The Ryland Group Inc. (RYL) filed Quarterly Report for the period ended 2009-09-30.
The Ryland Group Inc. is a leading national homebuilder and mortgage-related financial services firm. The Company's homebuilding segment specializes in the sale and construction of single-family attached and detached housing. The financial services segment complements the Company's homebuilding activities by providing various mortgage-related products and services for retail customers including loan origination loan servicing title and escrow services. The financial services segment also conducts investment activities. The Ryland Group Inc. has a market cap of $851.2 million; its shares were traded at around $19.43 with and P/S ratio of 0.4. The dividend yield of The Ryland Group Inc. stocks is 0.7%.
Highlight of Business Operations:
For the three months ended September 30, 2009, the Company reported a consolidated net loss of $52.5 million, or $1.20 per diluted share, compared to $65.7 million, or $1.54 per diluted share, for the same period in 2008. The decrease in losses for 2009, compared to 2008, was primarily due to lower inventory and other valuation adjustments, partially offset by declines in closings and home prices.
The Company’s revenues were $327.8 million for the third quarter of 2009, down 39.7 percent from $543.8 million for the third quarter of 2008. This decrease was primarily attributable to a decline in closings, average closing price and mortgage originations. Revenues for the homebuilding and financial services segments were $315.8 million and $12.1 million, respectively, for the third quarter of 2009, compared to $526.2 million and $17.6 million, respectively, for the same period in 2008.
Consolidated inventories owned by the Company, which include homes under construction, land under development and improved lots, and inventory held-for-sale declined 21.1 percent to $852.8 million at September 30, 2009, from $1.1 billion at December 31, 2008. Homes under construction decreased by 1.8 percent to $456.5 million at September 30, 2009, compared to $464.8 million at December 31, 2008. Land under development and improved lots declined by 40.1 percent to $327.6 million at September 30, 2009, compared to $547.3 million at December 31, 2008. Inventory held-for-sale decreased 0.4 percent and totaled $68.7 million at September 30, 2009, compared to $69.0 million at December 31, 2008.
At September 30, 2009, there were 62 of these communities held-for-sale, of which 35 communities have less than 20 lots remaining. Due to continued pressure on home prices symptomatic of excess home inventories and increasingly competitive home pricing in many markets, the Company recorded inventory impairment charges of $38.4 million and $60.4 million during the three months ended September 30, 2009 and 2008, respectively, in order to reduce the carrying value of the impaired communities to their estimated fair value. Approximately 87 percent of these impairment charges were recorded to residential land and lots and land held for development, while approximately 13 percent of these charges were recorded to residential construction in progress and finished homes in inventory. At September 30, 2009, the fair value of the Company’s inventory subject to valuation adjustments of $38.4 million during the quarter, net of impairments, was $30.0 million. Inventory and other impairment charges and write-offs of deposits and acquisition costs reduced total housing gross profit margins by 11.0 percent in the third quarters of 2009 and 2008. Should market conditions continue to deteriorate or costs increase, it is possible that the Company’s estimates of undiscounted cash flows from its communities could decline, resulting in additional future inventory impairment charges.
Homebuilding revenues for the third quarter of 2009 included $545,000 from land sales, compared to revenues of $13.9 million for the third quarter of 2008, which contributed net pretax losses of $42,000 and $7.2 million in the third quarters of 2009 and 2008, respectively. The gross profit margin from land sales was negative 7.7 percent for the three months ended September 30, 2009, compared to negative 52.0 percent for the same period in the prior year. Fluctuations in revenues and gross profit percentages from land sales were a result of local market conditions, land portfolios and income tax carryback rules. The Company generally purchases land and lots with
Homebuilding revenues for the first nine months of 2009 included $958,000 from land sales, compared to revenues of $25.4 million for the same period in 2008, which contributed net pretax losses of $247,000 and $6.2 million in the first nine months of 2009 and 2008, respectively. The gross profit margin from land sales was negative 25.8 percent for the nine months ended September 30, 2009, compared to negative 24.3 percent for the same period in the prior year.
RYL is in the portfolios of Bill Miller of Legg Mason Value Trust, Arnold Schneider of Schneider Capital Management, Charles Brandes of Brandes Investment.
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