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TORONTO, Nov. 15, 2024 /CNW/ - Bridgemarq Real Estate Services Inc. ("Bridgemarq" or the "Company") (TSX: BRE) today released its third quarter consolidated financial results and announced a monthly dividend to holders of the Company's restricted voting shares.
HIGHLIGHTS
THIRD QUARTER OPERATING RESULTS
Revenues during the third quarter were $126.8 million, compared to the $12.8 million generated in Q3 of 2023. The increase in revenues is substantially due to the inclusion of gross commission income and other revenues of the acquired businesses. Franchise fees reflect the impact of a January 1 fee increase for REALTORS® operating under the Royal LePage® brand, but are lower than the prior year as they exclude franchise fees received from the acquired businesses. The franchise fees received from the acquired businesses were treated as third party revenue prior to March 31, 2024.
During the quarter, the Company generated a net loss of $10.8 million or $1.14 per fully diluted restricted voting share ("Share"), compared to net earnings of $8.6 million or $0.26 per Share in the same quarter in 2023. The lower earnings are largely driven by a loss of $10.8 million on the fair valuation of the Exchangeable Units in the third quarter of 2024, compared to a gain of $6.8 million in the same quarter in 2023.
Cash provided by operating activities amounted to $2.7 million in the third quarter of 2024, compared to $4.5 million in the same quarter last year. The decrease of $1.8 million is driven primarily by higher interest payments.
Adjusted Net Earnings, which measures earnings of the business before certain non-cash gains and losses on a fully diluted basis, amounted to $2.7 million in the third quarter compared to $3.7 million in 2023. The reduction in Adjusted Net Earnings is primarily due to higher interest rates, increased non-cash amortization of intangible assets acquired as part of the transaction and non-cash impairment charges in the first quarter, partly offset by the positive operating results of the acquired businesses.
The Company generated $5.3 million in free cash flow during the third quarter of 2024, an improvement from the $5.1 million generated in the same quarter last year.
"We are focused on integrating our newly acquired brokerage operations into Bridgemarq, and are well positioned to grow and see improved profitability from this operating segment," said Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services Inc. "We are pleased with our ability to retain 99.5% of our REALTOR® count year to date, despite a challenging period in the market. This is due in large part to our ongoing commitment to providing the real estate professionals in our network with access to unmatched technology platforms and best-in-class training and coaching programs, to ensure the highest level of service excellence. Our brands' capacity to attract and retain top-performing agents allows us to deliver consistent results for our shareholders.
"In the months ahead, conditions in the Canadian real estate market are forecast to improve, as confidence in the economy rises and consumers benefit from materially lower borrowing costs. Further anticipated rate cuts by the Bank of Canada could boost housing market activity as buyer hopefuls, who had been previously sidelined by elevated lending rates, reenter the market," noted Mr. Enright.
MARKET UPDATE
The Canadian market posted a national increase in transactional dollar volume of 5% in the third quarter of 2024, compared to the same period last year.1 According to the Canadian Real Estate Association, the national average selling price remained essentially flat, increasing by less than 1% in the third quarter compared to the same period last year. On a quarter-over-quarter basis, transaction volume and average selling price posted declines of 17% and 5%, respectively.
Buyer demand remained somewhat sluggish through the summer months in Canada's largest and most expensive real estate markets. However, early indicators in the fourth quarter point to increased activity which may be as a result of some sidelined buyers entering the market after a 50-basis point rate reduction by the Bank of Canada in October.
For the fourth consecutive announcement this year, the Bank of Canada reduced interest rates in October – this time by 50 basis points – to reach 3.75%.2 This is the first time in two years the overnight lending rate has been below 4%. Governor Tiff Macklem cited falling inflation as one of the key factors in the central bank's decision to make a larger cut. In September, Canada's Consumer Price Index recorded the lowest yearly increase since February 2021, rising 1.6% year over year and landing below the Bank's 2% target rate for the second consecutive month.3
The market is widely expecting that the Bank of Canada will cut rates further in December, its last announcement of 2024. As borrowing costs become more favourable for consumers, more homebuyer hopefuls are expected to reenter the market.
_____________________________ |
1 CREA Canadian Housing Market Statistics |
2 Bank of Canada reduces policy rate by 50 basis points to 3¾%, October 23, 2024 |
3 Consumer Price Index, September 2024, October 15, 2024 |
CASH DIVIDEND
The Company declared a cash dividend of $0.1125 per Restricted Voting Share payable on December 31, 2024, to shareholders of record on November 29, 2024. The dividend distribution represents a target annual dividend of $1.35 per Restricted Voting Share, which is consistent with 2023.
