Standard Pacific returns to profit in 1st quarter
LOS ANGELES—Standard Pacific Corp. said Monday that it returned to a profit in the first quarter, as the homebuilder's completed home sales and contracts for new homes surged, driving revenue higher.
CEO and President Scott Stowell said that the company saw positive momentum coming into 2012, adding that "there may be some stabilization in the economy and the overall housing market."
The homebuilder's contracts for new homes jumped 43 percent from the same quarter last year. Completed sales, or closings, vaulted 46 percent. Standard Pacific ended the quarter with a 55 percent increase in its backlog of homes under contract, a key indicator of potential revenue for builders.
But its gross margin from home sales, or the percentage of each dollar in revenue the company actually keeps, slipped to 20.3 percent, from 20.5 percent a year earlier.
The Irvine, Calif., company's results echo those of other major builders reporting sharp increases in sales trends for the first three months of the year.
The spring home-selling season -- traditionally the peak period for home sales -- kicks off at the end of February, and homebuilders typically see a pickup in sales. This year, an unusually mild winter appears to have helped, as sales of new homes rose 7.3 percent nationally in February. However, sales fell last month by 7.1 percent -- the largest amount in more than a year.
An improved job market, increased retail spending and lower unemployment have helped stoke optimism that the housing market will fare better this year than in 2011. Sales of new homes sank last year to the lowest level on records dating back a half century.
Still, builders continue to face competition from sharply discounted foreclosures, which are expected to increase this year after slowing in 2011 as the mortgage lending industry sorted out foreclosure abuse claims.
For the three months ended March 31, Standard Pacific posted net income of $8.5 million, or 2 cents a share. That compares with a loss of $14.8 million, or 4 cents per share, a year earlier.
Results for the latest quarter included $4.1 million of income related to the settlement of a property insurance claim.
Analysts polled by FactSet forecast, on average, earnings of a penny a share.
Total revenue climbed to $223.7 million from $143.7 million a year earlier. Analysts were anticipating $223.5 million in revenue.
Standard Pacific's revenue got a boost from higher prices. The builder's average home sale price rose 5 percent from a year earlier to $343,000.
Net new orders grew to 934, while completed sales climbed to 642.
The builder's backlog totaled 973 homes.
The cancellation rate on new home purchase contracts was 13 percent, down from 14 percent a year earlier, and 19 percent in the fourth quarter.
Standard Pacific shares ended regular trading down 11 cents, or 2.1 percent, at $5.06. In aftermarket trading the stock added a penny to $5.10.