Bridgemarq Real Estate Services Reports Second Quarter Results and Monthly Dividend

·12 min read

TORONTO, Aug. 9, 2022 /CNW/ - Bridgemarq Real Estate Services Inc. ("Bridgemarq" or the "Company") (TSX: BRE) today announced its second quarter consolidated financial results and the approval of a monthly dividend to holders of the Company's restricted voting shares.

HIGHLIGHTS

  • Revenue for the first half of 2022 is $27.2 million compared to $27.1 million last year. Second quarter revenue was $13.8 million, down slightly from $14.0 million in Q2 last year. 

  • Net earnings for the quarter were $11.3 million or $0.36 per share, on a fully-diluted basis compared to $0.9 million or $0.10 per share in the second quarter of 2021 with non-cash valuation adjustments accounting for most of the increase.

  • Distributable Cash Flow decreased to $5.9 million compared to $6.4 million in the second quarter of 2021.

  • The Board of Directors approved a dividend to shareholders of $0.1125 per restricted voting share payable September 30, 2022, to shareholders of record on August 31, 2022.

SECOND QUARTER OPERATING RESULTS

Revenues during the second quarter were $13.8 million, compared to $14.0 million in the same period in 2021. The decrease in revenues is primarily due to a decline in transaction activity in the Canadian real estate market partly offset by an increase in the number of REALTORS® in the Company network over the past twelve months. In the first half of 2022, revenues increased to $27.2 million from $27.1 million the year prior as a result of network growth.

The Company generated net earnings of $11.3 million, or $0.36 per share, on a fully-diluted basis in the second quarter, compared to $0.9 million, or $0.10 per share, in Q2 2021. The increase in net earnings was primarily due to a gain on the fair value of Exchangeable Units of $8.1 million, compared to a loss of $2.5 million in the second quarter of 2021. The fair valuation adjustment on the Exchangeable Units is directly related to changes in the market price of the Corporation's Restricted Voting Shares.

Distributable Cash Flow for the twelve month period ending June 30, 2022, amounted to $20.9 million, or $1.63 per share, as compared to $18.4 million, or $1.43 per share, generated for the twelve month period ended June 30, 2021. The increase of $2.5 million is driven by strong real estate markets in the last half of 2021 and the first quarter of 2022. Distributable Cash Flow for the second quarter of 2022 amounted to $5.9 million, compared to $6.4 million generated during the second quarter of 2021, primarily due to lower revenues from a decline in market activity and higher income tax expense.

"The hyper-focus on one's home that arose during the pandemic caused demand to surge to levels that far exceeded our supply of properties for sale. As a result, markets set new records for both home prices and sales volumes. Activity in the industry is now moderating with significantly fewer houses trading hands. As with previous market downturns, the Company is well-positioned to weather the slowdown with our fixed-revenue focused business model," said Phil Soper, President and Chief Executive Officer, Bridgemarq Real Estate Services Inc. "Further, we are very pleased with the agent growth that we have experienced over the past year, which has allowed us to continue to deliver healthy revenue streams. Our brands' full-service offerings boast best-in-class technology, training and marketing, which are attractive when housing markets soften and broader support is required for success."

MARKET UPDATE

The market softening that began at the end of the first quarter of 2022 continued through the second quarter as sales decreased nationally by 22% year-over-year. Home prices remain significantly higher than pre-pandemic levels, however home price gains created at the beginning of the year have eroded, most notably in Ontario's golden horseshoe and some regions of British Columbia. Weakening demand may be attributed to potential buyers moving to the sidelines to determine how rising interest rates and inflation fears will affect the market. On July 13, the Bank of Canada increased its target for the overnight rate to 2.5%, citing excess demand in the economy, high and broadening inflation, and more businesses and consumers expecting high inflation to persist for longer.1

There are a number of factors which continue to support prospects for long-term market growth including healthy sources of demand from the existing pipeline of buyers who have not been able to transact over recent months due to limited supply, new household formation and expected record levels of immigration. In 2021, Canada welcomed more than 400,000 immigrants, which represents the most immigrants to arrive in Canada ever in one year. According to a Leger survey commissioned by Royal LePage, the average duration of time before newcomers purchase a home is three years after arriving in Canada. This demand supports the resale market as well as the invest or market due to rental demand.



