Market Overview

Standard Pacific Corp. Reports 2012 Third Quarter Results

Share:

Q3 2012 Net Income of $21.7 million, or $0.05 per diluted share

Q3 2012 Net New Orders up 29% and Backlog up 64% vs. Q3 2011

IRVINE, Calif., Oct. 25, 2012 /PRNewswire/ -- Standard Pacific Corp. (NYSE: SPF) today announced results for the third quarter ended September 30, 2012.

2012 Third Quarter Highlights and Comparisons to the 2011 Third Quarter:

  • Net income of $21.7 million, or $0.05 per diluted share, vs. net loss of $6.4 million, or $0.02 per diluted share
  • Net new orders of 989, up 29%
  • Backlog of 1,394 homes, up 64%
  • 156 average active selling communities, down 2%
  • Homebuilding revenues up 32%
    • Average selling price of $369 thousand, up 7%
    • 861 new home deliveries, up 24%
  • Gross margin from home sales of 20.2%, compared to 15.8% (18.8%* excluding impairment charges)
  • SG&A rate from home sales of 13.6%, a 260 basis point improvement
  • $246.2 million of land purchases and development costs compared to $106.4 million
  • Adjusted Homebuilding EBITDA of $51.5 million*, or 16.2%* of homebuilding revenues, compared to $28.4 million*, or 11.7%* of homebuilding revenues
  • Homebuilding cash balance of $500 million
  • Amended undrawn revolving credit facility in October 2012 to increase capacity to $350 million

Scott Stowell, the Company's Chief Executive Officer and President commented, "We are pleased that the positive momentum we experienced during the first half of 2012 continued into the third quarter.  We earned $21.7 million, with deliveries up 24%, orders up 29% and homebuilding revenues up 32% over the prior year period.  We are most pleased by the significant 64% year-over-year increase in the dollar value and number of homes in backlog to approximately $500 million, or 1,400 homes.  Our solid third quarter results reflect the execution of our strategy and improved housing market conditions during the quarter."

Revenues from home sales for the 2012 third quarter increased 31%, to $317.4 million from $241.4 million, as compared to the prior year period, primarily due to a 24% increase in new home deliveries (excluding joint ventures) to 861 homes and a 7% increase in our consolidated average home price to $369 thousand.  The increase in new home deliveries was driven by a 62% increase in the number of homes in backlog at the beginning of the quarter as compared to the prior year period. 

Gross margin from home sales for the 2012 third quarter increased to 20.2% compared to 15.8% (18.8%* excluding $7.2 million of inventory impairment charges) in the prior year period.  Excluding inventory impairment charges and previously capitalized interest costs, gross margin from home sales was 28.7%* for the 2012 third quarter versus 26.6%* for the 2011 third quarter.  This 210 basis point improvement was primarily attributable to a mix shift to more deliveries from higher margin communities, price increases in certain communities with higher sales absorption, and improved margins from speculative homes sold and delivered during the quarter. 

The Company's 2012 third quarter SG&A expenses (including Corporate G&A) were $43.1 million compared to $39.1 million for the prior year period, down 260 basis points as a percentage of home sale revenues to 13.6%, compared to 16.2% for the 2011 third quarter.  The improvement in the Company's SG&A rate was primarily due to a 31% increase in revenues from home sales and the operating leverage inherent in our business.

Net new orders (excluding joint ventures) for the 2012 third quarter increased 29% from the 2011 third quarter to 989 homes.  The 29% year-over-year growth is attributable to a 32% increase in the Company's monthly sales absorption rate, partially offset by a 2% decrease in the number of average active selling communities.    The Company's monthly sales absorption rate for the 2012 third quarter was 2.1 per community, compared to 1.6 per community for the 2011 third quarter and 2.4 per community for the 2012 second quarter.  The 10% decrease in absorption rate from the 2012 second quarter to the 2012 third quarter is slightly better than the historical seasonality for the Company.  The Company's cancellation rate for the 2012 third quarter was 14%, compared to 16% for the 2011 third quarter and 11% for the 2012 second quarter.   

