IRVINE, Calif., July 27 /PRNewswire-FirstCall/ -- Standard Pacific Corp. today reported the Company's 2006 second quarter operating results. Net income for the quarter ended June 30, 2006 was $96.5 million, or $1.44 per diluted share, compared to $107.6 million, or $1.54 per share, in the year earlier period. Homebuilding revenues were up 5% to a record $1.0 billion for the 2006 second quarter versus $952 million last year.
Stephen J. Scarborough, Chairman and Chief Executive Officer, stated, "The changing market tone that surfaced at the end of 2005 has continued to evolve during the first half of 2006, and we are clearly facing an increasingly competitive environment in most of our major markets across the country. We are impacted by growing levels of both new and existing home inventories, a steadily increasing interest rate environment, reduced affordability and weaker homebuyer confidence. All of these conditions have resulted in lower sales rates and higher levels of cancellations which have given rise to a greater use of incentives and other forms of discounting."
"It is difficult to predict when market conditions will stabilize and improve in our primary markets. However, we are taking the necessary steps to respond to the challenges that we all face while positioning the Company for the future. We have intensified our effort to manage our cash flows, including slowing our starts and reducing our capital outlays for land. And while we have had reasonable success during the first half of the year with the introduction of a number of our new communities that are well located and competitively priced, we have moderated our planned openings for the balance of the year in response to the slowing market environment that we face."
"Going forward, we will continue to adjust our new home pricing strategy to balance our volume and margin objectives. During the quarter we were able to generate a relatively strong gross margin of 27.2% with a modest 2% reduction in unit deliveries year over year. We are also working to realign our fixed cost structure to match current activity levels and continue our efforts to reduce our production costs while improving our cycle times."
Mr. Scarborough continued, "We have adjusted our business plan for 2006 to respond to these challenging market conditions and to reflect our expectation of generally lower absorption rates on a project-by-project basis going forward. We are targeting approximately 10,400 deliveries, excluding 425 joint venture homes, homebuilding revenues of approximately $4.0 billion, and earnings of $5.10 to $5.40 per share. Our expectations for the balance of the year are supported by our backlog of nearly 5,500 homes, valued at $2.1 billion, which, while subject to cancellations, represents approximately 95% of our projected 2006 revenue target when combined with our first half results. For the third quarter we are projecting approximately 2,275 deliveries, excluding 50 joint venture homes, and homebuilding revenues of approximately $850 million, with initial earnings guidance of $0.80 to $0.85 per share."
"We continue to be focused on maintaining a sound balance sheet and diversified capital structure. We ended the quarter with over $1.8 billion in shareholders' equity, and leverage within our targeted range. In addition, to further strengthen our balance sheet and improve our liquidity during the quarter, we refinanced $350 million of revolver borrowings with two new term loans, increased our revolving credit facility commitment to $1.1 billion and added a new $400 million accordion feature to the facility."
Mr. Scarborough concluded, "During the second quarter we repurchased an additional 1.9 million shares, which brings our year-to-date total to nearly 3.3 million shares, which depleted our previous $100 million buyback authorization. Accordingly, our Board approved a new $50 million repurchase limit for additional buybacks. While we believe that share repurchases at current prices are a sound use of our capital, we will be thoughtful about the degree of future buybacks so as not to undermine the strength of our balance sheet and our credit quality."
Homebuilding Operations
Homebuilding pretax income for the 2006 second quarter decreased 11% to $154.1 million from $172.4 million in the year earlier period. The decrease in pretax income was driven by a 30 basis point lower homebuilding gross margin percentage, a 130 basis point increase in our SG&A rate and a $15.8 million decrease in other income (expense). These negative factors were partially offset by a 5% increase in homebuilding revenues and a $6.0 million increase in joint venture income.
Homebuilding revenues for the 2006 second quarter increased 5% to $1,003.9 million from $952.3 million last year. The increase in revenues was primarily attributable to an 8% increase in our consolidated average home price to $374,000, partially offset by a 2% decrease in new home deliveries (exclusive of joint ventures).
