Standard Pacific Absorbs $98.4 Million Fourth Quarter Loss
Standard Pacific said late yesterday that it lost $98.6 million during the fourth quarter of 2006, as the home builder struggled to adjust to what it called a "sudden and swift decline" in demand. The company had earned $154.9 million in profits in the fourth quarter of 2005. New home deliveries dropped 13 percent in the fourth quarter compared to the same period one year ago, falling to 3,083 from 3,558. Standard Pacific said it received 1,296 net new home orders during the quarter, down 40% percent year-over-year, and reported a quarter-end backlog of 2,639 homes, valued at $923 million. The company's results for the 2006 fourth quarter included pretax impairment charges of $290.7 million, including inventory impairments, land deposit write-offs, and joint venture and goodwill impairments. "The sudden and swift decline in demand in most of the major housing markets across the country last year gave rise to significant price reductions and incentives to move inventory," said CEO Stephen J. Scarborough, "which quickly eroded our margins and triggered asset impairments and land deposit write-offs." The impact of particularly poor third and fourth quarter results at the home builder impacted the company's annual financials, with net income for 2006 dropping more than 71 percent to $123.7 million from $441.0 million in 2005. New home deliveries were also down for the year, finishing at 10,487 versus 11,411 in the previous year. "Although it is too early to predict when housing market conditions will improve," Scarborough said, "we did see a modest increase in our sales absorption rates and a decrease in our cancellation rate during the fourth quarter as compared to the 2006 third quarter despite the normal seasonal slowdown at year-end. "While these improvements were clearly the result of adjustments to our pricing strategy, it does show that there is demand at the right price. We believe many prospective homebuyers are waiting on the sidelines for signs of a stabilized pricing environment as economic conditions remain healthy and interest rates are still relatively attractive." For more information, visit http://www.standardpacifichomes.com.