Ryland reports strong quarter Columbia-based builder makes 42 cents a share


October 24, 1997|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

The Ryland Group Inc. reported yesterday that its third-quarter earnings rose 51 percent from a year ago to $6.7 million, on the strength of improved homebuilding gross profit margins and cuts in interest and corporate expenses.

The Columbia-based company's 42 cents per share performance for the period ended Sept. 30, compared with 25 cents per share in the year-ago quarter, comes as Ryland has been struggling in recent quarters to compete in the mid-Atlantic region, where smaller homebuilders often trim profits to increase sales.

Analysts had predicted Ryland would earn about 37 cents per share, according to statistics compiled by Zacks Investment Research.

"The improved profitability of our homebuilding segment during the third quarter represents the highest quarterly pretax earnings for the homebuilding segment since 1990," said R. Chad Dreier, Ryland's chairman, president and chief executive officer. "In addition, the strong growth in new orders and backlog should enable further profitability improvement in the fourth quarter." Ryland's total revenue for the quarter rose 5 percent to $421.6 million.

Ryland's homebuilding operations posted a 17.4 percent increase in new orders for the third quarter and a 12.2 percent improvement in backlog, which is defined as homes sold but not closed.

New orders for the third quarter increased to 2,151 homes, while its backlog rose to 3,310 outstanding contracts as of Sept. 30. The company said each of its five regions nationwide -- including the Mid-Atlantic -- reported increases in new orders.

Ryland's gross profit margins averaged 13.4 percent for the third quarter, level with the third quarter of 1996 but up from 13.2 percent for the second quarter of this year.

The gain marks the third consecutive quarter in which profit margins improved over the immediately preceding quarter. The company attributed the gain to increased closings in newer communities. At the same time, Ryland's interest expense was $5.8 million, down $2.4 million from the third quarter of 1996.

Corporate expenses related to selling and administrative functions as a percentage of revenue declined to 9.3 percent in the third quarter, compared with 9.8 percent of revenue in the third quarter of last year.

For the nine months ended Sept. 30, Ryland generated net income of $12.3 million, or 70 cents per share, a 14 percent increase from the same quarter a year ago.

Pub Date: 10/24/97

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