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Ryland Group Inc. Message Board

  • bluecheese4u bluecheese4u Oct 24, 2012 9:10 PM Flag

    Ryland Reports Results for the Third Quarter of 2012

    Ryland Reports Results for the Third Quarter of 2012

    WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)-- The Ryland Group, Inc. (NYSE: RYL) today announced results for its quarter ended September 30, 2012. Items of note included:
    • Net income from continuing operations totaled $10.4 million, or $0.21 per diluted share, for the quarter ended September 30, 2012. Net income from continuing operations included the impact of early retirement of debt costs of $9.1 million and valuation adjustments and write-offs of $3.5 million, and totaled $23.1 million, or $0.45 per diluted share, for the third quarter of 2012, excluding these items;
    • New orders increased 55.8 percent to 1,500 units for the third quarter of 2012 from 963 units for the third quarter of 2011. For the third quarter of 2012, new order dollars rose 61.3 percent to $393.4 million from $243.9 million for the same period in 2011;
    • Closings increased 37.4 percent to 1,312 units for the quarter ended September 30, 2012, compared to 955 units for the same period in the prior year;
    • Backlog rose 58.3 percent to 2,465 units at September 30, 2012, from 1,557 units at September 30, 2011;
    • Active communities increased 11.4 percent to 235 communities at September 30, 2012, from 211 communities at September 30, 2011;
    • Revenues totaled $358.7 million for the quarter ended September 30, 2012, representing a 44.3 percent increase from $248.6 million for the quarter ended September 30, 2011;
    • Average closing price increased 4.8 percent to $264,000 for the quarter ended September 30, 2012, from $252,000 for the same period in 2011;
    • Housing gross profit margin was 20.0 percent, excluding valuation adjustments and write-offs, for the third quarter of 2012, compared to 17.8 percent for the third quarter of 2011. Including valuation adjustments and write-offs, housing gross profit margin was 19.1 percent for the third quarter of 2012, compared to 17.7 percent for the same period in the prior year;
    • Debt issuance of $250.0 million of 5.4 percent senior notes due October 2022;
    • Redemption of $167.2 million of 6.9 percent senior notes due June 2013;
    • Selling, general and administrative expense (including corporate) totaled 13.8 percent of homebuilding revenues for the third quarter of 2012, compared to 18.4 percent for the third quarter of 2011;
    • Cash, cash equivalents and marketable securities totaled $799.7 million at September 30, 2012; and
    • Net debt-to-capital ratio was 41.2 percent at September 30, 2012, compared to 36.7 percent at December 31, 2011.

    RESULTS FOR THE THIRD QUARTER OF 2012

    For the quarter ended September 30, 2012, the Company reported net income from continuing operations of $10.4 million, or $0.21 per diluted share, compared to a net loss of $3.9 million, or $0.09 per diluted share, for the same period in 2011. Pretax charges related to early retirement of debt totaled $9.1 million and $477,000 during the quarters ended September 30, 2012 and 2011, respectively. Additionally, the Company had pretax charges related to valuation adjustments and write-offs that totaled $3.5 million and $1.3 million for the quarters ended September 30, 2012 and 2011, respectively.

    The homebuilding segments reported pretax earnings of $20.8 million for the third quarter of 2012, compared to pretax earnings of $910,000 for the same period in 2011. This increase was primarily due to a rise in closing volume; higher housing gross profit margin; a reduced selling, general and administrative expense ratio; and a decline in interest expense, partially offset by higher valuation adjustments and write-offs.

    Homebuilding revenues increased 44.7 percent to $349.2 million for the third quarter of 2012, compared to $241.3 million for the same period in 2011. This rise in homebuilding revenues was primarily attributable to a 37.4 percent increase in closings that totaled 1,312 units for the quarter ended September 30, 2012, compared to 955 units for the same period in the prior year. For the quarter ended September 30, 2012, the average closing price of a home increased 4.8 percent to $264,000 from $252,000 for the same period in 2011. Homebuilding revenues for the third quarter of 2012 included $2.2 million from land sales, which resulted in pretax earnings of $935,000, compared to homebuilding revenues for the third quarter of 2011 that included $931,000 from land sales, which resulted in pretax earnings of $342,000.

