Standard Pacific reports Q3 net income of US$58.9M, up from US$21.7M a year earlier, on home sales revenue up 61% to US$511.1M, net new orders up 12% to 1,110; CEO credits disciplined land buying, moving up market, new home designs for solid performance
Allison Oesterle
IRVINE, California
,
October 31, 2013
(press release)
–
Q3 2013 Pretax Income of $70.1 million, up 220% vs. Q3 2012 (Note: Tables Follow) KEY STATISTICS AND FINANCIAL DATA1 As of or For the Three Months Ended September 30, September 30, Percentage June 30, Percentage 2013 2012 or % Change 2013 or % Change Operating Data (Dollars in thousands) Deliveries 1,217 861 41% 1,095 11% Average selling price $ 420 $ 369 14% $ 397 6% Home sale revenues $ 511,059 $ 317,389 61% $ 434,308 18% Gross margin % (including land sales) 25.3% 20.1% 5.2% 23.4% 1.9% Gross margin % from home sales 25.3% 20.2% 5.1% 23.7% 1.6% Gross margin % from home sales (excluding interest amortized to cost of home sales)* 31.2% 28.7% 2.5% 30.7% 0.5% Incentive and stock-based compensation expense $ 8,023 $ 4,768 68% $ 5,927 35% Selling expenses $ 24,301 $ 17,069 42% $ 22,146 10% G&A expenses (excluding incentive and stock-based compensation expenses) $ 29,615 $ 21,284 39% $ 26,525 12% SG&A expenses $ 61,939 $ 43,121 44% $ 54,598 13% SG&A % from home sales 12.1% 13.6% (1.5%) 12.6% (0.5%) Operating margin $ 67,426 $ 20,924 222% $ 48,207 40% Operating margin % from home sales 13.2% 6.6% 6.6% 11.1% 2.1% Net new orders (homes) 1,110 989 12% 1,516 (27%) Net new orders (dollar value) $ 510,668 $ 368,772 38% $ 648,299 (21%) Average active selling communities 168 156 8% 164 2% Monthly sales absorption rate per community 2.2 2.1 4% 3.1 (29%) Cancellation rate 20% 14% 6% 11% 9% Gross cancellations 272 161 69% 184 48% Cancellations from current quarter sales 124 67 85% 87 43% Backlog (homes) 2,165 1,394 55% 2,272 (5%) Backlog (dollar value) $ 964,148 $ 498,739 93% $ 947,584 2% Cash flows (uses) from operating activities $ 22,808 $ (72,418) $ (90,743) Cash flows (uses) from investing activities $ (2,296) $ (95,704) 98% $ (125,253) 98% Cash flows (uses) from financing activities $ 261,980 $ 348,696 (25%) $ 10,319 2,439% Land purchases (incl. seller financing and JV purchases) $ 69,196 $ 206,740 (67%) $ 235,991 (71%) Adjusted Homebuilding EBITDA* $ 101,953 $ 51,523 98% $ 82,376 24% Adjusted Homebuilding EBITDA Margin %* 19.9% 16.2% 3.7% 18.8% 1.1% Homebuilding interest incurred $ 34,766 $ 36,112 (4%) $ 33,526 4% Homebuilding interest capitalized to inventories owned $ 34,118 $ 32,604 5% $ 32,782 4% Homebuilding interest capitalized to investments in JVs $ 648 $ 1,839 (65%) $ 744 (13%) Interest amortized to cost of sales (incl. cost of land sales) $ 30,322 $ 27,078 12% $ 30,662 (1%) As of September 30, June 30, Percentage December 31, Percentage 2013 2013 or % Change 2012 or % Change Balance Sheet Data (Dollars in thousands, except per share amounts) Homebuilding cash (including restricted cash) $ 373,523 $ 90,589 312% $ 366,808 2% Inventories owned $ 2,410,649 $ 2,325,490 4% $ 1,971,418 22% Homesites owned and controlled 35,643 35,126 1% 30,767 16% Homes under construction 2,373 2,277 4% 1,574 51% Completed specs 183 139 32% 215 (15%) Deferred tax asset valuation allowance $ 10,510 $ 10,510 ― $ 22,696 (54%) Homebuilding debt $ 1,837,622 $ 1,537,021 20% $ 1,542,018 19% Stockholders' equity $ 1,400,026 $ 1,337,468 5% $ 1,255,816 11% Stockholders' equity per share (including if-converted preferred stock)* $ 3.84 $ 3.67 5% $ 3.48 10% Total consolidated debt to book capitalization 57.6% 55.0% 2.6% 56.5% 1.1% Adjusted net homebuilding debt to total adjusted book capitalization* 51.1% 52.0% (0.9%) 48.3% 2.8% 1All statistical numbers exclude unconsolidated joint ventures unless noted otherwise. *Please see "Reconciliation of Non-GAAP Financial Measures" at the end of this release. