Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
SPF > SEC Filings for SPF > Form 10-K on 24-Feb-2014All Recent SEC Filings

Show all filings for STANDARD PACIFIC CORP /DE/

Form 10-K for STANDARD PACIFIC CORP /DE/


24-Feb-2014

Annual Report


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the section "Selected Financial Data" and our consolidated financial statements and the related notes included elsewhere in this Form 10-K.

Results of Operations
                         Selected Financial Information

                                                                       Year Ended December 31,
                                                           2013                    2012                2011
                                                          (Dollars in thousands, except per share amounts)
Homebuilding:
Home sale revenues                                   $       1,898,989       $       1,190,252     $     882,094
Land sale revenues                                              15,620                  46,706               899
Total revenues                                               1,914,609               1,236,958           882,993
Cost of home sales                                          (1,431,797 )              (946,630 )        (719,893 )
Cost of land sales                                             (13,616 )               (46,654 )            (903 )
Total cost of sales                                         (1,445,413 )              (993,284 )        (720,796 )
Gross margin                                                   469,196                 243,674           162,197
Gross margin percentage                                           24.5 %                  19.7 %            18.4 %
Selling, general and administrative expenses                  (230,691 )              (172,207 )        (154,375 )
Income (loss) from unconsolidated joint ventures                   949                  (2,090 )             207
Interest expense                                                     -                  (6,396 )         (25,168 )
Other income (expense)                                           6,815                   4,664            (1,017 )
Homebuilding pretax income (loss)                              246,269                  67,645           (18,156 )
Financial Services:
Revenues                                                        24,910                  21,300            10,907
Expenses                                                       (14,159 )               (11,062 )          (9,401 )
Other income                                                       678                     304               177
Financial services pretax income                                11,429                  10,542             1,683
Income (loss) before income taxes                              257,698                  78,187           (16,473 )
(Provision) benefit for income taxes                           (68,983 )               453,234                56
Net income (loss)                                              188,715                 531,421           (16,417 )
  Less: Net (income) loss allocated to preferred
shareholder                                                    (57,386 )              (224,408 )           7,101
  Less: Net (income) loss allocated to unvested
restricted stock                                                  (265 )                  (410 )               -
Net income (loss) available to common stockholders   $         131,064       $         306,603     $      (9,316 )

Income (Loss) per common share:
Basic                                                $            0.52       $            1.52     $       (0.05 )
Diluted                                              $            0.47       $            1.44     $       (0.05 )

Weighted average common shares outstanding:
Basic                                                      253,118,247             201,953,799       193,909,714
Diluted                                                    291,173,953             220,518,897       193,909,714

Weighted average additional common shares
outstanding
if preferred shares converted to common shares:            110,826,557             147,812,786       147,812,786

Total weighted average diluted common shares
outstanding
if preferred shares converted to common shares:            402,000,510             368,331,683       341,722,500

Net cash provided by (used in) operating
activities                                           $        (154,216 )     $        (283,116 )   $    (322,613 )
Net cash provided by (used in) investing
activities                                           $        (143,857 )     $        (105,205 )   $      (8,313 )
Net cash provided by (used in) financing
activities                                           $         314,809       $         324,354     $      10,077
Adjusted Homebuilding EBITDA (1)                     $         383,621       $         193,903     $     105,855

(1) Adjusted Homebuilding EBITDA means net income (loss) (plus cash distributions of income from unconsolidated joint ventures) before (a) income taxes, (b) homebuilding interest expense, (c) expensing of previously capitalized interest included in cost of sales, (d) impairment charges and deposit write-offs, (e) gain (loss) on early extinguishment of debt, (f) homebuilding depreciation and amortization, (g) amortization of stock-based compensation, (h) income (loss) from unconsolidated joint ventures and (i) income (loss) 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 management and investors as one 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 cash flows from operations or any other liquidity performance measure prescribed by GAAP.


Table of Contents

                   Selected Financial Information (continued)

                                  (1) Continued



The table set forth below reconciles net cash provided by (used in) operating
activities, calculated and presented in accordance with GAAP, to Adjusted
Homebuilding EBITDA.

