligence, these phishing attacks may contain highly convincing language making them difficult to distinguish from legitimate messages.
In response to increased inflation, the Federal Reserve has raised interest rates significantly, which has resulted in higher mortgage interest rates. Prolonged periods of elevated mortgage interest rates or further increases in mortgage interest rates could have an adverse impact on our business and financial results.
In response to increased inflation, the Federal Reserve has raised interest rates significantly in recent years, which, notwithstanding the recent reduction, has resulted in higher mortgage interest rates.
At September 30, 2023, $748.2 million remained available for issuance under the shelf registration statement, of which $298.2 million is reserved for sales under our at-the-market equity offering program.
At the time of filing the new registration statement, $728.1 million of equity securities remained available for issuance under our prior registration statement, which has since expired. Our at-the-market program expired in October 2024, and we anticipate entering into a new at-the-market equity offering program under our September 2024 shelf registration statement.
Added
In an effort to lower the current rate of inflation, the Federal Reserve has raised interest rates significantly, which has resulted in higher mortgage interest rates.
Added
The use of remote work environments and virtual platforms may increase our risk of cyber incidents or data security breaches. Further, geopolitical tensions or conflicts may create a heightened risk of cyber incidents or other data security breaches.
Added
Any loss of sensitive information and failure to comply with these requirements or other applicable laws and regulations in this area could result in substantial penalties, reputational damage or litigation.
Added
We may also incur costs to adapt our cybersecurity program to the evolving threat landscape and to investigate and remediate vulnerabilities or other identified risks.
Added
Additionally, if a cybersecurity incident is determined to be material, we are subject to additional reporting requirements.
Added
Though these rules are currently being challenged in legal proceedings and their effectiveness has been stayed by the SEC, these rules, if they become effective, would require public companies to make a wide range of climate-related disclosures.
Added
Similarly, the State of California has recently enacted its own legislation requiring extensive climate-related disclosures for companies deemed to be doing business in California, and other states are considering similar laws.
Added
In fiscal 2024, we issued 546,174 shares of common stock under our at-the-market equity offering program for proceeds of $19.7 million, net of commissions and other issuance costs totaling $0.4 million. In September 2024, we filed a new shelf registration statement, which became effective in October 2024, registering $750 million of equity securities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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It is possible, however, that charges related to these matters could be significant to our results of operations or cash flow in any single accounting period. Item 4. Mine Safety Disclosures. Not Applicable. 23 Table of Contents PART II
It is possible, however, that charges related to these matters could be significant to our results of operations or cash flow in any single accounting period.
Added
With respect to administrative or judicial proceedings involving the environment, we have determined that we will disclose any such proceeding if we reasonably believe such proceeding will result in monetary sanctions, exclusive of interest and costs, at or in excess of $1 million.
Added
On September 6, 2024, the Maryland Department of Environment (MDE) filed suit in the Circuit Court for Harford County, Maryland against the Company regarding various alleged stormwater compliance issues and violations at a project in Maryland dating from 2022 through 2024, seeking injunctive relief and civil penalties.
Added
Since our first discovery of these issues, we have enhanced our practices and procedures related to stormwater compliance at the project in question, and we are seeking to resolve these matters through further discussions with MDE.
Added
We do not believe it is reasonably possible that this matter would result in a loss that would have a material effect on our consolidated financial position, results of operations or cash flows. Item 4. Mine Safety Disclosures. Not Applicable. 25 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The declaration and payment of any future dividends will be at the discretion of our Board of Directors after taking into account various factors, including without limitation, our financial condition, earnings, capital requirements of our business, the terms of any credit agreements or indentures to which we may be a party at the time, legal requirements, industry practice and other factors that our Board of Directors deems relevant. 24 Table of Contents Stock Performance Graph The following graph illustrates the cumulative total stockholder return of an initial investment of $100 on September 30, 2018 in Forestar common stock for the period from September 30, 2018 through September 30, 2023 compared to the same investment in the Russell 2000 Index and our peer group.
The declaration and payment of any future dividends will be at the discretion of our Board of Directors after taking into account various factors, including without limitation, our financial condition, earnings, capital requirements of our business, the terms of any credit agreements or indentures to which we may be a party at the time, legal requirements, industry practice and other factors that our Board of Directors deems relevant. 26 Table of Contents Stock Performance Graph The following graph illustrates the cumulative total stockholder return of an initial investment of $100 on September 30, 2019 in Forestar common stock for the period from September 30, 2019 through September 30, 2024 compared to the same investment in the Russell 2000 Index and our peer group.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is traded on the NYSE under the trading symbol "FOR." As of November 13, 2023, the closing price of our common stock on the NYSE was $29.53, and there were approximately 928 holders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is traded on the NYSE under the trading symbol "FOR." As of November 14, 2024, the closing price of our common stock on the NYSE was $29.61, an d there were approximately 830 holders of record.
