Good day, ladies and gentlemen, and welcome to the Second Quarter 2013 Forestar Group Earnings Conference Call. My name is Dominique, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Anna Torma, Senior Vice President, Corporate Affairs. Please proceed.

Thanks, and good morning. I would like to welcome each of you who have joined us by conference call or webcast this morning to discuss Forestar's second quarter 2013 results. I'm Anna Torma, Senior Vice President, Corporate Affairs. Joining me on the call today is Jim DeCosmo, President and CEO; and Chris Nines, Chief Financial Officer. This call is being webcast and copies of the earnings release and presentation slides are now available on the Investor Relations section of our website at forestargroup.com. Before we get started, let me remind you to please review the warning statements our press release and our slides as we will make forward-looking statements during the presentation. In addition, this presentation includes non-GAAP financial measures. The required reconciliation to GAAP financial measures can be found at the back of our earnings release and slides or on our website. Now let me turn the call over to Chris for a review of our financial results.

Thank you, Anna, and welcome to everybody joining us on the call this morning. Let me begin by highlighting our second quarter financial results. In second quarter 2013, Forestar reported net income of approximately $500,000 or $0.02 per share compared with net income of $800,000 or $0.02 per share in the second quarter 2012. This first slide provides a high-level reconciliation between our second quarter 2013 and our second quarter 2012 net income and earnings per share on an after-tax basis. The most significant positive variance was lower general and administrative costs, which benefited earnings by $1.1 million or $0.03 per share. In the second quarter of 2012, we incurred expenses of approximately $1.6 million or $0.05 per share associated with the acquisition of Credo Petroleum. Other natural resources segment earnings increased by $900,000 or $0.03 per share primarily due to higher fiber sales and pricing. Real estate segment results improved by approximately $300,000 or $0.01 per share, which principally reflects the benefit of higher average prices for residential lots and commercial tracks. Most significant negative variance was interest expense, taxes and other cost, which negatively impacted earnings by $1.1 million or $0.03 per share principally due to additional interest expense associated with the issuance of $125 million in convertible notes during the first quarter of 2013. In addition, share-based compensation expense increased approximately $1 million or $0.03 per share as compared with second quarter 2012, principally driven by our higher stock price and the mark-to-market impact in our cash-settled awards. Oil and gas segment earnings results were down approximately $500,000 or $0.01 per share principally due to lower oil volumes associated with royalties from our own mineral interests. Now let me turn to the segment results for the quarter. In second quarter 2013, total segment earnings were approximately $13.3…

Thank you, Chris. And I'd also like to welcome everyone, who's joined us on the call this morning. At the midpoint of the year, I'm confident we're on track to deliver our Triple in FOR initiatives, I believe Forestar's headed in the right direction. To review the key -- a few of the key highlights for the second quarter this year versus the second quarter of 2012. First, a nice step up in average lot pricing with a healthy backlog of banking hundred [ph] lots on the contract. Second, we continue to make good progress in multi-family with 915 units under construction. Of the 3 projects, we have 1 that's currently pre-leasing, the second is expected to start pre-leasing by the end of this month and the third, later in the year. Number 3, oil and gas production is up nearly 170%, which is reflective of our acquisition of Credo and investments in drilling and completion. And 4, number of sales were up to nearly 185,000 tons [ph]. And last, in second quarter, we invested about $36 million of capital and strategic growth opportunities weighted toward oil and gas working interest and the development of lots. We firmly believe these investments will deliver additional value to Forestar and our shareholders. Let's take a closer look at our real estate segment and, in particular, current Texas market conditions. As we shared with you last quarter, the months of supply of finished vacant housing in Texas continues to be at the low end of equilibrium, the primary driver being historically low absolute inventory of new homes. Texas also continues to be a leader in job growth. 303,000 new jobs in the last 12 months accounts for about 12% of the national total. This is the cornerstone of demand. As the table on…

[Operator Instructions] The first question comes from the line of Mark Weintraub of Buckingham Research.

Jim, first question I had was on the 2,200 lot sales for 2015. I guess given the progress that we've already seen, given the type of environment that you're describing, could that prove to be quite conservative, the 2,200 for 2015?

Mark, the 2,200 was the average annual sales for the 4-year period for '12 through '15. So given 1,365 last year, 1,900 to 2,000 this year, continue to accelerate through '14 and '15. Assuming the housing market space is on track, I think the 2,200 is still a good number. I would tell you, it feels a little bit more conservative today than at the time that we adopted it back in 2011.

Okay. But just to clarify, I may have misunderstood then, so that 2,200 lots, that is the expected average for the 2012 through 2015 period, not the goal for 2015?

