Schuler Homes
sees strong quarter

The company's stock
soars today on the news

By Rob Perez
Star-Bulletin

Schuler Homes Inc. stock soared today after the company reported a more than three-fold increase in third-quarter profits, bolstered by its mainland operations.

The Honolulu-based home builder said earnings for the quarter ended Sept. 30 totaled $1.8 million, or 9 cents a share, compared with a $485,000 gain, or 2 cents a share, in the year earlier period. Revenue was $61.1 million, more than double the $21.9 million from the 1996 quarter.

Wall Street liked the numbers, which beat analysts' expectations. In Nasdaq trading today, Schuler's stock was up 18 percent to close at $7.37 a share.

Strong mainland home sales offset more dismal numbers in the sluggish isle market, the company said. "It looks like Schuler is bouncing back," said Jasmine Perry, an analyst with Goldman Sachs. "They're obviously benefiting from expansion onto the mainland."

During the quarter, the company closed sales of 423 homes and lots, with more than three-fourths coming from its Colorado and Washington state operations. Hawaii accounted for only 93 closings, down from 129 in the previous year's quarter.

The company said the weak Hawaii market has resulted in drops in local home-sale rates, prices and profit margins.

Perry expects Schuler to continue paring its isle operations to focus on the stronger mainland markets.

"I don't think they'll pull back drastically," she said. "But you have to do what the market tells you."

Because Schuler has been successful with its two mainland acquisitions earlier this year -- a Colorado home builder and a share in a Washington company -- Perry said she wouldn't be surprised to see the company buy another small builder in the West.

"It was a really solid move to expand to the mainland."

For the first nine months of 1997, Schuler earned $3.7 million on revenue of $163.5 million, compared with a loss of $11.6 million on revenue of $71.7 million a year earlier.