Headquarters: 15326 Alton Parkway, Irvine
Employees: 1,623; 338 in OC
Business: homebuilder
Market value as of April 1: $375
million
Revenue for 12 months ended Dec. 31: $2.9 billion, down 23%
Loss for 12 months ended Dec. 31: Loss of $767 million, versus a profit of $124 million in the year-ago period
Year in review:
Standard Pacific, the country’s 11th largest homebuilder by sales during the housing boom, had a year to forget in 2007.
The company’s been hit as hard as any homebuilder during the slowdown, both on the balance sheet and on Wall Street.
Standard saw a second straight year of declining sales in once-hot housing markets California, Florida, Arizona and Nevada. New home sales were down 25% year-over-year with 8,051 new homes sold. The previous year saw an additional 5% drop. Homebuilding revenue was off 23% from a year ago. There’s no sign or expectations of a quick market turnaround, company officials say.
The company saw its shares tumble during the year, dropping nearly 90% in 2007. It was the worst-performing stock of any major homebuilder in the past year.
Bankruptcy talk has hovered over the company, primarily due to debt concerns, including some $300 million due in the next year.
Reports that the company hired New York-based restructuring adviser Miller Buckfire added fuel to the fire. The company denied a filing is in the works, and says it is generating enough cash to pay off its debt.
These days, it’s been focusing on improving its balance sheet, lightening its debt load, and slimming down operations. The company’s sold thousand of home lots and rid itself of “non-core” developments to generate cash. It’s also exiting some markets altogether, including San Antonio and Southern Arizona.
Looking Ahead:
Recent executive changes have added more uncertainty to Standard’s future. Last month, longtime chief executive Stephen Scarborough abruptly retired, following a 27-year career with the company. He’s been replaced by Jeffrey Peterson, who has served as a director of Standard Pacific since 2001 and as lead independent director since 2004.
Peterson says that more urgency needs to be given to the company’s long-term strategy.
Officials have anticipated that housing market conditions will continue to weaken in 2008, resulting in fewer sales. The company said it plans to cut home starts and community openings while spending little on land acquisitions and site development costs.
Wall Street’s Take:
After bottoming out in January, when bankruptcy rumors gained traction, Standard’s shares have begun to rally, nearly tripling in value during the past two months. It shares now stand near its levels seen in October.
Despite the improvement, the company’s market value of $375 million is still well below the $3 billion value it had in 2005.
Analysts haven’t had time to make much sense of the executive shake-up, and what it means for Standard’s future.
Gimme Credit’s Vicki Bryan said she was “surprised and concerned” that Standard Pacific didn’t take the time to pursue a more thorough executive search, particularly given the company’s precarious financial situation as of late.
,
Mark Mueller
WHO’S IN CHARGE
JEFFREY PETERSON
Chairman, chief executive, Standard Pacific
Joined Company:
2008 (director since 2001)
Education:
bachelor’s degree from University of Southern California, master’s from Stanford University
Career:
Engaged in private investment for the past few years. From 1992 to 2005, served as a managing director for Los Angeles-based Trust Company of the West. Also served as a managing director of Kidder, Peabody & Co.
Notable:
Peterson and his wife, Eva, have three children and live in the Los Angeles area.
