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The Ryland Group Inc. Reports Operating Results (10-Q)

November 05, 2012 | About:
10qk

10qk

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The Ryland Group Inc. (RYL) filed Quarterly Report for the period ended 2012-09-30.

Ryland Group, Inc. has a market cap of $1.51 billion; its shares were traded at around $34.78 with a P/E ratio of 102.3 and P/S ratio of 1.7. The dividend yield of Ryland Group, Inc. stocks is 0.4%.

Highlight of Business Operations:

The Companys net income from continuing operations totaled $10.4 million, or $0.21 per diluted share, for the three months ended September 30, 2012, compared to a net loss from continuing operations of $3.9 million, or $0.09 per diluted share, for the same period in 2011. This increase for the third quarter of 2012, compared to the same period in 2011, 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. Pretax charges related to valuation adjustments and write-offs totaled $3.5 million and $1.3 million for the quarters ended September 30, 2012 and 2011, respectively. The Company continued to raise gross margins through ongoing investments in new, more profitable communities; selectively increasing prices; completing less profitable communities; and lowering expense ratios.

revenues increased 44.3 percent to $358.7 million for the three months ended September 30, 2012, from $248.6 million for the same period in 2011. This increase was primarily attributable to a 37.4 percent rise in closings and to a 4.8 percent increase in average closing price. The increase in average closing price was due to a slightly more stable price environment, as well as to a change in the product and geographic mix of homes delivered during the third quarter of 2012, versus the same period in 2011. Revenues for the homebuilding and financial services segments were $349.2 million and $9.5 million, respectively, for the third quarter of 2012, compared to $241.3 million and $7.2 million, respectively, for the third quarter of 2011.

Homebuilding revenues increased 44.7 percent to $349.2 million for the third quarter of 2012 from $241.3 million for the same period in 2011 primarily due to a 37.4 percent rise in closings and to a 4.8 percent increase in average closing price. 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. Gross profit margin from land sales was 41.9 percent for the three months ended September 30, 2012, compared to 36.7 percent for the same period in 2011. Fluctuations in revenues and gross profit percentages from land sales resulted from local market conditions and changing land portfolios. Although the Company generally purchases land and lots with the intent to build homes on those lots and sell them, it will occasionally sell a portion of its land to other homebuilders or third parties.

Homebuilding revenues increased 38.8 percent to $843.3 million for the first nine months of 2012 from $607.7 million for the same period in 2011 primarily due to a 33.6 percent rise in closings and to a 4.0 percent increase in average closing price. 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. Gross profit margin from land sales was 40.2 percent for the nine months ended September 30, 2012, compared to 8.6 percent for the same period in 2011. Fluctuations in revenues and gross profit percentages from land sales resulted from local market conditions and changing land portfolios.

For the three months 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. Revenues for the financial services segment increased 31.4 percent to $9.5 million for the three months ended September 30, 2012, compared to $7.2 million for the same period in the prior year. This improvement was primarily attributable to increases in locked loan pipeline and origination volumes and to higher title income. For the three months ended September 30, 2012, financial services expense totaled $6.1 million, versus $5.2 million for the same period in 2011. This increase was primarily attributable to higher indemnification, personnel and legal expenses and to interest related to the financial services credit facility that was entered into during December 2011. For the three months ended September 30, 2012 and 2011, the capture rates of mortgages originated for customers of the Companys homebuilding operations were 64.4 percent and 72.5 percent, respectively.

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