Standard Pacific said late Monday that its net new home orders for the first two months of its second quarter were down 12% from the same period last year, with a cancellation rate of 25%, down 3 percentage points from last year and up a point from this year's first quarter. The numbers excluded discontinued operations.
Taking into account the number of active selling communities, a so-called "same-store" comparison, orders were down 18%, but on that same basis, orders were up "slightly" in California, up 42% in Florida and up 10% in Arizona. Those positives were outweighed, however, by a decline of 34% in net new orders in Texas, a drop of 59% in the Carolinas and a 64% plunge in Colorado.
The company said in a statement that "our absolute sales absorption rates continue to reflect the difficult housing conditions in most of our markets." It said it was putting out the interim report on the second quarter in anticipation of a presentation at an investors conference.
In a research note to investors, Michael Rehaut of J.P. Morgan Securities chalked up the increase in orders in the three states to aggressive pricing and discounting and liquidation of spec inventory. "As a result, we believe this lesser decline is orders is not indicative of any improvement in market conditions." Rehaut has an overweight rating on Standard Pacific stock(NYSE:SPF) amid a negative stance on the home building sector.
David Goldberg of UBS took a similar view of the results, writing, "We believe this outperformance likely reflects management's efforts to continue to generate cash and work though higher priced lots. In turn, profitability will continue to lag more land-light peers."
Standard Pacific stock opened down and was trading down nearly 3% at $3.11 during the first half hour of trading on Tuesday.