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Jan 24, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- The Ryland Group, Inc. (NYSE: RYL), today announced record results for its fourth quarter ended December 31, 2005, including the highest fourth-quarter consolidated net earnings, revenues, closings, backlog and earnings per share in its history. Highlights included:
* Diluted earnings of $3.32 per share for the quarter ended
December 31, 2005, representing an increase of 53.0 percent over the
same period in the prior year;
* Consolidated revenues increased 22.9 percent to $1.5 billion for the
quarter ended December 31, 2005, compared to revenues of $1.2 billion
for the quarter ended December 31, 2004;
* Gross profit margins from home sales of 26.3 percent for the quarter
ended December 31, 2005, compared to 22.5 percent for the quarter ended
December 31, 2004;
* Closings of 5,165 for the quarter ended December 31, 2005, reflecting
an increase of 11.0 percent over the same period in the prior year and
representing the highest quarterly closings in the Company's history;
* Quarterly new order dollars at December 31, 2005, increased 8.9 percent
to $904.2 million from $830.4 million for the quarter ended
December 31, 2004. However, new orders in the fourth quarter of 2005
decreased 4.7 percent to 3,066 units from 3,217 units for the same
period in 2004;
* Backlog totaled $2.6 billion, up 24.0 percent at December 31, 2005,
compared to December 31, 2004, with backlog units increasing
11.1 percent to 8,464 from December 31, 2004, and representing the
highest year-end backlog in the Company's history; and
* Repurchase of approximately 660,000 shares of the Company's common
stock during the fourth quarter of 2005.
RECORD RESULTS HIGHLIGHT FOURTH QUARTER
The Company's consolidated net earnings rose 49.1 percent for the quarter ended December 31, 2005, to a record $162.0 million, or $3.32 per diluted share, compared to $108.7 million, or $2.17 per diluted share, for the same period in 2004.
The homebuilding segment reported quarterly pretax earnings of $265.8 million during the fourth quarter of 2005, representing a 47.2 percent rise over the $180.5 million reported for the same period in 2004. The increase over the prior year was primarily attributable to higher sales prices and closing volume.
Homebuilding revenues rose $281.9 million, or 23.1 percent, to $1.5 billion for the fourth quarter of 2005, compared to $1.2 billion for the same period in the prior year. This was primarily due to an 11.0 percent increase in closings and a 12.6 percent increase in the average closing price of a home, which rose to $286,000 for the quarter ended December 31, 2005, from $254,000 for the quarter ended December 31, 2004. Homebuilding revenues for the fourth quarter of 2005 included $24.3 million from land sales, compared to $37.9 million from land sales for the fourth quarter of 2004, which contributed net gains of $5.6 million and $16.3 million to pretax earnings in 2005 and 2004, respectively.
For the fourth quarter of 2005, new orders totaled $904.2 million, compared to $830.4 million in the fourth quarter of 2004, representing an increase of 8.9 percent. New orders of 3,066 units for the fourth quarter ended December 31, 2005, represented a decrease of 4.7 percent, compared to new orders of 3,217 for the same period in 2004. The dollar value of the Company's backlog at December 31, 2005, was $2.6 billion, an increase of 24.0 percent over December 31, 2004. Backlog units at the end of the fourth quarter of 2005 increased to 8,464 from 7,620 at December 31, 2004, a rise of 11.1 percent.
Gross profit margins from home sales averaged 26.3 percent for the fourth quarter of 2005, compared to 22.5 percent for the same period in 2004. Total gross profit margins, including land sales, increased to 26.3 percent in the fourth quarter of 2005 from 23.2 percent in the prior year. Selling, general and administrative expenses, as a percentage of revenue, were 8.5 percent for the fourth quarter of 2005, versus 8.3 percent for the same period in 2004. The homebuilding segment capitalized all interest incurred during the fourth quarter of 2005 due to increased development activity. The pretax homebuilding margin was 17.7 percent for the fourth quarter of 2005, compared to 14.8 percent for the fourth quarter of 2004.
Corporate expenses were $24.2 million for the fourth quarter of 2005, compared to $21.7 million for the same period in the prior year. This increase was primarily attributable to a rise in incentive compensation, which was due to improvement in the Company's financial results.
The Company's financial services segment, which includes mortgage, title, escrow and insurance services, reported pretax earnings of $19.7 million for the fourth quarter of 2005, compared to $17.9 million for the same period in 2004. This increase was primarily due to a 9.9 percent rise in loans originated and a 14.7 percent rise in average loan size, as well as to an increase in profitability from title, escrow and insurance operations. The capture rate of mortgages originated for the Company's homebuilding customers was 82.3 percent for the fourth quarter of 2005, compared to 82.7 percent for the fourth quarter of 2004.
NEW ANNUAL RECORDS ESTABLISHED FOR 2005
Consolidated net earnings for the twelve months ended December 31, 2005, increased 39.5 percent to a record $447.1 million, or $9.03 per diluted share, from $320.5 million, or $6.36 per diluted share, for the twelve months ended December 31, 2004.