    New orders increased 55.8 percent to 1,500 units for the quarter ended September 30, 2012, compared to new orders of 963 units for the same period in 2011. The Company had an average monthly sales absorption rate of 2.3 homes per community for the quarter ended September 30, 2012, versus 1.6 homes per community for the quarter ended September 30, 2011, and an average cancellation rate of 19.9 percent for the quarter ended September 30, 2012, versus 20.1 percent for the same period in 2011. For the third quarter of 2012, new order dollars increased 61.3 percent to $393.4 million from $243.9 million for the third quarter of 2011. At September 30, 2012, backlog increased 58.3 percent to 2,465 units from 1,557 units at September 30, 2011. For the third quarter of 2012, the dollar value of the Company's backlog was $661.2 million, reflecting a 65.5 percent rise from the same period in the prior year.

    Housing gross profit margin was 20.0 percent, excluding valuation adjustments and write-offs, for the quarter ended September 30, 2012, compared to 17.8 percent for the quarter ended September 30, 2011. Including valuation adjustments and write-offs, housing gross profit margin was 19.1 percent for the third quarter of 2012, compared to 17.7 percent for the third quarter of 2011. This improvement in housing gross profit margin was primarily attributable to a decline in direct construction costs; higher leverage of direct overhead expense due to an increase in the number of homes delivered; and reduced sales incentives and price concessions, partially offset by higher valuation adjustments and write-offs. For the third quarter of 2012, sales incentives and price concessions totaled 9.1 percent, compared to 10.9 percent for the same period in 2011.

    Selling, general and administrative expense, including corporate, totaled 13.8 percent of homebuilding revenues for the third quarter of 2012, compared to 18.4 percent for the third quarter of 2011. This decrease in the selling, general and administrative expense ratio was primarily attributable to higher leverage resulting from increased revenues, cost-saving initiatives and a rise in the market value of retirement plan investments, partially offset by higher compensation expense primarily due to the impact of fluctuations in the Company's stock price.

    The homebuilding segments recorded $3.2 million of interest expense during the third quarter of 2012, compared to $4.0 million during the third quarter of 2011. This decrease in interest expense from the third quarter of 2011 was primarily due to the capitalization of a greater amount of interest incurred during the third quarter of 2012, which resulted from a higher level of inventory-under-development and to lower interest incurred on senior notes related to the repurchase of 6.9 percent senior notes in July 2012 and the issuance of 5.4 percent senior notes in September 2012.

    During the third quarter of 2012, the Company used $16.0 million of cash for operating activities, invested $200.7 million of cash primarily received from the proceeds of a debt issuance and provided $85.7 million, net, from new financing.

    For the quarter ended September 30, 2012, the financial services segment reported pretax earnings of $3.4 million, compared to $2.0 million for the same period in 2011. This improvement was primarily attributable to increases in locked loan pipeline and origination volumes and to higher title income, partially offset by a rise in indemnification, personnel and legal expenses and by interest related to the financial services credit facility that was entered into during December 2011.

    The Company's net income from discontinued operations totaled $238,000, or $0.01 per diluted share, for the quarter ended September 30, 2012, compared to a net loss of $17.4 million, or $0.39 per diluted share, for the same period in 2011.

    RESULTS FOR THE FIRST NINE MONTHS OF 2012

    For the nine months ended September 30, 2012, the Company reported net income from continuing operations of $13.4 million, or $0.30 per diluted share, compared to a net loss of $31.1 million, or $0.70 per diluted share, for the same period in 2011. Pretax charges related to early retirement of debt totaled $9.1 million and $1.3 million during the nine months ended September 30, 2012 and 2011, respectively. Additionally, the Company had pretax charges related to inventory and other valuation adjustments and write-offs that totaled $6.0 million and $16.2 million for the nine months ended September 30, 2012 and 2011, respectively.

    The homebuilding segments reported pretax earnings of $31.8 million for the first nine months of 2012, compared to a pretax loss of $23.8 million for the same period in 2011. This increase was primarily due to a rise in closing volume; higher housing gross profit margin, including lower inventory and other valuation adjustments and write-offs; a decline in interest expense; and a reduced selling, general and administrative expense ratio.

