CALGARY, Nov. 13, 2018 /CNW/ - Genesis Land Development
Corp. (TSX: GDC) (the "Corporation" or "Genesis") reported its
financial and operating results for the three months ("Q3") and
nine months ("YTD") ended September 30,
2018.
Key financial results and operating data for Genesis were as
follows:
|
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
($000s, except for
per share items or unless otherwise noted)
|
2018
|
2017
|
2018
|
2017
|
Key Financial
Data
|
|
|
|
|
Total
revenues
|
27,178
|
31,128
|
60,502
|
85,289
|
Direct cost of
sales
|
(22,468)
|
(22,227)
|
(46,713)
|
(60,871)
|
Gross
margin
|
4,710
|
8,901
|
13,789
|
24,418
|
Gross margin
(%)
|
17.3%
|
28.6%
|
22.8%
|
28.6%
|
Net earnings
attributable to equity shareholders
|
539
|
3,372
|
1,766
|
8,285
|
Net earnings per
share - basic
|
0.01
|
0.08
|
0.04
|
0.19
|
Cash flows from
operating activities
|
7,694
|
8,888
|
7,555
|
19,610
|
Cash flows from
operating activities per share - basic
|
0.18
|
0.21
|
0.18
|
0.45
|
Key Operating
Data
|
|
|
|
|
Land
Development
|
|
|
|
|
Total residential
lots sold (units)
|
42
|
59
|
143
|
188
|
Residential lot
revenues
|
7,574
|
10,261
|
25,166
|
37,003
|
Gross margin on
residential lots sold
|
2,728
|
4,779
|
9,187
|
16,350
|
Gross margin (%) on
residential lots sold
|
36.0%
|
46.6%
|
36.5%
|
44.2%
|
Average revenue per
lot sold
|
180
|
174
|
176
|
197
|
Development and
non-core land sold
|
10,498
|
5,234
|
10,498
|
14,234
|
|
|
|
|
|
Home
Building
|
|
|
|
|
Homes sold
(units)
|
32
|
49
|
89
|
104
|
Revenues
(1)
|
13,816
|
22,750
|
38,080
|
49,244
|
Gross margin on homes
sold
|
2,066
|
3,917
|
5,606
|
8,601
|
Gross margin (%) on
homes sold
|
15.0%
|
17.2%
|
14.7%
|
17.5%
|
Average revenue per
home sold
|
432
|
464
|
428
|
473
|
Homes with lots
subject to firm sale contracts (units) at the period end
|
|
|
37
|
40
|
|
|
|
Key Balance Sheet
Data
|
|
|
As at Sept.
30,
2018
|
As at Dec. 31,
2017
|
Cash and cash
equivalents
|
|
|
14,704
|
23,585
|
Total
assets
|
|
|
284,463
|
301,425
|
Loans and credit
facilities
|
|
|
26,605
|
30,135
|
Total
liabilities
|
|
|
74,220
|
81,884
|
Shareholders'
equity
|
|
|
191,774
|
201,397
|
Total
equity
|
|
|
210,243
|
219,541
|
Loans and credit
facilities (debt) to total assets
|
|
|
9%
|
10%
|
|
|
(1)
|
Includes revenues
of $4,710,000 for 32 lots in Q3 2018 and $13,242,000 for 89 lots in
YTD 2018 purchased by the Home Building division from the Land
Development division
(46 and $7,117,000 in Q3 2017; 93 and $15,192,000 in YTD 2017) and
sold with the home. These amounts are eliminated on
consolidation
|
Highlights of Third Quarter
In Q3 2018, Genesis' cash flow from operating activities was
$7,694,000 ($0.18 per share), compared to cash flow from
operating activities of $8,888,000
($0.21 per share) for the third
quarter of 2017, a decrease of $1,194,000 ($0.03
per share). The difference was primarily due to lower cash inflows
from the sale of residential homes and lots, partially offset by
higher cash inflows from development land sales in Q3 2018 compared
to the Q3 2017. In August Genesis completed the sale of two parcels
of land in Sage Meadows for total
proceeds of $10.5 million.
Genesis' had $14,704,000 in cash
and cash equivalents at September 30,
2018 compared to $23,585,000
as at December 31, 2017, the decrease
being primarily due to the $8,000,000
payment on the vendor-take-back mortgage payable in the first
quarter of 2018. As a result of this payment, total loans and
credit facilities as at September 30,
2018 were $26,605,000, 12%
lower than at December 31, 2017.
Loans and credit facilities outstanding at September 30, 2018 were 9% of total book value of
assets, compared to $30,135,000 or
10% of the total book value of assets at December 31, 2017. In August a dividend
aggregating $10.3 million was
declared, which was paid to shareholders in September.
Revenues for Q3 2018 were $27,178,000, down $3,950,000 (13%) from $31,128,000 in Q3 2017. Revenues for YTD 2018 of
$60,502,000 were down $24,787,000 (29%) compared to $85,289,000 in YTD 2017. This decrease was
primarily due to significantly fewer residential lot sales to
third‑party builders (54 in YTD 2018, in comparison to 95 in YTD
2017) and lower revenues from home sales by the home building
division.
