The Ryland Group, Calabasas, Calif. (NYSE:RYL) after market close Wednesday reported a net loss of $19.1 million, or $0.43 per diluted share, for its fourth quarter ended Dec. 31. The loss included impairments and writedowns of $15.4 million.
Wall Street was expecting a loss of 34 cents a share.
The loss compared to consolidated net earnings of $39.0 million, or $0.88 per diluted share, for the same period in 2009, with included pretax charges of $73.8 million and an income tax benefit of $97.6 million.
Home building revenues were down 45.5% to $221.1 million on a 45.4% decline in closings to 909 units. The average closing price increased by 2.5% to $243,000.
New orders were down 19.9% to 776 units for the quarter, and new order dollars dropped 21.5% to $186.5 million. Sales incentives and price concessions averaged 11.6% for the fourth quarter of 2010, compared to 12.1% for the same period in 2009. A cancellation rate was not reported.
At December 31, 2010, backlog decreased 31.5% to 1,187 units, and dollar value of backlog was $297.4 million, down 31.6 percent from December 31, 2009.
Active communities increased to 207 communities at quarter's end from 202 communities at the end of the prior quarter and 182 communities at the end of the 2009 fourth quarter.
Housing gross profit margins averaged 14.3%, excluding inventory and other valuation adjustments, for the quarter, flat with 14.2% for the quarter ended December 31, 2009. Including inventory and other valuation adjustments, housing gross profit margins averaged 8.3% for the fourth quarter of 2010, compared to negative 1.6% for the same period in 2009.
SG&A totaled 13.2% of home building revenues for the quarter compared to 16.4% for the third quarter of 2010 and 9.3% for the fourth quarter of 2009.The year-over-year increase was primarily attributable to lower leverage resulting from a decline in revenues, partially offset by cost-saving initiatives. SG&A dollars decreased by $8.3 million from the same period in the prior year.
Corporate expense was $5.4 million for the quarter compared to $6.3 million for the same period in 2009 due primarily to lower executive compensation costs for the fourth quarter of 2010, versus the fourth quarter of 2009.
The financial services segment reported pretax earnings of $1.7 million, compared to pretax earnings of $776,000 for the same period in 2009, due to reductions in loan indemnification expense, reserves related to the Company's insurance captive and overhead costs, partially offset by lower origination income due to a 49.4 percent decline in volume.
The company noted in its earnings release that it has undertaken a corporate reorganization that replaces Ryland's current two-region operating structure with a single homebuilding management team. "This reorganization, coupled with additional downsizing completed within both the corporate and mortgage organizations, should result in substantial annual savings and improved operational efficiency in 2011 and beyond," the statement said.
For the year ended December 31, 2010, Ryland reported a net loss of $85.1 million, or $1.93 per diluted share, compared to a consolidated net loss of$162.5 million, or $3.74 per diluted share, for the year ended December 31, 2009. That loss included pretax charges of $54.6 million related to inventory and other valuation adjustments, write-offs and loan loss reserves, compared to pretax charges that totaled $224.6 million for the same period in 2009, as well as pretax charges of $19.3 million related to debt reduction for the year ended December 31, 2010, compared to a net gain that totaled $10.6 million related to debt reduction for the year ended December 31, 2009.
Home building revenues for the year declined 16.9% to $1.0 billion for the twelve months of 2010 as closings dropped 17.2% to 4,245 units. For the year, the average closing price increased to $242,000 from $240,000 for the year ended December 31, 2009.
The company ended the quarter and the year with cash, cash equivalents and marketable securities of $739.2 million. The company listed $879.9 million in long-term debt on its balance sheet at quarter's end, up from $856.2 million at the same time in 2009. The net debt-to-capital ratio was 22.0% at December 31, 2010, compared to 6.6% at December 31, 2009.