Standard Pacific Corp, No. 11 in the 2006 BUILDER 100, is reporting a $165.9 million loss for the second quarter ending June 30. Home building revenue for the California-based company plunged to $694.8 million from $1 billion a year ago.
"Challenging market conditions across most of the country continue to put pressure on our operating results," said CEO Stephen J. Scarborough. "High levels of new and existing home inventory on the market, increasing mortgage interest rates, a tightening of lending standards and reduced housing affordability in many markets have all contributed to weak new home sales. This environment has resulted in significant price competition leading to margin erosion and further impairments of the company's inventory holdings."
According to Scarborough, net new home orders were down 9 percent year-over-year companywide. Orders were up 23 percent in California, while down 15 percent in the Southwest and down 22 percent in the Southeast. In addition, the cancellation rate for the second quarter was 28 percent compared to 36 percent last year.
"In an ongoing effort to strengthen our balance sheet we continued to focus on closing our backlog, reducing our speculative home inventory, and lowering our supply of owned and controlled land companywide, with the goal of reducing inventories, generating cash, and paying down debt," Scarborough. "During the quarter, we were able to reduce our spec homes under construction by 28 percent year-over-year and lower our total lot position by 24 percent from the year-ago level resulting in a continued reduction in our revolver borrowings, which are down $340 million over the last three quarters.
"While difficult to predict going forward, it is possible that the Company will incur additional impairment charges until our markets stabilize, particularly with respect to the pricing of new homes. Because of the uncertainties now impacting the homebuilding industry, we will no longer be providing any earnings or operational guidance and are withdrawing our previous guidance, including guidance with respect to 2007 deliveries, revenues and margins."
Standard Pacific will hold a Friday morning teleconference to address their second quarter report.
Learn more about markets featured in this article: Los Angeles, CA.