FOR earnings analysis
What we found in FOR's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Forestar delivered modest third-quarter growth, with revenue of $407.0 million (+4% year over year) and diluted EPS of $0.70, while gross margin improved to 20.7%. Cash conversion improved sharply on a nine-month basis and liquidity remains strong, supported by $394.9 million of cash and $669.9 million of revolver availability. Offsetting these positives, year-to-date lot volume declined 9%, non-D.R. Horton sales fell materially in the quarter, and management continues to cite affordability, cautious consumers, elevated costs, and approval delays as operating headwinds.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue and EPS increased
- Third-quarter revenue rose $16.5 million, or 4%, year over year to $407.0 million from $390.5 million, and was $33.0 million above the prior quarter's $374.0 million. Diluted EPS was $0.70, up from $0.65 a year earlier and $0.63 in the preceding quarter.
- Margins improved versus prior year
- Gross margin was 20.7% in the quarter, calculated from $407.0 million of revenue and $322.9 million of cost of sales, versus 20.4% a year ago and 20.2% in the prior quarter. Pre-tax income increased 12% to $48.7 million from $43.6 million, implying a 12.0% pre-tax margin versus 11.2%.
- D.R. Horton volume and pricing rose
- Lot deliveries to D.R. Horton increased to 3,370 lots from 3,075 lots, while related revenue rose to $361.1 million from $325.0 million. Total residential lot volume increased to 3,659 lots from 3,605 lots and average lot price increased to $108,800 from $106,600.
- Operating cash flow swung positive
- Nine-month operating cash flow turned positive at $27.6 million, compared with cash used in operations of $454.0 million in the prior-year period. Net investing cash use was only $0.3 million; conventional capex is not separately disclosed because land development investment is principally reflected in operating cash flow.
- Liquidity and leverage strengthened
- Liquidity was substantial at $394.9 million of cash plus $669.9 million of unused revolver capacity at June 30, 2026. The company had no revolver borrowings, and net debt-to-total-capital improved to 17.7% from 19.3% at September 30, 2025.
- Large contracted lot backlog
- The contracted lot backlog remained sizable: 23,500 owned lots were under contract for an aggregate remaining sales price of about $2.3 billion. Total owned and controlled lot position was 91,700 lots.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Affordability pressure reduced year-to-date volume
- Affordability constraints and cautious consumers remain the key demand headwind. For the first nine months, total lots sold fell 9% to 8,541 from 9,349, with the 8% increase in average price to $113,000 only partially offsetting the volume decline.
- Customer concentration and non-D.R. sales decline
- Sales concentration and third-party demand weakened: D.R. Horton represented $361.1 million of the quarter's $398.0 million of gross residential lot sales, while revenue from other customers declined to $36.9 million from $59.3 million. D.R. Horton also owned approximately 62% of Forestar at June 30, 2026.
- Development timing and land write-offs increased
- Development-cycle and investment risks persist as municipal approvals continue to extend cycle times and development costs remain elevated. Land-contract deposit and pre-acquisition write-offs were $8.0 million for the nine months, versus $3.9 million a year earlier.
- Debt and facility maturity exposure
- Near-term refinancing exposure is limited but not absent: $65 million of the $715 million revolver commitment matures on October 28, 2026, while the company has $300 million of 5.0% senior notes due in March 2028.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.7
- Gross margin
- 20.7%
- Operating margin
- 11.3%
- Segment
- Real estate (sole reportable segment): $407.0 million of total revenue, including $397.4 million of residential lot sales and $9.6 million of tract sales and other revenue.
What they said about what is next.
The 10-Q does not provide explicit quantitative fiscal-year revenue, lot-delivery, or EPS guidance. Management states it expects seasonally greater lot deliveries, revenue, and pre-tax income in the fourth fiscal quarter, but does not quantify the outlook in this filing.
The filing reads about the same as the one before it.
What came before.
- 10-Q · April 23, 2026
- Forestar reported Q2 revenue of $374.3 million (up 7% YoY from $351.0 million) and income before income taxes of $43.9 million; diluted EPS was $0.63. Lot volume declined (2,938 lots sold in Q2 vs. 3,411 prior-year)…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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