Losses widen at Standard Pacific
Residential builder Standard Pacific has reported a net loss of $14.8 million for its first fiscal quarter, compared with a net loss of $5.1 million for the same period a year ago. The increase in the quarterly loss was driven primarily by an 18% decrease in home-sale revenues from $174.9 million for the 2010 first quarter to $143.7 million for the 2011 first quarter, which ended March 31, and a 220-basis point decline in the company's gross margin to 20.5%. The decrease in revenues was primarily the result of an 18% decline in new-home deliveries to 439 homes from 537 in last year’s first quarter.
The company's consolidated average home price for the 2011 first quarter was $327,000, up slightly from $326,000 for the year-earlier period, largely due to a mix shift, which was partially offset by slightly lower pricing and fewer California deliveries.
Net new orders (excluding joint ventures) for the 2011 first quarter decreased 14% from the 2010 first quarter to 652 homes. There was a 10% increase in the number of average active selling communities from 126 to 138. The company's cancellation rate for the 2011 first quarter was 14% versus 15% for the 2010 first quarter and 23% for the 2010 fourth quarter. The total number of sales cancellations for the 2011 first quarter was 106, of which 59 cancellations related to homes in the company's 2011 first-quarter beginning backlog and 47 related to orders generated during the quarter.
The dollar value of homes in backlog (excluding joint ventures) decreased 24% to $211.8 million, or 627 homes, compared with $278.3 million, or 821 homes, for the 2010 first quarter. The decrease in backlog value was driven primarily by a 14% decrease in net new orders.
Ken Campbell, CEO of Standard Pacific, said in a prepared statement: "Despite challenging housing market conditions, we continued to make progress with our strategy of opening new communities. We opened 18 new communities during the quarter and expect to open another 22 communities by the middle of the year, representing a 20% increase in community count compared with last year and bringing our total community count to north of 155." He added: "While home pricing has been under pressure over the last few quarters, our gross margin has remained above 20% for the sixth consecutive quarter. In addition, we increased the dollar value of our backlog by 54% over the 2010 fourth quarter, while holding the line on our margins in backlog."
The Irvine, Calif.-based company continues to purchase lots, Campbell pointed out, while preserving its liquidity. "Consistent with our land strategy, we approved the purchase of 2,000 lots totaling $122 million and purchased 1,100 lots for $87 million during the quarter,” he said. “With $620 million of cash on hand and the additional liquidity provided by our new senior unsecured revolving credit facility, we believe we have ample liquidity to navigate through the market downturn."
Standard Pacific operates in a number of major metropolitan areas across the country, including California, Florida, Arizona, the Carolinas, Texas, Colorado and Nevada.