The companies included in our peer group are M.D.C. Holdings, Inc.; Tri Pointe Homes, Inc.; Century Communities, Inc.; Beazer Homes USA, Inc.; Five Point Holdings, LLC (Class A); The Howard Hughes Corporation; The St. Joe Company; Masonite International Corporation; and PGT Innovations, Inc. These companies were selected based on their industries, similar market capitalization and business model.
Our former peer group consisted of the following companies: M.D.C. Holdings, Inc.; Tri Pointe Homes, Inc.; Century Communities, Inc.; Beazer Homes USA, Inc.; Five Point Holdings, LLC (Class A); The Howard Hughes Corporation; The St. Joe Company; Masonite International Corporation; and PGT Innovations, Inc.
September 30, Stock Performance Data: 2018 2019 2020 2021 2022 2023 Forestar Group Inc. $ 100.00 $ 86.23 $ 83.49 $ 87.88 $ 52.78 $ 127.08 Russell 2000 100.00 91.11 91.47 135.08 103.33 112.56 Peer Group 100.00 109.77 102.75 135.94 93.22 143.04 This performance graph shall not be deemed to be incorporated by reference into our SEC filings and should not constitute soliciting material or otherwise be considered filed under the Securities Act of 1933, as amended (Securities Act) or the Exchange Act.
September 30, Stock Performance Data: 2019 2020 2021 2022 2023 2024 Forestar Group Inc. $ 100.00 $ 96.83 $ 101.91 $ 61.21 $ 147.37 $ 177.08 Russell 2000 100.00 100.39 148.26 113.42 123.54 156.60 New Peer Group 100.00 88.76 119.55 72.16 113.63 152.60 Former Peer Group 100.00 93.61 123.85 84.92 130.32 156.90 This performance graph shall not be deemed to be incorporated by reference into our SEC filings and should not constitute soliciting material or otherwise be considered filed under the Securities Act of 1933, as amended (Securities Act) or the Exchange Act.
Added
During the fiscal year ended September 30, 2024, we revised our peer group to consist of American Woodmark Corporation; Beazer Homes USA, Inc.; Century Communities, Inc.; Five Point Holdings, LLC; Howard Hughes Holdings Inc.; JELD-WEN Holding, Inc.; LGI Homes, Inc.; M/I Homes, Inc.; MasterBrand, Inc. and The St. Joe Company.
Added
We revised our peer group as three of our former peers were acquired during the fiscal year ended September 30, 2024 (M.D.C. Holdings, Inc.; Masonite International Corporation; and PGT Innovations). The companies comprising our peer group as of September 30, 2024 were selected based on their industries, similar market capitalization and business model.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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We increase our land and lot sales prices when market conditions permit, and we attempt to offset cost increases in one component with savings in another. However, if market conditions are challenging, we may have to reduce selling prices or may not be able to offset cost increases with higher selling prices.
We attempt to offset cost increases in one component with savings in another, and we increase our land and lot sales prices when market conditions permit. However, if market conditions are challenging, we may have to reduce selling prices or may not be able to offset cost increases with higher selling prices.
Earnest money deposits from customers are subject to mortgages that are secured by the real estate under contract. These mortgages expire when the earnest money is released to homebuilders as lots are sold.
These earnest money deposits are typically released to the homebuilders as lots are sold. Earnest money deposits from customers are subject to mortgages that are secured by the real estate under contract. These mortgages expire when the earnest money is released to homebuilders as lots are sold.
A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity. At September 30, 2023, we were in compliance with all of the covenants, limitations and restrictions of our revolving credit facility.
A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity. At September 30, 2024, we were in compliance with all of the covenants, limitations and restrictions of our revolving credit facility.
MD&A is provided as a supplement to, and should be read in conjunction with our consolidated financial statements and notes to those statements that appear elsewhere in this Form 10-K. This section generally discusses the results of operations for fiscal 2023 compared to 2022.
MD&A is provided as a supplement to, and should be read in conjunction with our consolidated financial statements and notes to those statements that appear elsewhere in this Form 10-K. This section generally discusses the results of operations for fiscal 2024 compared to 2023.
At September 30, 2023, we were in compliance with all of the limitations and restrictions associated with our senior note obligations. Effective April 30, 2020, our Board of Directors authorized the repurchase of up to $30 million of our debt securities. The authorization has no expiration date. All of the $30 million authorization was remaining at September 30, 2023.
