Standard Pacific Corp. Reports 2012 Fourth Quarter and Full Year Results Q4 2012 Net Income of $486.9 million, or $1.22 per diluted share

Q4 2012 Net New Orders up 60% and Backlog up 106% vs. Q4 2011

IRVINE, Calif., Jan. 31, 2013 /PRNewswire/ -- Standard Pacific Corp. (NYSE: SPF) today announced results for the fourth quarter and year ended December 31, 2012.

2012 Fourth Quarter Highlights and Comparisons to the 2011 Fourth Quarter

  • Net income of $486.9 million, or $1.22 per diluted share, vs. $15.3 million, or $0.04 per diluted share
    • Diluted earnings per share of $0.08*, excluding $454 million deferred tax asset valuation allowance reversal
  • Net new orders of 983, up 60%
  • Backlog of 1,404 homes, up 106%; Dollar value of backlog up 122%
  • 150 average active selling communities, down 6%
    • 156 active selling communities at year end
  • Homebuilding revenues up 43%
    • Average selling price of $388 thousand, up 4%
    • 973 new home deliveries, up 24%
  • Gross margin from home sales of 20.8%, compared to 20.4%
  • SG&A rate from home sales of 13.1%, a 210 basis point improvement
  • $267.6 million of land purchases and development costs compared to $86.3 million
  • Adjusted Homebuilding EBITDA of $68.8 million*, or 16.4%* of homebuilding revenues, compared to $42.8 million*, or 14.6%* of homebuilding revenues
  • Homebuilding cash balance of $367 million

2012 Fiscal Year Highlights and Comparisons to Fiscal Year 2011

  • Net income of $531.4 million, or $1.44 per diluted share, vs. net loss of $16.4 million, or $0.05 per share
    • Diluted earnings per share of $0.21*, excluding $454 million deferred tax asset valuation allowance reversal
  • Net new orders of 4,014, up 44%
  • Homebuilding revenues of $1,237.0 million, up 40% from $883.0 million
    • Average selling price of $362 thousand, up 4%
    • 3,291 new home deliveries, up 30%
  • Gross margin from home sales of 20.5%, compared to 18.4%
  • SG&A rate from home sales of 14.5%, compared to 17.5%
  • Operating cash outflows of $283.1 million vs. $322.6 million
    • Excluding land purchases and development costs, cash inflows of $322.1 million* vs. $114.5 million*
  • Adjusted Homebuilding EBITDA of $193.9 million*, or 15.7%* of homebuilding revenues, compared to $105.9 million*, or 12.0%* of homebuilding revenues

Scott Stowell, the Company's Chief Executive Officer and President commented, "I am proud of our strong 2012 financial performance, which is proof of both the significant progress we've made executing our strategy and the lift we've experienced from the beginning of a real market recovery.  With our backlog up 106% year over year and the solid demand we have experienced during the first month of 2013, we are off to a good start on what we expect to be a strong 2013."

Revenues from home sales for the 2012 fourth quarter increased 29%, to $377.7 million, as compared to the prior year period, resulting primarily from a 24% increase in new home deliveries and a 4% increase in the Company's consolidated average home price to $388 thousand.  The increase in average home price was primarily attributable to price increases within most of the Company's markets.  The increase in new home deliveries was driven by a 64% 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 fourth quarter increased to 20.8% compared to 20.4% (19.4%* excluding a $2.9 million benefit related to a reduction in the Company's warranty accrual) in the prior year period.  Excluding the warranty accrual adjustment and previously capitalized interest costs, gross margin from home sales was 28.9%* for the 2012 fourth quarter versus 27.5%* for the 2011 fourth quarter.  This 140 basis point improvement was primarily attributable to the increase in the Company's consolidated average home price. 

The Company's 2012 fourth quarter SG&A expenses (including Corporate G&A) were $49.4 million compared to $44.5 million, down 210 basis points as a percentage of home sale revenues to 13.1%, compared to 15.2% for the 2011 fourth quarter.  The improvement in the Company's SG&A rate was primarily due to a 29% increase in revenues from home sales and reflects the operating leverage inherent in our business.

During the 2012 fourth quarter, the Company reversed a portion of its deferred tax valuation allowance, recognizing a $454 million benefit.  Following this reversal, the Company's remaining deferred tax valuation allowance stood at approximately $23 million, which as of December 31, 2012, partially offsets the Company's $478 million deferred tax asset. 

Net new orders for the 2012 fourth quarter increased 60% from the 2011 fourth quarter to 983 homes.  The 60% year-over-year growth is primarily attributable to a 70% increase in the Company's monthly sales absorption rate to 2.2 per community for the 2012 fourth quarter, compared to 1.3 per community for the 2011 fourth quarter, and a 3% increase from 2.1 per community for the 2012 third quarter.  The 3% quarter-over-quarter increase bucked the historical seasonal trend, which averaged down 19% over the last fifteen years.     

