Bridgemarq Real Estate Services Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 10, 2023

There are 3 speakers on the call.

Operator

Good morning. My name is Vanessa, and I would like to welcome everyone to the Bridgemark Real Estate Services Incorporated 20 23 Second Quarter Results Conference Call. This call is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Star then the number 1 on your telephone keypad. Thank you. I would now like to introduce Mr. Bill Sopher, President and CEO of Bridgemark Real Estate Services Incorporated. Mr.

Operator

Soffer, you may begin.

Speaker 1

Thank you, Vanessa, and good morning, everybody. With me today is our Chief Financial Officer, 2019. We appreciate you joining us on this call this morning. I will be with a brief overview of the company's 2nd quarter results and $1,000,000,000 update. Glenn will then discuss our financial results tomorrow, and I'll conclude by providing some marks on 2 operational highlights and market developments.

Speaker 1

Following our remarks, as Vanessa mentioned, Glenn and I would be happy to take your questions. I want to remind you that some of the remarks expressed during this call may contain forward looking statements. You should not place reliance on these forward looking statements Because they involve known and unknown risks and uncertainties that may cause the actual results or performance of the company to differ materially from the anticipated future results expressed or implied by such forward looking statements. I encourage everyone to review the cautionary language finding their news release percent. Over the last quarter, Canada's housing market has been trending upward again, following a significant market 2 correction that began in the spring of 2022.

Speaker 1

The correction followed 2 years of record breaking growth fueled by the pandemic. $5,000,000 Total transactional dollar volume has risen since the Q1, driven by an increase in both sales volumes and home prices. In some regions, home prices have not yet returned to the levels reached at the market's peak in February of last year, yet property values are significantly higher than pre pandemic levels. We're talking about early 2020 or 2019 Because of the continued strong demand, a strong economy and a chronic shortage of housing inventory. $1,000,000,000.

Speaker 1

Results for the Q2 were in line with our expectations, softer than the same period last year, the tail end of the pandemic boom, but improved over last quarter. 2017. The company's business structure showed considerable resilience during the quarter with revenues down just 6.9% 2 years to participate in the growth of the Canadian real estate market, while also mitigating the impact of market volatility on cash flows. $1,000,000 I'm pleased to report that despite this significant market correction, we have continued to see positive agent growth in our network. At the end of the Q2, the company's network count sat at 20,752 practitioners, percent, an increase of 1% over last year.

Speaker 1

Glenn will discuss this in more detail in a moment. At its board meeting yesterday, directors approved a dividend payable on September 29 $0.1125 per share to shareholders of record on August 31. This $0.35 per share, which is consistent with 2022. And with that, I'll turn the call over to Glenn $4,000,000 for a look at our 2nd quarter financial performance.

Speaker 2

Thank you, Phil, and good morning, everyone. $4,800,000 down from $27,200,000 $1,000,000 recorded in the same period last year. During the Q2, revenue was $12,800,000 down slightly from $13,800,000 last year. The company's network of Realtors sits at 20,752, which reflects the net growth of 214 agents for just over 1% compared to June of last year. Since the start of 2021, however, percent.

Speaker 2

We have grown our network by 9%. In the Q2, the company generated net earnings of $1,100,000 or $0.12 per share compared to net earnings of $11,300,000 or $0.36 per share last year. $2,000,000 The results reflect the loss on the fair valuation of our exchangeable units of $500,000 in the 2nd quarter $1,000,000 compared to a gain of $8,100,000 last year. Distributable cash flow amounted to $4,500,000 in the 2nd quarter, $5,800,000 in Q2 of last year, reflecting a decline in sales activity percent and an increase in administration costs, partly offset by continued network growth. $20,000,000 For the rolling 12 month period ended June 30, 2023, distributable cash flow amounted to $17,900,000 or $1.39 per share compared to $20,900,000 or $1.63 per share for the same period ending June 30, 2022.

Speaker 2

During the quarter, the Canadian residential real estate market closed down 4% $107,000,000,000 compared to Q2 of last year, driven by a 5% decrease in unit sales, percent, partly offset by a modest increase in the average selling price of 1%. The Greater Toronto Area Real Estate market $2,000,000,000 in the 2nd quarter, driven by an 8% increase in unit sales. While we did see a modest price decline in the average selling price of homes in Toronto compared to last year, percent. Average selling prices in Toronto were up 8% compared to Q1 and up by 10% compared to Q4 of 2022. The Greater Vancouver market was up 6% at $11,800,000,000 in the 2nd quarter compared to 2022, percent, driven by a 5% increase in unit sales and a 1% increase in the average selling price.