At September 30, 2024, we were in compliance with all of the limitations and restrictions associated with our senior note obligations. Effective April 30, 2020, our Board of Directors authorized the repurchase of up to $30 million of our debt securities. The authorization has no expiration date. All of the $30 million authorization was remaining at September 30, 2024.
Critical Accounting Policies and Estimates General — A comprehensive enumeration of the significant accounting policies of Forestar Group Inc. and subsidiaries is presented in Note 1 to the accompanying financial statements as of September 30, 2023 and 2022, and for the years ended September 30, 2023, 2022 and 2021.
Critical Accounting Policies and Estimates General — A comprehensive enumeration of the significant accounting policies of Forestar Group Inc. and subsidiaries is presented in Note 1 to the accompanying financial statements as of September 30, 2024 and 2023, and for the years ended September 30, 2024, 2023 and 2022.
Generally, our unsatisfied remaining performance obligations are expected to have an original duration of less than one year. Real Estate and Cost of Sales — Real estate includes the costs of direct land and lot acquisition, land development, capitalized interest, and direct overhead costs incurred during land development.
Generally, our unsatisfied remaining performance obligations are expected to have an original duration of less than one year. 34 Table of Contents Real Estate and Cost of Sales — Real estate includes the costs of direct land and lot acquisition, land development, capitalized interest, and direct overhead costs incurred during land development.
We believe we are well-positioned to operate effectively during changing economic conditions because of our low net leverage and strong liquidity position, our low overhead model and our strategic relationship with D.R. Horton. At September 30, 2023, our ratio of debt to total capital (debt divided by stockholders’ equity plus debt) was 33.7% compared to 37.1% at September 30, 2022.
We believe we are well-positioned to operate effectively during changing economic conditions because of our low net leverage and strong liquidity position, our low overhead model and our strategic relationship with D.R. Horton. At September 30, 2024, our ratio of debt to total capital (debt divided by stockholders’ equity plus debt) was 30.7% compared to 33.7% at September 30, 2023.
We capitalize interest costs throughout the development period (active real estate). Capitalized interest is charged to cost of sales as the related real estate is sold to the buyer. Interest incurred was $32.8 million and $32.9 million in fiscal 2023 and 2022.
We capitalize interest costs throughout the development period (active real estate). Capitalized interest is charged to cost of sales as the related real estate is sold to the buyer. Interest incurred was $32.6 million and $32.8 million in fiscal 2024 and 2023.
For similar operating and financial data and discussion of our fiscal 2022 results compared to our fiscal 2021 results, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part II of our annual report on Form 10-K for the fiscal year ended September 30, 2022, which was filed with the SEC on November 17, 2022.
For similar operating and financial data and discussion of our fiscal 2023 results compared to our fiscal 2022 results, refer to Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" under Part II of our annual report on Form 10-K for the fiscal year ended September 30, 2023, which was filed with the SEC on November 17, 2023.
Cost of sales related to tract sales and other revenues in fiscal 2023 and 2022 was $95.1 million and $20.3 million, respectively. Each quarter, we review the performance and outlook for all of our real estate for indicators of potential impairment and perform detailed impairment evaluations and analyses when necessary.
Cost of sales related to tract sales and other revenues in fiscal 2024 and 2023 was $17.4 million and $95.1 million, respectively. Each quarter, we review the performance and outlook for all of our real estate for indicators of potential impairment and perform detailed impairment evaluations and analyses when necessary.
Our ratio of net debt to total capital (debt net of unrestricted cash divided by stockholders’ equity plus debt net of unrestricted cash) was 5.5% compared to 26.9% at September 30, 2022. Over the long term, we intend to maintain our ratio of net debt to total capital at approximately 40% or less.
Our ratio of net debt to total capital (debt net of unrestricted cash divided by stockholders’ equity plus debt net of unrestricted cash) was 12.4% compared to 5.5% at September 30, 2023. Over the long term, we intend to maintain our ratio of net debt to total capital at approximately 40% or less.
The deferred tax assets were partially offset by a valuation allowance of $1.0 million, resulting in a net deferred tax liability of $36.9 million.
The deferred tax assets were partially offset by a valuation allowance of $0.9 million, resulting in a net deferred tax liability of $50.7 million.
Interest charged to cost of sales in fiscal 2023 was 2.4% of total cost of sales (excluding impairments and land option charges) compared to 2.9% of total cost of sales in fiscal 2022. Selling, General and Administrative (SG&A) Expense and Other Income Statement Items SG&A expense in fiscal 2023 was $97.7 million compared to $93.6 million in fiscal 2022.
