Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Forestar Group Inc. | d72804e8vk.htm |
| EX-99.2 - EX-99.2 - Forestar Group Inc. | d72804exv99w2.htm |
Exhibit 99.1
NEWS
RELEASE
RELEASE
| FOR IMMEDIATE RELEASE | ||
CONTACT:
|
Chris L. Nines | |
| (512) 433-5210 | ||
FORESTAR GROUP INC. REPORTS
FIRST QUARTER 2010 RESULTS
FIRST QUARTER 2010 RESULTS
AUSTIN, TEXAS, May 6, 2010—Forestar Group Inc. (NYSE: FOR) today reported a first quarter 2010
net loss of approximately ($3.0) million, or ($0.08) per basic share, compared with a first quarter
2009 net loss of ($3.9) million, or ($0.11) per basic share outstanding.
“Our first quarter results reflect current market conditions for our business,” said Jim
DeCosmo, president and chief executive officer of Forestar Group. “Although we are encouraged many
elements of the economy have stabilized or improved, we remain cautious as job growth has yet to
materialize — a critical component of demand for our real estate and natural resources.”
“Despite challenging market conditions, we fundamentally believe our strategy and the
execution of our near-term initiatives will enhance shareholder value and better position our
business to benefit from improving economic conditions. Our portfolio of assets, coupled with
demographic growth, increased economic activity and improving housing inventories in many Forestar
markets, is expected to drive demand for our real estate and natural resources,” concluded Mr.
DeCosmo.
Forestar Group manages its operations through three business segments:
| § | Real estate, | ||
| § | Mineral resources, and | ||
| § | Fiber resources |
At the end of first quarter 2010, our real estate segment includes over 249,000 acres of land
owned directly or through ventures located in nine states and twelve markets. Mineral resources
include about 620,000 net acres of oil and gas mineral interests located principally in Texas,
Louisiana, Alabama, and Georgia. Also included in the segment is a 45% nonparticipating royalty
interest in groundwater produced or withdrawn for commercial purposes from approximately 1.4
million acres in Texas, Louisiana, Georgia and Alabama. Fiber resources include the sale of wood
fiber and management of our recreational leases.
REAL ESTATE
| 1st Qtr. | 1st Qtr. | 4th Qtr. | ||||||||||
| Segment Earnings | 2010 | 2009 | 2009 | |||||||||
($ in Millions) |
$ | 0.3 | $ | 0.5 | ($2.5 | ) | ||||||
First quarter 2010 real estate segment earnings include $4.7 million in undeveloped land
revenues, compared with $8.3 million in first quarter 2009 and $10.2 million in fourth quarter
2009.
Fourth quarter 2009 real estate segment earnings were negatively impacted by impairment
charges of $2.7 million primarily associated with a condominium project located in Austin, Texas,
and a $3.6 million charge for environmental remediation activities at our San Joaquin River project
located near Antioch, California.
MINERAL RESOURCES
| 1st Qtr. | 1st Qtr. | 4th Qtr. | ||||||||||
| Segment Earnings | 2010 | 2009 | 2009 | |||||||||
($ in Millions) |
$ | 6.2 | $ | 4.8 | $ | 3.3 | ||||||
First quarter 2010 mineral resources segment earnings include approximately $3.2 million
in lease bonus revenues associated with leasing over 2,100 net mineral acres for $1,495 per acre.
FIBER RESOURCES
| 1st Qtr. | 1st Qtr. | 4th Qtr. | ||||||||||
| Segment Earnings | 2010 | 2009 | 2009 | |||||||||
($ in Millions) |
$ | 1.4 | $ | 2.9 | $ | 1.4 | ||||||
During first quarter 2010 Forestar generated approximately $1.5 million in revenues from
the sale of almost 113,000 tons of fiber, the majority of which was sold to Temple-Inland Inc. at
market prices. Sales of fiber in first quarter 2010 were negatively impacted by the sale of over
110,000 acres of timberland in 2009 associated with our near-term strategic initiatives and retail
land sales program.
