Ryland Swings to Expected Loss
Ryland Group (RYL), as expected, reported a large third-quarter loss as falling housing prices across the country forced the homebuilder to record hefty inventory impairment charges.
The Calabasas, Calif.-based builder reported a third-quarter loss of $54.7 million, or $1.30 a share, compared with profit of $87.9 million, or $1.97 a share a year earlier. Analysts expected a per-share loss of 88 cents, according to Thomson Financial.
The losses were primarily caused by $128.1 million of inventory valuation adjustments and write-offs related to land and housing communities under development.
As builders are aggressively cutting prices on homes, they're being forced to mark down the value of land and housing inventory on their balance sheets to reflect that the inventory is no longer profitable.Ryland's third-quarter revenue fell 35% from a year earlier to $732.3 million. Closings on homes dropped 32%, while new orders tumbled 21%. Higher marketing and advertising costs also ate into Ryland's profits. Selling, general and administrative expenses as a percentage of homebuilding revenue were 12.3% in the quarter, up from 9.7% a year earlier. Ryland reported the results after the market closed Wednesday. Pulte Homes (PHM) and MDC Holdings (MDC) are also expected to report results later Wednesday. On Tuesday, builder Centex (CTX) reported a $644 million loss because of nearly $1 billion of inventory writedowns.
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