Standard Pacific Corp. Reports 2013 First Quarter Results Q1 2013 Pretax Income of $35.4 million, up 306% vs. Q1 2012

Q1 2013 Net New Order Value up 74% and Backlog Value up 117% vs. Q1 2012

IRVINE, Calif., May 2, 2013 /PRNewswire/ -- Standard Pacific Corp. (NYSE: SPF) today announced results for the first quarter ended March 31, 2013.

2013 First Quarter Highlights and Comparisons to the 2012 First Quarter

  • Net income of $21.8 million, or $0.05 per diluted share, vs. $8.5 million, or $0.02 per diluted share
    • Pretax income of $35.4 million, vs. $8.7 million
  • Net new orders of 1,394, up 49%; Dollar value of net new orders up 74%
  • Backlog of 1,851 homes, up 90%; Dollar value of backlog up 117%
  • 158 average active selling communities, flat compared to the prior year
  • Home sale revenues up 61%
    • Average selling price of $375 thousand, up 9%
    • 947 new home deliveries, up 48%
  • Gross margin from home sales of 21.0%, compared to 20.3%
  • SG&A rate from home sales of 13.0%, a 410 basis point improvement
  • $118.7 million of land purchases and development costs, compared to $65.8 million
  • Adjusted Homebuilding EBITDA of $63.8 million*, or 17.8%* of homebuilding revenues, compared to $31.8 million*, or 14.2%* of homebuilding revenues
  • Homebuilding cash balance of $308 million

Scott Stowell, the Company's Chief Executive Officer commented, "Reflecting the significant progress we've made as we continue to execute our strategy and the lift we've experienced from the current housing market recovery, the strong performance we demonstrated in 2012 has continued into 2013."  Mr. Stowell added, "I am pleased with the strong start to the year and look forward to the remainder of 2013."   

Revenues from home sales for the 2013 first quarter increased 61%, to $355.1 million, as compared to the prior year period, resulting primarily from a 48% increase in new home deliveries and a 9% increase in the Company's consolidated average home price to $375 thousand.  The increase in average home price was primarily attributable to our increasing focus on the move-up market segment and price increases within most of our markets.  The increase in new home deliveries was driven by a 70% year-over-year increase in the number of homes in beginning backlog expected to close during the quarter, partially offset by a decrease in specs sold and closed in the quarter. 

Gross margin from home sales for the 2013 first quarter increased to 21.0% compared to 20.3% in the prior year period.  The 70 basis point year-over-year increase was primarily attributable to price increases, a mix shift to higher margin communities, and improved margins from speculative homes sold and delivered during the quarter.  Excluding previously capitalized interest costs, gross margin from home sales was 28.8%* for the 2013 first quarter versus 28.7%* for the 2012 first quarter.    

The Company's 2013 first quarter SG&A expenses (including Corporate G&A) were $46.3 million compared to $37.7 million, down 410 basis points as a percentage of home sale revenues to 13.0%, compared to 17.1% for the 2012 first quarter.  The improvement in the Company's SG&A rate was primarily due to a 61% increase in revenues from home sales and reflects the operating leverage inherent in our business.

Net new orders for the 2013 first quarter increased 49% from the 2012 first quarter to 1,394 homes.  The  year-over-year growth is primarily attributable to a 49% increase in the Company's monthly sales absorption rate to 2.9 per community for the 2013 first quarter, compared to 2.0 per community for the 2012 first quarter, and a 35% increase from 2.2 per community for the 2012 fourth quarter.       

The dollar value of homes in backlog increased 117% to $719.7 million, or 1,851 homes, compared to $331.9 million, or 973 homes, for the 2012 first quarter, and increased 40% compared to $515.5 million, or 1,404 homes, for the 2012 fourth quarter.  The increase in year-over-year backlog value was driven primarily by a 49% increase in net new orders, a 14% increase in the average selling price of the homes in backlog and a shift to more to-be-built homes that have a longer construction cycle.  The gross margin of our homes in backlog was 23.1% at the end of the quarter as compared to 20.2% at the end of the first quarter of 2012.

The Company used $58.5 million of cash in operating activities for the 2013 first quarter versus $42.1 million in the 2012 first quarter.  During the 2013 first quarter, the Company spent $118.7 million on land purchases and development costs, compared to $65.8 million for the 2012 first quarter.  Excluding land purchases and development costs, cash inflows from operating activities for the 2013 first quarter were $60.2 million* versus $23.6 million* in the 2012 first quarter.  The year-over-year increase in cash inflows from operating activities (excluding land purchases and development costs) was primarily due to a 61% increase in home sale revenues. 