SUMMARY
“Forestar is well positioned to maximize and grow long-term value for shareholders through the
combination of our strategy, an experienced management team, a strong mix of assets, and a balance
sheet which is well positioned for growth,” concluded Mr. DeCosmo.
2
The Company will host a conference call on May 7, 2010 at 10:00 am EDT to discuss results of
first quarter 2010. The meeting may be accessed through webcast or by conference
call. The webcast may be accessed through Forestar’s Internet site at
www.forestargroup.com. To access the conference call, listeners calling from North America
should dial 1-866-788-0545 at least 15 minutes prior to the start of the meeting. Those wishing to
access the call from outside North America should dial 1-857-350-1683. The password is Forestar.
Replays of the call will be available for two weeks following the completion of the live call and
can be accessed at 1-888-286-8010 in North America and at 1-617-801-6888 outside North America.
The password for the replay is 11366695.
About Forestar Group
Forestar Group Inc. operates in three business segments: real estate, mineral resources and
fiber resources. The real estate segment owns directly or through ventures over 249,000 acres of
real estate located in nine states and twelve markets in the U.S. The real estate segment has 20
real estate projects representing over 31,200 acres currently in the entitlement process, and 74
entitled, developed and under development projects in seven states and eleven markets encompassing
over 16,200 acres, comprised of over 29,700 residential lots and over 2,400 commercial acres. The
mineral resources segment manages about 620,000 net acres of oil and gas mineral interests. The
fiber resources segment includes the sale of wood fiber and management of our recreational leases.
The company also has a 45% nonparticipating royalty interest in groundwater produced or withdrawn
for commercial purposes from approximately 1.4 million acres in Texas, Louisiana, Georgia and
Alabama. Forestar’s address on the World Wide Web is www.forestargroup.com.
Forward-looking Statements
This release contains “forward-looking statements” within the meaning of the
federal securities laws. These statements reflect management’s current views with
respect to future events and are subject to risk and uncertainties. We note that a
variety of factors and uncertainties could cause our actual results to differ
significantly from the results discussed in the forward-looking statements. Factors
and uncertainties that might cause such differences include, but are not limited to:
general economic, market, or business conditions; the opportunities (or lack
thereof) that may be presented to us and that we may pursue; fluctuations in costs
and expenses including development costs; demand for new housing, including impacts
from mortgage credit availability; lengthy and uncertain entitlement processes;
cyclicality of our businesses; accuracy of accounting assumptions; competitive
actions by other companies; changes in laws or regulations; and other factors, many
of which are beyond our control. Except as required by law, we expressly disclaim
any obligation to publicly revise any forward-looking statements contained in this
news release to reflect the occurrence of events after the date of this news
release.
3
FORESTAR GROUP INC.
(UNAUDITED)
Business Segments
| First Quarter | ||||||||
| 2010 | 2009 | |||||||
| (In thousands, | ||||||||
| Except per share) | ||||||||
Revenues |
||||||||
Real estate |
$ | 17,248 | $ | 18,787 | ||||
Mineral resources |
7,127 | 5,921 | ||||||
Fiber resources |
1,983 | 4,369 | ||||||
Total revenues |
$ | 26,358 | $ | 29,077 | ||||
Segment earnings |
||||||||
Real estate |
$ | 312 | $ | 542 | ||||
Mineral resources |
6,178 | 4,782 | ||||||
Fiber resources |
1,443 | 2,909 | ||||||
Total segment earnings |
7,933 | 8,233 | ||||||
Items not allocated to segments |
||||||||
General and administrative (a) |
(4,538 | ) | (7,619 | ) | ||||
Share-based compensation |
(3,534 | ) | (1,706 | ) | ||||
Interest expense |
(4,546 | ) | (5,166 | ) | ||||
Other non-operating income |
198 | 51 | ||||||
Loss before taxes |
(4,487 | ) | (6,207 | ) | ||||
Income tax benefit |
1,515 | 2,315 | ||||||
Net loss attributable to Forestar Group Inc. |
$ | (2,972 | ) | $ | (3,892 | ) | ||
Earnings per share — Basic: |
||||||||
Net loss per common share |
$ | (0.08 | ) | $ | (0.11 | ) | ||
Average basic shares outstanding |
36.1 | 35.7 | ||||||
| First Quarter | First Quarter | |||||||
| Supplemental Financial Information | 2010 | 2009 | ||||||
| ($ In thousands) | ||||||||
Borrowings under credit facility |
$ | 128,000 | $ | 244,700 | ||||
Other debt (b) |
76,406 | 104,483 | ||||||
Total Debt |
$ | 204,406 | $ | 349,183 | ||||
| (a) | First quarter 2009 general and administrative costs include approximately $3.2 million paid to outside advisors regarding an evaluation by our Board of Directors of an unsolicited shareholder proposal. | |
| (b) | Consists principally of consolidated venture non-recourse debt. |
4
FORESTAR GROUP INC.
