IRVINE, CALIFORNIA, February 3, 2010. Standard Pacific Corp. (NYSE:SPF) today announced operating results for its fourth quarter ended December 31, 2009. Homebuilding revenues for the quarter were $339.8 million, down 10% from $376.4 million for the fourth quarter of last year. The Company generated net income of $82.7 million, or $0.31 per diluted share, for the 2009 fourth quarter compared to a net loss of $397.8 million, or $1.65 per diluted share, for the year earlier period. Net income for the 2009 fourth quarter included an income tax benefit of $94.1 million related to recently enacted tax legislation that extended the carryback of net operating losses from two years to five years. The 2009 fourth quarter results included asset impairment charges of $11.2 million versus $443.6 million in the prior year quarter and also included $5.1 million in debt refinancing and other restructuring charges. Excluding asset impairment and restructuring charges and the tax benefit, the Company generated net income of $4.0 million* during the 2009 fourth quarter.
Homebuilding revenues for the year ended December 31, 2009 were $1.17 billion versus $1.54 billion in the prior year. The Company generated a net loss of $13.8 million, or $0.06 per diluted share, for 2009, compared to a net loss of $1.23 billion, or $9.14 per diluted share, for 2008.
The Company’s average home price for the fourth quarter was up 5% to $318,000 versus $302,000 for the 2009 third quarter and down 3% from the prior year quarter. On a same plan community basis, which adjusts for shifts in product mix, the fourth quarter average home price was up 1% over the 2009 third quarter and down 5% versus the 2008 fourth quarter. Gross margin from home sales for the fourth quarter was 18.1% versus 18.6% for the 2009 third quarter and, excluding impairments, was 20.3%* versus 18.6%* for the same periods.
The Company generated $100.9 million of cash flows from operations during the 2009 fourth quarter which included $39.3 million of proceeds from land sales and $35.3 million in land purchases. For the full year 2009, the Company generated $411.1 million of cash flows from operations and ended the year with $602.2 million of homebuilding cash (including $15.1 million of restricted cash). Excluding land purchases and proceeds from land sales, cash flows from operations for the year ended December 31, 2009 were $372.1 million*. In addition, the Company expects to receive a $103 million federal tax refund during the 2010 first quarter.
The Company reduced the principal amount of its homebuilding debt during 2009 by $322 million, from $1.51 billion to $1.19 billion. Homebuilding debt due before 2013 declined from $838 million to $239 million, and the Company ended the year with an adjusted net homebuilding debt to total adjusted book capital ratio of 56.0%* versus 67.8%* as of December 31, 2008. Unconsolidated joint venture recourse debt was reduced by $135.1 million during the year, bringing total joint venture recourse debt to $38.8 million as of December 31, 2009.
Ken Campbell, the Company’s President and CEO stated, “We are pleased with our fourth quarter results, particularly with the improvement in our gross margin and average selling price as compared to the 2009 third quarter, as well as with the significant level of cash generation we achieved. Notwithstanding the challenging economic and housing market conditions that exist, we look ahead to 2010 with the goals of returning to profitability and rebuilding our land portfolio.”
Mr. Campbell continued, “With over $600 million of cash, an anticipated tax refund in excess of $100 million and our ability to generate cash flows from operations, we believe we are well positioned to support our growth prospects and to withstand a further decline if the market takes longer to recover.”
Homebuilding Operations
The Company’s homebuilding pretax loss of $14.2 million for the 2009 fourth quarter included $11.2 million of asset impairment charges, $3.5 million of loss on early extinguishment of debt and $1.6 million in restructuring charges. The decrease in quarterly pretax loss from $445.5 million in the 2008 fourth quarter was primarily the result of a $432.4 million decrease in impairment charges and a $20.6 million decrease in the Company’s selling, general and administrative (“SG&A”) expenses. These improvements were partially offset by a $5.6 million increase in non-capitalized interest expense from $6.4 million to $12.0 million.
Revenues and Average Selling Price
Homebuilding revenues decreased 10% from the 2008 fourth quarter to $339.8 million during the 2009 fourth quarter primarily due to an 18% decrease in new home deliveries to 943 homes (exclusive of joint ventures) and a 3% decline in consolidated average home price to $318,000. These decreases were offset in part by a $39.2 million increase in land sale revenues as compared to the 2008 fourth quarter. The 2009 fourth quarter land sale revenues included $34.8 million attributable to the bulk sale of a finished podium project in Southern California, which resulted in a $2.9 million loss that was included in cost of land sales as an inventory impairment charge.
The year over year decrease in the fourth quarter average home price was primarily due to general price declines offset in part by a slight mix shift to more California deliveries. The Company’s 2009 fourth quarter average home price increased 5% to $318,000 as compared to $302,000 for the 2009 third quarter. The increase was primarily due to a greater distribution of homes delivered within California during the fourth quarter at higher average home prices.
Gross Margin
The Company’s homebuilding gross margin (including land sales) for the 2009 fourth quarter was 15.3% compared to a negative 78.6% in the prior year quarter. The 2009 fourth quarter gross margin included $10.9 million in inventory impairment charges, of which $6.6 million was included in cost of home sales related to one Southern California project and $4.3 million was included in cost of land sales related to a parcel of land in Florida and the sale of a Southern California podium project. Excluding land sales and the inventory impairment charges, the Company’s 2009 fourth quarter gross margin from home sales was 20.3%* versus 21.6%* for the 2008 fourth quarter and 18.6%* for the 2009 third quarter. The Company’s 2008 fourth quarter gross margin from home sales benefited from a $10.7 million reduction in its warranty accrual. The 170 basis point improvement in the 2009 fourth quarter gross margin from homes sales as compared to the 2009 third quarter was largely the result of a larger mix of California deliveries in the 2009 fourth quarter, lower direct construction costs and, to a lesser extent, price increases primarily in California. Adjusted gross margins from homes sales excluding impairments and previously capitalized interest included in cost of home sales for the 2009 fourth quarter was 26.9%* versus 24.3%* for the 2009 third quarter.
