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Standard Pacific Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: SPF

I'm pleased to report that the positive momentum we experienced during the first quarter of 2012 continued into the second. Our solid second quarter results reflect the execution of our strategy and continued improvement in housing market conditions during the quarter. There are still highly mixed signs regarding the relative strength of the economy. We were able to realize significant year-over-year improvement in our own financial performance during the quarter.

New housing starts and permits are up significantly from last year, albeit at levels that are still well below normal. Consumers remained cautious despite price increases in many markets. And while unemployment has improved since last year, month-over-month improvement has stalled recently. We have always maintained that the housing recovery would likely be an uneven one. And against this backdrop, we have been working diligently to proactively improve our businesses, with the goal of outpacing what we thought would be a slow and unsteady recovery. Based in large parts on strategic land purchases we made early on and with new home design introductions company-wide, we are pleased to make progress in improving our business ahead of the uptick in market conditions. This has us positioned even better for the months and years ahead. Even though the recovery may be choppy, we do believe that we'll continue to move in the right direction going forward.

Our positive results demonstrate the progress we're making against our strategy. I'm pleased to report that we were able to achieve profitability for the third consecutive quarter. We earned $14.3 million or $0.04 per share, with orders up 45%, deliveries up 34%, revenues up 35% and backlog up 62% over the prior year. It's important to note that our 45% year-over-year increase in orders was achieved with only a 3% increase in community count, demonstrating the strength of our execution in our local markets. In addition to these significant improvements, I'm also pleased with our normalized gross margin for home sales, which rose from -- which rose to 20.5% as compared to the 20% gross margin that we achieved during the second quarter of 2011. In the constant balancing act between margin and sales pace, we continue to emphasize margin, with the community-by-community focus on tactically raising sales prices and reducing incentives as demand warrants.

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