CALGARY, March 6, 2020 /CNW/ - Genesis Land Development
Corp. (TSX: GDC) (the "Corporation" or "Genesis") reported its
financial and operating results for the three months ("Q4") and
year ended ("YE") December 31,
2019. Genesis is an integrated land developer and residential
home builder operating in the Calgary Metropolitan Area ("CMA"), owning and
developing a portfolio of well-located, entitled and unentitled
residential, commercial and mixed-use lands and serviced lots in
the CMA.
2019 Highlights:
- In 2019, Genesis generated positive cash flows from operating
activities of $9.5 million and
realized net earnings attributable to equity shareholders of
$1.7 million, the 19th
consecutive year of positive earnings.
- Genesis sold 128 homes and 161 residential lots in 2019 and
ended the year with 54 outstanding 2020 new home orders.
- The current economic environment in the Calgary Metropolitan Area has created
opportunities for favourable land acquisitions and in 2019 Genesis
completed the following acquisitions:
-
- In September 2019, 130 acres of
future residential development land in north Calgary was acquired for $23.7 million. Land servicing is slated to begin
in 2020;
- In July 2019, $1.9 million was invested to acquire a 5%
interest in a limited partnership that is expected to commence
development in 2020 of 224 acres of land in northeast Calgary. As part of this investment, Genesis
secured the right to purchase a minimum of 25% of the single-family
lots for its home building division; and
- In November 2019, $3.8 million was invested to acquire an 8%
interest in a joint venture expected to commence development in
2020 of 320 acres of land in southwest Calgary. As part of this investment, Genesis
secured the right to purchase 1/6th (333 lots) of the
single-family lots for its home building division.
- Key approval milestones were reached for the 51-acre Sage Hill
Crossing community and the 354-acre southeast Calgary community, with development of these
communities anticipated to commence in 2020 and 2021,
respectively.
- At December 31, 2019, Genesis
maintained a solid cash position of $16.2
million in cash and cash equivalents and a debt level of
$51.5 million in loans and credit
facilities being 17% of total assets.
Selected financial results and operating data:
|
Three months
ended
December 31,
|
Year ended
December 31,
|
($000s, except for
per share items or unless otherwise noted)
|
2019
|
2018
|
2019
|
2018
|
Key Financial
Data
|
|
|
|
|
Total
revenues
|
26,081
|
20,935
|
68,097
|
81,437
|
Net earnings
attributable to equity shareholders
|
1,684
|
2,358
|
1,701
|
4,124
|
Net earnings per
share - basic and diluted
|
0.04
|
0.06
|
0.04
|
0.10
|
Cash flows from
operating activities
|
7,969
|
7,192
|
9,537
|
14,747
|
Cash flows from
operating activities per share - basic and diluted
|
0.19
|
0.16
|
0.23
|
0.34
|
Key Operating
Data
|
|
|
|
|
Land
Development
|
|
|
|
|
Total residential
lots sold (units)
|
64
|
33
|
161
|
176
|
Residential lot
revenues
|
12,230
|
6,603
|
29,071
|
31,769
|
Development and
non-core land sales revenue
|
550
|
4,628
|
550
|
15,126
|
|
|
|
|
|
Home
Building
|
|
|
|
|
Homes sold
(units)
|
43
|
32
|
128
|
121
|
Revenues
(1)
|
20,551
|
16,033
|
59,746
|
54,113
|
Outstanding new home
orders at period end (units)
|
|
|
54
|
34
|
(1)
|
Includes revenues
of $7,250,000 for 43 lots in Q4 2019 and $21,270,000 for 128 lots
in YE 2019 purchased by Genesis' Home Building division from its
Land Development division ($6,329,000 and 32 in Q4 2018;
$19,571,000 and 121 in YE 2018) and sold with the home. These
amounts are eliminated on consolidation.
|
($000s, except for
per share items or unless otherwise noted)
|
As at Dec.
31,
2019
|
As at Dec.
31,
2018
|
Key Balance Sheet
Data
|
|
|
Cash and cash
equivalents
|
16,248
|
24,042
|
Total
assets
|
296,268
|
278,156
|
Loans and credit
facilities
|
51,546
|
31,696
|
Shareholders'
equity
|
193,957
|
191,970
|
Loans and credit
facilities (debt) to total assets
|
17%
|
11%
|
Q4 2019 home sales increased to 43 as compared to 32 in the same
period in 2018. This brought the total home sales in 2019 to 128,
an increase of 6% over the 121 home sales in 2018. The demand for
presale homes increased and Genesis ended the fourth quarter of
2019 with 54 new home orders, up from 34 new home orders a year
earlier. New home orders for the year ended December 31, 2019 were 148 units, an increase of
19% over the 124 units for the same period in 2018.