Interest charged to cost of sales in fiscal 2024 was 2.5% of total cost of sales (excluding impairments and land option charges) compared to 2.4% of total cost of sales in fiscal 2023. Selling, General and Administrative (SG&A) Expense and Other Income Statement Items SG&A expense in fiscal 2024 was $118.5 million compared to $97.7 million in fiscal 2023.
In October 2017, we became a majority-owned subsidiary of D.R. Horton, Inc. As our controlling shareholder, D.R. Horton has significant influence in guiding our strategic direction and operations. We manage our operations through our real estate segment, which is our core business and generates substantially all of our revenues.
Horton, Inc. As our controlling shareholder, D.R. Horton has significant influence in guiding our strategic direction and operations. We manage our operations through our real estate segment, which is our core business and generates substantially all of our revenues.
We had no unrecognized tax benefits at September 30, 2023 and September 30, 2022. 29 Table of Contents Land and Lot Position Our land and lot position at September 30, 2023 and 2022 is summarized as follows: September 30, 2023 September 30, 2022 Lots owned 52,400 61,800 Lots controlled through land and lot purchase contracts 26,800 28,300 Total lots owned and controlled 79,200 90,100 Owned lots under contract to sell to D.R.
We had no unrecognized tax benefits at September 30, 2024 and 2023. 31 Table of Contents Land and Lot Position Our land and lot position at September 30, 2024 and 2023 is summarized as follows: September 30 2024 2023 Lots owned 57,800 52,400 Lots controlled through land and lot purchase contracts 37,300 26,800 Total lots owned and controlled 95,100 79,200 Owned lots under contract to sell to D.R.
SG&A expense as a percentage of revenues was 6.8% and 6.2% in fiscal 2023 and 2022, respectively. Our SG&A expense primarily consisted of employee compensation and related costs. Our business operations employed 303 and 291 employees at September 30, 2023 and 2022, respectively.
SG&A expense as a percentage of revenues was 7.9% and 6.8% in fiscal 2024 and 2023, respectively. Our SG&A expense primarily consisted of employee compensation and related costs. Our business operations employed 393 and 303 employees at September 30, 2024 and 2023, respectively.
At September 30, 2023, there were no borrowings outstanding and $27.7 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $382.3 million. 30 Table of Contents The revolving credit facility is guaranteed by our wholly-owned subsidiaries that are not immaterial subsidiaries or have not been designated as unrestricted subsidiaries.
At September 30, 2024, there were no borrowings outstanding and $32.8 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $377.2 million. 32 Table of Contents The revolving credit facility is guaranteed by our wholly-owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries.
At September 30, 2023, we had deferred tax liabilities, net of deferred tax assets, of $49.8 million. The deferred tax assets were partially offset by a valuation allowance of $0.9 million, resulting in a net deferred tax liability of $50.7 million. At September 30, 2022, deferred tax liabilities, net of deferred tax assets, were $35.9 million.
At September 30, 2024, we had deferred tax liabilities, net of deferred tax assets, of $66.7 million. The deferred tax assets were partially offset by a valuation allowance of $0.8 million, resulting in a net deferred tax liability of $67.5 million. At September 30, 2023, deferred tax liabilities, net of deferred tax assets, were $49.8 million.
The cash used in financing activities in the current year primarily consisted of the repayment of our other note payable.
The cash used in financing activities in fiscal 2023 primarily consisted of the repayment of our other note payable.
Income Taxes Our income tax expense was $54.7 million and $57.0 million in fiscal 2023 and 2022, respectively, and our effective tax rate was 24.7% and 24.2% in those respective years. Our effective tax rate for both years includes an expense for state income taxes and nondeductible expenses.
Income Taxes Our income tax expense was $66.7 million and $54.7 million in fiscal 2024 and 2023, respectively, and our effective tax rate was 24.7% for both years. Our effective tax rate for both years includes an expense for state income taxes and nondeductible expenses.
Horton, before deferred development projects and changes in contract liabilities, consisted of: Year Ended September 30, 2023 2022 (In millions) Revenues from lot sales to D.R. Horton $ 1,094.7 $ 1,230.0 Revenues from lot sales to customers other than D.R.
Horton, before deferred development projects and changes in contract liabilities, consisted of: Year Ended September 30, 2024 2023 (In millions) Revenues from lot sales to D.R. Horton $ 1,271.4 $ 1,094.7 Revenues from lot sales to customers other than D.R. Horton 185.0 181.0 $ 1,456.4 $ 1,275.7 Lots sold to customers other than D.R.
