TORONTO, Nov. 8, 2022
/CNW/ - Bridgemarq Real Estate Services Inc. ("Bridgemarq" or the
"Company") (TSX: BRE) today announced its third 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 three quarters of 2022 was $39.4 million, compared to $39.5 million in 2021. Third quarter revenue was
$12.2 million, down marginally from
$12.4 million in the same quarter
last year.
- The Company recorded a net loss for the quarter of $1.1 million, or $0.12 per Restricted Voting Share, on a fully
diluted basis, compared to net earnings of $3.9 million, or $0.28 per share, in the third quarter of 2021.
The difference was due to non-cash, revaluation adjustments on the
Exchangeable Units issued by the Company, driven by an increase in
the market price of the Corporation's Restricted Voting
Shares.
- In the quarter, Distributable Cash Flow amounted to
$4.8 million, compared to
$5.2 million in the third quarter of
2021.
- The Board of Directors approved a dividend to shareholders of
$0.1125 per Restricted Voting Share
payable December 30, 2022, to
shareholders of record on November 30,
2022.
THIRD QUARTER OPERATING
RESULTS
Revenues during the third quarter were $12.2 million, compared to the $12.4 in the same period in 2021. Year to date,
revenues were $39.4 million, compared
to $39.5 million in same period last
year. After a strong first quarter, the Canadian real estate market
started to soften in the second quarter and showed significant
weakness in the third quarter, relative to 2021. The impact of
weaker markets has been substantially offset by an increase in
number of REALTORS® in the Company Network over the past twelve
months.
The Company generated a net loss of $1.1
million, or $0.12 per
Restricted Voting Share, compared to net earnings of $3.9 million, or $0.28 per Share, in the third quarter of 2021.
Year to date, net earnings improved to $15.0
million from net earnings of $2.2
million, as a result of a $6.4
million gain on the valuation of the Exchangeable Units,
compared to a loss of $6.2 million in
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 amounted to $4.8
million in the quarter and $1.28 per Share on a year-to-date basis. The
lower results were driven by lower revenues and higher
administration expenses, partly offset by lower management fees.
For the twelve-month period ended September
30, 2022, Distributable Cash Flow per Share amounted to
$1.60, compared to $1.49 for the same period ended in 2021.
"Canada's real estate market
contracted in the third quarter, as higher borrowing costs and
economic uncertainty pushed more prospective buyers to the
sidelines," said Phil Soper,
President and Chief Executive Officer, Bridgemarq Real Estate
Services, Inc. "The Company continued to grow its REALTOR® network
during the period, a testament to its suite of best-in-class
technology, training and marketing services. We believe the
Company's trusted brands will continue to differentiate us in
today's marketplace."
MARKET UPDATE
The Canadian residential real estate market continued to soften
in the quarter as sales volumes decreased nationally by 29%,
compared to the third quarter of 2021, and 22% in the first nine
months of the year compared to 2021.1 According to data
published by the Canadian Real Estate Association, home prices
remain significantly higher than pre-pandemic levels, with the
national average home price 29% higher in the third quarter,
compared to the third quarter of 2019. Price gains made in the
first quarter of the year have been reversed in many real estate
markets across the country. These price reductions have been most
pronounced in the larger metropolitan areas of Toronto and Vancouver, where prices fell by 11% and 6%
respectively during the quarter, relative to the second quarter of
2022.2
With demand and supply falling in tandem, we anticipate limited
downward pressure on prices in the coming months. Gradually
decreasing inflation and low unemployment rates are supportive of
long-term housing market growth. In September, Canada's Consumer Price Index (CPI) was 6.9%
on a year-over-year basis,3 down marginally from 7% the
month prior; and the national unemployment rate sat at 5.2%, a
modest decline from the previous month and very low by historical
standards.4
With inflation above the Bank of Canada's 2% target, interest rates have risen
significantly since March, 2022. The Bank has acknowledged that
rate increases will have a negative effect on growth with GDP
expected to stall through the first half of 2023.5 It
remains to be seen whether slower growth will impact employment
levels and/or, potentially, housing demand. However, if interest
rates do return to lower levels and economic impacts on employment
are moderate, there remains a healthy pipeline of demand from
potential buyers who have moved to the sidelines in the rising
interest rate environment, as well as those unable to transact over
the last two years, due to supply and affordability
challenges.
CASH DIVIDEND
The Company declared a cash dividend of $0.1125 per Restricted Voting Share payable on
December 30, 2022, to shareholders of record on
November 30, 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 September 30, 2022, the
Company Network was comprised of 20,761 REALTORS® operating under
283 Franchise Agreements from 722 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, November 8,
2022, at 10 a.m. ET to discuss
its third quarter financial results.
To access the call by telephone, please dial 1-888-254-3590 or
647-484-0475 and enter confirmation number 6971002.
To access the call online, please visit
https://app.webinar.net/kjQvd04dgpb.
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, November 11, 2022.
DISTRIBUTABLE CASH FLOW AND
DISTRIBUTABLE CASH FLOW PER SHARE
This news release and accompanying financial statements make
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, "anticipate", "are",
"continue", "do", "expected", "growth", "if", "may", "potentially",
"to be", "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: any resurgence of COVID-19
(including any 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, 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 more than 20,000
REALTORS®.6 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 CREA
Canadian Housing Market Statistics
|
2 CREA
Canadian Housing Market Statistics, TRREB Real Estate Market
Statistics
|
3
Statistics Canada Consumer Price Index, September
2022
|
4
Statistics Canada Labour Force Survey, September
2022
|
5 Bank of
Canada increases policy interest rate by 50 basis points, continues
quantitative tightening
|
6 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 CRE
|
Bridgemarq Real
Estate Services Inc.