Lower revenues from the sale of development land parcels were
offset by the higher volume of residential lots sold in Q4 2019 (64
lots) compared to 33 lots in Q4 2018. In Q4 2019 one parcel of
development land owned by a limited partnership was sold for
$550,000, compared to one parcel sold
for $4,628,000 in Q4 2018.
There was a lower volume of residential lots sold in 2019 (161
lots) than in 2018 (176 lots). During 2019, one development land
parcel owned by a limited partnership was sold for $550,000 while $15,126,000 was realized from three land
development parcel sales in 2018. These are the two main factors
for lower 2019 revenue, and as a result, direct cost of sales was
also lower in 2019.
On June 28, 2019, legislation was
enacted to decrease the Alberta
corporate income tax rate from 12% to 8% with a 1% reduction
effective July 1, 2019 and further 1%
reductions on each of January 1,
2020, 2021 and 2022. As a result, deferred income tax assets
were reduced by $1,359,000 which was
recognized as an increase in 2019 deferred income tax expense and a
corresponding decrease in Genesis' 2019 net income attributable to
equity shareholders.
Net earnings attributable to equity shareholders in Q4 2019 was
$1,684,000 ($0.04 earnings per share - basic and diluted)
compared to net earnings attributable to equity shareholders of
$2,358,000 ($0.06 earnings per share - basic and diluted) in
Q4 2018. Net earnings attributable to equity shareholders in
YE 2019 was $1,701,000 ($0.04 earnings per share - basic and diluted)
compared to net earnings attributable to equity shareholders of
$4,124,000 ($0.10 earnings per share - basic and diluted) in
YE 2018.
Genesis' cash flows from operating activities were $7,969,000 ($0.19
per share - basic and diluted) in Q4 2019, compared to $7,192,000 ($0.16
per share - basic and diluted) in Q4 2018. Genesis' cash flows from
operating activities were $9,537,000
($0.23 per share - basic and diluted)
in YE 2019, compared to $14,747,000
($0.34 per share - basic and diluted)
in YE 2018.
Genesis had $16,248,000 in cash
and cash equivalents at December 31,
2019 compared to $24,042,000
at December 31, 2018 with the
reduction mainly due to Genesis paying down land project servicing
loans and housing project construction loans.
Total loans and credit facilities outstanding at December 31, 2019 were $51,546,000, 17% of the total book value of
assets, compared to $31,696,000 or
11% of the total book value of assets at December 31, 2018. Total loans and credit
facilities increased due to two new loans. One new loan related to
the acquisition of the Calgary
north lands described previously for which consideration included a
$18,624,000 vendor-take-back mortgage
("VTB"). A second new loan related to the purchase of a
$20,500,000 VTB receivable from a
limited partnership which was financed in part by a $14,470,000 loan.
Outlook
With the overall economic conditions in the CMA continuing to
show signs of improvement, Genesis is committed to implementing its
strategy focused on developing and realizing the value of its
strong land holdings and opportunistically acquiring additional
residential lands in the CMA, while prudently managing its
financial and other resources and controlling costs.
The strategy includes actively pursuing servicing and zoning
approvals to maximize the value of its land holdings. The strong
land base, integrated approach, solid financial position and
experienced team positions Genesis to take advantage of
opportunities to acquire additional lands for future residential
development.
Additional Information
The information contained in this press release should be read
in conjunction with the Consolidated Financial Statements for the
years ended December 31, 2019 and
2018 and the related Management's Discussion and Analysis
("MD&A") dated March 6, 2020
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.
Genesis Annual Meeting
Genesis will hold its annual general meeting on May 13, 2020 at 10 am
(Mountain Daylight Time) in Calgary at Genesis' head office located at
7315 - 8th Street NE, Calgary
AB T2E 8A2.
ADVISORIES
Cautionary Note Regarding 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. 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", "seeks", "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.
Forward-looking statements are based on material factors or
assumptions made by us with respect to, among other things,
opportunities that may or may not be pursued by us; changes in the
real estate industry; fluctuations in the Canadian and Alberta economy; changes in the number of lots
sold and homes delivered per year; and changes in laws or
regulations or the interpretation or application of those laws and
regulations. Because forward-looking statements relate to
the future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of our control. The following table outlines
certain significant forward-looking statements contained in this
press release and factors that could cause actual results to differ
from such statements.
Forward-looking statements in this
news release include, but are not limited to plans and strategies
surrounding the acquisition of additional land; the future
residential development of land; anticipated general economic and
business conditions; and future servicing and zoning
approvals.
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; the cyclicality of the oil and gas
industry; changes in the Canadian US dollar exchange rate; labour
matters; governmental regulations; general economic and financial
conditions; 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
in the Corporation's MD&A under the heading "Risks and
Uncertainties" and the Corporation's 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.
SOURCE Genesis Land Development Corp.