Exhibit 99.1
News Release
Standard Pacific Corp. Reports 2012 Second Quarter Results
Q2 2012 Net Income of $14.3 million, or $0.04 per diluted share
Q2 2012 Net New Orders up 45% vs. Q2 2011
IRVINE, CALIFORNIA, July 26, 2012. Standard Pacific Corp. (NYSE: SPF) today announced results for the second quarter ended June 30, 2012.
2012 Second Quarter Highlights and Comparisons to the 2011 Second Quarter:
| · | Net income of $14.3 million, or $0.04 per diluted share, vs. net loss of $10.5 million, or $0.03 per diluted share |
| · | Net new orders of 1,108, up 45% |
| · | Backlog of 1,266 homes, up 62% |
| · | 157 average active selling communities, up 3% |
| · | Homebuilding revenues up 35% |
| o | Average selling price of $337 thousand, up 1% |
| o | 815 new home deliveries, up 34% |
| · | Gross margin from home sales of 20.5%, compared to 17.0% (20.0%* excluding impairments in Q2 2011) |
| · | SG&A rate from home sales of 15.3%, a 350 basis point improvement |
| · | Operating cash outflows of $56.6 million, a $65.4 million improvement from $122.0 million |
| o | $131.1 million of land purchases and development costs, compared to $123.8 million |
| · | Adjusted Homebuilding EBITDA of $41.8 million*, or 15.2%* of homebuilding revenues, compared to $23.7 million*, or 11.6%* of homebuilding revenues |
| · | Homebuilding cash balance of $317 million |
Scott Stowell, the Company’s Chief Executive Officer and President commented, “We are pleased that the positive momentum we experienced during the first quarter of 2012 continued into the second quarter. We earned $14.3 million, or $0.04 cents per share, with deliveries up 34%, revenues up 35%, orders up 45% and homes in backlog up 62% over the prior year period. Our solid second quarter results reflect the execution of our strategy and continued improvement in housing market conditions during the quarter.”
Home sale revenues for the 2012 second quarter increased 35% from $204.2 million for the 2011 second quarter to $274.9 million, primarily due to a 34% increase in new home deliveries (excluding joint ventures) to 815 homes. The increase in new home deliveries was driven by a 55% increase in the number of homes in backlog at the beginning of the quarter as compared to the prior year period and a 13% increase in speculative homes sold and delivered during the quarter to 285 homes, compared to 253 homes.
Gross margin from home sales for the 2012 second quarter increased to 20.5% compared to 17.0% (20.0%* excluding $6.0 million of inventory impairment charges) in the prior year period, primarily attributable to the improvement in gross margins from speculative homes sold and delivered during the quarter, offset by an increase in previously capitalized interest included in cost of home sales. Excluding inventory impairment charges and previously capitalized interest costs, gross margin from home sales was 29.4%* for the 2012 second quarter versus 27.9%* for the 2011 second quarter.
The Company’s 2012 second quarter SG&A expenses (including Corporate G&A) were $42.0 million compared to $38.4 million for the prior year period, down 350 basis points as a percentage of home sale revenues to 15.3%, compared to 18.8% (17.8%* excluding $2.2 million of severance and other charges related to executive management changes) for the 2011 second quarter. The improvement in the Company’s SG&A
rate was primarily due to a 35% increase in revenues from home sales and the operating leverage inherent in our business. The Company’s G&A expenses (excluding incentive and stock-based compensation and charges related to executive management changes) were $21.0 million for the 2012 second quarter, compared to $20.8 million for the 2011 second quarter and $20.9 million for the 2012 first quarter.
Net new orders (excluding joint ventures) for the 2012 second quarter increased 45% from the 2011 second quarter to 1,108 homes on a slight increase in the number of average active selling communities, from 153 to 157, reflecting an increase in the Company’s monthly sales absorption rate for the 2012 second quarter to 2.4 per community, compared to 1.7 per community for the 2011 second quarter and 2.0 per community for the 2012 first quarter. The Company’s cancellation rate for the 2012 second quarter was 11%, compared to 14% for the 2011 second quarter and 13% for the 2012 first quarter.
The dollar value of homes in backlog (excluding joint ventures) increased 50% to $439.7 million, or 1,266 homes, compared to $293.8 million, or 781 homes, for the 2011 second quarter, and increased 32% compared to $331.9 million, or 973 homes, for the 2012 first quarter. The increase in year over year backlog value was driven primarily by a 45% increase in net new orders.
The Company used $56.6 million of cash in operating activities for the 2012 second quarter versus $122.0 million in the 2011 second quarter. Cash flows used in operating activities for the 2012 second quarter included $96.6 million of cash land purchases and $34.5 million of land development costs, compared to $92.2 million and $31.6 million, respectively, for the 2011 second quarter. Excluding land purchases and development costs, cash inflows from operating activities for the 2012 second quarter were $74.5 million* versus $1.9 million* in the 2011 second quarter. The year over year increase in cash inflows from operating activities (excluding land purchases and development costs) was primarily due to a 35% increase in home sale revenues.
The Company purchased $96.6 million of land (2,238 homesites) during the 2012 second quarter. Approximately 36% of land purchases (based on land value) were located in California and 32% in Florida, with the balance spread throughout the Company’s other operations. As of June 30, 2012, the Company owned or controlled 27,757 homesites, of which 14,966 owned homesites are actively selling or under development. The homesites owned that are actively selling or under development represent a 5.1 year supply based on the Company’s deliveries for the trailing twelve months ended June 30, 2012.