The 2% decrease in new home deliveries companywide was influenced by the following regional operations. During the 2006 second quarter, the Company delivered 703 new homes in California (exclusive of joint ventures), an 8% decrease from the 2005 second quarter. Deliveries were up 12% in Southern California to 526 new homes (excluding 16 joint venture deliveries) reflecting the rebound in order activity last year. Deliveries were down 41% in Northern California to 177 new homes (excluding 34 joint venture deliveries), and primarily reflects the decrease in new home orders we began to experience in the second half of 2005 resulting from a slowdown in new home demand, coupled with a decrease in the number of active selling communities during the same period, particularly in the San Francisco Bay area. In Florida, the Company delivered 756 new homes in the second quarter of 2006, representing a 10% year-over-year decline. The lower Florida delivery total was due to a modest decrease in net new orders in the state last year combined with an increase in the state's cancellation rate during the first half of 2006. The Company delivered 275 homes (excluding 5 joint venture deliveries) during the 2006 second quarter in Arizona, a 48% decrease from the 2005 second quarter. The lower level of new home deliveries was due to a modest decline in net new orders in the state last year as well as a significant jump in the Phoenix division's cancellation rate during the second quarter of 2006. In the Carolinas, deliveries were off 18% to 219 new homes driven primarily by a slight reduction in the number of active selling communities this year, coupled with a modest slowdown in order activity during the 2006 second quarter. New home deliveries were up 171% in Texas to 574 new homes, driven by improving market conditions in Dallas and Austin, combined with the delivery of 303 homes from our new San Antonio division. Deliveries were up 21% in Colorado to 150 new homes for the quarter.
During the 2006 second quarter, the Company's average home price increased 8% to $374,000. The Company's regional average home prices changed as follows. Our average home price in California was $729,000 for the second quarter of 2006, a 10% increase from the year earlier period. The higher average home price was primarily due to a greater delivery mix of more expensive homes from the Company's Orange County, Ventura, and San Diego divisions in Southern California. Our average price in Florida was up 16% from the year ago period to $271,000, and primarily reflects the impact of general price increases throughout the state experienced last year and, to a lesser degree, a shift in product mix. Our average price in Arizona was up 51% to $318,000, primarily reflecting the strong level of price appreciation experienced in Phoenix during 2004 and much of 2005. Our average price was up 21% in the Carolinas and primarily reflected a change in delivery mix. Our average price in Texas was down 15%, primarily reflecting the addition of San Antonio last year, where our average home price was $145,000. Companywide, we expect that our full-year average new home price will increase approximately $38,000, or 11%, to $385,000 in 2006. We are projecting a 2006 third quarter average home price of $375,000, up 11% over the 2005 third quarter average. The expected increase in the 2006 third quarter and full year average home prices primarily reflect the significant appreciation in new home prices experienced in the Phoenix market in 2005 and the more moderate level of price appreciation experienced in the California and Florida markets over the same time period.
The Company's 2006 second quarter homebuilding gross margin percentage was down 30 basis points year-over-year to 27.2%. The slight decrease in the year-over-year gross margin percentage was driven primarily by a lower gross margin in Southern California offset, in part, by higher gross margins in Northern California, Florida, and Arizona. In addition, margins in the Carolinas and Texas continue to improve, but are still below our company-wide average. The higher gross margin percentages in most of our markets reflected our ability to raise home prices during much of 2005 as a result of healthy housing demand during the year. Our homebuilding gross margin percentage for the 2006 third quarter is expected to be in the 23.0% to 24.0% range, while our margin for the full year is expected to be approximately 25.0% to 25.5%. While difficult to estimate under changing market conditions, our 2006 full year gross margin guidance reflects our best estimate at this time for the level of incentives needed in certain of our markets to sell homes.
Selling, general and administrative expenses (including corporate G&A) for the 2006 second quarter increased 130 basis points to 12.3% of homebuilding revenues, which was at the low end of our guidance for the quarter, and compared to 11.0% last year. The higher level of SG&A expenses as a percentage of homebuilding revenues was primarily due to (1) increased levels of sales and marketing expenses, including outside sales commissions and advertising, as a result of the general slowdown in new housing demand in our largest markets, (2) the shifting geographic mix of our deliveries, where our non-California operations generally incur higher levels of SG&A expenses as a percentage of revenues, (3) an increase in equity-based compensation, including the cost of expensing stock options and other share-based awards, and (4) overhead incurred in connection with our start-up operations in Bakersfield, the Central Valley of California and Las Vegas. Our projected SG&A rate for 2006 is expected to be approximately 12.0% to 12.5%, while the 2006 third quarter rate is expected to be approximately 13.5% to 14.0%.