Speaker 2

Percent. The Greater Montreal area market decreased 19% to $6,800,000,000 in the 2nd quarter, percent driven by a 16% decrease in unit sales and a 4% decline in average selling price. Percent. Market correction in Montreal in the Montreal region began later than in the other 2 major urban centers, and as a result, the rebound there is lagging. Bill will now provide additional insights into the markets and an update on our operations.

Speaker 1

Thank you, Glenn. While Canada's real estate market has not entirely reversed The declines recorded in the final 9 months of 2022, as Glenn mentioned, it has been growing. The market has been 2023. Compared to the Q2 last year, which marked the tail end of the pandemic 2 fueled real estate boom. Total transactional volumes are down slightly.

Speaker 1

However, since the start of 20 23 sales volumes and average home prices have been steadily climbing nationally and in the country's 3 largest urban centers. We are close to that pivotal point where most people who purchased at the peak of the market In February March of 2022 would breakeven, if they sold their homes today. The Bank of Canada's extended interest rate hike campaign aimed at curbing inflation pushed many buyers to the sideline. This had caused activity to slow and average home prices did decline in 2022 Following a pause in interest increases at meetings in March April, which Triggered many buyers return to the market, the Central Bank restarted its monetary tightening campaign. While pleased that inflation was down significantly from the peak, the Governor of the Bank of Canada indicated that he was

Speaker 2

percent. Concerned that inflation would settle in stubbornly

Speaker 1

above the target range of 2% to 3%. Thus, percent. Many would be sellers who do not have a critical need to move have put their plans to list their homes on hold. This is putting additional pressure on Canada's critical housing shortage By reducing the volume of homes available to trade hands. These homeowners who are sitting on the sidelines may Hold well below market mortgages and are spooked by the sharp increase in the cost of borrowing And have decided to sit still for now.

Speaker 1

Yet every month these below market mortgages are renewing at market rates, Which is steadily fine this freeze in activity. They're also waiting for a sign of stability and interest rate 2 policy before moving. All of this is putting further pressure on our critically low supply of housing, which began well before the pandemic and is putting upward pressure percent on home prices. And this won't end anytime soon. Canada's consumer 20.6% price index currently sits at 2.8%.

Speaker 1

The Bank of Canada acknowledged that while inflation has reduced significantly percent. From a high of more than 8% last summer, downward momentum is coming from lower energy prices, while core inflation remains elevated. This is due in part to immigration adding both supply and demand in the economy. Newcomers to Canada are filling labor shortages while simultaneously adding to general consumer and overall real estate demand. Percent.

Speaker 1

The Central Bank's key lending rate currently sits at 5%, the highest it's been in 20 years. In July, Canada's unemployment rate increased marginally, but remains very high. Yes, this could be a signal to the bank that the increases implemented thus far are starting to slow the economy. $1,000,000 I'm pleased to say that our company's reputable brands have continued to attract and retain high producing agents from coast to coast, 2. Thanks to our ongoing commitment to investing in industry leading technology platforms, including 2.5% in areas that continue to attract the best and brightest in the industry to our brands.

Speaker 1

2. And we intend to continue to make significant investments in these areas for future growth. During the Q2, the company launched its spring series of in person training sessions aimed at helping realtors reach their lead generation and conversion goals. This was done through the RLP Sphere platform. Our Rolopage brand's exclusive, fully customized and Canadianized cloud based AI driven customer relationship management ecosystem, quite the mouthful.

Speaker 1

It is a digital platform that allows our people a competitive advantage in the marketplace. In addition, The company rebranded and relaunched the portal, the website that Supports our commercial practice, our national commercial real estate business. This new Platform includes the integration of external listings and the addition of new lead sources for the Rolopage commercial practitioners through a program called Smart Leads. The company also continued to improve its corporate offering of training and marketing support available to members of our luxury Johnson and Daniel brand and in Quebec through Via Capital, where we continue to improve new online video 2 platform providing realtors with access to important news, training and events information. To recap, the company's revenue And for the Q2 and year to date are in line with historic results and surpass Pre pandemic levels reached in 2019.

Speaker 1

We have seen sustained network growth over the last 12 months despite the market correction and slowdown in activity, which bodes well for the future. And with that, I will turn the call back to our operator and open up the call to questions.

Operator

5, and thank you. We will now begin our question and answer session. Star followed by the 1 on your touch tone phone. You'll hear a tone acknowledging your request. Questions will be taken in the order received.

Operator

Before pressing any keys. I'm standing by for questions.

Speaker 1

All right. Well, thank you very much and thank you all for participating in today's call. We look forward to speaking to you again

Operator

and thank you. Ladies and gentlemen, this concludes your conference. Please disconnect your lines.

Powered by Quartr
Earnings Conference Call
Bridgemarq Real Estate Services Q2 2023
00:00 / 00:00