TORONTO, Aug. 9, 2019 /CNW/ - Bridgemarq Real Estate
Services Inc. ("Bridgemarq") (TSX: BRE) announced today its
second quarter financial results and the approval of a monthly
dividend to holders of the Company's restricted voting shares.
HIGHLIGHTS
- The Company's network of REALTORS® (the "Network")
increased to 19,046, up from 18,780 as at June 30, 2018.
- Net earnings for the quarter were $7.8
million as a result of a gain of $6.7
million on the fair value of the exchangeable units issued
by the Company.
- Distributable cash flow for the first six months was
$8.4 million compared to $4.7 million for the same period in 2018.
- The Board of Directors of the Company approved a dividend of
$0.1125 per restricted voting share,
payable September 30, 2019 to
shareholders of record on August 30,
2019.
SECOND QUARTER OPERATING RESULTS
Net earnings for the quarter was $7.8
million, or $0.82 per Share,
compared to a net loss of $3.7
million or $0.39 per Share,
for the same period in 2018. The primary driver of the net earnings
is the determination of the fair value on the exchangeable units.
The fair value of the exchangeable units is determined with
reference to the trading price of the Company's restricted voting
shares.
Distributable cash flow for the first six months of 2019
amounted to $8.4 million, a
substantial increase from the $4.7
million generated in 2018. In the first quarter of
2018, the Company acquired Franchise Agreements from the Manager of
$8.6 million, negatively impacting
distributable cash flow. No such acquisitions were completed in
2019 as a result of changes to the management services agreement
which governs the management of the Company (the "MSA") For
the quarter, distributable cash flow was $4.5 million, compared to distributable cash flow
of $6.8 million generated in the
second quarter of 2018. The primary driver of the decline in
distributable cash flow for the quarter is higher management fees
paid as a result of changes to the MSA partly offset by lower
income tax payments and higher revenues.
Revenues during the second quarter were $11.7 million, compared to $11.5 million in the same period in 2018 with the
increase being primarily due to the increase in the number of
REALTORS® represented by the Company's real estate services brands.
Ancillary revenues transferred to the Company under changes to the
MSA effective January 1, 2019 served
to substantially offset the loss of premium fee revenues earned in
the second quarter of 2018. Revenues generated by the Company are
primarily fixed in nature, based on the number of
REALTORS® in the Network. This fixed nature of the
Company's revenues provides the Company some protection from the
impact of a changing housing market, but also reduces the degree to
which the Company participates in periods of rapid market
expansion.
"We are pleased with the Company's financial performance this
quarter. Of note are our two largest cities, Toronto and Vancouver, where home sale volumes appear to
be returning to normal after the market correction of 2018," said
Phil Soper, President and Chief
Executive Officer, Bridgemarq Real Estate Services. "Leveraging the
industry's best technology, training and support, our brands remain
attractive to new brokerages and agent recruits. As a result,
the Company continues to generate a healthy and reliable revenue
stream that allows for increased investment in our leading delivery
platform while supporting the goal of paying a significant portion
of cash flow as dividends to shareholders."
THE COMPANY NETWORK
As at June 28, 2019, the Network
was comprised of 19,046 REALTORS®, operating under 295
franchise agreements providing services from 671 locations, with an
approximate one-fifth share of the Canadian residential real estate
market ("Canadian Market") based on 2018 transactional dollar
volume.
Since 2003, the Company's network has grown at a 5% compound
annual growth rate, outperforming the 4% growth in the industry
despite the addition of competitive offerings over the same time
period.
CASH DIVIDEND
The Company declared a cash dividend of $0.1125 per restricted voting share payable on
September 30, 2019, to shareholders
of record on August 30, 2019. This
represents a targeted annual dividend of $1.35 per restricted voting share.
CONFERENCE CALL
Brookfield Real Estate Services Inc. will host a conference call
on Friday, August 9, 2019 at
10 a.m. ET to discuss its second
quarter financial results.
To access the call by telephone, please dial 1-888-231-8191 or
647-427-7450.
To access the call online, please visit
https://event.on24.com/wcc/r/2051216/D454EFC54E92BEFF071EE4CB438ADA7D
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 Wednesday, August 14, 2019.
DISTRIBUTABLE CASH FLOW
This news release and accompanying financial statements make
reference to distributable cash flow. Distributable cash flow is
defined as operating income before deducting amortization and net
impairment or recovery of intangible assets minus current income
tax expense and minus cash used in investing activities.
Distributable cash flow is used by the Company to measure the
amount of cash generated from operations which is available to the
Company's shareholders on a diluted basis, where such dilution
represents the total number of shares of the Company that would be
outstanding if holders of exchangeable units converted Class B LP
units into restricted voting shares. The Company uses distributable
cash flow to assess its operating results and the value of its
business and believes that many of its shareholders and analysts
also find this measure useful. Distributable cash flow does not
have any standard meaning prescribed by IFRS and therefore may not
be comparable to similar measures presented by other companies.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking information and other
"forward-looking statements". Words such as, "retaining",
"continues", "steady", "appear", "allows", "increased",
"supporting" "paying" and "targeted" 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: 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 strategy with respect to 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,
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, 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 royalty 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. The factors underlying current
expectations are dynamic and subject to change. Although the
forward-looking statements contained in this MD&A 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 over 19,000 REALTORS®1.
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.
