The Ryland Group is not immune to the housing downturn as the large builder reported a $54.7 million loss, or $1.30 per diluted share, for this year's third quarter, but president and CEO Chad Dreier says his company is better prepared than most to navigate through the downturn.
"I think it's hard to be optimistic that the market will get much better in the next six months," said Dreier during a press conference with financial analysts earlier today.
"There are still people out there who want to buy houses, and we feel pretty good about how we're positioned moving forward," said Dreier, who pointed out that Ryland's lot count was as low as it's been since 2001, with 87 percent of the company's lots already developed.
Dreier also said the company's debt to capital ratio remains in the low 40s, and Ryland has minimal exposure to joint ventures with other big builders or land developers.
When asked by one analyst when he thought the market would turn, Dreier would not speculate. However, he did say management would feel the market would have stabilized when the builder is back to making one sale per community per week.
"Right now we're at about roughly a half-sale per week, and you really get into trouble if you get below that number," he said.
Ryland's numbers are down, but, compared to competitors D.R. Horton and Pulte, the losses don't appear as staggering.
Home building revenues decreased 35.2 percent to $717.5 million for the third quarter of 2007, compared to $1.1 billion for the same period in 2006. The decline was due largely to a 32.3 percent decrease in closings to 2,495 units, as well as a decline in the average closing price of a Ryland home, which slid to $284,000 in the third quarter compared to $291,000 a year ago.
The company also reported a $131.6 million loss or $3.12 per diluted share for the first nine months of 2007, compared to earnings of $272.8 million or $5.86 per diluted share a year ago. Since the second quarter of 2006, Ryland has taken $418 million of impairments on 70 communities .