Ryland reports Q1 net income of US$23.5M, up from US$22.1M a year earlier, on revenues up 30.7% to US$489.7M; closings up 12.5% to 1,470 units, new orders up 6.6% to 2,186 units
Allison Oesterle
WESTLAKE VILLAGE, California
,
April 24, 2014
(press release)
–
The Ryland Group, Inc. (NYSE: RYL) today announced results for its quarter ended March 31, 2014. Items of note included:
RESULTS FOR THE FIRST QUARTER OF 2014
For the quarter ended March 31, 2014, the Company reported net income from continuing operations of $23.5 million, or $0.42 per diluted share, compared to $22.0 million, or $0.43 per diluted share, for the same period in 2013.
The homebuilding segments reported pretax earnings of $46.2 million for the first quarter of 2014, compared to $23.5 million for the same period in 2013. 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.
Homebuilding revenues increased 32.5 percent to $481.5 million for the first quarter of 2014 from $363.5 million for the same period in 2013. This rise in homebuilding revenues was primarily attributable to a 12.5 percent increase in closings that totaled 1,470 units for the quarter ended March 31, 2014, compared to 1,307 units for the same period in the prior year, as well as to an 18.1 percent rise in average closing price, which was $327,000 for the first quarter of 2014, versus $277,000 for the same period in 2013. Homebuilding revenues for the first quarter of 2014 included $844,000 from land sales, which resulted in pretax earnings of $157,000, compared to homebuilding revenues for the first quarter of 2013 that included $2.1 million from land sales, which resulted in pretax earnings of $946,000.
New orders increased 6.6 percent to 2,186 units for the quarter ended March 31, 2014, from 2,051 units for the same period in 2013. The Company had an average monthly sales absorption rate of 2.5 homes per community for the quarter ended March 31, 2014, versus 2.8 homes per community for the quarter ended March 31, 2013, and an average cancellation rate of 15.3 percent for the quarter ended March 31, 2014, versus 15.4 percent for the same period in 2013. For the first quarter of 2014, new order dollars increased 20.5 percent to $729.4 million from $605.1 million for the first quarter of 2013. At March 31, 2014, backlog increased 6.6 percent to 3,342 units from 3,135 units at March 31, 2013. At the end of the first quarter of 2014, the dollar value of the Company's backlog was $1.1 billion, reflecting a 21.7 percent rise from the end of the first quarter of the prior year.
Housing gross profit margin was 21.1 percent for the quarter ended March 31, 2014, compared to 19.4 percent for the quarter ended March 31, 2013. This improvement in housing gross profit margin was primarily attributable to a relative decline in direct construction costs. For the first quarter of 2014, sales incentives and price concessions totaled 6.4 percent of housing revenues, compared to 7.9 percent for the same period in 2013.
Selling, general and administrative expense totaled 13.0 percent of homebuilding revenues for the first quarter of 2014, compared to 13.9 percent for the first quarter of 2013. This decrease in the selling, general and administrative expense ratio was primarily attributable to higher leverage that resulted from increased revenues.
The homebuilding segments recorded no interest expense during the first quarter of 2014, compared to $3.8 million during the first quarter of 2013. This decrease in interest expense from the first quarter of 2013 was primarily due to the capitalization of a greater amount of interest incurred during the first quarter of 2014, which resulted from a higher level of inventory under development.
For the quarter ended March 31, 2014, the financial services segment reported a pretax loss of $1.4 million, compared to pretax earnings of $4.3 million for the same period in 2013. This decline was primarily attributable to a decrease in secondary net gain percentage; higher expense related to estimates of ultimate insurance loss liability; increased personnel costs; and a decrease in locked loan pipeline, which was due to the reversal of the accelerated timing of loan locks during 2013, partially offset by a rise in origination volume and title income.
Headquartered in Southern California, Ryland is one of the nation's largest homebuilders and a leading mortgage-finance company. Since its founding in 1967, Ryland has built more than 310,000 homes and financed more than 255,000 mortgages. The Company currently operates in 17 states across the country and is listed on the New York Stock Exchange under the symbol "RYL." For more information, please visit www.ryland.com.
