The Ryland Group Inc. reported improved results for 1996 and its fourth quarter yesterday, signaling an end to the gloomy financial cloud that has loomed over the Columbia-based homebuilder for much of the decade.
For the year ended Dec. 31, Ryland posted consolidated net income of $15.8 million, reversing a $2.6 million loss from 1995. In the final quarter of last year, Ryland generated net income of $5 million as compared with a net loss of $23.8 million a year earlier, the result of an accounting change.
The fourth-quarter results mark the fourth consecutive three-month period that Ryland has reported improved earnings.
The nation's third largest homebuilder attributed the earnings gain for the year -- 87 cents per share compared with 31 cents per share -- to continued improvements in its homebuilding operation, which Ryland has been working to boost for the past three years.
"We are pleased with the company's progress in executing its strategies for better land acquisition, improved products and reduced costs," said R. Chad Dreier, Ryland's chairman and chief executive. "In 1997, we are continuing to focus on establishing a strong foundation for long-term growth and further profitability."
As in its recent past, Ryland continued to push gross profit margins upward in 1996, despite a slight dip in the final quarter. At the same time, Ryland trimmed expenses as a percentage of revenues to 9.9 percent as of Dec. 31, down from 10.4 percent. In all, Ryland clipped expenses by 12.3 percent in the quarter and by 4.5 percent for the year, to $427.7 million and $1.5 billion, respectively.
The expense decrease helped offset largely flat revenues for both the quarter and the year, to $436 million and $1.58 billion.
The company also generated increases in the average closing price of its homes, raising prices 6 percent for the year to $174,000, and nearly 5 percent in the quarter, to $177,000. The average price of its outstanding contracts also is up 6.3 percent, to $185,000.
"Their homebuilding margins continue to come back, which is the key to their profitability, and it looks like they're turning the corner," said Matthew V. Roswell, a Legg Mason Wood Walker Inc. industry analyst.
"The problem Ryland keeps running into is that demand is not wonderful, and there are a lot of people building homes and cutting prices."
Its number of closings for the year fell 6.2 percent, to 8,388, and in the fourth quarter dropped 7 percent to 2,298 units. New orders for the year declined to 7,838, a drop of 14.2 percent. For the quarter, orders were off 12.3 percent.
Ryland's backlog of sales is down 20 percent from a year ago, to 2,195 homes, and the total dollar volume of those sales is expected to fall 15 percent to $405.3 million.
Pub Date: 2/05/97