Standard Pacific Corp. officials blamed declining home prices and increased sales incentives, in part, for $192.3 million in pretax impairment charges that contributed to a $216.4 million net loss for the quarter.
The quarterly loss reported today, which amounted to a loss per share of $3.34, compares with a net loss of $40.8 million in first-quarter 2007 and a loss per share of 63 cents for that quarter.
Revenues totaled $348.2 million in the first quarter, down 46.5 percent compared with revenues of $651.1 million in first-quarter 2007. Other major public builders have continued to take hits in earnings, too — builder D.R. Horton Inc. reported a $1.3 billion quarterly net loss for the quarter ended March 31, for example, compared with net income of $51.7 million for the same quarter last year.
"The impairments reflect the general decline in the housing market," said Jeffrey V. Peterson, who took over as Standard Pacific chairman, CEO and president in March.
Peterson noted that the company’s management team has sought, "with a heightened sense of urgency," to reduce home inventories and to "carefully manage cash and reduce debt."
The company reported that it was not in compliance with its debt covenants in the company’s revolving credit facility as of March 31, though the company reached an agreement with its bank group "to extend the bank group’s previous waiver of any default arising from our noncompliance … to May 14," according to the company’s earnings report filed with the U.S. Securities and Exchange Commission.
Also, the company received preliminary consent of the bank group on May 9 to extend the waiver to Aug. 14. The proposed extension of the waiver also seeks to expand the scope of the waiver to include "a broader waiver of defaults arising from non-compliance with financial covenants and a suspension of the application of the borrowing base," among other provisions.
And the company would agree to collateralize new advances made under the credit facility, to reduce the credit facility commitment from $700 million to $500 million, and not to borrow under this facility when the company’s cash on hand exceeds $300 million, according to the SEC filing.
A $144 million inventory impairment and a $19.1 million joint venture impairment in California account for most of the company’s impairment charges in the first quarter.
Standard Pacific reported that its consolidated average home price from continuing operations, excluding joint ventures, dropped 12 percent year-over-year in the first quarter, to $334,000.
"The overall decrease was due primarily to the level of incentives and discounts and price cutting required to sell homes in most of our markets, offset in part from changes in the company’s geographic mix, whereby a greater percentage of homes were delivered from the higher-priced California markets," the company reported.
The average price of the company’s homes in Northern California dropped 26 percent.
Net new orders in the first quarter fell 30 percent to 1,245 compared to the same quarter last year. The cancellation rate was 24 percent, matching the rate for first-quarter 2007. New-home deliveries dropped 38 percent in the first quarter compared to the same quarter last year.
In addition to California, Southern Pacific also has operations in Arizona, Texas, Colorado, Nevada, Florida, North Carolina and South Carolina.
The company’s stock price was trading at $3.10 per share as of 1:15 p.m. ET today, down 67 cents compared with the previous day’s closing price of $3.77.
The price per share hit an all-time low of $1.47 on Jan. 11, 2008, with share-price data dating back to Dec. 30, 1987. On Jan. 17, 2008, the adjusted closing price of the company’s stock was $2.06 per share, the lowest since $2.05 on Jan. 24, 1991.
On Friday, builder D.R. Horton reported a $1.3 billion net loss, which amounts to a loss of $4.14 per share, with stockholders’ equity falling 38 percent to $4.1 billion compared to the same quarter last year.
The number of homes closed fell 31 percent year-over-year in the first quarter to 6,719, and the average sales price of those homes fell 8 percent to $237,800.
Net sales orders dropped 25 percent year-over-year to 7,528 homes and the sales order backlog dropped 57 percent to a value of $2.1 billion, D.R. Horton reported. The company has operations in 27 states and 82 market areas.
On Jan. 9 the company reported that its stock price dropped to a low of $9.78 per share, which was the lowest level since July 15, 1992. And the company’s adjusted closing price per share of $10.17 per share was the lowest since Sept. 9, 2002. The company’s stock price closed at $14.83 on Friday.
