EX-99.1 3 a89429exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 [RYLAND LOGO] ________________________________________________________________________________ NEWS RELEASE The Ryland Group, Inc. www.ryland.com FOR IMMEDIATE RELEASE CONTACT: Cathey Lowe, Senior Vice President, Finance Investor Relations (818) 223-7530 Pam Krebs, Manager, Communications Media Relations (818) 223-7591 RYLAND REPORTS 55.4 PERCENT INCREASE IN FIRST-QUARTER EPS, INCREASES EARNINGS GUIDANCE FOR 2003 CALABASAS, Calif. (April 23, 2003) - The Ryland Group, Inc. (NYSE: RYL) today announced record results for its first quarter ended March 31, 2003, including the highest first-quarter consolidated net earnings, revenues, new orders, closings, backlog and earnings per share in its history. Highlights include: - Diluted earnings of $1.43 per share for the quarter ended March 31, 2003, representing an increase of 55.4 percent over the same period in the prior year - Revenues of $659.7 million for the quarter ended March 31, 2003, reflecting an increase of 22.3 percent over the quarter ended March 31, 2002 - Gross profit margins from home sales of 20.8 percent for the quarter ended March 31, 2003, compared to 19.8 percent for the quarter ended March 31, 2002 - Record quarterly new orders of 4,260, representing an increase of 13.4 percent over the quarter ended March 31, 2002 - Record backlog at March 31, 2003, of 6,678 outstanding contracts, representing the highest first quarter-end backlog in the Company's history and a 14.5 percent increase over the backlog at March 31, 2002 - A decrease in average diluted common shares outstanding of 1.7 million versus the first quarter of 2002 - A net debt-to-capital ratio of 32.0 percent at March 31, 2003, compared to 34.1 percent at March 31, 2002. -more- PAGE 2 RYLAND FIRST-QUARTER RESULTS "The secret to Ryland's continued success is having the strongest management team in the industry and a long-term, low-risk strategy," said R. Chad Dreier, chairman, president and chief executive officer of The Ryland Group, Inc. "Additionally, we remain committed to internal growth through the strategic expansion of both current and new markets." RECORD RESULTS HIGHLIGHT FIRST QUARTER The Company's consolidated net earnings for the first quarter of 2003 were $38.2 million, or $1.43 per diluted share, compared to consolidated net earnings of $26.0 million, or $0.92 per diluted share, for the first quarter of 2002. The Company finished the first quarter of 2003 in a strong financial position with cash and cash equivalents of $164.2 million and no borrowings outstanding against its $300.0 million revolving credit facility. The homebuilding segment reported its highest first-quarter pretax earnings in the Company's history at $62.9 million. This represents a 45.3 percent rise over the $43.3 million reported for the first quarter of 2002. The increase over the prior year was primarily attributable to higher closing volume and gross profit margins. Homebuilding revenues rose $115.3 million to $641.2 million for the first quarter of 2003, compared to the same period in the prior year. This was the result of a 4.3 percent increase in average closing price from $208,000 for the quarter ended March 31, 2002, to $217,000 for the quarter ended March 31, 2003, as well as an 18.0 percent increase in the number of closings (2,950 homes closed in the first quarter of 2003 versus 2,501 homes closed in the same quarter of 2002). Homebuilding revenues for the first quarter of 2003 included $2.0 million from land sales, compared to $4.5 million for the first quarter of 2002, which contributed net gains of $0.5 million and $1.0 million to pretax earnings in 2003 and 2002, respectively. New orders of 4,260 for the first quarter of 2003 represented a 13.4 percent increase, compared to new orders of 3,757 for the first quarter of 2002. The Company operated in 322 active communities at March 31, 2003, compared to 284 active communities at March 31, 2002. The Company's backlog increased by 14.5 percent to 6,678 outstanding contracts at March 31, 2003, compared to a backlog of 5,833 outstanding contracts at March 31, 2002. The dollar value of the Company's backlog at March 31, 2003, was $1,497.1 million, or an increase of 24.9 percent over that of March 31, 2002. "I am very pleased with Ryland's success during the first quarter," said Dreier. "We have great financial strength, a solid backlog and an increase in new communities opening around the country that leave us poised for continued success the rest of the year." -more- PAGE 3 RYLAND