Forestar Group Inc. (NYSE:FOR) Q2 2024 Earnings Call Transcript

Katie Smith: Yeah. And so, of the $1.5 billion to $1.6 billion that we’re going to spend this year, about a third of that will be on land acquisition. And those projects can take anywhere from 12 to 15 months to deliver that first phase. And so, we’re really investing to grow in 2025 and beyond. We do want to get back to high growth at that 20% range or maybe even a little bit higher. And we are putting stuff under contract and doing the due diligence process before we bring it onto our balance sheet. We’ve also added to our team to help us to be able to do that faster.

Mike Rehaut: Great. Appreciate it, Thank you.

Katie Smith: Sure.

Operator: We have a follow-up question coming from Carl Reichardt with BTIG. Please proceed, Carl.

Carl Reichardt: Thanks. And, Katie, on that point, I wanted to ask about SG&A. I recognize the leverage bounces around with the top-line. But is a good run rate to you still sort of $30 million a quarter? When do we get to a point where the staff up is going to have some revenue leverage on it, or should we expect you to continue to add staff over — into through ’25 to support the growth you’re talking about?

Katie Smith: So, the leverage is going to change quarter to quarter just based on volume. We always see really good SG&A leverage in that fourth quarter. It’s not going to stay at stagnant $30 million a quarter. We’re continually adding to our team. And so, I would expect a step-up quarter to quarter, but we do think that the business can be managed at that mid-single-digit SG&A percent on an annual basis. And so, we’re adding team members in line with that, but we do need to add members that are focused on land acquisition and development so that, that way we can double in size.

Carl Reichardt: Okay, great. Thank you very much.

Operator: Okay. We’ve reached the end of the question-and-answer session. I will now turn the call over to Andy Oxley for closing remarks.

Andy Oxley: Thank you, John, and thank you to everyone on the Forestar team for your focus and hard work. Stay disciplined, flexible, and opportunistic as we continue to consolidate market share. We appreciate everyone’s time on the call today and look forward to speaking with you again in July to share our third quarter results.

Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.