Ryland 3Q Loss Narrows On Fewer Write-offs But Revenue Slumps

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; [e-mail]