FIRST-QUARTER RESULTS Gross profit margins from home sales averaged 20.8 percent in the first quarter of 2003, an increase of 100 basis points over the first quarter of 2002. Selling, general and administrative expenses, as a percentage of revenue, were 10.8 percent in the first quarter of 2003 versus 11.2 percent in the first quarter of 2002. Compared to the first quarter of the previous year, interest expense decreased $0.8 million to $1.2 million in the first quarter of 2003. This was primarily due to a rise in capitalized interest, which resulted from increased development activity in a greater number of new communities, partially offset by a reduction in interest earnings on cash investments. The pretax homebuilding margin increased 160 basis points to 9.8 percent in the first quarter of 2003, compared to 8.2 percent in the first quarter of 2002. Corporate expenses were $11.7 million for the first quarter of 2003, compared to $8.8 million for the same period in the prior year. The rise in corporate expenses was primarily attributable to increased incentive compensation, which was due to the improvement of the financial results of the Company. The Company's financial services segment reported pretax earnings of $12.4 million for the first quarter of 2003, compared to $8.4 million for the same period last year, due to a 31.6 percent rise in loan sales volume, a 31.8 percent increase in origination volume and heightened profitability as a result of the recent interest rate environment. The percentage of Ryland homebuyers who chose Ryland Mortgage Company to finance their new-home purchases was 85.2 percent in the first quarter of 2003, compared to 79.6 percent in the first quarter of 2002. "The reason that Ryland Mortgage Company services more than 85 percent of Ryland homebuyers is that it provides excellent customer service, competitive rates and a variety of financing options," said Dreier. "Our customer satisfaction surveys show that buyers who select Ryland Mortgage and its family of title, escrow and insurance services are happier with their overall home purchases than those who choose other service providers." STOCK REPURCHASE PROGRAM The Company repurchased approximately 500,000 shares of its common stock during the first quarter of 2003 and had Board authorization to purchase an additional 1.4 million shares at March 31, 2003. The Company continues to buy shares of its common stock. NEW EARNINGS GUIDANCE Given its results for the first quarter of 2003, the Company anticipates earnings for the fiscal year ending December 31, 2003, will exceed $7.50 per share. -more- PAGE 4 RYLAND FIRST-QUARTER RESULTS With headquarters in Southern California, Ryland is one of the nation's largest homebuilders and a leading mortgage-finance company. The Company, which currently operates in 25 markets across the country, has built more than 205,000 homes and financed over 175,000 mortgages since its founding in 1967. Note: Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various factors and assumptions that include such risks and uncertainties as the completion and profitability of sales reported; the market for homes generally and in areas where the Company operates; the availability and cost of land; changes in economic conditions and interest rates; an increase in raw materials and labor costs; consumer confidence; government regulation; and general economic, business and competitive factors, all or each of which may cause actual results to differ from the statements made in this press release. # # # Five financial-statement pages follow. CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) The Ryland Group, Inc. and subsidiaries (in thousands, except share data)
THREE MONTHS ENDED MARCH 31, 2003 2002 ----------- ----------- REVENUES Homebuilding $ 641,167 $ 525,940 Financial services 18,509 13,420 ----------- ----------- TOTAL REVENUES 659,676 539,360 ----------- ----------- EXPENSES Homebuilding Cost of sales 507,835 421,836 Selling, general and administrative 69,305 58,755 Interest 1,165 2,015 ----------- ----------- Total homebuilding expenses 578,305 482,606 Financial services General and administrative 5,615 4,348 Interest 484 720 ----------- ----------- Total financial services expenses 6,099 5,068 Corporate expenses 11,653 8,770 ----------- ----------- TOTAL EXPENSES 596,057 496,444 Earnings before taxes 63,619 42,916 Tax expense 25,448 16,952 ----------- ----------- NET EARNINGS $ 38,171 $ 25,964 =========== =========== NET EARNINGS PER COMMON SHARE Basic $ 1.52 $ 0.97 Diluted $ 1.43 $ 0.92 AVERAGE COMMON SHARES OUTSTANDING Basic 25,156,209 26,749,112 Diluted 26,632,814 28,318,346