The dollar value of homes in backlog (excluding joint ventures) increased 64% to $498.7 million, or 1,394 homes, compared to $304.8 million, or 848 homes, for the 2011 third quarter, and increased 13% compared to $439.7 million, or 1,266 homes, for the 2012 second quarter.  The increase in year over year backlog value was driven primarily by a 29% increase in net new orders and a shift to more to-be-built homes. 

The Company used $72.4 million of cash in operating activities for the 2012 third quarter versus $78.5 million in the 2011 third quarter.  During the 2012 third quarter, the Company spent $246.2 million on land purchases and development costs, of which $140.8 million of cash land purchases and development costs were included in cash flows used in operating activities, compared to $106.4 million for the 2011 third quarter.  Excluding land purchases and development costs, cash inflows from operating activities for the 2012 third quarter were $68.4 million* versus $27.9 million* in the 2011 third quarter.  The year over year increase in cash inflows from operating activities (excluding land purchases and development costs) was primarily due to a 31% increase in home sale revenues. 

The Company purchased $206.7 million of land (3,497 homesites) during the 2012 third quarter, of which 76% (based on homesites) was located in California and 11% in Texas, with the balance spread throughout the Company's other operations.  The Company purchased $337.3 million of land (6,259 homesites) during the nine months ended September 30, 2012, of which 47% (based on homesites) was located in California, 24% in the Carolinas, 13% in Texas and 13% in Florida, with the balance spread throughout the Company's other operations.  As of September 30, 2012, the Company owned or controlled 30,154 homesites, of which 17,718 are owned and actively selling or under development, 6,180 are controlled or under option, and the remaining 6,256 homesites are held for future development or for sale.  The homesites owned that are actively selling or under development represent a 5.7 year supply based on the Company's deliveries for the trailing twelve months ended September 30, 2012.  

Earnings Conference Call

A conference call to discuss the Company's 2012 third quarter results will be held at 12:00 p.m. Eastern time October 26, 2012.  The call will be broadcast live over the Internet and can be accessed through the Company's website at http://ir.standardpacifichomes.com.  The call will also be accessible via telephone by dialing (888) 811-5448 (domestic) or (913) 905-3226 (international); Passcode: 8191394.  The audio transmission with the slide presentation will be available on our website for replay within 2 to 3 hours following the live broadcast, and can be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international); Passcode: 8191394.

About Standard Pacific

Standard Pacific, one of the nation's largest homebuilders, has built more than 115,000 homes during its 47-year history.  The Company constructs homes within a wide range of price and size targeting a broad range of homebuyers.  Standard Pacific operates in many of the largest housing markets in the country with operations in major metropolitan areas in California, Florida, Arizona, the Carolinas, Texas and Colorado.  For more information about the Company and its new home developments, please visit our website at: www.standardpacifichomes.com.

This news release contains forward-looking statements.  These statements include but are not limited to statements regarding new home orders, deliveries, backlog, average home price, revenue, profitability, cash flow, liquidity, gross margins, overhead expenses and other costs; community count; product mix; execution on our strategy; and the future condition of the economy and the housing market.  Forward-looking statements are based on our current expectations or beliefs regarding future events or circumstances, and you should not place undue reliance on these statements.  Such statements involve known and unknown risks, uncertainties, assumptions and other factors many of which are out of the Company's control and difficult to forecast that may cause actual results to differ materially from those that may be described or implied.  Such factors include but are not limited to:  local and general economic and market conditions, including consumer confidence, employment rates, interest rates, the cost and availability of mortgage financing, and stock market, home and land valuations; the impact on economic conditions, terrorist attacks or the outbreak or escalation of armed conflict involving the United States; the cost and availability of suitable undeveloped land, building materials and labor; the cost and availability of construction financing and corporate debt and equity capital; our significant amount of debt and the impact of restrictive covenants in our debt agreements; our ability to repay our debt as it comes due; changes in our credit rating or outlook; the demand for and affordability of single-family homes; the supply of housing for sale; cancellations of purchase contracts by homebuyers; the cyclical and competitive nature of the Company's business; governmental regulation, including the impact of "slow growth" or similar initiatives; delays in the land entitlement process, development, construction, or the opening of new home communities; adverse weather conditions and natural disasters; environmental matters; risks relating to the Company's mortgage banking operations; future business decisions and the Company's ability to successfully implement the Company's operational and other strategies; litigation and warranty claims; and other risks discussed in the Company's filings with the Securities and Exchange Commission, including in the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2011 and subsequent Quarterly Reports on Form 10-Q.  The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements.  The Company nonetheless reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release.  No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.

