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%








































































































































Total (including joint ventures)


$

370


$

347


7%


$

352


$

339


4%