Correct.

My misunderstanding. Okay. Just 1 question to -- if I look at the lots that you still have available and what you were selling, it looks like that the Dallas region, in particular, you have more inventory relative to the amount of product that you're selling. Can you talk a little bit about that? Is it that -- do you expect Dallas to pick up? How is your Dallas inventory different than what you have in the other regions in Texas?

Mark, I think as you are aware, the inventory is variable by market, just based on historic acquisitions as well as sales rates. But we continue to expect whether it's DFW or Austin or San Antonio or Houston for sales rates to continue to increase. But as far as the inventory by market, it's just a function of the projects they required and their size. I think as you know, Cibolo Canyons, for example, which you're familiar with, initially, it had anywhere from, I think, 2,200 maybe to 2,500 lots. So if you were to buy a master plan that had that type of yield, given where we are today, that's going to make a pretty big swing at the market level but -- so I would tell you that the variation among markets today, as far as existing available inventory, is principally a reflection of historic acquisitions.

Okay. And I guess, what I mean to say, if you look at, for instance, your lot sales in the second quarter in Dallas, they're 118, and your remaining lots to be developed are north of 4,000 and also you have 640 vacant lots. Whereas in the Austin, you only have 100 vacant developed lots and 2,200 in total, yet your lot sales are higher. Does it take longer to sell through the Dallas inventory typically? Or not necessarily? That's just...

Mark, I would say not necessarily. I would tell you that there's a -- as you'd expect, there's a couple of projects in Dallas that are early in their life and haven't started or are just beginning to generate some sales. So you also have to keep in mind the timing of the projects and where they are in their life.

Okay, great. And one last one, just real quick. Any change in your views in terms -- because you'd previously given some indications on the types of profitability you expected from the multifamily developments. Is that pretty much the same today as what you had indicated 3 months ago?

Yes. Yes, Mark, I would say that we still have the same view on cash multiples and the profitability and returns in these projects that we did 2 or 3 months ago.

Your next question comes from the line of Steve Chercover of D. A. Davidson. Steven Chercover - D.A. Davidson & Co., Research Division: My first question, I guess it's just a housekeeping one. Is the second quarter kind of a key quarter for share-based compensation as a line item?

Steve, historically, the first quarter's had more noise in it than the second. And keep in mind that it's very sensitive to the movement in stock price, given the mix between cash-settled awards and those that are settled with stock. Steven Chercover - D.A. Davidson & Co., Research Division: Great. And then I've got 1 real estate and 1 Oil and Gas question. So on Page 27, this is a good table. Looks like your commercial acreage -- that the value for your commercial acreage just over doubled year-over-year. Is that a function of location or the economic environment or a little bit of each?

Little bit of each, more location. Steve, there'll be some commercial sales that are similar to 2012, it could be $50,000 an acre and there could be some that could be as high as a couple of hundred thousand dollars an acre. It's just a function of location. I think if you looked at these commercial tract sales historically, they've tended to be in the $90,000 to $100,000 an acre range. But to your point, there's going to be -- there'll be some variability in that sales price. Steven Chercover - D.A. Davidson & Co., Research Division: Well, maybe can you give us some color, like, this quarter, the $100,000 an acre product, where was that located as compared to last year's $50,000 an acre? And where do you have more inventory?

Yes. Steve, if I recall, last year -- I can tell you this year, a majority of the sales in the second quarter were in Houston. And obviously Houston is in really good shape. And the sales last year, well, Steve, I can't remember exactly where those parcels were located off the top of my head. We can follow up. We can give you some more color on that. But I can't tell you off the top of my head. I know what second quarter this year was. Steven Chercover - D.A. Davidson & Co., Research Division: Got you. And then you did say that your EBITDA is going to be kind of more -- better than the $50 million run rate in the second half. So is that applicable to minerals as well? Because you did say that results should improve. Were you referring to segment EBITDA for minerals or to production levels?

Both. My comment was that we've been investing in oil and gas business really for the last 3 quarters, and we anticipate that those investments will begin to yield additional production which will turn into both earnings and EBITDAX. Steven Chercover - D.A. Davidson & Co., Research Division: Got it. And sorry, 1 last one on real estate, then I'll turn it over it. Your total lot inventory of 10,485 represents about a 5-year supply. So is it safe to assume that you're either looking at your existing land base to kind of keep on building that pipeline or you'll have to buy new acreage to make sure that you always have a 4-, 5-year supply?