Contact:
Jeff McCall, EVP & CFO (949) 789-1655, jmccall@stanpac.com

*Please see "Reconciliation of Non-GAAP Financial Measures" at the end of this release.

(Note: Tables Follow)

 

KEY STATISTICS AND FINANCIAL DATA1

















As of or For the Three Months Ended









September 30,



September 30,



Percentage



June 30,



Percentage









2012



2011



or % Change



2012



or % Change



Operating Data

(Dollars in thousands)



































Deliveries



861





697



24%





815



6%



Average selling price

$

369



$

346



7%



$

337



9%



Home sale revenues

$

317,389



$

241,434



31%



$

274,872



15%



Gross margin %



20.1%





15.8%



4.3%





20.5%



(0.4%)



Gross margin % from home sales (excluding impairments)*



20.2%





18.8%



1.4%





20.5%



(0.3%)



Gross margin % from home sales (excluding impairments and

interest amortized to cost of home sales)*



28.7%





26.6%



2.1%





29.4%



(0.7%)



Inventory impairments and deposit write-offs

$

  ―  



$

8,959



(100%)



$

  ―  



  ―  



Restructuring charges

$

  ―  



$

631



(100%)



$

  ―  



  ―  



Incentive and stock-based compensation expense

$

4,768



$

4,380



9%



$

4,676



2%



Selling expenses

$

17,069



$

12,985



31%



$

16,311



5%



G&A expenses (excluding incentive and stock-based compensation

expenses and restructuring charges)

$

21,284



$

21,128



1%



$

20,965



2%



SG&A expenses

$

43,121



$

39,124



10%



$

41,952



3%



SG&A % from home sales



13.6%





16.2%



(2.6%)





15.3%



(1.7%)



































Net new orders



989





764



29%





1,108



(11%)



Average active selling communities



156





159



(2%)





157



(1%)



Monthly sales absorption rate per community



2.1





1.6



32%





2.4



(10%)



Cancellation rate



14%





16%



(2%)





11%



3%



Gross cancellations



161





144



12%





138



17%



Cancellations from current quarter sales



67





63



6%





72



(7%)



Backlog (homes)



1,394





848



64%





1,266



10%



Backlog (dollar value)

$

498,739



$

304,846



64%



$

439,694



13%



































Cash flows (uses) from operating activities

$

(72,418)



$

(78,464)



8%



$

(56,600)



(28%)



Cash flows (uses) from investing activities

$

(95,704)



$

4,254







$

(5,545)



(1,626%)



Cash flows (uses) from financing activities

$

348,696



$

21,884



1,493%



$

(11,638)







Land purchases (incl. seller financing and JV purchases) 

$

206,740



$

74,736



177%



$

96,584



114%



Adjusted Homebuilding EBITDA*

$

51,523



$

28,350



82%



$

41,810



23%



Adjusted Homebuilding EBITDA Margin %*



16.2%





11.7%



4.5%





15.2%



1.0%



Homebuilding interest incurred

$

36,112



$

35,273



2%



$

35,305



2%



Homebuilding interest capitalized to inventories owned

$

32,604



$

29,329



11%



$

31,876



2%



Homebuilding interest capitalized to investments in JVs

$

1,839



$

1,694



9%



$

1,812



1%



Interest amortized to cost of sales (incl. cost of land sales)

