There's a tendency to want to double check the date on Standard Pacific's third quarter earnings results.
With a $368.8 million loss, more than triple its losses in the same quarter last year, and almost the same amount of impairment charges, it looks more like a public home builder's results in 2007, when they were slashing land values like Freddie Krueger on Elm Street.
While many other public builders this quarter have reported sizably slimmer losses for their most recent quarter, thanks in part to having taken their big impairment hits last year, Standard Pacific appears to be catching up.
There is one thing in Standard Pacific's results that are pure 2008: its sales numbers. The company had 921 new orders in the third quarter ended Sept. 30. Its backlog, at 1,248, was half the 2,421 it had the same time last year. Company officials said during Thursday's conference call that sales have deteriorated even more in October.
Standard Pacific, thanks in part to a cash infusion from investor MatlinPatterson, had boosted its cash to $712 million. It is likely to need it. While the company has significantly cut its exposure to joint ventures down from $1.3 billion to $512 million, it's likely those that are left will need cash infusions, management said during the company's earnings call.
The company has debt due next year, and its debt-to-equity has climbed to 67%, nearing a leverage covenant trigger, CFO Andrew Parnes said during the call.
Cash next year is likely to be even harder to come by. "It's increasingly difficult to generate improved cash flow going forward," CEO Jeffrey V. Peterson said during the call.
And the company has already written off $134.1 million it had expected to get back in tax refunds from taxes paid in past years against losses it is realizing now. It's asking the IRS to revisit the issue, but, for now, it looks as though the infusion of cash from MatlinPatterson constituted a change in control that would disallow the rebate.
While some market conditions are beyond the company's control, it does have one area where it can make changes, Peterson said. "We can have a great deal of influence over our expenses. ... We have dedicated the entire Standard Pacific efforts toward that end."
The company has already reduced head count by half its peak. But there are other areas yet to cut, management said.
The company has reduced SG&A expenses by 18% from last year, but not nearly fast enough to keep up with revenue loss. As a percentage of revenue, they climbed to 19.2% from 14.6% last year.
"We think there's a lot more out there than head count alone" to be cut, Parnes said.