Golden State-Based Builder Sees Net Earnings Fall
The Ryland Group here saw its consolidated net earnings decreased 25.5% in the third quarter.
CALABASAS, CA -- The Ryland Group here saw its consolidated net earnings decreased 25.5% in the third quarter ended Sept. 30 to $87.9 million, compared to $118 million for the same period in 2005.
The homebuilding segments reported pretax earnings of $141.3 million during the third quarter of 2006, representing a 30% decline, compared to $201.7 million in pretax earnings reported for the same period in 2005. The decrease from the prior year was primarily due to a decline in closings and margins.
Homebuilding revenue decreased $123.8 million, or 10.1%, to $1.1 billion for the third quarter of 2006, compared to $1.2 billion for the same period in 2005. This was mainly attributable to a decrease in closings that was partially offset by a 4.7% increase in the average closing price of a home, which rose to $291,000 for the quarter endedSept. 30 from $278,000 for the quarter ended Sept. 30, 2005.
Homebuilding revenue for the third quarter of 2006 included $37.4 million from land sales, compared to $25.9 million from land sales for the third quarter of 2005, which contributed net gains of $7.3 million and $4 million to pretax earnings in 2006 and 2005, respectively.
For the third quarter of 2006, new order dollars decreased 49.4% to $673.2 million from $1.33 billion in the third quarter of 2005. Neworders of 2,372 units for the quarter ended Sept. 30 represented a decrease of 45.6% compared to new orders of 4,361 units for the same period in 2005.
Gross profit margins from home sales averaged 22.5% for the third quarter of 2006, compared to 25.7% for the same period in 2005. Totalgross profit margins, including land sales, decreased to 22.5% in the third quarter from 25.5% during the third quarter of 2005. This decrease was primarily due to increased sales incentives relating to deliveries for the third quarter of 2006.
The company's financial services segment, which includes mortgage,title, escrow and insurance services, reported pretax earnings of $14.4 million for the third quarter of 2006, compared to pretax earnings of $15.1 million for the same period in 2005. This decrease was primarily due to a 14.7% decline in loans originated.
The capture rate of mortgages originated for the company's homebuilding customers was 82.2% for the third quarter of 2006 and 81.6% forthe third quarter of 2005.
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