The Ryland Group late today (July 25) announced a net loss of $52.4 million (-$1.25 per diluted share) for its fiscal second quarter, including $147.1 million in write-offs, compared to earnings of $94.8 million ($2.03 per diluted share) during the same period last year. The company noted that without the write-offs, it would have earned $0.80 per share.

Ryland's home building operations lost $91.5 million in the quarter, compared to $153.8 million in pretax earnings in last year's second quarter.The company attributed the decrease to "a decline in closings and margins, which included the impact of inventory valuation adjustments and write-offs."

Home building revenues were off 38.3% from last year to $722.6 on closings of 2,461 units, a 35.3% decrease. Ryland also reported a drop in the average closing price of a home to $292,000 from $295,000. The home building revenue figure included $3.0 million from land sales, compared to $29.2 million from land sales for the second quarter of 2006, which contributed a net gain of $595,000 compared to $10.0 million last year.

Orders were down 16.6% for the quarter to 2,521 units for the quarter, and revenue from new orders was off 21.8% to $696.8 million. The company cut its backlog during the quarter to 4,953 units, a drop of 39.2%. The value of its backlog at the end of the quarter was down 42.2% to $1.5 billion.

Margins averaged 19.0%, not including the impairments, but fell to -1.3% when they were factored in. Margins in the 2006 quarter averaged 23.2%.The company said that increased sales incentives contributed to the decline in margins.

SG&A was up 13.9% to 11.5% of home building revenue, due primarily to higher marketing and advertising costs per unit, the company said. It also discled that it had capitalized all interest incurred during the second quarter of 2007 "due to development activity."

Ryland cut its corporate expenses significantly, from $19 million to $7.1 million, largely due to lower incentive compensation resulting from declines in earnings and stock price.

The Company's financial services segment earned $9.8 million for the quarter, down from $16.9 million for the same period in 2006. The decline was primarily attributable to a 38.3% decrease in the number of mortgages originated due to a slowdown in the homebuilding market, partially offset by a 2.0% increase in average loan size. The capture rate of mortgages originated for the Company's homebuilding customers was 79.9% for the quarter, compared to 82.5% for the same period in 2006.

For the six months of 2007, Ryland reported a consolidated net loss of$76.9 million, (-$1.82 per diluted share), compared to earnings of $184.8 million ($3.88 per diluted share) for the same period in 2006. Write-offs totaled $212.6 million. The home building segments reported a pretax loss of$123.7 million during the half, compared to $301.3 million in pretax earnings for the same period in 2006. Home building revenues were off 36.5% to $1.4 billion; closings were down 35.3% to 4,763; and new orders fell 21.8% to 5,510 units. Sales revenue fell 24.3% to $1.6 billion from $2.1 billion for the first six months of 2006. Total gross profit margins, including land sales, decreased to 3.9 percent for the first six months of2007 from 23.8 percent for the same period in 2006.

For the half, Ryland's financial services segment reported pretax earnings of $17.8 million compared to pretax earnings of $28.4 million for the same period in 2006. The decline was primarily attributable to a 36.7% decrease in the number of mortgages originated due to a slowdown in the homebuilding market, partially offset by a 2.0% increase in average loan size. The capture rate of mortgages originated for the Company's homebuilding customers was 79.5% for the first half of 2007 compared to 81.4 percent for the same period in 2006.

Ryland repurchased 370,000 shares of its common stock at a cost of $15.9 million during the second quarter, leaving it with $142.3 million in its previously authorized $175 million share repurchase program.