                                                             Year Ended December 31,
                                                        2013           2012           2011
                                                              (Dollars in thousands)

Net cash provided by (used in) operating
activities                                           $ (154,216 )   $ (283,116 )   $ (322,613 )
Add:
Provision (benefit) for income taxes                     68,983       (453,234 )          (56 )
Deferred income tax benefit (provision)                 (84,214 )      454,000              -
Homebuilding interest amortized to cost of sales
and interest expense                                    121,778        110,298         94,804
Less:
Income from financial services subsidiary                10,751         10,238          1,506
Depreciation and amortization from financial
services subsidiary                                         121            108            611
Loss on disposal of property and equipment                   17             37            179
Net changes in operating assets and liabilities:
Trade and other receivables                               3,244           (801 )        5,358
Mortgage loans held for sale                              2,543         46,339         43,661
Inventories-owned                                       415,312        315,639        282,447
Inventories-not owned                                    43,319         31,551         19,727
Other assets                                               (965 )       (2,618 )       (6,212 )
Accounts payable                                        (13,325 )       (4,617 )       (1,113 )
Accrued liabilities                                      (7,949 )       (9,155 )       (7,852 )
Adjusted Homebuilding EBITDA                         $  383,621     $  193,903     $  105,855

Overview

We are focused on acquiring and developing strategically located and appropriately priced land and on designing and building highly desirable, amenity-rich communities and homes that appeal to the move-up and luxury home buying segments we target. The execution of this move-up strategy, coupled with the lift we experienced from improved market conditions, drove the strong financial performance we achieved in 2013, the fourth most profitable year in the Company's nearly 50-year history. We reported net income of $188.7 million, or $0.47 per diluted share, for 2013 (2013 net income included the aggregate income tax benefit of $30.6 million related primarily to the partial reversal of our deferred tax asset valuation allowance and the reversal of our liability for unrecognized tax benefits during the year), compared to net income of $531.4 million, or $1.44 per diluted share for 2012 (2012 net income included the $454 million tax benefit we received in 2012 from the reversal of a significant portion of our deferred tax asset valuation allowance), and a net loss of $16.4 million, or $0.05 per share, for 2011. Homebuilding pretax income for 2013 was $246.3 million, compared to $67.6 million in 2012 and a loss of $18.2 million in 2011. 2013 homebuilding revenues, new home deliveries, net new orders and homes in backlog were up 55%, 40%, 22% and 21%, respectively, as compared to 2012, and our average selling price of homes delivered was $413 thousand, a 14% increase from the prior year. Our gross margin from home sales rose to 24.6% for 2013, a 410 basis point increase compared to 2012 and our operating margin from home sales for 2013 was 12.5%, a 650 basis point increase compared to 2012.

We ended 2013 with $376.9 million of homebuilding cash (including $21.5 million of restricted cash), compared to $366.8 million (including $26.9 million of restricted cash) at the end of the prior year. Net cash used in operating activities during 2013 was $154.2 million compared to $283.1 million in 2012. The lower level of cash used in operating activities for 2013 as compared to the prior year was driven primarily by a 55% increase in homebuilding revenues, partially offset by a $77.4 million increase in cash land purchase and development costs. Cash flows from financing activities for 2013 included $296 million of net proceeds from a senior notes offering during the 2013 third quarter. In October 2013, we amended our revolving credit facility to, among other things, increase the total aggregate commitment to $470 million. Tranche B of the revolver matures on February 28, 2014, at which time the total aggregate commitment and the accordion feature will be reduced to $440 million and $520 million, respectively.


Table of Contents

Homebuilding

                                                             Year Ended December 31,
                                                       2013            2012           2011
                                                             (Dollars in thousands)
Homebuilding revenues:
California                                          $ 1,006,572     $   699,672     $ 506,002
Southwest                                               411,967         248,421       190,622
Southeast                                               496,070         288,865       186,369
Total homebuilding revenues                         $ 1,914,609     $ 1,236,958     $ 882,993

Homebuilding pretax income (loss):
California                                          $   164,805     $    46,491     $   6,310
Southwest                                                42,792          12,852       (12,345 )
Southeast                                                38,672           8,302       (12,121 )
Total homebuilding pretax income (loss)             $   246,269     $    67,645     $ (18,156 )

Homebuilding inventory impairment charges (1):
California                                          $         -     $         -     $   9,490
Southwest                                                     -               -         2,878
Southeast                                                     -               -           821
Total homebuilding inventory impairment charges     $         -     $         -     $  13,189



                                    As of December 31,
                           2013            2012            2011
                                  (Dollars in thousands)
Total Assets:
   California           $ 1,344,605     $ 1,192,249     $   985,560
  Southwest                 641,711         496,902         355,060
   Southeast                785,988         438,122         294,996
  Corporate                 740,950         842,705         473,971
   Total homebuilding     3,513,254       2,969,978       2,109,587
   Financial services       148,851         143,096          90,796
    Total Assets        $ 3,662,105     $ 3,113,074     $ 2,200,383

(1) Inventory impairment charges are included in cost of sales in the accompanying consolidated statements of operations.

For 2013, we generated homebuilding pretax income of $246.3 million compared to $67.6 million in 2012. This improvement was primarily the result of a 40% increase in new home deliveries, an increase in gross margin from home sales, a $6.4 million decrease in interest expense and the operating leverage inherent in our business.

