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Standard Pacific Corp. Reports 2009 Second Quarter Results
IRVINE, Calif., July 22, 2009 /PRNewswire-FirstCall/ -- Standard Pacific Corp. (NYSE: SPF) today announced operating results for its second quarter ended June 30, 2009. Homebuilding revenues from continuing operations for the 2009 second quarter were $289.7 million, down 29% from $410.6 million last year. The Company generated a net loss of $23.1 million, or $0.10 per diluted share, versus a net loss of $249.0 million, or $3.44 per diluted share, for the year earlier period. The 2009 second quarter results included asset impairment charges of $21.3 million, of which $13.1 million related to real estate inventories and $8.2 million related to a joint venture. Impairment related charges for the 2008 second quarter totaled $149.2 million. The 2009 second quarter results also included $5.5 million in restructuring charges and an $8.9 million charge related to the Company's deferred tax asset valuation allowance. Excluding asset impairment and restructuring charges, the Company generated 2009 second quarter net income of approximately $2.2 million*, or $0.01 per diluted share.*
During the quarter the Company generated $68.6 million of cash flows from operating activities, driven primarily from a $95.3 million decrease in inventories that was largely attributable to a 48% reduction in the number of completed spec homes (excluding podium projects). These cash flows were partially offset by other changes in working capital. The Company reduced its homebuilding debt during the quarter by $136.0 million (after assuming $25.2 million of secured project debt in connection with a joint venture unwind) and ended the quarter with $573.0 million of homebuilding cash (including $4.2 million of restricted cash). The debt reduction was driven primarily by the repayment of the remaining $124.6 million balance of the Company's 5 1/8% senior notes and the repayment of $10.0 million of credit facility indebtedness. The Company's homebuilding restricted cash balance decreased by $120.8 million during the quarter as a result of the Company meeting its bank credit facility cash flow coverage requirement.
The Company's 2009 second quarter selling, general and administrative ("SG&A") expenses decreased $33.1 million, or 42%, from the year earlier period resulting in an SG&A rate of 15.9% versus 19.3% in the prior year period. Excluding restructuring charges, the Company's 2009 second quarter SG&A rate was 14.3%* versus 19.1%* for the 2008 second quarter despite a 29% decrease in revenues.
Ken Campbell, President and CEO stated, "We are pleased with the progress we have made to date, particularly with respect to reducing our SG&A - both in absolute dollars and as a percent of revenues. Our SG&A reductions demonstrate our ability to vary our costs in line with our sales volumes, a capability that may get tested further if the recession continues for an extended period of time. We are also pleased with the $69 million of cash flows generated from operations during the quarter that resulted largely from the reduction of our completed spec inventory levels and improved order and delivery activity. These were improvements we told investors we were going to make, so I guess it's not a big surprise, but all of us here at Standard Pacific feel good about our progress to date."
Mr. Campbell added, "While we still obviously have not achieved the level of profitability that we ultimately need, we are a lot closer than we were a couple of quarters ago and believe that we are in pretty good shape in the short run because of our higher backlog level. However, if we need to adjust further, we will."
Homebuilding Operations
The Company generated a homebuilding pretax loss from continuing operations for the 2009 second quarter of $24.3 million compared to a pretax loss of $185.9 million in the year earlier period. The Company's homebuilding pretax loss from continuing operations for the 2009 second quarter included $21.3 million of asset impairment charges and $5.3 million in restructuring charges. The decrease in pretax loss was primarily the result of a $127.9 million decrease in impairment charges, a $33.1 million decrease in the Company's SG&A expenses (which included approximately $4.6 million in restructuring charges related to severance and facilities reductions), a $12.2 million decrease in joint venture loss and a $13.0 million decrease in other expense. These changes were partially offset by a 29% decrease in homebuilding revenues to $289.7 million (due to a 24% decrease in new home deliveries to 942 homes and an 8% decline in our consolidated average home price to $302,000) and the expensing of $11.7 million of non-capitalized interest expense during the 2009 second quarter.
