CALGARY, Aug. 13, 2015 /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, 2015.
SUMMARY CORPORATE HIGHLIGHTS
Our key financial results and operating data are as follows:
|
|
|
|
Three months
ended June
30,
|
Six months
ended June
30,
|
($000s, except for
per share items or unless otherwise noted)
|
2015
|
2014
|
2015
|
2014
|
Key Financial
Data
|
|
|
|
|
Total
revenues
|
31,822
|
34,765
|
47,595
|
72,752
|
Gross
margin
|
(1,147)
|
14,465
|
3,544
|
22,303
|
Net earnings
attributable to equity shareholders
|
1,333
|
7,231
|
1,393
|
10,171
|
Adjusted earnings
attributable to equity shareholders(1)
|
4,212
|
6,459
|
4,272
|
9,399
|
Net earnings per
share – basic and diluted
|
0.03
|
0.16
|
0.03
|
0.23
|
Adjusted earnings per
share – basic and diluted(1)
|
0.09
|
0.14
|
0.10
|
0.21
|
Cash flows (used in)
from operating activities
|
(1,324)
|
9,312
|
(20,051)
|
30,362
|
Cash flows (used in)
from operating activities per share(2)
|
(0.03)
|
0.21
|
(0.45)
|
0.68
|
Key Operating
Data
|
|
|
|
|
Residential lots sold
to third parties (units)
|
|
3
|
39
|
6
|
100
|
Average revenue per lot
sold to third parties
|
|
183
|
207
|
165
|
196
|
Residential lots sold
through the home building business segment (units)
|
|
27
|
74
|
42
|
99
|
Homes sold
(units)
|
|
59
|
65
|
91
|
92
|
Average revenue per
home sold
|
|
526
|
409
|
509
|
422
|
New home orders
(units)
|
|
42
|
63
|
61
|
158
|
|
|
|
|
|
|
|
|
|
As at June 30,
|
|
|
|
|
2015
|
2014
|
Homes with firm sale
contracts (units)
|
|
|
|
107
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Balance Sheet
Data ($000s, except for per share items or unless otherwise
noted)
|
As
at June 30, 2015
|
As at
December
31,
2014
|
Cash and cash
equivalents
|
|
|
3,975
|
33,048
|
Total
assets
|
|
|
324,951
|
309,742
|
Loans and credit
facilities
|
|
|
49,387
|
23,892
|
Total
liabilities
|
|
|
100,592
|
78,468
|
Shareholders'
equity
|
|
|
209,601
|
208,101
|
Total
equity
|
|
|
224,359
|
231,274
|
(1)
|
Non-GAAP financial
measure
|
(2)
|
Basic and diluted
amounts per share
|
"The Calgary real estate market
continues weaker than last year and will likely remain challenged
for a period of time due to general economic weakness. In light of
these market conditions, we are adjusting our approach to be
especially cost competitive and focused on profitability, while
continuing to implement our strategic plan," said Bruce Rudichuk, President and Chief Executive
Officer.
Highlights
We began the year 2015 with an opening order book of 137 homes
with firm sales contracts. Our financial results in the home
building business during the three and six months ended
June 30, 2015 ("Q2 2015" and "YTD
2015") were stronger than those of the three and six months ended
June 30, 2014 ("Q2 2014" and "YTD
2014").
In 2015 we expect to close the 137 new home orders we brought in
to 2015 from 2014. Buyer traffic was steady during Q2 2015, up from
the slow start at the beginning of the year. However, new home
orders continued to be slow during Q2 2015 and YTD 2015 when
compared to the same periods in 2014, reflecting a softer housing
market. We have 107 homes with firm sales contracts at the end of
Q2 2015. We have delivered 91 homes in YTD 2015 and continue to
retain our target of 200 home closings for 2015.
The land development segment experienced lower than normal
revenue during Q2 2015 and YTD 2015 due to the market turndown, the
timing of release for sale of new development phases and,
consistent with the Corporation's strategy, to reserve a
significant portion of the developed lots for our home building
business segment.
Revenue:
- Due to lower lot sales in 2015 revenues were lower in the
quarter. They were $31,822 for Q2
2015 compared to $34,765 for Q2 2014.
Revenues for YTD 2015 were $47,595
compared to $72,752 for YTD
2014.
Gross margin and write-downs:
- Gross margin percentage before write-down or recovery increased
to 31.8% and 31.1% for Q2 2015 and YTD 2015 compared to 29.1% and
24.7% in Q2 2014 and YTD 2014, respectively.
