Ryland's earnings rose 91% in fourth quarter Company says it has achieved turnaround

January 30, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

After years of sometimes languid results, increased competition and sales setbacks, The Ryland Group Inc. proclaimed yesterday that it had turned a financial corner, and produced its best homebuilding earnings this decade as evidence.

In the final quarter of 1997, the Columbia homebuilder generated net income of $9.5 million, 64 cents per share, a 91 percent gain from the same period a year ago. Revenue in the quarter rose 14.4 percent to just over $499 million.

At the same time, Ryland's homebuilding operation reported record new orders that rose 33 percent to 2,059, and a 28 percent boost to 2,812 in its backlog of homes sold but not closed. Its gross profit margin inched up to 13.8 percent for the quarter, from 12.7 percent a year ago.

Closings in the quarter totaled 2,557, an 11 percent increase.

"The turnaround that we have worked toward is upon us, and I am pleased to report that we have done this with an ever-expanding and improving product line of single-family homes, prime land positions, a reduction in costs and a superior management team," said R. Chad Dreier, Ryland's chairman.

For the year ended Dec. 31, Ryland posted net earnings of $22 million, $1.33 per share, a 38 percent gain from 1996. Revenue was $1.65 billion, a 4 percent gain.

The company's gross profit margins -- a key gauge of a homebuilder's profitability -- increased slightly for 1997, to 13.6 percent.

New orders for the year rose 15 percent to 8,994, while closings for all of 1997 were flat, at 8,377. For both the quarter and the year, Ryland's average closing price increased 4.5 percent. At year-end, its average closing price was $182,000, and its dollar volume of outstanding contract units -- the company's backlog -- stood at $509,345, up 25.6 percent from the comparable period in 1996.

But amid the positive news, Ryland still suffers from problems in the mid-Atlantic area, a former stronghold that the company has de-emphasized in the past year. Most notably, fourth-quarter new orders were up, compared with 1996, in all of Ryland's five regions except the mid-Atlantic.

Pub Date: 1/30/98

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