Gross Margin
The Company's homebuilding gross margin percentage from continuing operations (including land sales) for the 2009 second quarter was 13.5% compared to a negative 18.5% in the prior year period. The 2009 second quarter gross margin included $13.1 million in inventory impairment charges related to 10 projects. The impairments, which were included in cost of sales, related primarily to four projects in California totaling $8.2 million. Excluding the housing inventory impairment charges from continuing operations, the Company's 2009 second quarter gross margin from home sales would have been 18.5%* versus 12.9%* for the 2008 second quarter. The 560 basis point increase in the year-over-year adjusted gross margin was driven primarily by higher margins in California and lower direct construction costs as a result of value engineering and the rebidding of contracts. These factors were partially offset by lower home prices.
Restructuring
The Company's 2009 second quarter results included approximately $5.3 million in homebuilding restructuring charges related to severance ($3.0 million) and lease terminations and fixed asset write offs ($2.3 million), of which approximately $4.6 million was included in the Company's SG&A expenses and $0.7 million in other expense. Since December 31, 2008, the Company has reduced its total headcount by 33%, or 425 employees.
Net New Orders and Backlog
Net new orders (excluding joint ventures and discontinued operations) for the 2009 second quarter decreased 6% from the 2008 second quarter to 1,169 new homes on a 29% decrease in the number of average active selling communities from the prior year period. The Company's cancellation rate for the three months ended June 30, 2009 was 16%, down from 24% for the 2009 first quarter and 25% for the 2008 second quarter. The Company's sales absorption rate for the 2009 second quarter was 2.7 per month per community, up from the prior year second quarter rate of 2.0 per month per community, and up from 1.5 per month per community for the 2009 first quarter. The improvement in the Company's sales absorption rate during the quarter as compared to the 2008 second quarter was due to increases in most of its markets on a per community basis with absorption rates particularly stronger in California and Arizona.
As a result of the improved order trends experienced during the 2009 second quarter, the dollar value of the Company's backlog (excluding joint ventures) increased 45% from the 2009 first quarter to $308.5 million, or 982 homes.
Joint Ventures
During the 2009 second quarter the Company unwound one Southern California joint venture for a $1.1 million cash payment and the assumption of approximately $25.2 million of secured project debt. The Company also made a $9.1 million loan remargin payment related to another Southern California joint venture. As of June 30, 2009, the Company's unconsolidated joint ventures had $361.1 million in outstanding borrowings, $112.1 million of which were recourse to the Company, and remaining land takedown obligations of approximately $21.1 million related to a single unconsolidated joint venture. In addition, the Company recorded an $8.2 million impairment charge during the quarter related to its remaining investment in its North Las Vegas joint venture.
Income Taxes
The Company recorded a noncash valuation allowance of $8.9 million against the net deferred tax asset created as a result of the net loss generated during the three months ended June 30, 2009. As of June 30, 2009, the total deferred tax valuation allowance was $682.2 million.
*Please see "Reconciliation of Non-GAAP Financial Measures" on page 10.
