Bridgemarq Real Estate Services Q1 & AGM 2024 Earnings Call Transcript

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Provided by Quartr
May 15, 2024

There are 4 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to the Annual Meeting of Bridgemark Real Estate Services Inc. Please note that the meeting is being recorded. I would like to introduce Lorraine Bell, the Chair of the Board of the Corporation. Ms. Bell, the floor is yours.

Speaker 1

Thank you. My name is Lorraine Bell, and as Chair of the Board of the Corporation, I will be chairing the meeting today. Before we begin with the formal business portion of the meeting, I will provide some comments on voting and asking questions at today's meeting. In making the decision to hold today's meeting virtually, we have ensured that shareholder rights are protected. As such, this meeting offers shareholders the same opportunities to participate as in an in person meeting.

Speaker 1

I welcome all guests who are not registered shareholders or holding proxies for registered shareholders. As a reminder, as with an in person meeting, only registered shareholders and duly appointed proxy holders who have registered with the transfer agent ahead of time are able to vote or ask questions during the formal portion of the meeting. Guests will be permitted to ask questions during the management presentation after the meeting. We will conduct the votes on the matters before us by a poll. On a poll, every shareholder entitled to vote has one vote for each share entitled to be voted on the matter and held by that shareholder.

Speaker 1

Voting during this meeting can only be done through our virtual voting platform on the webcast. The polls are now open for all matters to be voted on at this meeting. And those of you who have registered to vote today should see a voting tab on the left side of the screen. Voting can be completed at any time from now until the end of the formal business of the meeting. Thank you to those of you who have already voted.

Speaker 1

Votes collected by the poll will reflect selections at the time the poll closes. If you have already voted in advance of the meeting, you do not need to do anything as your vote has already been recorded. However, if you wish to change your vote or you have not yet voted, we encourage you to vote now. Shareholders and guests can submit questions at any time during the meeting. There will be opportunities for registered shareholders and duly appointed proxy holders to ask specific questions to each resolution.

Speaker 1

If you have a question, select Ask a Question button on the left side of the page. Type your question in the chat box and click on the Ask Now button to submit the question. We ask that you identify whether your question relates to a motion being considered as part of the formal business of this meeting or whether it is of a more general nature. We will address all questions that directly relate to a particular motion at the appropriate time of the meeting. We will respond to general questions following the formal business of the meeting during the management presentation, time permitting.

Speaker 1

The secretary will receive the questions and at the appropriate time will read them out in order for everyone to be aware of the question being addressed. And with that, I would like to call the meeting to order. Again, I remind you that the polls are open for all matters to be voted on at this meeting. I will now ask TSX Trust Company through its representative to act as scrutineer to report on the restricted voting shareholders present online and the number of restricted voting shares represented by proxy at this meeting to compute the votes on any polls taken or ballots cast at this meeting or any adjournment and in each case to report to me as Chair. With me today are Spencer Enright, the corporation's Chief Executive Officer.

Speaker 1

Also with us today is Glenn McMillan, the Chief Financial Officer of the corporation, who is to act as the Secretary of today's meeting. Mr. Enright and McMillan have joined me in the offices of the corporation for this meeting. First, I will deal with the formal part of the meeting as outlined in the management proxy circular you received in April. Mr.

Speaker 1

Enright will then make a presentation on the corporation's financial and operating performance. And finally, management will be happy to answer your questions. In order to expedite the formal part of the meeting, I have asked certain individuals to nominate and second various resolutions. Although this procedure will assist in the handling of formal affairs, it is not intended to discourage anyone from participating in reference to any resolution after it has been proposed and seconded. Any proposed amendments or objections to a motion will need to be submitted as questions using the Ask a Question tab on the left side of the web page.

Speaker 1

All proposed amendments or objections submitted by shareholders or duly appointed proxy holders who are entitled to vote at the meeting will be addressed during the meeting, provided they are submitted before the polls are closed. As I previously mentioned, questions which do not specifically relate to the formal matters being addressed at the meeting will be considered during the presentation of management at the conclusion of the meeting, time permitting. I have been advised by the Secretary that he has received the declaration from the TSX Trust Company dated April 16, 2024, that the notice and access calling this meeting and the accompanying management information circular, the form of proxy and the audited financial statements for the year ended December 31, 2023 and the related auditors' reports were mailed to the shareholders of record at the close of business on April 11, 2024. Therefore, we will dispense with the reading of the notice of the meeting. I have received the scrutineers' preliminary report on attendance, and I confirm that we have received quorum for the meeting, the required quorum for this meeting.

