The Ryland Group, Calabasas, Calif. (NYSE:RYL) late Wednesday reported a consolidated net loss of $29.9 million, or $0.68 per diluted share, for the third quarter ended Sept. 30, compared to a consolidated net loss of $52.5 million, or $1.20 per diluted share, for the same period in 2009. For the third quarter ended September 30, 2010, the company had pretax charges for inventory and other valuation adjustments and write-offs that totaled $16.7 million, compared to pretax charges that totaled $39.1 million for the same period in 2009. Analysts were expecting a loss of 28 cents per share.

The home-building segments reported a pretax loss of $24.8 million during the third quarter of 2010, compared to a pretax loss of $48.5 million for the same period in 2009. This reduction in loss was primarily due to lower inventory and other valuation adjustments and write-offs and higher gross profit margins, partially offset by increased interest expense, reduced closing volume and a higher selling, general and administrative expense ratio.

Home-building revenues fell 34.6% to $206.5 million for the third quarter of 2010, compared to $315.8 million for the same period in 2009. This decrease was primarily attributable to a 36.0% decline in closings that totaled 847 units for the third quarter ended September 30, 2010, compared to 1,323 units for the same period in the prior year. For the third quarter ended September 30, 2010, the average closing price of a home increased by 2.5% to $244,000 from $238,000 for the same period in 2009. Home-building revenues for the third quarter of 2010 included $85,000 from land sales, which resulted in net pretax earnings of $18,000, compared to homebuilding revenues for the third quarter of 2009 that included $545,000 from land sales, which resulted in a net pretax loss of $42,000.

New orders of 799 units for the third quarter ended September 30, 2010, represented a decrease of 37.1%, compared to new orders of 1,270 units for the same period in 2009. For the third quarter of 2010, new order dollars declined 35.0% to $195.3 million from $300.3 million for the third quarter of 2009.

Backlog at the end of the third quarter of 2010 declined 45.7% to 1,320 units from 2,429 units at September 30, 2009. At September 30, 2010, the dollar value of the company's backlog was $331.6 million, reflecting a decrease of 44.0% from September 30, 2009.

Housing gross profit margins averaged 14.2%, excluding inventory and other valuation adjustments, for the third quarter ended September 30, 2010, compared to 10.8% for the quarter ended September 30, 2009. Including inventory and other valuation adjustments, housing gross profit margins averaged 8.7% for the third quarter of 2010, compared to negative 0.2% for the same period in 2009. The increase in average housing gross profit margins for the third quarter ended September 30, 2010, compared to the third quarter ended September 30, 2009, was primarily due to lower inventory and other valuation adjustments, as well as to reduced sales discounts and allowances that related to homes closed during the quarter.

Sales incentives and price concessions averaged 11.2% for the third quarter ended September 30, 2010, compared to 14.7% for the same period in 2009. Selling, general and administrative expense totaled 16.4% of homebuilding revenues for the third quarter of 2010, compared to 12.3% of homebuilding revenues for the same period in 2009. This increase in the selling, general and administrative expense ratio was primarily attributable to lower leverage resulting from a decline in revenues and a $3.0 million allowance recorded against notes receivable during the third quarter of 2010, partially offset by cost-saving initiatives. Selling, general and administrative expense dollars for the third quarter ended September 30, 2010, decreased $4.9 million from the same period in the prior year.

The home building segments recorded $6.7 million of interest expense during the third quarter of 2010, compared to $4.6 million of interest expense during the third quarter of 2009. This increase in interest expense was primarily due to lower inventory-under-development resulting in a higher debt-to-inventory-under-development ratio.Corporate expense was $5.5 million for the third quarter of 2010, compared to $4.5 million for the same period in 2009. This increase was primarily due to a $1.4 million decrease in gain on the market value of retirement plan investments for the third quarter of 2010, versus the same period in 2009, partially offset by lower executive compensation costs.

During the third quarter of 2010, the company used $70.8 million of cash for operating activities, $995,000 of cash for investing activities and $6.0 million of cash for financing activities.For the third quarter ended September 30, 2010, the financial services segment reported a pretax loss of $661,000, compared to a pretax loss of $618,000 for the same period in 2009. This increase in loss was primarily due to a 41.1% decline in mortgage originations, which was partially offset by a $5.3 million reduction in loan indemnification expense.