KEY STATISTICS AND FINANCIAL DATA**
As of or For The Three Months Ended
% or % or
June 30, June 30, Percentage March 31, Percentage
2009 2008 Change 2009 Change
(Dollars in thousands, except average selling price)
Operating Data:
Deliveries (1) 942 1,237 (24%) 687 37%
Average selling
price (1) $302,000 $327,000 (8%) $300,000 1%
Homebuilding
revenues $289,672 $410,634 (29%) $209,535 38%
Gross margin % 13.5% (18.5%) 32.0% 3.9% 9.6%
Gross margin % from
home sales (excluding
impairments) 18.5% 12.9% 5.6% 17.4% 1.1%
Impairments $21,270 $149,185 (86%) $30,805 (31%)
Restructuring
charges $5,504 $913 503% $14,119 (61%)
SG&A % 15.9% 19.3% (3.4%) 25.0% (9.1%)
SG&A % (excluding
restructuring
charges) 14.3% 19.1% (4.8%) 19.3% (5.0%)
Net new orders (1) 1,169 1,241 (6%) 734 59%
Monthly sales
absorption rate per
community (1) 2.7 2.0 35% 1.5 80%
Cancellation rate (1) 16% 25% (9%) 24% (8%)
Average active selling
communities (1) 144 203 (29%) 158 (9%)
Backlog (homes) (1) 982 1,515 (35%) 689 43%
Backlog (dollar
value) (1) $308,540 $522,484 (41%) $212,208 45%
Cash flows (uses)
from operating
activities $68,595 $(62,852) (209%) $128,998 (47%)
Cash flows (uses)
from investing
activities $(10,128) $18,923 (154%) $(1,500) 575%
Cash flows (uses)
from financing
activities $(32,681) $278,151 (112%) $(204,723) (84%)
Land purchases, net $7,857 $19,819 (60%) $680 1055%
Adjusted Homebuilding
EBITDA (2) $33,139 $(10,859) (405%) $7,260 356%
As of
% or % or
June 30, March 31, Percentage December 31, Percentage
2009 2009 Change 2008 Change
(Dollars in thousands, except per share amounts)
Balance Sheet Data:
Homebuilding cash
(including
restricted
cash) $573,038 $668,300 (14%) $626,379 (9%)
Inventories
owned $1,115,556 $1,195,483 (7%) $1,262,521 (12%)
Building sites
owned or
controlled 22,012 22,775 (3%) 24,136 (9%)
Homes under
Construction (1) 1,041 999 4% 1,326 (21%)
Completed specs
(excluding podium
projects) (1) 258 500 (48%) 589 (56%)
Completed specs -
podium projects (1) 193 104 86% - -
Deferred tax asset
valuation
allowance $682,186 $673,274 1% $654,107 4%
Homebuilding
debt $1,275,300 $1,411,290 (10%) $1,486,437 (14%)
Joint venture
recourse debt $112,141 $157,492 (29%) $173,894 (36%)
Stockholders'
equity $346,512 $361,028 (4%) $407,941 (15%)
Stockholders'
equity per share
(including
as-converted
preferred stock) (3) $1.44 $1.50 (4%) $1.70 (15%)
Total debt to book
capitalization (4) 79.3% 80.2% (0.9%) 79.2% 0.1%
Adjusted net
homebuilding debt
to book
capitalization (5) 67.1% 67.4% (0.3%) 68.0% (0.9%)
**Please see "Notes to Key Statistics and Financial Data" beginning on
page 11.
Earnings Conference Call
A conference call to discuss the Company's 2009 second quarter will be held at 1:00 p.m. Eastern Time Thursday, July 23, 2009. The call will be broadcast live over the Internet and can be accessed through the Company's website at http://standardpacifichomes.com/ir" style="color:0000FF;">http://standardpacifichomes.com/ir. The call will also be accessible via telephone by dialing (888) 791-4315 (domestic) or (913) 981-5567 (international); Passcode: 5410511. The entire audio transmission with the synchronized 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: 5410511.
About Standard Pacific
Standard Pacific, one of the nation's largest homebuilders, has built more than 105,000 homes during its 43-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, Colorado and Nevada. The Company provides mortgage financing and title services to its homebuyers through Standard Pacific Mortgage and SPH Title. 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: our ability to align our cost structure with demand for new homes; trends in new home orders and deliveries; our progress toward achieving profitability; and orders and backlog. 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 of 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 credit agreements, public notes, and private term loans and our ability to comply with their covenants and repay such debt as it comes due; a negative change 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, 2008 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:
John Stephens, SVP & CFO (949) 789-1641, jstephens@stanpac.com or
Lloyd McKibbin, SVP & Treasurer (949) 789-1603, lmckibbin@stanpac.com
(Note: Tables follow)
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(2008 as Adjusted(1))
Three Months Ended June 30, Six Months Ended June 30,
2009 2008 % Change 2009 2008 % Change
(Dollars in thousands, except per share amounts)
Homebuilding:
Home sale
revenues $284,206 $404,678 (30%) $490,439 $750,666 (35%)
Land sale
revenues 5,466 5,956 (8%) 8,768 8,211 7%
Total
revenues 289,672 410,634 (29%) 499,207 758,877 (34%)
Cost of
home
sales (244,868) (479,690) (49%) (441,570) (914,032) (52%)
Cost of
land
sales (5,696) (6,834) (17%) (10,431) (38,329) (73%)
Total
cost of
sales (250,564) (486,524) (48%) (452,001) (952,361) (53%)
Gross
margin 39,108 (75,890) (152%) 47,206 (193,484) (124%)
Gross
margin % 13.5% (18.5%) 9.5% (25.5%)
Selling,
general and
administrative
expenses (46,026) (79,135) (42%) (98,405) (158,579) (38%)
Loss from
unconsolidated
joint
ventures (5,578) (17,817) (69%) (2,489) (38,385) (94%)
Interest
expense (11,735) - - (22,776) - -
Other
income
(expense) (61) (13,098) (100%) 4,363 (12,543) (135%)
Homebuilding
pretax
loss (24,292) (185,940) (87%) (72,101) (402,991) (82%)
Financial
Services:
Revenues 4,283 2,164 98% 6,333 8,405 (25%)
Expenses (3,261) (3,514) (7%) (6,256) (7,957) (21%)
Income
from
unconsolidated
joint
ventures 119 172 (31%) 119 375 (68%)
Other income 48 53 (9%) 89 111 (20%)
Financial
services
pretax
income
(loss) 1,189 (1,125) (206%) 285 934 (69%)
Loss from
continuing
operations
before
income
taxes (23,103) (187,065) (88%) (71,816) (402,057) (82%)
Provision for
income taxes (10) (61,186) (100%) (265) (61,870) (100%)
Loss from
continuing
operations (23,113) (248,251) (91%) (72,081) (463,927) (84%)
Loss from
discontinued
operations, net
of income
taxes (20) (745) (97%) (524) (1,936) (73%)
Net loss (23,133) (248,996) (91%) (72,605) (465,863) (84%)
Less: Net
loss
allocated
to preferred
stockholders 14,191 - - 44,573 - -
Net loss
available
to common
stockholders $(8,942) $(248,996) (96%) $(28,032) $(465,863) (94%)
Basic loss
per share:
Continuing
operations $(0.10) $(3.43) (97%) $(0.30) $(6.41) (95%)
Discontinued
operations - (0.01) (100%) - (0.03) (100%)
Basic loss
per share $(0.10) $(3.44) (97%) $(0.30) $(6.44) (95%)
Diluted loss
per share:
Continuing
operations $(0.10) $(3.43) (97%) $(0.30) $(6.41) (95%)
Discontinued
operations - (0.01) (100%) - (0.03) (100%)
Diluted loss
per share $(0.10) $(3.44) (97%) $(0.30) $(6.44) (95%)
Weighted average
common shares
outstanding:
Basic 93,134,612 72,418,288 29% 92,959,116 72,361,505 28%
Diluted 240,947,398 72,418,288 233% 240,771,902 72,361,505 233%
(1) Certain 2008 amounts have been retroactively adjusted to reflect the
adoption of APB No. 14-1, "Accounting for Convertible Debt
Instruments That May be Settled in Cash upon Conversion (Including
Partial Cash Settlement)."