- We obtained independent appraisals for all our real estate at
the end of Q2 2015 with the exception of non-core properties that
are actively being marketed for sale. Our core properties have
retained or increased their appraised value since December 31, 2014 ("YE 2014") and NAV has
increased to $9.00 per share (YE 2014
- $8.69).
- The projected development time line of certain non-core parcels
of agricultural land, held by Genesis and by a limited partnership,
is expected to be significantly extended, resulting in a write-down
to Genesis of $3,839 (2014 – recovery
of $1,030). The limited partnership
incurred a write-down of $7,422 (2014
– recovery of $3,331).
Net earnings:
- Adjusted net earnings, after adjusting for after-tax write-down
or recovery of real estate, was $4,212 for Q2 2015 and $4,272 for YTD 2015 compared to $6,459 and $9,399
in Q2 2014 and YTD 2014 respectively.
Cash flows from operations:
- Cash used in operations was $1,324 or $0.03 per
share for Q2 2015 compared cash flows from operations of
$9,312 or $0.21 per share for Q2 2014. Cash used in
operations was $20,051 or
$0.45 per share for YTD 2015 compared
to cash flows from operations of $30,362 or $0.68
per share for YTD 2014.
Financing:
- Genesis reduced its loans and credit facilities by $7,511, excluding the vendor-take-back mortgage
("VTB") of $33,006 which was assumed
for the purchase of lands in southeast Calgary.
- Non-cash interest on the VTB amounted to $658 and $1,318 for
Q2 2015 and YTD 2015 respectively.
Home building segment:
- The home building business performance was in line with
expectations, with home building revenues, gross margins and
earnings increasing in Q2 2015 and YTD 2015 compared to the same
periods in 2014.
- Genesis sold 59 homes in Q2 2015 with revenues of $31,029 (Q2 2014 – 65 and $26,592) and 91 homes in YTD 2015 with revenues
of $46,330 (YTD 2014 - 92 and
$38,877).
Land development segment:
- Residential lot sales were slower during 2015 as no new phases
were yet completed. Lot sales are anticipated to increase once
development of new phases is complete and lots are available for
sale.
- Genesis sold 30 residential lots in Q2 2015 with revenues of
$5,834 (Q2 2014 – 113 and
$17,590) and 48 residential lots in
YTD 2015 with revenues of $9,064 (YTD
2014 – 199 and $32,624).
Operations Update
Land Development Division
- We will commence development of Bayside phase 8 in fall 2015 and expect the
phase to be ready in late 2015, thus adding 128 single family-lots
to our inventory.
- We are awaiting approval from the City of Calgary to commence development work
in Saddlestone phase 8 and from the City
of Airdrie to commence development work in Bayview Phase
10.
- Deep utility construction is in progress in Sage Meadows Phase
4. Completion of this site is expected in late 2015 adding 74
single-family lots to our inventory.
Home Building Division
- The home building division runs a spec home program to meet
deliveries on a quick possession basis. As of June 30, 2015 we have 109 homes (December 31, 2014 – 46 homes) in various stages
of construction with a total investment of $5.7 million (December 31,
2014 - $1.7 million).
- In addition to spec home inventory, we have as at June 30, 2015, 107 homes (December 31, 2014 – 137 homes) under construction
which are under firm contracts to be delivered to home buyers upon
completion.
Additional Information
The information contained in this press release should be read
in conjunction with the condensed consolidated interim financial
statements for the three and six months ended June 30, 2015 and 2014, and the related
Management's Discussion and Analysis ("MD&A") dated
August 13, 2015, 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.
2015 Second Quarter Conference Call
Genesis will host a conference call and web cast on Friday, August 14, 2015 at 7:00 a.m. MDT (9:00 a.m.
EDT) to discuss the Corporation's 2015 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: http://tinyurl.com/genesis-Q215. The web
cast will be archived two hours after the presentation at the
website 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
#278086 until August 28, 2015.
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
NAV, gross margin before recovery or write-down, and adjusted
earnings 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 Corporation's 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. 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".
Forward-looking statements in this news release 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 2015 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, Genesis'
business strategy, including the geographic focus of its activities
in 2015 and beyond, the constraint on margins, profitability and
the pace of activity in Calgary's
home building industry throughout 2015 and possibly 2016, the
expected capital contribution of future earnings and cash flow from
land holdings in the Calgary
Metropolitan Area, the ability to close the book of homes with firm
sales contracts, the ability to meet the objective to increase the
closing of home builds in 2015 as compared to 2014, 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 and the ability of management to
close the gap between net asset value and share price. 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 access and 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; 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 Corporation's AIF under the heading "Risk
Factors". Furthermore, the forward-looking statements contained in
the MD&A 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.