CALGARY, March 21, 2017 /CNW/ - Genesis Land
Development Corp. (TSX: GDC) (the "Corporation" or "Genesis") is
pleased to report its financial and operating results for the three
months and year ended December 31,
2016.
SUMMARY CORPORATE HIGHLIGHTS
Our key financial results and operating data are as follows:
|
|
|
|
Three months
ended December
31,
|
Year
ended December
31,
|
($000s, except for
per share items or unless otherwise noted)
|
2016
|
2015
|
2016
|
2015
|
Key Financial
Data
|
|
|
|
|
Total
revenues
|
28,145
|
36,575
|
115,957
|
119,088
|
Gross
margin
|
3,942
|
9,231
|
26,618
|
22,509
|
Net (loss) earnings
attributable to equity shareholders
|
(1,216)
|
5,365
|
5,906
|
11,014
|
Net (loss) earnings
per share – basic and diluted
|
(0.03)
|
0.13
|
0.13
|
0.25
|
Cash flows from (used
in) operating activities
|
6,229
|
(7,193)
|
42,952
|
(18,325)
|
Cash flows from (used
in) operating activities per share(1)
|
0.14
|
(0.16)
|
0.98
|
(0.41)
|
Special cash dividend
per common share, declared and paid
|
0.25
|
0.12
|
0.25
|
0.12
|
Key Operating
Data
|
|
|
Residential lots sold
to third parties (units)
|
12
|
50
|
58
|
69
|
Residential lots sold
through home building business segment (units)
|
53
|
41
|
146
|
115
|
Average revenue per
lot sold
|
169
|
168
|
181
|
172
|
Development land sold
(acres)
|
-
|
114
|
1,674
|
118
|
Homes sold
(units)
|
56
|
51
|
166
|
209
|
Average revenue per
home sold
|
437
|
460
|
501
|
489
|
New home orders
(units)
|
30
|
36
|
142
|
135
|
|
|
|
|
|
|
As at December
31,
|
|
|
|
2016
|
2015
|
Homes (with lots)
subject to firm sale contracts (units)
|
|
39
|
63
|
|
|
|
|
|
|
|
As at December
31,
|
Key Balance Sheet
Data ($000s, except for per share items or unless otherwise
noted)
|
2016
|
2015
|
Cash and cash
equivalents
|
|
14,318
|
11,399
|
Total
assets
|
|
288,995
|
331,045
|
Loans and credit
facilities
|
|
43,295
|
63,819
|
Total
liabilities
|
|
77,330
|
106,054
|
Shareholders'
equity
|
|
205,751
|
212,125
|
Total
equity
|
|
211,665
|
224,991
|
(1) Basic and diluted
amounts per share
|
Significant 2016 Cash Flows from Operating Activities and
a Large Dividend for Shareholders
Genesis generated significant positive cash flow in 2016 in
comparison to 2015 as a result of its focus on strengthening cash
flow and its balance sheet. In 2016, Genesis had cash inflows from
operating activities of $42,952,000
($0.98 per share), up $61,277,000 ($1.39
per share) compared to 2015 cash outflows from operations of
$18,325,000 ($0.41) per share). 2016 cash inflows from
operations were mainly used to:
- Reduce debt by over $20,500,000
- Pay a dividend of $10,936,000
($0.25 per share)
- Increase cash on hand by $2,919,000
- Repurchase common shares through the normal course issuer bid
in the amount of $1,420,000
2016 – A TRANSFORMATION YEAR
2016 was a transformative year for Genesis, with the board
adopting a shareholder focused strategy adapted to the realities of
the Alberta economy, a significant
improvement in cash flow from operations, the largest dividend in
the company's history as a public company, a revised leadership
structure designed to create accountability and deliver results,
and the achievement of significant cost reductions and
efficiencies. Management renewed its focus on obtaining or
improving entitlements on its lands, adopted a balanced approach to
selling land and lots to third parties rather than only internally,
and prudently sold non-core lands.
New Strategy
In prior years, Genesis focused on building homes primarily on
its own land, with most free cash flow being reinvested in the
business to fund land servicing and new projects, and to acquire
additional land. In 2016, Genesis adopted a new strategy to achieve
the following objectives:
- Generate strong cash flow from the current inventory of land in
the Calgary Metropolitan Area (the
"CMA") – Genesis land inventory is estimated to include over 10,000
single family and townhouse units and over 300 acres of mixed use
commercial lands
- Return excess cash flow to shareholders through special
dividends and/or share buy backs
- Sell land with the objective of maximizing the current net
present value of the land, which may include developing a parcel
for later sale, holding land off the market or selling it before
full development has occurred
- Restructure the home building business to reflect current
market opportunities and to improve efficiency, reduce the invested
capital and expand the product mix to include additional small
townhouse projects - all with the goal of generating a strong
return on invested capital
- Minimize capital expenditures by servicing land only when it
has been sold or is highly likely to be sold within 12-24
months
- Reorganize the leadership team to improve and speed up
decision-making and create higher levels of accountability
throughout the organization
- Minimize overhead and other costs
- Sell non-core land as reasonable prices can be realized.
Changes in leadership structure
Genesis made a number of staffing and organizational changes in
early 2016 with the objective of creating clear lines of
responsibility for the three main business functions of Genesis
(land development, land sales and project financing, and home
building) and consolidating in the CFO role, responsibility for all
support functions. This structure has allowed the CEO to focus on
developing and implementing the new strategy, monitoring and
analyzing results, delegating day to day operational responsibility
and ensuring that Genesis has strong cash flow available for
distribution to shareholders. In addition, the executive
compensation plan was simplified to eliminate the share option
plan, create accountability for delivering measurable results for
shareholders and create additional accountability for achieving or
exceeding specific operational targets.