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(2008 as Adjusted(1))
June 30, December 31,
2009 2008
ASSETS (unaudited)
Homebuilding:
Cash and equivalents $568,816 $622,157
Restricted cash 4,222 4,222
Trade and other receivables 19,831 21,008
Inventories:
Owned 1,115,556 1,262,521
Not owned 35,815 42,742
Investments in unconsolidated joint
ventures 50,850 50,468
Deferred income taxes 10,715 14,122
Other assets 22,990 145,567
1,828,795 2,162,807
Financial Services:
Cash and equivalents 5,583 3,681
Restricted cash 2,745 4,295
Mortgage loans held for sale 58,393 63,960
Mortgage loans held for investment 10,337 11,736
Other assets 5,964 4,792
83,022 88,464
Assets of discontinued operations 331 1,217
Total Assets $1,912,148 $2,252,488
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable $22,301 $40,225
Accrued liabilities 182,509 216,418
Liabilities from inventories not owned 24,409 24,929
Revolving credit facility 22,870 47,500
Secured project debt and other notes
payable 95,960 111,214
Senior notes payable 1,030,702 1,204,501
Senior subordinated notes payable 125,768 123,222
1,504,519 1,768,009
Financial Services:
Accounts payable and other liabilities 2,298 3,657
Mortgage credit facilities 55,640 63,655
57,938 67,312
Liabilities of discontinued operations 1,114 1,331
Total Liabilities 1,563,571 1,836,652
Equity:
Stockholders' Equity:
Preferred stock, $0.01 par value;
10,000,000 shares authorized; 450,829
shares issued and outstanding at
June 30, 2009 and December 31, 2008,
respectively 5 5
Common stock, $0.01 par value;
600,000,000 shares authorized;
101,110,072 and 100,624,350 shares
issued and outstanding at June 30, 2009
and December 31, 2008, respectively 1,011 1,006
Additional paid-in capital 1,002,227 996,492
Accumulated deficit (639,447) (566,842)
Accumulated other comprehensive loss,
net of tax (17,284) (22,720)
Total Stockholders' Equity 346,512 407,941
Noncontrolling Interests 2,065 7,895
Total Equity 348,577 415,836
Total Liabilities and Equity $1,912,148 $2,252,488
(1) Certain 2008 amounts have been retroactively adjusted to reflect the
adoption of APB No. 14-1, "Accounting for Convertible Debt
Instruments That May be Settled in Cash upon Conversion (Including
Partial Cash Settlement)."
REGIONAL OPERATING DATA
Three Months Ended June 30,
2009 2008 % Change
New homes delivered:
California 383 469 (18%)
Arizona 62 149 (58%)
Texas (1) 118 176 (33%)
Colorado 46 72 (36%)
Nevada 6 12 (50%)
Florida 208 224 (7%)
Carolinas 119 135 (12%)
Consolidated total 942 1,237 (24%)
Unconsolidated joint ventures 58 57 2%
Discontinued operations - 46 (100%)
Total (including joint
ventures) 1,000 1,340 (25%)
Average selling prices of homes
delivered:
California $403,000 $442,000 (9%)
Arizona 203,000 236,000 (14%)
Texas (1) 293,000 280,000 5%
Colorado 303,000 374,000 (19%)
Nevada 222,000 280,000 (21%)
Florida 195,000 215,000 (9%)
Carolinas 224,000 258,000 (13%)
Consolidated (excluding
joint ventures) 302,000 327,000 (8%)
Unconsolidated joint ventures 513,000 468,000 10%
Total continuing operations
(including joint ventures) $314,000 $333,000 (6%)
Discontinued operations
(including joint ventures) $- $195,000 (100%)
Three Months Ended June 30,
% Change
% Same
2009 2008 Change Store
Net new orders:
California 499 488 2% 33%
Arizona 116 139 (17%) 48%
Texas (1) 131 164 (20%) 33%
Colorado 32 39 (18%) 9%
Nevada 8 12 (33%) 0%
Florida 249 252 (1%) 45%
Carolinas 134 147 (9%) 14%
Consolidated total 1,169 1,241 (6%) 33%
Unconsolidated joint ventures 89 69 29% 93%
Discontinued operations - 25 (100%) -
Total (including joint ventures) 1,258 1,335 (6%) 35%
Average number of selling
communities during the period:
California 53 69 (23%)
Arizona 9 16 (44%)
Texas (1) 18 30 (40%)
Colorado 6 8 (25%)
Nevada 2 3 (33%)
Florida 32 47 (32%)
Carolinas 24 30 (20%)
Consolidated total 144 203 (29%)
Unconsolidated joint ventures 8 12 (33%)
Discontinued operations - 2 (100%)
Total (including joint ventures) 152 217 (30%)
(1) Texas excludes the San Antonio division, which is classified as a
discontinued operation.
