Home builder Standard Pacific Corp. today reported that its net income in fourth-quarter 2005 increased 11.5 percent, from $138.8 million to $154.9 million, compared to fourth-quarter 2004. And net income for the full year was up 39.6 percent, from $315.8 million to $441 million, compared to 2004.
Fourth-quarter 2005 earnings were up 10 percent to $2.22 per share from $2.01 per share in fourth-quarter 2004.
Home-building pretax income for the 2005 fourth quarter increased 11 percent to $247.9 million from $223.8 million the prior year, driven by an 8 percent increase in home-building revenues, an 80 basis point improvement in the company’s homebuilding gross margin percentage, and a $15.1 million increase in home-building joint venture income, Standard Pacific reported.
During the 2005 fourth quarter, the company’s average home price declined 12 percent year-over-year to $351,000. The decline was due to the shifting geographic mix of the company’s new home deliveries whereby 72 percent of this year’s consolidated fourth quarter deliveries were from outside of California compared to 61 percent last year (exclusive of joint venture homes), the company said.
Home-building revenues for the 2005 fourth quarter increased 8 percent to $1.27 billion from $1.17 billion last year. The increase in revenues was attributable to a 24 percent increase in new home deliveries (exclusive of joint ventures), partially offset by a 12 percent decrease in the company’s consolidated average home price to $351,000.
During the fourth quarter, the company delivered 989 new homes in California (exclusive of joint ventures), a 12 percent decrease from the 2004 fourth quarter. Deliveries were up 7 percent in Southern California to 769 new homes (excluding 22 joint venture deliveries), and deliveries were down 47 percent in Northern California to 220 new homes (excluding 44 joint venture deliveries), the company reported.
The decrease in active selling communities was principally due to the rapid sell out of projects during late 2004 and the first half of 2005. In Florida, where the company had been steadily increasing the number of active selling communities, the company delivered 1,038 new homes in the fourth quarter of 2005, representing a 17 percent year-over-year increase, the company reported.
Standard Pacific delivered 553 homes (excluding four joint venture deliveries) during the 2005 fourth quarter in Arizona, a 27 percent increase from the 2004 fourth quarter. The increase was due to higher new home order levels in Phoenix during the fourth quarter of 2004 and the first quarter of 2005 reflecting strong demand for new housing. In the Carolinas, deliveries were up 104 percent to 351 new homes driven primarily by order growth from new community openings and improving market conditions. New home deliveries were up 346 percent in Texas to 504 new homes, driven by new community growth and improving market conditions in Dallas and Austin, combined with the delivery of 250 new homes from the company’s newly acquired San Antonio division. Deliveries were off 8 percent in Colorado year-over-year as a result of a decrease in new orders in the second quarter of 2005.
The average home prices in the company’s non-California divisions are substantially lower than those in California. The company’s average home price in California was $687,000 for the fourth quarter of 2005, a 1 percent increase from the year earlier period.
The relatively flat average home price reflects the impact of delivering a greater percentage of the company’s homes in California from the more affordable Inland Empire, Ventura, and Bakersfield divisions, Standard Pacific reported.
The impact on the company’s California average home price from the geographic mix shift was more than offset by the general level of price increases experienced in the state. The company’s average price in Florida was up 8 percent from the year ago period to $240,000, and primarily reflects the impact of general price increases throughout the state. The company’s average price in Arizona was up 32 percent to $237,000, primarily reflecting the strong level of price increases experienced in Phoenix over the past several quarters.
The company’s average price was up 4 percent in the Carolinas and primarily reflected a change in delivery mix. The company’s average prices in Texas and Colorado were down 26 percent and 5 percent, respectively, reflecting shifts in the company’s product mix to more affordable homes, and the addition of San Antonio during the year. The average home price in the company’s new San Antonio division was $140,000. For 2006, we expect that the company’s average home price will increase approximately $33,000, or 10 percent, to $380,000. We are projecting a 2006 first quarter average home price of $356,000, up slightly over the 2005 first quarter average. The increase in the first quarter and full year average home price primarily reflects the significant increase in new home prices experienced in the Phoenix market in 2005 and the moderate level of price increases experienced in the California and Florida markets over the same time period.
New orders companywide for the fourth quarter of 2005 totaled 2,154 homes (excluding 64 from unconsolidated joint ventures), an 11 percent decrease from the 2004 fourth quarter. The overall decline in orders resulted from the delay in a number of new community openings during the quarter as well as a slowing of demand in some of the company’s markets from the unsustainable pace of the past several quarters. Even with this moderation in demand, the company believes that current conditions are generally healthy in its three largest markets: California, Florida, and Arizona, while conditions are generally improving in the Carolinas, Texas and Colorado.
Excluding joint ventures, new home orders were up 11 percent year over year in Southern California on a 12 percent higher average community count, reflecting healthy demand for new homes and the generally supply-constrained nature of the Southern California region. In Northern California, new home orders were down 74 percent on a 29 percent lower average community count. The decrease in new home orders reflects a slowdown in order activity from the robust pace in 2004, an increased level of cancellations and a significant reduction in new communities from the 2004 level due to rapid sellouts in many San Francisco Bay Area projects earlier in 2005.
The level of new home orders for the 2005 fourth quarter resulted in a strong fourth quarter backlog of 6,276 presold homes (excluding 203 joint venture homes) valued at a record $2.3 billion (excluding $118 million of joint venture backlog), an increase of 9 percent from the December 31, 2004 backlog value.
The company ended the year with 181 active selling communities (excluding five joint venture communities), an 8 percent increase over the year earlier period. The company is projecting to open approximately 150 new communities during 2006 with the openings evenly split between the first half and the second half of the year. As a result, the company is targeting 220 active communities by mid year and 240 to 250 by the end of 2006.
Financial services joint venture income, which is derived from mortgage banking joint ventures with third party financial institutions currently operating in conjunction with the company’s homebuilding divisions in Colorado, the Carolinas, and Tampa, Orlando and Southwestern Florida, was up 11 percent to $635,000. The higher level of income was primarily due to an increase in the number of new home deliveries in these markets.
The company and The Beechwood Organization, a New York-based home builder, have jointly elected to discontinue the previously announced discussions regarding the company’s potential acquisition of Beechwood’s home-building operations.
Standard Pacific has built homes for more than 82,000 families during its 40-year history. The company operates in major metropolitan areas in California, Florida, Arizona, the Carolinas, Texas, Colorado, and Nevada.
The company provides mortgage financing and title services to its homebuyers through its subsidiaries and joint ventures, Family Lending Services, WRT Financial, Westfield Home Mortgage, Home First Funding, Universal Land Title of South Florida and SPH Title.
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