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.
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IRVINE, Calif. (

TheStreet

) -- Homebuilder

Standard Pacific

(SPF)

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.

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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