Horton 14,400 17,800 Owned lots under contract to customers other than D.R. Horton 600 1,400 Total owned lots under contract 15,000 19,200 Owned lots subject to right of first offer with D.R.
Horton 20,500 14,400 Owned lots under contract to customers other than D.R. Horton 500 600 Total owned lots under contract 21,000 15,000 Owned lots subject to right of first offer with D.R.
Horton based on executed purchase and sale agreements 17,000 18,900 Owned lots fully developed 6,400 5,500 Liquidity and Capital Resources Liquidity At September 30, 2023, we had $616.0 million of cash and cash equivalents and $382.3 million of available borrowing capacity on our revolving credit facility. We have no senior note maturities until fiscal 2026.
Horton based on executed purchase and sale agreements 17,200 17,000 Owned lots fully developed 6,300 6,400 Liquidity and Capital Resources Liquidity At September 30, 2024, we had $481.2 million of cash and cash equivalents and $377.2 million of available borrowing capacity on our revolving credit facility. We have no senior note maturities until fiscal 2026.
As a result of this process, we recorded real estate impairment charges of $19.4 million and $3.8 million during fiscal 2023 and 2022, respectively. During fiscal 2023 and 2022, land purchase contract deposit and pre-acquisition cost write-offs related to land purchase contracts that we terminated or expect to terminate were $4.6 million and $8.7 million, respectively.
As a result of this process, no impairment charges were recorded during fiscal 2024. During fiscal 2023 we recorded non-cash impairment charges of $19.4 million. During fiscal 2024, and 2023, land purchase contract deposit and pre-acquisition cost write-offs related to land purchase contracts that we have terminated or expect to terminate were $4.1 million and $4.6 million.
Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the caption "Forward-Looking Statements" and under Item 1A — “Risk Factors." Our Operations We are a residential lot development company with operations in 54 markets in 22 states as of September 30, 2023.
Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the caption "Forward-Looking Statements" and under Item 1A —"Risk Factors." Our Operations We are a residential lot development company with operations in 59 markets in 24 states as of September 30, 2024. In October 2017, we became a majority-owned subsidiary of D.R.
Horton for $35.7 million. 28 Table of Contents Cost of Sales, Real Estate Impairment and Land Option Charges and Interest Incurred Cost of sales in fiscal 2023 decreased compared to fiscal 2022 primarily due to the decrease in the number of lots sold.
Horton for $12.8 million. 30 Table of Contents Cost of Sales, Real Estate Impairment and Land Option Charges and Interest Incurred Cost of sales in fiscal 2024 increased compared to fiscal 2023 primarily due to the increase in the number of lots sold.
Residential lot sales to D.R. Horton and customers other than D.R. Horton, before deferred development projects, consisted of: Year Ended September 30, 2023 2022 Residential lots sold to D.R. Horton 12,249 14,895 Residential lots sold to customers other than D.R. Horton 1,791 1,942 14,040 16,837 Residential lot revenues from lot sales to D.R. Horton and customers other than D.R.
Residential lot sales to D.R. Horton and customers other than D.R. Horton consisted of: Year Ended September 30, 2024 2023 Residential lots sold to D.R. Horton 13,267 12,249 Residential lots sold to customers other than D.R. Horton 1,801 1,791 15,068 14,040 Residential lot revenues from lot sales to D.R. Horton and customers other than D.R.
At September 30, 2023, $748.2 million remained available for issuance under the shelf registration statement, of which $298.2 million was reserved for sales under our at-the-market equity offering program. 31 Table of Contents Operating Cash Flow Activities In fiscal 2023, net cash provided by operating activities was $364.1 million, which was primarily the result of our net income generated in the year adjusted for impairments and land option charges and the decrease in real estate, partially offset by the decreases in accounts payable and other accrued liabilities, accrued development costs and earnest money deposits on sales contracts.
In fiscal 2023, net cash provided by operating activities was $364.1 million, which was primarily the result of net income generated in the period adjusted for impairments and land option charges and the decrease in real estate, partially offset by the decreases in accounts payable and other accrued liabilities, accrued development costs and earnest money deposits on sales contracts.
Horton in fiscal 2023 and 2022 included 252 and 943 lots that were sold for $28.2 million and $131.1 million, respectively, to a lot banker who expects to sell those lots to D.R. Horton at a future date. Tract sales and other revenue in fiscal 2023 primarily consisted of 820 tract acres sold to D.R.
Horton in fiscal 2024 and 2023 included 124 and 252 lots that were sold for $15.1 million and $28.2 million, respectively, to a lot banker who expects to sell those lots to D.R. Horton at a future date. In fiscal 2022, we sold 854 deferred development lots to customers other than D.R.