Earnings Conference Call
A conference call to discuss the Company’s 2012 second quarter results will be held at 12:00 p.m. Eastern time July 27, 2012. The call will be broadcast live over the Internet and can be accessed through the Company’s website at http://ir.standardpacifichomes.com. The call will also be accessible via telephone by dialing (888) 204-4426 (domestic) or (913) 312-1457 (international); Passcode: 4884756. The audio transmission with the 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: 4884756.
About Standard Pacific
Standard Pacific, one of the nation’s largest homebuilders, has built more than 115,000 homes during its 47-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 and Colorado. 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 statements regarding new home orders, deliveries, backlog, average home price, revenue, profitability, cash flow, liquidity, gross margins, overhead expenses and other costs; community count growth; product mix; execution on our strategy; and the future condition of the economy and 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.
2
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, 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 debt agreements; our ability to repay our debt as it comes due; changes 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, 2011 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:
Jeff McCall, EVP & CFO (949) 789-1655, jmccall@stanpac.com
| *Please see “Reconciliation of Non-GAAP Financial Measures” beginning on page 10. |
| ### |
| (Note: Tables Follow) |
3
KEY STATISTICS AND FINANCIAL DATA1
| As of or For the Three Months Ended | ||||||||||||||
| June 30, | June 30, | Percentage | March 31, | Percentage | ||||||||||
| 2012 | 2011 | or % Change | 2012 | or % Change | ||||||||||
| Operating Data | (Dollars in thousands) | |||||||||||||
| Deliveries | 815 | 610 | 34% | 642 | 27% | |||||||||
| Average selling price | $ | 337 | $ | 335 | 1% | $ | 343 | (2%) | ||||||
| Home sale revenues | $ | 274,872 | $ | 204,236 | 35% | $ | 220,317 | 25% | ||||||
| Gross margin % | 20.5% | 17.0% | 3.5% | 20.0% | 0.5% | |||||||||
| Gross margin % from home sales (excluding impairments)* | 20.5% | 20.0% | 0.5% | 20.3% | 0.2% | |||||||||
| Gross margin % from home sales (excluding impairments and | ||||||||||||||
| interest amortized to cost of home sales)* | 29.4% | 27.9% | 1.5% | 28.7% | 0.7% | |||||||||
| Inventory impairments | $ | ― | $ | 5,959 | (100%) | $ | ― | ― | ||||||
| Severance and other charges | $ | ― | $ | 2,178 | (100%) | $ | ― | ― | ||||||
| Incentive and stock-based compensation expense | $ | 4,676 | $ | 4,178 | 12% | $ | 3,905 | 20% | ||||||
| Selling expenses | $ | 16,311 | $ | 11,306 | 44% | $ | 12,866 | 27% | ||||||
| G&A expenses (excluding incentive and stock-based compensation | ||||||||||||||
| expenses and severance and other charges) | $ | 20,965 | $ | 20,781 | 1% | $ | 20,921 | 0% | ||||||
| SG&A expenses | $ | 41,952 | $ | 38,443 | 9% | $ | 37,692 | 11% | ||||||
| SG&A % from home sales | 15.3% | 18.8% | (3.5%) | 17.1% | (1.8%) | |||||||||
| SG&A % from home sales (excluding severance and other charges)* | 15.3% | 17.8% | (2.5%) | 17.1% | (1.8%) | |||||||||
| Net new orders | 1,108 | 764 | 45% | 934 | 19% | |||||||||
| Average active selling communities | 157 | 153 | 3% | 158 | (1%) | |||||||||
| Monthly sales absorption rate per community | 2.4 | 1.7 | 41% | 2.0 | 20% | |||||||||
| Cancellation rate | 11% | 14% | (3%) | 13% | (2%) | |||||||||
| Gross cancellations | 138 | 129 | 7% | 144 | (4%) | |||||||||
| Cancellations from current quarter sales | 72 | 64 | 13% | 79 | (9%) | |||||||||
| Backlog (homes) | 1,266 | 781 | 62% | 973 | 30% | |||||||||
| Backlog (dollar value) | $ | 439,694 | $ | 293,804 | 50% | $ | 331,884 | 32% | ||||||
| Cash flows (uses) from operating activities | $ | (56,600) | $ | (121,963) | 54% | $ | (42,118) | (34%) | ||||||
| Cash flows (uses) from investing activities | $ | (5,545) | $ | (5,475) | (1%) | $ | (2,346) | (136%) | ||||||
| Cash flows (uses) from financing activities | $ | (11,638) | $ | 12,938 | $ | 6,607 | ||||||||
| Land purchases | $ | 96,584 | $ | 92,171 | 5% | $ | 33,986 | 184% | ||||||
| Adjusted Homebuilding EBITDA* | $ | 41,810 | $ | 23,678 | 77% | $ | 31,768 | 32% | ||||||
