TORONTO, Aug. 10,
2023 /CNW/ - Bridgemarq Real Estate Services Inc.
("Bridgemarq" or the "Company") (TSX: BRE) today released its
second quarter consolidated financial results and announced a
monthly dividend to holders of the Company's restricted voting
shares.
HIGHLIGHTS
- Revenue in the second quarter amounted to $12.8 million, compared to the $13.8 million generated in the second 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 net earnings of $1.1 million or $0.12 per Share, compared to net earnings of
$11.3 million or $0.36 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 $4.5
million or $0.35 per Share
compared to $5.8 million or
$0.46 per Share recorded in the
second quarter of 2022.
- The board of directors approved a dividend to shareholders of
$0.1125 per Share payable on
September 29, 2023, to shareholders
of record on August 31, 2023.
SECOND QUARTER OPERATING RESULTS
Revenues during the second quarter were $12.8 million, compared to the $13.8 million generated in Q2 of 2022. The change
in revenues is primarily due to weakness in real estate markets
across Canada (the "Canadian
Market") partly offset by an increase in the number of agents in
the Company's network of REALTORS® (the "Company Network") over the
past twelve months.
During the quarter, the Company generated net earnings of
$1.1 million or $0.12 per fully diluted restricted voting share
("Share"), compared to net earnings of $11.3
million or $0.36 per Share in
the same quarter in 2022. Net earnings decreased primarily due to a
loss of $0.5 million on the fair
value of the Exchangeable Units compared to a gain of $8.1 million in the second quarter last year. The
fair valuation adjustment on the Exchangeable Units is directly
related to changes in the market price of the Company's Shares.
Lower revenues and higher administration expenses also contributed
to the reduction in earnings for the quarter.
Distributable Cash Flow amounted to $4.5
million for the quarter, 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.
"Results for the second quarter were in line with our
expectations: softer than the same quarter last year - which marked
the tail-end of the pandemic-driven real estate boom - but improved
over the first quarter," said Phil
Soper, President and Chief Executive Officer, Bridgemarq
Real Estate Services, Inc.
"Sales activity increased and property prices rose in the second
quarter, as the Bank of Canada
temporarily paused its interest rate increase program," added
Soper. "Our Company's reputable brands have continued to attract
and retain high-producing agents. This is due, in no small part, to
our ongoing commitment to results for our agents and their clients
through continued investment in industry-leading technology
platforms, including lead-generating and nurturing tools, and
best-in-class training programs and support."
MARKET UPDATE
The Canadian Market posted a national decline in transactional
dollar volume of 4% in the second quarter of 2023, compared to the
same period last year. Compared to last quarter, however, the
market grew by 74%.1 In the second
quarter of 2022, the Bank of Canada continued increasing interest rates to
combat inflation, marking the start of sales and price declines
after two years of pandemic-fueled growth. According to the
Canadian Real Estate Association, the national average selling
price remained flat, increasing just 1% in the second quarter of
2023 compared to the same period last year, and increased 9% on a
quarter-over-quarter basis.
Following two consecutive rate holds in March and April, the
Bank of Canada raised interest
rates by 25 basis points in June and again in July, bringing its
key lending rate to 5%.2 The central bank noted the
continued strength of Canada's
economy, including a pickup in the housing market. The Bank also
acknowledged that, while inflation has reduced, downward momentum
is coming from lower energy prices, while core inflation remains
elevated, due in part to newcomers to Canada adding both supply and demand to the
economy; filling labour shortages and adding to real estate
demand.
Despite the central bank's decision to reignite its campaign to
increase interest rates, homebuyers continue to be active in the
market. Meanwhile, some would-be sellers have put their plans to
list on hold, waiting for interest rates and the economy to
stabilize, further shrinking the low supply of housing and putting
continued upward pressure on home prices.
_________________________________
1 CREA Canadian Housing Market
Statistics 2 Bank of Canada raises policy
rate 25 basis points, continues quantitative tightening,
July 12, 2023
|
CASH DIVIDEND
The Company declared a cash dividend of $0.1125 per restricted voting share payable on
September 29, 2023, to
shareholders of record on August 31,
2023. The dividend distribution represents a target annual
dividend of $1.35 per restricted
voting share.
