Ryland Group Inc. (RYL) swung to a fourth-quarter loss as the home-building company recorded a big tax benefit in the year-earlier quarter and saw revenue decline by more than half and new orders slide in the most recent period.
California-based Ryland, which operates in 15 states, has reported just a single profitable quarter--the one in the year-earlier period--in the last few years, though it had narrowed its losses in recent quarters because of fewer write-downs. Still, the expiration of a government tax credit that boosted sales last year left home-building companies struggling to sell homes. In the most recent quarter, Ryland's orders dropped 20%.
Ryland posted a fourth-quarter loss of $19.1 million, or 43 cents a share, compared with a profit of $39 million, or 88 cents a share, a year earlier. The most-recent quarter included charges totaling $15.4 million related to inventory and valuation adjustments, while the year-earlier quarter included a tax benefit of $97.6 million.
Revenue plunged 52% to $227.1 million.
Analysts polled by Thomson Reuters had most recently forecast a loss of 35 cents a share and $234 million in revenue.
Housing gross margin edged up a hair, to 14.3% from 14.2%.
Backlog at the end of the quarter fell 31% from a year earlier, indicating more pain lies ahead. The average closing price increased 2.5%.
"Ryland's performance is likely to lag [that of its] peers, and weak volume at below-average gross margins continue to hamper the company's ability to generate a profit," wrote Carl Reichardt, a home-building analyst with Wells Fargo Securities, in a client note. "We note community count has grown modestly for three quarters in a row, and is up 14% year/year, which should aid volumes. Additionally, the company announced a corporate reorganization aimed at achieving 'substantial annual savings.' Combined, we believe these two efforts may position the company for improved profitability in the back half of 2011."
Shares closed at $18.24 and slipped 0.63% to $18.13 after hours. The stock has fallen 13% this year.
--Dawn Wotapka contributed to this article.
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