Standard Pacific Corp. Reports 2014 First Quarter Results
Q1 2014 pretax income of $61.6 million, up 74% from Q1 2013
Q1 2014 backlog value of $1.0 billion, up 39% from Q1 2013
IRVINE, CALIFORNIA, May 1, 2014. Standard Pacific Corp. (NYSE: SPF) today announced results for the first quarter ended March 31, 2014.
2014 First Quarter Highlights and Comparisons to the 2013 First Quarter
| · | Net income of $38.2 million, or $0.09 per diluted share, vs. $21.8 million, or $0.05 per diluted share |
| · | Pretax income of $61.6 million, up 74% |
| · | Net new orders of 1,311, down 6%; Dollar value of net new orders up 16% |
| · | Backlog of 2,016 homes, up 9%; Dollar value of backlog up 39% |
| · | 174 average active selling communities, up 10% |
| · | Home sale revenues of $446.9 million, up 26% |
| · | Average selling price of $449 thousand, up 20% |
| · | 995 new home deliveries, up 5% |
| · | Gross margin from home sales of 26.6%, compared to 21.0% |
| · | Operating margin from home sales of $60.1 million, or 13.4%, compared to $28.2 million, or 7.9% |
| · | $224.1 million of land purchases and development costs, compared to $124.4 million |
Scott Stowell, the Company’s Chief Executive Officer commented, “The strong operating performance we achieved during the last two years has continued into the first quarter, with pretax income, backlog value, home sale revenues and new order value up 74%, 39%, 26% and 16%, respectively.” Mr. Stowell added, “In addition to these solid results, I am particularly pleased with our operating margin from home sales, which was 13.4% for the 2014 first quarter, a 550 basis point improvement from the prior year.”
Revenues from home sales for the 2014 first quarter increased 26%, to $446.9 million, as compared to the prior year period, resulting primarily from a 20% increase in the Company’s consolidated average home price to $449 thousand and a 5% increase in new home deliveries. The increase in average home price was primarily attributable to general price increases within a majority of the Company’s markets, a shift to more move-up product and a decrease in the use of sales incentives. The increase in new home deliveries was driven by a 10% year-over-year increase in the number of homes in beginning backlog expected to close during the quarter.
Gross margin from home sales for the 2014 first quarter increased to 26.6% compared to 21.0% in the prior year period. The 560 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 32.0%* for the 2014 first quarter versus 28.8%* for the 2013 first quarter.
While net new orders for the 2014 first quarter decreased 6% from the 2013 first quarter to 1,311 homes, the dollar value of these orders was up 16%. The Company’s monthly sales absorption rate was 2.5 per community for the 2014 first quarter, compared to 1.7 per community for the 2013 fourth quarter. The increase in sales absorption rate from the 2013 fourth quarter to the 2014 first quarter was above the seasonality we typically experience in our business. The Company’s cancellation rate for the 2014 first quarter was 14%, compared to 21% for the 2013 fourth quarter. Our 2014 first quarter cancellation rate was below our average historical cancellation rate of approximately 21% over the last 10 years.
The dollar value of homes in backlog increased 39% to $1.0 billion, or 2,016 homes, compared to $719.7 million, or 1,851 homes, for the 2013 first quarter, and increased 25% compared to $800.5 million, or 1,700 homes, as of the end of 2013. The increase in year-over-year backlog value was driven primarily by a 28% increase in the average selling price of the homes in backlog, reflecting the continued execution of our strategy to focus on the move-up buyer and pricing opportunities in select markets.
The Company purchased $144.7 million of land (2,190 homesites) during the 2014 first quarter, of which 34% (based on homesites) was located in Florida, 20% in Arizona, 19% in the Carolinas, 14% in California and 12% in Texas. As of March 31, 2014, the Company owned or controlled 35,715 homesites, of which 23,783 are owned and actively selling or under development, 6,972 are controlled or under option, and the remaining 4,960 homesites are held for future development or for sale. 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 March 31, 2014.
The Company ended the quarter with $635 million of available liquidity, including $195 million of unrestricted homebuilding cash and a $440 million untapped revolving credit facility. Cash used in operating activities was $117.6 million for the 2014 first quarter versus $58.5 million in the 2013 first quarter. During the 2014 first quarter, the Company spent $224.1 million on land purchases and development costs, compared to $124.4 million for the 2013 first quarter. The Company’s homebuilding debt to book capitalization as of March 31, 2014 and 2013 was 54.9% and 54.4%, respectively, and adjusted net homebuilding debt to adjusted book capitalization was 51.7%* and 48.8%*, respectively. In addition, the Company’s homebuilding debt to adjusted homebuilding EBITDA for the LTM period ending March 31, 2014 and 2013 was 4.5x* and 6.8x*, respectively.
Earnings Conference Call
A conference call to discuss the Company’s 2014 first quarter results will be held at 12:00 p.m. Eastern time May 2, 2014. 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 (877) 545-1414 (domestic) or (719) 325-4831 (international); Passcode: 8923683. 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: 8923683.
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, 2013 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. |
*Please see “Reconciliation of Non-GAAP Financial Measures” beginning on page 10.
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 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.
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.
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:
