$SPF Standard Pacific Corp. Reports 2014 Third Quarter Results
Q3 2014 pretax income of $92.1 million, up 31% from Q3 2013
Q3 2014 backlog value of $1.1 billion, up 17% from Q3 2013
PR Newswire
IRVINE, Calif., Oct. 30, 2014
IRVINE, Calif., Oct. 30, 2014 /PRNewswire/ -- Standard Pacific Corp. (NYSE: SPF) today announced results for the third quarter ended September 30, 2014.
2014 Third Quarter Highlights and Comparisons to the 2013 Third Quarter
-- Net income of $56.6 million, or $0.14 per diluted share, vs. $58.9
million, or $0.15 per diluted share
-- Pretax income of $92.1 million, up 31%
-- Net new orders of 1,154, up 4%; Dollar value of net new orders up 11%
-- Backlog of 2,208 homes, up 2%; Dollar value of backlog up 17%
-- 185 average active selling communities, up 10%
-- Home sale revenues of $603.8 million, up 18%
-- Average selling price of $483 thousand, up 15%
-- 1,250 new home deliveries, up 3%
-- Gross margin from home sales of 26.3%, compared to 25.3%
-- Operating margin from home sales of $88.7 million, or 14.7%, compared to
$67.4 million, or 13.2%
-- $251.2 million of land purchases and development costs, compared to
$156.3 million
Scott Stowell, the Company's President and Chief Executive Officer commented, "The solid performance we achieved during the first half of 2014 continued into the third quarter, with pretax income, home sale revenues and backlog value up 31%, 18% and 17%, respectively, over the prior year period." Mr. Stowell added, "In addition, I am pleased with the growth in our operating margin from home sales, which was 14.7% for the 2014 third quarter, compared to 13.2% for the prior year period."
Revenue. Revenues from home sales for the 2014 third quarter increased 18%, to $603.8 million, as compared to the prior year period, resulting primarily from a 15% increase in the Company's average home price to $483 thousand, the highest quarterly average home price in the Company's nearly 50 year history, and a 3% increase in new home deliveries. The increase in average home price was primarily attributable to a shift to more move-up product and general price increases within a majority of the Company's markets. The increase in new home deliveries compared to the prior year period was driven primarily by the increase in deliveries from the Company's Southwest region where the Company's average active selling communities grew 31%, and an 81% increase in speculative homes sold and closed during the quarter.
Orders. Net new orders for the 2014 third quarter were up slightly from the 2013 third quarter, to 1,154 homes, with the dollar value of these orders up 11%. The Company's monthly sales absorption rate was 2.1 per community for the 2014 third quarter, relatively flat compared to 2.2 per community for the 2013 third quarter and 2.8 per community for the 2014 second quarter (or 2.6 per community for the 2014 second quarter excluding the backlog the Company acquired in connection with the acquisition of an Austin, Texas homebuilder in June 2014). The decrease in sales absorption rate from the 2014 second quarter to the 2014 third quarter (excluding the impact of the second quarter acquisition) was consistent with the seasonality we typically experience in our business. The Company's cancellation rate for the 2014 third quarter was 19%, compared to 20% for the 2013 third quarter and 14% for the 2014 second quarter. Our 2014 third quarter cancellation rate remains below our average historical cancellation rate of approximately 21% over the last 10 years.
Backlog. The dollar value of homes in backlog increased 17% to $1.1 billion, or 2,208 homes, compared to $964.1 million, or 2,165 homes, for the 2013 third quarter, and decreased 1% compared to $1.1 billion, or 2,304 homes, for the 2014 second quarter. The increase in year-over-year backlog value was driven primarily by a 15% increase in the average selling price of the homes in backlog, reflecting the continued execution of our move-up homebuyer focused strategy and a favorable pricing environment in select markets.
Land. During the 2014 third quarter, the Company spent $251.2 million on land purchases and development costs, compared to $156.3 million for the 2013 third quarter. The Company purchased $155.7 million of land, consisting of 1,377 homesites, of which 37% (based on homesites) is located in California, 35% in Florida, 13% in the Carolinas, 8% in Colorado and 7% in Texas. As of September 30, 2014, the Company owned or controlled 36,307 homesites, of which 23,997 were owned and actively selling or under development, 7,370 were controlled or under option, and the remaining 4,940 homesites were held for future development or for sale. The homesites owned that are actively selling or under development represent a 5.0 year supply based on the Company's deliveries for the trailing twelve months ended September 30, 2014.
Liquidity. The Company ended the quarter with $465 million of available liquidity, including $15 million of unrestricted homebuilding cash and a $450 million untapped revolving credit facility. The revolving credit facility has an accordion feature under which the aggregate commitment may be increased to a maximum amount of $750 million, subject to the Company's future needs and the availability of additional bank capacity. The Company's homebuilding debt to book capitalization as of September 30, 2014 and 2013 was 52.9% and 56.8%, respectively, and adjusted net homebuilding debt to adjusted book capitalization was 52.2%* and 51.1%*, respectively. In addition, the Company's homebuilding debt to adjusted homebuilding EBITDA for the LTM period ending September 30, 2014 and 2013 was 3.9x* and 5.8x*, respectively.
