Standard Pacific Corp. Reports 2011 Third Quarter Results
Thursday , October 27, 2011 16:04ET
IRVINE, Calif., Oct. 27, 2011 /PRNewswire/ -- Standard Pacific Corp. (NYSE: SPF) announced results for the third quarter and nine months ended September 30, 2011.
2011 Third Quarter Highlights
-- Net new orders of 764; flat compared to Q2 2011 and up 38% from Q3 2010 -- Adjusted net income of $3.2 million* (net loss of $6.4 million including impairment charges, deposit write-offs and restructuring charges) -- Backlog of 848 homes; up 9% from Q2 2011 and up 40% from Q3 2010 -- 159 average active selling communities (11 new/10 closed out); up 4% from prior quarter and up 21% from Q3 2010 -- Average selling price of $346 thousand; up 3% from Q2 2011 -- Homebuilding revenues up 17% due to 16% increase in new home deliveries from Q3 2010 -- Inventory impairment charges totaling $7.3 million in four communities; $1.7 million of deposit write-offs -- Adjusted gross margin from home sales of 18.8%* (15.8% including inventory impairments); down 120 basis points from Q2 2011 and 480 basis points from Q3 2010 -- Adjusted SG&A rate from home sales of 15.9%* (16.2% including restructuring charges); 190 basis point improvement from Q2 2011 and 170 basis point improvement from Q3 2010 -- Restructuring charge of $0.6 million recognized in conjunction with the implementation of the Company's 10% G&A expense reduction plan -- Operating cash outflows of $78.5 million in Q3 2011, a $43.5 million improvement from $122.0 million in Q2 2011 -- Excluding land purchases and development costs, cash inflows of $27.9 million* in Q3 2011 and $1.9 million* in Q2 2011 -- Adjusted EBITDA of $28.4 million*, or 11.7%* of homebuilding revenues, in Q3 2011 ($91.9 million*, or 11.5%*, for LTM ended September 30, 2011) -- Cash balance of $451.2 million with $197 million available from revolving credit facility vs. $546.1 million in cash as of the end of Q3 2010 when the Company had no revolving credit facility -- Approved land purchases of $55 million for 1,280 lots; down from $98.5 million for 1,493 lots in Q2 2011
Ken Campbell, the Company's CEO commented, "Our 38% year-over-year order growth and increasing ASP are a reflection of the execution of our strategy to grow community count in desirable locations and increase our product mix within the move-up segment." Scott Stowell, the Company's President added, "Through our focus on community count growth and cost reduction over the last several years we have lowered our break-even absorption rate, better positioning the Company for profitability in what we expect to be an ongoing, difficult 2012 housing market."
For the third quarter of 2011, the Company reported a net loss of $6.4 million, or $0.02 per share, on homebuilding revenues of $241.8 million compared to net income of $4.5 million, or $0.02 per share, on homebuilding revenues of $207.5 million in the 2010 third quarter. The net loss in the 2011 third quarter included $9.0 million of inventory impairment charges and deposit write-offs and $0.6 million of restructuring charges. Excluding these charges, the Company's adjusted net income was $3.2 million* in the 2011 third quarter.
Homebuilding revenues increased 17% from $207.5 million for the 2010 third quarter to $241.8 million for the 2011 third quarter driven primarily by a 16% increase in new home deliveries to 697 homes. The Company's consolidated average home price for the 2011 third quarter was $346 thousand, which was up 3% over the prior quarter.
Gross margin from home sales for the 2011 third quarter was 15.8% (18.8%* excluding $7.3 million of inventory impairment charges) versus 17.0% (20.0%* excluding $6.0 million of inventory impairment charges) for the prior quarter. The 120 basis point decline in the 2011 third quarter adjusted gross margin from home sales was driven by lower margins in substantially all of the Company's markets due to general price softening and a mix shift to more deliveries from lower margin projects. The impairments related to two homebuilding projects in Northern California totaling $5.7 million, one homebuilding project in Arizona for $0.8 million and one homebuilding project in the Carolinas for $0.8 million. Excluding inventory impairment charges and previously capitalized interest costs, gross margin from home sales for the 2011 third quarter was 26.6%* versus 27.9%* for the 2011 second quarter.
The Company's 2011 third quarter SG&A expenses (including Corporate G&A) were $39.1 million compared to $38.4 million for the 2011 second quarter and included noncash stock-based compensation expenses of $2.6 million and $3.5 million, respectively. The Company's 2011 third quarter SG&A expenses included $0.6 million in restructuring charges related to the implementation of our plan to reduce the fixed portion of our G&A expenses for 2012 by 10% as compared to 2011. The Company's 2011 third quarter SG&A rate from home sales was 16.2% versus 17.6% for the 2010 third quarter. Excluding restructuring charges, the Company's 2011 third quarter SG&A rate was 15.9%*. The improvement in the Company's SG&A rate was primarily the result of a 17% increase in revenues from home sales, partially offset by higher sales and marketing costs associated with new community openings. The Company's G&A expenses (excluding incentive compensation and restructuring charges) were $22.8 million for the 2011 third quarter, and have remained stable, ranging from $22.4 million to $22.8 million per quarter since the 2010 first quarter.
Net new orders (excluding joint ventures) for the 2011 third quarter increased 38% from the 2010 third quarter to 764 homes on a 21% increase in the number of average active selling communities from 131 to 159. The Company's monthly sales absorption rate for the 2011 third quarter was 1.6 per community compared to 1.4 per community for the 2010 third quarter and 1.7 per community for the 2011 second quarter. The Company's cancellation rate for the 2011 third quarter was 16%, compared to 19% for the 2010 third quarter and 14% for the 2011 second quarter. The total number of sales cancellations for the 2011 third quarter was 144, of which 81 cancellations related to homes in the Company's 2011 third quarter beginning backlog and 63 related to orders generated during the quarter.
The dollar value of homes in backlog (excluding joint ventures) increased 42% to $304.8 million, or 848 homes, compared to $214.2 million, or 605 homes, for the 2010 third quarter, and increased 4% compared to $293.8 million, or 781 homes, for the 2011 second quarter. The increase in backlog value was driven primarily by a 38% increase in net new orders as compared to the prior year period.
The Company used $78.5 million of cash in operating activities for the 2011 third quarter versus $67.4 million of cash used in operating activities in the 2010 third quarter. Cash flows used in operating activities for the 2011 third quarter included cash land purchases and land development costs of $74.7 million and $31.7 million, respectively, compared to $91.3 million and $22.3 million, respectively, for the 2010 third quarter. Excluding land and development costs, cash inflows from operating activities for the 2011 third quarter were $27.9 million* versus cash inflows of $46.1 million* in the 2010 third quarter. The decrease in cash inflows from operating activities (excluding land and development costs) as compared to the 2010 third quarter was primarily due to a $47 million decrease in cash flows attributable to the timing of the origination and sale of mortgage loans held for sale by the Company's financial services subsidiary, offset by the increase in cash inflows as a result of a 16% increase in deliveries compared to the prior year period.
During the 2011 third quarter, the Company approved the purchase of $55 million of land, comprised of 1,280 lots. Approximately 46% of the land approved (based on land value) was for land located in California, 21% in Florida, 20% in Texas and 13% in the Carolinas. During the same period, the Company purchased $74.7 million of land, comprised of 1,682 lots. Approximately 62% of the land purchased (based on land value) is located in California and 24% in Florida, with the balance spread throughout the Company's other operations.
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