Melcor Developments (MRD) Q3 2024 earnings summary

Executive summary

• Q3-2024 revenue declined 33.0% to $59.51 million, mainly due to no US sales; year-to-date revenue down 5.9% to $178.96 million.

• Net loss of $34.98 million in Q3-2024 versus net income of $28.88 million in Q3-2023; year-to-date net income fell 97.8% to $1.14 million.

• Funds from operations (FFO) dropped 26.4% in Q3 to $16.51 million but rose 7.4% year-to-date to $50.37 million.

• Quarterly dividend of $0.11 per share declared, payable December 31, 2024.

• Announced acquisition of remaining 44.6% interest in Melcor REIT LP for $4.95 per unit; backstop loan agreement with REIT at 12% interest.

Financial highlights

• Q3-2024 gross profit down 29.6% to $28.61 million; year-to-date gross profit down 5.9% to $87.31 million.

• Basic EPS fell to a loss of $1.15 in Q3-2024 (Q3-2023: $0.94); year-to-date EPS down to $0.04 (2023: $1.70).

• Gross margin improved to 48.1% in Q3-2024 (Q3-2023: 45.8%).

• Net margin in Q3-2024 was -58.8% (Q3-2023: 32.5%).

• Book value per share at September 30, 2024 was $39.56.

Outlook and guidance

• Alberta's land and housing market remains strong, driven by migration and demand for suburban living.

• Focus remains on maintaining a strong balance sheet and prudent spending amid inflation and higher interest rates.

• Proceeds from asset sales to be used for debt reduction and focus on core Alberta markets.