The Ryland Group, Calabasas, Calif. (NYSE:RYL) on Wednesday after market close reported a net profit of $39 million ($0.88 per diluted share) for the fourth quarter ended Dec. 31. The profit was due to a $96.7 million tax benefit under the recently enacted net-operating-loss carry back provision of housing stimulus legislation that allowed losses to be written against profits going back five instead of two years.
The gain included pretax charges for land impairment and other valuation adjustments of $66.1 million. Excluding the write downs and the tax benefit, the company said it would have earned $4.7 million ($0.11 per diluted share). The gain compares with a loss of $59.9 million ($-1.40 per share) for the comparable period in 2008. Minus the tax benefit but including the write downs, the company would have had a pretax loss of $58.5 million.
The consensus analyst estimate was for a loss of $0.26 per share. Shares of Ryland had gained 1.6% to $21.91 in after-hours trading at 5:30 p.m. after closing up 3.1% during the regular session Wednesday.
For all of 2009, Ryland had a net loss of $162.5 million (-$3.74 per diluted share), compared to a consolidated net loss of $396.6 million (-$9.33 per diluted share) for the same period in 2008, including inventory and other valuation adjustments, joint venture impairments, and option deposit and feasibility write-offs that totaled $202.0 million. Additionally, the Company recorded the income tax benefit of $97.2 million during the year ended December 31, 2009, compared to $9.2 million for the same period in 2008.
As a result of the tax benefit, Ryland expects a refund of $99.4 million in early 2010.
Home building revenues decreased 21.1% to $405.3 million for the quarter, due primarily to a 15.2% decline in closings to 1,666 and a 3.7% drop in the average price of closed homes to $237,000. Home building revenues for the quarter also included $10.1 million from land sales, which resulted in a net pretax loss of $736,000.
New orders shot up 74.9% from the 2008 quarter to 969 units, representing sales of 1.7 homes per community versus 0.7 for the same period in 2008. New order dollars increased 94.8% to $237.6 million. Ryland did not report a cancellation rate.
Backlog at quarter's end increased 11.1% to 1,732 units, with the dollar value of backlog up 6.9% to $435.1 million.
For the full year, closings totaled 5,129 units, down 30.2% from 2008, with the average closing price down 4.8% to $240,000. Inventory of houses started and unsold decreased by 32.9% to 429 units at December 31, 2009, from 639 units at December 31, 2008.
During the quarter, housing gross profit margins averaged 14.2%, excluding inventory and other valuation adjustments, up from 10.8% for the previous quarter and 10.2% for the quarter ended December 31, 2008. The company attributed the improvement to lower sales discounts and allowances relating to homes closed during the quarter. Including inventory and other valuation adjustments, housing gross profit margins averaged negative 1.6% for the quarter of 2009, compared to 0.1% for the same period in 2008.
SG&A totaled 9.3% of revenue for the quarter, down $22.8 million from 11.7% of revenue for the same period in 2008. The decrease was attributed to cost-saving initiatives and to lower marketing and advertising expenditures per unit, partially offset by a decline in revenues.
For the quarter, the financial services segment reported pretax earnings of $776,000, compared to pretax earnings of $5.0 million for the same period in 2008, due to higher loan indemnification expense and a 7.3% decline in the number of mortgages originated.
The company ended the quarter with $285.2 million in cash, $457.8 million in marketable securities and $71.8 million in restricted cash. It was carrying$856.2 million in debt on its balance sheet. The company reported a net debt-to-capital ratio (debt, net of cash, cash equivalents and marketable securities, divided by the sum of debt and total stockholders' equity, net of cash, cash equivalents and marketable securities) of 6.6% at December 31, 2009.
Ryland provided no commentary on the results.