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.
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1
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Bank of Canada, July
13, 2022,
https://www.bankofcanada.ca/2022/07/fad-press-release-2022-07-13/
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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.
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June
30,
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December 31,
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Balance Sheet
Highlights
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2022
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2021
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Cash
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$
6,536
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$
6,217
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Other current
assets
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5,157
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3,917
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Total current
assets
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11,693
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10,134
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Non-current
assets
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65,304
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68,462
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Total
assets
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$
76,997
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$
78,596
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Accounts payable and
accrued liabilities
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$
1,701
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$
1,107
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Interest payable on
Exchangeable Units
|
484
|
484
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Dividends payable to
shareholders
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1,067
|
1,067
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Contract transfer
obligation
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588
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573
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Total current
liabilities
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3,840
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3,231
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Debt
facilities
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66,939
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68,419
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Other non-current
liabilities
|
8,152
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9,152
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Exchangeable
Units
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44,890
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54,274
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Total
Liabilities
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1,23,821
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1,35,076
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Shareholders'
deficit
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(46,824)
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(56,480)
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Total Liabilities
and Shareholders' deficit
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$
76,997
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$
78,596
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Three
months
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Three
months
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Six
months
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Six months
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|
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ended
|
ended
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ended
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ended
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June
30,
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June 30,
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June
30,
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June 30,
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Interim Earnings
Highlights
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2022
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2021
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2022
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2021
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Fixed franchise
fees
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$
8,258
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$
7,665
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$
16,253
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$
15,249
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Variable franchise
fees
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4,332
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4,806
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8,484
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8,551
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Other
revenue
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1,206
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1,481
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2,485
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3,251
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Revenues
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13,796
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13,952
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27,222
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27,051
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Cost of other
revenue
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(288)
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(294)
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(539)
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(567)
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Administration
expenses
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(307)
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(90)
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(575)
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(142)
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Management
fees
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(5,276)
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(5,364)
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(10,492)
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(10,541)
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Interest
expense
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(743)
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(745)
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(1,457)
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(1,485)
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7,182
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7,459
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14,159
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14,316
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Amortization of
intangible assets
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(1,817)
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(1,913)
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(3,636)
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(3,864)
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Interest on
Exchangeable Units
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(1,452)
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(1,452)
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(2,904)
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(2,904)
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Gain (loss) on fair
value of Exchangeable Units
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8,119
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(2,529)
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9,384
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(7,887)
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Gain on interest rate
swap
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651
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380
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1,787
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945
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Income tax
expense
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(1,222)
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(1,008)
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(2,369)
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(2,116)
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Deferred income tax
expense
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(122)
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(23)
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(363)
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(112)
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Net and
comprehensive earnings (loss)
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$
11,339
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$
914
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$
16,058
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$
(1,622)
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Basic earnings
(loss) per Restricted Voting Share
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$
1.20
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$
0.10
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$
1.69
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$
(0.17)
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Diluted earnings
(loss) per Share
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$
0.36
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$
0.10
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$
0.75
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$
(0.17)
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Cash Flow
Highlights
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Cash provided by
operating activities:
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$
4,887
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$
5,291
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$
8,394
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$
8,511
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Cash used for investing
activities:
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(107)
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(47)
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(173)
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(157)
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Cash used for financing
activities:
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(4,701)
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(5,701)
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(7,902)
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(8,902)
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Change in cash for
the period
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79
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(457)
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319
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(548)
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Cash, beginning of
the period
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6,457
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9,065
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6,217
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9,156
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Cash, end of the
period
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$
6,536
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$
8,608
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$
6,536
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$
8,608
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Distributable Cash
Flow Highlights
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Distributable Cash
Flow
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$
5,853
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$
6,404
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$
11,617
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$
12,043
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Distributable Cash Flow
per Share
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$
0.46
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$
0.50
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$
0.91
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$
0.94
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Twelve
months
|
Twelve
months
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ended
|
ended
|
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June 30,
2022
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June 30,
2021
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Distributable Cash
Flow
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$
20,884
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$
18,384
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Distributable Cash Flow
per Share
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$
1.63
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$
1.43
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SOURCE Bridgemarq Real Estate Services Inc.