TORONTO, May 12, 2022
/CNW/ - Bridgemarq Real Estate Services Inc. ("Bridgemarq" or the
"Company") (TSX: BRE) announced today its first quarter
consolidated financial results and the approval of a monthly
dividend to holders of the Company's restricted voting shares.
HIGHLIGHTS
- Revenue in the first quarter was strong at $13.4 million, an increase of 2% over the same
period in 2021. The increase was driven by growth in the number of
REALTORS® in the Company network over the past 12
months.
- The Company generated net earnings for the quarter of
$4.7 million or $0.50 per share, on a fully diluted basis
compared to a net loss of $2.5
million in the first quarter of 2021. The increase was
primarily due to non-cash, revaluation adjustments on the
Exchangeable Units issued by the Company.
- Distributable Cash Flow was $5.8
million or $0.45 per fully
diluted share compared to $5.6
million or $0.44 per share in
the first quarter of 2021.
- The Board of Directors approved a dividend to shareholders of
$0.1125 per restricted voting share
payable June 30, 2022 to shareholders
of record on May 31, 2022.
- The Company's annual shareholders' meeting will be held on
May 12th, 2022 at 10 a.m. eastern time.
FIRST QUARTER OPERATING RESULTS
Revenues during the first quarter were $13.4 million, compared to $13.1 million in the same period in 2021. The
improvement was a result of an increase in the number of REALTORS®
in the Company Network and continued strong real estate markets in
Canada.
The Company generated net earnings for the quarter of
$4.7 million, or $0.50 per share on a fully diluted basis driven
by a $1.3 million gain on the fair
valuation of the Exchangeable Units compared to a $5.4 million loss during Q1 2021.
Distributable cash flow for the first quarter of 2022 amounted
to $5.8 million, compared to
$5.6 million generated during the
first quarter of last year. The increase in distributable cash flow
was primarily driven by an increase in revenues partly offset by an
increase in management fees, increased administration expenses and
higher current income tax expense.
"The Company is pleased with its first quarter financial
performance, which was driven by healthy network growth over the
past year and continued strong real estate market conditions during
the quarter," said Phil Soper,
President and Chief Executive Officer, Bridgemarq Real Estate
Services Inc. "After the pandemic-driven spike in real estate
activity and home prices in 2021, we had anticipated a slowing
market this year as conditions normalized. The first indications of
moderating activity appeared in early in the first quarter, as the
cumulative impact of rising home prices and higher borrowing costs
pushed some potential buyers temporarily to the sidelines."
"Slowing real estate markets offer growth opportunities to the
Company's premium brokerage offerings which we call a 'flight to
quality.' We believe, in tighter markets, REALTORS® and their
brokerages often seek out the rich service offerings that show
leadership in technology, brand marketing and training. Bridgemarq
brands resonate as a result of our significant investments in these
areas."
MARKET UPDATE
The strong market conditions that persisted in 2021, continued
through the first quarter of 2022 although sales volumes did start
to slow in Q1. Buyer demand continued to outpace new inventory,
putting upward pressure on home prices. The Canadian market ended
the quarter up 2% year-over-year. A number of indicators are
supportive of continued upward price pressure including the lowest
unemployment rate on record since 1976 and the highest number of
immigrants in Canada's history,
surpassing the previous record set in 1913. As home prices
rise across the country, home affordability has become a top
priority for all levels of government with housing supply becoming
a key focus. An improvement in housing supply is supportive of
healthy real estate markets and Company profitability.
On April 7th, the federal
government announced its 2022 budget that includes more than
$10 billion to support housing
affordability through programs aimed at increasing the pace of new
home construction. In addition, there were new initiatives
announced to help young people into home ownership, including the
First Home Savings Account, which combines tax incentive features
found in current RRSP and TFSA programs. The federal government
acknowledged that 3.5 million new homes are required by 2031 to
keep up with demand.
On April 13, the Bank of
Canada announcement of a 0.5%
interest rate increase and indicated that it intends to continue to
increase the overnight rate through 2023. An increase in the cost
of borrowing may prove challenging for first-time home buyers.
While homeowners who purchased after the implementation of the OSFI
mortgage stress test in 2018 have proven their ability to carry
mortgages at a higher rate of interest, higher interest rates are
expected to contribute to lower transaction volumes in 2022
relative to 2021.
CASH DIVIDEND
The Company declared a cash dividend of $0.1125 cents per restricted voting share payable
on June 30, 2022 to shareholders of
record on May 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 March 31, 2022, the Network
was comprised of 20,321 REALTORS®, operating under 282 franchise
agreements providing services from 723 locations. The Company
participates in 26% of all home transactions based on 2021
transactions.