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Nine Months Ended 2013 2012 2013 2012 (Dollars in thousands, except per share amounts) (Unaudited) Homebuilding: Home sale revenues $ 511,059 $ 317,389 $ 1,300,493 $ 812,578 Land sale revenues 697 1,152 7,665 4,537 Total revenues 511,756 318,541 1,308,158 817,115 Cost of home sales (381,694) (253,344) (993,809) (647,525) Cost of land sales (672) (1,092) (7,671) (4,458) Total cost of sales (382,366) (254,436) (1,001,480) (651,983) Gross margin 129,390 64,105 306,678 165,132 Gross margin % 25.3% 20.1% 23.4% 20.2% Selling, general and administrative expenses (61,939) (43,121) (162,831) (122,765) Income (loss) from unconsolidated joint ventures (32) (39) 1,249 (2,707) Interest expense ― (1,669) ― (5,816) Other income (expense) 301 117 2,624 4,708 Homebuilding pretax income 67,720 19,393 147,720 38,552 Financial Services: Revenues 5,839 5,218 18,927 14,249 Expenses (3,590) (2,777) (10,394) (7,952) Other income 167 70 420 217 Financial services pretax income 2,416 2,511 8,953 6,514 Income before taxes 70,136 21,904 156,673 45,066 Provision for income taxes (11,201) (194) (32,778) (570) Net income 58,935 21,710 123,895 44,496 Less: Net income allocated to preferred shareholder (14,166) (9,100) (40,353) (18,980) Less: Net income allocated to unvested restricted stock (90) (22) (169) (31) Net income available to common stockholders $ 44,679 $ 12,588 $ 83,373 $ 25,485 Income Per Common Share: Basic $ 0.16 $ 0.06 $ 0.34 $ 0.13 Diluted $ 0.15 $ 0.05 $ 0.31 $ 0.12 Weighted Average Common Shares Outstanding: Basic 276,966,995 204,485,294 244,998,581 198,469,130 Diluted 314,897,098 235,273,648 283,189,878 210,441,932 Weighted average additional common shares outstanding if preferred shares converted to common shares 87,812,786 147,812,786 118,582,017 147,812,786 Total weighted average diluted common shares outstanding if preferred shares converted to common shares 402,709,884 383,086,434 401,771,895 358,254,718 CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2013 2012 (Dollars in thousands) ASSETS (Unaudited) Homebuilding: Cash and equivalents $ 345,999 $ 339,908 Restricted cash 27,524 26,900 Trade and other receivables 19,186 10,724 Inventories: Owned 2,410,649 1,971,418 Not owned 103,734 71,295 Investments in unconsolidated joint ventures 58,330 52,443 Deferred income taxes, net 405,912 455,372 Other assets 48,812 41,918 Total Homebuilding Assets 3,420,146 2,969,978 Financial Services: Cash and equivalents 17,129 6,647 Restricted cash 1,795 2,420 Mortgage loans held for sale, net 75,211 119,549 Mortgage loans held for investment, net 10,989 9,923 Other assets 4,926 4,557 Total Financial Services Assets 110,050 143,096 Total Assets $ 3,530,196 $ 3,113,074 LIABILITIES AND EQUITY Homebuilding: Accounts payable $ 29,301 $ 22,446 Accrued liabilities 196,478 198,144 Secured project debt and other notes payable 5,105 11,516 Senior notes payable 1,832,517 1,530,502 Total Homebuilding Liabilities 2,063,401 1,762,608 Financial Services: Accounts payable and other liabilities 2,589 2,491 Mortgage credit facilities 64,180 92,159 Total Financial Services Liabilities 66,769 94,650 Total Liabilities 2,130,170 1,857,258 Equity: Stockholders' Equity: Preferred stock, $0.01 par value; 10,000,000 shares authorized; 267,829 and 450,829 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively 3 5 Common stock, $0.01 par value; 600,000,000 shares authorized; 277,064,975 and 213,245,488 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively 2,770 2,132 Additional paid-in capital 1,350,706 1,333,255 Accumulated earnings (deficit) 46,547 (77,348) Accumulated other comprehensive loss, net of tax ― (2,228) Total Equity 1,400,026 1,255,816 Total Liabilities and Equity $ 3,530,196 $ 3,113,074 INVENTORIES September 30, December 31, 2013 2012 (Dollars in thousands) Inventories Owned: (Unaudited) Land and land under development $ 1,636,011 $ 1,444,161 Homes completed and under construction 647,271 427,196 Model homes 127,367 100,061 Total inventories owned $ 2,410,649 $ 1,971,418 