The gross margin on residential lot sales in Q3 2018 was 36%,
compared to 47% in Q3 2017. Gross margin on development land sales
made during Q3 2018 and YTD 2018 was nominal compared to 3.9%
during Q3 2017 and YTD 2017. Gross margins vary primarily due to
the mix of sales by community and product/lot type, the nature and
cost of the development work required to ready the lots for sale
and the original cost of the land.
The gross margin of the home building division was 15% in Q3
2018, down from 17% in Q3 2017 due to the reduction of prices to
reflect market conditions and the change in product mix to lower
priced and lower margin homes.
Total expenses for Q3 2018 were lower than in Q3 2017, with
interest expense being lower by $256,000 (39%) due to lower average loan balances
during Q3 2018 compared to Q3 2017, higher financing income due to
a vendor-take-back mortgage receivable, partially offset by higher
selling and marketing expense.
Net earnings attributable to equity shareholders for Q3 2018 was
$539,000 ($0.01 per share), down from $3,372,000 ($0.08
per share) in Q3 2017. Net earnings attributable to equity
shareholders for YTD 2018 was $1,766,000 ($0.04
per share) compared to $8,285,000
($0.19 per share) in YTD 2017. Both
were a result of lower overall revenues and lower margins earned in
both land and homes.
Strategy Update and Executive Appointments
Genesis Land Development Corp. is a land developer and
residential home builder operating in the Calgary Metropolitan Area ("CMA"), holding and
developing a significant portfolio of well-located, entitled and
unentitled residential, commercial and mixed-use lands and serviced
lots in the CMA.
As a land developer, Genesis acquires, plans, rezones,
subdivides, services and sells residential lots and commercial and
industrial lands to third-party developers and builders, and also
sells lots and completed homes through its home building division.
The land portfolio is planned, developed, serviced and sold at
opportune times with the objective of maximizing the risk adjusted
net present value of the land and to maximize net cash
flow.
Home building is operated through a wholly-owned subsidiary,
Genesis Builders Group Inc. ("GBG"). GBG designs, constructs and
sells single-family homes and townhouses primarily on lands
developed by Genesis. The objective of the home building division
is to deliver an acceptable return and cash flow from the capital
invested in it and to sell incremental Genesis single-family lots
and townhouse land parcels.
In mid-2018, management updated the strategy plan of the
Corporation, which update was approved by the Board of Directors.
As a part of this update, management identified that there was the
potential for the Corporation to acquire additional residential
development lands in the CMA, primarily with the objective of
replacing the lots and parcels sold by the Corporation on an annual
basis. Management is actively exploring potential CMA land
acquisitions, although there is no assurance that any suitable
transactions can be completed.
As part of its overall strategy, Genesis continues to focus on
minimizing overhead costs and long-term commitments, where
possible, to preserve flexibility.
Any excess cash on hand is generally used to pay dividends to
shareholders, buy back common shares and/or opportunistically
acquire additional development land.
Executive Appointments
Effective September 20, 2018, the
following executive appointments were made:
- Iain Stewart was appointed
President and Chief Executive Officer. Mr. Stewart had been an
independent director of Genesis since August
2013, and was Vice Chair of the Board since May 12, 2017. Mr. Stewart remains as a member of
the Board of Directors.
- Stephen J. Griggs was appointed
Executive Chair of the Board. Mr. Griggs has been a director and
Chair of the Board since August 2013,
and was Chief Executive Officer or interim Chief Executive Officer
since February 2016. Mr. Griggs
remains as a member of the Board of Directors.
In these new roles, Mr. Stewart and Mr. Griggs are working
collaboratively to implement Genesis's strategy of realizing the
value of its existing properties, opportunistically acquiring
additional residential development lands in the CMA, and maximizing
dividends and returns to shareholders while maintaining a strong
balance sheet and creating long term shareholder value. An equity
based long term incentive plan comprised of stock options and
deferred share units was approved by the Board to align management
incentives with the interests of shareholders.
Additional Information
The information contained in this press release should be read
in conjunction with the unaudited condensed consolidated interim
financial statements for the three and nine months ended
September 30, 2018 and 2017 and the
related Management's Discussion and Analysis ("MD&A") dated
November 13, 2018 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.
About Genesis
Genesis Land Development Corp. is a land developer and
residential home builder in the Calgary Metropolitan Area. The Corporation's
common shares are listed on the Toronto Stock Exchange (TSX:
GDC).
ADVISORIES
Forward-Looking Statements
This news release may contain 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. 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
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 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; the uncertainties of real estate
development and acquisition activity; fluctuations in interest
rates; ability to access and raise capital on favourable terms; not
realizing on the anticipated benefits from transactions or not
realizing on such anticipated benefits within the expected time
frame; labour matters, governmental regulations, stock market
volatility 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 Corporation's MD&A under
the heading "Risks and Uncertainties" and the AIF 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.
SOURCE Genesis Land Development Corp.