Standard Pacific Corp (SPF)

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Standard Pacific Corp. (SPF)

Q4 2012 Earnings Call

February 01, 2013 12:00 PM ET


Scott Stowell - President and CEO

Jeff McCall - EVP and CFO


Mike Dahl - Credit Suisse

Alan Ratner - Zelman & Associates

David Goldberg - UBS

Adam Rudiger -Wells Fargo Securities

Alex Barron - Housing Research Center

Michael Rehaut - JPMorgan

Michael Kim with CRT Capital Group

Joel Locker - FBN Securities

Buck Horne - Raymond James



Good morning and welcome to the Standard Pacific Homes 2012 Fourth Quarter and Full Year Results Conference Call. Today's conference is being recorded.

Before we begin, I would like to direct your attention to the Company's Safe Harbor statement and remind you that this conference call contains forward-looking statements, including statements concerning future financial and operational performance. Actual results may differ materially from those projected in the forward-looking statements.

For additional information regarding factors that could cause actual results to differ materially from those contained in the forward-looking statements, please see the Company's SEC filings, including reports on Form 10-K and Form 10-Q under the heading, Risk Factors.

A question-and-answer period will follow today's prepared remarks. A recording of today's presentation will be available for replay a few hours after this call ends and will continue to be available on the company's website for 30 days.

At this time, I would like to turn the call over to Scott Stowell, CEO and President. Please go ahead sir.

Scott Stowell

Thank you Vicky and good morning everyone. With me this morning are Jeff McCall, our Chief Financial Officer and Mr. John Babel, our General Counsel. I want to thank you all for taking the time to join us today for the Standard Pacific Homes 2012 fourth quarter and full year update.

To begin, I would like to provide you with a few brief comments about the housing market and our overall results before turning it back over to Jeff who'll provide additional detail about our financial performance.

After navigating an unprecedented and what seems at times endless economic downturn, we saw significant market improvement during 2012. While the economic signs were mixed and our success are bit uneven, we saw meaningful increase in demand in nearly all of our markets translating into higher prices and higher sales volumes as the year progressed, with sales bucking the historical seasonal declines, we typically experienced during the third and fourth quarters.

As we head into 2013, these positive trends along with falling unemployment, historical low interest rates and high affordability should continue to bolster the confidence of the numerous home shoppers who are recognizing that it is a good time to buy a home.

We think this is especially true with our core consumer, the move up a home buyer who has the advantage of being more financially secure and possessing stronger credit than the typical home buyer.

While we are seeing many positive macroeconomic signs and significant improvement in our own performance, news on the economy remain mixed. On the positive side, in addition to extraordinarily low mortgage rate, strengthening housing demand in rising prices, the number of homes listed for sale in the U.S. has fallen by more than 50% from the peak in 2007 and nearly 20% in the past year alone and supply is particularly tight in the west, where we have invested over $1 billion in land since 2009.

Homes also remain extremely affordable, with home prices more than 20% below their July 2006 peak. Single family home building starts in 2012 where 535,000 up 23% from the prior year which represents the first meaningful increase in six years but still significantly below historical averages suggesting there is still significant room for the new home market to grow.

On the negative side, the U.S. and world economic picture remains uncertain, the final shoe in the fiscal cliff debate has still not dropped and the long term availability of mortgage credit remains uncertain.

In our view, the strength of the U.S. economy certainty surrounding U.S. economic policy and the availability of mortgage credit are few of the as of yet unknowns with potential to negatively impact the scope and pace of the housing market recovery.

Against this backdrop of uncertainty and conflicting viewpoints, we view the fundamentals of the housing recovery positively and continue to executive against our strategy, working diligently to proactively improve our business with the goal of outpacing the recovery.

Last year at this time, I reviewed with you our progress against the strategy we began to implement in 2008. I explained that we had successfully completed the first two prongs of the strategy, rightsizing our organization to align our cost structures with our revenue base and fixing our capital structure to create a stable platform for growth.

I noted that in 2012 and beyond, we would be focused on the third prong, leveraging our stable platform to grow revenue and position us for profitable growth. To that end, our focus has been on a simple and clear path for growth; allocate capital to attractive long-term housing markets and acquired land in locations that appeal to the move up market segment, design highly desirable amenity rich communities, construct well-built and innovatively designed homes and deliver an outstanding customer experience.

The disciplined land buying program that we launched in 2009 is beginning to pay dividends. As others have scrambled to find finished lots in good locations under market conditions that have been labeled a severe shortage by metro study, we have the land we need for the near term.

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