| Adjusted Homebuilding EBITDA Margin %* | 15.2% | 11.6% | 3.6% | 14.2% | 1.0% | |||||||||
| Homebuilding interest incurred | $ | 35,305 | $ | 35,353 | (0%) | $ | 35,315 | (0%) | ||||||
| Homebuilding interest capitalized to inventories owned | $ | 31,876 | $ | 26,186 | 22% | $ | 30,992 | 3% | ||||||
| Homebuilding interest capitalized to investments in JVs | $ | 1,812 | $ | 1,723 | 5% | $ | 1,793 | 1% | ||||||
| Interest amortized to cost of sales (incl. cost of land sales) | $ | 24,465 | $ | 16,146 | 52% | $ | 18,575 | 32% | ||||||
| As of | ||||||||||||||
| June 30, | March 31, | Percentage | December 31, | Percentage | ||||||||||
| 2012 | 2012 | or % Change | 2011 | or % Change | ||||||||||
| Balance Sheet Data | (Dollars in thousands, except per share amounts) | |||||||||||||
| Homebuilding cash (including restricted cash) | $ | 317,242 | $ | 394,368 | (20%) | $ | 438,157 | (28%) | ||||||
| Inventories owned | $ | 1,605,138 | $ | 1,525,930 | 5% | $ | 1,477,239 | 9% | ||||||
| Homesites owned and controlled | 27,757 | 26,117 | 6% | 26,444 | 5% | |||||||||
| Homes under construction | 1,317 | 990 | 33% | 940 | 40% | |||||||||
| Completed specs | 239 | 349 | (32%) | 383 | (38%) | |||||||||
| Deferred tax asset valuation allowance | $ | 499,701 | $ | 507,208 | (1%) | $ | 510,621 | (2%) | ||||||
| Homebuilding debt | $ | 1,319,682 | $ | 1,326,080 | (0%) | $ | 1,324,948 | (0%) | ||||||
| Stockholders' equity | $ | 656,624 | $ | 637,912 | 3% | $ | 623,754 | 5% | ||||||
| Stockholders' equity per share (including if-converted | ||||||||||||||
| preferred stock)* | $ | 1.91 | $ | 1.86 | 3% | $ | 1.82 | 5% | ||||||
| Total consolidated debt to book capitalization | 67.5% | 68.3% | (0.8%) | 68.7% | (1.2%) | |||||||||
| Adjusted net homebuilding debt to total adjusted | ||||||||||||||
| book capitalization* | 60.4% | 59.4% | 1.0% | 58.7% | 1.7% | |||||||||
1All statistical numbers exclude unconsolidated joint ventures unless noted otherwise.
*Please see “Reconciliation of Non-GAAP Financial Measures” beginning on page 10.
4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Homebuilding: | ||||||||||||||||
| Home sale revenues | $ | 274,872 | $ | 204,236 | $ | 495,189 | $ | 347,935 | ||||||||
| Land sale revenues | ― | 109 | 3,385 | 109 | ||||||||||||
| Total revenues | 274,872 | 204,345 | 498,574 | 348,044 | ||||||||||||
| Cost of home sales | (218,586 | ) | (169,433 | ) | (394,181 | ) | (283,745 | ) | ||||||||
| Cost of land sales | ― | (114 | ) | (3,366 | ) | (114 | ) | |||||||||
| Total cost of sales | (218,586 | ) | (169,547 | ) | (397,547 | ) | (283,859 | ) | ||||||||
| Gross margin | 56,286 | 34,798 | 101,027 | 64,185 | ||||||||||||
| Gross margin % | 20.5 | % | 17.0 | % | 20.3 | % | 18.4 | % | ||||||||
| Selling, general and administrative expenses | (41,952 | ) | (38,443 | ) | (79,644 | ) | (70,704 | ) | ||||||||
| Loss from unconsolidated joint ventures | (1,146 | ) | (379 | ) | (2,668 | ) | (636 | ) | ||||||||
| Interest expense | (1,617 | ) | (7,444 | ) | (4,147 | ) | (17,959 | ) | ||||||||
| Other income (expense) | 307 | 977 | 4,591 | 1,269 | ||||||||||||
| Homebuilding pretax income (loss) | 11,878 | (10,491 | ) | 19,159 | (23,845 | ) | ||||||||||
| Financial Services: | ||||||||||||||||
| Revenues | 5,405 | 2,535 | 9,031 | 3,595 | ||||||||||||
| Expenses | (2,915 | ) | (2,429 | ) | (5,175 | ) | (4,847 | ) | ||||||||
| Other income | 84 | 41 | 147 | 56 | ||||||||||||
| Financial services pretax income (loss) | 2,574 | 147 | 4,003 | (1,196 | ) | |||||||||||
| Income (loss) before income taxes | 14,452 | (10,344 | ) | 23,162 | (25,041 | ) | ||||||||||
| Provision for income taxes | (189 | ) | (175 | ) | (376 | ) | (275 | ) | ||||||||
| Net income (loss) | 14,263 | (10,519 | ) | 22,786 | (25,316 | ) | ||||||||||
| Less: Net (income) loss allocated to preferred shareholder | (6,130 | ) | 4,554 | (9,807 | ) | 10,968 | ||||||||||
| Less: Net (income) loss allocated to unvested restricted stock | (15 | ) | ― | (12 | ) | ― | ||||||||||
| Net income (loss) available to common stockholders | $ | 8,118 | $ | (5,965 | ) | $ | 12,967 | $ | (14,348 | ) | ||||||
| Income (Loss) Per Common Share: | ||||||||||||||||
| Basic | $ | 0.04 | $ | (0.03 | ) | $ | 0.07 | $ | (0.07 | ) | ||||||