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
December
31,
|
|
|
Balance Sheet
Highlights
|
2022
|
2021
|
|
|
Cash
|
$
7,603
|
$
6,217
|
|
|
Other current
assets
|
4,163
|
3,917
|
|
|
Total current
assets
|
11,766
|
10,134
|
|
|
Non-current
assets
|
63,782
|
68,462
|
|
|
Total
assets
|
$
75,548
|
$
78,596
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
1,594
|
$
1,107
|
|
|
Interest payable on
Exchangeable Units
|
484
|
484
|
|
|
Dividends payable to
shareholders
|
1,067
|
1,067
|
|
|
Contract transfer
obligation
|
595
|
573
|
|
|
Total current
liabilities
|
3,740
|
3,231
|
|
|
Debt
facilities
|
66,949
|
68,419
|
|
|
Other non-current
liabilities
|
8,060
|
9,152
|
|
|
Exchangeable
Units
|
47,918
|
54,274
|
|
|
Total
Liabilities
|
1,26,667
|
1,35,076
|
|
|
Shareholders'
deficit
|
(51,119)
|
(56,480)
|
|
|
Total Liabilities
and Shareholders' deficit
|
$
75,548
|
$
78,596
|
|
|
|
|
|
|
|
|
Three
months
|
Three
months
|
Nine
months
|
Nine months
|
|
ended
|
ended
|
ended
|
ended
|
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
Interim Earnings
Highlights
|
2022
|
2021
|
2022
|
2021
|
Fixed franchise
fees
|
$
8,452
|
$
7,836
|
$
24,705
|
$
23,085
|
Variable franchise
fees
|
2,732
|
3,483
|
11,216
|
12,034
|
Other
revenue
|
1,041
|
1,115
|
3,526
|
4,366
|
Revenues
|
12,225
|
12,434
|
39,447
|
39,485
|
|
|
|
|
|
Cost of other
revenue
|
(353)
|
(215)
|
(892)
|
(782)
|
Administration
expenses
|
(335)
|
(264)
|
(910)
|
(406)
|
Management
fees
|
(4,884)
|
(4,986)
|
(15,376)
|
(15,527)
|
Interest
expense
|
(754)
|
(740)
|
(2,211)
|
(2,225)
|
|
5,899
|
6,229
|
20,058
|
20,545
|
Write-off of intangible
assets
|
(154)
|
-
|
(154)
|
-
|
Amortization of
intangible assets
|
(1,771)
|
(1,905)
|
(5,407)
|
(5,769)
|
Interest on
Exchangeable Units
|
(1,452)
|
(1,452)
|
(4,355)
|
(4,355)
|
Gain (loss) on fair
value of Exchangeable Units
|
(3,028)
|
1,730
|
6,356
|
(6,157)
|
Gain on interest rate
swap
|
368
|
254
|
2,155
|
1,199
|
Income tax
expense
|
(911)
|
(987)
|
(3,280)
|
(3,103)
|
Deferred income tax
expense
|
(47)
|
(4)
|
(410)
|
(116)
|
Net and
comprehensive earnings (loss)
|
$
(1,096)
|
$
3,865
|
$
14,963
|
$
2,244
|
Basic earnings
(loss) per Restricted Voting Share
|
$
(0.12)
|
$
0.41
|
$
1.58
|
$
0.24
|
Diluted earnings
(loss) per Share
|
$
(0.12)
|
$
0.28
|
$
1.01
|
$
0.24
|
|
|
|
|
|
Cash Flow
Highlights
|
|
|
|
|
Cash provided by
operating activities:
|
$
4,497
|
$
4,311
|
$
12,890
|
$
12,821
|
Cash used for investing
activities:
|
(229)
|
(52)
|
(402)
|
(209)
|
Cash used for financing
activities:
|
(3,201)
|
(3,201)
|
(11,102)
|
(12,102)
|
Change in cash for
the period
|
1,067
|
1,058
|
1,386
|
510
|
Cash, beginning of
the period
|
6,536
|
8,608
|
6,217
|
9,156
|
Cash, end of the
period
|
$
7,603
|
$
9,666
|
$
7,603
|
$
9,666
|
|
|
|
|
|
Distributable Cash
Flow Highlights
|
|
|
|
|
|
|
|
|
|
Distributable Cash
Flow
|
$
4,759
|
$
5,190
|
$
16,376
|
$
17,233
|
Distributable Cash Flow
per Share
|
$
0.37
|
$
0.41
|
$
1.28
|
$
1.35
|
|
|
|
|
|
|
Twelve
months
|
Twelve
months
|
|
|
|
ended
|
ended
|
|
|
|
September
30,
|
September
30,
|
|
|
|
|
|
|
|
Distributable Cash
Flow
|
$
20,453
|
$
19,146
|
|
|
Distributable Cash Flow
per Share
|
$
1.60
|
$
1.49
|
|
|
|
|
|
|
|
SOURCE Bridgemarq Real Estate Services Inc.