Income from unconsolidated joint ventures was up $6.0 million for the 2006 second quarter to $19.2 million. For the quarter, $14.0 million of joint venture income was generated from land sales to other builders while $5.4 million was generated from new home deliveries. Deliveries from the Company's unconsolidated homebuilding joint ventures totaled 55 new homes in the 2006 second quarter versus 109 last year. For 2006, we are projecting approximately $60-$65 million in total joint venture income of which $25 million is expected to be generated from approximately 425 new home deliveries and approximately $40 million is projected from profits from joint venture land sales to other builders. For the 2006 third quarter, we are projecting $6 million in total venture income, of which $3 million is expected to be generated from the delivery of approximately 50 joint venture homes and approximately $3 million is projected from venture land sale income.
Other income (expense) for the 2006 second quarter includes a pre-tax charge of approximately $16.3 million related to the write-off of deposits and capitalized pre-acquisition costs for abandoned or uncertain projects.
Net new orders companywide for the second quarter of 2006 totaled 1,887 homes, a 41% decrease from the 2005 second quarter, while gross orders were off 22% year-over-year. The overall decline in unit orders resulted from the slowing of demand for homes in the Company's three largest markets, California, Florida and Arizona. The declining level of demand in these markets is generally attributable to reduced housing affordability, higher mortgage interest rates, and increased levels of new and existing homes for sale. These conditions have also contributed to an erosion of homebuyer confidence in many of these markets.
Excluding joint ventures, net new home orders were off 56% year-over-year in Southern California on a 33% higher average community count. The lower level of sales activity in Southern California was due to: (1) a softening in buyer demand across all divisions in the region, and (2) a doubling of our cancellation rate. In Northern California, net new home orders were down 48% on a 31% higher average community count. The year-over-year decrease in new home orders during the quarter reflected a slowdown in demand which began in the latter half of 2005 compared to the robust pace experienced in 2004 and the first half of 2005. Net order activity, however, was up slightly year- over-year in Sacramento.
Net new home orders were down 67% in Florida on a 13% lower community count. A number of factors contributed to the year-over-year decrease in Florida order activity: (1) a softening in buyer demand, most notably in South and Southwest Florida, Jacksonville and Orlando, (2) a nearly threefold increase in our cancellation rate, and (3) reduced product availability in our Orlando and Jacksonville divisions.
In Arizona, net new home orders were down 62% on a 100% higher average community count. The Phoenix market is clearly experiencing challenging market conditions for new and existing homes as evidenced by the surge in our cancellation rate during the second quarter and the increasing need for incentives to sell homes.
Orders were down 16% in the Carolinas on a 5% lower community count, and up 88% in Texas on a 54% higher average community count. The Texas total for the 2006 second quarter includes 223 net new home orders generated from 16 communities from the Company's new San Antonio division. In Colorado, orders were up 7% on an 18% higher community count. Housing market conditions in the Company's Texas markets are generally improving compared to the year earlier period, while housing market conditions in Colorado remain challenging. The tone of the Carolina markets, while off slightly year-over-year, generally feels good.
The Company's cancellation rate (excluding joint ventures) for the 2006 second quarter was 36%, up from the year earlier rate of 15%. As mentioned above, the Company's cancellation rate was up meaningfully year-over-year in California, Florida and Arizona.
The 2006 second quarter backlog of 5,480 presold homes (excluding 240 joint venture homes) was valued at $2.1 billion (excluding $128 million of joint venture backlog), a decrease of 17% from the June 30, 2005 backlog value, reflecting the slowdown in order activity during 2006, particularly in the second quarter.
The Company ended the quarter with 203 active selling communities (excluding 10 joint venture communities), a 23% increase over the year earlier period. The Company is projecting to open approximately 110-120 new communities for the full year compared to 92 last year. The revised new community target for the year reflects adjustments in all of our markets with the largest reduction in new openings in Arizona as a result of the meaningful slowing of housing demand in the state. The Company is targeting approximately 245 communities by the end of 2006, representing a 35% year- over-year increase.