These forward-looking statements are identified by their use of terms and phrases such as “believe,” “anticipate,” “could,” “estimate,” “likely,” “intend,” “may,” “plan,” “expect,” and similar expressions, including references to assumptions. These statements reflect our current views with respect to future events and are subject to risks and uncertainties.
These forward-looking statements are identified by their use of terms and phrases such as "believe," "anticipate," "could," "estimate," "likely," "intend," "may," "plan," "expect," and similar expressions, including references to assumptions. These statements reflect our current views with respect to future events and are subject to risks and uncertainties.
New factors emerge from time to time and it is not possible for us to predict all such factors, nor can we assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. 34 Table of Contents Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. 35 Table of Contents
New factors emerge from time to time and it is not possible for us to predict all such factors, nor can we assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
Issuance of Common Stock We have an effective shelf registration statement filed with the Securities and Exchange Commission in October 2021, registering $750 million of equity securities, of which $300 million was reserved for sales under our at-the-market equity offering program that became effective November 2021.
The note is non-recourse, is secured by the underlying real estate, accrues interest at 4.0% per annum and matures in December 2025. 33 Table of Contents Issuance of Common Stock We had an effective shelf registration statement filed with the Securities and Exchange Commission in October 2021, registering $750 million of equity securities, of which $300 million was reserved for sales under our at-the-market equity offering program.
Horton for $114.1 million and 68 tract acres sold to customers other than D.R. Horton for $12.8 million. Tract sales and other revenue in fiscal 2022 primarily consisted of 512 tract acres sold to customers other than D.R.
Horton in fiscal 2024 included 12 tract acres sold for $5.1 million to a third party who expects to sell the tract to D.R Horton at a later date. Tract sales and other revenue in fiscal 2023 primarily consisted of 820 tract acres sold to D.R. Horton for $114.1 million and 68 tract acres sold to customers other than D.R.
Operating Results Components of income before income taxes were as follows: Year Ended September 30, 2023 2022 (In millions) Revenues $ 1,436.9 $ 1,519.1 Cost of sales 1,132.8 1,195.1 Selling, general and administrative expense 97.7 93.6 Equity in earnings of unconsolidated ventures — (1.2) Gain on sale of assets (1.6) (3.2) Interest and other income (13.6) (1.0) Income before income taxes $ 221.6 $ 235.8 Lot Sales Residential lots sold consisted of: Year Ended September 30, 2023 2022 Development projects 14,040 16,454 Lot banking projects — 383 14,040 16,837 Deferred development projects — 854 14,040 17,691 Average sales price per lot (a) $ 90,900 $ 86,300 _______________ (a) Excludes lots sold from deferred development projects and any impact from change in contract liabilities. 27 Table of Contents Revenues Revenues consisted of: Year Ended September 30, 2023 2022 (In millions) Residential lot sales: Development projects $ 1,275.7 $ 1,420.2 Lot banking projects — 33.5 Decrease in contract liabilities — 1.8 1,275.7 1,455.5 Deferred development projects 29.0 26.8 1,304.7 1,482.3 Tract sales and other 132.2 36.8 Total revenues $ 1,436.9 $ 1,519.1 Residential lots sold and residential lot sales revenues in fiscal 2023 decreased compared to the prior year primarily as a result of the moderation in demand for finished lots that persisted throughout the first half of the current fiscal year as homebuilders had reduced their pace of new home starts to better match the moderation of housing demand caused by increases in mortgage interest rates and elevated inflationary pressures.
Operating Results Components of income before income taxes were as follows: Year Ended September 30, 2024 2023 (In millions) Revenues $ 1,509.4 $ 1,436.9 Cost of sales 1,150.1 1,132.8 Selling, general and administrative expense 118.5 97.7 Gain on sale of assets (9.5) (1.6) Interest and other income (19.8) (13.6) Income before income taxes $ 270.1 $ 221.6 Lot Sales Residential lots sold consisted of: Year Ended September 30, 2024 2023 Development projects 14,769 14,040 Lot banking projects 299 — 15,068 14,040 Average sales price per lot (a) $ 96,600 $ 90,900 _______________ (a) Excludes any impact from change in contract liabilities. 29 Table of Contents Revenues Revenues consisted of: Year Ended September 30, 2024 2023 (In millions) Residential lot sales: Development projects $ 1,418.5 $ 1,275.7 Lot banking projects 37.9 — Decrease in contract liabilities 2.9 — 1,459.3 1,275.7 Deferred development projects 8.1 29.0 1,467.4 1,304.7 Tract sales and other 42.0 132.2 Total revenues $ 1,509.4 $ 1,436.9 Residential lots sold and residential lot sales revenues in fiscal 2024 increased compared to the prior year period primarily due to improved demand for finished lots as homebuilders increased their pace of new home starts to better match the stronger demand for new homes, particularly at affordable price points.