| Diluted | $ | 0.04 | $ | (0.03 | ) | $ | 0.06 | $ | (0.07 | ) | ||||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||
| Basic | 195,746,733 | 193,577,324 | 195,427,992 | 193,369,182 | ||||||||||||
| Diluted | 201,340,622 | 193,577,324 | 200,564,039 | 193,369,182 | ||||||||||||
| Weighted average additional common shares outstanding | ||||||||||||||||
| if preferred shares converted to common shares | 147,812,786 | 147,812,786 | 147,812,786 | 147,812,786 | ||||||||||||
| Total weighted average diluted common shares outstanding | ||||||||||||||||
| if preferred shares converted to common shares | 349,153,408 | 341,390,110 | 348,376,825 | 341,181,968 | ||||||||||||
5
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| (Dollars in thousands) | ||||||||
| ASSETS | (Unaudited) | |||||||
| Homebuilding: | ||||||||
| Cash and equivalents | $ | 292,107 | $ | 406,785 | ||||
| Restricted cash | 25,135 | 31,372 | ||||||
| Trade and other receivables | 18,987 | 11,525 | ||||||
| Inventories: | ||||||||
| Owned | 1,605,138 | 1,477,239 | ||||||
| Not owned | 86,434 | 59,840 | ||||||
| Investments in unconsolidated joint ventures | 85,465 | 81,807 | ||||||
| Deferred income taxes, net | 3,360 | 5,326 | ||||||
| Other assets | 34,825 | 35,693 | ||||||
| Total Homebuilding Assets | 2,151,451 | 2,109,587 | ||||||
| Financial Services: | ||||||||
| Cash and equivalents | 6,775 | 3,737 | ||||||
| Restricted cash | 1,295 | 1,295 | ||||||
| Mortgage loans held for sale, net | 70,091 | 73,811 | ||||||
| Mortgage loans held for investment, net | 9,522 | 10,115 | ||||||
| Other assets | 3,187 | 1,838 | ||||||
| Total Financial Services Assets | 90,870 | 90,796 | ||||||
| Total Assets | $ | 2,242,321 | $ | 2,200,383 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Homebuilding: | ||||||||
| Accounts payable | $ | 16,376 | $ | 17,829 | ||||
| Accrued liabilities | 203,387 | 185,890 | ||||||
| Secured project debt and other notes payable | 4,934 | 3,531 | ||||||
| Senior notes payable | 1,276,258 | 1,275,093 | ||||||
| Senior subordinated notes payable | 38,490 | 46,324 | ||||||
| Total Homebuilding Liabilities | 1,539,445 | 1,528,667 | ||||||
| Financial Services: | ||||||||
| Accounts payable and other liabilities | 1,825 | 1,154 | ||||||
| Mortgage credit facilities | 44,427 | 46,808 | ||||||
| Total Financial Services Liabilities | 46,252 | 47,962 | ||||||
| Total Liabilities | 1,585,697 | 1,576,629 | ||||||
| Equity: | ||||||||
| Stockholders' Equity: | ||||||||
| Preferred stock, $0.01 par value; 10,000,000 shares | ||||||||
| authorized; 450,829 shares issued and outstanding | ||||||||
| at June 30, 2012 and December 31, 2011 | 5 | 5 | ||||||
| Common stock, $0.01 par value; 600,000,000 shares | ||||||||
| authorized; 199,933,447 and 198,563,273 shares | ||||||||
| issued and outstanding at June 30, 2012 and | ||||||||
| and December 31, 2011, respectively | 1,999 | 1,985 | ||||||
| Additional paid-in capital | 1,246,058 | 1,239,180 | ||||||
| Accumulated deficit | (585,983 | ) | (608,769 | ) | ||||
| Accumulated other comprehensive loss, net of tax | (5,455 | ) | (8,647 | ) | ||||
| Total Equity | 656,624 | 623,754 | ||||||
| Total Liabilities and Equity | $ | 2,242,321 | $ | 2,200,383 | ||||
INVENTORIES
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| (Dollars in thousands) | ||||||||
| (Unaudited) | ||||||||
| Inventories Owned: | ||||||||
| Land and land under development | $ | 1,087,209 | $ | 1,036,829 | ||||
| Homes completed and under construction | 402,900 | 339,849 | ||||||
| Model homes | 115,029 | 100,561 | ||||||
| Total inventories owned | $ | 1,605,138 | $ | 1,477,239 | ||||
| Inventories Owned by Segment: | ||||||||
| California | $ | 914,633 | $ | 890,300 | ||||
| Southwest | 337,225 | 302,686 | ||||||
| Southeast | 353,280 | 284,253 | ||||||
| Total inventories owned | $ | 1,605,138 | $ | 1,477,239 | ||||
6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Cash Flows From Operating Activities: | ||||||||||||||||
| Net income (loss) | $ | 14,263 | $ | (10,519 | ) | $ | 22,786 | $ | (25,316 | ) | ||||||
| Adjustments to reconcile net income (loss) to net cash | ||||||||||||||||
| provided by (used in) operating activities: | ||||||||||||||||
| Amortization of stock-based compensation | 1,885 | 3,537 | 2,959 | 5,459 | ||||||||||||
