Standard Pacific Corp., Irvine, Calif. (NYSE:SPF) reported a net loss of$14.8 million, or -$0.04 per diluted share, for the first quarter ended March 31. The loss compares to a net loss of $5.1 million, or -$0.02 per diluted share, for the year earlier period. Wall Street was expecting a loss this quarter of two cents per share.
Home sale revenues fell 18% to $143.7 million for the quarter as closings dropped 18% to 439. The average home price ticked up a bit from $326,000 to $327,000 due to a mix shift, lower pricing and fewer deliveries in California.
New orders fell 14% to 652 homes despite a 10% increase in the number of average active selling communities from 126 to 138. The monthly sales absorption rate for the quarter fell to 1.6 per community from 2.0 per community for the 2010 first quarter. The cancellation rate was 14%, down from 15% for the 2010 first quarter and 23% for the 2010 fourth quarter.
Backlog at quarter's end was down 24% to 627 homes with an aggregate value of $211.8, down 24% from the same time last year.
Gross margin from home sales fell to 20.5% from 22.7% for the year earlier period, due in part to competitive pricing pressure, a mix shift to more deliveries from lower margin projects and, to a lesser extent, a reduction in the percentage of California deliveries as compared to the 2010 first quarter.
SG&A (including Corporate G&A) was virutually flat--$32.3 million compared to $32.8 million for the 2010 first quarter--and included noncash stock-based compensation expenses of $1.9 million and $2.0 million, respectively and approximately $0.6 million in restructuring charges related to employee severance costs. The SG&A rate from home sales was 22.5% versus 18.7% for the 2010 first quarter.
Standard Pacific approved the purchase of 2,000 lots for a total of $122 million and purchased 1,100 lots for $87 million during the quarter. At quarter's end, lot count was 25,505, up from 20,505 at the same time last year, with 18,221 owned, 5,844 optioned or under contract and 1,440 related to joint ventures.
The company ended the quarter with $619.8 million in cash, down 17% from the yearend, 2010, but up from $591.7 million at the end of last year's quarter and listed $1.32 billion in debt, roughly flat with yearend. Debt related to joint ventures declined 74% to $995,000. Total debt to book capitalization was 68.6%, down from 72.7%. The debt-to-total-adjusted-capitalization ratio was 53.4%, down from 55.1%.
"Despite challenging housing market conditions, we continued to make progress with our strategy of opening new communities," said Ken Campbell, Standard Pacific CEO. "We opened 18 new communities during the quarter and expect to open another 22 communities by the middle of the year, representing a 20% increase in community count compared to last year and bringing our total community count to north of 155."
Adam Rudiger, home building analyst at Wells Fargo Securities, was modestly upbeat despite the earnings miss. In a note to investors, he wrote, "Consistent with recently reported financial results from other builders, orders were weaker than expected and gross margins were negatively impacted by competitive pricing pressure. SPF remains committed to its strategy of acquiring land during depressed periods of demand however, with an 8% sequential increase in lots controlled. Community count increased on a yr/yr basis for the second consecutive quarter and management expects that by mid-year, community count should be up by 20% vs. last year, which should help SPF grow revenues and cover its fixed costs in late 2011 and 2012."