In fiscal 2022, net cash provided by operating activities was $108.7 million, which was primarily the result of net income generated in the year and increases in liabilities and other accrued expenses, partially offset by the increase in our real estate.
Operating Cash Flow Activities In fiscal 2024, net cash used in operating activities was $158.4 million, which was primarily the result of the increase in real estate, partially offset by net income generated in the period and the increases in earnest money on sales contracts, accrued development costs and accounts payable and other accrued liabilities.
Any changes to the estimated total development costs subsequent to the initial lot sales are generally allocated to the remaining lots. 32 Table of Contents We receive earnest money deposits from homebuilders for purchases of developed lots. These earnest money deposits are typically released to the homebuilders as lots are sold.
Any changes to the estimated total development costs subsequent to the initial home or lot closings in a community are generally allocated on a pro-rata basis to the remaining homes or lots in the community associated with the relevant development activity. We receive earnest money deposits from homebuilders for purchases of developed lots.
Although our quarterly assessments reflect management’s best estimates, due to uncertainties in the estimation process, actual results could differ from such estimates. 33 Table of Contents Forward-Looking Statements This Annual Report on Form 10-K and other materials we have filed or may file with the Securities and Exchange Commission contain “forward-looking statements” within the meaning of the federal securities laws.
We are currently evaluating the impact this standard will have on our disclosures. 36 Table of Contents Forward-Looking Statements This Annual Report on Form 10-K and other materials we have filed or may file with the Securities and Exchange Commission contain "forward-looking statements" within the meaning of the federal securities laws.
In fiscal 2023 and 2022, we recognized $29.0 million and $26.8 million of revenues as a result of our progress towards completion of our remaining unsatisfied performance obligations on these deferred development projects. Lots sold to customers other than D.R.
Horton for a total transaction price of $63.9 million. In fiscal 2024 and 2023, we recognized $8.1 million and $29.0 million of revenues as a result of our progress towards completion of our remaining unsatisfied performance obligations on these deferred development projects. At September 30, 2024, all performance obligations related to these deferred development lot sales have been fully satisfied.
Horton. 26 Table of Contents Results of Operations The following tables and related discussion set forth key operating and financial data as of and for the fiscal years ended September 30, 2023 and 2022.
We plan to remain disciplined when investing in land opportunities and to remain focused on managing our lot sales pace and lot pricing at each community to optimize the return on our investments. 28 Table of Contents Results of Operations The following tables and related discussion set forth key operating and financial data as of and for the fiscal years ended September 30, 2024 and 2023.
We believe we are well-positioned to operate effectively through changing economic conditions because of our low net leverage and strong liquidity position, our low overhead model and our strategic relationship with D.R.
We believe we are well-positioned to consolidate market share in the highly fragmented lot development industry because of our low net leverage and strong liquidity position, low overhead model, geographically diverse lot portfolio that is focused on affordable price points and strategic relationship with D.R. Horton.
Other Note Payable In August 2023, we repaid the $12.5 million principal amount, together with accrued interest, of a note payable that was issued as part of a transaction to acquire real estate for development. The note was non-recourse, was secured by the underlying real estate and accrued interest of 4.0% per annum.
Other Note Payable In December 2023, we issued a note payable of $9.9 million as part of a transaction to acquire real estate for development.
Additionally, cash provided by investing activities in the prior year includes distributions received from our unconsolidated ventures. Financing Cash Flow Activities In fiscal 2023, net cash used in financing activities was $13.2 million compared to $1.2 million of cash provided by financing activities in the prior year.
Financing Cash Flow Activities In fiscal 2024, net cash provided by financing activities was $16.3 million compared to $13.2 million of cash used in financing activities in fiscal 2023. The cash provided by financing activities in fiscal 2024 primarily consisted of the issuance of common stock under our at-the-market equity offering program for net proceeds of $19.7 million.
Investing Cash Flow Activities In fiscal 2023, net cash provided by investing activities was $0.3 million compared to $1.3 million in fiscal 2022. The cash provided by investing activities in both years consisted primarily of cash received from the sale of assets, partially offset by cash expenditures for property and equipment.