SEGMENT PERFORMANCE METRICS
SEGMENT PERFORMANCE METRICS
| First Quarter | ||||||||
| 2010 | 2009 | |||||||
REAL ESTATE |
||||||||
Owned, Consolidated & Equity Method Ventures: |
||||||||
Residential Lots Sold |
195 | 107 | ||||||
Revenue per Lot Sold |
$ | 49,500 | $ | 72,400 | ||||
Commercial Acres Sold |
1.6 | 4.1 | ||||||
Revenue per Commercial Acre Sold |
$ | 172,800 | $ | 215,600 | ||||
Undeveloped Acres Sold |
2,088 | 2,192 | ||||||
Revenue per Acre Sold |
$ | 2,300 | $ | 3,800 | ||||
Owned & Consolidated Ventures: |
||||||||
Residential Lots Sold |
102 | 78 | ||||||
Revenue per Lot Sold |
$ | 57,400 | $ | 71,900 | ||||
Commercial Acres Sold |
1.3 | 0.3 | ||||||
Revenue per Commercial Acre Sold |
$ | 121,700 | $ | 424,700 | ||||
Undeveloped Acres Sold |
2,088 | 2,192 | ||||||
Revenue per Acre Sold |
$ | 2,300 | $ | 3,800 | ||||
Ventures Accounted For Using the Equity Method: |
||||||||
Residential Lots Sold |
93 | 29 | ||||||
Revenue per Lot Sold |
$ | 40,700 | $ | 73,600 | ||||
Commercial Acres Sold |
0.3 | 3.8 | ||||||
Revenue per Commercial Acre Sold |
$ | 372,700 | $ | 197,000 | ||||
Undeveloped Acres Sold |
— | — | ||||||
Revenue per Acre Sold |
$ | — | — | |||||
MINERAL RESOURCES |
||||||||
Leasing Activity |
||||||||
Acres Leased |
2,130 | 6,116 | ||||||
Average Bonus / Acre |
$ | 1,495 | $ | 347 | ||||
Delay Rental Revenues |
$ | 432,000 | $ | 322,000 | ||||
Royalties |
||||||||
Natural Gas Production (MMCF) |
373.2 | 394.7 | ||||||
Average Natural Gas Price ($ / MCF) |
$ | 4.30 | $ | 6.16 | ||||
Oil Production (Barrels) |
29,400 | 27,300 | ||||||
Average Oil Price ($ / Barrel) |
$ | 71.26 | $ | 46.78 | ||||
FIBER RESOURCES |
||||||||
Fiber Sales |
||||||||
Pulpwood Tons Sold |
83,100 | 206,600 | ||||||
Average Pulpwood Price / Ton |
$ | 10.92 | $ | 8.15 | ||||
Sawtimber Tons Sold |
29,600 | 90,700 | ||||||
Average Sawtimber Price / Ton |
$ | 20.14 | $ | 22.84 | ||||
Recreational Activity |
||||||||
Average Acres Leased |
211,000 | 299,000 | ||||||
Average Lease Rate / Acre |
$ | 8.22 | $ | 8.09 | ||||
5
FORESTAR GROUP INC.
REAL ESTATE & MINERAL PIPELINES
REAL ESTATE & MINERAL PIPELINES
REAL ESTATE
Forestar’s real estate segment includes over 249,000 acres of land owned directly or through
ventures located in nine states and twelve markets.
