CALGARY, Nov. 6, 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 nine months ended September 30,
2014.
CORPORATE HIGHLIGHTS
Our key financial results and operating data are as follows:
|
|
|
|
Three months
ended September
30,
|
Nine months
ended September
30,
|
($000s, except for
per share items or unless otherwise noted)
|
2014
|
2013
|
2014
|
2013
|
|
|
|
|
|
Key Financial
Data
|
|
|
|
|
Total
revenues
|
32,984
|
19,734
|
105,736
|
69,746
|
Gross
margin
|
9,311
|
(5,564)
|
31,614
|
8,501
|
Recovery (write-down)
of real estate held for development and sale
|
-
|
(11,141)
|
4,361
|
(12,127)
|
Gross margin before
recovery (write-down)(1)
|
9,311
|
5,577
|
27,253
|
20,628
|
Gross margin before
recovery (write-down) (%)(1)
|
28.2%
|
28.3%
|
25.8%
|
29.6%
|
Net earnings
attributable to equity shareholders
|
4,366
|
(4,644)
|
14,537
|
733
|
Net earnings per
share – basic and diluted
|
0.09
|
(0.10)
|
0.32
|
0.02
|
Adjusted earnings per
share – basic (1)
|
0.09
|
0.01
|
0.30
|
0.15
|
Cash flows from
operating activities
|
7,976
|
2,538
|
39,032
|
53,379
|
Cash flows from
operating activities per share(2)
|
0.18
|
0.06
|
0.87
|
1.19
|
|
|
|
|
|
Key Operating
Data
|
|
|
|
|
Residential lots sold
to third parties (units)
|
21
|
17
|
121
|
88
|
Residential lots sold
through the home building business segment (units)
|
30
|
36
|
129
|
74
|
Development land sold
(acres)
|
-
|
-
|
121.91
|
11.28
|
Average revenue per
lot sold to third parties
|
166
|
163
|
191
|
184
|
Average revenue per
acre
|
-
|
-
|
115
|
591
|
Homes sold
(units)
|
62
|
40
|
154
|
122
|
Average revenue per
home sold
|
473
|
423
|
443
|
384
|
New home orders
(units)
|
43
|
55
|
201
|
135
|
|
|
|
|
|
|
|
|
As at September
30,
|
|
|
|
2014
|
2013
|
Homes with firm sale
contracts (units)
|
|
|
161
|
97
|
|
|
|
|
|
|
|
|
(1) Non-GAAP financial
measure
|
(2) Basic and diluted
amounts per share
|
|
|
|
Key Balance Sheet
Data ($000s, except for per share items or unless otherwise
noted)
|
As at
September
30, 2014
|
As
at December 31, 2013
|
Cash and cash
equivalents
|
|
|
16,693
|
|
17,678
|
Total
assets
|
|
|
303,416
|
|
313,846
|
Loans and credit
facilities
|
|
|
16,519
|
|
50,373
|
Total
liabilities
|
|
|
74,392
|
|
95,920
|
Shareholders'
equity
|
|
|
204,874
|
|
195,483
|
Total
equity
|
|
|
229,024
|
|
217,926
|
Debt to total
assets
|
|
|
5.4%
|
|
16.1%
|
|
(1) Non-GAAP financial
measure
|
"This quarter is highlighted by continuing and
improved results in both home building and land development," said
Bruce Rudichuk, President and Chief
Executive Officer. "Notably, our home building business has
improved in almost every measure of performance, including a level
of revenue, profitability and quality never achieved at Genesis. We
are very proud of the success our team has achieved".
Board Chair Stephen
Griggs stated, "This is another excellent quarter for the
company that builds on the company's growing home building and land
development business. The board of directors is very pleased to see
the positive results of the successful implementation of the
strategic plan and the increasing strength of the company. With
such a strong financial position and more cash than drawn loans and
credit facilities, we are well-positioned for any market
opportunities, to weather challenges that may arise and reward all
of our shareholders".
Highlights
The ongoing successful implementation of our
strategic plan is driving strong performance in both our land
development and home building business segments. We continue to
experience 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, strengthening profitability, strong cash flow and a
balance sheet poised to support future growth and shareholder
distributions.
Home building profitability accelerates:
- Earnings before income taxes and Non-Controlling Interest
("NCI") for the home building segment rose in Q3 2014 to
$2,204 (2013 - $410) and YTD 2014 to $3,290 (2013 - $117)
- Across the board improvement in the home building business
segment with revenues, gross margins, earnings and volumes up
significantly during Q3 2014 and YTD 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.