THE COMPANY NETWORK
As at September 30, 2024, the Franchise Network was comprised of 20,430 REALTORS® operating under 279 franchise agreements from 679 locations. The Company's corporately owned real estate brokerages operate 37 real estate locations in the Greater Toronto Area, Greater Vancouver and within the province of Quebec, with 2,724 sales representatives.
CONFERENCE CALL
Bridgemarq Real Estate Services Inc. will host a conference call on Friday, November 15, 2024, at 10 a.m. Eastern Standard Time to discuss its third quarter financial results.
To access the call by telephone, please dial 1-888-510-2154 or 437-900-0527.
To access the call online, please visit https://app.webinar.net/78eGN8K1WrJ.
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 Wednesday, November 20, 2024.
NON-GAAP FINANCIAL MEASURES
This news release makes reference to Free Cash Flow and Free Cash Flow per Share as well as Adjusted Net Earnings and Adjusted Net Earnings per Share, which are non-GAAP financial measures. These financial measures do not have any standardized meaning under International Financial Reporting Standards and, accordingly, may not be comparable to similar measures used by other companies.
Free Cash Flow represents operating income before deducting interest on leases, depreciation and amortization and net impairment and write-off of intangible assets, minus current income tax expense, minus additions to property and equipment and intangible assets, minus repayment of contract transfer obligations, minus lease payments. Free Cash Flow per Share is calculated by dividing Free Cash Flow by the total number of Restricted Voting Shares outstanding, on a diluted basis. The Company believes that Free Cash Flow and Free Cash Flow per Share are useful supplemental measures of performance as they provide investors with an indication of the amount of cash flow generated by the Company which is available to holders of Restricted Voting Shares and Exchangeable Unitholders, subject to working capital and other investment requirements and principal debt repayments, if any. Please see Free Cash Flow reconciled to Cash Flow from Operating Activities for a reconciliation of Free Cash Flow to cash flow from operating activities in the consolidated statements of cash flows and Free Cash Flow for further information about Free Cash Flow and Free Cash Flow per Share.
Adjusted Net Earnings represents operating income minus income tax expense. Adjusted Net Earnings per Share is calculated by dividing Adjusted Net Earnings by the total number of Restricted Voting Shares outstanding, on a diluted basis. Management believes that Adjusted Net Earnings and Adjusted Net Earnings per Share are useful supplemental measures as they provide investors with an indication of the operating results of the Company on a fully-diluted basis (excluding certain non-cash or non-recurring items that do not directly impact the ongoing operations of the Company) as if all Exchangeable Units had been converted into Restricted Voting Shares at the beginning of the period presented. Non-cash and non-recurring items excluded from the calculation of Adjusted Net Earnings are comprised of gains or losses on interest rate swaps, gains on settlement of liabilities and losses on amendment of the Company's debt facilities.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking information and other "forward-looking statements". Words such as "ahead", "anticipated", "benefit", "believes", "could", "expectations", "expected", "expecting", "forecast", "further", "grow", "improve", "improved", "may", "ongoing", "point to", "reenter", "rises", "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, but are not limited to: 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, changes to any products or services developed or offered by the Company, 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 of REALTORS®, 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.sedarplus.ca. 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 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 21,000 REALTORS® through its franchise network and corporately owned brokerages. We operate in Canada under the Royal LePage®, Proprio Direct®, Via Capitale®, Johnston & Daniel® and Les Immeubles Mont-Tremblant brands. For more information, go to www.bridgemarq.com.