| Inventory impairment charges and deposit write-offs | ― | 5,959 | 133 | 5,959 | ||||||||||||
| Other operating activities | 1,912 | 1,273 | 4,040 | 2,558 | ||||||||||||
| Changes in cash and equivalents due to: | ||||||||||||||||
| Trade and other receivables | (471 | ) | (10,330 | ) | (7,462 | ) | (11,493 | ) | ||||||||
| Mortgage loans held for sale | (4,430 | ) | (15,064 | ) | 4,103 | (4,770 | ) | |||||||||
| Inventories - owned | (70,986 | ) | (88,912 | ) | (115,187 | ) | (194,058 | ) | ||||||||
| Inventories - not owned | (872 | ) | (9,990 | ) | (3,499 | ) | (12,800 | ) | ||||||||
| Other assets | (1,105 | ) | (1,112 | ) | (77 | ) | 2,028 | |||||||||
| Accounts payable | (3,368 | ) | 793 | (1,453 | ) | (138 | ) | |||||||||
| Accrued liabilities | 6,572 | 2,402 | (5,061 | ) | 458 | |||||||||||
| Net cash provided by (used in) operating activities | (56,600 | ) | (121,963 | ) | (98,718 | ) | (232,113 | ) | ||||||||
| Cash Flows From Investing Activities: | ||||||||||||||||
| Investments in unconsolidated homebuilding joint ventures | (5,414 | ) | (5,451 | ) | (8,281 | ) | (8,820 | ) | ||||||||
| Other investing activities | (131 | ) | (24 | ) | 390 | (704 | ) | |||||||||
| Net cash provided by (used in) investing activities | (5,545 | ) | (5,475 | ) | (7,891 | ) | (9,524 | ) | ||||||||
| Cash Flows From Financing Activities: | ||||||||||||||||
| Change in restricted cash | 2,663 | (1,401 | ) | 6,237 | (5,576 | ) | ||||||||||
| Principal payments on secured project debt and other notes payable | (178 | ) | (118 | ) | (644 | ) | (523 | ) | ||||||||
| Principal payments on senior subordinated notes payable | (9,990 | ) | ― | (9,990 | ) | ― | ||||||||||
| Net proceeds from (payments on) mortgage credit facilities | (5,102 | ) | 14,178 | (2,381 | ) | 4,529 | ||||||||||
| Other financing activities | 969 | 279 | 1,747 | (4,489 | ) | |||||||||||
| Net cash provided by (used in) financing activities | (11,638 | ) | 12,938 | (5,031 | ) | (6,059 | ) | |||||||||
| Net increase (decrease) in cash and equivalents | (73,783 | ) | (114,500 | ) | (111,640 | ) | (247,696 | ) | ||||||||
| Cash and equivalents at beginning of period | 372,665 | 598,175 | 410,522 | 731,371 | ||||||||||||
| Cash and equivalents at end of period | $ | 298,882 | $ | 483,675 | $ | 298,882 | $ | 483,675 | ||||||||
| Cash and equivalents at end of period | $ | 298,882 | $ | 483,675 | $ | 298,882 | $ | 483,675 | ||||||||
| Homebuilding restricted cash at end of period | 25,135 | 33,814 | 25,135 | 33,814 | ||||||||||||
| Financial services restricted cash at end of period | 1,295 | 2,870 | 1,295 | 2,870 | ||||||||||||
| Cash and equivalents and restricted cash at end of period | $ | 325,312 | $ | 520,359 | $ | 325,312 | $ | 520,359 | ||||||||
7
REGIONAL OPERATING DATA
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2012 | 2011 | % Change | 2012 | 2011 | % Change | ||||||||||
| New homes delivered: | |||||||||||||||
| California | 316 | 231 | 37% | 541 | 401 | 35% | |||||||||
| Arizona | 64 | 43 | 49% | 110 | 78 | 41% | |||||||||
| Texas | 137 | 96 | 43% | 261 | 172 | 52% | |||||||||
| Colorado | 23 | 27 | (15%) | 47 | 44 | 7% | |||||||||
| Nevada | 6 | 5 | 20% | 9 | 10 | (10%) | |||||||||
| Florida | 134 | 111 | 21% | 260 | 173 | 50% | |||||||||
| Carolinas | 135 | 97 | 39% | 229 | 171 | 34% | |||||||||
| Consolidated total | 815 | 610 | 34% | 1,457 | 1,049 | 39% | |||||||||
| Unconsolidated joint ventures | 10 | 6 | 67% | 14 | 14 | ― | |||||||||
| Total (including joint ventures) | 825 | 616 | 34% | 1,471 | 1,063 | 38% | |||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
| 2012 | 2011 | % Change | 2012 | 2011 | % Change | ||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Average selling prices of homes delivered: | |||||||||||||||||||
| California | $ | 465 | $ | 492 | (5%) | $ | 479 | $ | 480 | (0%) | |||||||||
| Arizona | 206 | 211 | (2%) | 207 | 209 | (1%) | |||||||||||||
| Texas | 300 | 299 | 0% | 299 | 297 | 1% | |||||||||||||
| Colorado | 377 | 307 | 23% | 377 | 309 | 22% | |||||||||||||
| Nevada | 194 | 198 | (2%) | 192 | 195 | (2%) | |||||||||||||
| Florida | 230 | 195 | 18% | 237 | 198 | 20% | |||||||||||||
| Carolinas | 244 | 225 | 8% | 236 | 223 | 6% | |||||||||||||