The dollar value of homes in backlog increased 122% to $515.5 million, or 1,404 homes, compared to $232.6 million, or 681 homes, for the 2011 fourth quarter, and increased 3% compared to $498.7 million, or 1,394 homes, for the 2012 third quarter.  The increase in year-over-year backlog value was driven primarily by a 60% increase in net new orders and a shift to more to-be-built homes. 

The Company used $112.0 million of cash in operating activities for the 2012 fourth quarter versus $12.0 million in the 2011 fourth quarter.  During the 2012 fourth quarter, the Company spent $267.6 million on land purchases and development costs, compared to $86.3 million for the 2011 fourth quarter.  Excluding land purchases and development costs, cash inflows from operating activities for the 2012 fourth quarter were $155.6 million* versus $74.3 million* in the 2011 fourth quarter.  The year-over-year increase in cash inflows from operating activities (excluding land purchases and development costs) was primarily due to a 29% increase in home sale revenues. 

The Company purchased $204.8 million of land (3,085 homesites) during the 2012 fourth quarter, of which 21% (based on homesites) was located in California, 49% in Florida, 13% in Arizona and 10% in Texas, with the balance spread throughout the Company's other operations.  The Company purchased $542.1 million of land (9,344 homesites) during the year ended December 31, 2012, of which 39% (based on homesites) was located in California, 25% in Florida, 18% in the Carolinas and 12% in Texas, with the balance spread throughout the Company's other operations.  As of December 31, 2012, the Company owned or controlled 30,767 homesites, of which 19,219 are owned and actively selling or under development, 5,292 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 5.8 year supply based on the Company's deliveries for the year ended December 31, 2012.  

Earnings Conference Call

A conference call to discuss the Company's 2012 fourth quarter results will be held at 12:00 p.m. Eastern time February 1, 2013.  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) 221-9542 (domestic) or (913) 312-1507 (international); Passcode: 5053434.  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: 5053434.

About Standard Pacific

Standard Pacific Homes (NYSE: SPF) has been building beautiful, high-quality homes and neighborhoods since its founding in Southern California in 1965.  With a trusted reputation for quality craftsmanship, an outstanding customer experience and exceptional architectural design, the Company utilizes its decades of land acquisition, development and homebuilding expertise to successfully navigate today's complex landscape to acquire and build desirable communities in locations that meet the high expectations of the Company's targeted move-up homebuyers.  Currently offering new homes in major metropolitan areas in Arizona, California, Colorado, Florida, North Carolina, South Carolina, and Texas, we invite you to learn more about us by visiting standardpacifichomes.com.

This news release contains forward-looking statements.  These statements include but are not limited to statements regarding new home orders, deliveries, backlog, absorption rates, average home price, revenue, profitability, cash flow, liquidity, gross margin, operating margin, overhead expenses and other costs; community count; product mix; execution on our strategy; our future performance 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




December 31,


December 31,


Percentage


September 30,


Percentage




2012


2011


or % Change


2012


or % Change

Operating Data

(Dollars in thousands)
















Deliveries


973



782


24%



861


13%

Average selling price

$

388


$

374


4%


$

369


5%

Home sale revenues

$

377,674


$

292,725


29%


$

317,389


19%

Gross margin % (including land sales)


18.7%



20.4%


(1.7%)



20.1%


(1.4%)

Gross margin % from home sales (excluding warranty accrual

adjustments)*


20.8%



19.4%


1.4%



20.2%


0.6%

Gross margin % from home sales (excluding warranty accrual adjustments and interest amortized to cost of home sales)*


28.9%



27.5%


1.4%



28.7%


0.2%

Severance and other charges

$

  ―  


$

875


(100%)


$

  ―  


  ―  

Incentive and stock-based compensation expense

$

7,013


$

6,651


5%


$

4,768


47%

Selling expenses

$

19,362


$

15,609


24%


$

17,069


13%

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

expenses and severance and other charges)

$

23,067


$

21,412


8%


$

21,284


8%

SG&A expenses

$

49,442


$

44,547


11%


$

43,121


15%

SG&A % from home sales


13.1%



15.2%


(2.1%)



13.6%


(0.5%)
















Net new orders


983



615


60%



989


(1%)

Average active selling communities


150



160


(6%)



156


(4%)

Monthly sales absorption rate per community


2.2



1.3


70%



2.1


3%

Cancellation rate


15%



19%


(4%)



14%


1%

Gross cancellations


178



141


26%



161


11%

Cancellations from current quarter sales


71



53


34%



67


6%

Backlog (homes)


1,404



681


106%



1,394


1%

Backlog (dollar value)

$

515,469


$

232,583


122%


$

498,739


3%
















Cash flows (uses) from operating activities

$

(111,980)


$

(12,036)


(830%)


$

(72,418)


(55%)

Cash flows (uses) from investing activities

$

(1,610)


$

(3,043)


47%


$

(95,704)


98%

Cash flows (uses) from financing activities

$

(19,311)


$

(5,748)


(236%)


$

348,696



Land purchases (incl. seller financing and JV purchases) 

$

204,796


$

49,759


312%


$

206,740


(1%)

