The Ryland Group (NYSE:RYL) after market close Wednesday reported a consolidated net loss of $65.7 million, or $1.54 per diluted share, for its fiscal third quarter ended Sept. 30. The loss was nearly double the consensus estimate of a loss of 88 cents a share among analysts.
The loss included impairments and write-downs totaling $64.7 million, which were substantially lower than the $180.4 million the company wrote down in its second fiscal quarter. The loss also included a $16.5 million non-cash charge to deferred income tax assets.
Home building reported a pretax loss of $72.4 million, compared to a pretax loss of $90.0 million for the same period in 2007. "The reduction in loss was primarily due to lower inventory valuation adjustments and write-offs, partially offset by a decline in closings and margins," the company said.
Home building revenues were down 26.7% to $526.2 million as closings fell 19.2% to 2,017 units and average closing prices fell 10.6% to $254,000. Home building revenues for the third quarter of 2008 included $13.9 million from land sales, which contributed net losses of $7.2 million to pretax losses in 2008.
New orders fell 31.6% to 1,284 units with an aggregate value of $325.3 million, a 33.8% decline from the same quarter last year. Backlog at the end of the quarter of decreased 19.8% to 2,969 units with a dollar value of$768.9 million, down 19.5% from June 30, 2008, and 38.0% from September 30, 2007. Inventory of houses started and unsold decreased by 12.6% to 719 units.
Housing gross profit margins averaged 11.8% prior to inventory valuation adjustments (0.8% after writedowns) and write-offs for the quarter, compared to 17.4% (-0.3%) for the same period in 2007. The company attributed the decline to "increased sales incentives and price reductions that related to home deliveries for the third quarter of 2008."
SG&A, as a percentage of homebuilding revenue, was 11.6% for the quarter, compared to 13.8% for the second quarter and 12.3% for the third quarter of 2007. The company attributed that decrease to "cost saving initiatives, including lower marketing and advertising costs per unit, partially offset by severance and model abandonment costs totaling $4.9 million."
The Company's financial services segment reported pretax earnings of $6.0 million for the quarter of 2008, down from $6.8 million for the same period in 2007. Mortgages originated declined 15.1% and loan size fell 8.1% during the quarter.
This decrease was primarily attributable to a 15.1 percent decline in the number of mortgages originated, due to a slowdown in the homebuilding market, and to an 8.1 percent decrease in average loan size.
Ryland said it generated $101 million in cash during the quarter and had$344.8 million in cash on hand at quarter's end. It said its net debt-to-capital ratio at quarter's end was 35.9%.
Ryland shares were up marginally from market close at $18.06 in after-hours trading late Wednesday afternoon.