SHAREHOLDERS MEETING
The Company will be holding its annual meeting of shareholders
on May 12th, 2022 at 10 a.m. eastern time. The meeting is a virtual
only, live audio webcast.
To access the shareholders' meeting, please
visit https://web.lumiagm.com/410446517 and follow the login
instructions. Shareholders and proxyholders will require their
unique control number, which is provided by TSX Trust Company
Canada in accordance with the instructions provided to
shareholders. Guests are welcomed to join the meeting by following
the platform's instructions on the morning of the meeting.
For more information on participation at the virtual only, live
audio webcast, please review the Company's meeting
guide (http://www.bridgemarq.com/meeting-guide) and the
Management Information Circular. For answers to frequently asked
questions regarding the virtual meeting platform, please
visit https://go.lumiglobal.com/faq.
DISTRIBUTABLE CASH FLOW
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 "are", "continued",
"intends", "is", "show" and "upward" 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, the impact of
government or other regulatory initiatives to address the impact of
the spread of COVID-19 on the Canadian economy, including the
impact on real estate markets, 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 as a result of COVID-19, 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,
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
as a result of COVID-19 or otherwise, 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, 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.
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 Inc.
|
|
|
|
|
|
|
March
31,
|
December
31,
|
Balance Sheet
Highlights
|
2022
|
2021
|
Cash
|
$
6,457
|
$
6,217
|
Other current
assets
|
5,270
|
3,917
|
Total current
assets
|
11,727
|
10,134
|
Non-current
assets
|
66,640
|
68,462
|
Total
assets
|
$
78,367
|
$
78,596
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
1,516
|
$
1,107
|
Interest payable on
Exchangeable Units
|
484
|
484
|
Dividends payable to
shareholders
|
1,067
|
1,067
|
Contract transfer
obligation
|
580
|
573
|
Total current
liabilities
|
3,647
|
3,231
|
Debt
facilities
|
68,429
|
68,419
|
Other non-current
liabilities
|
8,244
|
9,152
|
Exchangeable
Units
|
53,009
|
54,274
|
Total
Liabilities
|
133,329
|
135,076
|
Shareholders'
deficit
|
(54,962)
|
(56,480)
|
Total Liabilities
and Shareholders' deficit
|
$
78,367
|
$
78,596
|
|
|
|
|
Three
months
|
Three
months
|
|
ended
|
ended
|
|
March
31,
|
March 31,
|
Interim Earnings
Highlights
|
2022
|
2021
|
Fixed franchise
fees
|
$
7,995
|
$
7,584
|
Variable franchise
fees
|
4,152
|
3,745
|
Other
revenue
|
1,279
|
1,770
|
Revenues
|
13,426
|
13,099
|
|
|
|
Cost of other
revenue
|
(251)
|
(273)
|
Administration
expenses
|
(268)
|
(52)
|
Management
fees
|
(5,216)
|
(5,177)
|
Interest
expense
|
(714)
|
(740)
|
|
6,977
|
6,857
|
Amortization of
intangible assets
|
(1,819)
|
(1,951)
|
Interest on
Exchangeable Units
|
(1,452)
|
(1,452)
|
Gain (loss) on fair
value of Exchangeable Units
|
1,265
|
(5,358)
|
Gain on interest rate
swap
|
1,136
|
565
|
Income tax
expense
|
(1,147)
|
(1,108)
|
Deferred income tax
expense
|
(241)
|
(89)
|
Net and
comprehensive earnings (loss)
|
$
4,719
|
$
(2,536)
|
Basic earnings
(loss) per Restricted Voting Share
|
$
0.50
|
$
(0.27)
|
Diluted earnings
(loss) per Share
|
$
0.38
|
$
(0.27)
|
|
|
|
Cash Flow
Highlights
|
|
|
Cash provided by
operating activities:
|
$
3,507
|
$
3,220
|
Cash used for investing
activities:
|
(66)
|
(110)
|
Cash used for financing
activities:
|
(3,201)
|
(3,201)
|
Change in cash for
the period
|
240
|
(91)
|
Cash, beginning of
the period
|
6,217
|
9,156
|
Cash, end of the
period
|
$
6,457
|
$
9,065
|
|
|
|
|
|
|
|
Twelve
months
|
Twelve
months
|
|
ended
|
ended
|
Distributable Cash
Flow Highlights
|
31-Mar-22
|
31-Mar-21
|
|
|
|
Distributable Cash
Flow
|
$
21,435
|
$
15,699
|
Distributable Cash Flow
per Share
|
$
1.67
|
$
1.23
|
SOURCE Bridgemarq Real Estate Services Inc.