Standard Pacific Homes reported yesterday that it lost $119.7 million in the three months ended Sept. 30, a steeper drop than some analysts had anticipated. Its revenue from home and land sales during that quarter fell 19 percent to $675.5 million. Through the first nine months of its fiscal year, StanPac's revenue declined 24 percent to $2.07 billion, and it reported a loss of $326.4 million, compared to positive earnings of $222.1 million in the same period a year ago.
In recent weeks, speculation has been swirling within the investment community that Standard Pacific, with $2 billion in debt, might not generate enough cash flow to cover its interest payments or meet covenant requirements established by its lenders, which in turn could force the company to reorganize under Chapter 11. An article this week in TheStreet.com points out, too, that Standard Pacific is the only public builder with debt maturities that come due in each of the next four years.
In its quarterly report, Standard Pacific stated that it had reduced its home building-related debt by $265 million, and reduced its revolving credit facility to $900 million from $1.1 billion. In exchange, the company agreed to tighter leverage covenants. During the quarter, StanPac gave itself some financial breathing room by issuing $100 million in new debt. Yesterday, the builder said that it would call a special meeting of shareholders, to be held on December 11, to consider increasing its shares of common stock outstanding. (Such a new offering could be difficult if its stock price, which is down 80 percent this year, continues to languish.)
During its latest quarter, the Irvine, Calif.-based builder took $223.5 million in charges related to inventory and joint-venture impairments, and reported a $38.7 million loss from joint ventures, two of which it recently "unwound" by buying out its partners and paying off that venture's debt.
On the home building side, Standard Pacific delivered 1,697 homes in the quarter (excluding joint ventures), or 25 percent fewer than the same period a year earlier. Its steepest drop was in Florida, where deliveries fell 48 percent. New orders nationwide, however, rose 23 percent to 1,474, with the greatest gains in Nevada and northern California. The company also saw its cancellation rate for the quarter lower to 34 percent (from 50 percent in the third quarter in 2006). The company's backlog of 2,584 homes (again, excluding joint ventures) was 42 percent down from the third quarter last year, and the dollar value of that backlog declined 39 percent.
Standard Pacific pruned the number of home sites that it owns or controls (including those through ventures) by 26 percent to just over 47,000 lots, as well as the number of homes it has under construction by 35 percent to 4,139.
Interestingly, Standard Pacific seems to be one of the few builders that have not engaged in significant price slashing to sell more houses. The overall selling prices of its homes declined in the quarter by only 1 percent to $364,000. But there were wide geographic variances, as prices were down 31 percent in northern California to $483,000, but rose by 21 percent in the Carolinas to $241,000.