1

Bank of Canada, July 13, 2022, https://www.bankofcanada.ca/2022/07/fad-press-release-2022-07-13/



CASH DIVIDEND

The Company declared a cash dividend of $0.1125 per restricted voting share payable on September 30, 2022, to shareholders of record on August 31, 2022. The dividend distribution represents a target annual dividend of $1.35 per restricted voting share, which is consistent with 2021.

THE COMPANY NETWORK

As at June 30, 2022, the Network was comprised of 20,538 REALTORS®, operating under 283 franchise agreements providing services from 730 locations. During 2021, REALTORS® in the Company Network participated in approximately 26% of all home resales in Canada.

CONFERENCE CALL

Bridgemarq Real Estate Services Inc. will host a conference call on Tuesday, August 9, 2022, at 10 a.m. ET to discuss its second quarter financial results.

To access the call by telephone, please dial 1-888-220-8451 or 647-484-0475 and enter confirmation number 7006753.

To access the call online, please visit https://app.webinar.net/64LNRVqO75z

Please connect approximately ten minutes prior to the beginning of the call to ensure participation.

A recording of the conference call will be available in the Investor Centre section of the Company's website by Friday, August 19, 2022.

 

DISTRIBUTABLE CASH FLOW AND DISTRIBUTABLE CASH FLOW PER SHARE

This news release and accompanying financial statements makes reference to Distributable Cash Flow and Distributable Cash Flow per Share, which are non-GAAP financial measures and do not have any standardized meaning under International Financial Reporting Standards and, accordingly, may not be comparable to similar measures used by other companies. Distributable Cash Flow represents operating income before deducting amortization and net impairment of intangible assets, minus current income tax expense, minus cash used in investing activities. Distributable Cash Flow per Share is calculated by dividing the Distributable Cash Flow by the total number of Restricted Voting Shares outstanding, on a diluted basis. Management believes that Distributable Cash Flow and Distributable Cash Flow per Share are useful supplemental measures of performance as they provide investors with an indication of the amount of cash flow generated after investing activities which is available to holders of Restricted Voting Shares and Exchangeable Unitholders, subject to working capital and other investment requirements.

FORWARD-LOOKING STATEMENTS

This news release contains forward-looking information and other "forward-looking statements". Words such as, "broadening", "continue", "demand", "expected", "expecting", "growth", "moving", "new", "persist", "rising", "supports", "uses", "will", and other expressions that are predictions of or could indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those indicated in the forward-looking statements include: the duration and effects of the COVID-19 pandemic, including the impact of COVID-19 on the economy and the Company's business, changes in the supply or demand of houses for sale in Canada or in any particular region within Canada, changes in the selling price for houses in Canada or any particular region within Canada, changes in the Company's cash flow, changes in the Company's strategy with respect to and/or ability to pay dividends, changes in the productivity of the Company's REALTORS® or the commissions they charge their customers, changes in government policy, laws or regulations which could reasonably affect the housing markets in Canada or the economy in general (including initiatives to address the impact of the spread of COVID 19), consumer response to any changes in the housing markets in Canada or any changes in government policy, laws or regulations, changes in general economic conditions (including interest rates, consumer confidence and other general economic factors or indicators), changes in global and regional economic growth, changes in the demand for and prices of natural resources on local and international markets, the level of residential real estate transactions, competition from other real estate brokers or from discount and/or Internet-based real estate alternatives, the closing of existing real estate brokerage offices, other developments in the residential real estate brokerage industry or the Company that reduce the number of REALTORS® in the Company's Network or revenue from the Company's Network, our ability to maintain brand equity through the use of trademarks, the methods used by shareholders or analysts to evaluate the value of the Company and its publicly traded securities, changes in tax laws or regulations, and other risks detailed in the Company's annual information form, which is filed with securities commissions and posted on SEDAR at www.sedar.com. Forward-looking information is based on various material factors or assumptions, which are based on information currently available to management. Material factors or assumptions that were applied in drawing conclusions or making estimates set out in the forward-looking statements include, but are not limited to: anticipated economic conditions, anticipated impact of government policies, anticipated financial performance, anticipated market conditions, business prospects, the successful execution of the Company's business strategies and recent regulatory developments, including as the foregoing relate to COVID-19. The factors underlying current expectations are dynamic and subject to change. Although the forward-looking statements contained in this press release are based upon what management believes are reasonable assumptions, the Company cannot assure readers that actual results will be consistent with these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

About Bridgemarq Real Estate Services

Bridgemarq is a leading provider of services to residential real estate brokers and a network of approximately 20,000 REALTORS®. We operate in Canada under the Royal LePage, Via Capitale and Johnston & Daniel brands. For more information, go to bridgemarq.com.