Note: Certain statements in this press release may be regarded as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and may qualify for the safe harbor provided for in Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent the Company's expectations and beliefs concerning future events, and no assurance can be given that the future results described in this press release will be achieved. These forward-looking statements can generally be identified by the use of statements that include words such as "anticipate," "believe," "could," "estimate," "expect," "foresee," "goal," "intend," "likely," "may," "plan," "project," "should," "target," "will" or other similar words or phrases. All forward-looking statements contained herein are based upon information available to the Company on the date of this press release. Except as may be required under applicable law, the Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company's control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. The factors and assumptions upon which any forward-looking statements herein are based are subject to risks and uncertainties which include, among others:
THE RYLAND GROUP, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(in thousands, except share data)
Three months ended March 31,
2014
2013
REVENUES
Homebuilding
$
481,485
$
363,501
Financial services
8,198
11,179
TOTAL REVENUES
489,683
374,680
EXPENSES
Cost of sales
379,999
292,336
Selling, general and administrative
62,794
50,517
Financial services
9,609
6,858
Interest
-
3,762
TOTAL EXPENSES
452,402
353,473
OTHER INCOME
Gain from marketable securities, net
404
705
Other income
485
291
TOTAL OTHER INCOME
889
996
Income from continuing operations before taxes
38,170
22,203
Tax expense
14,643
199
NET INCOME FROM CONTINUING OPERATIONS
23,527
22,004
Income from discontinued operations, net of taxes
-
113
NET INCOME
$
23,527
$
22,117
NET INCOME PER COMMON SHARE
Basic
$
0.50
$
0.48
Diluted
$
0.42
$
0.43
AVERAGE COMMON SHARES
OUTSTANDING
Basic
46,579,280
45,434,996
Diluted
58,126,928
53,362,097
THE RYLAND GROUP, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, 2014
December 31, 2013
(Unaudited)
ASSETS
Cash, cash equivalents and marketable securities
Cash and cash equivalents
$
259,153
$
227,986
Restricted cash
85,253
90,034
Marketable securities, available-for-sale
264,689
313,155
Total cash, cash equivalents and marketable securities
609,095
631,175
Housing inventories
Homes under construction
741,304
643,357
Land under development and improved lots
973,720
973,250
Consolidated inventory not owned
34,469
33,176
Total housing inventories
1,749,493
1,649,783
Property, plant and equipment
26,811
25,437
Mortgage loans held-for-sale
69,037
139,576
Net deferred taxes
174,071
185,904
Other
146,223
148,437
Assets of discontinued operations
-
30
TOTAL ASSETS
2,774,730
2,780,342
LIABILITIES
Accounts payable
157,257
172,841
Accrued and other liabilities
191,097
212,680
Financial services credit facility
59,119
73,084
Debt
1,397,553
1,397,308
Liabilities of discontinued operations
-
504
TOTAL LIABILITIES
1,805,026
1,856,417
EQUITY
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value:
Authorized—10,000 shares Series A Junior
Participating Preferred, none outstanding
-
-
Common stock, $1.00 par value:
Authorized—199,990,000 shares
Issued—46,866,216 shares at March 31, 2014
(46,234,809 shares at December 31, 2013)
46,866
46,235
Retained earnings
906,482
862,968
Accumulated other comprehensive loss
(964
)
(1,157
)
TOTAL STOCKHOLDERS' EQUITY
FOR THE RYLAND GROUP, INC.
952,384
908,046
NONCONTROLLING INTEREST
17,320
15,879
TOTAL EQUITY
969,704
923,925
TOTAL LIABILITIES AND EQUITY
$
2,774,730
$
2,780,342
THE RYLAND GROUP, INC. and Subsidiaries
SEGMENT INFORMATION (Unaudited)
Three months ended March 31,
2014
2013
EARNINGS (LOSS) BEFORE TAXES (in thousands)
Homebuilding
North
$
10,794
$
3,339
Southeast
14,857
7,205
Texas
7,847
5,023
West
12,728
7,906
Financial services
(1,411
)
4,321
Corporate and unallocated
(6,645
)
(5,591
)
Discontinued operations
-
113
Total
$
38,170
$
22,316
NEW ORDERS
Units
North
610
640
Southeast
635
704
Texas
507
389
West
434
318
Discontinued operations
-
1
Total
2,186
2,052
Dollars (in millions)
North
$
190
$
192
Southeast
192
177
Texas
165
117
West
182
119
Discontinued operations
-
-
Total
$
729
$
605
CLOSINGS
Units
North
424
328
Southeast
446
439
Texas
351
271
West
249
269
Discontinued operations
-
8
Total
1,470
1,315
Average closing price (in thousands)
North
$
314
$
291
Southeast
284
239
Texas
316
284
West
442
313
Discontinued operations
-
312
Total
$
327
$
277
OUTSTANDING CONTRACTS
March 31,
Units
2014
2013
North
1,018
931
Southeast
991
1,146
Texas
770
595
West
563
463
Discontinued operations
-
-
Total
3,342
3,135
Dollars (in millions)
North
$
324
$
285
Southeast
298
284
Texas
252
175
West
230
163
Discontinued operations
-
-
Total
$
1,104
$
907
Average price (in thousands)
North
$
318
$
306
Southeast
301
247
Texas
328
294
West
407
353
Discontinued operations
-
-
Total
$
330
$
289
THE RYLAND GROUP, INC. and Subsidiaries
FINANCIAL SERVICES SUPPLEMENTAL INFORMATION (Unaudited)
(in thousands, except origination data)
Three months ended March 31,
RESULTS OF OPERATIONS
2014
2013
REVENUES
Income from origination and sale of mortgage loans, net
$
5,640
$
8,986
Title, escrow and insurance
1,897
1,762
Interest and other
661
431
TOTAL REVENUES
8,198
11,179
EXPENSES
9,609
6,858
PRETAX (LOSS) EARNINGS
$
(1,411
)
$
4,321
OPERATIONAL DATA
Retail operations:
Originations (units)
704
714
Ryland Homes originations as a
percentage of total originations
100.0
%
100.0
%
Ryland Homes origination capture rate
60.2
%
62.4
%
OTHER CONSOLIDATED SUPPLEMENTAL INFORMATION (Unaudited)
(in thousands)
Three months ended March 31,
2014
2013
Interest incurred
$
17,383
$
16,805
Interest capitalized during the period
17,111
12,894
Amortization of capitalized interest included in cost of sales
10,470
11,114
Depreciation and amortization
4,718
4,040
The Ryland Group, Inc.
Drew Mackintosh, VP
Investor Relations and Corporate Communications
(805) 367-3722
Source: The Ryland Group, Inc.
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