Net new orders of 1,571, up 20%, net new order value up 31%

Q1 2015 backlog value of $1.3 billion, up 29% from Q1 2014

 

IRVINE, CALIFORNIA, April 30, 2015.  Standard Pacific Corp. (NYSE: SPF) today announced results for the first quarter ended March 31, 2015.

 

 

·	Net new orders of 1,571, up 20%; Dollar value of net new orders up 31%

·	Backlog of 2,310 homes, up 15%; Dollar value of backlog up 29%

·	198 average active selling communities, up 14%

·	972 new home deliveries, down 2%

·	Average selling price of $482 thousand, up 7%

·	Home sale revenues of $468.4 million, up 5%

·	Gross margin from home sales of 24.2%, compared to 26.6%

·	Operating margin from home sales of $47.5 million, or 10.1%, compared to $60.1 million, or 13.4%

·	Net income of $31.6 million, or $0.08 per diluted share, vs. net income of $38.2 million, or $0.09 per diluted share

·	$160.1 million of land purchases and development costs, compared to $224.1 million

 

Scott Stowell, the Company's President and Chief Executive Officer commented, "I'm pleased with our first quarter results and the start to the spring selling season.  With our orders up 20%, backlog value up 29% and the solid improvement we are seeing in our backlog gross margin, 2015 is setting up to be another year of solid growth and performance for the Company."

 

Orders.  Net new orders for the 2015 first quarter were up 20% from the 2014 first quarter, to 1,571 homes, with the dollar value of these orders up 31%.  The Company's monthly sales absorption rate was 2.6 per community for the 2015 first quarter, up 5% from the 2014 first quarter and up 49% compared to the 2014 fourth quarter.  The increase in sales absorption rate from the 2014 fourth quarter to the 2015 first quarter was above the seasonality we typically experience in our business.  The Company's cancellation rate for the 2015 first quarter was 11% compared to 14% for the 2014 first quarter and 21% for the 2014 fourth quarter.

 

Backlog.  The dollar value of homes in backlog increased 29% to $1.3 billion, or 2,310 homes, compared to $1.0 billion, or 2,016 homes, for the 2014 first quarter, and increased 41% compared to $916.4 million, or 1,711 homes, for the 2014 fourth quarter.  The increase in year-over-year backlog value was driven primarily by a 13% increase in the average selling price of the homes in backlog, reflecting the continued execution of our move-up homebuyer focused strategy and a favorable pricing environment in select markets.

 

Revenue.  Revenues from home sales for the 2015 first quarter increased 5%, to $468.4 million, as compared to the prior year period, resulting primarily from a 7% increase in the Company's average home price to $482 thousand, partially offset by a 2% decrease in new home deliveries.  The increase in average home price was primarily attributable to a shift to more move-up product and general price increases within a majority of the Company's markets.  The decrease in new home deliveries compared to the prior year period was driven primarily by a 14% decrease in deliveries from the Company's California region, partially offset by an 11% increase from the Company's Southwest region.

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Gross Margin.  Gross margin percentage from home sales for the 2015 first quarter was 24.2%, down 100 basis points from last quarter, consistent with the Company's expectations.  As previously disclosed, we anticipate our full year gross margin will be in the 24-25% range.

 

Land.  During the 2015 first quarter, the Company spent $160.1 million on land purchases and development costs, compared to $224.1 million for the 2014 first quarter. The Company purchased $78.5 million of land, consisting of 971 homesites, of which 31% (based on homesites) is located in California, 28% in Texas, 21% in the Carolinas, 19% in Florida, and 1% in Colorado.  As of March 31, 2015, the Company owned or controlled 35,183 homesites, of which 24,771 were owned and actively selling or under development, 5,999 were controlled or under option, and the remaining 4,413 homesites were held for future development or for sale.  The homesites owned that are actively selling or under development represent a 5.0 year supply based on the Company's deliveries for the trailing twelve months ended March 31, 2015.

 

Liquidity.  The Company ended the quarter with $516 million of available liquidity, including $81 million of unrestricted homebuilding cash and $435 million available to borrow under the revolving credit facility. The revolving credit facility has an accordion feature under which the aggregate commitment may be increased from $450 million to a maximum amount of $750 million, subject to the Company's future needs and the availability of additional bank capacity.  The Company's homebuilding debt to book capitalization as of March 31, 2015 and 2014 was 56.0% and 54.9%, respectively, and adjusted net homebuilding debt to adjusted book capitalization was 54.6%* and 51.7%*, respectively.  In addition, the Company's homebuilding debt to adjusted homebuilding EBITDA for the LTM period ending March 31, 2015 and 2014 was 4.6x* and 4.5x*, respectively.

 

Earnings Conference Call

 

A conference call to discuss the Company's 2015 first quarter results will be held at 12:00 p.m. Eastern time May 1, 2015.  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) 299-7230 (domestic) or (719) 325-2359 (international); Passcode: 7558033. 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: 7558033.

 

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; cancellation rates; average home price; revenue; profitability; cash flow; liquidity; gross margin; operating margin; product mix; land supply; the benefit of, and execution on, our strategy; our future cash needs and the availability of additional bank commitments; the spring selling season; and our future growth and performance.  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

 

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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, 2014 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.

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(Note: Tables Follow)

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KEY STATISTICS AND FINANCIAL DATA¹

 

 

 

¹All statistical numbers exclude unconsolidated joint ventures unless noted otherwise.

*Please see "Reconciliation of Non-GAAP Financial Measures" beginning on page 10.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

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CONDENSED CONSOLIDATED BALANCE SHEETS

 

INVENTORIES

 

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

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REGIONAL OPERATING DATA

 

 

 

 

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REGIONAL OPERATING DATA (Continued)

 

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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 me asures 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 adjusted 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 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.  In addition, the table set forth below calculates homebuilding debt to adjusted homebuilding EBITDA.  We believe these ratios are 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.

 

 

The table set forth below calculates adjusted stockholders' equity per common share.  The Company believes that the adjusted 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 the pro forma effect to the conversion of our outstanding preferred shares assuming full conversion to common stock.

 

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued)

 

The table set forth below calculates EBITDA and Adjusted Homebuilding EBITDA.  Adjusted Homebuilding EBITDA means net income (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 subsidiaries.  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: