Standard Pacific Corp. Monday night reported a $440.9 million loss ($6.80 per share) for the fourth quarter of 2007, including impairment charges of $433.5 million and a non-cash FAS 109 charge of $180.5 million to deferred income tax assets.
The company also reported that it had more than $219 million in cash on hand at the end of the quarter and cut the balance on its revolver by $163 million down to $90 million. It also began to retire its $150 million of 6 1/2% senior notes due October 1, 2008 through the open market purchase in the fourth quarter of $24 million of those notes, and it paid down its trust deed notes payable by nearly $66 million. It said it expects a tax refund of approximately $235 million during the 2008 first quarter.
Standard Pacific stock (NYSE:SPF) shot up at market open Tuesday and was trading up 13% at $5.20 by 10 a.m. Michael Rehaut, home building analyst at J.P. Morgan Securities, said in a research note that though he believes the run-up in builder stock prices has been premature, "overdone going-concern fears" about Standad Pacific will "drive relative outperformance." David Goldberg of UBS put out a note calling the company's results "impressive," but adding, "We remain concerned about the company's liquidity position moving forward, given that completed/in-progress unsold homes are ~10.4/community, among the highest level in the group. We would view a reduction in this favorably, as it would generate significant capital to meet near-term requirements."
The pretax loss from home building operations for the quarter was $385.3 million, driven by a 20% decrease in homebuilding revenues to $933.6 million, a negative 17.0% homebuilding gross margin percentage, a $36.3 million increase in joint venture loss (to a loss of $71.0 million) and an $18.4 million increase in other expense, which was partially offset by a $5.3 million decrease in the Company's absolute level of SG&A expenses.
The impairment charges consisted of $96.1 million related to ongoing consolidated real estate inventories; $211.4 million related to land sold or held for sale; $77.8 million related to the Company's share of joint venture inventory impairment charges; $11.8 million related to land deposit and capitalized preacquisition cost write-offs for abandoned projects; and $36.4 million in goodwill write-downs.
New-home orders were down 11% to 1,002. The cancellation rate fell to 37% from 44% during the same quarter last year and 35% in the previous quarter. New-home deliveries fell 23% to 2,150. Regionally, new-home deliveries were up 11% in California (4% in the south and 38% in the north); down 45% in the Southwest region; and down 33% in the Southeast. The company noted that it had exited the San Antonio and Tucson markets.
The company's average selling price fell 6% on a year-over-year basis to $384,000, but it was down more substantially in California, where it fell 21%; Arizona, where it fell 19%; and Florida, where it also was down 19%. The company's backlog was down 48% compared to fourth quarter, 2006, to 1,279 homes with a aggregate estimated value of $442.7 million, the latter down 50% from the same time in 2006.
The company's inventory of completed and unsold homes at yearend was up 22% from September 30, 2007 to 695 homes, a decrease of 1% compared to the peak at Dec. 31, 2006. The number of homes under construction decreased 37% from the year earlier period to 2,085 units.
During the quarter, Standard Pacific exited six joint ventures and reaped a net cash payment of $3.0 million. It accelerated the take down of lots from one Southern California venture while acquiring its share of unstarted lots from another Southern California joint venture. The absolute level of joint venture debt (including discontinued operations) declined year-over-year by 39% to $771 million. Since the end of 2006, the company said, it has reduced the number of lots in its joint ventures (including discontinued operations) by 45%.
For the 2007 fiscal year, Standard Pacific reported a net loss of $767.3 million ($11.85 per share). Home building revenues for the year were down 23% to $2.9 billion. Pretax impairment charges totalted $1,09 billion, including $456.1 million for ongoing consolidated real estate inventories; $336.0 million for land sold or held for sale; $211.8 million for the Company's share of joint venture inventory impairment charges; $23.1 million for land deposit and capitalized preacquisition cost write-offs for abandoned projects; $65.8 million for goodwill impairment charges; and the $180.5 million FAS 109 charge.
"As we enter 2008, we anticipate that housing market conditions will continue to weaken, resulting in a decrease in companywide deliveries," said Stephen J. Scarborough, Standard Pacific CEO and president. In response, we plan to cut new home starts, new community openings and spends for land acquisitions and site development costs, and continue to balance overhead to sales levels. Based on our current view of market conditions, we expect to generate positive cash flow during the year even after paying off the remaining balance of the 2008 senior notes."