Inventories Owned by Segment: California $ 1,151,866 $ 1,086,159 Southwest 581,280 461,201 Southeast 677,503 424,058 Total inventories owned $ 2,410,649 $ 1,971,418 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended Nine Months Ended 2013 2012 2013 2012 (Dollars in thousands) (Unaudited) Cash Flows From Operating Activities: Net income $ 58,935 $ 21,710 $ 123,895 $ 44,496 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Amortization of stock-based compensation 2,681 1,559 6,656 4,518 Deposit write-offs ― ― ― 133 Deferred income taxes 27,306 ― 48,489 ― Other operating activities 1,096 1,798 4,592 5,838 Changes in cash and equivalents due to: Trade and other receivables 11,186 (4,681) (8,462) (12,143) Mortgage loans held for sale 32,221 (18,119) 44,179 (14,016) Inventories - owned (84,352) (70,645) (314,375) (185,832) Inventories - not owned (21,990) (7,191) (31,700) (10,690) Other assets 1,655 999 401 922 Accounts payable 7,235 82 6,855 (1,371) Accrued liabilities (13,165) 2,070 (6,926) (2,991) Net cash provided by (used in) operating activities 22,808 (72,418) (126,396) (171,136) Cash Flows From Investing Activities: Investments in unconsolidated homebuilding joint ventures (2,190) (44,797) (12,942) (53,078) Distributions of capital from unconsolidated joint ventures 750 10,145 2,319 11,940 Net cash paid for acquisitions ― (60,752) (113,793) (60,752) Other investing activities (856) (300) (4,734) (1,705) Net cash provided by (used in) investing activities (2,296) (95,704) (129,150) (103,595) Cash Flows From Financing Activities: Change in restricted cash (2,062) (1,203) 1 5,034 Principal payments on secured project debt and other notes payable (72) (138) (7,289) (782) Principal payments on senior subordinated notes payable ― ― ― (9,990) Proceeds from the issuance of senior notes payable 300,000 253,000 300,000 253,000 Payment of debt issuance costs (4,045) (8,081) (4,045) (8,081) Net proceeds from (payments on) mortgage credit facilities (32,784) 26,608 (27,979) 24,227 Proceeds from the issuance of common stock ― 75,849 ― 75,849 Payment of common stock issuance costs ― (3,913) ― (3,913) Payment of issuance costs in connection with preferred shareholder equity transactions (3) ― (350) ― Proceeds from the exercise of stock options 946 6,574 11,781 8,321 Net cash provided by (used in) financing activities 261,980 348,696 272,119 343,665 Net increase (decrease) in cash and equivalents 282,492 180,574 16,573 68,934 Cash and equivalents at beginning of period 80,636 298,882 346,555 410,522 Cash and equivalents at end of period $ 363,128 $ 479,456 $ 363,128 $ 479,456 Cash and equivalents at end of period $ 363,128 $ 479,456 $ 363,128 $ 479,456 Homebuilding restricted cash at end of period 27,524 25,713 27,524 25,713 Financial services restricted cash at end of period 1,795 1,920 1,795 1,920 Cash and equivalents and restricted cash at end of period $ 392,447 $ 507,089 $ 392,447 $ 507,089 REGIONAL OPERATING DATA Three Months Ended Nine Months Ended 2013 2012 % Change 2013 2012 % Change New homes delivered: California 467 363 29% 1,286 904 42% Arizona 51 66 (23%) 171 176 (3%) Texas 170 107 59% 458 368 24% Colorado 36 33 9% 117 80 46% Nevada ― ― ― ― 9 (100%) Florida 285 151 89% 707 411 72% Carolinas 208 141 48% 520 370 41% Consolidated total 1,217 861 41% 3,259 2,318 41% Unconsolidated joint ventures 2 14 (86%) 23 28 (18%) Total (including joint ventures) 1,219 875 39% 3,282 2,346 40% Three Months Ended Nine Months Ended 2013 2012 % Change 2013 2012 % Change (Dollars in thousands) Average selling prices of homes delivered: California $ 586 $ 505 16% $ 541 $ 489 11% Arizona 286 204 40% 260 206 26% Texas 385 328 17% 379 307 23% Colorado 484 399 21% 439 386 14% Nevada ― ― ― ― 192 ― Florida 283 256 11% 269 244 10% Carolinas 284 241 18% 279 238 17% Consolidated 420 369 14% 399 351 14% Unconsolidated joint ventures 578 450 28% 505 443 14% Total (including joint ventures) $ 420 $ 370 14% $ 400 $ 