SG&A
The Company’s 2009 fourth quarter SG&A expenses (including Corporate G&A) decreased $20.6 million, from $70.0 million to $49.4 million, or 29%, from the year earlier period resulting in an SG&A rate of 14.5% versus 18.6% for the prior year period. The Company’s 2009 fourth quarter SG&A expenses included approximately $1.0 million in restructuring charges related primarily to severance and lease terminations versus $13.8 million in the prior year quarter. Excluding land sale revenues and restructuring charges, the Company’s 2009 fourth quarter SG&A rate was 16.1%* compared to 15.0%* in the 2008 fourth quarter. The higher SG&A rate was primarily due to a $7.0 million expense recorded during the 2009 fourth quarter related to incentive compensation (of which $4.1 million represented stock-based compensation). The 2008 fourth quarter SG&A rate benefited from the reversal of $9.5 million of incentive compensation expense. Adjusting the SG&A rate further to exclude the impact of compensation expense related to annual bonuses for these periods, our SG&A rate would have been 13.8%* for the 2009 fourth quarter versus 17.5%* for the year earlier period. The 2009 fourth quarter also included the amortization of $1.5 million in other stock-based compensation expense versus $778,000 in the year earlier period.
Net New Orders and Backlog
Net new orders (excluding joint ventures and discontinued operations) for the 2009 fourth quarter increased 1% from the 2008 fourth quarter to 547 new homes on a 28% decrease in the number of average active selling communities from 172 in the 2008 fourth quarter to 124 for the 2009 fourth quarter. The Company’s monthly sales absorption rate for the 2009 fourth quarter was 1.5 per community, up from the prior year fourth quarter rate of 1.0 per community, but down from 2.2 per community for the 2009 third quarter. The Company’s cancellation rate for the three months ended December 31, 2009 was 21%, down from 33% for the 2008 fourth quarter, but up from 15% for the 2009 third quarter. The Company’s cancellation rate as a percentage of beginning backlog was 15% for the 2009 fourth quarter, compared to 21% in the year earlier period and 17% in the 2009 third quarter.
The dollar value of the Company’s backlog (excluding joint ventures) increased 7% to $207.9 million, or 599 homes, as compared to the 2008 fourth quarter value, but was down 37% from the 2009 third quarter backlog value.
Earnings Conference Call
A conference call to discuss the Company’s 2009 fourth quarter will be held at 1:00 p.m. Eastern Time Thursday, February 4, 2010. The call will be broadcast live over the Internet and can be accessed through the Company’s website at http://standardpacifichomes.com/ir. The call will also be accessible via telephone by dialing (888) 599-4883 (domestic) or (913) 312-1475 (international); Passcode: 8400892. The entire audio transmission with the synchronized slide presentation will be available on our website for replay within 2 to 3 hours following the live broadcast, and can be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international); Passcode: 8400892.
About Standard Pacific
Standard Pacific, one of the nation’s largest homebuilders, has built more than 110,000 homes during its 44-year history. The Company constructs homes within a wide range of price and size targeting a broad range of homebuyers. Standard Pacific operates in many of the largest housing markets in the country with operations in major metropolitan areas in California, Florida, Arizona, the Carolinas, Texas, Colorado and Nevada. For more information about the Company and its new home developments, please visit our website at: www.standardpacifichomes.com.
This news release contains forward-looking statements. These statements include but are not limited to our ability to rebuild our land portfolio; statements regarding trends in new home orders, deliveries, average home price and backlog; anticipated cash flows and future profitability; the sufficiency of our liquidity to support growth and to withstand further market declines; an expected tax refund; the value of our deferred tax asset; and the future condition of the housing market. Forward-looking statements are based on our current expectations or beliefs regarding future events or circumstances, and you should not place undue reliance on these statements. Such statements involve known and unknown risks, uncertainties, assumptions and other factors many of which are out of the Company’s control and difficult to forecast that may cause actual results to differ materially from those that may be described or implied. Such factors include but are not limited to: local and general economic and market conditions, including consumer confidence, employment rates, interest rates, the cost and availability of mortgage financing, and stock market, home and land valuations; the impact on economic conditions of terrorist attacks or the outbreak or escalation of armed conflict involving the United States; the cost and availability of suitable undeveloped land, building materials and labor; the cost and availability of construction financing and corporate debt and equity capital; our significant amount of debt and the impact of restrictive covenants in our credit agreements, public notes, and private term loans and our ability to comply with their covenants and repay such debt as it comes due; a negative change in our credit rating or outlook; the demand for and affordability of single-family homes; the supply of housing for sale; cancellations of purchase contracts by homebuyers; the cyclical and competitive nature of the Company’s business; governmental regulation, including the impact of "slow growth" or similar initiatives; delays in the land entitlement process, development, construction, or the opening of new home communities; adverse weather conditions and natural disasters; environmental matters; risks relating to the Company’s mortgage banking operations; future business decisions and the Company’s ability to successfully implement the Company’s operational and other strategies; litigation and warranty claims; and other risks discussed in the Company’s filings with the Securities and Exchange Commission, including in the Company’s Annual Report on Form 10-K for the year ended Dec. 31, 2008 and subsequent Quarterly Reports on Form 10-Q. The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements. The Company nonetheless reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
Contact:
John Stephens, SVP & CFO (949) 789-1641, jstephens@stanpac.com
| | *Please see “Reconciliation of Non-GAAP Financial Measures” on page 10. |
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