Despite revenues and deliveries that were down by more than a third compared with last year, Standard Pacific Corp. posted a profit Tuesday of $4.5 million, $0.02 a share, for its third quarter, beating analyst consensus estimate of a $0.01 loss and last year's $0.10 a share loss.
It was the second positive quarter in a row for the Irvine, Calif.-based builder.
The profits were driven by higher average home prices, up 14% to $345,000 as well as gross margins that were at 23.6% versus 18.6% last year.
Still, both sales and deliveries of homes slipped meaningfully compared to the same quarter last year. The company delivered 599 new homes in the quarter, down 33% from 893 last year. And net new orders were down 38% to 555.
The earnings proved that the company is able to not lose money despite a severely depressed market. "Our ability to generate a profit at a delivery rate of 1.5 homes per community per month bodes well for us when the housing market returns to any level of normalcy," CEO Ken Campbell said in the earnings news release.
Those most recent sales rates portend a market that is not here yet.
"Unfortunately, it appears that the nation's economic recovery may take longer than many anticipated," Campbell said. "We will continue to manage through this downturn with a focus on rebuilding our land portfolio while keeping an eye on maintaining the proper balance between new investment and liquidity."
Standard Pacific has been busily buying land to prepare itself for the recovery when it does arrive. During its third quarter it approved, but hasn't closed on, $93 million of land comprised primarily of 2,000 lots, 32% finished, 43% partially developed and 25% raw. During the same time frame, it closed on 1,900 lots valued at $127 million, $91 million paid in cash and the other $32 million acquired through an investment in a joint venture.
Homebuilding revenues for the 2010 third quarter were $207.5 million, down 37% from $327.4 million for the 2009 third quarter.
The decrease in homebuilding revenues was driven primarily by a 33% decline in new home deliveries, offset in part by a 14% increase in consolidated average home price to $345,000 as compared to the 2009 third quarter/ The increase in average home price was largely due to the delivery of more higher priced homes in Southern California and a reduction in deliveries in Florida as compared to the 2009 third quarter.
Gross margin from home sales for the 2010 third quarter was 23.6% versus 18.6% for the year earlier period. The 500 basis point improvement in the 2010 third quarter gross margin from home sales was driven primarily by lower direct construction costs and higher margins in substantially all of our markets, and price increases in Southern California.
Excluding previously capitalized interest costs, gross margin from home sales for the 2010 third quarter was 29.7% versus 24.3% for the 2009 third quarter.
The Company's 2010 third quarter SG&A expenses (including Corporate G&A) was $36.3 million compared to $43.7 million for the 2009 third quarter, which included non-cash stock-based compensation charges of $3.1 million and $1.7 million, respectively.
The Company's 2010 third quarter SG&A rate from home sales was 17.6% versus an adjusted rate of 15.6% for the 2009 third quarter (2009 third quarter excludes $1.5 million in restructuring charges). The increase in the Company's SG&A rate was primarily the result of a 23% decrease in revenues from home sales.
Learn more about markets featured in this article: Los Angeles, CA.