For 2012, we generated homebuilding pretax income of $67.6 million compared to a pretax loss of $18.2 million in 2011. This improvement was primarily the result of a 30% increase in new home deliveries, a $13.2 million decrease in asset impairment charges, an increase in gross margin from home sales, an $18.8 million decrease in interest expense and our operating leverage.

Revenues

Homebuilding revenues for 2013 increased 55% from 2012 as a result of a 40% increase in new home deliveries and a 14% increase in our consolidated average home price to $413 thousand, partially offset by a $31.1 million decrease in land sale revenues. Homebuilding revenues for 2012 increased 40% from 2011 as a result of a 30% increase in new home deliveries, a $45.8 million increase in land sale revenues and a 4% increase in our consolidated average home price to $362 thousand.


Table of Contents

                                         Year Ended December 31,
                               2013    % Change    2012    % Change    2011
New homes delivered:
     California                1,762        35%    1,304        34%      975
     Arizona                     258         4%      247        46%      169
     Texas                       669        42%      472        12%      420
     Colorado                    168        47%      114        18%       97
     Nevada                      -       (100%)        9      (40%)       15
          Total Southwest      1,095        30%      842        20%      701
     Florida                   1,027        77%      581        30%      446
     Carolinas                   718        27%      564        39%      406
          Total Southeast      1,745        52%    1,145        34%      852
                Total          4,602        40%    3,291        30%    2,528

New home deliveries increased 40% in 2013 as compared to the prior year, driven largely by a 106% increase in the number of homes in backlog at the beginning of the year as compared to the year earlier period and a 22% increase in net new orders, partially offset by a decrease in speculative homes sold and closed during the year. New home deliveries increased 30% in 2012 compared to 2011, driven largely by a 64% increase in the number of homes in backlog at the beginning of the year as compared to the year earlier period and a 44% increase in net new orders.

                                                                             Year Ended December 31,
                                                                 2013     % Change     2012     % Change     2011
                                                                              (Dollars in thousands)
Average selling prices of homes delivered:
       California                                              $    565        12%   $    506       (3%)   $    519
       Arizona                                                      280        31%        213         5%        202
       Texas                                                        393        24%        318         9%        292
       Colorado                                                     450        16%        388        26%        308
       Nevada                                                       -          -          192         1%        190
              Total Southwest                                       375        27%        295         9%        271
       Florida                                                      279        13%        247        19%        208
       Carolinas                                                    289        17%        247         7%        231
              Total Southeast                                       283        15%        247        13%        219
                     Total                                     $    413        14%   $    362         4%   $    349

During 2013, our consolidated average home price increased 14% to $413 thousand as compared to $362 thousand for 2012. This increase was largely due to higher average home prices within the majority of our markets and a decrease in the use of sales incentives. During 2012, our consolidated average home price increased 4% to $362 thousand as compared to $349 thousand for 2011. This increase was largely due to higher average home prices within most of our markets, partially offset by lower average home prices in California compared to 2011.

Gross Margin

Our 2013 gross margin percentage from home sales was 24.6%, up 410 basis points from 20.5% in 2012. This 410 basis point increase resulted primarily from price increases, a higher proportion of deliveries from our profitable new communities, and improved margins from speculative homes sold and delivered during the year. Our 2012 gross margin percentage from home sales was 20.5%, up 210 basis points from 18.4% in 2011. This 210 basis point increase resulted primarily from a mix shift to more deliveries from higher margin communities, a decrease in the use of sales incentives, base house price increases at some of our faster selling communities, and the absence of inventory impairments in 2012.

SG&A Expenses

Our 2013 SG&A expenses (including corporate G&A) were $230.7 million compared to $172.2 million for the prior year. Despite this increase in dollar amount, our 2013 SG&A rate from home sales was 12.1% versus 14.5% for 2012. This 240 basis point improvement was primarily the result of a 60% increase in home sale revenues and our operating leverage. Our 2012 SG&A expenses (including corporate G&A) were $172.2 million compared to $154.4 million for 2011. Our 2012 SG&A rate from home sales was 14.5% versus 17.5% for 2011. This 300 basis point improvement was primarily the result of a 35% increase in home sale revenues and our operating leverage.


Table of Contents

Interest Expense

During the year ended December 31, 2013, our qualified assets exceeded our debt, and as of December 31, 2013, the amount of our qualified assets in excess of our debt was $430.6 million. As a result, all of our interest incurred during 2013 was capitalized in accordance with ASC Topic 835, Interest. During 2012 and 2011, the amount of our debt was in excess of our qualified assets. As a result, we expensed $6.4 million and $25.2 million of interest costs in 2012 and 2011, respectively. If our debt exceeds our qualified assets in the future, we will be required to expense a portion of the interest related to such debt.