| Consolidated | 337 | 335 | 1% | 340 | 332 | 2% | |||||||||||||
| Unconsolidated joint ventures | 426 | 549 | (22%) | 436 | 459 | (5%) | |||||||||||||
| Total (including joint ventures) | $ | 338 | $ | 337 | 0% | $ | 341 | $ | 333 | 2% | |||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2012 | 2011 | % Change | 2012 | 2011 | % Change | ||||||||||
| Net new orders: | |||||||||||||||
| California | 425 | 313 | 36% | 752 | 545 | 38% | |||||||||
| Arizona | 93 | 33 | 182% | 176 | 79 | 123% | |||||||||
| Texas | 151 | 139 | 9% | 292 | 259 | 13% | |||||||||
| Colorado | 42 | 25 | 68% | 68 | 51 | 33% | |||||||||
| Nevada | 1 | 2 | (50%) | 6 | 3 | 100% | |||||||||
| Florida | 208 | 142 | 46% | 394 | 257 | 53% | |||||||||
| Carolinas | 188 | 110 | 71% | 354 | 222 | 59% | |||||||||
| Consolidated total | 1,108 | 764 | 45% | 2,042 | 1,416 | 44% | |||||||||
| Unconsolidated joint ventures | 16 | 8 | 100% | 24 | 16 | 50% | |||||||||
| Total (including joint ventures) | 1,124 | 772 | 46% | 2,066 | 1,432 | 44% | |||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2012 | 2011 | % Change | 2012 | 2011 | % Change | ||||||||||
| Average number of selling communities during the period: | |||||||||||||||
| California | 53 | 53 | ― | 52 | 49 | 6% | |||||||||
| Arizona | 7 | 8 | (13%) | 8 | 9 | (11%) | |||||||||
| Texas | 20 | 21 | (5%) | 20 | 21 | (5%) | |||||||||
| Colorado | 6 | 5 | 20% | 6 | 5 | 20% | |||||||||
| Nevada | ― | 1 | (100%) | ― | 1 | (100%) | |||||||||
| Florida | 36 | 35 | 3% | 36 | 34 | 6% | |||||||||
| Carolinas | 35 | 30 | 17% | 35 | 27 | 30% | |||||||||
| Consolidated total | 157 | 153 | 3% | 157 | 146 | 8% | |||||||||
| Unconsolidated joint ventures | 2 | 3 | (33%) | 3 | 3 | ― | |||||||||
| Total (including joint ventures) | 159 | 156 | 2% | 160 | 149 | 7% | |||||||||
8
REGIONAL OPERATING DATA (Continued)
| At June 30, | |||||||||||||||||||||
| 2012 | 2011 | % Change | |||||||||||||||||||
| Homes | Dollar Value | Homes | Dollar Value | Homes | Dollar Value | ||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||
| Backlog: | |||||||||||||||||||||
| California | 385 | $ | 191,654 | 263 | $ | 157,217 | 46% | 22% | |||||||||||||
| Arizona | 123 | 25,648 | 37 | 7,710 | 232% | 233% | |||||||||||||||
| Texas | 180 | 62,773 | 186 | 54,024 | (3%) | 16% | |||||||||||||||
| Colorado | 54 | 21,317 | 37 | 12,117 | 46% | 76% | |||||||||||||||
| Nevada | ― | ― | 1 | 203 | (100%) | (100%) | |||||||||||||||
| Florida | 296 | 76,986 | 151 | 35,025 | 96% | 120% | |||||||||||||||
| Carolinas | 228 | 61,316 | 106 | 27,508 | 115% | 123% | |||||||||||||||
| Consolidated total | 1,266 | 439,694 | 781 | 293,804 | 62% | 50% | |||||||||||||||
| Unconsolidated joint ventures | 13 | 5,997 | 7 | 2,558 | 86% | 134% | |||||||||||||||
| Total (including joint ventures) | 1,279 | $ | 445,691 | 788 | $ | 296,362 | 62% | 50% | |||||||||||||
| At June 30, | |||||||||
| 2012 | 2011 | % Change | |||||||
| Homesites owned and controlled: | |||||||||
| California | 8,926 | 9,533 | (6%) | ||||||
| Arizona | 1,820 | 1,883 | (3%) | ||||||
| Texas | 4,038 | 4,259 | (5%) | ||||||
| Colorado | 690 | 741 | (7%) | ||||||
| Nevada | 1,124 | 1,138 | (1%) | ||||||
| Florida | 6,937 | 5,864 | 18% | ||||||
| Carolinas | 4,222 | 2,985 | 41% | ||||||
| Total (including joint ventures) | 27,757 | 26,403 | 5% | ||||||
| Homesites owned | 21,369 | 19,121 | 12% | ||||||
| Homesites optioned or subject to contract | 5,176 | 5,848 | (11%) | ||||||
| Joint venture homesites | 1,212 | 1,434 | (15%) | ||||||
| Total (including joint ventures) | 27,757 | 26,403 | 5% | ||||||
| Homesites owned: | |||||||||
| Raw lots | 3,570 | 3,665 | (3%) | ||||||
| Homesites under development | 6,582 | 3,945 | 67% | ||||||
| Finished homesites | 5,464 | 6,085 | (10%) | ||||||
| Under construction or completed homes | 2,089 | 1,801 | 16% | ||||||
| Held for sale | 3,664 | 3,625 | 1% | ||||||
| Total | 21,369 | 19,121 | 12% | ||||||
9
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
Each of the below measures are non-GAAP financial measures and other companies may calculate such non-GAAP measures differently. Due to the significance of the GAAP components excluded, such measures should not be considered in isolation or as an alternative to operating performance measures prescribed by GAAP.