Adjusted Homebuilding EBITDA*

$

68,802


$

42,809


61%


$

51,523


34%

Adjusted Homebuilding EBITDA Margin %*


16.4%



14.6%


1.8%



16.2%


0.2%

Homebuilding interest incurred

$

35,095


$

35,425


(1%)


$

36,112


(3%)

Homebuilding interest capitalized to inventories owned

$

33,664


$

30,777


9%


$

32,604


3%

Homebuilding interest capitalized to investments in JVs

$

851


$

1,689


(50%)


$

1,839


(54%)

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

$

33,784


$

23,657


43%


$

27,078


25%

 




For the Year Ended




December 31,


December 31,


Percentage




2012


2011


or % Change

Operating Data

(Dollars in thousands)











Deliveries


3,291



2,528


30%

Average selling price

$

362


$

349


4%

Home sale revenues

$

1,190,252


$

882,094


35%

Gross margin % (including land sales)


19.7%



18.4%


1.3%

Gross margin % from home sales (excluding impairments and warranty accrual adjustments)*


20.5%



19.6%


0.9%

Gross margin % from home sales (excluding impairments, warranty accrual adjustments and interest amortized to cost of home sales)*


28.9%



27.4%


1.5%

Inventory impairment charges

$

  ―  


$

13,189


(100%)

Severance and other charges

$

  ―  


$

4,245


(100%)

Incentive and stock-based compensation expense

$

20,362


$

18,511


10%

Selling expenses

$

65,608


$

48,291


36%

G&A expenses (excluding incentive and stock-based compensation expenses and severance and other charges)

$

86,237


$

83,328


3%

SG&A expenses

$

172,207


$

154,375


12%

SG&A % from home sales


14.5%



17.5%


(3.0%)











Net new orders


4,014



2,795


44%

Average active selling communities


155



152


2%

Monthly sales absorption rate per community


2.2



1.5


41%

Cancellation rate


13%



16%


(3%)

Gross cancellations


621



520


19%

Cancellations from current year sales


289



227


27%











Cash flows (uses) from operating activities

$

(283,116)


$

(322,613)


12%

Cash flows (uses) from investing activities

$

(105,205)


$

(8,313)


(1,166%)

Cash flows (uses) from financing activities

$

324,354


$

10,077


3,119%

Land purchases (incl. seller financing and JV purchases) 

$

542,106


$

303,775


78%

Adjusted Homebuilding EBITDA*

$

193,903


$

105,855


83%

Adjusted Homebuilding EBITDA Margin %*


15.7%



12.0%


3.7%

Homebuilding interest incurred

$

141,827


$

140,905


1%

Homebuilding interest capitalized to inventories owned

$

129,136


$

109,002


18%

Homebuilding interest capitalized to investments in JVs

$

6,295


$

6,735


(7%)

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

$

103,902


$

69,636


49%

 




As of 




December 31,


December 31,


Percentage




2012


2011


or % Change

Balance Sheet Data

(Dollars in thousands, except per share amounts)











Homebuilding cash (including restricted cash)

$

366,808


$

438,157


(16%)

Inventories owned

$

1,971,418


$

1,477,239


33%

Homesites owned and controlled


30,767



26,444


16%

Homes under construction


1,574



940


67%

Completed specs


215



383


(44%)

Deferred tax asset valuation allowance

$

22,696


$

510,621


(96%)

Homebuilding debt

$

1,542,018


$

1,324,948


16%

Stockholders' equity

$

1,255,816


$

623,754


101%

Stockholders' equity per share (including if-converted preferred stock)*

$

3.48


$

1.82


91%

Total consolidated debt to book capitalization


56.5%



68.7%


(12.2%)

Adjusted net homebuilding debt to total adjusted book capitalization*


48.3%



58.7%


(10.4%)

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
December 31,


Year Ended
December 31,





2012


2011


2012


2011





(Dollars in thousands, except per share amounts)





(Unaudited)

Homebuilding:













Home sale revenues

$

377,674


$

292,725


$

1,190,252


$

882,094


Land sale revenues


42,169



431



46,706



899



Total revenues


419,843



293,156



1,236,958



882,993


Cost of home sales


(299,105)



(232,960)



(946,630)



(719,893)


Cost of land sales


(42,196)



(430)



(46,654)



(903)



Total cost of sales


(341,301)



(233,390)



(993,284)



(720,796)




Gross margin


78,542



59,766



243,674



162,197




Gross margin %


18.7%



20.4%



19.7%



18.4%


Selling, general and administrative expenses


(49,442)



(44,547)



(172,207)



(154,375)


Income (loss) from unconsolidated joint ventures


617



1,298



(2,090)



207


Interest expense


(580)



(2,959)



(6,396)



(25,168)


Other income (expense)


(44)



(338)



4,664



(1,017)




Homebuilding pretax income (loss)


29,093



13,220



67,645



(18,156)

Financial Services:













Revenues


7,051



3,783



21,300



10,907


Expenses


(3,110)



(2,230)



(11,062)



(9,401)


Other income


87



79