At June 30,
Backlog 2009 2008 % Change
($in Dollar Dollar Dollar
thousands): Homes Value Homes Value Homes Value
California 381 $164,807 479 $247,050 (20%) (33%)
Arizona 98 21,144 172 42,212 (43%) (50%)
Texas (1) 123 37,618 267 82,098 (54%) (54%)
Colorado 63 19,432 111 38,681 (43%) (50%)
Nevada 4 917 21 6,037 (81%) (85%)
Florida 207 39,843 313 68,688 (34%) (42%)
Carolinas 106 24,779 152 37,718 (30%) (34%)
Consolidated
total 982 308,540 1,515 522,484 (35%) (41%)
Unconsolidated
joint
ventures 22 17,706 66 46,201 (67%) (62%)
Discontinued
operations - - 6 1,183 (100%) (100%)
Total (including
joint
ventures) 1,004 $326,246 1,587 $569,868 (37%) (43%)
(1) Texas excludes the San Antonio division, which is classified as a
discontinued operation.
At June 30,
2009 2008 % Change
Building sites owned or controlled:
Building sites owned 17,508 21,000 (17%)
Building sites optioned or subject
to contract 2,413 3,843 (37%)
Joint venture lots 2,089 4,272 (51%)
Total continuing operations
(including joint ventures) 22,010 29,115 (24%)
Discontinued operations 2 20 (90%)
Total 22,012 29,135 (24%)
Total homes under construction
(including specs):
Consolidated (excluding podium
projects) 1,041 2,248 (54%)
Podium projects - 134 (100%)
Total consolidated 1,041 2,382 (56%)
Spec homes under construction:
Consolidated (excluding podium projects) 480 1,009 (52%)
Podium projects - 134 (100%)
Total consolidated 480 1,143 (58%)
Completed and unsold homes:
Consolidated (excluding podium projects) 258 421 (39%)
Podium projects 193 - -
Total consolidated 451 421 7%
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
The table set forth below reconciles the Company's earnings (loss) for
the three months ended June 30, 2009 and 2008 to earnings (loss)
excluding the after-tax impairment, restructuring and deferred tax
asset valuation charges:
Three Months Ended June 30,
2009 2008
(Dollars in thousands,
except per share amounts)
Net income (loss) $(23,133) $(248,996)
Add: Impairment charges, net of
income taxes 13,081 93,539
Add: Restructuring charges, net of
income taxes 3,384 572
Add: Deferred tax asset charge 8,912 130,871
Add: Loss on early extinguishment of debt - 9,144
Net income (loss), as adjusted $2,244 $(14,870)
Diluted earnings (loss) per share $0.01 $(0.21)
Diluted shares outstanding 240,947,398 72,418,288
The table set forth below reconciles the Company's homebuilding gross
margin percentage and gross margin percentage from home sales for the
three months ended June 30, 2009 and 2008, and March 31, 2009, excluding
housing inventory impairment charges:
Three Months Ended
June 30, Gross June 30, Gross March 31, Gross
2009 Margin % 2008 Margin % 2009 Margin %
(Dollars in thousands)
Homebuilding
gross margin $39,108 13.5% $(75,890) (18.5%) $8,098 3.9%
Less: Land sale
revenues (5,466) (5,956) (3,302)
Add: Cost of
land sales 5,696 6,834 4,735
Gross margin from
home sales 39,338 13.8% (75,012) (18.5%) 9,531 4.6%
Add: Housing
inventory
impairment
charges 13,129 127,386 26,332
Gross margin
from home sales,
as adjusted $52,467 18.5% $52,374 12.9% $35,863 17.4%
The table set forth below reconciles the Company's SG&A rate for the
three months ended June 30, 2009 and 2008, and March 31, 2009 to the
SG&A rate excluding restructuring charges:
Three Months Ended
June 30, June 30, March 31,
2009 SG&A% 2008 SG&A% 2009 SG&A%
(Dollars in thousands)
Selling,
general and
administrative
expenses $46,026 15.9% $79,135 19.3% $52,379 25.0%
Less:
Restructuring
charges (4,650) (1.6%) (569) (0.2%) (12,001) (5.7%)
Selling,
general and