The table set forth below reconciles the Company's gross margin percentage from home sales to the gross margin percentage from home sales, excluding inventory impairment charges and interest amortized to cost of home sales. We believe these measures are useful to management and investors as they provide perspective on the underlying operating performance of the business excluding these charges and provide comparability with the Company’s peer group.
| Three Months Ended | ||||||||||||||
June 30, 2012 | Gross Margin % | June 30, 2011 | Gross Margin % | March 31, 2012 | Gross Margin % | |||||||||
| (Dollars in thousands) | ||||||||||||||
| Home sale revenues | $ | 274,872 | $ | 204,236 | $ | 220,317 | ||||||||
| Less: Cost of home sales | (218,586) | (169,433) | (175,595) | |||||||||||
| Gross margin from home sales | 56,286 | 20.5% | 34,803 | 17.0% | 44,722 | 20.3% | ||||||||
| Add: Inventory impairment charges | ― | 5,959 | ― | |||||||||||
| Gross margin from home sales, excluding | ||||||||||||||
| impairment charges | 56,286 | 20.5% | 40,762 | 20.0% | 44,722 | 20.3% | ||||||||
| Add: Capitalized interest included in cost | ||||||||||||||
| of home sales | 24,465 | 8.9% | 16,108 | 7.9% | 18,556 | 8.4% | ||||||||
| Gross margin from home sales, excluding | ||||||||||||||
| impairment charges and interest amortized | ||||||||||||||
| to cost of home sales | $ | 80,751 | 29.4% | $ | 56,870 | 27.9% | $ | 63,278 | 28.7% | |||||
The table set forth below reconciles the Company’s SG&A expenses to SG&A expenses excluding severance and other charges related to management changes. We believe this measure is useful to management and investors as it provides perspective on the underlying operating performance of the business excluding these charges.
| Three Months Ended | ||||||||
June 30, 2012 | June 30, 2011 | March 31, 2012 | ||||||
| (Dollars in thousands) | ||||||||
| Selling, general and administrative expenses | $ | 41,952 | $ | 38,443 | $ | 37,692 | ||
| Less: Severance and other charges | ― | (2,178) | ― | |||||
| Selling, general and administrative expenses, excluding severance and other charges | $ | 41,952 | $ | 36,265 | $ | 37,692 | ||
| SG&A % from home sales, excluding severance and other charges | 15.3% | 17.8% | 17.1% | |||||
The table set forth below reconciles the Company’s cash flows used in operations to cash inflows from operations excluding land purchases and development costs. We believe this measure is useful to management and investors to provide perspective on underlying cash flow generation excluding swings related to the timing of land purchases and development costs.
| Three Months Ended | ||||||||
June 30, 2012 | June 30, 2011 | March 31, 2012 | ||||||
| (Dollars in thousands) | ||||||||
| Cash flows used in operations | $ | (56,600) | $ | (121,963) | $ | (42,118) | ||
| Add: Cash land purchases | 96,584 | 92,171 | 33,986 | |||||
| Add: Land development costs | 34,514 | 31,642 | 31,778 | |||||
| Cash inflows from operations (excluding land purchases and development costs) | $ | 74,498 | $ | 1,850 | $ | 23,646 | ||
10
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued) |
The table set forth below calculates EBITDA and Adjusted Homebuilding EBITDA. Adjusted Homebuilding EBITDA means net income (loss) (plus cash distributions of income from unconsolidated joint ventures) before (a) income taxes, (b) homebuilding interest expense (c) expensing of previously capitalized interest included in cost of sales, (d) impairment charges and deposit write-offs, (e) (gain) loss on early extinguishment of debt (f) homebuilding depreciation and amortization, (g) amortization of stock-based compensation, (h) income (loss) from unconsolidated joint ventures and (i) income (loss) from financial services subsidiary. Other companies may calculate Adjusted Homebuilding EBITDA (or similarly titled measures) differently. We believe Adjusted Homebuilding EBITDA information is useful to management and investors as one measure of the Company’s ability to service debt and obtain financing. Adjusted Homebuilding EBITDA is a non-GAAP financial measure and due to the significance of the GAAP components excluded, should not be considered in isolation or as an alternative to net income, cash flow from operations or any other operating or liquidity performance measure prescribed by GAAP.
| Three Months Ended | LTM Ended June 30, | |||||||||||||||
June 30, 2012 | June 30, 2011 | March 31, 2012 | 2012 | 2011 | ||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Net income (loss) | $ | 14,263 | $ | (10,519) | $ | 8,523 | $ | 31,685 | $ | (42,630) | ||||||
| Provision (benefit) for income taxes | 189 | 175 | 187 | 45 | (643) | |||||||||||
| Homebuilding interest amortized to cost of sales and interest expense | 26,082 | 23,590 | 21,105 | 96,906 | 90,239 | |||||||||||
| Homebuilding depreciation and amortization | 575 | 663 | 590 | 2,483 | 2,304 | |||||||||||
| Amortization of stock-based compensation | 1,885 | 3,537 | 1,074 | 8,739 | 11,824 | |||||||||||
| EBITDA | 42,994 | 17,446 | 31,479 | 139,858 | 61,094 | |||||||||||
| Add: | ||||||||||||||||
| Cash distributions of income from unconsolidated joint ventures | 160 | ― | ― | 160 | 20 | |||||||||||
| Impairment charges and deposit write-offs | ― | 5,959 | 133 | 9,508 | 7,877 | |||||||||||
| Loss on early extinguishment of debt | ― | ― | ― | ― | 24,838 | |||||||||||
| Less: | ||||||||||||||||
| Income (loss) from unconsolidated joint ventures | (1,146) | (379) | (1,522) | (1,825) | 1,190 | |||||||||||
