CALGARY, Aug. 7, 2019 /CNW/ - Genesis Land
Development Corp. (TSX: GDC) (the "Corporation" or "Genesis")
reported its financial and operating results for the three months
("Q2") and six months ("YTD") ended June
30, 2019. Genesis 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.
2019 Q2 Highlights:
- Positive cash flow from operating activities of $5.2 million in Q2 2019 and $9.8 million in YTD 2019;
- Genesis had net loss attributable to equity shareholders of
($357,000) or ($0.01 loss per share - basic and diluted) in Q2
2019 and ($283,000) or ($0.01 loss per share - basic and diluted) in YTD
2019, which included a $1.4 million
increase of income tax expense (and a corresponding decrease in
deferred income tax assets) in Q2 and YTD 2019 due to decreases in
the Alberta corporate income tax
rate from 12% to 8%;
- Solid financial position maintained with $19.1 million in cash and cash equivalents and
$17.9 million in loans and credit
facilities (being 7% of total assets) as at June 30, 2019; and
- In July 2019, Genesis made a
$1.85 million investment in a
224-acre property development near its NE Calgary Saddlestone
development through the purchase of 5% of a limited partnership,
including the right to purchase up to 25% of the single-family lots
developed.
Selected financial results and operating data:
|
|
|
|
|
|
|
|
Three months
ended
June 30,
|
Six months
ended
June 30,
|
($000s, except for
per share items or unless otherwise noted)
|
2019
|
2018
|
2019
|
2018
|
Key Financial
Data
|
|
|
|
|
|
Total
revenues
|
|
|
16,533
|
18,955
|
29,230
|
33,324
|
Net (loss) earnings
attributable to equity shareholders
|
(357)
|
540
|
(283)
|
1,227
|
Net (loss) earnings
per share - basic and diluted
|
(0.01)
|
0.01
|
(0.01)
|
0.03
|
Cash flows from (used
in) operating activities
|
5,211
|
(1,336)
|
9,794
|
(139)
|
Cash flows from (used
in) operating activities per share - basic and diluted
|
0.12
|
(0.03)
|
0.23
|
0.00
|
Key Operating
Data
|
|
|
|
|
Land
Development
|
|
|
|
|
Total residential
lots sold (units)
|
37
|
64
|
70
|
101
|
Residential lot
revenues
|
6,554
|
12,141
|
11,930
|
17,592
|
|
|
|
|
|
Home
Building
|
|
|
|
|
Homes sold
(units)
|
33
|
24
|
59
|
57
|
Revenues
(1)
|
15,486
|
10,859
|
26,572
|
24,264
|
New home orders at
period end (units)
|
|
|
49
|
37
|
(1)Includes revenues of
$5,507,000 for 33 lots in Q2 2019 and $9,272,000 for 59 lots in YTD
2019 purchased by the Home Building division from the Land
Development division ($4,045,000 and 24 in Q2 2018; $8,532,000 and
57 in YTD 2018) and sold with the home. These amounts are
eliminated on consolidation
|
($000s, except for
per share items or unless otherwise noted)
|
|
As at Jun. 30,
2019
|
As at Dec.
31,
2018
|
Key Balance Sheet
Data
|
|
|
|
Cash and cash
equivalents
|
|
19,144
|
24,042
|
Total
assets
|
|
262,493
|
278,156
|
Loans and credit
facilities
|
|
17,865
|
31,696
|
Shareholders'
equity
|
|
191,818
|
191,970
|
Loans and credit
facilities (debt) to total assets
|
|
7%
|
11%
|
Overall revenues for Q2 2019 were $16,533,000, down $2,422,000 (13%) from $18,955,000 in Q2 2018. Home sales revenue
was higher by $4,627,000 (43%) with
33 units sold ($15,486,000) in Q2
2019 compared to 24 ($10,859,000) in
Q2 2018 while residential lots sales to third party builders
decreased to 4 lots ($1,047,000) in
Q2 2019 from 40 lots ($8,096,000) in
Q2 2018, a decrease of $7,049,000 or
87%. Due to the lower sales, direct cost of sales was also lower by
$2,292,000 from $14,302,000 in Q2 2018 to $12,010,000 in Q2 2019. Overall gross margins of
$4,523,000 (27.4%) for Q2 2019 were
comparable to gross margins of $4,653,000 in Q2 2018 (24.5%).