administrative
expenses,
excluding
restructuring
charges $41,376 14.3% $78,566 19.1% $40,378 19.3%
We believe that the measures described above, which exclude the effect
of impairment, tax valuation and restructuring charges, and loss on early
extinguishment of debt, are useful to investors as they provide investors
with a perspective on the underlying operating performance of the
business by isolating the impact of charges related to impairments, tax
valuation and restructuring charges, and loss on early extinguishment of
debt. However, it should be noted that such measures are not GAAP
financial measures. 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.
NOTES TO KEY STATISTICS AND FINANCIAL DATA
(1) Excludes unconsolidated joint ventures and discontinued operations.
(2) 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, (e) homebuilding depreciation and amortization,
(f) amortization of stock-based compensation, (g) income (loss) from
unconsolidated joint ventures and (h) 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
investors as one measure of the Company's ability to service debt and
obtain financing. However, it should be noted that Adjusted
Homebuilding EBITDA is not a U.S. generally accepted accounting
principles ("GAAP") financial measure. Due to the significance of
the GAAP components excluded, Adjusted Homebuilding EBITDA 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.
For the three and twelve months ended June 30, 2009 and 2008, and
three months ended March 31, 2009, EBITDA and Adjusted Homebuilding
EBITDA from continuing and discontinued operations was calculated as
follows:
Three Months Ended LTM Ended June 30,
June 30, June 30, March 31,
2009 2008 2009 2009 2008
(Dollars in thousands)
Net income (loss) $(23,133) $(248,996) $(49,472) $(840,357) $(1,026,533)
Provision
(benefit) for
income taxes - 60,769 - (67,564) 390
Homebuilding
interest amortized
to cost of sales
and interest
expense 33,590 20,689 25,718 123,606 115,876
Homebuilding
depreciation and
amortization 711 1,613 824 4,122 7,326
Amortization of
stock-based
compensation 4,079 1,002 1,529 11,560 18,674
EBITDA 15,247 (164,923) (21,401) (768,633) (884,267)
Add:
Cash distributions
of income from
unconsolidated
joint ventures 326 185 - 1,759 7,155
Impairment charges 13,129 134,884 30,805 741,025 844,582
Less:
Income (loss)
from unconsolidated
joint ventures (5,459) (17,645) 3,089 (115,235) (156,502)
Income (loss) from
financial services
subsidiary 1,022 (1,350) (945) (443) (269)
Adjusted Homebuilding
EBITDA $33,139 $(10,859) $7,260 $89,829 $124,241
The table set forth below reconciles net cash provided by (used in)
operating activities, from continuing and discontinued operations,
calculated and presented in accordance with GAAP, to Adjusted
Homebuilding EBITDA:
Three Months Ended LTM Ended June 30,
June 30, June 30, March 31,
2009 2008 2009 2009 2008
(Dollars in thousands)
Net cash provided by
(used in) operating
activities $68,595 $(62,852) $128,998 $294,714 $499,385
Add:
Provision
(benefit) for
income taxes - 60,769 - (67,564) 390
Deferred tax
valuation
allowance (8,913) (130,871) (19,167) (287,090) (395,097)
Homebuilding
interest
amortized to
cost of sales
and interest
expense 33,590 20,689 25,718 123,606 115,876
Excess tax
benefits from
share-based
payment
arrangements - - - - 28
Gain (loss) on
early
extinguishment
of debt 55 (9,144) 5,333 5,388 (5,254)
Less:
Income (loss)
from financial
services
subsidiary 1,022 (1,350) (945) (443) (269)
Depreciation and
amortization from
financial services