- Gross margins increased to 17.8% and 17.0% for Q3 2014 and YTD
2014 respectively, compared to 15.4% and 14.5% for the same periods
in 2013.
Earnings rise to new
levels:
- Earnings rose to $4,366 (2013 –
loss of $4,644) and $14,537 (2013 - $733) for Q3 2014 and YTD 2014 respectively.
- Reflecting large revenue gains in our home building segment,
total revenues grew by 67.1% and 51.6% to $32,984 (2013 – $19,734) and $105,736 (2013 – $69,746) respectively in Q3 2014 and YTD 2014
compared to the same periods in 2013.
- Gross margins increased to 28.2% and 29.9% for Q3 2014 and YTD
2014 respectively, compared to -28.2% and 12.2% for the same
periods in 2013.
Sharply higher increase in new home orders and
firm sale contracts:
- New home orders for Q3 2014 and YTD 2014 were 43 and 201
compared to 55 and 135 in the same periods in 2013, even though the
new home orders declined for Q3 by 21.8%, new homes orders for YTD
increased by 48.9%.
- Homes with firm sale contracts increased 66% to 161 at
September 30, 2014 compared to 97 at
September 30, 2013.
- Home sales for Q3 2014 and YTD 2014 were 62 and 154 compared to
40 and 122 in the same periods in 2013.
Land development segment continues revenue growth
and sharply improved profitability:
- Genesis' land development business segment produced solid
revenue gains
- Earnings before income taxes and NCI for Q3 2014 and YTD 2014
of $3,398 (2013 – loss of
$6,244) and $18,166 (2013 – $863) respectively.
- Land development segment's residential lot sales for Q3 2014
and YTD 2014 were 51 and 250 compared to 53 and 162 in the same
periods in 2013, despite a decrease of 3.8% for Q3 there was a
54.3% increase for YTD 2014.
Continuing strong cash flows from operations:
- Cash flow from operating activities for Q3 2014 and YTD 2014
was $7,976 ($0.18 per share) and $39,032 ($0.87 per
share) compared to $2,538
($0.06 per share) and $53,379 ($1.19 per
share) in the same periods in 2013.
Balance sheet
strength:
- Significantly reduced Loans and Credit Facilities to
$16,519 at September 30, 2014 from $50,373 at December 31,
2013.
- Genesis has more cash on hand at Q3 2014 ($16,693), than it has drawn loans and credit
facilities of ($16,519) largely due
to strong cash flows from operating activities and the sale of the
non-core Acheson development land
parcel in Q1 2014.
- Debt to total assets dropped to 5.4% at September 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 48.1% to $1,493 from $2,875
for YTD 2014 compared to the same period in 2013.
Market Overview
We own a large portfolio of entitled residential
and mixed-use land, which is well positioned to benefit
significantly from the continued robust activity in the
Alberta economy. Land values in
Calgary have risen for both
entitled land and home building lots, reflecting the tightening of
entitled land supply and the continuing strong demand for homes in
the Calgary Metropolitan Area.
Alberta's
general economic conditions continue to be strong, supporting
expectations of a vigorous pace of activity in Calgary's home building industry throughout
the balance of 2014 and likely well into 2015. Despite a
recent drop in crude oil prices, which may temper growth estimates
for the province, strong economic fundamentals include low
unemployment and interest rates, low and stable inflation rates,
positive net migration to Alberta
and above average earnings by Albertans. There are three main oil
pipelines which are pending approvals. Approvals for any of these
three projects are expected to give a further boost to the economy
as pipeline construction will likely produce more jobs and
Alberta oil producers will be able
to move the oil currently affected by transportation capacity
constraints.
In addition to the strong economic fundamentals,
the policy framework, designed to manage growth in the City of Calgary, is contributing to
constraints on the industry's capacity to bring supply of developed
building lots to market. Such constraints generally
contribute to price increases and challenges for home builders that
are without a stable lot supply to support their operations. We see
such challenges and increases in price not only continuing but
perhaps escalating. These 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 all of which are expected to contribute to continued
strong earnings, and more importantly, potentially substantive
increases to our net asset value over the next several years.
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 nine months ended
September 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 Third Quarter Conference Call
Genesis will host a conference call and web cast
on Friday, November 7, 2014 at
7:00 a.m. MST (9:00 a.m. EST) to discuss the Corporation's 2014
third 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 #977307 until November 21, 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 positive 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
anticipated boost of any proposed pipeline construction to the
Alberta economy, 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, net asset value and
profitability, the timing and operation of new accounting and
operating software and , the ability of management to close
the gap between net asset value and share price. 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.