1
|
The trademarks
REALTOR®, REALTORS® and the REALTOR® logo are controlled by The
Canadian Real Estate Association (CREA) and identify real estate
professionals who are members of CREA.
|
Bridgemarq Real
Estate Services
|
|
|
|
|
(Unaudited, in
thousands of Canadian dollars, except per share
information)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interim Balance
Sheet Highlights
|
June
30,
|
December
31,
|
|
|
As at
|
2019
|
2018
|
|
|
Cash
|
$
|
4,090
|
$
|
4,339
|
|
|
Other current
assets
|
|
6,716
|
|
4,954
|
|
|
Total current
assets
|
|
10,806
|
|
9,293
|
|
|
Non-current
assets
|
|
90,246
|
|
86,366
|
|
|
Total
assets
|
$
|
101,052
|
$
|
95,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
1,347
|
$
|
1,003
|
|
|
Interest payable on
Exchangeable Units
|
|
484
|
|
484
|
|
|
Dividends payable to
shareholders
|
|
1,067
|
|
1,067
|
|
|
Other current
liabilities
|
|
3,213
|
|
-
|
|
|
Total current
liabilities
|
|
6,111
|
|
2,554
|
|
|
Debt
facilities
|
|
73,317
|
|
71,297
|
|
|
Other non-current
liabilities
|
|
5,726
|
|
-
|
|
|
Exchangeable
Units
|
|
49,616
|
|
48,484
|
|
|
Total
Liabilities
|
|
134,770
|
|
122,335
|
|
|
Shareholders'
deficit
|
|
(33,718)
|
|
(26,676)
|
|
|
Total Liabilities
and Shareholders' deficit
|
$
|
101,052
|
$
|
95,659
|
|
|
|
|
|
|
|
|
Three
Months
|
Three
Months
|
Six
Months
|
Six Months
|
|
ended
|
ended
|
ended
|
ended
|
Interim Eanings
Highlights
|
June 30,
2019
|
June 30,
2018
|
June 30,
2019
|
June 30,
2018
|
Revenues
|
$
|
11,685
|
$
|
11,472
|
$
|
21,693
|
$
|
21,942
|
Administration,
Management Fee and Interest Expense
|
|
(5,086)
|
|
(3,062)
|
|
(9,943)
|
|
(5,977)
|
|
|
6,599
|
|
8,410
|
|
11,750
|
|
15,965
|
Impairment, write-off
and amortization of intangible assets
|
|
(2,807)
|
|
(2,055)
|
|
(5,945)
|
|
(4,064)
|
Interest on
Exchangeable Units
|
|
(1,452)
|
|
(1,452)
|
|
(2,904)
|
|
(2,904)
|
Gain (loss) on fair
value of Exchangeable Units
|
|
6,655
|
|
(6,988)
|
|
(1,132)
|
|
(9,916)
|
Gain (loss) on
interest rate swap
|
|
(460)
|
|
4
|
|
(1,429)
|
|
63
|
Loss on fair value of
purchase obligation
|
|
-
|
|
(26)
|
|
-
|
|
(544)
|
Income tax
expense
|
|
(783)
|
|
(1,558)
|
|
(980)
|
|
(2,630)
|
Net and
comprehensive earnings (loss)
|
$
|
7,752
|
$
|
(3,665)
|
$
|
(640)
|
$
|
(4,030)
|
Basic earnings
(loss) per Restricted Voting Share
|
$
|
0.82
|
$
|
(0.39)
|
$
|
(0.07)
|
$
|
(0.42)
|
Diluted earnings
(loss) per Share
|
$
|
0.20
|
$
|
(0.39)
|
$
|
(0.07)
|
$
|
(0.42)
|
|
|
|
|
|
Interim Cash Flow
Highlights
|
|
|
|
|
Cash provided by
operating activities:
|
$
|
4,658
|
$
|
5,447
|
$
|
6,117
|
$
|
9,168
|
Cash used for
investing activities:
|
|
(1,002)
|
|
(6)
|
|
(1,964)
|
|
(8,536)
|
Cash used for
financing activities:
|
|
(3,201)
|
|
(3,201)
|
|
(4,402)
|
|
798
|
Change in cash for
the period
|
|
455
|
|
2,240
|
|
(249)
|
|
1,430
|
Cash, beginning of
the period
|
|
3,635
|
|
2,648
|
|
4,339
|
|
3,458
|
Cash, end of the
period
|
$
|
4,090
|
$
|
4,888
|
$
|
4,090
|
$
|
4,888
|
|
|
|
|
|
Interim
Distributable Cash Flow Highlights
|
|
|
|
|
Distributable Cash
Flow
|
$
|
4,854
|
$
|
6,836
|
$
|
8,354
|
$
|
4,659
|
Distibutable Cash
Flow per Share
|
$
|
0.38
|
$
|
0.53
|
$
|
0.65
|
$
|
0.36
|
|
|
|
|
|
|
Twelve
Months
|
Twelve
Months
|
|
|
|
ended
|
ended
|
|
|
|
June 30,
2019
|
June 30,
2018
|
|
|
Distributable Cash
Flow
|
$
|
18,131
|
$
|
16,678
|
|
|
Distibutable Cash
Flow per Share
|
$
|
1.42
|
$
|
1.30
|
|
|
|
|
|
|
|
SOURCE Bridgemarq Real Estate Services Inc.