Bridgemarq Real Estate Services Reports First Quarter Results and Monthly Dividend

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.

Sarah Louise Gardiner, Director of Investor Relations, Bridgemarq Real Estate Services, [email protected], Tel: [phone]