Standard Pacific Corp. (NYSE:SPF), Irvine, Calif., kicked off the public-builders-on-a-calendar-quarter earnings season Monday morning with a report that was mixed.
The loss for the company's first quarter ended March 31 was down to $5.1 million, or two cents a share, from $49.5 million (-$0.21 per share) for the comparable quarter last year, and there were no impairments or write-offs versus $30.8 million, and a $14.1 million restructuring charge, in last year's first quarter. The results included a $108 million tax refund, compared to a refund of $114 million in the same quarter of 2009.
Analysts were expecting a loss of six cents per share. Shares of SPF opened Monday down nearly 3% at $5.31 on the news but had recovered to $5.40 during the first half-hour of trading.
Home building revenues were down 16% to $175.4 million as closings dropped 22% to 537. Average prices, however, rose 9% to $326,000, but much of that appreciation was the result of a larger share of total home sales in the company's core market of California, where its homes are more expensive. The California average price, however, was up only marginally to $454,000 from $453,000. Actual price appreciation came from only two regions, Texas and the Carolinas, where the average price was up 9.1% and 7% respectively. The company's joint ventures delivered 13 homes, down from 19 in the prior year quarter, as the average price fell to $492,000 from $538,000.
New orders were up 3% to 759 homes on a community count that was down 20% to 126, with same-store sales rising 30% and the monthly sales absorption rate per community rising 33% to 2.0. The cancellation rate fell to 15% from 24% in last year's quarter and 21% in the fourth quarter of 2009. No average price was reported for new orders. The company's JVs, which now include only3 communities, took 15 new orders, down from 50 in last year's quarter.
Backlog was up 19% in units to 821 and dollar value of backlog was up 31% to$278.2 million. The backlog value increase was also fueled by the increased mix of California home sales.
Gross margin, excluding impairments and previously capitalized interest costs, improved to 29.2% from 23.7% for the 2009 first quarter. Including those costs, the gross margin was 22.7%, up from 3.9% in the 2009 quarter.SG&A expenses (including corporate G&A) decreased $19.6 million, or 37%, to $32.8 million. The company's 2009 first quarter SG&A expenses included $12.0 million in restructuring charges related to severance and lease terminations. The rate from home sales was 18.7%.
Standard Pacific listed $50.7 million in land purchases on its books for the quarter, including 940 lots, 42% in California and 37% in the Carolinas.Also during the quarter, it approved the purchase of another $105 million in purchases, comprised of approximately 1,800 lots, 76% of which are finished, 11% partially developed and 13% raw. Approximately 56% of the approved purchases are transactions with developers and 25% with banks. As of March 31, 2010, the Company had outstanding approximately $179 million of approved land purchases and option contracts, of which $113 million is expected to be purchased in 2010 and $66 million expected to be purchased in 2011 and beyond.
The company's lot count, owned and controlled, was up 7% to 20,505. Spec homes were down 10% to 254.
Total consolidated debt was down to $1.15 billion from $1.2 billion at yearend 2009 and $1.45 billion at the end of last year's first quarter.Total debt-to-cap was at 73.2% at quarter's end, down from 73.4% at yearend2009 and 80.2% at the end of last year's quarter. Net debt-to-cap was 55.1% versus 56% and 67.% for the fourth and first quarters of 2009, respectively.
Standard Pacific's joint venture recourse debt was down 4% to $37.5 million.
The company ended the quarter with $577.5 million in home building cash and$14.1 million in restricted cash.
In a statement, Standard Pacific President and CEO Ken Campbell took note of the higher margins and lower overhead spending and said he was "encouraged by the growth in our land opportunities at prices that meet our return thresholds."
Carl Reichardt, home building analyst for Wells Fargo Securities, put out a note to investors noting the mixed message in the earnings report. "There were several positives in the quarter," he wrote. "Gross margin was strong, SPF was profitable in its core home building business and the company took no impairments. However, we believe the weaker-than-expected orders will be what investors focus on most and will be viewed negatively."
Reichardt added, "We are somewhat reluctant to extrapolate SPF's volume weakness to others in the group as we believe the company may be more margin focused than peers (at the expense of volume)."