Significant cost reductions in 2016
In early 2016, Genesis reviewed its operating and capital
budgets to reduce operating costs and service investments and to
respond to the expected level of land and lot sales over the next
several years. This resulted in 2016 operating costs being
reduced by 14% in comparison to 2015, the postponement of
previously planned land servicing costs on a large development land
parcel until a buyer is found, and the significant reduction of
home building work in progress. Genesis reduced its staffing
and consolidated a number of roles, ending 2016 with 55 employees
in comparison to 80 employees at the end of 2015. Genesis continues
to seek cost reductions and operating efficiencies.
Focus on obtaining entitlements or improving existing
entitlements
In 2016, Genesis renewed its efforts to obtain or improve the
zoning and servicing entitlements for its large portfolio of land.
Zoning changes generally take a number of years and are not certain
until the required municipal and other regulatory approvals have
been obtained. Overall, Genesis made significant progress on all of
its rezoning projects in 2016 and progress continues in 2017.
Balanced approach to selling land and lots to third
parties rather than only internally
In 2016, Genesis focused on selling residential lots, townhouse
sites and other lands to third parties, rather than retaining land
for future use primarily by Genesis in its homebuilding business.
2016 revenues included the sale of three land parcels to third
parties for $21,237,000 and 58 lots
to third parties compared to two land parcels for $3,600,000 and 69 lots in 2015 (with 50 lots
being sold to a third party builder in late 2015 for use in 2016).
In 2016, Genesis Builders Group Inc., ("GBG") a wholly owned
subsidiary of Genesis, sold 146 homes on lots provided by Genesis,
in comparison to 115 in 2015 and continues to play an important
role in the sale of Genesis lots.
Solid 2016 results for Genesis Builders Group
GBG had 166 new home sales in 2016 with revenues of $83,249,000 compared to 209 new home sales with
revenues of $102,846,000 in 2015. Of
the 166 new home sales, 146 were built on residential lots supplied
by Genesis, generating residential lot revenues included in the
land division of $25,495,000 (2015 –
115 and $18,935,000
respectively). There were 142 new home orders in 2016
compared to 135 in 2015. There were 30 new home orders in Q4 2016
compared to 36 in Q4 2015.
Monetization of non-core lands
Significant progress was made in selling non-core land in 2016
with $1,650,000 realized in
2016. In March 2017, Genesis
announced the sale of 1,476 acres of unentitled, undeveloped
non-core lands owned by Genesis near the Hamlet of Delacour,
Alberta for $9,000,000, which is expected to close in
May 2017. This sale will
substantially complete the plan to dispose of the non-core lands
owned by Genesis, with the bulk of non-core assets by dollar value
having been sold or contracted for sale.
Net earnings down – impacted by non-cash write
downs
Net earnings were $5,906,000 for
the year ending December 31, 2016
compared to $11,014,000 for the year
ending December 31, 2015. There was a
net loss of $1,216,000 for Q4 2016
compared to net earnings of $5,365,000 in Q4 2015 in part due to non-cash
write offs of certain lands owned by Genesis as a result of revised
estimates of costs to complete the development, including a
significant increase in the estimate of municipal levies. Net
earnings for the three months and year ended December 31, 2016 were impacted by $5,372,000 and $8,665,000 write-downs on parcels of development
land located in Alberta (2015 –
$1,129,000 and $12,390,000 respectively).
2017 BUSINESS PLAN
The business plan for 2017 includes:
- Maximizing the return of capital to shareholders through
dividends and/or buying back shares
- Obtaining additional land servicing and zoning entitlements
which are expected to materially increase the value and
marketability of these lands
- Developing detailed plans for the development and ultimate
disposition of several large parcels of land to maximize the net
present value of each project
- Adding one or more third party builders acquiring lots in
Genesis communities, in addition to the seven third-party builders
working with Genesis at the end of 2016
- Increasing the number of units sold by GBG, including
constructing several townhouse complexes, at reasonable
construction margins while optimizing the amount of required
capital
- Servicing a phase of the "Saddlestone" community in
Calgary and an additional phase in
Airdrie
- Selling the remaining non-core land
Additional Information
The information contained in this press release should be read
in conjunction with the consolidated financial statements for the
year ended December 31, 2016 and 2015
and the related Management's Discussion and Analysis ("MD&A")
dated March 21, 2017 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 holding a
significant portfolio of well-located entitled and unentitled
residential, commercial and mixed-use lands as well as serviced
lots. The Corporation's common shares are listed on the Toronto
Stock Exchange (TSX: GDC).
As a land developer, Genesis plans, rezones, subdivides,
services and sells residential communities and commercial and
industrial lands to third parties, and sells lots and completed
homes through its home building business. The land portfolio is
planned, developed, serviced and sold with the objective of
maximizing the risk adjusted net present value of the land and to
maximize the cash flow available for distribution to
shareholders.
Genesis Builders Group Inc. designs, constructs and sells
single-family homes and townhouses primarily on lands developed by
Genesis. The objective of the home building business is to deliver
a significant return and cash flow from the capital invested in it
and to sell incremental Genesis single family lots and townhouse
land parcels.
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". Forward-looking
statements in this news release include statements with respect to
the economic environment, objectives to achieve in Genesis' new
strategy, Genesis' business plan for 2017, the Corporation's cost
reductions and operating efficiencies, progress of rezoning
projects, the continuing role of GBG in the sale of Genesis lots,
the closing of a sale of land near Delacour, Alberta, the expected level of new serviced
lot inventory available to builders and the ability of Genesis to
sell homes on a quick possession basis. 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 or unanticipated impact of general
economic conditions in Canada,
the United States and globally;
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; 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, any forward-looking statements contained in the 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.