Q3 2013 Pretax Income of $70.1 million, up 220% vs. Q3 2012
Q3 2013 Net New Order Value up 38% and Backlog Value up 93% vs. Q3 2012
IRVINE, CALIFORNIA, October 31, 2013. Standard Pacific Corp. (NYSE: SPF) today announced results for the third quarter ended September 30, 2013.
2013 Third Quarter Highlights and Comparisons to the 2012 Third Quarter
| · | Net income of $58.9 million, or $0.15 per diluted share, vs. $21.7 million, or $0.05 per diluted share |
| · | Pretax income of $70.1 million, vs. $21.9 million |
| · | Net new orders of 1,110, up 12%; Dollar value of net new orders up 38% |
| · | Backlog of 2,165 homes, up 55%; Dollar value of backlog up 93% |
| ·�� | 168 average active selling communities, up 8% |
| · | Home sale revenues up 61% |
| · | Average selling price of $420 thousand, up 14% |
| · | 1,217 new home deliveries, up 41% |
| · | Gross margin from home sales of 25.3%, compared to 20.2% |
| · | SG&A rate from home sales of 12.1%, a 150 basis point improvement |
| · | Operating margin from home sales of $67.4 million, or 13.2%, compared to $20.9 million, or 6.6% |
| · | $141.7 million of land purchases and development costs, compared to $246.2 million |
Scott Stowell, the Company’s Chief Executive Officer commented, “The positive performance we achieved during the first half of 2013 continued into the third quarter.” Mr. Stowell added, “Notwithstanding the tempered approach to homebuying that impacted the market during the third quarter, the benefit of our long-term growth strategy continued to unfold as disciplined land buying, moving up market, and new home designs, all led to a solid third quarter performance.”
Net income for the 2013 third quarter was $58.9 million, or $0.15 per diluted share, compared to $21.7 million, or $0.05 per diluted share. Pretax income for the 2013 third quarter increased 220% to $70.1 million compared to $21.9 million for the prior year period. The provision for income taxes for the 2013 third quarter included a non-cash tax benefit of $16.1 million related to the reduction of the Company’s accrual for unrecognized tax benefits.
Revenues from home sales for the 2013 third quarter increased 61%, to $511.1 million, as compared to the prior year period, resulting primarily from a 41% increase in new home deliveries and a 14% increase in the Company’s consolidated average home price to $420 thousand. The increase in average home price was primarily attributable to our move-up market focus and general price increases within most of our markets. The increase in new home deliveries was driven by a 62% year-over-year increase in the number of homes in beginning backlog expected to close during the quarter, partially offset by a decrease in speculative homes sold and closed in the quarter.
Gross margin from home sales for the 2013 third quarter increased to 25.3% compared to 20.2% in the prior year period. The 510 basis point year-over-year increase was primarily attributable to price increases and a decrease in the use of sales incentives. Excluding previously capitalized interest costs, gross margin from home sales was 31.2%* for the 2013 third quarter versus 28.7%* for the 2012 third quarter.
The Company’s 2013 third quarter SG&A expenses (including Corporate G&A) were $61.9 million compared to $43.1 million, down 150 basis points as a percentage of home sale revenues to 12.1%, compared to 13.6% for the 2012 third quarter. The improvement in the Company’s SG&A rate was primarily due to a 61% increase in revenues from home sales and reflects the operating leverage inherent in our business.
Net new orders for the 2013 third quarter increased 12% from the 2012 third quarter to 1,110 homes. The year-over-year growth is primarily attributable to an increase in the Company’s monthly sales absorption rate to 2.2 per community for the 2013 third quarter, compared to 2.1 per community for the 2012 third quarter. The Company’s cancellation rate for the 2013 third quarter was 20%, compared to 14% for the 2012 third quarter and 11% for the 2013 second quarter. Our 2013 third quarter cancellation rate increased from the historically low levels we experienced in the prior quarter and the prior year period, but was consistent with our average historical cancellation rate over the last 10 years. As a percentage of beginning backlog our cancellation rate was 6.5% in the quarter, a 90 basis point reduction from the same period last year.
The dollar value of homes in backlog increased 93% to $964.1 million, or 2,165 homes, compared to $498.7 million, or 1,394 homes, for the 2012 third quarter, and increased 2% compared to $947.6 million, or 2,272 homes, for the 2013 second quarter. The increase in year-over-year backlog value was driven primarily by a 24% increase in the average selling price of the homes in backlog, a 12% increase in net new orders and a shift to more to-be-built homes that have a longer construction cycle.
Cash provided by operating activities was $22.8 million for the 2013 third quarter versus cash used in operating activities of $72.4 million in the 2012 third quarter. During the 2013 third quarter, the Company spent $141.7 million on land purchases and development costs, compared to $246.2 million for the 2012 third quarter, of which $140.8 million of cash land purchases and development costs were included in cash flows used in operating activities. Excluding land purchases and development costs, cash inflows from operating activities for the 2013 third quarter were $164.5 million* versus $68.4 million* in the 2012 third quarter. The year-over-year increase in cash inflows from operating activities (excluding land purchases and development costs) was primarily due to a 61% increase in home sale revenues.
The Company purchased $69.2 million of land (628 homesites) during the 2013 third quarter, of which 46% (based on homesites) was located in Florida, 21% in the Carolinas and 18% in California, with the balance spread throughout the Company’s other operations. As of September 30, 2013, the Company owned or controlled 35,643 homesites, of which 21,993 are owned and actively selling or under development, 8,707 are controlled or under option, and the remaining 4,943 homesites are held for future development or for sale. The homesites owned that are actively selling or under development represent a 5.2 year supply based on the Company’s deliveries for the trailing twelve months ended September 30, 2013.
Earnings Conference Call
A conference call to discuss the Company’s 2013 third quarter results will be held at 12:00 p.m. Eastern time November 1, 2013. 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 (800) 768-6490 (domestic) or (785) 830-7987 (international); Passcode: 8782855. 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: 8782855.
About Standard Pacific
Standard Pacific Homes (NYSE: SPF) has been building beautiful, high-quality homes and neighborhoods since its founding in Southern California in 1965. With a trusted reputation for quality craftsmanship, an outstanding customer experience and exceptional architectural design, the Company utilizes its decades of land acquisition, development and homebuilding expertise to successfully navigate today’s complex landscape to acquire and build desirable communities in locations that meet the high expectations of the Company’s targeted move-up homebuyers. Currently offering new homes in major metropolitan areas in Arizona, California, Colorado, Florida, North Carolina, South Carolina, and Texas, we invite you to learn more about us by visiting standardpacifichomes.com.
This news release contains forward-looking statements. These statements include but are not limited to statements regarding new home orders, deliveries, backlog, absorption rates, average home price, pricing power, revenue, profitability, cash flow, liquidity, gross margin, overhead expenses and other costs; community count; product mix; the benefit of, and execution on, our strategy; supply; demand; our future performance 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. 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, 2012 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. |