The Company's homebuilding segment reported pretax earnings of $738.9 million for the twelve months ended December 31, 2005, compared to $530.1 million for the same period in the prior year, representing an increase of 39.4 percent. Homebuilding revenues rose $858.7 million to $4.7 billion for the twelve months ended December 31, 2005, compared to $3.9 billion for the same period in 2004. Homebuilding revenues for the twelve months ended December 31, 2005, included $96.9 million from land sales, compared to $74.2 million from land sales for the twelve months ended December 31, 2004, which contributed net gains of $23.9 million and $25.2 million to pretax earnings in 2005 and 2004, respectively. The Company closed 16,673 homes during the twelve months ended December 31, 2005, representing the highest annual closings in its history and an increase of 10.4 percent over the prior year. New order dollars increased $702.5 million, or 15.8 percent, to $5.1 billion at December 31, 2005, from $4.4 billion at December 31, 2004. Additionally, new order units increased 3.8 percent to 17,517 for the twelve months ended December 31, 2005, from 16,880 for the same period in 2004.
Housing gross profit margins were 25.2 percent for the twelve months ended December 31, 2005, versus 23.2 percent for the same period in 2004. Total gross profit margins, including land sales, increased to 25.1 percent for the year ended December 31, 2005, from 23.4 percent for the same period in 2004. Selling, general and administrative expenses, as a percentage of revenue, were 9.3 percent for the twelve months ended December 31, 2005, compared to 9.6 percent in 2004. The decrease was primarily attributable to having had additional closings in growth markets without corresponding increases in overhead. Interest expense was $0.7 million in 2005, compared to $1.2 million in 2004. Additionally, the Company recorded $8.3 million of expenses related to the early retirement of debt in 2005.
The Company's financial services segment reported pretax earnings of $59.5 million for the twelve months ended December 31, 2005, compared to $56.9 million for the same period in the prior year.
Corporate expenses increased to $77.4 million for the twelve months ended December 31, 2005, compared to $65.8 million for the same period in the prior year. The rise in corporate expenses was primarily attributable to increased incentive compensation, which was related to improvement in the Company's financial results.
STOCK REPURCHASE PROGRAM
The Company repurchased approximately 660,000 shares of its common stock during the fourth quarter of 2005, bringing the yearly total to 2.6 million shares at a cost of $176.2 million. In December 2005, the Company's Board of Directors authorized the purchase of additional shares totaling $250.0 million.
2006 EARNINGS GUIDANCE
The Company is comfortable with the current street consensus of $10.09 diluted earnings per share for 2006.
With headquarters in Southern California, Ryland is one of the nation's largest homebuilders and a leading mortgage-finance company. The Company currently operates in 27 markets across the country and has built more than 250,000 homes and financed more than 210,000 mortgages since its founding in 1967. Ryland is a Fortune 500 company listed on the New York Stock Exchange under the symbol "RYL." Previous news releases may be obtained at 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," "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 are subject to risks and uncertainties which include, among others:
* economic changes nationally or in the Company's local markets,
including volatility in interest rates, inflation, changes in consumer
confidence levels and the state of the market for homes in general;
* the availability and cost of land;
* increased land development costs on projects under development;
* shortages of skilled labor or raw materials used in the production of
houses;
* increased prices for labor, land and raw materials used in the
production of houses;
* 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;
* 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 and
the environment);
* delays in obtaining approvals from applicable regulatory agencies and
others in connection with the Company's communities and land
activities; and
* other factors over which the Company has little or no control.
Five financial statements follow.
