Good morning all:
Found this this morning on RYL:
The Ryland Group Reports 100% Increase in Third Quarter Earnings
Per Share From Operations
PR Newswire - October 22, 1998 10:59
COLUMBIA, Md., Oct. 22 /PRNewswire/ -- The Ryland Group, Inc. (NYSE: RYL) today reported a significant
improvement in results for the third quarter of 1998, continuing the strong positive trend that began last year. Highlights
include: -- Consolidated net earnings from operations of $12.5 million, or $.84 per share, -- double the $.42 per share for
the third quarter of 1997. -- Homebuilding pretax earnings of $25.1 million, the highest third- quarter earnings in Ryland
Homes' history, and an increase of 139 percent, or $14.6 million, over the third quarter of 1997. -- An increase in gross
profit margins from home sales to 16.3 percent, up 290 basis points from 13.4 percent for the prior-year quarter. -- A 16
percent increase in backlog units over the third quarter of 1997, with backlog reaching a contract value of $738 million.
Consolidated net earnings from operations (before extraordinary item) for the third quarter of 1998 were $12.5 million,
or $.84 per share ($.81 per share diluted), compared with $6.7 million, or $.42 per share ($.41 per share diluted), for the
third quarter of 1997. The $5.8 million increase was due to improved homebuilding results which were driven by
significantly higher gross profit margins as well as a 9 percent increase in closings.
"This was the second consecutive quarter in which Ryland's gross profit margins increased in excess of 200 basis points
over the prior-year quarter," said R. Chad Dreier, Chairman, President, and Chief Executive Officer of The Ryland
Group, Inc. "We are very pleased with the results of our drive to increase shareholder value through profitability
improvement in our core operations. The success of our strategies -- improving our land positions and product lines,
effectively controlling costs, and establishing leadership positions in each of our markets -- is evident in our strong
earnings results. Our current outlook for the fourth quarter continues to be positive."
HOMEBUILDING SEGMENT
The Company's homebuilding segment reported record third-quarter pretax earnings of $25.1 million, compared with
pretax earnings of $10.5 million for the same period last year. This 139 percent, or $14.6 million improvement was
primarily due to higher gross profit margins, combined with increased closings and lower interest costs.
Homebuilding revenues totaled $448 million, up 12 percent from $398 million for the third quarter of last year. The
growth in revenues resulted primarily from a 9 percent increase in closings, which totaled 2,361 for the third quarter of
1998. New orders increased by 2 percent to 2,183, and sales per community were up 12.5 percent reflecting fewer active
communities. Total orders were up in all regions except the West, where strong sales earlier in the year reduced the
number of communities currently open for sales. The West region will be opening additional communities in the fourth
quarter. As of September 30, 1998, the backlog included 3,831
outstanding contracts, a 16 percent increase from September 30, 1997, and had a contract value of $738 million.
Gross profit margins from home sales averaged 16.3 percent for the third quarter of 1998, a major improvement from the
13.4 percent reported for the third quarter last year. This was the fourth consecutive quarter in which the Company
reported a significant increase over the prior year's gross profit margins. Increased closings from newer communities,
which have better land positions and more cost-effective product, continue to be the driving force behind the Company's
improved performance, and market conditions have also been favorable.
Selling, general and administrative expenses totaled $42.7 million for the third quarter of 1998, up $5.8 million from the
same period in 1997. This increase was primarily related to the larger volume of closings in this year's third quarter.
Interest expense declined by $1.3 million due to lower average borrowings and a lower cost of funds. The Company
continues to focus on effectively controlling all operating costs and improving the efficiency of its homebuilding
operations.
FINANCIAL SERVICES
The Company's financial services segment reported pretax earnings of $1.6 million for the third quarter of 1998,
compared with $4.5 million for the third quarter of 1997. The decline was due to lower earnings from retail operations,
primarily the result of lower loan-servicing income and lower gains on the sales of mortgages and servicing rights. The
third quarter of 1997 included higher gains on sales of mortgage-servicing rights as a result of servicing sales from the
originated portfolio in excess of amounts originated. Mortgage originations of 2,110 increased by 9 percent for the third
quarter of 1998, and the Company increased its loan capture rate for Ryland homebuilding contracts to 71 percent.
RESULTS FOR FIRST NINE MONTHS
Consolidated net earnings from operations (before extraordinary item) for the first nine months of 1998 were $26.0
million, or $1.72 per share ($1.67 per share diluted). This compares with earnings of $12.3 million, or $.71 per share
($.70 per share diluted), for the first nine months of 1997. The Company's homebuilding segment reported pretax
earnings of $45.8 million, a 141 percent, or $26.8 million, increase from the $19.0 million reported for the first nine
months of 1997. Housing gross profit margins averaged 15.3 percent for the first nine months of 1998 versus 13.3
percent for the same period of 1997. This 200 basis point increase was the principal reason for the earnings
improvement. Lower interest expense, which was down $3.7 million, or 20 percent, contributed to the earnings increase.
New orders were up 5 percent from the first nine months of 1997.
The financial services segment reported pretax earnings of $10.1 million for the first nine months of 1998 compared with
$11.6 million for the first nine months of last year. The results for 1998 included a $6.1 million pretax gain from the
first-quarter sale of a majority of the Company's loan-servicing portfolio.
EXTRAORDINARY ITEM
In the third quarter of 1998, the Company recognized an extraordinary loss of $3.3 million (net of taxes of $2.2 million),
or $.23 per share. The loss was recorded in connection with the redemption on July 15, 1998 of $100 million of 10.5
percent senior subordinated notes due 2002. The redemption of the notes was at the stated call price of 103.9 percent of
par and was funded by the April 1998 issuance of lower cost debt. Third-quarter net earnings after the extraordinary item
were $9.2 million, or $.61 per share, versus $.42 per share for the third quarter of 1997. For the first nine months of
1998, net earnings after the extraordinary item were $22.7 million, or $1.49 per share, versus $.71 per share for the first
nine months of 1997.
STOCK REPURCHASE
In the third quarter of 1998, the Board of Directors approved the repurchase of up to one million of the Company's
outstanding common shares,
from time to time, in the open market or in privately negotiated transactions, subject to market conditions. During the
second quarter of 1998, the Company completed a 2.0 million share repurchase program initiated in April 1997.
With headquarters in Columbia, Maryland, Ryland is one of the nation's largest homebuilders and a leading mortgage
finance company. Founded in 1967, Ryland has built more than 150,000 homes and currently operates in 21 divisions.
Note: Certain statements in this Press Release are "forward-looking statements" within the meaning of the Private
Securities Litigation Act of 1995. Forward-looking statements are based on various factors and assumptions that include
risks and uncertainties, such as the completion and profitability of sales reported, the market for homes generally and in
areas where the Company operates, the availability and cost of land, changes in economic conditions and interest rates,
increases in raw material and labor costs, consumer confidence, government regulation, and general competitive factors,
all or each of which may cause actual results to differ materially.
|
