Ryland doubles its net income

Second-quarter home construction earnings set record

July 23, 1999|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Driven by the highest second-quarter home construction earnings in the company's history, Ryland Group Inc. said yesterday that its net earnings doubled to $17.6 million compared with the year-ago quarter.

The Columbia-based company's second-quarter profit rose to $1.12 per diluted share from 57 cents in the comparable period a year ago.

Ryland surpassed the expectations of analysts, who estimated the company would earn 93 cents a share in the second quarter, according to a Wall Street consensus compiled by Zacks Investment Research.

Revenue in the quarter, which ended June 30, increased 18 percent, to $502.4 million.

Ryland, which suffered from sluggish sales in 1997, also reported record new orders, closings and backlog.

"Certainly, we have not been hurt by the good housing market, but the vast majority of our improvements have been the result of our internal strategies," said Anne Madison, a Ryland spokeswoman.

"We've improved our home designs, our land positions and the quality of our people," she said. "But the core of the strategy is increasing our dominance in our existing markets."

Ryland is one of the nation's largest home builders and a leading mortgage finance company.

The company's gross profit margin increased to 16.6 percent from 15.3 percent in the corresponding period last year.

"The real message is, Ryland's sales level right now is probably the best indication of the strength of this company," said R. Bentley Offutt, president of Offutt Securities, a Hunt Valley investment firm. "They have achieved 19 percent sales growth with their existing markets. That's an awfully good performance," he said.

Closings for the quarter totaled 2,558, a 16 percent increase.

Nationwide, new orders increased 19 percent, to 2,941, the highest second-quarter sales in the Ryland's history. The backlog of homes sold but not closed on rose 19 percent, to 4,770.

For the six months that ended June 30, net earnings increased 105 percent to $27.7 million, and revenue climbed 15.7 percent to $906.4 million.

Ryland shares lost 87.5 cents yesterday on the New York Stock Exchange to close at $28.

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