Investing Cash Flow Activities In fiscal 2024, net cash provided by investing activities was $7.3 million compared to $0.3 million in fiscal 2023. Cash provided by investing activities in fiscal 2024 included $9.5 million of excess hotel occupancy and sales and use tax revenues collected from the Cibolo Canyons Special Improvement District.
Removed
Throughout the majority of fiscal 2022, demand for our residential lots remained strong. In the fourth quarter of fiscal 2022, we began to see weakening demand that persisted through the end of the second quarter of fiscal 2023 as mortgage interest rates increased substantially and inflationary pressures remained elevated.
Added
Demand for residential lots, particularly at affordable price points, remained strong during fiscal 2024, and our revenues increased 5% from the prior year period. The supply of new and existing homes at affordable price points remains limited, and low resale supply continues to support the demand for new construction.
Removed
In the second half of fiscal 2023, demand for finished lots improved as homebuilders increased their pace of new home starts to better match the stronger demand for new homes, particularly at affordable price points.
Added
Demographics supporting housing demand remain favorable despite elevated mortgage rates and inflationary pressures, and homebuilders have continued to adjust to current market conditions by using incentives and price adjustments.
Removed
Horton 181.0 223.7 $ 1,275.7 $ 1,453.7 In fiscal 2022, we sold 854 deferred development lots to customers other than D.R. Horton for a total transaction price of $64.1 million.
Added
While the disruptions in the supply chain for certain construction materials and tightness in the labor market have largely subsided, delays in receiving the necessary approvals from municipalities are still extending development cycle times, and development costs remain elevated.
Removed
In fiscal 2023, there were no shares of common stock issued under our at-the-market equity offering program.
Added
Tract sales and other revenue in fiscal 2024 primarily consisted of $19.0 million of revenue recognized related to land banking contracts with D.R. Horton as well as 64 tract acres sold to customers other than D.R. Horton for $11.8 million. Tract sales and other revenue sold to customers other than D.R.
Added
The gain on sale of assets in fiscal 2024 is the result of $9.5 million of excess hotel occupancy and sales and use tax revenues collected from the Cibolo Canyons Special Improvement District. Interest and other income primarily represents interest earned on our cash deposits.
Added
In fiscal 2024, we issued 546,174 shares of common stock issued under our at-the-market equity offering program for proceeds of $19.7 million, net of commissions and other issuance costs totaling $0.4 million. In September 2024, we filed a new shelf registration statement, which became effective in October 2024, registering $750 million of equity securities.
Added
At the time of filing the new registration statement, $728.1 million of equity securities remained available for issuance under our prior registration statement, which has since expired. Our at-the-market program expired in October 2024, and we anticipate entering into a new at-the-market equity offering program under our September 2024 shelf registration statement.
Added
Although our quarterly assessments reflect management’s best estimates, due to uncertainties in the estimation process, actual results could differ from such estimates. 35 Table of Contents Pending Accounting Standards In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosures.
Added
The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.
Added
It also requires disclosure of the amount and description of the composition of other segment items and interim disclosures of a reportable segment’s profit or loss and assets. The standard is effective for our annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026 on a retrospective basis to all periods presented.
Added
This standard will impact our disclosures but will not impact our consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, “Income Taxes - Improvements to Income Tax Disclosures,” which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation and modifies other income tax related disclosures.
Added
The standard is effective for us beginning October 1, 2025, with early adoption permitted. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.
Added
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,” which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements.
Added
The standard is effective for our annual periods beginning in fiscal 2028 and interim periods beginning in the first quarter of fiscal 2029, with early adoption permitted.
Added
Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. 37 Table of Contents

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed3 unchanged
At September 30, 2023, our fixed rate debt consisted of $400 million principal amount of 3.85% senior notes due May 2026 and $300 million principal amount of 5.0% senior notes due March 2028. Our variable rate debt consisted of the outstanding borrowings on our $410 million senior unsecured revolving credit facility, of which there were none at September 30, 2023.
At September 30, 2024, our fixed rate debt consisted of $400 million principal amount of 3.85% senior notes due May 2026, $300 million principal amount of 5.0% senior notes due March 2028 and $9.9 million principal amount of our 4.0% other note payable due December 2025.
Foreign Currency Risk We have no exposure to foreign currency fluctuations. Commodity Price Risk We have no significant exposure to commodity price fluctuations. 36 Table of Contents
Our variable rate debt consisted of the outstanding borrowings on our $410 million senior unsecured revolving credit facility, of which there were none at September 30, 2024. Foreign Currency Risk We have no exposure to foreign currency fluctuations. Commodity Price Risk We have no significant exposure to commodity price fluctuations. 38 Table of Contents

Other FOR 10-K year-over-year comparisons