subsidiary 171 203 175 719 832
Loss on disposal
of property and
equipment 675 - 663 4,130 1,439
Net changes in
operating assets
and liabilities:
Trade and other
receivables (7,666) 396 6,393 (11,654) (1,230)
Mortgage loans
held for sale 8,854 (9,020) (15,799) 10,478 (36,850)
Inventories-
owned (95,734) 49,968 (41,822) (258,149) (214,539)
Inventories-not
owned 460 29 678 115 (5,554)
Deferred income
taxes 8,913 26,108 19,167 284,877 122,638
Other assets 1,599 32,910 (120,274) (78,323) 14,615
Accounts payable 10,336 3,340 7,793 44,681 14,126
Accrued
liabilities 14,918 5,672 10,135 33,156 17,709
Adjusted Homebuilding
EBITDA $33,139 $(10,859) $7,260 $89,829 $124,241
(3) The pro forma common shares outstanding include the as-converted
Series B Preferred Stock. In addition, this calculation excludes
7.8 million shares issued under a share lending agreement related
to the Company's 6% Convertible Senior Subordinated Notes issued on
September 28, 2007. The Company believes that the pro forma
stockholders' equity per common share information is useful to
investors as a measure to determine the book value per common share
after giving effect of the issuance of Preferred Shares assuming full
conversion to common stock and excluding shares outstanding under
the share lending agreement. This is a non-GAAP financial measure
and due to the significance of items adjusted and excluded from this
calculation, such measure should not be considered in isolation or as
an alternative to operating performance measures. The following
table reconciles actual common shares outstanding to pro forma
common shares outstanding and calculates pro forma stockholders'
equity per share:
June 30, March 31, December 31,
2009 2009 2008
Actual common shares
outstanding 101,110,072 100,851,622 100,624,350
Add: Conversion of
Preferred shares to
common shares 147,812,786 147,812,786 147,812,786
Less: Common shares
outstanding under share
lending facility (7,839,809) (7,839,809) (7,839,809)
Pro forma common shares
outstanding 241,083,049 240,824,599 240,597,327
Stockholders' equity
(actual amounts
rounded to nearest
thousand) $346,512,000 $361,028,000 $407,941,000
Divided by pro forma
common shares
outstanding / 241,083,049 / 240,824,599 / 240,597,327
Pro forma stockholders'
equity per common share $1.44 $1.50 $1.70
(4) Total debt at June 30, 2009, March 31, 2009 and December 31, 2008
includes $55.6 million, $46.9 million and $63.7 million,
respectively, of indebtedness of the Company's financial services
subsidiary.
(5) Adjusted net homebuilding debt excludes indebtedness of the Company's
financial services subsidiary and additionally reflects the offset of
cash and equivalents in excess of $5 million. We believe that the
adjusted net homebuilding debt to total book capitalization ratio is
useful to investors as a measure of the Company's ability to obtain
financing. This is a non-GAAP ratio and other companies may calculate
this ratio differently. For purposes of the ratio of adjusted net
homebuilding debt to total book capitalization, total book
capitalization is adjusted net homebuilding debt plus stockholders'
equity. Adjusted net homebuilding debt is calculated as follows:
June 30, March 31, December 31,
2009 2009 2008
(Dollars in thousands)
Total consolidated debt $1,330,940 $1,458,230 $1,550,092
Less:
Financial services
indebtedness (55,640) (46,940) (63,655)
Homebuilding cash in
excess of $5 million (568,038) (663,300) (621,386)
Adjusted net homebuilding
debt $707,262 $747,990 $865,051
SOURCE Standard Pacific Corp.