Standard Pacific Corp. late today (April 26) announced a $40.8 million (-0.62 per share) first-quarter loss overall and a $67.3 million loss on home building operations on home building revenues of $698 million versus $879 million last year.
The home building results reflect $130.2 million in charges related to inventory and joint-venture impairments, $86.1 million related to consolidated real estate inventories and $44.1 million related to joint venture inventory impairment. New home deliveries were off 24% to 1,868 from 2,473 in last year's first quarter. Net new home orders were down 22% to 1,941.
The Company's consolidated cancellation rate for the 2007 first quarter was 25% of gross orders during the quarter compared to 25% in the 2006 first quarter and 43% in the 2006 fourth quarter. The Company's cancellation rate as a percentage of beginning backlog for the quarter was 24% compared to 13% last year. Its SG&A rate rose to 14.4% from 13.0% last year. Standard Pacific's average home price (excluding joint ventures) increased 2% to $361,000.
"The Company's 2007 first quarter results reflect the challenges the industry faces in most of the major markets across the country," said Stephen J. Scarborough, president and CEO. "Overall, sales rates continue to be sluggish in many markets reflecting continued high inventory levels and buyers' concerns over home price stability. With that being said, however, there were a few bright spots. We saw a continuation of the improved order levels that we began to see in the fourth quarter of last year in both our Southern and Northern California regions, including increased absorption rates and significantly lower cancellation rates. While this activity has come as a result of our more aggressive pricing strategy, it does show that demand exists at the right price. In addition, as a result of the Company's focus on its balance sheet, we generated a modest level of cash flow during the quarter which was used to reduce a portion of our consolidated debt."
Regionally, deliveries were off 39% in Southern California to 276 new homes (excluding 58 joint venture deliveries). Deliveries were down 7% in Northern California to 157 (excluding 23 joint venture deliveries). In Florida, deliveries were down 50% to 358, representing a 50% year-over-year decline. In Arizona, the company delivered 434 homes (excluding 4 joint venture deliveries) during the 2007 first quarter, a 21% increase from the 2006 first quarter. In the Carolinas, deliveries were off 22% to 183. New home deliveries were down 13% in Texas to 378 new homes. Deliveries were off 30% in Colorado to 77.
Net new home orders were off 6% year-over-year for the quarter in Southern California on a 9% higher average community count. In Northern California, net new home orders were up 117% on an 85% higher average community count. Net new home orders were down 44% in Florida on a 2% lower community count. In Arizona, net new home orders were down 48% for the first quarter on a 7% lower average community count. Orders were up 9% in the Carolinas on a 24% higher community count, and down 36% in Texas on a 5% higher average community count for the first quarter. In Colorado, orders were down 26% on an 8% higher community count.
The 2007 first quarter backlog of 2,712 presold homes (excluding 215 joint venture homes) was valued at $983 million (excluding $131 million of joint venture backlog), a decrease of 58% from the March 31, 2006 backlog value.
In the 2007 first quarter, the Company's financial services subsidiary generated pretax income of $1.2 million compared to a small loss in the year earlier period. The increase in profitability was driven primarily by a 57% higher level of loan sales, combined with an increase in origination fees and margins (in basis points) on loans sold, partially offset by a decline in the amount of net interest income earned on loans held for sale.
Financial services joint-venture income, which is derived from mortgage banking joint ventures with third party financial institutions operating in conjunction with home building divisions in the Carolinas, and Tampa, Orlando and Southwestern Florida, was down 61% to $259,000. The lower level of income was due to the declining level of new home deliveries combined with the transition of the Company's Colorado operations during 2006 from a joint venture arrangement to the Company's wholly owned financial services subsidiary.