TORONTO, May 11, 2023
/CNW/ - Bridgemarq Real Estate Services Inc. ("Bridgemarq" or the
"Company") (TSX: BRE) today released its first quarter consolidated
financial results and announced a monthly dividend to holders of
the Company's restricted voting shares.
HIGHLIGHTS
- Revenue in the first quarter amounted to $12.0 million, compared to the $13.4 million generated in the first quarter of
2022, due to weakness in the Canadian Market partly offset by an
increase in the Company's network of REALTORS® over the past
year.
- The Company generated a net loss $4.7
million or $0.50 per Share,
compared to net earnings of $4.7
million or $0.50 per Share in
2022, primarily due to a loss on the fair value of Exchangeable
Units compared to a gain last year.
- Distributable Cash Flow was $4.8
million or $0.37 per fully
diluted share compared to $5.8
million or $0.45 per share
recorded in the first quarter of 2022.
- The Board of Directors approved a dividend to shareholders of
$0.1125 per Restricted Voting Share
payable June 30, 2023, to
shareholders of record on May 31,
2023.
- The Company's annual shareholders' meeting will be held
virtually on May 11th, 2023, at
10 a.m. Eastern Daylight Time.
FIRST QUARTER OPERATING RESULTS
Revenues during the first quarter were $12.0 million, compared to the $13.4 million generated in Q1 of 2022. The change
in revenues is primarily due to weakness in the Canadian Market
partly offset by an increase in the number of REALTORS® in the
Company network over the past twelve months.
During the quarter, the Company generated a net loss of
$4.7 million or $0.50 per Share, compared to net earnings of
$4.7 million or $0.50 per Share in 2022. Net earnings decreased
primarily due to a loss of $6.0
million compared to a gain on fair value of Exchangeable
Units of $1.3 million in the first
quarter last year. 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, compared to $5.8
million in the same quarter last year driven by lower
revenues and higher administration expenses, partly offset by lower
management fees and lower current income tax expense.
"As anticipated, our first quarter results were softer when
compared to a year prior, when the Canadian housing market was at
its pandemic-driven peak. The Bank of Canada's aggressive twelve months of interest
rate increases, a monetary policy made necessary when inflation
reached a thirty-nine-year high, took its toll on our industry.
However, the Company's ability to retain talent and continue
attracting new agents over the course of 2022 underscores our
brands' reputations as the proven choice of real estate
professionals, even during a down-market," said Phil Soper, President and Chief Executive
Officer, Bridgemarq Real Estate Services, Inc. "In uncertain times,
highly productive agents are better positioned to weather the
storm, while others flock to brands that demonstrate superior
leadership. Our sustained investment in, and emphasis on,
delivering industry-leading technology platforms, best-in-class
training and an unwavering commitment to client services continues
to attract top talent. While sales volumes dropped more than 35%
nationally in the first quarter, our agent count remained
stable.
"Looking ahead, we believe that the market has turned the corner
and that the residential real estate industry is growing again.
While some buyer hopefuls will remain sidelined by a reduced
capacity to borrow in this stable but higher rate environment, many
of those who had chosen to pause their search to see where prices
and interest rates would land have resumed their home buying plans.
The constrained supply of homes available for sale remains a
concern and will likely be the most serious challenge facing our
industry in the months ahead."
MARKET UPDATE
After record sales and price appreciation in Canada's housing market peaked in the first
quarter of 2022, the Canadian residential real estate market posted
a national decline in transactional dollar volume of 47% in the
first quarter of 2023, compared to the same period last
year.1 According to the Canadian Real
Estate Association, the national average selling price declined 16%
year-over-year in the first quarter, however increased 5% on a
quarter-over-quarter basis. Although the total units sold in
Canada declined by 37% in Q1
compared to the first quarter of last year, the number of homes
sold rose by 8% over the fourth quarter of 2022, indicating an
uptick in housing market activity and price appreciation during the
first three months of 2023.