352 14% Three Months Ended Nine Months Ended 2013 2012 % Change 2013 2012 % Change Net new orders: California 386 417 (7%) 1,381 1,169 18% Arizona 95 61 56% 248 237 5% Texas 154 132 17% 612 424 44% Colorado 29 45 (36%) 156 113 38% Nevada ― ― ― ― 6 (100%) Florida 274 174 57% 1,010 568 78% Carolinas 172 160 8% 613 514 19% Consolidated total 1,110 989 12% 4,020 3,031 33% Unconsolidated joint ventures 2 18 (89%) 12 42 (71%) Total (including joint ventures) 1,112 1,007 10% 4,032 3,073 31% Three Months Ended Nine Months Ended 2013 2012 % Change 2013 2012 % Change Average number of selling communities during the period: California 48 50 (4%) 46 51 (10%) Arizona 10 5 100% 9 7 29% Texas 30 22 36% 30 20 50% Colorado 8 7 14% 7 6 17% Florida 41 38 8% 40 37 8% Carolinas 31 34 (9%) 31 35 (11%) Consolidated total 168 156 8% 163 156 4% Unconsolidated joint ventures ― 1 (100%) ― 2 (100%) Total (including joint ventures) 168 157 7% 163 158 3% At September 30, 2013 2012 % Change Homes Dollar Value Homes Dollar Value Homes Dollar Value (Dollars in thousands) Backlog: California 535 $ 341,743 439 $ 217,549 22% 57% Arizona 154 50,512 118 28,357 31% 78% Texas 358 158,863 205 74,736 75% 113% Colorado 114 56,528 66 26,406 73% 114% Florida 669 250,241 319 81,950 110% 205% Carolinas 335 106,261 247 69,741 36% 52% Consolidated total 2,165 964,148 1,394 498,739 55% 93% Unconsolidated joint ventures 1 599 17 6,836 (94%) (91%) Total (including joint ventures) 2,166 $ 964,747 1,411 $ 505,575 54% 91% At September 30, 2013 2012 % Change Homesites owned and controlled: California 9,979 9,806 2% Arizona 2,291 1,844 24% Texas 4,468 4,451 0% Colorado 1,216 669 82% Nevada 1,124 1,124 ― Florida 11,409 8,211 39% Carolinas 5,156 4,049 27% Total (including joint ventures) 35,643 30,154 18% Homesites owned 26,936 23,974 12% Homesites optioned or subject to contract 8,192 5,605 46% Joint venture homesites 515 575 (10%) Total (including joint ventures) 35,643 30,154 18% Homesites owned: Raw lots 6,101 4,503 35% Homesites under development 8,549 8,773 (3%) Finished homesites 6,871 5,304 30% Under construction or completed homes 3,061 2,170 41% Held for sale 2,354 3,224 (27%) Total 26,936 23,974 12% RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Each of the below measures are non-GAAP financial measures and other companies may calculate such non-GAAP measures differently. Due to the significance of the GAAP components excluded, such measures should not be considered in isolation or as an alternative to operating performance measures prescribed by GAAP. The table set forth below reconciles the Company's gross margin percentage from home sales to the gross margin percentage from home sales, excluding interest amortized to cost of home sales. We believe these measures are useful to management and investors as they provide perspective on the underlying operating performance of the business excluding these charges and provide comparability with the Company's peer group. Three Months Ended September 30, Gross September 30, Gross June 30, Gross (Dollars in thousands) Home sale revenues $ 511,059 $ 317,389 $ 434,308 Less: Cost of home sales (381,694) (253,344) (331,503) Gross margin from home sales 129,365 25.3% 64,045 20.2% 102,805 23.7% Add: Capitalized interest included in cost of home sales 30,303 5.9% 27,071 8.5% 30,337 7.0% Gross margin from home sales, excluding interest amortized to cost of home sales $ 159,668 31.2% $ 91,116 28.7% $ 133,142 30.7% The table set forth below reconciles the Company's cash flows provided by (used in) operations to cash inflows from operations excluding land purchases and development costs. We believe this measure is useful to management and investors to provide perspective on underlying cash flow generation excluding swings related to the timing of land purchases and development costs. Three Months Ended September 30, September 30, June 30, (Dollars in thousands) Cash flows provided by (used in) operations $ 22,808 $ (72,418) $ (90,743) Add: Cash land purchases included in operating activities 69,196 101,363 122,180 Add: Land development costs 72,542 39,422 63,028 Cash inflows from operations (excluding land purchases and development costs) $ 164,546 $ 68,367 $ 94,465 The table set forth below reconciles the Company's total consolidated debt to adjusted net homebuilding debt and provides the Company's total consolidated debt to book capitalization and adjusted net homebuilding debt to total adjusted book capitalization ratios. We believe that the adjusted net homebuilding debt to total adjusted book capitalization ratio is useful to management and investors as a measure of the Company's ability to obtain financing. For purposes of the ratio of adjusted net homebuilding debt to total adjusted book capitalization, total adjusted book capitalization is adjusted net homebuilding debt plus stockholders' equity. Adjusted net homebuilding debt excludes indebtedness of the Company's financial services subsidiary and additionally reflects the offset of cash and equivalents. September 30, June 30, December 31, September 30, (Dollars in thousands) Total consolidated debt $ 1,901,802 $ 1,633,985 $ 1,634,177 $ 1,652,111 Less: Financial services indebtedness (64,180) (96,964) (92,159) (71,035) Homebuilding cash (373,523) (90,589) (366,808) (499,572) Adjusted net homebuilding debt 1,464,099 1,446,432 1,175,210 1,081,504 Stockholders' equity 1,400,026 1,337,468 1,255,816 760,017 Total adjusted book capitalization $ 2,864,125 $ 2,783,900 $ 2,431,026 $ 1,841,521 Total consolidated debt to book capitalization 57.6% 55.0% 56.5% 68.5% Adjusted net homebuilding debt to total adjusted book capitalization 51.1% 52.0% 48.3% 58.7% The table set forth below calculates pro forma stockholders' equity per common share. The Company believes that the pro forma stockholders' equity per common share information is useful to management and investors as a measure to determine the book value per common share after giving effect to the conversion of our outstanding preferred shares assuming full conversion to common stock. September 30, June 30, December 31, 2013 2013 2012 Actual common shares outstanding 277,064,975 276,792,010 213,245,488 Add: Conversion of preferred shares to common shares 87,812,786 87,812,786 147,812,786 Pro forma common shares outstanding 364,877,761 364,604,796 361,058,274 Stockholders' equity (Dollars in thousands) $ 1,400,026 $ 1,337,468 $ 1,255,816 Divided by pro forma common shares outstanding ÷ 364,877,761 ÷ 364,604,796 ÷ 361,058,274 Pro forma stockholders' equity per common share $ 3.84 $ 3.67 $ 3.48 The table set forth below calculates EBITDA and Adjusted Homebuilding EBITDA. 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 the Company's ability to service debt and obtain financing. Adjusted Homebuilding EBITDA is a non-GAAP financial measure and due to the significance of the GAAP components excluded, 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. Three Months Ended LTM Ended September 30, September 30, September 30, June 30, 2013 2012 (Dollars in thousands) Net income $ 58,935 $ 21,710 $ 43,136 $ 610,820 $ 59,829 Provision (benefit) for income taxes 11,201 194 8,008 (421,026) 89 Homebuilding interest amortized to cost of sales and interest expense 30,322 28,747 30,662 123,233 102,550 Homebuilding depreciation and amortization 1,031 590 702 2,978 2,386 Amortization of stock-based compensation 2,681 1,559 2,444 9,289 7,663 EBITDA 104,170 52,800 84,952 325,294 172,517 Add: Cash distributions of income from unconsolidated joint ventures ― 1,125 1,500 6,000 1,285 Deposit write-offs ― ― ― ― 549 Less: Income (loss) from unconsolidated joint ventures (32) (39) 147 1,866 (1,409) Income from financial services subsidiary 2,249 2,441 3,929 12,474 7,850 Adjusted Homebuilding EBITDA $ 101,953 $ 51,523 $ 82,376 $ 316,954 $ 167,910 Homebuilding revenues $ 511,756 $ 318,541 $ 438,681 $ 1,728,001 $ 