BRIDGEMARQ® & DESIGN / BRIDGEMARQ REAL ESTATE SERVICES®, VIA CAPITALE®, JOHNSTON & DANIEL® and PROPRIO DIRECT® are registered trademarks of Residential Income Fund L.P. and are used under licence. ROYAL LEPAGE® is a registered trademark of Royal Bank of Canada and is used under licence. |
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. | |||||
September 30, | December 31, | ||||
Balance Sheet Highlights | 2024 | 2023 | |||
Cash | $ | 12,135 | $ | 5,743 | |
Cash held in trust | 37,785 | - | |||
Other current assets | 8,301 | 4,671 | |||
Total current assets | 58,221 | 10,414 | |||
Non-current assets | 105,159 | 54,478 | |||
Total assets | $ | 163,380 | $ | 64,892 | |
Accounts payable and accrued liabilities | $ | 14,752 | $ | 1,407 | |
Customer deposits | 37,785 | - | |||
Interest payable on Exchangeable Units | 909 | 484 | |||
Dividends payable to shareholders | 1,067 | 1,067 | |||
Contract transfer obligation | - | 356 | |||
Lease liabilities | 2,944 | - | |||
Exchangeable Units | 87,480 | - | |||
Total current liabilities | 144,937 | 3,314 | |||
Debt facilities | 66,956 | 67,022 | |||
Other non-current liabilities | 20,388 | 7,851 | |||
Exchangeable Units | - | 43,825 | |||
Total Liabilities | 232,281 | 122,012 | |||
Shareholders' deficit | (68,901) | (57,120) | |||
Total Liabilities and Shareholders' deficit | $163,380 | $64,892 |
Three months | Three months | Nine months | Nine months | |||||
ended | ended | ended | ended | |||||
September 30, | September 30, | September 30, | September 30, | |||||
Interim Earnings Highlights | 2024 | 2023 | 2024 | 2023 | ||||
Gross Commission Income | $ | 109,624 | $ | - | $ | 201,661 | $ | - |
Franchise fees | 11,522 | 11,852 | 34,528 | 34,786 | ||||
Other revenue | 5,665 | 945 | 12,983 | 2,843 | ||||
Revenues | 126,811 | 12,797 | 249,172 | 37,629 | ||||
Commissions | (104,444) | - | (191,496) | - | ||||
Cost of other revenue | (1,973) | (266) | (4,436) | (837) | ||||
Operating Expenses | (11,563) | (5,507) | (29,730) | (16,562) | ||||
Interest on debt | (1,102) | (746) | (3,590) | (2,229) | ||||
Interest on lease obligation | (314) | - | (634) | - | ||||
7,415 | 6,278 | 19,286 | 18,001 | |||||
Impairment and write-off of intangible assets | (53) | (8) | (1,775) | (201) | ||||
Amortization of intangible assets | (3,298) | (1,711) | (8,345) | (5,186) | ||||
Interest on Exchangeable Units | (2,726) | (1,452) | (6,903) | (4,355) | ||||
Gain (loss) on fair value of Exchangeable Units | (10,810) | 6,755 | (2,850) | 266 | ||||
Gain on settlement of deferred payments | - | - | 1,224 | - | ||||
Gain on settlement of contract transfer obligation | - | - | 99 | - | ||||
Loss on interest rate swap | - | (420) | - | (950) | ||||
Loss on debt facility amendment | - | - | - | (122) | ||||
Current income tax expense | (1,246) | (990) | (2,315) | (2,754) | ||||
Deferred income tax expense (recovery) | (70) | 149 | (600) | 337 | ||||
Net and comprehensive earnings (loss) | $ | (10,788) | $ | 8,601 | $ | (2,179) | $ | 5,036 |
Basic earnings (loss) per share | $ | (1.14) | $ | $0.91 | $ | (0.23) | $ | 0.53 |
Diluted earnings (loss) per share | $ | (1.14) | $ | 0.26 | $ | (0.23) | $ | 0.53 |
Cash Flow Highlights | ||||||||
Cash provided by operating activities: | $ | 2,673 | $ | 4,503 | $ | 15,296 | 11,396 | |
Cash provided by (used for) investing activities: | (319) | (274) | 2,946 | (1,206) | ||||
Cash used for financing activities: | (4,299) | (3,201) | (11,850) | (9,665) | ||||
Change in cash for the period | (1,945) | 1,028 | 6,392 | 524 | ||||
Cash, beginning of the period | 14,080 | 5,915 | 5,743 | 6,419 | ||||
Cash, end of the period | $ | 12,135 | $ | 6,943 | $ | 12,135 | $ | 6,943 |
Free Cash Flow Highlights | ||||||||
Free Cash Flow | $ | 5,307 | $ | 5,138 | $ | 14,984 | $ | 14,457 |
Free Cash Flow per Share | $ | 0.34 | $ | 0.40 | $ | 1.01 | $ | 1.52 |
Twelve months | Twelve months | |||||||
ended | ended | |||||||
September 30, | September 30, | |||||||
Free Cash Flow | $18,604 | $18,238 | ||||||
Free Cash Flow per Share | $1.30 | $1.42 |
Free Cash Flow Reconciled to Cash Flow from Operating Activities | ||||||||
Three months | Three months | Nine months | Nine months | |||||