Following eight consecutive interest rate hikes since March of
2022, which brought the target overnight rate to 4.25%, the Bank of
Canada held lending rates steady
at its meetings in March and April. The increases appear to have
had the desired effect, gradually driving Canada's Consumer Price Index to 4.3% in
March, down from its peak of more than 8% last June.2
The central bank's governing council noted, however, that it
remains prepared to raise rates further if necessary to return
inflation to its 2% target rate.3
The decision to hold rates, which signaled that stability is
returning to the market, has had a swift and significant impact on
demand, coaxing many buyers off the sidelines and once again
fueling competition for too few available listings. We anticipate
increased activity will continue through the spring and summer, as
inventory shortages persist across the country.
Further supporting long-term growth in the housing market is
increased household savings, federal immigration targets of up to
500,000 newcomers per year by 2025,4 and
the continued strength of Canada's
labour force.
CASH DIVIDEND
The Company declared a cash dividend of $0.1125 per restricted voting share payable on
June 30, 2023, to shareholders
of record on May 31, 2023. The
dividend distribution represents a target annual dividend of
$1.35 per restricted voting share,
which is consistent with 2022.
THE COMPANY NETWORK
As at March 31, 2023, the Company
Network was comprised of 20,619 REALTORS® operating under 286
Franchise Agreements from 726 locations. This represents a 2%
increase over the agent count as at March
31, 2022. Based on 2022 transactions, REALTORS® in the
Company Network participate in approximately 28% of all home
resales in Canada.
SHAREHOLDERS MEETING
The Company will be holding its annual meeting of shareholders
on May 11th, 2023, at 10 a.m. Eastern Daylight Time. The meeting is a
virtual only, live audio webcast.
To access the shareholders' meeting, please visit
https://web.lumiagm.com/#/444572368 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 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",
"appears", "believe", "continue", "continues", "growing", "if",
"looking ahead", "persist", "remain", "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 changes in credit markets that affect the availability
of credit or changes in interest rates, 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 or profitability, 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, 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 level of residential real estate
transactions, 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, 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 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 21,000
REALTORS®5. 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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|
|
|
|
|
|
March
31,
|
December
31,
|
Balance Sheet
Highlights
|
2023
|
2022
|
Cash
|
$
|
6.160
|
$
|
6.419
|
Other current
assets
|
5.841
|
5.469
|
Total current
assets
|
12.001
|
11.888
|
Non-current
assets
|
59.036
|
60.741
|
Total
assets
|
$
|
71.037
|
$
|
72.629
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
1.475
|
$
|
1.138
|
Interest payable on
Exchangeable Units
|
484
|
484
|
Dividends payable to
shareholders
|
1.067
|
1.067
|
Contract transfer
obligation
|
542
|
602
|
Debt
facilities
|
-
|
66.959
|
Total current
liabilities
|
3.568
|
70.250
|
Debt
facilities
|
67.033
|
-
|
Other non-current
liabilities
|
7.939
|
7.966
|
Exchangeable
Units
|
48.717
|
42.727
|
Total
Liabilities
|
127.257
|
120.943
