The Ryland Group, Inc. (NYSE: RYL) today announced results for its quarter ended March 31, 2015. Items of note included:

  • Net income increased 12.5 percent to $26.5 million, or $0.47 per diluted share, for the first quarter of 2015 from $23.5 million, or $0.42 per diluted share, for the first quarter of 2014;
  • Pretax earnings rose 8.3 percent to $41.3 million for the quarter ended March 31, 2015, compared to $38.2 million for the quarter ended March 31, 2014;
  • Revenues totaled $517.4 million for the quarter ended March 31, 2015, representing a 5.7 percent increase from $489.7 million for the quarter ended March 31, 2014;
  • New order dollars rose 11.5 percent to $813.3 million for the first quarter of 2015, compared to the same period in 2014, and new orders increased 9.3 percent to 2,389 units for the first quarter of 2015, compared to the first quarter of 2014;
  • The dollar value of the Company’s backlog was $1.2 billion at March 31, 2015, an 11.5 percent increase from March 31, 2014. Backlog rose 6.0 percent to 3,543 units at March 31, 2015, from March 31, 2014;
  • Average closing price increased 4.9 percent to $343,000 for the quarter ended March 31, 2015, from $327,000 for the same period in 2014;
  • Selling, general and administrative expense totaled 12.7 percent of homebuilding revenues for the first quarter of 2015, compared to 13.0 percent for the first quarter of 2014;
  • Active communities increased 14.5 percent to 340 communities at March 31, 2015, from 297 communities at March 31, 2014;
  • After settling its 5.4 percent senior notes using existing cash of $126.5 million during the quarter, the Company’s cash, cash equivalents and marketable securities totaled $377.4 million at March 31, 2015, compared to $574.8 million at December 31, 2014; and
  • Net debt-to-capital ratio was 44.9 percent at March 31, 2015, compared to 43.3 percent at December 31, 2014.

RESULTS FOR THE FIRST QUARTER OF 2015

For the quarter ended March 31, 2015, the Company reported net income of $26.5 million, or $0.47 per diluted share, compared to $23.5 million, or $0.42 per diluted share, for the same period in 2014.

The homebuilding segments reported pretax earnings of $44.1 million for the first quarter of 2015, compared to $46.2 million for the same period in 2014. This decrease in pretax earnings was primarily due to lower housing gross profit margin, partially offset by an increase in homebuilding revenues and a reduction in selling, general and administrative expense as a percentage of homebuilding revenues.

For the first quarter of 2015, homebuilding revenues increased 4.9 percent to $505.0 million from $481.5 million for the same period in 2014. The improvement in homebuilding revenues was attributable to a rise in average closing price, which was $343,000 for the first quarter of 2015, versus $327,000 for the same period in 2014. Closings were flat at 1,463 units for the quarter ended March 31, 2015, compared to 1,470 units for the same period in the prior year. Homebuilding revenues for the first quarter of 2015 included $3.4 million from land sales, which resulted in pretax earnings of $717,000, compared to homebuilding revenues for the first quarter of 2014 that included $844,000 from land sales, which resulted in pretax earnings of $157,000.

New orders increased 9.3 percent to 2,389 units for the quarter ended March 31, 2015, from 2,186 units for the same period in 2014. The Company had an average monthly sales absorption rate of 2.3 homes per community for the quarter ended March 31, 2015, versus 2.5 homes per community for the quarter ended March 31, 2014, and an average cancellation rate of 15.1 percent for the quarter ended March 31, 2015, versus 15.3 percent for the same period in 2014. For the first quarter of 2015, new order dollars rose 11.5 percent to $813.3 million from $729.4 million for the first quarter of 2014. At March 31, 2015, backlog increased 6.0 percent to 3,543 units from 3,342 units at March 31, 2014. The dollar value of the Company’s backlog was $1.2 billion at March 31, 2015, reflecting an 11.5 percent rise from $1.1 billion at March 31, 2014.

