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Homebuilder Revenue Falls, Loss Narrows

Homebuilder Standard Pacific is a read on the California housing recovery, but modest signs of improvement in California don't result in earnings pop in the first quarter.

IRVINE, Calif. (


) -- Homebuilder

Standard Pacific


is suppose to recover along with the housing market in the state of California. Early on Monday morning, the California-based homebuilder provided mixed signals in its first quarter earnings report, and improvements in California were not helping its shares.

Standard Pacific reported a narrower loss of two cents per share than the Street estimates of a six cent loss. However, Standard Pacific revenues came in light, at $175.4 million, versus a Street estimate of over $184 million for the first quarter.

Investors and analysts have been looking closely at new order growth for the past few quarters as an important sign of a rebound in the home market. Standard Pacific deliveries were down in the quarter, while order growth ticked up by a modest 3%. Cancellations in the first quarter were 15%, versus 24% for the 2009 first quarter and 21% for the 2009 fourth quarter.

California did buoy Standard Pacific's earnings in one respect. While revenue was down 16% from the first quarter 2009 level, and deliveries down 22%, the average home price rose by 9% to $326,000 in the first quarter, driven by home deliveries in California.

Standard Pacific's backlog (excluding joint ventures) increased 31% to $278.3 million, or 821 homes, compared to $212.2 million, or 689 homes, for the 2009 first quarter. The increase in backlog value was driven primarily by an increase in the number and average price of California homes in backlog.

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Nevertheless, Standard Pacific shares were among the most active stocks early Monday morning, down more than 7%.

Gross margin improvement in the first quarter, to 22.7% versus 17.4% in the first quarter 2009, was also driven by the California deliveries increase and to a lesser extent, price increases in California.

Spending was down by $19.6 million, or 37%, to $32.8 million in the first quarter 2010, from $52.4 million in the 2009 first quarter, with lower costs in personnel and commissions.

Standard Pacific was also much more active acquiring land in the first quarter of 2010, with $50.8 million of land purchases, versus $3.7 million in 2009. During the 2010 first quarter, the Standard Pacific also approved the purchase of $105 million of land -- 1,800 lots, 76% of which are finished, 11% partially developed and 13% raw.

Ken Campbell, Standard Pacific President and CEO said in the earnings statement, "I am pleased with our strong gross margins and reduced spending on overhead. I am also encouraged by the growth in our land opportunities at prices that meet our return thresholds."

-- Reported by Eric Rosenbaum in New York.

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