Financial Services
In the 2006 second quarter, the Company's financial services subsidiary generated pretax income of $744,000 compared to $1.3 million in the year earlier period. The lower level of profitability was driven primarily by a decrease in margins on loans sold and a decline in the amount of net interest income earned on loans held for sale, which were partially offset by an increase in the dollar volume of loans sold.
Financial services joint venture income, which is derived from mortgage banking joint ventures with third party financial institutions and, which are currently operating in conjunction with our homebuilding divisions in the Carolinas, and Tampa, Orlando and Southwestern Florida, was down 25% to $374,000. The lower level of income was primarily due to the transition this year of the Company's Colorado operations from a joint venture arrangement to the Company's wholly-owned financial services subsidiary.
Earnings Conference Call
A conference call to discuss the Company's 2006 second quarter earnings will be held at 11:00 am Eastern time tomorrow, Friday, July 28, 2006. The call will be broadcast live over the Internet and can be accessed through the Company's website at http://standardpacifichomes.com/ir . The call will also be accessible via telephone by dialing (800) 946-0783. The entire audio transmission with the synchronized slide presentation will also 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 (Passcode: 7483081).
Standard Pacific, one of the nation's largest homebuilders, has built homes for more than 87,000 families during its 40-year history. The Company constructs homes within a wide range of price and size targeting a broad range of homebuyers. Standard Pacific operates in many of the largest housing markets in the country with operations 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, SPH Home Mortgage, Home First Funding, Universal Land Title of South Florida and SPH Title. For more information about the Company and its new home developments, please visit our website at: http://www.standardpacifichomes.com/.
This news release contains forward-looking statements. These statements include but are not limited to statements regarding: steps being taken to respond to market challenges and positioning the Company for the future; moderating planned openings in response to the slowing market environment; adjusting pricing strategy to balance volume and margin objectives; realigning our fixed cost structure to match current activity levels and continuing our efforts to reduce production costs while improving cycle times; our share repurchase strategy and desire to maintain the strength of our balance sheet and credit quality; the percentage of targeted revenues and deliveries in backlog; housing market conditions in the markets in which the Company operates; orders and backlog; expected new community openings and active subdivisions; the Company's expected earnings, earnings per share, deliveries and revenues; the Company's expected SG&A rate; expected average home prices; expected homebuilding gross margins; and expected joint venture income and deliveries. Forward-looking statements are based on 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 our 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 of 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; the demand for and affordability of single-family homes; cancellations of purchase contracts by homebuyers; the cyclical and competitive nature of our 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 our mortgage banking operations, including hedging activities; future business decisions and our ability to successfully implement our operational, growth and other strategies; litigation and warranty claims; and other risks discussed in our filings with the Securities and Exchange Commission, including in our Annual Report on Form 10-K for the year ended December 31, 2005. We assume no, and hereby disclaim any, obligation to update any of the foregoing or any other forward-looking statements. We nonetheless reserve 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.
* Excludes the Company's unconsolidated joint ventures.
** For a definition of Adjusted Homebuilding EBITDA and a reconciliation
of net income to Adjusted Homebuilding EBITDA and cash flows from
operating activities to Adjusted Homebuilding EBITDA, please see the
Selected Financial Data included herewith.
