Scott Stowell looks to have picked a good time to take over the top spot at Irvine-based homebuilder Standard Pacific Corp.
The 18-year company veteran was promoted from president to chief executive at the start of the year, taking over the duties from turnaround specialist Ken Campbell.
Shares of Standard Pacific—the largest homebuilder based in Orange County and 12th-largest in the U.S., according to trade reports—reached their highest point in almost a year last week.
The rise followed a fourth-quarter earnings report that beat Wall Street expectations and sent shares up about 20% early in the week. The shares have nearly doubled in value since early October to give the company’s stock a market value of about $940 million, excluding preferred shares.
Standard Pacific returned to profitability in the fourth quarter, posting net income of $15.3 million on revenue of $293 million.
Wall Street analysts had expected a fourth-quarter profit closer to $7 million, on revenue of $275 million.
The company has flirted with profitability during the last two years after bottoming out with a $1.2 billion loss in 2008. Its posted losses of $21.9 million in the fourth quarter of 2010 and $6.4 million in last year’s third quarter.
The fourth-quarter profit was helped by a few high-profile local sales, including the closings on the final two homes of its high-end Tides development in Newport Coast, according to the company.
The Tides homes sold in the $6 million range, according to the company. They were priced closer to $8 million when they were brought to market in 2007.
Standard Pacific also has seen more than 20 sales of its high-end Castillian homes at Brea’s Blackstone development, which opened last year. Those homes start at around $1.1 million.
The company closed on the sale of 782 homes in all in the fourth quarter, up 26% from a year ago. It now counts a backlog of 681 homes, which is up 64% from year-ago levels.
Stowell called it a “solid” fourth quarter, made better by recent job gains nationally, positive housing trends, and other indicators that seem to point to a general economic recovery.
“There are some signs today that a recovery may have already begun,” Stowell said in a quarterly call with analysts last week.
Early Returns
Early returns from this year back up Stowell’s contention. New home orders in January were running about 8% higher than year-earlier levels, and customer traffic at Standard Pacific’s projects is up 13% from a year ago, officials said.
“We realize that a month or two of data don’t make a trend, but we think the positive momentum we are seeing for many of these indicators bodes well for housing,” Stowell said.
Stowell expects the homebuilding industry “will face ongoing headwinds throughout 2012,” but he predicted Standard Pacific will remain profitable.
Analysts project the company to earn more than $30 million this year, with sales about 20% higher than 2011.
Stowell said the company expects to continue a healthy pace of land acquisitions and new development.
The company anticipates spending $400 million to $500 million on land and land development in 2012. It spent $437 million last year.
About $150 million of this year’s total should be for land development costs. Standard Pacific expects to open about 40 new projects this year, compared to 69 last year.
About 57% of last year’s land investments were for property in California. The company also builds in Florida, Arizona, the Carolinas, Texas, Colorado and Nevada.
Targeted Customers
Aside from occasional luxury projects like Newport Coast’s Tides, most Standard Pacific projects target move-up homebuyers. The average price of a home it sold last quarter was $374,000, a 10% increase from a year ago.
The company’s target customers aren’t likely to buy foreclosed homes, something that’s tamped down sales for some builders who target first-time buyers with lower-priced offerings.
The focus on the move-up market “reduces competition” from foreclosures, Stowell said.
The company is selling in seven OC projects currently. Data from Hanley-Wood LLC, a Washington, D.C.-based research, publishing and exhibition company, shows Standard Pacific sold 92 OC homes last year.