CONSOLIDATED STATEMENTS OF EARNINGS
The Ryland Group, Inc. and subsidiaries
(in thousands, except share data)
Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
REVENUES
Homebuilding $1,500,518 $1,218,580 $4,725,751 $3,867,086
Financial services 29,049 25,799 91,815 84,735
TOTAL REVENUES 1,529,567 1,244,379 4,817,566 3,951,821
EXPENSES
Cost of sales 1,106,534 936,407 3,537,603 2,964,087
Selling, general
and administrative 128,207 101,636 440,965 372,660
Financial services 9,220 7,711 31,582 26,825
Corporate 24,231 21,748 77,350 65,810
Interest 95 202 738 1,227
Expenses related to
early retirement
of debt -- -- 8,277 --
TOTAL EXPENSES 1,268,287 1,067,704 4,096,515 3,430,609
Earnings before taxes 261,280 176,675 721,051 521,212
Tax expense 99,288 68,020 273,999 200,667
NET EARNINGS $161,992 $108,655 $447,052 $320,545
NET EARNINGS PER
COMMON SHARE
Basic $3.48 $2.29 $9.52 $6.72
Diluted $3.32 $2.17 $9.03 $6.36
AVERAGE COMMON SHARES
OUTSTANDING
Basic 46,539,739 47,481,284 46,966,317 47,678,887
Diluted 48,860,375 50,026,130 49,490,887 50,378,840
CONSOLIDATED BALANCE SHEETS
The Ryland Group, Inc. and subsidiaries
(in thousands, except share data)
December 31, December 31,
2005 2004
ASSETS
Cash and cash equivalents $461,383 $88,388
Housing inventories
Homes under construction 1,253,460 1,002,214
Land under development and improved lots 1,087,016 877,801
Consolidated inventory not owned 239,191 144,118
Total inventories 2,579,667 2,024,133
Property, plant and equipment 65,980 50,258
Net deferred taxes 50,099 45,708
Purchase price in excess of net
assets acquired 18,185 18,185
Other 211,559 198,298
TOTAL ASSETS 3,386,873 2,424,970
LIABILITIES
Accounts payable 249,539 200,611
Accrued and other liabilities 664,691 500,808
Debt 921,970 558,942
TOTAL LIABILITIES 1,836,200 1,260,361
MINORITY INTEREST 174,652 107,775
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value:
Authorized - 200,000,000 shares
Issued - 46,368,143 shares at
December 31, 2005
(47,348,070 shares at December 31, 2004) 46,368 47,348
Retained earnings 1,326,689 1,009,242
Accumulated other comprehensive income 2,964 244
TOTAL STOCKHOLDERS' EQUITY 1,376,021 1,056,834
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,386,873 $2,424,970
SEGMENT INFORMATION
The Ryland Group, Inc. and subsidiaries
(in thousands)
Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
Earnings before taxes
Homebuilding $265,777 $180,537 $738,906 $530,129
Financial services 19,734 17,886 59,495 56,893
Corporate (24,231) (21,748) (77,350) (65,810)
Total $261,280 $176,675 $721,051 $521,212
HOMEBUILDING OPERATIONAL DATA (unaudited)
The Ryland Group, Inc. and subsidiaries
North Texas Southeast West Total
For the three months
ended December 31,
New Orders (units)
2005 754 791 1,041 480 3,066
2004 866 621 1,003 727 3,217
Closings (units)
2005 1,345 1,160 1,577 1,083 5,165
2004 1,113 1,119 1,417 1,005 4,654
Average Closing Price
(in thousands)
2005 $324 $184 $265 $378 $286
2004 $301 $159 $238 $328 $254
For the twelve months
ended December 31,
New Orders (units)
2005 4,333 3,702 5,630 3,852 17,517
2004 4,419 3,299 5,009 4,153 16,880
Closings (units)
2005 4,367 3,365 4,887 4,054 16,673
2004 4,349 3,116 4,374 3,262 15,101
Average Closing Price
(in thousands)
2005 $310 $177 $254 $356 $278
2004 $288 $165 $230 $312 $251
Outstanding Contracts
at December 31,
Units
2005 1,774 1,329 3,601 1,760 8,464
2004 1,808 992 2,858 1,962 7,620
Dollars (in millions)
2005 $571 $259 $1,106 $686 $2,622
2004 $568 $173 $725 $649 $2,115
Average Price
(in thousands)
2005 $322 $195 $307 $390 $310
2004 $314 $175 $254 $331 $278
FINANCIAL SERVICES SUPPLEMENTAL INFORMATION (unaudited)
The Ryland Group, Inc. and subsidiaries
($s in thousands)
Three months ended Twelve months ended
December 31, December 31,
RESULTS OF OPERATIONS 2005 2004 2005 2004
Revenues
Net gains on sales of
mortgages and
mortgage servicing
rights $13,370 $12,721 $45,918 $45,040
Title/escrow/insurance 9,269 7,840 28,489 23,740
Net origination fees 5,740 3,989 15,032 10,768
Interest
Mortgage-backed
securities and notes
receivable 272 394 1,375 2,639
Other 256 325 844 935
Total interest 528 719 2,219 3,574
Gain on sale of
investments 142 -- 142 1,074
Other -- 530 15 539
Total revenues 29,049 25,799 91,815 84,735
Expenses
General and
administrative 9,220 7,711 31,582 26,825
Interest 95 202 738 1,017
Total expenses 9,315 7,913 32,320 27,842
Pretax earnings $19,734 $17,886 $59,495 $56,893
OPERATIONAL DATA
Retail operations:
Originations (units) 3,956 3,598 12,774 11,920
Ryland Homes closings
as a percentage of
total closings 99.7% 99.1% 99.5% 99.0%
Ryland Homes
origination capture
rate 82.3% 82.7% 81.9% 84.2%
Investment operations:
Mortgage-backed
securities and notes
receivable average
balance $2,370 $10,668 $7,365 $18,603
SOURCE The Ryland Group, Inc.
Investors, Drew Mackintosh, Director, Finance, +1-818-223-7548, or Media, Marya Jones, Director, Communications, +1-818-223-7591, both of The Ryland Group, Inc.http://www.prnewswire.com
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