Mr. Iain Stewart reports
GENESIS REPORTS 2020 THIRD QUARTER RESULTS
Genesis Land Development Corp. has released its financial and operating results for the three months (Q3) and nine months (year to date (YTD)) ended Sept. 30, 2020. Genesis is an integrated land developer and residential home builder operating in the Calgary metropolitan area (CMA), owning and developing a growing portfolio of well-located, entitled and unentitled residential, commercial and mixed-use lands and serviced lots in the CMA.
As demonstrated in the highlights below, Genesis has focused on executing its business plan while preserving cash resources and protecting its balance sheet.
2020 highlights (Q3 2020 and YTD 2020):
- Positive cash flow from operations up significantly: Genesis generated positive cash flows from operating activities of $9.9-million (24 cents per share, basic and diluted) in Q3 2020 and $25.1-million (60 cents per share, basic and diluted) in YTD 2020. This is a significant improvement from the same periods in 2019, in which cash flows used in operating activities were $10.1-million (cash flows used of 24 cents per share, basic and diluted) for Q3 2019, while cash flows generated from operating activities were $1.6-million (cash flows generated of four cents per share, basic and diluted) for YTD 2019.
- Net earnings increased: Net earnings attributable to equity shareholders in Q3 2020 were $3.8-million (earnings of nine cents per share, basic and diluted), compared with $300,000 (earnings of one cent per share, basic and diluted) in Q3 2019. Net earnings attributable to equity shareholders in YTD 2020 were $70,000 (earnings of nil per share, basic and diluted), compared with $20,000 (earnings of nil per share, basic and diluted) in YTD 2019. In Q1 2020, the corporation recorded writedowns of $10.0-million (2019 -- $800,000) on a parcel of land held for development and $800,000 (2019 -- nil) relating to a townhouse project.
- Significant increase in homes sold and new home orders: In Q3 2020, Genesis sold 53 homes, an increase of 104 per cent from the 26 sold in Q3 2019. In YTD 2020, Genesis sold 135 homes, an increase of 59 per cent from the 85 sold YTD 2019. At Sept. 30, 2020, Genesis had 138 new home orders, compared with 112 at Sept. 30, 2019. Genesis had 57 outstanding new home orders at Sept. 30, 2020 (61 on Sept. 30, 2019, and 54 at Dec. 31, 2019).
- Lot sales up: In Q3 2020, Genesis sold 76 residential lots (23 to third party builders and 53 through Genesis's home building division), an increase of 182 per cent from 27 lots in Q3 2019 (one to a third party builder and 26 through its home building division). In YTD 2020, Genesis sold 195 residential lots (60 to third party builders and 135 through its home building division), an increase of 101 per cent from 97 lots in YTD 2019 (12 to third party builders and 85 through its home building division).
$9.5-million of development land sales: YTD 2020, Genesis has sold three development land parcels for $9.5-million, versus none in YTD 2019.
- Revenues up 132 per cent in Q3 2020: These higher sales volumes in all areas generated Q3 2020 revenue of $29.7-million, compared with $12.8-million in Q3 2019 and YTD 2020 revenues of $84.1-million, compared with $42.0-million in YTD 2019.
- $30.7-million of cash and net debt of $13.7-million: On Sept. 30, 2020, Genesis had $30.7-million in cash and cash equivalents, and outstanding loans and credit facilities of $44.4-million (15 per cent of the total book value of its assets).
SELECTED FINANCIAL RESULTS AND OPERATING DATA
(in thousands of dollars, except per-share items or unless otherwise noted)
Three months ended Sept. 30, Nine months ended Sept. 30,
2020 2019 2020 2019
Key financial data
Total revenues $ 29,739 $ 12,786 $ 84,116 $ 42,016
Net earnings attributable to equity shareholders 3,813 300 74 17
Net earnings per share, basic and diluted $ 0.09 $ 0.01 $ 0.00 $ 0.00
Cash flows from (used in) operating activities 9,893 (10,076) 25,125 1,568
Cash flows from (used in) operating activities per share,
basic and diluted $ 0.24 $ (0.24) $ 0.60 $ 0.04
Key operating data
Total residential lots sold (units) 76 27 195 97
Residential lot revenues 13,926 4,911 34,417 16,841
Development land revenues 320 - 9,482 -
Homes sold (units) 53 26 135 85
Revenues 24,838 12,623 62,827 39,195
Outstanding new home orders at period-end (units) 57 61
KEY BALANCE SHEET DATA
(in thousands of dollars, except per-share items or unless otherwise noted)
As at Sept. 30, As at Dec. 31,
Cash and cash equivalents $ 30,719 $ 16,248
Total assets 287,055 296,268
Loans and credit facilities 44,383 51,546
Shareholders' equity 193,952 193,957
Loans and credit facilities (debt) to total assets 15% 17%
Development approvals delayed
On Nov. 3, 2020, Calgary City Council did not approve applications for removal of growth management overlays (GMOs) from 11 proposed projects belonging to various land developers, of which two projects belonged to Genesis, namely Ricardo Ranch and Lewiston. GMOs are required to be removed prior to receiving final development approvals. The two Genesis projects met or exceeded, to the best of Genesis's understanding, all preidentified criteria for removal of their respective GMOs. Genesis intended to commence development of these two projects in 2021. Genesis will give a high priority to reapplying for removal of the GMOs at the earliest opportunity.
The Calgary metropolitan area economy has seen materially lower economic activity and increased unemployment levels due to the COVID-19 pandemic and low energy prices. While the Calgary economy improved in the third quarter, the duration and impact of the COVID-19 pandemic and the impact of lower energy prices remain unknown, and, as a result, it is not possible to reliably estimate the impact on the financial results and condition of the corporation in future periods.
Genesis continues to adapt its operations, capital investments and marketing approaches to address current conditions, and it has seen positive results from these activities. These positive results include significant increases in the volumes of new home orders and sales of houses, lots and development lands. These higher volumes generated significant cash flows from operating activities of $25.1-million for YTD 2020. "The strength and resilience of our people and assets shows in the strong results produced through Sept. 30 for 2020," said chief executive officer Iain Stewart. "I am confident we can continue to execute on our business plan and deliver long-term value for our shareholders despite current economic challenges."
Genesis is committed to implementing its strategy to develop and realize the value of its landholdings, while prudently managing its financial and other resources with a focus on controlling costs, preserving cash, protecting the value of its assets and limiting financing risk, while ensuring that all health and safety recommendations of regulatory authorities are being followed and, when feasible, exceeded.
The information contained in this news release should be read in conjunction with the unaudited condensed consolidated interim financial statements for the three and nine months ended Sept. 30, 2020, and Sept. 30, 2019, and the related management's discussion and analysis (MD&A) dated Nov. 5, 2020, which have been filed with Canadian securities regulatory authorities. Copies of these documents may be obtained via SEDAR or the company's website.
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