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2006 2005 2006 2005
Homebuilding:
Revenues $1,003,879 $952,333 $1,882,899 $1,788,679
Cost of sales (731,230) (690,376) (1,351,029) (1,309,555)
Gross margin 272,649 261,957 531,870 479,124
Selling, general
and administrative
expenses (123,907) (104,776) (238,375) (197,135)
Income from
unconsolidated
joint ventures 19,167 13,143 25,744 17,500
Other income
(expense) (13,766) 2,057 (12,502) 3,805
Homebuilding
pretax income 154,143 172,381 306,737 303,294
Financial Services:
Revenues 5,926 4,738 10,236 8,594
Expenses (5,182) (3,451) (9,555) (7,217)
Income from
unconsolidated
joint ventures 374 502 1,041 941
Other income 433 206 651 312
Financial services
pretax income 1,551 1,995 2,373 2,630
Income before taxes 155,694 174,376 309,110 305,924
Provision for income
taxes (59,199) (66,775) (117,858) (116,208)
Net Income $96,495 $107,601 $191,252 $189,716
Earnings Per Share:
Basic $1.48 $1.59 $2.90 $2.81
Diluted $1.44 $1.54 $2.82 $2.72
Weighted Average
Common Shares
Outstanding:
Basic 65,266,483 67,573,982 66,046,723 67,488,662
Diluted 67,006,759 69,828,262 67,911,393 69,737,038
Cash dividends
per share $0.04 $0.04 $0.08 $0.08
Selected Operating Data
Three Months Ended June 30, Six Months Ended June 30,
2006 2005 2006 2005
New homes delivered:
Southern California 526 468 977 798
Northern California 177 298 345 659
Total California 703 766 1,322 1,457
Florida 756 841 1,473 1,659
Arizona 275 532 634 974
Carolinas 219 266 455 434
Texas 574 212 1,006 348
Colorado 150 124 260 230
Consolidated total 2,677 2,741 5,150 5,102
Unconsolidated joint
ventures:
Southern California 16 30 43 40
Northern California 34 75 40 110
Arizona 5 4 11 5
Total unconsolidated
joint ventures 55 109 94 155
Total (including
joint ventures) 2,732 2,850 5,244 5,257
Average selling prices
of homes delivered:
Southern California $723,000 $637,000 $697,000 $701,000
Northern California $747,000 $708,000 $760,000 $666,000
Total California $729,000 $665,000 $714,000 $685,000
Florida $271,000 $234,000 $267,000 $220,000
Arizona $318,000 $211,000 $290,000 $204,000
Carolinas $186,000 $154,000 $182,000 $155,000
Texas $192,000 $225,000 $191,000 $226,000
Colorado $305,000 $330,000 $308,000 $316,000
Consolidated
(excluding joint
ventures) $374,000 $346,000 $364,000 $349,000
Unconsolidated
joint ventures $769,000 $729,000 $788,000 $708,000
Total (including
joint ventures) $382,000 $360,000 $372,000 $360,000
Net new orders:
Southern California 319 732 816 1,240
Northern California 117 223 231 501
Total California 436 955 1,047 1,741
Florida 345 1,054 796 1,804
Arizona 183 476 671 992
Carolinas 289 345 524 604
Texas 518 276 1,097 556
Colorado 116 108 272 260
Consolidated total 1,887 3,214 4,407 5,957
Unconsolidated
joint ventures:
Southern California 57 45 62 84
Northern California 37 35 54 76
Arizona -- 4 -- 6
Illinois 4 -- 15 --
Total unconsolidated
joint ventures 98 84 131 166
Total (including
joint ventures) 1,985 3,298 4,538 6,123
Average number of
selling communities
during the period:
Southern California 36 27 34 26
Northern California 17 13 15 14
Total California 53 40 49 40
Florida 48 55 47 54
Arizona 28 14 28 14
Carolinas 20 21 19 20
Texas 37 24 38 24
Colorado 13 11 13 12
Consolidated total 199 165 194 164
Unconsolidated joint
ventures:
Southern California 2 3 2 2
Northern California 5 3 5 3
Arizona -- 1 -- 1
Illinois 1 -- 1 --
Total unconsolidated
joint ventures 8 7 8 6
Total (including
joint ventures) 207 172 202 170
At June 30,
2006 2005
Backlog (in homes):
Southern California 824 1,143
Northern California 184 581
Total California 1,008 1,724
Florida 1,599 2,948
Arizona 1,455 1,474
Carolinas 276 335
Texas 920 478
Colorado 222 241
Consolidated total 5,480 7,200
Unconsolidated joint
ventures:
Southern California 116 69
Northern California 57 85
Arizona 20 4
Illinois 47 --
Total unconsolidated
joint ventures 240 158
Total (including
joint ventures) 5,720 7,358
Backlog (estimated dollar value in thousands):
Southern California $660,427 $752,795
