Headquarters: 15326 Alton Parkway, Irvine
Employees: 2,711; 217 in OC
Business: homebuilder
Market value, as of April 4: $2.3 billion
12-month revenue: $4.1 billion, up 20%
12-month net income: $441 million, up 40%
Year in review: Standard Pacific Corp. entered 2005 with big concerns about a slowdown in the housing market.
The homebuilder managed to post another year of big gains,its 10th straight. Standard Pacific sold 11,411 homes in 2005, a 29% rise from a year earlier.
The company’s expansion into other states in the past few years paid off in 2005.
Standard Pacific sold 3,166 homes in California last year, 4% fewer than in 2004. Florida, Arizona, Texas, Colorado and the Carolinas made up for it, with 11,441 homes sold, up 29% from 2004. The added home sales drove profits, as did a bid to keep costs in check.
While sales grew 20% last year, Standard Pacific’s cost of sales grew a more modest 15%. The company’s homebuilding gross margin rose 280 basis points to 27%.
Chief Executive Stephen Scarborough called it “the most successful year in the company’s 39-year history.”
What’s ahead: Standard Pacific starts 2006 the same way as a year ago: with big concerns about a housing slowdown. And there are some signs it could be for real this time.
In late February, Standard Pacific said home orders,contracts to buy a home under construction,were off 13% from a year earlier.
The fall came despite that Standard Pacific was selling at 186 developments, up from 162 a year earlier.
“The overall decline in orders resulted from the slowing of demand in some of our markets from the unsustainable pace of the past few years,” the company said.
California and Florida saw the steepest drops. Order cancellations for January and February were 26%, up from 18% a year earlier.
Standard Pacific hasn’t revised its quarterly or yearly outlook.
The company expects to sell 13,000 homes this year, a 13% increase. Sales could hit $5 billion, a 20% increase. Net income could be up 10%.
The question for Standard Pacific and other homebuilders is whether they’re in for a soft slowdown or a harder downturn.
Wall Street’s take: In a word, nervous. Standard’s shares are off about 10% so far this year.
Late last month, Wachovia downgraded the company to “market perform” from “outperform.”
There are optimists. Credit Suisse First Boston recently said homebuilders are undervalued and could see their shares rise 5%.
Still, Standard Pacific and others are in for stepped up competition, slowing construction and the use of incentives to sell homes.
WHO’S IN CHARGE
Stephen Scarborough
Chairman,
chief executive
Joined company: 1981
Education: bachelor’s and master’s in business from USC
Career: Joined the Orange County division of Standard Pacific in 1981 as president, managing operations in Orange, Los Angeles, San Bernardino and Riverside counties. Elected president in 1996, appointed chief executive in 2000 and chairman in 2001.
Notable: His favorite TV show is “Extreme Makeover: Home Edition.”
