News that Hovnanian Enterprises' huge weekend sales blitz generated good sales numbers seemed to buoy Standard Pacific Homes CEO Steve Scarborough's spirits Tuesday (Sept. 18) during the Credit Suisse Home Builder Conference in New York.
"We have a smaller campaign that is in progress in Southern California...for a 10-day period that started Friday," he said. "Hopefully we will have some good news to talk about in a few weeks."
While it's too early to count it a success, he said, the early numbers look good. The company had 70 sales over the weekend versus 10 to 15 in a recent typical week.
It was the second tidbit of happy information to come from the company in two days. Before the conference, Standard Pacific released sales figures for July and August that showed sales and cancellation rates in California and Arizona had improved in July and August compared to last year.
Granted, last year's numbers were depressed, Scarborough said. "But we'll take what we can get."
Scarborough and Standard Pacific's executive vice president of finance Andrew Parnes outlined for the investors what the company is doing to combat the all-but-stalled housing market including:
--A focus on cash and liquidity. The company reiterated that it has a goal to pay off its revolving line of credit by year's end. "Arguably that is a bit more challenging as we speak now," said Scarborough. "We are still focused on that, working very hard on that point."
--Diversifying the company's product offerings beyond move-up into entry level, growing entry level product from 20% to 40% in five years.
--Adjusting the size of the company to fit sales. Employee count was down 22% by the end of last year and Scarborough expects that number to be closer to 30% by year's end.
--Working with trades to better value engineer its product to cut costs.
--Reassessing all land positions.
--Reducing the number of spec. homes under construction from 2,200 to 1,600 year over year. The company only has 60 spec. houses in the entire state of California now, said Scarborough.
The company's speakers also went out of their way to try to ease any concerns investors might have about potential exposure the company's considerable number of joint-venture agreements might open it up to.
For more than 40 years Standard Pacific has worked with a large number of joint ventures, they said. "We are more than happy to talk about the joint ventures at the individual level or the aggregate level," Scarborough said.
At this time, the company's joint ventures' debt levels, at about 50%, mirrors that of Standard Pacific, they said.