Today, for the first time, CalAtlantic Group reported earnings, so comparisons to previous quarters may not be that revealing. Since the closing of the merger occurred after the third quarter was completed, comparisons and other financial information included in its earnings release relate solely to Standard Pacific on a stand-alone basis and do not include Ryland's results of operations.
The former StanPac’s last quarter had a lot of positives. Revenues increased 4% to $626.0 million and net new orders jumped 15% to 1,326. The dollar value of those new orders was up 35%. Its monthly sales absorption rate was flat year-over-year at 2.1 (but down 20% from the second quarter). Its cancellation rate for the 2015 third quarter was 19%, slightly below the 2014 third quarter and up from 15% for the 2015 second quarter.
That said, UBS's Susan Maklari said orders were a little less than expected.
"Unit orders [of] +15% YOY—below our +20% forecast—as gains in the Southwest [+33%] and West [+24%] were partially offset by a 4% decrease in the Southeast," she wrote. "In turn, absorptions declined 1% YOY despite a 16% rise in the community count. We believe the trends seen in revenues and backlog reflect the near term constraints we’ve been hearing of in our channel checks and seen from peers, including construction delays related to weather in certain parts of the country earlier in the year as well as on-going, broader labor constraints. We look for them to reverse over time."
CalAtlantic’s backlog of 2,733 homes, jumped 24% and the dollar value of backlog up 47%. It had 215 average active selling communities, which was up 16%. Its average selling price of $537,000 rose 11%.
According to CalAtlantic, the increase in average home price was primarily attributable to a shift to more move-up product and general price increases within a majority of its markets.
“The increase in year-over-year backlog value was driven primarily by our continued growth in community count and the corresponding increase in orders and a 19% increase in the average selling price of the homes in backlog, reflecting the product mix shift to more move-up and luxury homes and continued pricing power in many of our markets,” CalAtlantic said in the release.
CalAtlantic’s gross margin from home sales fell from 26.3% to 25.3% and it spent $262.2 million of land purchases and development costs, compared to $251.2 million in the third quarter of 2014. It purchased $126.0 million of land, consisting of 1,831 homesites. Fifty-eight percent of those sites are located in the California, 19% in the Carolinas, 12% in Texas, 10% in Florida and approximately 1% in Colorado.
Despite some disappointment this quarter, Maklari is optimistic about the company going forward. "We believe CalAtlantic is well positioned for the recovery and look for it to benefit from: the strategic acquisition of land throughout California, in various stages of development; its product and buyer diversification; and its leading market share position in 15 of the 25 largest MSAs," she wrote. "Further, management's conservative nature leaves us confident in their focus on driving long term shareholder value."