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Forestar Group Inc. Reports Full Year And Fourth Quarter 2012 Results

Stocks in this article: FOR

Forestar Group Inc. (NYSE: FOR) today reported full year 2012 net income of approximately $12.9 million, or $0.36 per diluted share, compared with full year 2011 net income of approximately $7.2 million, or $0.20 per diluted share outstanding.

($ in millions, except per share)

    Full Year 2012     Full Year 2011
Net income $ 12.9 $ 7.2
Net income per share $ 0.36 $ 0.20
 

Full year 2012 results include after-tax expenses of approximately ($4.1) million, or ($0.12) per share, associated with acquisition of CREDO Petroleum Corporation, and an after-tax loss of ($2.9) million, or ($0.08) per share, associated with loss on extinguishment of debt related to amendment and extension of our term loan. Full year 2011 results include an after-tax gain of $40.2 million, or $1.12 per share, related to sale of about 57,000 acres of timberland, an after-tax loss of ($29.4) million or ($0.82) per share principally related to non-cash asset impairments associated with entering into agreements to acquire certain assets from the CL Realty and TEMCO ventures and an after-tax loss of ($2.1) million, or ($0.06) per share, associated with proposed private debt offerings. Full year 2012 net income excluding special items was $19.9 million, or $0.56 per share, compared with a net loss before special items of ($1.5) million or ($0.04) per share in 2011.

($ in millions, except per share)

    Full Year 2012     Full Year 2011
Net income per share $0.36 $0.20
Special items:
CREDO Petroleum acquisition expenses $0.12 $ -
Loss on extinguishment of debt 0.08 -
Debt offering expenses - 0.06
Non-cash asset impairments - 0.82
Gain on sale of timberland - (1.12 )
Total special items $0.20 ($0.24 )
 
Net income (loss) per share before special items * $0.56 ($0.04 )

* These are Non-GAAP financial measures. The reconciliation between GAAP and Non-GAAP measures is provided in the tables following this press release, and on the investor relations section of the company’s website.

“Our 2012 results are beginning to reflect the benefit of our Triple in FOR strategic initiatives focused on accelerating value realization, optimizing transparency and disclosure, and growing our net asset value through strategic and disciplined investments,” said Jim DeCosmo, president and chief executive officer of Forestar Group.

Full Year 2012 Significant Highlights (includes ventures)

Mineral Resources – Oil & Gas

  • Oil production increased over 144% compared with 2011
  • 29 additional oil and gas wells completed; 936 total producing wells at year-end
  • 8,910 net mineral acres leased to exploration and production companies

Real Estate

  • Sold 1,365 developed residential lots, a 22% increase compared with 2011 – almost 1,340 lots under option contracts at year-end
  • Generated $18.4 million in gross profit from residential lot sales, including our share of venture activity, up 60% compared with 2011
  • Acquired entire interest in 17 residential and mixed-use real estate projects from the CL Realty and TEMCO ventures for a net investment of approximately $23.5 million
  • Sold approximately 9,330 acres of undeveloped land for about $19 million through our retail sales program
  • Sold two stabilized multifamily communities, Broadstone Memorial and Las Brisas, generating approximately $40 million in cash flow
  • Completed construction of Promesa, a 289-unit multifamily community in Austin, Texas
  • Initiated development of two multifamily venture properties, with locations in Austin and Denver

Strategic Initiatives

  • Completed the acquisition of CREDO Petroleum in an all cash transaction for $14.50 per share, representing an equity purchase price of $146 million

Fourth Quarter 2012 Significant Highlights

The company reported fourth quarter 2012 net income of approximately $10.0 million, or $0.28 per diluted share, compared with a fourth quarter 2011 net loss of approximately ($22.9) million, or ($0.65) per share outstanding.

($ in millions, except per share)

    4th Qtr 2012     4th Qtr 2011
Net income (loss) $10.0 ($22.9)
Net income (loss) per share $0.28 ($0.65)
 

Fourth quarter 2012 results include after-tax expenses of approximately ($0.4) million, or ($0.01) per share, associated with acquisition of CREDO Petroleum. Fourth quarter 2011 results include an after-tax loss of ($28.9) million, or ($0.82) per share principally related to non-cash asset impairments associated with entering into agreements to acquire the entire interest in 17 projects from the CL Realty and TEMCO ventures. Fourth quarter 2012 net income excluding special items was $10.4 million, or $0.29 per share, compared with net income excluding special items of $6.0 million, or $0.17 per share in 2011.

($ in millions, except per share)

    4th Qtr 2012     4th Qtr 2011
Net income (loss) per share $0.28 ($0.65 )
Special items:
CREDO Petroleum acquisition expenses 0.01 -
Non-cash asset impairments - 0.82  
Total special items 0.01 $0.82
 
Net income per share before special items * $0.29 $0.17  
 

* These are Non-GAAP financial measures. The reconciliation between GAAP and Non-GAAP measures is provided in the tables following this press release, and on the investor relations section of the company’s website.

MINERAL RESOURCES

Fourth Quarter 2012 Significant Highlights

  • Oil production up almost 122,000 barrels or 245% compared with fourth quarter 2011, including over 116,500 barrels of production from acquisition of CREDO Petroleum
  • Leased almost 5,000 net mineral acres to exploration and production companies for almost $300 per acre
  • 16 wells drilled; 936 gross producing wells, up 406 compared with fourth quarter 2011 principally due to acquisition of Credo Petroleum during third quarter 2012

Mineral Resources Segment Financial Results:

($ in millions)

    4Q 2012     4Q 2011     FY 2012     FY 2011
Segment Revenues $17.2 $6.8 $44.2 $24.6
Segment Earnings $5.7 $3.7

$21.6

1

$16.0

1

1Full year 2012 and 2011 mineral resources segment results include $5.0 million and $3.8 million, respectively, in costs principally associated with development of our water resource initiatives.

Mineral resources segment earnings increased in fourth quarter and full year 2012 compared with fourth quarter and full year 2011 principally due to higher oil production primarily due to the acquisition of CREDO Petroleum and higher lease bonus revenues, which more than offset lower oil and gas pricing and increased costs.

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