The Ryland Group Inc., declaring its four-year turnaround effort complete, reported yesterday that its fourth-quarter net profit climbed 85 percent.
The Columbia-based homebuilder attributed the increase in net income -- to $17.6 million, or $1.12 per diluted share, from $9.5 million, or 62 cents per diluted share in the year-earlier period -- to a well-executed strategic plan that was helped by a booming U.S. housing market.
Ryland's earnings beat the 93-cent average forecast of six analysts surveyed by Zack's Investment Research.
Ryland's revenue in the quarter was $541.1 million, an 8.4 percent gain from the previous year's $499.1 million.
"The turnaround chapter of the Ryland story is now complete with our performance in 1998," said Michael D. Mangan, the company's chief financial officer and executive vice president.
In the three months that ended Dec. 31, Ryland's homebuilding pretax earnings totaled $34.3 million, more than double the $16.1 million it generated from home sales in the comparable period in 1997.
Ryland also reported that its gross profit margins from home sales -- a key industry gauge of performance -- rose to 17.2 percent, from 13.9 percent a year ago.
The company's agenda last year was to increase its market dominance by allocating additional capital to markets that have the greatest potential -- such as Tampa, Fla., where it acquired Regency Communities in November -- and exiting smaller markets by the end of this year, such as the Delaware Valley, which consists of parts of Delaware, Pennsylvania and New Jersey.
Regency Communities is not related to Regency Homes Corp., a private homebuilder in Maryland that filed for Chapter 7 bankruptcy in July.
"Certainly we have been operating in a favorable market, and we can attribute about one-third of our profit margin growth to that," Mangan said. "But the lion's share of our success must be attributed to our internal initiatives."
Ryland is the nation's sixth-largest homebuilder and the second-largest homebuilder in the Baltimore metropolitan market.
For the year that ended Dec. 31, Ryland posted net earnings of $40.3 million, or $2.58 a share, from $21.9 million, or $1.32 a share. Revenue rose 7 percent to $1.77 billion from $1.65 billion. The 1998 figures are after an extraordinary charge of $3.3 million for the early retirement of debt.
The company's gross profit margins increased last year to 15.9 percent from 13.5 percent.
Ryland completed 8,994 homes last year. Its common stock closed at $25.4375 per share, up $1.875, yesterday.
Pub Date: 1/29/99