Northern California 127,628 393,229
Total California 788,055 1,146,024
Florida 470,145 743,259
Arizona 483,398 360,429
Carolinas 56,159 53,277
Texas 194,595 107,257
Colorado 76,076 85,943
Consolidated total 2,068,428 2,496,189
Unconsolidated joint ventures:
Southern California 60,531 53,653
Northern California 41,274 60,518
Arizona 6,021 1,141
Illinois 20,397 --
Total unconsolidated joint
ventures 128,223 115,312
Total (including joint ventures) $2,196,651 $2,611,501
Building sites owned or controlled:
Southern California 14,022 15,638
Northern California 8,082 5,483
Total California 22,104 21,121
Florida 13,821 11,967
Arizona 12,469 11,976
Carolinas 4,717 4,496
Texas 10,273 4,385
Colorado 1,318 1,812
Nevada 3,019 --
Illinois 220 --
Total (including joint ventures) 67,941 55,757
Total building sites owned 38,650 32,274
Total building sites optioned 14,323 14,208
Total joint venture lots 14,968 9,275
Total (including joint ventures) 67,941 55,757
Completed and unsold homes:
Consolidated 425 151
Joint ventures -- 3
Total (including joint ventures) 425 154
Homes under construction:
Consolidated 6,952 6,488
Joint ventures 735 263
Total (including joint ventures) 7,687 6,751
Selected Financial Data
Three Months Ended June 30,
2006 2005
(Dollars in thousands)
Net income $96,495 $107,601
Net cash provided by (used in)
operating activities $(61,116) $(111,960)
Net cash provided by (used in)
investing activities $(58,317) $1,465
Net cash provided by (used in)
financing activities $98,273 $109,221
Adjusted Homebuilding EBITDA(1) $184,317 $190,346
Homebuilding SG&A as a percentage
of homebuilding revenues 12.3% 11.0%
Homebuilding interest incurred $37,689 $22,680
Homebuilding interest capitalized
to inventories owned $34,527 $20,588
Homebuilding interest capitalized to
investments in and advances to
unconsolidated joint ventures $3,162 $2,092
Ratio of LTM Adjusted Homebuilding
EBITDA to homebuilding interest incurred 6.8x 8.5x
(1) Adjusted Homebuilding EBITDA means net income (plus cash
distributions of income from unconsolidated joint ventures) before
(a) income taxes, (b) expensing of previously capitalized interest
included in cost of sales, (c) material noncash impairment charges,
if any, (d) homebuilding depreciation and amortization, (e)
amortization of stock-based compensation, (f) income from
unconsolidated joint ventures and (g) income 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 investors as a
measure of our ability to service debt and obtain financing.
However, it should be noted that Adjusted Homebuilding EBITDA is not
a U.S. generally accepted accounting principles ("GAAP") financial
measure. Due to the significance of the GAAP components excluded,
Adjusted Homebuilding EBITDA 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 tables set forth below reconcile net cash provided by (used in)
operating activities and net income, calculated and presented in
accordance with GAAP, to Adjusted Homebuilding EBITDA:
Three Months Ended
June 30, LTM Ended June 30,
2006 2005 2006 2005
(Dollars in thousands)
Net cash provided by
(used in) operating
activities $(61,116) $(111,960) $(355,335) $55,025
Add:
Income taxes 59,199 66,775 271,480 248,792
Expensing of previously
capitalized interest
included in cost of sales 18,571 14,968 69,869 65,291
Excess tax benefits from
share-based payment
arrangements 358 -- 2,426 --
Less:
Income from financial
services subsidiary 744 1,287 2,762 3,181
Depreciation and
amortization from financial
services subsidiary 136 140 578 547
Loss on early extinguishment
of debt -- -- 5,938 --
Net changes in operating
assets and liabilities:
Trade and other
receivables (25,667) 48,784 (34,050) 83,046
Inventories-owned 206,223 197,965 897,906 329,417
Inventories-not owned (33,093) (16,191) 796 19,142
Deferred income taxes 7,192 3,032 21,683 9,095
Other assets 3,019 14,201 4,187 9,496
Accounts payable 5,063 (9,541) 6,385 (35,836)
Accrued liabilities 5,448 (16,260) (40,590) (41,847)
Adjusted Homebuilding
EBITDA $184,317 $190,346 $835,479 $737,893
