Ryland posts record home sales in quarter

Columbia builder's new orders, backlog both increased 19%

Turnaround accelerates

Housing

July 08, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

Continuing its turnaround after a troubled period, Ryland Group Inc. reported yesterday that home sales for the three months that ended June 30 were higher than any other second quarter in its history.

The homebuilder, based in Columbia, had 2,941 new orders in the second quarter, 19 percent more than in the same period last year. The company's backlog of homes -- those sold but not built -- was 4,770, also a 19 percent increase and a second-quarter record.

Sales in the first quarter reached a record 2,980 homes, Ryland said.

"I'm just thrilled," said R. Bentley Offutt, president of Offutt Securities, a Hunt Valley investment firm, who has been following the company for more than a dozen years. "We were looking for a 12 percent [sales] increase."

Ryland won't release the quarter's financial results until July 22, but Offutt said he's expecting a net income of $14.9 million, or 95 cents a share, which would be an increase of 69 percent over the year-ago quarter's income of $8.83 million.

Ryland shares closed up 31.25 cents yesterday at $30.25.

Sales were strongest in Chicago, Denver, Northern and Southern California, western Florida and Charlotte, N.C., said spokeswoman Anne Madison. The company did better in the Baltimore market than it did during the same period last year, she said, but the company does not release details about its performance in specific markets.

Although homebuilders nationwide are facing a shortage of labor and materials in the booming housing market, Ryland's size allows it to buy in volume and offer volume building opportunities to subcontractors to avoid the crunch, Madison said.

"We have not seen an impact," she said.

Yesterday's announcement of record sales was good news for a company that had seen its share of disappointments in the past several years. In August, the company agreed to pay $8.7 million in fines after its mortgage subsidiary was charged with defrauding the federal government.

In the second quarter of 1997, Ryland cut its dividend from 15 cents to 4 cents a share to create a more efficient capital structure and lower its cost of borrowing.

In that same quarter, Ryland's profit fell 29 percent despite one of the nation's best housing markets since World War II.

The company's turnaround came about because Ryland has chosen good locations, put an emphasis on quality at a fair price and improved its home designs, Offutt said.

R. Chad Dreier, Ryland's chairman, president and chief executive, said, "The company's second-quarter sales results represent another indication of the success of our strategic initiatives focused on improved profitability and growing our operations."

Pub Date: 7/08/99

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