1,110,271 Adjusted Homebuilding EBITDA Margin % 19.9% 16.2% 18.8% 18.3% 15.1% 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: Three Months Ended LTM Ended September 30, September 30, September 30, June 30, 2013 2012 (Dollars in thousands) Net cash provided by (used in) operating activities $ 22,808 $ (72,418) $ (90,743) $ (238,376) $ (183,172) Add: Provision (benefit) for income taxes, net of deferred component (16,105) 194 199 (15,515) 89 Homebuilding interest amortized to cost of sales and interest expense 30,322 28,747 30,662 123,233 102,550 Less: Income from financial services subsidiary 2,249 2,441 3,929 12,474 7,850 Depreciation and amortization from financial services subsidiary 33 32 28 121 94 Loss on disposal of property and equipment ― 12 1 38 10 Net changes in operating assets and liabilities: Trade and other receivables (11,186) 4,681 10,732 (4,482) 5,192 Mortgage loans held for sale (32,221) 18,119 (11,818) (11,856) 37,940 Inventories-owned 84,352 70,645 156,993 444,182 206,502 Inventories-not owned 21,990 7,191 4,770 52,561 12,758 Other assets (1,655) (999) 3,083 (2,097) (7,447) Accounts payable (7,235) (82) (1,198) (12,843) 6,147 Accrued liabilities 13,165 (2,070) (16,346) (5,220) (4,695) Adjusted Homebuilding EBITDA $ 101,953 $ 51,523 $ 82,376 $ 316,954 $ 167,910
Q3 2013 Net New Order Value up 38% and Backlog Value up 93% vs. Q3 2012
Standard Pacific Corp. (NYSE: SPF) today announced results for the third quarter ended September 30, 2013.
2013 Third Quarter Highlights and Comparisons to the 2012 Third Quarter
Scott Stowell, the Company's Chief Executive Officer commented, "The positive performance we achieved during the first half of 2013 continued into the third quarter." Mr. Stowell added, "Notwithstanding the tempered approach to homebuying that impacted the market during the third quarter, the benefit of our long-term growth strategy continued to unfold as disciplined land buying, moving up market, and new home designs, all led to a solid third quarter performance."
Net income for the 2013 third quarter was $58.9 million, or $0.15 per diluted share, compared to $21.7 million, or $0.05 per diluted share. Pretax income for the 2013 third quarter increased 220% to $70.1 million compared to $21.9 million for the prior year period. The provision for income taxes for the 2013 third quarter included a non-cash tax benefit of $16.1 million related to the reduction of the Company's accrual for unrecognized tax benefits.
Revenues from home sales for the 2013 third quarter increased 61%, to $511.1 million, as compared to the prior year period, resulting primarily from a 41% increase in new home deliveries and a 14% increase in the Company's consolidated average home price to $420 thousand. The increase in average home price was primarily attributable to our move-up market focus and general price increases within most of our markets. The increase in new home deliveries was driven by a 62% year-over-year increase in the number of homes in beginning backlog expected to close during the quarter, partially offset by a decrease in speculative homes sold and closed in the quarter.
Gross margin from home sales for the 2013 third quarter increased to 25.3% compared to 20.2% in the prior year period. The 510 basis point year-over-year increase was primarily attributable to price increases and a decrease in the use of sales incentives. Excluding previously capitalized interest costs, gross margin from home sales was 31.2%* for the 2013 third quarter versus 28.7%* for the 2012 third quarter.
The Company's 2013 third quarter SG&A expenses (including Corporate G&A) were $61.9 million compared to $43.1 million, down 150 basis points as a percentage of home sale revenues to 12.1%, compared to 13.6% for the 2012 third quarter. The improvement in the Company's SG&A rate was primarily due to a 61% increase in revenues from home sales and reflects the operating leverage inherent in our business.
