Forestar Group Inc.

Good afternoon and welcome to Four Star's third quarter 2022 earnings conference call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. If you have any questions or comments during the question and answer portion of the call, please press star 1 on your touchtone phone. Pressing star 2 will remove you from the queue should your question be answered. I will now turn the call over to Katie Smith, Director of Finance and Investor Relations for Four Star.

Thank you, John. Good afternoon, everyone, and welcome to the call to discuss Four Star's third quarter results. Thank you for joining us. Before we get started, today's call includes 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 we do not undertake any obligation to update or revise any forward-looking statements publicly. Additional information about issues that could lead to material changes in performance is contained in Four Star's annual report on Form 10-K and its most recent quarterly report on Form 10-Q, both of which are filed with the Securities and Exchange Commission. This afternoon's earnings release is on our website at investor.fourstar.com, and we plan to file the 10-Q later this week. After this call, we will post an updated investor presentation to our investor relations site under investment presentations for your reference. Now I will turn the call over to Dan Bartok, our CEO.

Thank you, Katie, and good afternoon, everyone. In addition to Katie, I am pleased to be joined on the call today by Jim Allen, our chief financial officer. The four-star team delivered a strong third quarter highlighted by net income increasing 151%, from the prior year to $39.7 million, or 80 cents per diluted share. Pre-tax income increased 150 percent to $52.7 million, and our pre-tax profit margin expanded by over 1,000 basis points year-over-year to 17.1 percent. Revenues decreased 1 percent to $308.5 million, while lot deliveries decreased by 10% to 3,473. Our lot deliveries for the quarter fell below our expectations due to increased headwinds in the development process. This was primarily related to municipality delays and, to a lesser extent, shortages of certain materials. However, demand for finished lots remained strong during the quarter, supported by our seventh consecutive quarter of finished lots on hand accounting for less than 10% of Four Star's owned portfolio. Customers continued to purchase lots soon after completion. Four Star's lots sold to D.R. Horton continued to grow as a percentage of D.R. Horton's closings year over year. Additionally, our lots sold to customers other than D.R. Horton increased 213% compared to the prior year quarter. As a result of continued demand and our focused teams, we achieved significant improvement in our pre-tax profit margin, both year-over-year and sequentially. Our increasing profitability and focus on capital efficiency is translating into higher returns for our shareholders. Four Star achieved a 16.2% return on equity for the trailing 12 months and the June 30, 2022. This was a 620 basis point improvement from the same period a year ago and our ninth consecutive quarter of ROE improvement. Interest rates rose very quickly in June, and the housing market is adjusting accordingly. Although we did not see demand deteriorate for finished lots during the third quarter, we expect new home starts will continue to moderate. We will now discuss our third quarter results in more detail, and I will end the call with closing remarks and updated guidance. Jim?