Builder MDC Holdings on May 2 reported a $77.2 million net loss in the first quarter, compared with a $143.7 million net loss in the same quarter last year. Total revenue dropped 45 percent in the first quarter compared to the same quarter last year, to $406.1 million.
"Home buyer demand for new homes remained weak, and the mortgage lending industry continued to be impacted negatively by the uncertainties in the credit and capital markets," the company reported.
"We believe that the stability of the credit and capital markets will play a major role in the timing, strength and sustainability of a turnaround in the home-building and mortgage lending industries."
The average home price declined in most of the company’s operating areas. The company reported impairments of $6.1 million in its held-for-sale land inventory, which "primarily resulted from deterioration in market conditions that led us to the conclusion that the best use of these assets is to sell them in their current condition."
MDC’s stock price per share hit a low of $31.57 on Jan. 9, which was the lowest level since $31.52 per share on Aug. 29, 2001. And the company’s adjusted closing price hit its lowest level on Jan. 8, 2008, since May 29, 2003.
Last week, builder Hovnanian Enterprises reported in a preliminary earnings report that it achieved positive cash flow in the quarter ended April 30, 2008, with deliveries dropping 21 percent and net new contracts falling 29 percent. Deliveries totaled 2,494 homes in the quarter, with net contracts totaling 2,226 homes.
The company also reported an expected $225 million to $275 million in noncash pretax charges in the second quarter related to land impairments and write-offs of predevelopment costs and land deposits "as a result of continued deterioration in sales pace, pricing and gross margin" since the close of the first quarter.
Cancellations represented 29 percent of gross contracts in the second quarter, compared with 38 percent in the first quarter and 32 percent in second-quarter 2007, the company reported.
On May 8, Hovnanian Enterprises reported that the company entered into an underwriting agreement with several financial companies related to a planned public offering of 14 million shares of common stock.
Hovnanian’s stock price per share hit an all-time low of $4.25 on Jan. 9, 2008, and its adjusted closing price of $4.80 on Jan. 9 represents the lowest level since $4.78 on Jan. 26, 2001.
Earnings reports for home builder Beazer Homes Inc. have been delayed by a restatement process for earlier earnings in 2005-07.
Beazer’s stock price per share hit an all-time low of $4.53 on Jan. 9, 2008, and its adjusted closing price on that day was the lowest since the mid-1990s.
K.B. Home reported a net loss of $268.2 million for the quarter ended Feb. 29, 2008, compared with net earnings of $27.5 million for the same quarter last year.
Also last month, builder Lennar reported a net loss of $88.2 million in the first quarter ended Feb. 29, 2008, compared with net earnings of $68.6 million in the same quarter last year. The company had total home-building revenues of $993.8 million in the first quarter compared with $2.6 billion in first-quarter 2007.
The company had a backlog of 3,398 homes as of Feb. 29, 2008, compared with 9,705 at the end of the same quarter last year, with the dollar value of backlog homes falling to $1.15 billion for the quarter compared with $3.45 billion for the same quarter last year.
Lennar’s stock price on Jan. 22, 2008, hit its lowest level since October 1990, falling to $11.98. And the stock price hit its lowest adjusted closing price on Jan. 18, 2008, since Oct. 2, 2000.
Centex Corp., Pulte Homes Inc. and Ryland Group Inc. filed their latest earnings reports in February.
Centex reported a net loss of $720.7 million in the quarter ended Dec. 31, 2007, compared with a loss of $299.6 million for the same quarter last year, and its revenues slipped 30.1 percent to $1.91 billion.
Pulte Homes reported in February that it had a net loss of $2.26 billion for the full year in 2007, compared with net earnings of $687.5 million in the 2006 calendar year
And Ryland Group reported a loss of $424,981 for the full year in 2007, compared with net earnings of $573.1 million in 2006.
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