Bridgemarq is an affiliate of Brookfield Business Partners, a business services and industrials company focused on owning and operating high-quality businesses that benefit from barriers to entry and/or low production costs. Brookfield Business Partners is listed on the New York and Toronto stock exchanges. Further information is available at bbu.brookfield.com.

 

Bridgemarq Real Estate Services Inc.













June 30,

December 31,




Balance Sheet Highlights

2022

2021




Cash

$                     6,536

$                   6,217




Other current assets

5,157

3,917




Total current assets

11,693

10,134




Non-current assets

65,304

68,462




Total assets

$                   76,997

$                 78,596
















Accounts payable and accrued liabilities

$                     1,701

$                   1,107




Interest payable on Exchangeable Units

484

484




Dividends payable to shareholders

1,067

1,067




Contract transfer obligation

588

573




Total current liabilities

3,840

3,231




Debt facilities

66,939

68,419




Other non-current liabilities

8,152

9,152




Exchangeable Units

44,890

54,274




Total Liabilities

1,23,821

1,35,076




Shareholders' deficit

(46,824)

(56,480)




Total Liabilities and Shareholders' deficit

$                   76,997

$                 78,596











Three months 

Three months 

Six months

Six months



ended

ended

ended

ended



June 30,

June 30,

June 30,

June 30,


Interim Earnings Highlights

2022

2021

2022

2021


Fixed franchise fees

$                     8,258

$                   7,665

$           16,253

$         15,249


Variable franchise fees

4,332

4,806

8,484

8,551


Other revenue

1,206

1,481

2,485

3,251


Revenues

13,796

13,952

27,222

27,051








Cost of other revenue

(288)

(294)

(539)

(567)


Administration expenses

(307)

(90)

(575)

(142)


Management fees

(5,276)

(5,364)

(10,492)

(10,541)


Interest expense

(743)

(745)

(1,457)

(1,485)



7,182

7,459

14,159

14,316


Amortization of intangible assets

(1,817)

(1,913)

(3,636)

(3,864)


Interest on Exchangeable Units

(1,452)

(1,452)

(2,904)

(2,904)


Gain (loss) on fair value of Exchangeable Units

8,119

(2,529)

9,384

(7,887)


Gain on interest rate swap

651

380

1,787

945


Income tax expense

(1,222)

(1,008)

(2,369)

(2,116)


Deferred income tax expense

(122)

(23)

(363)

(112)


Net and comprehensive earnings (loss)

$                   11,339

$                      914

$           16,058

$         (1,622)


Basic earnings (loss) per Restricted Voting Share

$                       1.20

$                     0.10

$              1.69

$           (0.17)


Diluted earnings (loss) per Share

$                       0.36

$                     0.10

$              0.75

$           (0.17)








Cash Flow Highlights






Cash provided by operating activities:

$                     4,887

$                   5,291

$            8,394

$           8,511


Cash used for investing activities:

(107)

(47)

(173)

(157)


Cash used for financing activities:

(4,701)

(5,701)

(7,902)

(8,902)


Change in cash for the period

79

(457)

319

(548)


Cash, beginning of the period

6,457

9,065

6,217

9,156


Cash, end of the period

$                     6,536

$                   8,608

$            6,536

$           8,608








Distributable Cash Flow Highlights












Distributable Cash Flow

$                     5,853

$                   6,404

$           11,617

$         12,043


Distributable Cash Flow per Share

$                       0.46

$                     0.50

$              0.91

$            0.94









Twelve months

Twelve months





ended

ended





June 30, 2022

June 30, 2021










Distributable Cash Flow

$                   20,884

$                 18,384




Distributable Cash Flow per Share

$                       1.63

$                     1.43






















SOURCE Bridgemarq Real Estate Services Inc.

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