Ryland's earnings double in quarter

Homebuilder's board extends chairman's contract through 2003

Real estate

April 23, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

The Ryland Group Inc. reported yesterday that its earnings more than doubled in the first three months of this year to $10.1 million, on the strength of the largest quarterly sales volume in the company's 32-year history.

The Columbia homebuilder's first-quarter profit rose to 67 cents per share vs. 30 cents per share in the comparable period a year ago.

With the positive results, Ryland's board opted to extend the contract of Chairman and Chief Executive Officer R. Chad Dreier through at least 2003.

Dreier's contract had been set to expire in 2001, but the new deal, coupled with unlimited one-year extensions the board can issue at its discretion, means the 51-year-old executive could be at Ryland for years to come.

The one-year extension options were revealed in Ryland's recently issued proxy, which listed Dreier's compensation as $2.47 million in 1998, a 15 percent increase from the year before.

"The company's financial position is stronger than it has ever been," said William G. Kagler, a Ryland board member and a former president of the Kroger Co. supermarket chain. "As evident by record homebuilding results in 1998 and again in the first quarter of 1999, Mr. Dreier has clearly established a level of excellence at Ryland and positioned the company for continued success."

Ryland announced this month that its first-quarter sales of 2,980 homes, a 13 percent gain from the same period in 1998, shattered a company first-quarter record. Analysts had expected Ryland to earn 47 cents per share in the first quarter, or about $7 million, according to a Wall Street consensus compiled by First Call Corp.

"It was just an incredible quarter," said R. Bentley Offutt, president of Offutt Securities Inc., a Hunt Valley investment firm. "To double earnings for a homebuilder is just unheard of."

At 67 cents per share, Ryland's first-quarter profit is the highest it has been in a decade.

In addition, Ryland also generated record pretax homebuilding earnings of $18.8 million, more than a threefold increase from the $3.9 million it produced in the first three months of 1998.

Ryland attributed its performance to a 21 percent increase in closings, and improved homebuilding gross profit margins, a key gauge of a builder's health. Ryland posted gross profit margins of 16.5 percent, up from 13.8 percent a year ago.

Offutt described the gains in gross profit margins as "amazing."

Ryland's revenue in the quarter that ended March 31 rose 20 percent, to $404 million.

"The company's results demonstrate that Ryland is successfully executing its strategy to grow in the company's geographically diverse markets and achieve greater dominance," said Dreier.

Ryland's common stock price rose 31.25 cents per share to close at $25.8125 per share.

Pub Date: 4/23/99

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