Q1 2010 Real Estate Pipeline
| In | Developed & | |||||||||||||||||||
| Entitlement | Under | Total | ||||||||||||||||||
| Real Estate | Undeveloped | Process | Entitled | Development | Acres* | |||||||||||||||
Undeveloped Land |
||||||||||||||||||||
Owned |
194,913 | |||||||||||||||||||
Ventures |
6,763 | 201,676 | ||||||||||||||||||
Residential |
||||||||||||||||||||
Owned |
26,868 | 7,790 | 617 | |||||||||||||||||
Ventures |
840 | 4,492 | 901 | 41,508 | ||||||||||||||||
Commercial |
||||||||||||||||||||
Owned |
3,502 | 1,055 | 520 | |||||||||||||||||
Ventures |
594 | 293 | 5,964 | |||||||||||||||||
Total Acres |
201,676 | 31,210 | 13,931 | 2,331 | 249,148 | |||||||||||||||
Estimated Residential Lots |
26,238 | 3,548 | 29,786 | |||||||||||||||||
| * | In addition, Forestar owns a 58% ownership interest in a venture which controls approximately 16,000 acres of undeveloped land in Georgia with minimal investment. |
MINERAL INTEREST 1
Forestar’s mineral resources segment includes approximately 620,000 net mineral acres
principally located in Texas, Louisiana, Alabama and Georgia.
| Available | Held by | |||||||||||||||
| State | for Lease | Leased | Production | Total2 | ||||||||||||
Texas |
140,000 | 88,000 | 24,000 | 252,000 | ||||||||||||
Louisiana |
133,000 | 4,000 | 7,000 | 144,000 | ||||||||||||
Georgia |
180,000 | — | — | 180,000 | ||||||||||||
Alabama |
40,000 | 2,000 | — | 42,000 | ||||||||||||
California |
1,000 | — | — | 1,000 | ||||||||||||
Indiana |
1,000 | — | — | 1,000 | ||||||||||||
Total |
495,000 | 94,000 | 31,000 | 620,000 | ||||||||||||
| 1 | Includes ventures | |
| 2 | Excludes 463 net mineral acres located in Colorado |
6
FORESTAR GROUP INC.
PROJECTS IN ENTITLEMENT
PROJECTS IN ENTITLEMENT
A summary of projects in the entitlement process(a) at first quarter end 2010 follows:
| Project | ||||||
| Project | County | Acres(b) | ||||
California |
||||||
Hidden Creek Estates |
Los Angeles | 700 | ||||
Terrace at Hidden Hills |
Los Angeles | 30 | ||||
Georgia |
||||||
Ball Ground |
Cherokee | 500 | ||||
Burt Creek |
Dawson | 970 | ||||
Crossing |
Coweta | 230 | ||||
Dallas Highway |
Haralson | 1,060 | ||||
Fincher Road |
Cherokee | 3,890 | ||||
Fox Hall |
Coweta | 960 | ||||
Garland Mountain |
Cherokee/Bartow | 350 | ||||
Home Place |
Coweta | 1,510 | ||||
Jackson Park |
Jackson | 700 | ||||
Martin’s Bridge |
Banks | 970 | ||||
Mill Creek |
Coweta | 770 | ||||
Serenity |
Carroll | 440 | ||||
Waleska |
Cherokee | 150 | ||||
Wolf Creek |
Carroll/Douglas | 12,230 | ||||
Yellow Creek |
Cherokee | 1,060 | ||||
Texas |
||||||
Lake Houston |
Harris/Liberty | 3,700 | ||||
San Jacinto |
Montgomery | 150 | ||||
Woodlake Village(c) |
Montgomery | 840 | ||||
Total |
31,210 | |||||
| (a) | A project is deemed to be in the entitlement process when customary steps necessary for the preparation and submittal of an application, like conducting pre-application meetings or similar discussions with governmental officials, have commenced, or an application has been filed. Projects listed may have significant steps remaining, and there is no assurance that entitlements ultimately will be received. | |
| (b) | Project acres, which are the total for the project regardless of our ownership interest, are approximate. The actual number of acres entitled may vary. | |
| (c) | We own a 50% interest in this project. |
7
FORESTAR GROUP INC.
