CALGARY,
Aug. 7, 2014 /CNW/ - Genesis Land
Development Corp. (TSX: GDC) (the "Corporation" or "Genesis") is
pleased to report its financial and operating results for the three
and six months ended June 30,
2014.
CORPORATE HIGHLIGHTS
Our key financial results and operating data are
as follows:
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Three months ended
June 30, |
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Six months ended
June 30, |
($000s, except for per share items or unless
otherwise noted) |
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2014 |
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2013 |
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2014 |
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2013 |
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Key Financial Data |
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Total revenues |
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34,765 |
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22,402 |
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72,752 |
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50,012 |
Gross margin |
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14,465 |
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5,313 |
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22,303 |
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14,065 |
Recovery (write-down) of real
estate held for development and sale |
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4,361 |
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(986) |
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4,361 |
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(986) |
Gross margin before recovery
(write-down)(1) |
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10,104 |
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6,299 |
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17,942 |
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15,051 |
Gross margin before recovery (write-down)
(%)(1) |
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29.1% |
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28.1% |
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24.7% |
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30.1% |
Net earnings attributable to equity
shareholders |
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7,231 |
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1,697 |
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10,171 |
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5,377 |
Net earnings per share - basic and diluted |
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0.16 |
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0.04 |
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0.23 |
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0.12 |
Adjusted earnings per share - basic and
diluted(1) |
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0.14 |
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0.05 |
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0.21 |
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0.14 |
Cash flows from operating activities |
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9,918 |
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709 |
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31,056 |
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50,939 |
Cash flows from operating activities per
share(2) |
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0.22 |
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0.02 |
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0.69 |
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1.14 |
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Key Operating Data |
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Residential lots sold to third parties
(units) |
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39 |
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29 |
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100 |
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71 |
Residential lots sold through the
home building business
segment (units) |
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74 |
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16 |
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99 |
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35 |
Development land sold (acres) |
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- |
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1.56 |
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121.91 |
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11.28 |
Average revenue per lot sold to third parties |
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207 |
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180 |
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196 |
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186 |
Average revenue per acre |
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- |
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1,100 |
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115 |
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591 |
Homes sold (units) |
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65 |
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42 |
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92 |
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82 |
Average revenue per home sold |
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409 |
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366 |
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422 |
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366 |
New home orders (units) |
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63 |
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15 |
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158 |
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54 |
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As at
June 30, |
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2014 |
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2013 |
Homes with firm sale contracts (units) |
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180 |
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85 |
(1) |
Non-GAAP financial measure |
(2) |
Basic and diluted amounts per share |
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Key Balance
Sheet Data ($000s, except for per share items or unless
otherwise noted) |
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As at
June 30, 2014 |
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As at
December
31, 2013 |
Cash and cash equivalents |
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10,126 |
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17,678 |
Total assets |
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302,236 |
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313,846 |
Loans and credit facilities |
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19,873 |
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50,373 |
Total liabilities |
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77,139 |
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95,920 |
Shareholders' equity |
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200,438 |
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195,483 |
Total equity |
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225,097 |
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217,926 |
Net asset value per share(1) |
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8.58 |
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7.18 |
Debt to total assets |
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6.6% |
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16.1% |
(1) |
Non-GAAP financial measure |
"We are very pleased with our financial results
and strategic plan implementation," said Bruce Rudichuk, President and Chief Executive
Officer. "In a short time our people have managed a dramatic
turnaround in the company's operations, resulting in significant
across-the-board increases in overall earnings, cash flow, home
sales, new home orders and profitability of our home building
business segment. The economy in Calgary is thriving and land prices are rising
rapidly. I am proud of our team and extremely optimistic about our
company's future."
Over the last nine months the board has focused
on aligning the board and management with shareholder objectives.
Board Chair Stephen Griggs stated,
"We are having a transformational year, and we are pleased that
results from these efforts are becoming evident. The full impact in
our work will take time and we are committed to seeing this process
through." Board Vice Chair and Chair of the Corporation's strategy
committee, William Pringle, stated,
"Stephen Griggs has worked hard to
build consensus, enhance governance practices, guide management and
focus everyone on building shareholder value. I am confident that
the market will recognize the steady progress that the company is
making."
Highlights
We continue to successfully implement our
strategic plan with both our land development and home building
business segments performing very well. We have experienced a
dramatic turnaround in our business prospects and in our financial
situation, taking advantage of a strong land and housing market in
the Calgary Metropolitan Area.
These factors have resulted in rapidly growing home sales, strong
cash flow and a balance sheet poised to support potential
growth.
Land value turnaround and growth
acceleration:
- Substantial 19.5% increase in net asset value to
$8.58 per share, after payment of a
$0.12 special dividend, from
$7.18 at December 31, 2013.
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- Our net asset value is supported by Calgary's strong economy, and a housing market
and policy framework designed to manage growth in the City of Calgary. This has contributed to
constraints on the industry's capacity to bring a sufficient supply
of developed building lots to market, leading to price increases in
both serviced lots and, to a lesser extent, on home prices.
