Forestar Group Inc. (NYSE:FOR) Q1 2023 Earnings Call Transcript

Carl Reichardt: Thanks. Good afternoon, everybody. Thanks for taking my question. I just wanted to follow-up on Truman’s. You have $90,000 on a sort of average revenue per lot rate this quarter. Obviously, the markets change to some degree, the Southeast has remained reasonably decent Texas has been good, the West has slowed a lot. As you’re thinking about your mix of deliveries in 2023, recognizing you’re not giving guidance? Do you think it’s going to adjust appreciably from what it was in ’22 geographically speaking?

Dan Bartok: It’s always challenging that what product mix is going to sell and what dates $90,000 I think is probably the highest we’ve hit on a quarter, but we also had some sales in the West. We sold our last lots up in the Seattle market. Again, we might reenter that market when it’s more attractively priced again. And then we had some other Western type sales that maybe skewed that number a little higher than usual So I would expect overall our ASP will probably not increase from $90,000, but will probably trend down a little bit this year.

Carl Reichardt: All right. Thanks, Dan. And then regarding your comments on the potential for opportunities, you talked about some builders may be looking more at finished lot transactions as opposed to doing self-development. Besides deals that you passed on before that are now coming back to the market. Is there any sense that you’re seeing now some of those vertically integrated builders want to move towards not developing their own given they sort of need it for margin? And are you seeing other developers out there not looking at new deals? So not only dropping deals, but just effectively disappearing from the market at all. That kind of firm level distress yet?

Dan Bartok: Yes. I think, I clearly, I’ve seen that the smaller developers are having a hard time getting new financing on new projects. And are probably negotiating with their banks on their existing deals, that’s my sense. We are seeing some developers that have put a couple packages together, but again, I don’t feel it. I don’t think they’re feeling overly stressed yet. That may happen. I think, I guess, we’ll see what happens here with the spring selling season about to begin. But we are definitely seeing a slow up in transactions by developers. As far as builders, the conversations over the last couple of months have been interesting. People are looking for positions in areas that they’re not in yet. But I think everybody is getting ready to pull the trigger. Again, I think we’re going to really see over the next eight to 12 weeks what happens with sales and therefore builders desire to ramp up starts again.

Carl Reichardt: Okay, great. I appreciate it, Dan. Thanks very much. Thanks all.

Dan Bartok: Thanks, Carl.

Operator: Okay. The next question is coming from Anthony Pettinari with Citigroup. Please proceed with your question.

Asher Sohnen: Hi, this is Asher Sohnen on for Anthony. Thanks for taking my question. So ASP per lot rose 2% quarter-over-quarter, which seems somewhat out of line with what we’re seeing in terms of home prices of what they’re doing? So is that largely due to delivery of loss with prior pricing, kind of, already put under contract in the time of those deliveries? And then if so, was there any renegotiation of prices between you and builders baked into that number? And then if not, should we start to expect like renegotiations to be a price headwind over the balance of the year?

Jim Allen: Well. This is Jim Allen. With respect to the $90,100 ASP for the quarter, I think the increase there probably had more to do with mix than anything as Dan mentioned. I guess with respect to renegotiating and what