REAL ESTATE PROJECTS
REAL ESTATE PROJECTS
A summary of our entitled,(a) developed and under development projects at first
quarter-end 2010 follows:
| Residential Lots(c) | Commercial Acres(d) | |||||||||||||||||||||
| Lots Sold | Acres Sold | |||||||||||||||||||||
| Interest | Since | Lots | Since | Acres | ||||||||||||||||||
| Project | County | Owned(b) | Inception | Remaining | Inception | Remaining | ||||||||||||||||
Projects we own |
||||||||||||||||||||||
California |
||||||||||||||||||||||
San Joaquin River |
Contra Costa/Sacramento | 100 | % | — | — | — | 288 | |||||||||||||||
Colorado |
||||||||||||||||||||||
Buffalo Highlands |
Weld | 100 | % | — | 164 | — | — | |||||||||||||||
Johnstown Farms |
Weld | 100 | % | 115 | 493 | 2 | 8 | |||||||||||||||
Pinery West |
Douglas | 100 | % | — | — | — | 115 | |||||||||||||||
Stonebraker |
Weld | 100 | % | — | 603 | — | 13 | |||||||||||||||
Westlake Highlands |
Jefferson | 100 | % | 12 | 9 | — | — | |||||||||||||||
Texas |
||||||||||||||||||||||
Arrowhead Ranch |
Hays | 100 | % | — | 232 | — | 6 | |||||||||||||||
Caruth Lakes |
Rockwall | 100 | % | 285 | 364 | — | — | |||||||||||||||
Cibolo Canyons |
Bexar | 100 | % | 605 | 1,142 | 64 | 81 | |||||||||||||||
Harbor Lakes |
Hood | 100 | % | 199 | 250 | 1 | 13 | |||||||||||||||
Harbor Mist |
Calhoun | 100 | % | — | 200 | — | — | |||||||||||||||
Hunter’s Crossing |
Bastrop | 100 | % | 322 | 169 | 38 | 68 | |||||||||||||||
La Conterra |
Williamson | 100 | % | 69 | 440 | — | 60 | |||||||||||||||
Maxwell Creek |
Collin | 100 | % | 678 | 333 | 10 | — | |||||||||||||||
Oak Creek Estates |
Comal | 100 | % | 67 | 581 | 13 | — | |||||||||||||||
The Colony |
Bastrop | 100 | % | 410 | 2,242 | 22 | 49 | |||||||||||||||
The Gables at North Hill |
Collin | 100 | % | 195 | 88 | — | — | |||||||||||||||
The Preserve at Pecan Creek |
Denton | 100 | % | 270 | 548 | — | 9 | |||||||||||||||
The Ridge at Ribelin Ranch |
Travis | 100 | % | — | — | 179 | 16 | |||||||||||||||
Westside at Buttercup Creek |
Williamson | 100 | % | 1,303 | 218 | 66 | — | |||||||||||||||
Other projects (7) |
Various | 100 | % | 1,550 | 19 | 197 | 23 | |||||||||||||||
Georgia |
||||||||||||||||||||||
Towne West |
Bartow | 100 | % | — | 2,674 | — | 121 | |||||||||||||||
Other projects (13) |
Various | 100 | % | — | 2,934 | — | 705 | |||||||||||||||
Missouri and Utah |
||||||||||||||||||||||
Other projects (2) |
Various | 100 | % | 448 | 316 | — | — | |||||||||||||||
| 6,528 | 14,019 | 592 | 1,575 | |||||||||||||||||||
| Projects in entities we consolidate | ||||||||||||||||||||||
Texas |
||||||||||||||||||||||
City Park |
Harris | 75 | % | 1,099 | 212 | 50 | 105 | |||||||||||||||
Lantana |
Denton | 55 | % (e) | 508 | 1,792 | — | — | |||||||||||||||
Light Farms |
Collin | 65 | % | — | 2,517 | — | — | |||||||||||||||
Stoney Creek |
Dallas | 90 | % | 78 | 676 | — | — | |||||||||||||||
Timber Creek |
Collin | 88 | % | — | 614 | — | — | |||||||||||||||
Other projects (5) |
Various | Various | 953 | 254 | 26 | 21 | ||||||||||||||||
| 2,638 | 6,065 | 76 | 126 | |||||||||||||||||||
| Total owned and consolidated | 9,166 | 20,084 | 668 | 1,701 | ||||||||||||||||||
