Forestar Group Inc.

Good afternoon and welcome to Four Star's fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I will now turn the call over to Jessica Hansen, Vice President of Investor Relations for D.R. Horton, the majority shareholder of Four Star.

Thank you, Paul, and good afternoon. We welcome each of you to the call to discuss Four Star's fourth quarter and fiscal 2020 financial results. Before we get started, today's call may include comments that constitute forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Although Four Star believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. All forward-looking statements are based upon information available to Four Star on the date of this conference call, and Four Star does not undertake any obligation to publicly update or revise any forward-looking statements. Additional information about issues that could lead to material changes in performance is contained in Four Star's 2019 annual report on Form 10-K and the subsequent quarterly reports on Form 10-Q, all of which are filed with the Securities and Exchange Commission. This afternoon's earnings release is on Four Star's website at investor.fourstar.com, and the 10-K is planned to be filed in about two weeks. After this call, we will post an updated investor presentation to Four Star's investor relations site under Events and Presentations for your reference. Now I will turn the call over to Dan Bartok, the CEO of Four Star.

Thank you, Jessica, and good afternoon, everyone. In addition to Jessica, I am pleased to be joined on the call today by Jim Allen, our Chief Financial Officer, and by Colin Dawson, DR Horton's Vice President of Corporate Finance and Treasurer. We're extremely proud of the four-star team's accomplishments in fiscal 2020. We continue to deliver on key milestones, which we believe will create additional value for our shareholders. We are rapidly scaling our business and have capitalized on the strength of the residential finished lot market. We delivered more than 10,000 lots to home builders in fiscal 2020. more than double our deliveries in fiscal 2019. We continue to implement drivers which will translate to increased pre-tax profitability. We are efficiently scaling our business with SG&A leverage improving 180 basis points from fiscal 2019. And we expect improved gross margins in fiscal 2021 as a result of the overall market strength and our intentional shift towards more four-star source transactions and less lot banking. We are consolidating market share in the undercapitalized and fragmented lot development industry. As four-star lots sold to D.R. Horton doubled as a percentage of D.R. Horton's closings on a year-over-year basis. In addition, we are pleased to report we recently closed our first project, which was sourced by a third-party builder. We continue to execute on our returns-focused business model build upon the foundation which has been set. Our high turnover, lower risk manufacturing strategy led to a 260 basis point year-over-year improvement and four stars return on equity. We expect to generate further growth in profits and increases in returns in fiscal 2021 as our platform continues to gain scale and our team matures. We'll now discuss our fourth quarter and fiscal 2020 results in more detail. Jim?