$

27,078



$

18,853



44%



$

24,465



11%



































































































 







As of 









September 30,



June 30,



Percentage



December 31,



Percentage









2012



2012



or % Change



2011



or % Change



Balance Sheet Data

(Dollars in thousands, except per share amounts)



































Homebuilding cash (including restricted cash)

$

499,572



$

317,242



57%



$

438,157



14%



Inventories owned

$

1,829,996



$

1,605,138



14%



$

1,477,239



24%



Homesites owned and controlled



30,154





27,757



9%





26,444



14%



Homes under construction



1,507





1,317



14%





940



60%



Completed specs



212





239



(11%)





383



(45%)



Deferred tax asset valuation allowance

$

488,490



$

499,701



(2%)



$

510,621



(4%)



Homebuilding debt

$

1,581,076



$

1,319,682



20%



$

1,324,948



19%



Stockholders' equity

$

760,017



$

656,624



16%



$

623,754



22%



Stockholders' equity per share (including if-converted 





























preferred stock)*

$

2.11



$

1.91



10%



$

1.82



16%



Total consolidated debt to book capitalization



68.5%





67.5%



1.0%





68.7%



(0.2%)



Adjusted net homebuilding debt to total adjusted 





























book capitalization*



58.7%





60.4%



(1.7%)





58.7%



0.0%



































































1All statistical numbers exclude unconsolidated joint ventures unless noted otherwise.
*Please see "Reconciliation of Non-GAAP Financial Measures" at the end of this release.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS























Three Months Ended
September 30,



Nine Months Ended
September 30,









2012



2011



2012



2011









(Dollars in thousands, except per share amounts)









(Unaudited)

Homebuilding:

























Home sale revenues

$

317,389



$

241,434



$

812,578



$

589,369



Land sale revenues



1,152





359





4,537





468





Total revenues



318,541





241,793





817,115





589,837



Cost of home sales



(253,344)





(203,188)





(647,525)





(486,933)



Cost of land sales



(1,092)





(359)





(4,458)





(473)





Total cost of sales



(254,436)





(203,547)





(651,983)





(487,406)







Gross margin



64,105





38,246





165,132





102,431







Gross margin %



20.1%





15.8%





20.2%





17.4%



Selling, general and administrative expenses



(43,121)





(39,124)





(122,765)





(109,828)



Loss from unconsolidated joint ventures



(39)





(455)





(2,707)





(1,091)



Interest expense



(1,669)





(4,250)





(5,816)





(22,209)



Other income (expense)



117





(1,948)





4,708





(679)







Homebuilding pretax income (loss)



19,393





(7,531)





38,552





(31,376)

Financial Services:

























Revenues



5,218





3,529





14,249





7,124



Expenses



(2,777)





(2,324)





(7,952)





(7,171)



Other income



70





42





217





98







Financial services pretax income



2,511





1,247





6,514





51

Income (loss) before income taxes



21,904





(6,284)





45,066





(31,325)

Provision for income taxes



(194)





(150)





(570)





(425)

Net income (loss)



21,710





(6,434)





44,496





(31,750)

  Less: Net (income) loss allocated to preferred shareholder



(9,100)





2,780





(18,980)





13,743

  Less: Net (income) loss allocated to unvested restricted stock



(22)





 ―   





(31)





 ―   

Net income (loss) available to common stockholders

$

12,588



$

(3,654)



$

25,485



$

(18,007)































Income (Loss) Per Common Share:

























Basic



$

0.06



$

(0.02)



$

0.13



$

(0.09)



Diluted

$

0.05



$

(0.02)



$

0.12



$

(0.09)































Weighted Average Common Shares Outstanding:

























Basic





204,485,294





194,311,129





198,469,130





193,686,614



Diluted



235,273,648





194,311,129





210,441,932





193,686,614































Weighted average additional common shares outstanding

























if preferred shares converted to common shares



147,812,786





147,812,786





147,812,786





147,812,786































Total weighted average diluted common shares outstanding

























if preferred shares converted to common shares



383,086,434





342,123,915





358,254,718





341,499,400

 