In our view, the increase in our net asset value over the past six
months reflects the initial impact on this trend. We expect
the influence of the current policy framework to continue for at
least the next several years and, in combination with strong
demand, cause even further increases in lot and home prices.
- Management is closely monitoring the demand for and the price
of land, lots and homes with the objective of optimizing the price
and pace of sales. Our objective is to exceed appraised value on
land sales, since these values, which are based on historical
transactions, often lag actual market prices in a fast rising
market.
- It is important to note that the value of housing projects
under development used in the calculation of net asset value is the
value of the work in progress and no additional value has been
added for the profitable home building business.
Earnings and earnings per share (EPS) reflect improved
operations and market conditions:
- Earnings rose 326% and 89.2% for the three and six months ended
June 30, 2014 to $7,231 (2013 - $1,697) and $10,171
(2013 - $5,377) respectively,
compared to the same periods in 2013.
- A 300% and 91.7% increase in EPS for the three and six months
ended June 30, 2014 to $0.16 and $0.23
respectively compared to $0.04 and
$0.12 in the same periods in
2013.
- Total revenues grew by 55.2% and 45.5% to $34,765 (2013 - $22,402) and $72,752 (2013 - $50,012) respectively for the three and six
months ended June 30, 2014 compared
to the same periods in 2013.
Home building breaks through to profitability:
- Dramatic performance improvement in the home building business
segment with revenues, gross margins, earnings and volumes up
significantly during the three and six months ended June 30, 2014 compared to the same periods in
2013.
- Improved efficiencies and higher sales volumes have produced
higher gross margins with these translating into a profitable home
building business segment.
Sharply higher increase in new home orders and
firm sale contracts:
- New home orders for the three and six months ended June 30, 2014 were 63 and 158 compared to 15 and
54 in the same periods in 2013, an increase of 320% and 193%
respectively.
- Homes with firm sale contracts increased to 180 at June 30, 2014 compared to 85 at June 30, 2013, a 112% increase.
- Home sales for the three and six months ended June 30, 2014 were 65 and 92 compared to 42 and
82 in the same periods in 2013.
Land sales experience surge:
- Land development segment's residential lot sales for the three
and six months ended June 30, 2014
were 113 and 199 compared to 45 and 106 in the same periods in
2013, an increase of 151% and 87.7% respectively.
- Recovery of write-downs previously made to real estate held for
development and sale of $4,361 during
the three months ended June 30, 2014
(2013 - write-down of $986). Recovery
of $1,030 (2013 - write-down of
$986) relates to lands held by the
Corporation and recovery of $3,331
(2013 - $Nil) relates to lands held by Limited Partnerships.
Continuing strong cash flows from
operations:
- Cash flow from operating activities for the three and six
months ended June 30, 2014 was
$9,918 ($0.22 per share) and $31,056 ($0.69 per
share) compared to $709 ($0.02 per share) and $50,939 ($1.14 per
share) in the same periods in 2013.
Balance sheet strength:
- Significantly reduced Loans and Credit Facilities from
$50,373 at December 31, 2013 to $19,873 at June 30,
2014
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- This was largely due to strong cash flows from operating
activities and the sale of the non-core Acheson development land parcel.
- Debt to total assets dropped to 6.6% at June 30, 2014 from 16.1% at December 31, 2013. We have significant unutilized
debt capacity to execute our strategic plan and further grow our
business.
- Reduced total interest expense by 45.8% to $1,096 from $2,022
for the six months ended June 30,
2014 compared to the same period in 2013.
Successfully executing program to sell all
non-core assets:
- Completed sale of the non-core Acheson development land parcel near
Edmonton, the largest non-core
asset for gross proceeds of $14,000.
This sale was completed at close to the Corporation's book value,
which reduces the overall strong margin on land sales.
- Remaining non-core assets represent only 3.7% (December 31, 2013 - 3.3%) of Genesis' real estate
portfolio with a carrying value of $5,843 (December 31,
2013 - $5,843)
Market Overview
Alberta's
strong market dynamics provide a continued healthy environment for
development and growth of our core land positions, sale of lots and
expansion of our home building activities. In addition to the
strong market dynamics, the policy framework, designed to manage
growth in the City of Calgary, is
contributing to constraints in the industry's capacity to bring
supply of developed building lots to market. Such constraints
generally contribute to price increases and we see such increases
not only continuing but perhaps escalating.
Additional Information
The information contained in this release should
be read in conjunction with the unaudited condensed consolidated
interim financial statements for the three and six months ended
June 30, 2014 and 2013 and the
related Management's Discussion and Analysis ("MD&A") which
have been filed with Canadian securities regulatory authorities.
Copies of these documents may be obtained via www.sedar.com or our
website at www.genesisland.com.
2014 Second Quarter Conference Call
Genesis will host a conference call and web cast
on Friday, August 8, 2014 at
7:00 a.m. MDT (9:00 a.m. EDT) to discuss the Corporation's 2014
second quarter financial and operating results. The format of the
call will be as a question and answer session for analysts and
investors after a brief summary of results. To participate in
the conference call, please contact the conference operator ten
minutes prior to the call at 1-888-390-0605 or 1-416-764-8609. To
participate in the web cast, please visit:
www.genesisland.com. The web cast will be archived two hours
after the presentation at the websites listed above for 90
days. For a replay of this call, please dial: 1-888-390-0541
or 1-416-764-8677 and enter access code #437422 until August 22, 2014.
