Ryland Group Inc.'s (RYL) third-quarter loss narrowed as the
home builder and mortgage-finance company posted fewer write-offs
and valuation adjustments and orders posted a small decline.
There is concern that the housing market, already struggling for
years, will soften if an $8,000 tax credit to lure first-time home
buyers isn't extended beyond Nov. 30. The major housing industry
trade groups have mounted a vigorous campaign to push for the
credit's extension and last week, Sen. Johnny Isakson (R-Ga.) said
the credit was key to reducing oversupply and stimulating the
crucial "move up" market.
In August, Standard & Poor's Ratings Services lifted its
outlook on Ryland's junk-level ratings to stable, citing the
company's healthy cash position, as well as its largely developed
owned lot position and lack of near-term debt maturities.
Ryland, which last reported a profitable quarter in 2006, on
Wednesday posted a loss of $52.5 million, or $1.20 a share,
compared with a year-earlier loss of $65.7 million, or $1.54 a
share. The latest results included $39.1 million of valuation
adjustments and write-offs, while the year-ago quarter included
$64.8 million of those charges.
Revenue slumped 40%, to $327.8 million.
Analysts surveyed by Thomson Reuters projected a loss of 88
cents on revenue of $354 million.
Gross margin fell to 10.8%, excluding items, from 11.8%. New
orders fell 1.1%, to 1,270 units, and closings declined 34%, to
1,323. The inventory of unsold homes dropped 30%, to 447 units,
from the beginning of the year.
In the financial-services segment, the company posted a 32%
decline in the number of mortgages originated.
Ryland's shares fell 0.4%, to $18.58 in after-hours trading,
after closing down 6.9% in the regular session amid a broad market
decline.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com