CONDENSED CONSOLIDATED BALANCE SHEETS































September 30,



December 31,













2012



2011













(Dollars in thousands)

ASSETS

(Unaudited)







Homebuilding:













Cash and equivalents

$

473,859



$

406,785



Restricted cash





25,713





31,372



Trade and other receivables



23,668





11,525



Inventories:



















Owned







1,829,996





1,477,239





Not owned





52,112





59,840



Investments in unconsolidated joint ventures



52,630





81,807



Deferred income taxes, net



2,366





5,326



Other assets







40,833





35,693







Total Homebuilding Assets



2,501,177





2,109,587

Financial Services:













Cash and equivalents



5,597





3,737



Restricted cash





1,920





1,295



Mortgage loans held for sale, net



88,136





73,811



Mortgage loans held for investment, net



9,652





10,115



Other assets







3,871





1,838







Total Financial Services Assets



109,176





90,796









Total Assets

$

2,610,353



$

2,200,383























LIABILITIES AND EQUITY











Homebuilding:













Accounts payable



$

16,458



$

17,829



Accrued liabilities





179,658





185,890



Secured project debt and other notes payable



11,600





3,531



Senior notes payable



1,529,863





1,275,093



Senior subordinated notes payable



39,613





46,324







Total Homebuilding Liabilities



1,777,192





1,528,667

Financial Services:













Accounts payable and other liabilities



2,109





1,154



Mortgage credit facilities



71,035





46,808







Total Financial Services Liabilities



73,144





47,962









Total Liabilities



1,850,336





1,576,629

Equity:













Stockholders' Equity:















Preferred stock, $0.01 par value; 10,000,000 shares 















    authorized; 450,829 shares issued and outstanding















    at September 30, 2012 and December 31, 2011



5





5





Common stock, $0.01 par value; 600,000,000 shares 















    authorized; 215,576,688 and 198,563,273 shares 















    issued and outstanding at September 30, 2012 and 















    and December 31, 2011, respectively



2,156





1,985





Additional paid-in capital



1,325,970





1,239,180





Accumulated deficit



(564,273)





(608,769)





Accumulated other comprehensive loss, net of tax



(3,841)





(8,647)







Total Equity



760,017





623,754









Total Liabilities and Equity

$

2,610,353



$

2,200,383























 

INVENTORIES























September 30,



December 31,









2012



2011









(Dollars in thousands)

Inventories Owned:







(Unaudited)



















     Land and land under development







$      1,301,857



$      1,036,829

     Homes completed and under construction







416,759



339,849

     Model homes







111,380



100,561

        Total inventories owned







$      1,829,996



$      1,477,239















Inventories Owned by Segment:



























     California







$      1,082,181



$         890,300

     Southwest







378,954



302,686

     Southeast







368,861



284,253

        Total inventories owned







$      1,829,996



$      1,477,239















 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



























Three Months Ended
September 30,



Nine Months Ended
September 30,











2012



2011



2012



2011











(Dollars in thousands)











(Unaudited)

Cash Flows From Operating Activities:

























Net income (loss)

$

21,710



$

(6,434)



$

44,496



$

(31,750)



Adjustments to reconcile net income (loss) to net cash 



























provided by (used in) operating activities:





























Amortization of stock-based compensation



1,559





2,635





4,518





8,094







Inventory impairment charges and deposit write-offs



 ―   





8,959





133





14,918







Other operating activities



1,798





1,343





5,838





3,901







Changes in cash and equivalents due to:































Trade and other receivables



(4,681)





(816)





(12,143)





(12,309)









Mortgage loans held for sale



(18,119)





(14,967)





(14,016)





(19,737)









Inventories - owned



(70,645)





(67,719)





(185,832)





(261,777)









Inventories - not owned



(7,191)





(4,859)





(10,690)