Housing gross profit margin was 19.7 percent for the quarter ended March 31, 2015, compared to 21.1 percent for the quarter ended March 31, 2014. This decline in housing gross profit margin was primarily driven by the relative mix of closings within the Company’s markets during the first quarter of 2015, compared to the same period in the prior year. Sales incentives and price concessions totaled 7.6 percent of housing revenues for the first quarter of 2015, compared to 6.4 percent for the same period in 2014.

Selling, general and administrative expense totaled 12.7 percent of homebuilding revenues for the first quarter of 2015, compared to 13.0 percent for the first quarter of 2014. This decrease was primarily attributable to improved leverage that resulted from increased revenues.

For the quarter ended March 31, 2015, the financial services segment reported pretax earnings of $5.1 million, compared to a pretax loss of $1.4 million for the quarter ended March 31, 2014. This increase in pretax earnings was primarily attributable to higher locked loan and origination volumes during the first quarter of 2015, compared to the same period in 2014, as well as to a reduction in financial services expense that related to a change in the estimate of ultimate insurance loss liability in the prior year.

DEBT MATURITY IN JANUARY 2015

The Company used existing cash of $126.5 million to settle its 5.4 percent senior notes that matured in January 2015.

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 315,000 homes and financed more than 260,000 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:

  • economic changes nationally or in the Company’s local markets, including volatility and increases in interest rates, the impact of, and changes in, governmental stimulus, tax and deficit reduction programs, inflation, changes in consumer demand and confidence levels and the state of the market for homes in general;
  • changes and developments in the mortgage lending market, including revisions to underwriting standards for borrowers and lender requirements for originating and holding mortgages, changes in government support of and participation in such market, and delays or changes in terms and conditions for the sale of mortgages originated by the Company;
  • the availability and cost of land and the future value of land held or under development;
  • increased land development costs on projects under development;
  • shortages of skilled labor or raw materials used in the production of homes;
  • increased prices for labor, land and materials used in the production of homes;
  • increased competition;
  • failure to anticipate or react to changing consumer preferences in home design;
  • increased costs and delays in land development or home construction resulting from adverse weather conditions or other factors;
  • potential delays or increased costs in obtaining necessary permits as a result of changes to laws, regulations or governmental policies (including those that affect zoning, density, building standards, the environment and the residential mortgage industry);
  • delays in obtaining approvals from applicable regulatory agencies and others in connection with the Company’s communities and land activities;
  • changes in the Company’s effective tax rate and assumptions and valuations related to its tax accounts;
  • the risk factors set forth in the Company’s most recent Annual Report on Form 10-K; and
  • other factors over which the Company has little or no control.
 
THE RYLAND GROUP, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(in thousands, except share data)
 
      Three months ended March 31,
2015       2014
REVENUES      
Homebuilding $ 504,999 $ 481,485
Financial services   12,400         8,198
TOTAL REVENUES   517,399         489,683
 
EXPENSES
Cost of sales 405,291 379,999
Selling, general and administrative 64,170 62,794
Financial services   7,334         9,609
TOTAL EXPENSES   476,795         452,402
 
OTHER INCOME
Gain from marketable securities, net 145 404
Other income   592         485
TOTAL OTHER INCOME   737         889
Income before taxes 41,341 38,170
Tax expense   14,884         14,643
NET INCOME $ 26,457       $ 23,527
 
NET INCOME PER COMMON SHARE
Basic $ 0.57 $ 0.50
Diluted $ 0.47 $ 0.42
 

AVERAGE COMMON SHARES OUTSTANDING

Basic 46,465,586 46,579,280
Diluted 57,981,137 58,126,928
 
 
THE RYLAND GROUP, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
      March 31,       December 31,
2015       2014
(Unaudited)
 
ASSETS
Cash, cash equivalents and marketable securities
Cash and cash equivalents $ 330,438 $ 521,195
Restricted cash 29,059 35,720
Marketable securities, available-for-sale   17,933           17,845  
Total cash, cash equivalents and marketable securities 377,430 574,760
Housing inventories
Homes under construction 824,516 764,853
Land under development and improved lots 1,274,384 1,250,159
Consolidated inventory not owned   30,738           30,811  
Total housing inventories 2,129,638 2,045,823
Property, plant and equipment 34,218 30,566
Mortgage loans held-for-sale 86,699 153,366
Net deferred taxes 88,278 91,766
Other   161,868           155,808  
TOTAL ASSETS   2,878,131           3,052,089  
 
