Press Releases

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; execut ion 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%

 

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

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Each of the below measures are non-GAAP financial measures and other companies may calculate such non-GAAP measures differently.  Due to the significance of the GAAP components excluded, such measures should not be considered in isolation or as an alternative to operating performance measures prescribed by GAAP.

The table set forth below reconciles the Company's gross margin percentage from home sales to the gross margin percentage from home sales, excluding inventory impairment charges and interest amortized to cost of home sales.  We believe these measures are useful to management and investors as they provide perspective on the underlying operating performance of the business excluding these charges and provide comparability with the Company's peer group.

The table set forth below reconciles the Company's cash flows used in operations to cash inflows from operations excluding land purchases and development costs.  We believe this measure is useful to management and investors to provide perspective on underlying cash flow generation excluding swings related to the timing of land purchases and development costs.

The table set forth below calculates EBITDA and Adjusted Homebuilding EBITDA.  Adjusted Homebuilding EBITDA means net income (loss) (plus cash distributions of income from unconsolidated joint ventures) before (a) income taxes, (b) homebuilding interest expense (c) expensing of previously capitalized interest included in cost of sales, (d) impairment charges and deposit write-offs, (e) (gain) loss on early extinguishment of debt (f) homebuilding depreciation and amortization, (g) amortization of stock-based compensation, (h) income (loss) from unconsolidated joint ventures and (i) income (loss) from financial services subsidiary.  Other companies may calculate Adjusted Homebuilding EBITDA (or similarly titled measures) differently.  We believe Adjusted Homebuilding EBITDA information is useful to management and investors as one measure of the Company's ability to service debt and obtain financing.  Adjusted Homebuilding EBITDA is a non-GAAP financial measure and due to the significance of the GAAP components excluded, should not be considered in isolation or as an alternative to net income, cash flow from operations or any other operating or liquidity performance measure prescribed by GAAP.

The table set forth below reconciles net cash provided by (used in) operating activities, calculated and presented in accordance with GAAP, to Adjusted Homebuilding EBITDA:

The table set forth below reconciles the Company's total consolidated debt to adjusted net homebuilding debt and provides the Company's total consolidated debt to book capitalization and adjusted net homebuilding debt to total adjusted book capitalization ratios.  We believe that the adjusted net homebuilding debt to total adjusted book capitalization ratio is useful to management and investors as a measure of the Company's ability to obtain financing.  For purposes of the ratio of adjusted net homebuilding debt to total adjusted book capitalization, total adjusted book capitalization is adjusted net homebuilding debt plus stockholders' equity.  Adjusted net homebuilding debt excludes indebtedness of the Company's financial services subsidiary and additionally reflects the offset of cash and equivalents.

The table set forth below calculates pro forma stockholders' equity per common share.  The pro forma common shares outstanding include common shares issuable upon conversion of our outstanding Series B Preferred Stock, and excludes 3.9 million shares issued under a share lending agreement related to the Company's 6% Convertible Senior Subordinated Notes.  The Company believes that the pro forma stockholders' equity per common share information is useful to management and investors as a measure to determine the book value per common share after giving effect to the conversion of our outstanding preferred shares assuming full conversion to common stock and excluding shares outstanding under the share lending agreement.

 

SOURCE Standard Pacific Corp.