Other Income (Expense)

Other income (expense) for 2013 was primarily attributable to the receipt of
property insurance claim settlements of approximately $10.2 million and interest
income of $0.8 million, partially offset by $1.7 million of project abandonment
costs and $1.2 million of acquisition-related costs. Other income (expense) for
2012 was primarily attributable to $4.1 million received in connection with a
property insurance claim settlement and $1.1 million of interest income.

Operating Data

                                                               Year Ended December 31,
                                                         % Absorption                       % Absorption
                                      2013    % Change    Change (1)     2012    % Change    Change (1)     2011
Net new orders (2):
    California                        1,718         9%            14%    1,570        52%            52%    1,030
    Arizona                             286         7%          (17%)      267        41%            81%      190
    Texas                               755        43%           (3%)      527        12%            12%      470
    Colorado                            201        29%            13%      156        56%            11%      100
    Nevada                               -      (100%)             -         6      (40%)             -        10
        Total Southwest               1,242        30%           (5%)      956        24%            28%      770
    Florida                           1,165        48%            34%      785        45%            49%      541
    Carolinas                           773        10%            24%      703        55%            33%      454
        Total Southeast               1,938        30%            30%    1,488        50%            41%      995
            Total                     4,898        22%            14%    4,014        44%            41%    2,795

(1) Represents the percentage change of net new orders per average number of selling communities during the period.

(2) Net new orders are new orders for the purchase of homes during the period, less cancellations during such period of existing contracts for the purchase of homes.

                                                                           Year Ended December 31,
                                                                 2013    % Change    2012    % Change    2011
Average number of selling communities during the year:
        California                                                  47       (4%)       49          -       49
        Arizona                                                      9        29%        7      (22%)        9
        Texas                                                       31        48%       21          -       21
        Colorado                                                     8        14%        7        40%        5
        Nevada                                                       -          -        -     (100%)        1
                Total Southwest                                     48        37%       35       (3%)       36
        Florida                                                     40        11%       36       (3%)       37
        Carolinas                                                   31      (11%)       35        17%       30
                Total Southeast                                     71          -       71         6%       67
                        Total                                      166         7%      155         2%      152

Net new orders for 2013 increased 22% from the prior year on a 7% increase in the number of average active selling communities. Our monthly sales absorption rate was 2.5 per community for 2013, up from 2.2 for 2012. During the 2013 fourth quarter our monthly sales absorption rate was 1.7 per community, compared to 2.2 in both the 2012 fourth quarter and the 2013 third quarter. The 23% decrease in sales absorption rate from the 2013 third to fourth quarter is slightly higher than the seasonality we typically experience in our business, and the decrease in sales absorption rate from the 2012 fourth quarter reflected the more tempered selling conditions we experienced during the 2013 fourth quarter as well as our continued emphasis on margin over sales pace. Our consolidated cancellation rate for 2013 was 15% compared to 13% for 2012, and was 21% for the 2013 fourth quarter compared to 15% for the 2012 fourth quarter. Our 2013 fourth quarter cancellation rate was consistent with our average historical cancellation rate over the last 10 years.


Table of Contents

Net new orders for 2012 increased 44% from 2011 on a 2% increase in the number of average active selling communities. Our monthly sales absorption rate was 2.2 per community for 2012, up from 1.5 for 2011. Our consolidated cancellation rate for 2012 was 13% compared to 16% for 2011.

                                                      As of December 31,
                                         2013                  2012              % Change
                                             Dollar                Dollar             Dollar
Backlog ($ in thousands):         Homes      Value      Homes      Value      Homes   Value
     California                      396   $  262,097      440   $  218,115   (10%)      20%
     Arizona                         105       35,846       77       19,178     36%      87%
     Texas                           290      134,583      204       78,468     42%      72%
     Colorado                        108       54,946       75       32,230     44%      70%
          Total Southwest            503      225,375      356      129,876     41%      74%
     Florida                         504      215,312      366       95,264     38%     126%
     Carolinas                       297       97,710      242       72,214     23%      35%
          Total Southeast            801      313,022      608      167,478     32%      87%
               Total               1,700   $  800,494    1,404   $  515,469     21%      55%

The dollar value of our backlog as of December 31, 2013 increased 55% from 2012 to $800.5 million. The increase in backlog value from 2012 reflects the increase in order activity experienced during 2013 and a 28% increase in our consolidated average home price in backlog to $471 thousand. The higher average home price in our backlog as of December 31, 2013 compared to the prior year reflected price increases within the majority of our markets, resulting from the continued execution of our move-up homebuyer focused strategy and pricing opportunities in select markets.

                                                                 At December 31,
                                                 2013     % Change    2012     % Change    2011
Homesites owned and controlled:
  California                                      9,638       (6%)    10,288        11%     9,230
  Arizona                                         2,351        20%     1,965         5%     1,872
  Texas                                           4,607      (10%)     5,129        21%     4,232
. . .
  Add SPF to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for SPF - All Recent SEC Filings
Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.