About Genesis
Genesis is an integrated, award-winning land
developer and residential homebuilder, creating innovative and
successful communities in the Calgary Metropolitan Area. Genesis is
committed to supporting its communities through partnerships like
the Genesis Centre of Community Wellness and Genesis Place
Recreational Centre. Genesis owns a large portfolio of entitled
residential and mixed-use land, which is exceptionally well
positioned to benefit from the continued robust activity in the
Alberta economy. The Corporation's
common shares are listed on the Toronto Stock Exchange (TSX:
GDC).
ADVISORIES
Non-GAAP Financial Measures
Net asset value, gross margin before recovery
or write-down and adjusted earnings per share are non-GAAP measures
that do not have any standardized meaning as prescribed by IFRS and
therefore they may not be comparable to similarly titled measures
reported by other companies. These non-GAAP measures have been
described and presented in this news release in order to provide
shareholders and potential investors with additional information
regarding the Corporation's performance, liquidity and value.
Additional information on these measures can be found in the
MD&A.
Forward-Looking Statements
This news release contains certain statements
which constitute forward-looking statements or information
("forward-looking statements") within the meaning of applicable
securities legislation, including Canadian Securities
Administrators' National Instrument 51-102 'Continuous Disclosure
Obligations', concerning the business, operations and financial
performance and condition of Genesis.
Forward-looking statements include, but are
not limited to, statements with respect to the nature of
development lands held and the anticipated inventory and
development potential of such lands, ability to bring new
developments to market, anticipated general economic and business
conditions in 2014 and beyond including low unemployment and
interest rates, low stable inflation rates, positive net migration,
petroleum commodity prices and above average earnings in
Alberta and the anticipated impact
on Genesis' development and home building activities, the positive
trend in the general economic conditions and the industry through
2014 and beyond; Genesis' business strategy, including the
geographic focus of its activities in 2014 and beyond, the expected
capital contribution of future earnings and cash flow from land
holdings in the Calgary
Metropolitan Area, the ability to meet the objective to increase
the closing of home builds in 2014 as compared to 2013, including
the ability to significantly increase home builds per year without
substantial addition to costs to our production team or
infrastructure so as to increase the effect on net margin and
profitability, the timing and operation of new accounting and
operating software, anticipated areas of focus for Genesis in 2014
and beyond; and the ability of Genesis to develop projects (and the
nature of such projects). Generally, these forward-looking
statements can be identified by the use of forward-looking
terminology such as "plans", "expects" or "does not expect", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes",
or variations of such words and phrases or state that certain
actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved". Although Genesis
believes that the anticipated future results, performance or
achievements expressed or implied by the forward-looking statements
are based upon reasonable assumptions and expectations, the reader
should not place undue reliance on forward-looking statements
because they involve assumptions, known and unknown risks,
uncertainties and other factors many of which are beyond the
Corporation's control, which may cause the actual results,
performance or achievements of Genesis to differ materially from
anticipated future results, performance or achievement expressed or
implied by such forward-looking statements. Accordingly, Genesis
cannot give any assurance that its expectations will in fact occur
and cautions that actual results may differ materially from those
in the forward-looking statements.
Factors that could cause actual results to
differ materially from those set forth in the forward-looking
statements include, but are not limited to: the impact or
unanticipated impact of general economic conditions in Canada, the United
States and globally; the impact of contractual arrangements
and incurred obligations on future operations and liquidity; local
real estate conditions, including the development of properties in
close proximity to Genesis' properties; timely leasing of
newly-developed properties and re-leasing of occupied square
footage upon expiration; dependence on tenants' financial
condition; the uncertainties of real estate development and
acquisition activity; the ability to effectively integrate
acquisitions; fluctuations in interest rates; ability to raise
capital on favourable terms; the impact of newly-adopted accounting
principles on Genesis' accounting policies and on period-to-period
comparisons of financial results; not realizing on the anticipated
benefits from transactions or not realizing on such anticipated
benefits within the expected time frame; and other risks and
factors described from time to time in the documents filed by
Genesis with the securities regulators in Canada available at www.sedar.com,
including the MD&A under the heading "Risks and Uncertainties"
and the Annual Information Form under the heading "Risk Factors".
Furthermore, the forward-looking statements contained in this news
release are made as of the date of this news release and, except as
required by applicable law, Genesis does not undertake any
obligation to publicly update or to revise any of the
forward-looking statements, whether as a result of new information,
future events or otherwise.
Caution should be exercised in the evaluation
and use of the appraisal results. The appraisal is an estimate of
market value at specific dates and not a precise measure of value,
being based on subjective comparison of related activity taking
place in the real estate market. The appraisal is based on various
assumptions of future expectations and while the appraiser's
assumptions are considered to be reasonable at the current time,
some of the assumptions may not materialize or may differ
materially from actual experience in the future.
SOURCE Genesis Land Development Corp.