| Projects in ventures that we account for using the equity method | ||||||||||||||||||||||
Georgia |
||||||||||||||||||||||
Seven Hills |
Paulding | 50 | % | 635 | 449 | 26 | 113 | |||||||||||||||
The Georgian |
Paulding | 38 | % | 288 | 1,097 | — | — | |||||||||||||||
Other projects (4) |
Various | Various | 1,820 | 77 | 3 | — | ||||||||||||||||
Texas |
||||||||||||||||||||||
Bar C Ranch |
Tarrant | 50 | % | 208 | 991 | — | — | |||||||||||||||
Entrada |
Travis | 50 | % | — | 821 | — | 3 | |||||||||||||||
Fannin Farms West |
Tarrant | 50 | % | 285 | 96 | — | 15 | |||||||||||||||
Lantana |
Denton | Various (e) | 1,436 | 34 | 14 | 75 | ||||||||||||||||
Long Meadow Farms |
Fort Bend | 19 | % | 614 | 1,492 | 72 | 138 | |||||||||||||||
Southern Trails |
Brazoria | 40 | % | 394 | 633 | — | — | |||||||||||||||
Stonewall Estates |
Bexar | 25 | % | 229 | 160 | — | — | |||||||||||||||
Summer Creek Ranch |
Tarrant | 50 | % | 796 | 1,772 | — | 363 | |||||||||||||||
Summer Lakes |
Fort Bend | 50 | % | 325 | 798 | 56 | — | |||||||||||||||
Village Park |
Collin | 50 | % | 347 | 213 | 3 | 2 | |||||||||||||||
Waterford Park |
Fort Bend | 50 | % | — | 493 | — | 37 | |||||||||||||||
Other projects (2) |
Various | Various | 296 | 228 | — | 15 | ||||||||||||||||
Florida |
||||||||||||||||||||||
Other projects (3) |
Various | Various | 497 | 348 | — | — | ||||||||||||||||
Total in ventures |
8,170 | 9,702 | 174 | 761 | ||||||||||||||||||
Combined Total |
17,336 | 29,786 | 842 | 2,462 | ||||||||||||||||||
| (a) | A project is deemed entitled when all major discretionary governmental land-use approvals have been received. Some projects may require additional permits and/or non-governmental authorizations for development. | |
| (b) | Interest owned reflects our net equity interest in the project, whether owned directly or indirectly. There are some projects that have multiple ownership structures within them. Accordingly, portions of these projects may appear as owned, consolidated and/or accounted for using the equity method. |
8
| (c) | Lots are for the total project, regardless of our ownership interest. Lots remaining represent vacant developed lots, lots under development and future planned lots. | |
| (d) | Commercial acres are for the total project, regardless of our ownership interest and are net developable acres, which may be fewer than the gross acres available in the project. | |
| (e) | The Lantana project consists of a series of 15 partnerships in which our voting interests range from 25% to 55%. We account for three of these partnerships using the equity method and we consolidate the remaining partnerships. |
A summary of our significant commercial and income producing properties at first quarter-end
2010 follows:
| Interest | ||||||||||||
| Project | County | Market | Owned(a) | Type | Description | |||||||
Radisson Hotel |
Travis | Austin | 100 | % | Hotel | 413 guest rooms and suites | ||||||
Palisades West |
Travis | Austin | 25 | % | Office | 375,000 square feet | ||||||
Las Brisas |
Williamson | Austin | 59 | % | Multifamily | 414 unit luxury apartment | ||||||
| (a) | Interest owned reflects our net equity interest in the project, whether owned directly or indirectly. |
9