|
Shareholders'
deficit
|
(56.220)
|
(48.314)
|
Total Liabilities
and Shareholders' deficit
|
$
|
71.037
|
$
|
72.629
|
|
|
|
|
Three
months
|
Three months
|
|
ended
|
ended
|
|
March
31,
|
March 31,
|
Interim Earnings
Highlights
|
2023
|
2022
|
Fixed franchise
fees
|
$
|
8.380
|
$
|
7.995
|
Variable franchise
fees
|
2.799
|
4.152
|
Other
revenue
|
812
|
1.279
|
Revenues
|
11.991
|
13.426
|
|
|
|
Cost of other
revenue
|
(226)
|
(251)
|
Administration
expenses
|
(367)
|
(268)
|
Management
fees
|
(4.852)
|
(5.216)
|
Interest
expense
|
(743)
|
(714)
|
|
5.803
|
6.977
|
Write-off of intangible
assets
|
(102)
|
-
|
Amortization of
intangible assets
|
(1.741)
|
(1.819)
|
Interest on
Exchangeable Units
|
(1.452)
|
(1.452)
|
Gain (loss) on fair
value of Exchangeable Units
|
(5.990)
|
1.265
|
Gain (loss) on interest
rate swap
|
(378)
|
1.136
|
Loss on debt facility
amendment
|
(122)
|
-
|
Income tax
expense
|
(937)
|
(1.147)
|
Deferred income tax
expense (recovery)
|
214
|
(241)
|
Net and
comprehensive earnings (loss)
|
$
|
(4.705)
|
$
|
4.719
|
Basic earnings
(loss) per Restricted Voting Share
|
$
|
(0,50)
|
$
|
0,50
|
Diluted earnings
(loss) per Share
|
$
|
(0,50)
|
$
|
0,38
|
|
|
|
Cash Flow
Highlights
|
|
|
Cash provided by
operating activities:
|
$
|
3.081
|
$
|
3.507
|
Cash used for investing
activities:
|
(81)
|
(66)
|
Cash used for financing
activities:
|
(3.259)
|
(3.201)
|
Change in cash for
the period
|
(259)
|
240
|
Cash, beginning of
the period
|
6.419
|
6.217
|
Cash, end of the
period
|
$
|
6.160
|
$
|
6.457
|
Distributable Cash
Flow Highlights
|
|
|
|
|
|
Distributable Cash
Flow
|
$
|
4.785
|
$
|
5.764
|
Distributable Cash Flow
per Share
|
$
|
0,37
|
$
|
0,45
|
|
|
|
|
Twelve
months
|
Twelve
months
|
|
ended
|
ended
|
|
March
31,
|
March 31,
|
|
|
|
Distributable Cash
Flow
|
$
|
19.177
|
$
|
21.435
|
Distributable Cash Flow
per Share
|
$
|
1,50
|
$
|
1,67
|
|
|
|
|
|
|
|
|
|
Distributable Cash
Flow Reconciled to Cash Flow from Operating
Activities
|
|
|
|
|
|
|
|
|
Three
months
|
Three months
|
(Unaudited)
|
ended
|
ended
|
($ 000's)
|
March
31,
|
March 31,
|
|
2023
|
2022
|
|
|
|
Cash flow from
operating activities
|
$
|
3.081
|
$
|
3.507
|
Add
(deduct):
|
|
|
Interest on Exchangeable
Units
|
1.452
|
1.452
|
Current Income tax
expense
|
(937)
|
(1.147)
|
Income taxes paid
|
900
|
1.350
|
Changes in non-cash working
capital
|
443
|
710
|
Interest expense
|
(2.248)
|
(2.129)
|
Interest paid
|
2.175
|
2.087
|
Interest income
|
84
|
-
|
Interest received
|
(84)
|
-
|
Cash used for investing
activities
|
(81)
|
(66)
|
Distributable Cash
Flow
|
$
|
4.785
|
$
|
5.764
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
For twelve months
ended,
|
Mar.
31
|
Mar. 31
|
($ 000's)
|
2023
|
2022
|
|
|
|
Cash flow from
operating activities
|
14.678
|
15.427
|
Add
(deduct):
|
|
|
Interest on Exchangeable
Units
|
5.806
|
5.806
|
Current Income tax
expense
|
(3.738)
|
(3.857)
|
Income taxes paid
|
3.625
|
4.950
|
Net changes in non-cash
working capital
|
(509)
|
(433)
|
Interest expense
|
(8.882)
|
(8.584)
|
Interest paid
|
8.810
|
8.358
|
Interest income
|
207
|
7
|
Interest received
|
(207)
|
(8)
|
Cash used for investing
activities
|
(613)
|
(231)
|
Distributable Cash
Flow
|
$
|
19.177
|
$
|
21.435
|
1
|
CREA Canadian
Housing Market Statistics
|
2
|
Consumer Price
Index, March 2023, April 18, 2023
|
3
|
Bank of Canada
maintains policy rate, continues quantitative tightening,
April 12, 2023
|
4
|
2022 Annual Report to
Parliament on Immigration, December 31, 2022
|
5
|
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.
|
SOURCE Bridgemarq Real Estate Services Inc.