Overall revenues for YTD 2019 were $29,230,000, down $4,094,000 (12%) from $33,324,000 in YTD 2018. Home sales revenue was
higher by $2,308,000 (10%) with 59
units sold ($26,572,000) in YTD 2019
compared to 57 ($24,264,000) in YTD
2018 while residential lots sales to third party builders decreased
to 11 lots ($2,658,000) in YTD 2019
from 44 lots ($9,060,000) in YTD
2018, a decrease of $6,402,000 or
71%. Due to the lower sales, direct cost of sales was also lower by
$3,636,000 from $24,245,000 in YTD 2018 to $20,609,000 in YTD 2019. Overall gross margins
were $8,621,000 (29.5%) for YTD 2019
compared to gross margins of $9,079,000 in YTD 2018 (27.2%).
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 $1,387,000 which was
recognized as an increase in deferred income tax expense in Q2
2019. Increased income tax expense resulted in Genesis' net loss
attributable to equity shareholders in Q2 2019 and in YTD 2019. Net
loss attributable to equity shareholders in Q2 2019 was
($357,000) ($0.01 loss per share - basic and diluted)
compared to net earnings attributable to equity shareholders of
$540,000 ($0.01 earnings per share - basic and diluted) in
Q2 2018. Net loss attributable to equity shareholders in YTD
2019 was ($283,000) ($0.01 loss per share - basic and diluted)
compared to net earnings attributable to equity shareholders of
$1,227,000 ($0.00 earnings per share - basic and diluted) in
YTD 2018.
Genesis generated positive cash flows from operating activities
of $5,211,000 ($0.12 per share - basic and diluted) in Q2 2019,
compared to cash flows used in operating activities of ($1,336,000) (($0.03) per share - basic and diluted) in Q2
2018. Genesis generated cash flows from operating activities of
$9,794,000 ($0.23 per share - basic and diluted) in YTD 2019,
compared to cash flows used in operating activities of ($139,000) ($0.00
per share - basic and diluted) in YTD 2018.
Genesis had $19,144,000 in cash
and cash equivalents at June 30, 2019
compared to $24,042,000 as at
December 31, 2018 with the reduction
due primarily to Genesis making an $8,000,000 payment on a vendor-take-back mortgage
payable in the first quarter of 2019 and the reduction of other
debts, offset by positive overall cash flows. Total loans and
credit facilities outstanding at June 30,
2019 were $17,865,000, 7% 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.
Outlook
Genesis continues to implement its strategy focused on
developing its assets in a prudent manner and actively marketing
lots, parcels and homes while controlling costs with the goal of
maximizing cash flow and maintaining its solid financial position.
Additionally, Genesis continues to seek opportunities to acquire
new lands for residential development within the CMA. As mentioned
above, Genesis made an investment of $1,850,000 in a 224-acre property development
near its NE Calgary Saddlestone development through the purchase of
5% of a limited partnership, including the right to purchase up to
25% of the single-family lots developed.
With the expected substantial completion in 2019 of the
development programs for the four new phases started in 2018, and
with no additional phases undertaken in 2019, Genesis expects to
have sufficient lot inventory to meet market needs. Genesis will
continue to actively pursue 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 that may arise
in this environment.
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 months and six months ended
June 30, 2019 and 2018 and the
related Management's Discussion and Analysis ("MD&A") dated
August 7, 2019 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.
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. Forward-looking statements in this news release
include, but are not limited to, the expected completion dates of
various projects that the Corporation is currently engaged in,
plans and strategies surrounding the acquisition of additional
land, the proposed purchase of additional lands
for future development in the CMA, the exercise of Genesis'
right to purchase lots in the new development adjacent to its
Saddlestone community, anticipated general economic and business
conditions, the Alberta real
estate cycle, expectations for lot and home prices, construction
starts and completions, anticipated expenditures on land
development activities, being able to increase home sales process
and construction margins, the timing of the annual meeting and the
ability to continue to renew or repay financial
obligations.
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; labor 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 in 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.