Campbell to Exit Standard Pacific at Yearend
When Ken Campbell cleared security and got buzzed in by Standard Pacific’s lobby receptionist in Irvine, Calif., in the Fall of 2008, the company’s welcome for the Matlin Patterson operative had all the warmth of greetings to the grim reaper himself.
In an April, 2010 profile of Campbell, just shy of two years into his resuscitation efforts at Standard Pacific, we wrote:
His m.o. is simple. Come in. Listen. Do the obvious. Give others credit for success. Then, move on, making Matlin-Patterson’s $5 billion distressed market fund investors a little—or a lot of—money in the bargain. It’s become an iterative play because it’s his makeup—a good listener, a rapid learner, a dispassionate decision-maker, an impatient doer, and—what strikes many as an oxymoron but shouldn’t—a deeply caring pragmatist with little-to-zero need to prove anything to anybody … except maybe himself.
Home building, they say, is different. It’s local. It’s real estate. It’s manufacturing. It’s marketing and sales. It’s trade relationships. It’s logistics and distribution. It’s the business of dreams. It eats “outsiders” for lunch. You have to be there. You have to do it to know it. Public home building company CEOs are a club not looking for new members.
Campbell stepped into the StanPac arena with fluid three-part goal: 1). stop the bleeding, 2). prevent the venerable company from going into bankruptcy, and 3) establish a platform from which the company could grow.
Industry insiders, observers, and analysts may have their say about Campbell’s three-year tenure now that he’s chosen this moment–before the destiny of both the company and the home building industry itself is clear–to exit.
Whatever the subjective comment might be, the facts of Campbell’s Standard Pacific performance are pretty clear. Here’s some of what that tenure looks like:
- Overhead: reduced overhead by $145 million to $145 million … i.e. cut overhead by 50% from end of 2008 to present
- during that period sales went from 5,000 to 2,500
- Debt: Standard Pacific had a balance of $2.2 billion in May 2008, all of it due to mature before 2016; now, the debt balance is $1.3 billion, and less than $100 million of it is due before 2016
- JV debt went from $178 million to zero
- Operating Profit: EBIDTA is 12%, highest in the industry … actual dollars went from $44 million to $132 million
- Per unit margin: breakeven in terms of sales per month per community was 3.2 … now the breakeven on per sales per community is 1.1
- ASP: Average selling s price in 2008 was $300,000; now, in StanPac’s new communities, the ASP is close to $390,000 …. Opened 100 new communities in last 2 years… all new home designs…. Another 50 are scheduled to open in the next year
- JD Power noted in its final series of rankings of that Standard Pacific ranked No. 1 in customer satisfaction among public home builders in its markets
Not a bad report card to add to the resume of a “fixer.”
Thing is, Campbell lives up to another standard on all that one might consider an accomplishment, his own.
“The real measure of whether I’ve succeeded is does the company do better after I’ve left. Standard Pacific is in a position to do that.”
As was his plan practically from the get-go Campbell’s operational mantel goes now to Scott Stowell, who’s worked yeoman’s service at the company since 1986, in various division, region, and headquarters titles, most recently as president. In June, the team added an industry outsider, Jeffrey J. McCall, as chief financial officer and executive vice president, who’d worked in the past with Campbell, and who represents continuity in asking questions, raising challenges, and thinking outside prevailing industry conventional wisdom.
“I used to say in analyst calls that it was easy for me to think out of the box because I didn’t know where the box was,” says Campbell. “Now, that role goes to Jeff, who also doesn’t know where the box is. The issue is fatigue… people are tired but they get it… Sitting around and waiting for the market to recover is not a good operating strategy. Jeff is not tired. He’ll keep people focused on what’s going on as opposed to what they hope will go on.”
Campbell is a big believer in Stowell, McCall, and the team of 750 associates who currently work for a company founded and built by Ron Foell and Art Svendson, starting 45 years ago. Going from losing $1.2 billion to actually making money didn’t happen without a lot of inspired, committed, sweat equity.
“A turnaround as successful as this was only possible because of the solid “bones” the company had,” says Campbell.
The afternoon of the announcement of his forthcoming status as an expert in sand saves, Campbell was riding an exercycle at the gym.
“Exactly what I was doing the morning I finished at Railworks….was asked to run Ormet that afternoon….weird.”
Today, Ormet, the Hannibal, Ohio-based aluminum plant Campbell “fixed” before his StanPac term of service thrives, and is hiring.
That’s what he wants for Standard Pacific three years from now.