The Company purchased $71.5 million of land (1,167 homesites) during the 2013 first quarter, of which 34% (based on homesites) was located in Florida, 31% in California and 26% in Texas, with the balance spread throughout the Company's other operations.  As of March 31, 2013, the Company owned or controlled 32,123 homesites, of which 20,213 are owned and actively selling or under development, 6,434 are controlled or under option, and the remaining 5,476 homesites are held for future development or for sale.  The homesites owned that are actively selling or under development represent a 5.6 year supply based on the Company's deliveries for the trailing twelve months ended March 31, 2013.

Scott Stowell, the Company's Chief Executive Officer concluded, "I am pleased with our first quarter results and am excited about the strong spring selling season that has continued into the month of April.  In April, we recorded 527 net new orders, raising our April 30 ending backlog to 2,096 units (up 89% from last year) with an average selling price of $396 thousand and gross margin in backlog of 23.8%." 

Earnings Conference Call

A conference call to discuss the Company's 2013 first quarter results will be held at 12:00 p.m. Eastern time May 3, 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 (800) 390-5311 (domestic) or (719) 325-2316 (international); Passcode: 4768857.  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: 4768857.

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, 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, 2012 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




March 31,


March 31,


Percentage


December 31,


Percentage




2013


2012


or % Change


2012


or % Change

Operating Data

(Dollars in thousands)
















Deliveries


947



642


48%



973


(3%)

Average selling price

$

375


$

343


9%


$

388


(3%)

Home sale revenues

$

355,126


$

220,317


61%


$

377,674


(6%)

Gross margin % (including land sales)


20.8%



20.0%


0.8%



18.7%


2.1%

Gross margin % from home sales


21.0%



20.3%


0.7%



20.8%


0.2%

Gross margin % from home sales (excluding interest amortized to cost of home sales)*


28.8%



28.7%


0.1%



28.9%


(0.1%)

Incentive and stock-based compensation expense

$

4,848


$

3,905


24%


$

7,013


(31%)

Selling expenses

$

18,444


$

12,866


43%


$

19,362


(5%)

G&A expenses (excluding incentive and stock-based

compensation expenses)

$

23,002


$

20,921


10%


$

23,067


(0%)

SG&A expenses

$

46,294


$

37,692


23%


$

49,442


(6%)

SG&A % from home sales


13.0%



17.1%


(4.1%)



13.1%


(0.1%)
















Net new orders (homes)


1,394



934


49%



983


42%

Net new orders (dollar value)

$

548,561


$

315,946


74%


$

385,461


42%

Average active selling communities


158



158


   ―  



150


5%

Monthly sales absorption rate per community


2.9



2.0


49%



2.2


35%

Cancellation rate


10%



13%


(3%)



15%


(5%)

Gross cancellations


162



144


13%



178


(9%)

Cancellations from current quarter sales


86



79


9%



71


21%

Backlog (homes)


1,851



973


90%



1,404


32%

Backlog (dollar value)

$

719,652


$

331,884


117%


$

515,469


40%
















Cash flows (uses) from operating activities

$

(58,461)


$

(42,118)


(39%)


$

(111,980)


48%

Cash flows (uses) from investing activities

$

(1,601)


$

(2,346)


32%


$

(1,610)


1%

Cash flows (uses) from financing activities

$

(180)


$

6,607




$

(19,311)


99%

Land purchases

$

71,541


$

33,986


111%


$

204,796


(65%)

Adjusted Homebuilding EBITDA*

$

63,823


$

31,768


101%


$

68,802


(7%)

Adjusted Homebuilding EBITDA Margin %*


17.8%



14.2%


3.6%



16.4%


1.4%

Homebuilding interest incurred

$

35,027


$

35,315


(1%)


$

35,095


(0%)

Homebuilding interest capitalized to inventories owned

$

34,201


$

30,992


10%


$

33,664


2%

Homebuilding interest capitalized to investments in JVs

$

826


$

1,793


(54%)


$

851


(3%)

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

$

27,885


$

18,575


50%


$

33,784


(17%)
















 




As of 




March 31,


December 31,


Percentage




2013


2012


or % Change

Balance Sheet Data

(Dollars in thousands, except per share amounts)











Homebuilding cash (including restricted cash)

$

308,029


$

366,808


(16%)

Inventories owned

$

2,049,702


$

1,971,418


4%

Homesites owned and controlled


32,123



30,767


4%

Homes under construction


1,907



1,574


21%

Completed specs


200



215


(7%)