THE COMPANY NETWORK
As at June 30, 2023, the Company
Network was comprised of 20,752 REALTORS® operating under 289
Franchise Agreements from 733 locations. This represents a 1%
increase over the agent count as at June 30,
2022. Based on 2022 transactions, REALTORS® in the Company
Network participate in approximately 28% of all home resales in
Canada.
CONFERENCE CALL
Bridgemarq Real Estate Services Inc. will host a conference
call on Thursday, August 10, 2023, at
10 a.m. Eastern Daylight Time to
discuss its second quarter financial results.
To access the call by telephone, please dial 1-888-664-6383 or
416-764-8650.
To access the call online, please visit
https://app.webinar.net/V70QmXQ2BX9.
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 Monday, August 14, 2023.
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 "believes", "continue",
"may", "remains", "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®. 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 &
DESIGN / BRIDGEMARQ REAL ESTATE SERVICES are registered trademarks
of Residential Income Fund L.P. and are used under licence by
Bridgemarq Real Estate Services Inc. and Bridgemarq Real Estate
Services Manager Limited.
|
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.
|
|
|
|
|
|
|
June 30,
|
December 31,
|
Balance Sheet Highlights
|
2023
|
2022
|
Cash
|
$
5,915
|
$
6,419
|
Other current
assets
|
5,906
|
5,469
|
Total current
assets
|
11,821
|
11,888
|
Non-current
assets
|
57,588
|
60,741
|
Total assets
|
$
69,409
|
$
72,629
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
1,508
|
$
1,138
|
Interest payable on
Exchangeable Units
|
484
|
484
|
Dividends payable to
shareholders
|
1,067
|
1,067
|
Contract transfer
obligation
|
481
|
602
|
Debt
facilities
|
-
|
66,959
|
Total current
liabilities
|
3,540
|
70,250
|
Debt
facilities
|
67,026
|
-
|
Other non-current
liabilities
|
7,909
|
7,966
|
Exchangeable
Units
|
49,216
|
42,727
|
Total
Liabilities
|
127,691
|
120,943
|
Shareholders'
deficit
|
(58,282)
|
(48,314)
|
Total Liabilities and Shareholders'
deficit
|
$
69,409
|
$
72,629
|
|
Three months
|
Three
months
|
Six
months
|
Six months
|
|
ended
|
ended
|
ended
|
ended
|
|
June 30,
|
June 30,
|
June
30,
|
June 30,
|
Interim Earnings Highlights
|
2023
|
2022
|
2023
|
2022
|
Fixed franchise
fees
|
$
8,367
|
$
8,258
|
$
16,747
|
$
16,253
|
Variable franchise
fees
|
3,388
|
4,332
|
6,187
|
8,484
|
Other
revenue
|
1,086
|
1,206
|
1,898
|
2,485
|
Revenues
|
12,841
|
13,796
|
24,832
|
27,222
|
|
|
|
|
|
Cost of other
revenue
|
(345)
|
(288)
|
(571)
|
(539)
|
Administration
expenses
|
(948)
|
(307)
|
(1,315)
|
(575)
|
Management
fees
|
(4,888)
|
(5,276)
|
(9,740)
|
(10,492)
|
Interest
expense
|
(740)
|
(743)
|
(1,483)
|
(1,457)
|
|
5,920
|
7,182
|
11,723
|
14,159
|
Write-off of intangible
assets
|
(91)
|
-
|
(193)
|
-
|
Amortization of
intangible assets
|
(1,734)
|
(1,817)
|
(3,475)
|
(3,636)
|
Interest on
Exchangeable Units
|
(1,452)
|
(1,452)
|
(2,904)
|
(2,904)
|
Gain (loss) on fair
value of Exchangeable Units
|
(499)