Net income $96,495 $107,601 $442,520 $403,146
Add:
Cash distributions of
income from
unconsolidated
joint ventures 25,012 11,861 99,561 49,742
Income taxes 59,199 66,775 271,480 248,792
Expensing of previously
capitalized interest
included in cost of sales 18,571 14,968 69,869 65,291
Homebuilding depreciation
and amortization 1,662 1,096 6,425 3,775
Amortization of
stock-based compensation 3,663 2,977 17,926 9,171
Less:
Income from unconsolidated
joint ventures 19,541 13,645 69,540 38,843
Income from financial
services subsidiary 744 1,287 2,762 3,181
Adjusted Homebuilding
EBITDA $184,317 $190,346 $835,479 $737,893
Balance Sheet Data
(Dollars in thousands, except per share amounts)
At June 30,
2006 2005
Stockholders' equity per share $28.53 $22.40
Ratio of total debt to total
book capitalization(1) 54.9% 47.7%
Ratio of adjusted net homebuilding debt
to total book capitalization(2) 53.3% 44.9%
Ratio of total debt to LTM adjusted
homebuilding EBITDA(1) 2.7x 1.9x
Ratio of adjusted net homebuilding debt
to LTM adjusted homebuilding EBITDA(2) 2.5x 1.7x
Homebuilding interest capitalized
in inventories owned $110,774 $68,279
Homebuilding interest capitalized
as a percentage of inventories owned 3.1% 2.7%
(1) Total debt at June 30, 2006 and 2005 includes $84.6 million and
$112.0 million, respectively, of indebtedness of the Company's
financial services subsidiary and $48.4 million and $34.4 million,
respectively, of indebtedness included in liabilities from
inventories not owned.
(2) Net homebuilding debt reflects the offset of $4.8 million and
$2.1 million in cash and equivalents at June 30, 2006 and 2005,
respectively, against homebuilding debt of $2,100.1 million and
$1,237.1 million, respectively. Adjusted net homebuilding debt at
June 30, 2006 and 2005 is further adjusted to exclude $84.6 million
and $112.0 million, respectively, of indebtedness of the Company's
financial services subsidiary and $48.4 million and $34.4 million,
respectively, of indebtedness included in liabilities from
inventories not owned. We believe that the adjusted net homebuilding
debt to total book capitalization and adjusted net homebuilding debt
to LTM adjusted homebuilding EBITDA ratios are useful to investors as
a measure of our ability to obtain financing. These are non-GAAP
ratios and other companies may calculate these ratios differently.
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
2006 2005
(Unaudited)
ASSETS
Homebuilding:
Cash and equivalents $9,772 $18,824
Trade and other receivables 48,752 74,986
Inventories:
Owned 3,578,224 2,928,850
Not owned 386,569 590,315
Investments in and advances to
unconsolidated joint ventures 322,752 285,760
Deferred income taxes 59,232 58,681
Goodwill and other intangibles, net 121,199 120,396
Other assets 69,781 60,052
4,596,281 4,137,864
Financial Services:
Cash and equivalents 5,974 9,799
Mortgage loans held for sale 92,844 129,835
Other assets 6,504 3,344
105,322 142,978
Total Assets $4,701,603 $4,280,842
LIABILITIES AND STOCKHOLDERS' EQUITY
Homebuilding:
Accounts payable $102,531 $115,082
Accrued liabilities 286,765 345,294
Liabilities from inventories not owned 120,470 48,737
Revolving credit facility 424,800 183,100
Trust deed and other notes payable 76,893 97,031
Senior notes payable 1,449,198 1,099,153
Senior subordinated notes payable 149,177 149,124
2,609,834 2,037,521
Financial Services:
Accounts payable and other liabilities 2,741 2,246
Mortgage credit facilities 84,594 123,426
87,335 125,672
Total Liabilities 2,697,169 2,163,193
Minority Interests 169,648 378,490
Stockholders' Equity:
Preferred stock, $0.01 par value;
10,000,000 shares authorized;
none issued -- --
Common stock, $0.01 par value;
100,000,000 shares authorized;
64,313,589 and 67,129,010 shares
outstanding, respectively 643 671
Additional paid-in capital 314,990 405,638
Retained earnings 1,518,770 1,332,850
Accumulated other comprehensive income 383 --
Total Stockholders' Equity 1,834,786 1,739,159
Total Liabilities and Stockholders'
Equity $4,701,603 $4,280,842