(Unaudited) | ended | ended | ended | ended | ||||
($ 000's) | Sept. 30, | Sept. 30, | Sept. 30, | Sept. 30, | ||||
2024 | 2023 | 2024 | 2023 | |||||
Cash flow from operating activities | $ | 2,673 | $ | 4,503 | $ | 15,296 | $ | 11,396 |
Add (deduct): | ||||||||
Interest on Exchangeable Units | 2,726 | 1,452 | 6,903 | 4,355 | ||||
Interest on Lease Obligation | 314 | 634 | ||||||
Current Income tax expense | (1,246) | (990) | (2,315) | (2,754) | ||||
Income taxes paid | 831 | 900 | 2,402 | 2,700 | ||||
Changes in non-cash working capital | 1,697 | (433) | (3,258) | 40 | ||||
Interest expense | (4,142) | (2,294) | (11,127) | (6,845) | ||||
Interest paid | 3,871 | 2,273 | 9,689 | 6,772 | ||||
Interest income | 521 | 111 | 1,148 | 290 | ||||
Interest received | (521) | (111) | (1,148) | (290) | ||||
Lease payments | (1,098) | - | (2,171) | - | ||||
Additions to property and equipment and intangible assets | (319) | (122) | (1,065) | (757) | ||||
Repayment of contract transfer obligation | - | (152) | (4) | (449) | ||||
Free Cash Flow | $ | 5,307 | $ | 5,138 | $ | 14,984 | $ | 14,457 |
(Unaudited) | ||||
For twelve months ended, | September 30, | September 30, | ||
($ 000's) | 2024 | 2023 | ||
Cash flow from operating activities | 17,985 | 14,066 | ||
Add (deduct): | ||||
Interest on Exchangeable Units | 8,355 | 5,808 | ||
Interest on lease obligation | 634 | - | ||
Current Income tax expense | (2,957) | (3,422) | ||
Income taxes paid | 3,202 | 3,525 | ||
Net changes in non-cash working capital | (3,594) | 196 | ||
Interest expense | (13,595) | (9,238) | ||
Interest paid | 12,501 | 9,161 | ||
Interest income | 1,261 | 362 | ||
Interest received | (1,261) | (362) | ||
Lease payments | (2,171) | - | ||
Additions to property and equipment and intangible assets | (1,597) | (1,263) | ||
Repayment of contract transfer obligation | (159) | (595) | ||
Free Cash Flow | $ | 18,604 | $ | 18,238 |
Adjusted Net Earnings Highlights | ||||||||
Adjusted Net Earnings | $ | 2,748 | $ | 3,718 | $ | 6,251 | $ | 10,197 |
Adjusted Net Earnings Per Share | $ | 0.17 | $ | 0.29 | $ | 0.42 | $ | 0.80 |
Three months | Three months | Nine months | Nine months | |||||
(Unaudited) | ended | ended | ended | ended | ||||
($ 000's) | September 30, | September 30, | September 30, | September 30, | ||||
2024 | 2023 | 2024 | 2023 | |||||
Gross Commission Income | $ | 109,624 | $ | - | $ | 201,661 | $ | - |
Franchise fees | 11,522 | 11,852 | 34,528 | 34,786 | ||||
Other revenue | 5,665 | 945 | 12,983 | 2,843 | ||||
Revenues | 126,811 | 12,797 | 249,172 | 37,629 | ||||
Commissions | (104,444) | - | (191,496) | - | ||||
Cost of other revenue | (1,973) | (266) | (4,436) | (837) | ||||
Operating Expenses | (11,563) | (5,507) | (29,730) | (16,562) | ||||
Interest on debt | (1,102) | (746) | (3,590) | (2,229) | ||||
Interest on lease obligation | (314) | - | (634) | - | ||||
Impairment and write-off of intangible assets | (53) | (8) | (1,775) | (201) | ||||
Amortization of intangible assets | (3,298) | (1,711) | (8,345) | (5,186) | ||||
Operating Income | 4,064 | 4,559 | 9,166 | 12,614 | ||||
Current income tax expense | (1,246) | (990) | (2,315) | (2,754) | ||||
Deferred income tax expense (recovery) | (70) | 149 | (600) | 337 | ||||
Adjusted Net Earnings | $ | 2,748 | $ | 3,718 | $ | 6,251 | $ | 10,197 |
Three months | Three months | Nine months | Nine months | |||||
ended | ended | ended | ended | |||||
September 30, | September 30, | September 30, | September 30, | |||||
2024 | 2023 | 2024 | 2023 | |||||
Net and comprehensive earnings (loss) | $ | (10,788) | $ | 8,601 | $ | (2,179) | $ | 5,036 |
Add (deduct): | ||||||||
Interest on Exchangeable Units | 2,726 | 1,452 | 6,903 | 4,355 | ||||
Gain (loss) on fair value of Exchangeable Units | 10,810 | (6,755) | 2,850 | (266) | ||||
Gain on settlement of deferred payments | - | - | (1,224) | - | ||||
Gain on settlement of contract transfer obligation | - | - | (99) | - | ||||
Loss on interest rate swap | - | 420 | - | 950 | ||||
Loss on debt facility amendment | - | - | - | 122 | ||||
Adjusted Net Earnings | $ | 2,748 | $ | 3,718 | $ | 6,251 | $ | 10,197 |
SOURCE Bridgemarq Real Estate Services Inc.