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Standard Pacific Posts Big Loss, Reports Efforts on Cutting Debt

Irvine-based homebuilder Standard Pacific Corp. posted a worse-than-expected loss of $119.7 million for the third quarter, but said it was taking steps to improve its heavy debt load.

Analysts were expecting a loss closer to $100 million. The company made a profit of $30.8 million a year earlier. The third-quarter results included $223.5 million of charges, including write-offs to account for diminishing land values.

The company reported revenue of $675 million, down 19% from a year earlier. The figure includes $57 million in land sales.

Revenue from the building and selling of homes was $618 million, down 25%. Home deliveries, or closing of contracts to buy a home, fell 25% for the quarter. New orders for homes rose 23%.

“High levels of unsold new and existing homes, decreasing home prices, tenuous homebuyer confidence and further erosion of mortgage credit liquidity during the quarter combined to undermine any stability within the markets,” Chief Executive Stephen Scarborough said in a statement

Amid analyst speculation over the company’s debt, Scarborough said that Standard Pacific was continuing to take steps to reduce it.

The company has cut homebuilding debt by more than $265 million during the past year, and plans to generate cash next year, he said.

Shares of Standard Pacific have been battered in recent months, losing more than 80% its value this year. The company counts a market value of about $340 million.

Some analysts fear the worst for the country’s 11th largest homebuilder by sales.

CreditSights analysts Frank Lee and Sarah Rowin recently predicted Standard Pacific could be forced to file for Chapter 11 bankruptcy protection, due to slow sales and the company’s high debt, totaling close to $2 billion.

“It’s a matter of time. If Standard Pacific continues on this path, they won’t be too far away,” the analysts said in a report.

Other analysts have been more optimistic, saying the builder has the capacity to pay down its revolving debt, assuming it’s able to sell off land it holds.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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