| Income (loss) from financial services subsidiary | 2,490 | 106 | 1,366 | 6,614 | (650) | |||||||||||
| Adjusted Homebuilding EBITDA | $ | 41,810 | $ | 23,678 | $ | 31,768 | $ | 144,737 | $ | 93,289 | ||||||
| Homebuilding revenues | $ | 274,872 | $ | 204,345 | $ | 223,702 | $ | 1,033,523 | $ | 767,934 | ||||||
| Adjusted Homebuilding EBITDA Margin % | 15.2% | 11.6% | 14.2% | 14.0% | 12.1% | |||||||||||
The table set forth below reconciles net cash provided by (used in) operating activities, calculated and presented in accordance with GAAP, to Adjusted Homebuilding EBITDA:
| Three Months Ended | LTM Ended June 30, | ||||||||||||||||
June 30, 2012 | June 30, 2011 | March 31, 2012 | 2012 | 2011 | |||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Net cash provided by (used in) operating activities | $ | (56,600) | $ | (121,963) | $ | (42,118) | $ | (189,218) | $ | (351,990) | |||||||
| Add: | |||||||||||||||||
| Provision (benefit) for income taxes | 189 | 175 | 187 | 45 | (643) | ||||||||||||
| Homebuilding interest amortized to cost of sales and interest expense | 26,082 | 23,590 | 21,105 | 96,906 | 90,239 | ||||||||||||
| Less: | |||||||||||||||||
| Income (loss) from financial services subsidiary | 2,490 | 106 | 1,366 | 6,614 | (650) | ||||||||||||
| Depreciation and amortization from financial services subsidiary | 28 | 233 | 16 | 79 | 1,200 | ||||||||||||
| (Gain) loss on disposal of property and equipment | 3 | (2) | ― | 182 | (1) | ||||||||||||
| Net changes in operating assets and liabilities: | |||||||||||||||||
| Trade and other receivables | 471 | 10,330 | 6,991 | 1,327 | 3,390 | ||||||||||||
| Mortgage loans held for sale | 4,430 | 15,064 | (8,533) | 34,788 | (33,170) | ||||||||||||
| Inventories-owned | 70,986 | 88,912 | 44,201 | 203,576 | 305,653 | ||||||||||||
| Inventories-not owned | 872 | 9,990 | 2,627 | 10,426 | 23,111 | ||||||||||||
| Other assets | 1,105 | 1,112 | (1,028) | (4,107) | (4,082) | ||||||||||||
| Accounts payable and accrued liabilities | (3,204) | (3,195) | 9,718 | (2,131) | 61,330 | ||||||||||||
| Adjusted Homebuilding EBITDA | $ | 41,810 | $ | 23,678 | $ | 31,768 | $ | 144,737 | $ | 93,289 | |||||||
11
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued) |
The table set forth below reconciles the Company’s total consolidated debt to adjusted net homebuilding debt and provides the Company’s total consolidated debt to book capitalization and adjusted net homebuilding debt to total adjusted book capitalization ratios. We believe that the adjusted net homebuilding debt to total adjusted book capitalization ratio is useful to management and investors as a measure of the Company’s ability to obtain financing. For purposes of the ratio of adjusted net homebuilding debt to total adjusted book capitalization, total adjusted book capitalization is adjusted net homebuilding debt plus stockholders’ equity. Adjusted net homebuilding debt excludes indebtedness of the Company’s financial services subsidiary and additionally reflects the offset of cash and equivalents.
| June 30, | March 31, | December 31, | June 30, | ||||||||||
| 2012 | 2012 | 2011 | 2011 | ||||||||||
| (Dollars in thousands) | |||||||||||||
| Total consolidated debt | $ | 1,364,109 | $ | 1,375,609 | $ | 1,371,756 | $ | 1,357,437 | |||||
| Less: | |||||||||||||
| Financial services indebtedness | (44,427) | (49,529) | (46,808) | (34,873) | |||||||||
| Homebuilding cash | (317,242) | (394,368) | (438,157) | (507,207) | |||||||||
| Adjusted net homebuilding debt | 1,002,440 | 931,712 | 886,791 | 815,357 | |||||||||
| Stockholders' equity | 656,624 | 637,912 | 623,754 | 607,269 | |||||||||
| Total adjusted book capitalization | $ | 1,659,064 | $ | 1,569,624 | $ | 1,510,545 | $ | 1,422,626 | |||||
| Total consolidated debt to book capitalization | 67.5% | 68.3% | 68.7% | 69.1% | |||||||||
| Adjusted net homebuilding debt to total adjusted book capitalization | 60.4% | 59.4% | 58.7% | 57.3% | |||||||||
The table set forth below calculates pro forma stockholders’ equity per common share. The pro forma common shares outstanding include common shares issuable upon conversion of our outstanding Series B Preferred Stock, and excludes 3.9 million shares issued under a share lending agreement related to the Company’s 6% Convertible Senior Subordinated Notes. The Company believes that the pro forma stockholders’ equity per common share information is useful to management and investors as a measure to determine the book value per common share after giving effect to the conversion of our outstanding preferred shares assuming full conversion to common stock and excluding shares outstanding under the share lending agreement.
| June 30, | March 31, | December 31, | ||||||
| 2012 | 2012 | 2011 | ||||||
| Actual common shares outstanding | 199,933,447 | 199,423,826 | 198,563,273 | |||||
| Add: Conversion of preferred shares to common shares | 147,812,786 | 147,812,786 | 147,812,786 | |||||
| Less: Common shares outstanding under share lending facility | (3,919,904) | (3,919,904) | (3,919,904) | |||||
| Pro forma common shares outstanding | 343,826,329 | 343,316,708 | 342,456,155 | |||||
| Stockholders' equity (Dollars in thousands) | $ | 656,624 | $ | 637,912 | $ | 623,754 | ||
| Divided by pro forma common shares outstanding | ÷ | 343,826,329 | ÷ | 343,316,708 | ÷ | 342,456,155 | ||
| Pro forma stockholders' equity per common share | $ | 1.91 | $ | 1.86 | $ | 1.82 | ||
12