(17,659)









Other assets



999





(2,341)





922





(313)









Accounts payable



82





6,027





(1,371)





5,889









Accrued liabilities



2,070





(292)





(2,991)





166





Net cash provided by (used in) operating activities



(72,418)





(78,464)





(171,136)





(310,577)

































Cash Flows From Investing Activities:

























Investments in unconsolidated homebuilding joint ventures



(44,797)





(2,484)





(53,078)





(11,304)



Distributions of capital from unconsolidated joint ventures



10,145





7,737





11,940





7,786



Net cash paid for acquisitions



(60,752)





 ―   





(60,752)





 ―   



Other investing activities



(300)





(999)





(1,705)





(1,752)





Net cash provided by (used in) investing activities



(95,704)





4,254





(103,595)





(5,270)

































Cash Flows From Financing Activities:

























Change in restricted cash



(1,203)





3,757





5,034





(1,819)



Principal payments on secured project debt and other notes payable



(138)





(316)





(782)





(839)



Principal payments on senior subordinated notes payable



 ―   





 ―   





(9,990)





 ―   



Proceeds from the issuance of senior notes payable



253,000





 ―   





253,000





 ―   



Payment of debt issuance costs



(8,081)





 ―   





(8,081)





(4,575)



Net proceeds from (payments on) mortgage credit facilities



26,608





17,655





24,227





22,184



Proceeds from the issuance of common stock



75,849





 ―   





75,849





 ―   



Payment of common stock issuance costs



(3,913)





 ―   





(3,913)





 ―   



Proceeds from the exercise of stock options



6,574





788





8,321





874





Net cash provided by (used in) financing activities



348,696





21,884





343,665





15,825

































Net increase (decrease) in cash and equivalents



180,574





(52,326)





68,934





(300,022)

Cash and equivalents at beginning of period



298,882





483,675





410,522





731,371

Cash and equivalents at end of period

$

479,456



$

431,349



$

479,456



$

431,349

































Cash and equivalents at end of period

$

479,456



$

431,349



$

479,456



$

431,349

Homebuilding restricted cash at end of period



25,713





31,182





25,713





31,182

Financial services restricted cash at end of period



1,920





1,745





1,920





1,745

Cash and equivalents and restricted cash at end of period

$

507,089



$

464,276



$

507,089



$

464,276

































 

REGIONAL OPERATING DATA































Three Months Ended
September 30, 



Nine Months Ended
September 30, 













2012



2011



% Change



2012



2011



% Change

New homes delivered:



























California



363



295



23%



904



696



30%



Arizona





66



37



78%



176



115



53%



Texas





107



113



(5%)



368



285



29%



Colorado



33



25



32%



80



69



16%



Nevada





     ― 



2



(100%)



9



12



(25%)



Florida





151



120



26%



411



293



40%



Carolinas



141



105



34%



370



276



34%







Consolidated total



861



697



24%



2,318



1,746



33%



Unconsolidated joint ventures



14



13



8%



28



27



4%







Total (including joint ventures) 



875



710



23%



2,346



1,773



32%



































 











Three Months Ended
September 30, 



Nine Months Ended
September 30, 



















































































































































































































































































2012



2011



% Change



2012



2011



% Change



















































































































































































































































































(Dollars in thousands)









































































































































































































































































Average selling prices of homes delivered:











































































































































































































































































































California



$

505



$

496



2%



$

489



$

487



0%











































































































































































































































































Arizona





204





195



5%





206





204



1%











































































































































































































































































Texas





328





281



17%





307





290



6%











































































































































































































































































Colorado





399





307



30%





386





308



25%











































































































































































































































































Nevada





      ―  





192



--





192





194



(1%)











































































































































































































































































Florida





256





202



27%





244





200



22%











































































































































































































































































Carolinas





241





226



7%





238





225



6%















































































































































































































































































Consolidated





369





346



7%





351





338



4%











































































































































































































































































Unconsolidated joint ventures





450





356



26%





443





409



8%