Net new orders for the 2013 third quarter increased 12% from the 2012 third quarter to 1,110 homes. The year-over-year growth is primarily attributable to an increase in the Company's monthly sales absorption rate to 2.2 per community for the 2013 third quarter, compared to 2.1 per community for the 2012 third quarter. The Company's cancellation rate for the 2013 third quarter was 20%, compared to 14% for the 2012 third quarter and 11% for the 2013 second quarter. Our 2013 third quarter cancellation rate increased from the historically low levels we experienced in the prior quarter and the prior year period, but was consistent with our average historical cancellation rate over the last 10 years. As a percentage of beginning backlog our cancellation rate was 6.5% in the quarter, a 90 basis point reduction from the same period last year.
The dollar value of homes in backlog increased 93% to $964.1 million, or 2,165 homes, compared to $498.7 million, or 1,394 homes, for the 2012 third quarter, and increased 2% compared to $947.6 million, or 2,272 homes, for the 2013 second quarter. The increase in year-over-year backlog value was driven primarily by a 24% increase in the average selling price of the homes in backlog, a 12% increase in net new orders and a shift to more to-be-built homes that have a longer construction cycle.
Cash provided by operating activities was $22.8 million for the 2013 third quarter versus cash used in operating activities of $72.4 million in the 2012 third quarter. During the 2013 third quarter, the Company spent $141.7 million on land purchases and development costs, compared to $246.2 million for the 2012 third quarter, of which $140.8 million of cash land purchases and development costs were included in cash flows used in operating activities. Excluding land purchases and development costs, cash inflows from operating activities for the 2013 third quarter were $164.5 million* versus $68.4 million* in the 2012 third quarter. The year-over-year increase in cash inflows from operating activities (excluding land purchases and development costs) was primarily due to a 61% increase in home sale revenues.
The Company purchased $69.2 million of land (628 homesites) during the 2013 third quarter, of which 46% (based on homesites) was located in Florida, 21% in the Carolinas and 18% in California, with the balance spread throughout the Company's other operations. As of September 30, 2013, the Company owned or controlled 35,643 homesites, of which 21,993 are owned and actively selling or under development, 8,707 are controlled or under option, and the remaining 4,943 homesites are held for future development or for sale. The homesites owned that are actively selling or under development represent a 5.2 year supply based on the Company's deliveries for the trailing twelve months ended September 30, 2013.
Earnings Conference Call
A conference call to discuss the Company's 2013 third quarter results will be held at 12:00 p.m. Eastern time November 1, 2013. The call will be broadcast live over the Internet and can be accessed through the Company's website at http://ir.standardpacifichomes.com. The call will also be accessible via telephone by dialing (800) 768-6490 (domestic) or (785) 830-7987 (international); Passcode: 8782855. The audio transmission with the slide presentation will 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 (domestic) or (719) 457-0820 (international); Passcode: 8782855.
About Standard Pacific
Standard Pacific Homes (NYSE: SPF) has been building beautiful, high-quality homes and neighborhoods since its founding in Southern California in 1965. With a trusted reputation for quality craftsmanship, an outstanding customer experience and exceptional architectural design, the Company utilizes its decades of land acquisition, development and homebuilding expertise to successfully navigate today's complex landscape to acquire and build desirable communities in locations that meet the high expectations of the Company's targeted move-up homebuyers. Currently offering new homes in major metropolitan areas in Arizona, California, Colorado, Florida, North Carolina, South Carolina, and Texas, we invite you to learn more about us by visiting standardpacifichomes.com.
This news release contains forward-looking statements. These statements include but are not limited to statements regarding new home orders, deliveries, backlog, absorption rates, average home price, pricing power, revenue, profitability, cash flow, liquidity, gross margin, overhead expenses and other costs; community count; product mix; the benefit of, and execution on, our strategy; supply; demand; our future performance and the future condition of the economy and the housing market. Forward-looking statements are based on our 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 the Company's 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, 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; our significant amount of debt and the impact of restrictive covenants in our debt agreements; our ability to repay our debt as it comes due; changes in our credit rating or outlook; the demand for and affordability of single-family homes; the supply of housing for sale; cancellations of purchase contracts by homebuyers; the cyclical and competitive nature of the Company's 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 the Company's mortgage banking operations; future business decisions and the Company's ability to successfully implement the Company's operational and other strategies; litigation and warranty claims; and other risks discussed in the Company's filings with the Securities and Exchange Commission, including in the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2012 and subsequent Quarterly Reports on Form 10-Q. The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements. The Company nonetheless reserves 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.
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SOURCE Standard Pacific Corp.
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