Deferred tax asset valuation allowance

$

22,696


$

22,696


   ―  

Homebuilding debt

$

1,535,570


$

1,542,018


(0%)

Stockholders' equity

$

1,287,207


$

1,255,816


2%

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

$

3.55


$

3.48


2%

Total consolidated debt to book capitalization


55.9%



56.5%


(0.6%)

Adjusted net homebuilding debt to total adjusted book capitalization*


48.8%



48.3%


0.5%











1

All 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 March 31,





2013


2012





(Dollars in thousands, except per share amounts)





(Unaudited)

Homebuilding:







Home sale revenues

$

355,126


$

220,317


Land sale revenues


2,595



3,385



Total revenues


357,721



223,702


Cost of home sales


(280,612)



(175,595)


Cost of land sales


(2,583)



(3,366)



Total cost of sales


(283,195)



(178,961)




Gross margin


74,526



44,741




Gross margin %


20.8%



20.0%


Selling, general and administrative expenses


(46,294)



(37,692)


Income (loss) from unconsolidated joint ventures


1,134



(1,522)


Interest expense


   ―  



(2,530)


Other income (expense)


3,570



4,284




Homebuilding pretax income 


32,936



7,281

Financial Services:







Revenues


5,677



3,626


Expenses


(3,322)



(2,260)


Other income


102



63




Financial services pretax income


2,457



1,429

Income before taxes


35,393



8,710

Provision for income taxes


(13,569)



(187)

Net income 


21,824



8,523

  Less: Net income allocated to preferred shareholder


(8,903)



(3,674)

  Less: Net income allocated to unvested restricted stock


(22)



 ―   

Net income available to common stockholders

$

12,899


$

4,849










Income Per Common Share:







Basic

$

0.06


$

0.02


Diluted

$

0.05


$

0.02










Weighted Average Common Shares Outstanding:







Basic


214,166,912



195,109,252


Diluted


252,947,416



199,873,977










Weighted average additional common shares outstanding if preferred shares converted to common shares


147,812,786



147,812,786










Total weighted average diluted common shares outstanding if preferred shares converted to common shares


400,760,202



347,686,763










 









CONDENSED CONSOLIDATED BALANCE SHEETS














March 31,


December 31,






2013


2012






(Dollars in thousands)

ASSETS

(Unaudited)




Homebuilding:







Cash and equivalents

$

280,467


$

339,908


Restricted cash


27,562



26,900


Trade and other receivables


19,640



10,724


Inventories:








Owned


2,049,702



1,971,418



Not owned


72,019



71,295


Investments in unconsolidated joint ventures


53,024



52,443


Deferred income taxes, net


441,344



455,372


Other assets


39,322



41,918




Total Homebuilding Assets


2,983,080



2,969,978

Financial Services:







Cash and equivalents


5,846



6,647


Restricted cash


2,420



2,420


Mortgage loans held for sale, net


119,246



119,549


Mortgage loans held for investment, net


9,716



9,923


Other assets


5,391



4,557




Total Financial Services Assets


142,619



143,096





Total Assets

$

3,125,699


$

3,113,074











LIABILITIES AND EQUITY






Homebuilding:







Accounts payable

$

20,868


$

22,446


Accrued liabilities


186,712



198,144


Secured project debt and other notes payable


4,423



11,516


Senior notes payable


1,531,147



1,530,502




Total Homebuilding Liabilities


1,743,150



1,762,608

Financial Services:







Accounts payable and other liabilities


2,066



2,491


Mortgage credit facilities


93,276



92,159




Total Financial Services Liabilities


95,342



94,650





Total Liabilities


1,838,492



1,857,258

Equity:







Stockholders' Equity:








Preferred stock, $0.01 par value; 10,000,000 shares authorized; 450,829 shares issued and outstanding at March 31, 2013 and December 31, 2012


5



5



Common stock, $0.01 par value; 600,000,000 shares authorized; 215,210,139 and 213,245,488 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively


2,152



2,132



Additional paid-in capital


1,341,223



1,333,255



Accumulated deficit


(55,524)



(77,348)



Accumulated other comprehensive loss, net of tax


(649)



(2,228)




Total Equity


1,287,207



1,255,816





Total Liabilities and Equity

$

3,125,699


$

3,113,074











 





INVENTORIES






March 31,


December 31,


2013


2012


(Dollars in thousands)

Inventories Owned:

(Unaudited)