    Homebuilding revenues increased 38.8 percent to $843.3 million for the first nine months of 2012, compared to $607.7 million for the same period in 2011. This rise in homebuilding revenues was primarily attributable to a 33.6 percent increase in closings that totaled 3,242 units for the nine-month period ended September 30, 2012, compared to 2,427 units for the same period in the prior year. For the nine months ended September 30, 2012, the average closing price of a home increased 4.0 percent to $259,000 from $249,000 for the same period in 2011. Homebuilding revenues for the first nine months of 2012 included $3.9 million from land sales, which resulted in pretax earnings of $1.6 million, compared to homebuilding revenues for the first nine months of 2011 that included $2.3 million from land sales, which resulted in pretax earnings of $198,000.

    New orders increased 47.9 percent to 4,226 units for the nine months ended September 30, 2012, compared to new orders of 2,857 units for the same period in 2011. The Company had an average monthly sales absorption rate of 2.2 homes per community for the nine months ended September 30, 2012, versus 1.6 homes per community for the nine months ended September 30, 2011, and an average cancellation rate of 19.4 percent for the nine months ended September 30, 2012, versus 19.7 percent for the same period in 2011. For the first nine months of 2012, new order dollars increased 55.4 percent to $1.1 billion from $720.0 million for the first nine months of 2011.

    Housing gross profit margin was 19.2 percent, excluding inventory valuation adjustments and write-offs, for the nine months ended September 30, 2012, compared to 17.3 percent for the nine months ended September 30, 2011. Including inventory valuation adjustments and write-offs, housing gross profit margin was 18.6 percent for the first nine months of 2012, compared to 16.1 percent for the first nine months of 2011. This improvement in housing gross profit margin was primarily attributable to a decline in land and direct construction costs; lower inventory and other valuation adjustments and write-offs; higher leverage of direct overhead expense due to an increase in the number of homes delivered; and reduced sales incentives and price concessions. For the first nine months of 2012, sales incentives and price concessions totaled 10.0 percent, compared to 11.3 percent for the same period in 2011.

    Selling, general and administrative expense, including corporate, totaled 15.7 percent of homebuilding revenues for the first nine months of 2012, compared to 19.1 percent for the first nine months of 2011. This decrease in the selling, general and administrative expense ratio was primarily attributable to higher leverage resulting from increased revenues, cost-saving initiatives and a rise in the market value of retirement plan investments, partially offset by higher compensation expense primarily due to the impact of fluctuations in the Company's stock price. The homebuilding segments recorded $11.0 million of interest expense during the first nine months of 2012, compared to $14.5 million during the first nine months of 2011. This decrease in interest expense from the first nine months of 2011 was primarily due to the capitalization of a greater amount of interest incurred during the first nine months of 2012, which resulted from a higher level of inventory-under-development and to lower interest incurred on senior notes related to the repurchase of 6.9 percent senior notes in July 2012 and the issuance of 5.4 percent senior notes in September 2012.

    For the nine-month period ended September 30, 2012, the financial services segment reported pretax earnings of $7.0 million, compared to $5.3 million for the same period in 2011. This improvement was primarily attributable to increases in locked loan pipeline and origination volumes and to higher title income, partially offset by a rise in legal, personnel and indemnification expenses and by interest related to the financial services credit facility that was entered into during December 2011.

    The Company's net loss from discontinued operations totaled $1.6 million, or $0.04 per diluted share, for the nine-month period ended September 30, 2012, compared to a net loss of $20.4 million, or $0.46 per diluted share, for the same period in 2011.

    DEBT OFFERING AND REDEMPTION

    During the third quarter of 2012, the Company paid $177.2 million to redeem and repurchase all of its 6.9 percent senior notes, which were due June 2013 and totaled $167.2 million, resulting in a loss of $9.1 million. In addition, the Company issued $250.0 million of 5.4 percent senior notes due October 2022. The Company will use the $246.6 million in net proceeds that it received from this offering for general corporate purposes, which may include the purchase of marketable securities.

    shareholder

 
RYL
38.81+0.44(+1.15%)Nov 21 4:02 PMEST

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