LIABILITIES
Accounts payable 161,469 205,397
Accrued and other liabilities 202,805 215,221
Financial services credit facilities 80,702 129,389
Debt   1,294,259           1,403,079  
TOTAL LIABILITIES   1,739,235           1,953,086  
 
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—46,788,655 shares at March 31, 2015
(46,296,045 shares at December 31, 2014) 46,789 46,296
Retained earnings 1,078,630 1,039,076
Accumulated other comprehensive loss   (750 )         (799 )

TOTAL STOCKHOLDERS' EQUITY FOR THE RYLAND GROUP, INC.

1,124,669 1,084,573
NONCONTROLLING INTEREST   14,227           14,430  
TOTAL EQUITY   1,138,896           1,099,003  
TOTAL LIABILITIES AND EQUITY $ 2,878,131         $ 3,052,089  
 
 
THE RYLAND GROUP, INC. and Subsidiaries
SEGMENT INFORMATION (Unaudited)
 
      Three months ended
March 31,
2015       2014
EARNINGS (LOSS) BEFORE TAXES (in thousands)      
Homebuilding
North $ 11,539 $ 10,794
Southeast 12,643 14,857
Texas 6,729 7,847
West 13,187 12,728
Financial services 5,122 (1,411 )
Corporate and unallocated   (7,879 )         (6,645 )
Total       $ 41,341         $ 38,170  
NEW ORDERS
Units
North 707 610
Southeast 690 635
Texas 475 507
West   517           434  
Total   2,389           2,186  
Dollars (in millions)
North $ 226 $ 190
Southeast 215 192
Texas 161 165
West   211           182  
Total       $ 813         $ 729  
CLOSINGS
Units
North 422 424
Southeast 427 446
Texas 334 351
West   280           249  

Total

  1,463           1,470  
Average closing price (in thousands)
North $ 321 $ 314
Southeast 320 284
Texas 337 316
West   419           442  
Total       $ 343         $ 327  
 
OUTSTANDING CONTRACTS March 31,

Units

2015       2014
North 1,082 1,018
Southeast 1,046 991
Texas 693 770
West   722           563  
Total   3,543           3,342  
Dollars (in millions)
North $ 347 $ 324
Southeast 344 298
Texas 242 252
West   298           230  
Total $ 1,231         $ 1,104  
Average price (in thousands)
North $ 321 $ 318
Southeast 329 301
Texas 348 328
West   413           407  
Total       $ 347         $ 330  
 
 
THE RYLAND GROUP, INC. and Subsidiaries
SUPPLEMENTAL INFORMATION (Unaudited)
 
 
FINANCIAL SERVICES SUPPLEMENTAL INFORMATION            
(in thousands, except origination data) Three months ended March 31,
2015       2014
RESULTS OF OPERATIONS
REVENUES
Income from origination and sale of mortgage loans, net $ 9,774 $ 5,640
Title, escrow and insurance 2,115 1,897
Interest and other   511           661  
TOTAL REVENUES 12,400 8,198
EXPENSES 7,334 9,609
OTHER INCOME   56           -  
PRETAX EARNINGS (LOSS) $ 5,122         $ (1,411 )
 
OPERATIONAL DATA
 
Retail operations:
Originations (units) 814 704

Ryland Homes originations as a percentage of total originations

99.6 % 100.0 %
Ryland Homes origination capture rate 62.6 % 60.2 %
                 
OTHER CONSOLIDATED SUPPLEMENTAL INFORMATION
(in thousands) Three months ended March 31,
2015       2014
Interest incurred $ 16,493 $ 17,383
Interest capitalized during the period 16,063 17,111
Amortization of capitalized interest included in cost of sales 9,793 10,470
Depreciation and amortization         4,802           4,718