CONSOLIDATED BALANCE SHEETS The Ryland Group, Inc. and subsidiaries (in thousands, except share data)
MARCH 31, December 31, 2003 2002 ----------- ------------ (UNAUDITED) ASSETS HOMEBUILDING Cash and cash equivalents $ 161,353 $ 266,577 Housing inventories Homes under construction 643,998 575,794 Land under development and improved lots 511,609 524,218 ---------- ---------- Total inventories 1,155,607 1,100,012 Property, plant and equipment 41,729 40,479 Purchase price in excess of net assets acquired 18,185 18,185 Other 58,051 58,252 ---------- ---------- 1,434,925 1,483,505 ---------- ---------- FINANCIAL SERVICES Cash and cash equivalents 2,888 2,868 Mortgage-backed securities and notes receivable 38,678 42,583 Other 29,226 38,163 ---------- ---------- 70,792 83,614 ---------- ---------- OTHER ASSETS Net deferred taxes 34,299 36,830 Other 63,066 53,802 ---------- ---------- TOTAL ASSETS 1,603,082 1,657,751 ========== ========== LIABILITIES HOMEBUILDING Accounts payable and other liabilities 256,403 300,168 Long-term debt 490,500 490,500 ---------- ---------- 746,903 790,668 ---------- ---------- FINANCIAL SERVICES Accounts payable and other liabilities 16,719 23,718 Short-term notes payable 38,605 43,145 ---------- ---------- 55,324 66,863 ---------- ---------- OTHER LIABILITIES 99,871 120,141 ---------- ---------- TOTAL LIABILITIES 902,098 977,672 ---------- ---------- STOCKHOLDERS' EQUITY Common stock, $1.00 par value: Authorized - 80,000,000 shares Issued - 24,892,395 shares (25,260,343 for 2002) 24,892 25,260 Retained earnings 674,572 653,461 Accumulated other comprehensive income 1,520 1,358 ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 700,984 680,079 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,603,082 $1,657,751 ========== ========== STOCKHOLDERS' EQUITY PER COMMON SHARE $ 28.16 $ 26.92 ========== ==========
SEGMENT INFORMATION (UNAUDITED) The Ryland Group, Inc. and subsidiaries (in thousands)
THREE MONTHS ENDED MARCH 31, 2003 2002 -------- -------- EARNINGS BEFORE TAXES Homebuilding $ 62,862 $ 43,334 Financial services 12,410 8,352 Corporate (11,653) (8,770) -------- -------- Total $ 63,619 $ 42,916 ======== ========
HOMEBUILDING OPERATIONAL DATA (UNAUDITED) The Ryland Group, Inc. and subsidiaries
======================================================================================= North Texas Southeast West Total --------------------------------------------------------------------------------------- FOR THE THREE MONTHS ENDED MARCH 31, NEW ORDERS (UNITS) 2003 1,181 1,011 1,250 818 4,260 2002 1,166 921 1,058 612 3,757 --------------------------------------------------------------------------------------- CLOSINGS (UNITS) 2003 961 629 810 550 2,950 2002 867 588 716 330 2,501 --------------------------------------------------------------------------------------- AVERAGE CLOSING PRICE (IN THOUSANDS) 2003 $ 249 $ 159 $ 201 $ 249 $ 217 2002 $ 228 $ 155 $ 194 $ 282 $ 208 --------------------------------------------------------------------------------------- OUTSTANDING CONTRACTS AT MARCH 31, UNITS 2003 1,966 1,341 2,231 1,140 6,678 2002 1,936 1,404 1,811 682 5,833 -------------------------------------------------------------------------------- DOLLARS (IN MILLIONS) 2003 $ 498 $ 214 $ 470 $ 315 $ 1,497 2002 $ 442 $ 215 $ 357 $ 185 $ 1,199 ------------------------------------------------------------------------------- AVERAGE PRICE (IN THOUSANDS) 2003 $ 253 $ 159 $ 211 $ 276 $ 224 2002 $ 228 $ 153 $ 197 $ 271 $ 206 =======================================================================================
FINANCIAL SERVICES SUPPLEMENTAL INFORMATION (UNAUDITED) The Ryland Group, Inc. and subsidiaries (in thousands)
THREE MONTHS ENDED MARCH 31, RESULTS OF OPERATIONS 2003 2002 -------- -------- Revenues Net gains on sales of mortgages and mortgage servicing rights $11,553 $ 8,654 Title/escrow/insurance 3,637 2,599 Net origination fees 1,755 178 Interest Mortgage-backed securities and notes receivable 1,263 1,758 Other 244 227 ------- ------- Total interest 1,507 1,985 Other 57 4 ------- ------- Total revenues 18,509 13,420 Expenses General and administrative 5,615 4,348 Interest 484 720 ------- ------- Total expenses 6,099 5,068 ------- ------- Pretax earnings $12,410 $ 8,352 ======= ======= OPERATIONAL DATA Retail operations: Originations (units) 2,423 1,929 Ryland Homes closings as a percentage of total closings 98.3% 96.9% Ryland Homes capture rate 85.2% 79.6% Investment operations: Portfolio average balance $38,728 $57,027