The Ryland Group (NYSE:RYL) after market close Wednesday reported a net loss of $59.9 million, or $1.40 per diluted share, for the fourth quarter of 2008, compared to a loss of $201.9 million, or $4.80 per diluted share, for the same period in 2007. The loss included inventory and other valuation adjustments, including goodwill and joint venture impairments, and option deposit and feasibility write-offs that totaled $55.1 million during the quarter ended December 31, 2008. Wall Street was expecting a loss of $1.06; Ryland shares were down 2.5% at $16.09 in after hours trading shortly after the announcement.
The loss for the year was $396.6 million, or $9.33 per diluted share, compared to a loss of $333.5 million, or $7.92 per diluted share, for the same period in 2007, including impairments and write-offs of $328.3 million and a noncash income tax charge of $143.8 million related to its deferred tax valuation allowance.
Home building revenues decreased 38% to $513.5 million for the quarter compared to the same period in 2007. Closings fell 35.8% to 1,964 units, and the average selling price was down 8.6% to $246,000. Land sales generated$29.6 million, which contributed a net loss of $19.7 million to pretax losses, compared to $5.9 million from land sales for the fourth quarter of 2007, which contributed a net loss of $223,000 to pretax losses.
New orders were down 65.3% to 554 units, and new order dollars declined 66.9% to $122.0 million. The cancellation rate was not reported. Backlog at the end of the fourth quarter of 2008 decreased 47.5% to 1,559 units from2,969 units at Sept. 30, 2008 and declined 45.7% from 2,869 units at the end of the fourth quarter of 2007. The dollar value of the Company's backlog was$407.1 million, a decrease of 47.0% from Sept. 30, 2008 and a decline of 48.2% from yearend. Houses started and unsold decreased by 22.4% to 639 units at the end of the quarter.
Housing gross profit margins averaged 10.2%, excluding inventory valuation adjustments and write-offs, the company said. Including the inventory valuation adjustments, housing gross profit margins averaged 0.1%. Selling, general and administrative expenses, as a percentage of homebuilding revenue, were 11.7%, up from 10.2% for the fourth quarter of 2007.
The Company's financial services segment reported pretax earnings of $5.0 million for the quarter, down from $16.3 million for the same period in 2007. This decrease was primarily attributable to a 34.5% decline in the number of mortgages originated due to a slowdown in the homebuilding market and to a 6.2 percent decrease in average loan size, as well as to a $3.7 million decline in sales of insurance renewal rights in the fourth quarter of 2008, compared to the fourth quarter of 2007.
Ryland generated cash from operations of $78.7 million for the quarter and had a cash balance of $423.3 million as of Dec. 31, 2008. The company also said it was expecting a tax refund of $160.7 million at yearend. Its net debt-to-total capital ratio was 33.6 percent at the close of the year.