Forestar Group Inc. Reports 9% Revenue Increase but Decline in Net Income for December 2025 Quarter

Forestar Group Inc. reported a revenue increase of 9% for the three months ended December 31, 2025, reaching $273.0 million compared to $250.4 million in the same period last year. However, net income decreased to $15.4 million, or $0.30 per diluted share, down from $16.5 million, or $0.32 per diluted share, in the prior year. The company's pre-tax income also saw a decline, totaling $20.8 million, compared to $21.9 million in the previous year. The increase in revenue was primarily driven by a rise in tract sales, which contributed $37.8 million, compared to just $3.0 million in the prior year, while residential lot sales decreased by 5% due to a 17% drop in volume, despite a 15% increase in average sales price per lot.

In terms of operational metrics, Forestar sold 1,944 residential lots during the quarter, down from 2,333 in the same period last year. The average sales price per lot rose to $121,000 from $105,500, reflecting a shift in the regional mix of lot sales. The company’s total lot position increased to 101,000 lots, with 65,600 owned and 35,400 controlled through purchase contracts. The company continues to maintain a strong liquidity position, with cash and cash equivalents totaling $211.7 million and $607.6 million available under its revolving credit facility.

Forestar's balance sheet showed total assets of $3.18 billion as of December 31, 2025, up from $3.14 billion at the end of the previous quarter. Total liabilities also increased slightly to $1.39 billion from $1.37 billion. The company’s equity rose to $1.79 billion, reflecting a solid retained earnings position of $1.06 billion. The company’s debt-to-capital ratio improved to 30.8%, down from 31.2% in the previous quarter, indicating a stable leverage position.

Strategically, Forestar continues to focus on expanding its operations across 64 markets in 23 states, leveraging its relationship with D.R. Horton, which owns approximately 62% of the company. The company is committed to developing affordable housing options and managing its lot sales pace to optimize returns. Despite facing challenges such as ongoing affordability constraints and cautious consumer sentiment, Forestar remains optimistic about its market position and plans to continue investing in land acquisition and development to meet demand.

Looking ahead, Forestar anticipates that market conditions will remain challenging, with potential impacts from inflation and interest rates. The company is focused on managing its pricing strategy and sales pace to adapt to local market conditions. Forestar's management believes that its strong liquidity, low leverage, and strategic partnerships will enable it to navigate these challenges effectively and continue to consolidate its market share in the residential lot development industry.