|
8,119
|
(6,489)
|
9,384
|
Gain (loss) on interest
rate swap
|
(152)
|
651
|
(530)
|
1,787
|
Loss on debt facility
amendment
|
-
|
-
|
(122)
|
-
|
Income tax
expense
|
(827)
|
(1,222)
|
(1,764)
|
(2,369)
|
Deferred income tax
expense (recovery)
|
(26)
|
(122)
|
188
|
(363)
|
Net and comprehensive earnings
(loss)
|
$
1,139
|
$
11,339
|
$
(3,566)
|
$
16,058
|
Basic earnings (loss) per Restricted Voting
Share
|
$
0.12
|
$
1.20
|
$
(0.38)
|
$
1.69
|
Diluted earnings (loss) per
Share
|
$
0.12
|
$
0.36
|
$
(0.38)
|
$
0.75
|
|
|
|
|
|
Cash Flow Highlights
|
|
|
|
|
Cash provided by
operating activities:
|
$
3,520
|
$
4,887
|
$
6,601
|
$
8,394
|
Cash used for investing
activities:
|
(559)
|
(107)
|
(639)
|
(173)
|
Cash used for financing
activities:
|
(3,206)
|
(4,701)
|
(6,465)
|
(7,902)
|
Change in cash for the period
|
(245)
|
79
|
(504)
|
319
|
Cash, beginning of the period
|
6,160
|
6,457
|
6,419
|
6,217
|
Cash, end of the period
|
$
5,915
|
$
6,536
|
$
5,915
|
$
6,536
|
|
|
|
|
|
Distributable Cash Flow
Highlights
|
|
|
|
|
|
|
|
|
|
Distributable Cash
Flow
|
$
4,535
|
$
5,853
|
$
9,320
|
$
11,617
|
Distributable Cash Flow
per Share
|
$
0.35
|
$
0.46
|
$
0.73
|
$
0.91
|
|
|
|
|
|
|
Twelve months
|
Twelve
months
|
|
|
|
ended
|
ended
|
|
|
|
June 30, 2023
|
June 30,
2022
|
|
|
|
|
|
|
|
Distributable Cash
Flow
|
$
17,859
|
$
20,884
|
|
|
Distributable Cash Flow
per Share
|
$
1.39
|
$
1.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributable Cash Flow Reconciled to Cash Flow from
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
|
Three months
|
Six months
|
Six months
|
(Unaudited)
|
ended
|
ended
|
ended
|
ended
|
($ 000's)
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
Cash flow from
operating activities
|
$
3,520
|
$
4,887
|
$
6,601
|
$
8,394
|
Add
(deduct):
|
|
|
|
|
Interest on Exchangeable
Units
|
1,452
|
1,452
|
2,904
|
2,904
|
Current Income tax
expense
|
(827)
|
(1,222)
|
(1,764)
|
(2,369)
|
Income taxes paid
|
900
|
1,150
|
1,800
|
2,500
|
Changes in non-cash working
capital
|
28
|
(301)
|
470
|
409
|
Interest expense
|
(2,243)
|
(2,171)
|
(4,491)
|
(4,300)
|
Interest paid
|
2,264
|
2,165
|
4,438
|
4,252
|
Interest income
|
95
|
14
|
179
|
14
|
Interest received
|
(95)
|
(14)
|
(179)
|
(14)
|
Cash used for investing
activities
|
(559)
|
(107)
|
(639)
|
(173)
|
Distributable Cash
Flow
|
$
4,535
|
$
5,853
|
$
9,320
|
$
11,617
|
(Unaudited)
|
|
|
For twelve months
ended,
|
June 30,
|
June 30,
|
($ 000's)
|
2023
|
2022
|
|
|
|
Cash flow from
operating activities
|
13,311
|
15,023
|
Add
(deduct):
|
|
|
Interest on Exchangeable
Units
|
5,806
|
5,806
|
Current Income tax
expense
|
(3,343)
|
(4,071)
|
Income taxes paid
|
3,375
|
5,350
|
Net changes in non-cash
working capital
|
(181)
|
(758)
|
Interest expense
|
(8,954)
|
(8,599)
|
Interest paid
|
8,908
|
8,424
|
Interest income
|
288
|
8
|
Interest received
|
(288)
|
(8)
|
Cash used for investing
activities
|
(1,064)
|
(291)
|
Distributable Cash
Flow
|
$
17,859
|
$
20,884
|
SOURCE Bridgemarq Real Estate Services Inc.