Genesis Reports 2016 Second Quarter Results

CALGARY, Aug. 11, 2016 /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, 2016.  

SUMMARY CORPORATE HIGHLIGHTS

Our key financial results and operating data are as follows:

 

Overview of Market and Operating Results

With major reductions in operating costs, a focused and creative home selling effort and a strong balance sheet, Genesis has delivered profitable operations and generated significant positive cash flows. During the second quarter of 2016, Genesis reduced its debt by $23,236,000 from $63,819,000 at December 31, 2015 to $40,583,000 at June 30, 2016. Genesis grew its cash on hand from $11,399,000 at December 31, 2015 to $15,359,000 at June 30, 2016, resulting in a net debt position of $25,224,000.

Focussed and creative selling efforts targeting the quick possession home segment resulted in home building work in progress being reduced by $10,378,000 from $30,768,000 at December 31, 2015 to $20,390,000 at June 30, 2016. Genesis also focusses on selling residential lots and developed townhouse sites to third parties.

The results for the six months ended June 30, 2016 are substantially improved relative to the same period in 2015. 2016 revenues included two land parcel sales ($11,800,000) with no significant land parcel sales in the same period in 2015 ($100,000). Despite a continuing challenging economic environment, the business is delivering strong results. The general margin improvement in the second quarter was due to cost saving initiatives implemented in March 2016. General, administrative and sales expenses for the second quarter of 2016 were reduced by $923,000 to $3,770,000 compared to $4,693,000 in the second quarter of 2015, or by 19.7%.

Highlights

Volumes and Revenue:

• Genesis sold 40 homes in Q2 2016 with revenues of $21,533,000 (Q2 2015 – 59 and $31,029,000 respectively). Of the 40 homes, 35 were built on residential lots supplied by Genesis’, generating residential lot revenues of $6,952,000 (Q2 2015 – 27 and $5,140,000 respectively).
• Genesis sold 82 homes in YTD 2016 with revenues of $43,742,000 (YTD 2015 – 91 and $46,330,000 respectively). Of the 82 homes, 71 were built on residential lots supplied by Genesis, generating residential lot revenues of $13,956,000 (YTD 2015 – 42 and $7,899,000 respectively).
• Sales of homes, delivered on a quick possession basis, were higher at 15 during Q2 2016 compared to 3 during Q2 2015. YTD sales of quick possession homes were higher at 36 for 2016 compared to 12 during 2015. 
• New home orders were 46 during Q2 2016 compared to 42 in Q2 2015. YTD new home orders were 74 during 2016 compared to 61 in 2015.
• The Q2 2016 closing order book of 55 firm home sales contracts compared to 107 at the close of Q2 2015. This year over year decline is believed to be due to home buyers preferring homes that can be delivered on a quick possession basis. Genesis has been successful in delivering quick possession homes in sufficient volumes to offset the decline in pre-sales orders.
• A 1,653 acre non-core development land parcel was sold in Q2 2016 with revenues of $1,650,000 (Q2 2015 – $100,000). 

Net Earnings:

• Net earnings were $2,828,000 for Q2 2016 compared to $1,333,000 in Q2 2015 and $4,938,000 for YTD 2016 compared to $1,393,000 for YTD 2015.

Cash Flows from Operating Activities

• Cash inflows from operating activities on a quarterly basis were $14,394,000 (inflows of $0.33 per share) at Q2 2016 compared to cash outflows of $1,324,000 (outflows of $0.03 per share) at Q2 2015. Cash inflows from operating activities were $26,663,000 (inflows of $0.60 per share) YTD compared to cash outflows of $20,051,000 (outflows of $0.45 per share) at Q2 2015.

Loans and credit facilities:

• Loans and credit facilities at June 30, 2016 were $40,583,000, compared to $63,819,000 at December 31, 2015, a reduction of $23,236,000.
• The components of loans and credit facilities related to land servicing and home building (excludes the vendor-take-back mortgage and a loan held by a limited partnership) amount to $4,845,000 which is a reduction of $8,271,000 since March 31, 2016 and $16,528,000 since December 31, 2016.
• Genesis made repayments, net of advances, of $8,340,000 during Q2 2016 compared to $2,499,000 during Q2 2015 and $16,669,000 during YTD 2016 compared to $8,031,000 during YTD 2015. In addition, Genesis made a payment of $8,000,000 as the first installment of a $40,000,000 VTB.

Continued cost reductions:

• Genesis continues to review its business with a focus on cost reductions, particularly as long term contractual commitments end and, if necessary to operations, can be replaced with lower cost, shorter term arrangements.

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 and six months ended June 30, 2016 and 2015 and the related Management’s Discussion and Analysis (“MD&A”) dated August 11, 2016 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. The Corporation’s common shares are listed on the Toronto Stock Exchange (TSX: GDC).

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 and Genesis’ ongoing review of its business. 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; the impact of election of governments in Alberta and Canada and the direction of policy which could impact the overall pace of economic growth; 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.

Image with caption: “Genesis Reports 2016 Second Quarter Results (CNW Group/Genesis Land Development Corp.)”. Image available at: http://photos.newswire.ca/images/download/20160811_C3284_PHOTO_EN_751786.jpg