Steve, we're always looking at potential acquisitions. I'll tell you that in the first half of 2012, we made a couple of small acquisitions, but not enough to really move the needle or -- relative to lot inventory. I think as you know, there's a lot of demand for land and lot positions and we've continued to be both disciplined as well as patient. So there's a time to make good acquisitions, but the benefit that we have today Steve, is -- and you made the point, is that we've got a good, solid pipeline and we've got inventory to work out of for a while.

Your next question comes from the line of David Woodyatt of Keeley Asset Management.

Is there anything you can report on the possibility of monetizing, to some degree, the resort and the surrounding land?

David, let me first share with you, in the second quarter, I think we received close to $2 million from the district. So we've got cash coming in. As always, we look at and work with the district on ways to accelerate the monetization of that cash flow stream and I would report this morning that we're doing that. As soon as we make some progress to the point that I feel pretty confident that we're going to be able to deliver something, I'll certainly share that with you as well as the market.

Okay. The other question I have is, I know the Atlanta market was hit hard and certainly hasn't been as good as the Texas markets. But it seems like, recently, I've seen some pretty encouraging data about the Atlanta area and housing. How soon might we see something material done with your property in the Atlanta area?

David, I think your comments are accurate. The Atlanta market is improving. Keep in mind that's a relative term and Atlanta was in a pretty deep dark hole relative to housing, so it's headed in the right direction. I will tell you that of the projects that we have that can generate lot sales, that activity has picked up considerably. And we've got maybe 3 or 4 different projects that are now generating sales, so we're encouraged by that. Relative to the other projects that we have entitled, our strategy is to continue to be very disciplined and strategic in those investments and when the market warrants an investment, then we'll invest there. But here again, as I said, it is better and we're seeing some positive results, but I think Atlanta still has a ways to go.

You're next question comes from the line of Steven Eisman of Emrys Partners.

I'm wondering if we could explore something, a little bit more of an overview of the company. This is company that has a market capital of about $740 million for shareholders. But it's quite complicated and hard to understand for such a small market cap. Is there a way to get rid of sales -- dispose of some of the more extraneous businesses like timber, which seems to be not an area of focus to the company and take the proceeds and reinvest in the parts of the company that are clearly a focus?

Yes, Steve, I think that's consistent with some of our actions over the last 2 or 3 years. If you look back, we've sold probably, oh, 220,000, 230,000 acres of Timberland. So we've been very active at monetizing those assets and reinvesting them back into the business. In fact, to your point, since we've spun out in 2008, we've monetized close to $400 million in assets that we don't believe are core or meet our return expectations, and we've reinvested maybe $360 million, $370 million back into the business. So that would support your comment.

And just one more follow-up. You basically have 2 core businesses, being the land development and the oil business. They're not 2 businesses that naturally fit with one another. Is there any thinking within the company about putting the company up basically into 2 companies, so that there would be more clarity as to the entire value of the company, because those of us who own the stock believe that there is great value here.

Steven, we also believe that there's a lot of potential value in Forestar. Keep in mind that when we spun out back in 2008, it was more of a collection or a portfolio of assets and what we've done to date is to begin to take those assets and develop businesses on top of them, which in my opinion is really what creates the real value. We're somewhat early in that process. I think that the business is on the right track but somewhat fledgling. I do believe in time, that we'll have some very nice strategic options. However, today, we're very focused on the businesses at hand and making sure that they're best of class. Not the biggest, but the best in class. And believe that's what will generate the greatest value for shareholders.

But you're not, in principle against necessarily splitting up the company, you just think it's early?

Yes -- Steven, I do think it's early. Today, I think the focus has got to be on proving up these businesses and these assets, and ultimately that's what's going to create the greatest value for the shareholders.

You have a follow-up question from the line of David Woodyatt of Keeley Asset Management.

I just had one more question. Are we, at all, close to seeing some meaningful initial transaction related to the Water Rights?

David, the team that we have that's dedicated to the water business continues to stay very focused on perfecting and garnering withdrawal permits for groundwater in addition to continuing with negotiations and discussions with potential buyers. So I will tell you, I think that were making good progress, yet at the same time, as I've said on a number of different occasions, this is a political and emotionally charged process. So predicting time or the when is extremely difficult. As I've said, I don't think it's an if. It's a when. And I'm encouraged by the progress and the results today. But David, I think it's still a little bit premature that to say that we're going to expect something in the next quarter, the next 2 quarters. But I will say that we're diligently focused on delivering those elements of the business that will create and deliver value for us and that's garnering the withdrawal permits and executing purchase and sale agreements with potential buyers.

This ends today's question-and-answer session. I would like to hand the call back over to Jim DeCosmo for closing remarks.

Thank you. Once again, I want to thank everyone for joining us on the call this morning, as well as your interest in Forestar and hope that you have a great day.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect, and have a wonderful day.