Speaker 1

A copy of the scrutineers' final report on attendance will be filed with the records of the meeting and posted on SEDAR Plus. I now declare the meeting to be properly constituted for the transaction of the business for which it has been called. The minutes of the annual meeting of the shareholders held on May 11, 2023, were reviewed by the Board of Directors of the corporation at its quarterly meeting on August 9, 2023. Such minutes were found to be in order and were approved by the Board at that meeting and have been included in the minute books of the corporation. I trust that everyone has had the opportunity to read the materials that were provided to the meeting, including the annual report, which includes the letter to the shareholders, the management's discussion and analysis for the year ended December 31, 2023 and the audited financial statements for the corporation, including the auditor's report thereon.

Speaker 1

Copies of these materials were made available to all shareholders and are available on SEDAR Plus and on the corporation's website atwww.bridgemark.com. Should anyone have any questions relating to these matters or questions of a more general nature, we will be pleased to respond to them during management's presentation after the conclusion of the meeting. The Chief Financial Officer has tabled the consolidated financial statements of the corporation for the year ended December 31, 2023, together with the auditors report, and such financial statements will form a record will form a part of this record of this meeting. The next item of business is the appointment of auditors and the authorization to fix the remuneration. It is the intention of the persons named in the management proxy sent

Speaker 2

to all

Speaker 1

shareholders to vote in favor of a resolution reappointing Deloitte LLP as the external auditor of the corporation until the next annual meeting and authorizing the Board of Directors to fix the remuneration to be paid to the auditors. As stated in the management information circular, the Audit Committee of your Board of Directors has recommended to shareholders that Deloitte LLP be reappointed as the corporation's external auditor. Will someone please move a resolution for the appointment of the auditors?

Speaker 3

Madam Chair, I move that Deloitte LLP be reappointed auditors of the corporation to hold office until the next annual meeting and that the directors be authorized to fix the remuneration.

Speaker 1

Thank you, Glyn. May I have a seconder?

Speaker 2

Madam Chair, I second the motion.

Speaker 1

Thank you, Spencer. Adoption of this motion requires a favorable vote of a majority of the votes cast at the meeting by shareholders. Management has received proxies representing approximately 16.1% of the corporation's restricted voting shares. In addition, management has received a proxy for the special voting share, which is entitled to 6,248,544 votes. These proxies represent approximately 49.4 percent of the total votes eligible to be cast at this meeting and direct me to vote 99.9 percent of the eligible votes in favor of the resolution.

Speaker 1

I will now ask the secretary to please advise if any questions specific to this motion were submitted or if there were any objections or amendments to this motion. We will wait for a brief period of time to allow for the broadcast delay and to allow eligible shareholders to submit their questions related to this motion.

Speaker 3

Madam Chair, there have been no questions specific to this motion nor any objections or amendments submitted.

Speaker 1

Thank you. As there have been no questions or comments submitted related to this motion, we will now proceed with the vote. If you have not already recorded your vote, please record it now, remembering that if you've already voted in advance of the meeting and do not wish to change your vote, no further action is required. We will wait for a brief moment to allow you to record your vote. The next item of business is the election of directors.

Speaker 1

The corporation's board is comprised of 6 persons. Brookfield Business Partners, through its subsidiary, Brookfield PPP Canada Holdings LP, is entitled to designate up to 2 5ths of the members of the Board and has chosen to designate Mr. Spencer Enright and Mr. Joe Friedman as their representatives to the Board of Directors. With the designation of 2 directors by Brookfield Business Partners, there are 4 directors to be elected at this meeting who will hold office until the earlier of the end of the next annual meeting or until their successors are elected or appointed.

Speaker 1

The proposed nominees for election as directors are Colm Bastable, Lorraine Bell, Jitangeli Datt and Gail Kilgore. All of the director nominees are standing for reelection and have served on the Board of Directors of the corporation since they were elected at last year's shareholders meeting. All of these director nominees are present virtually on this call today. Additional information on the proposed director nominees is set out in our management information circular, which was sent to all shareholders. I now declare the meeting open for nominations.

Speaker 3

Madam Chair, I nominate for election as directors of the corporation, 4 nominees named in the corporation's management information circular relating to the Annual Meeting of Shareholders dated April 1, 2024.

Speaker 1

Thank you, Glenn. May I have a seconder?

Speaker 2

Madam Chair, I second the motion.

Speaker 1

Thank you, Spencer. I will now ask the secretary to please advise if any questions specific to this motion were submitted or whether there were any additional director nominees to be proposed at this time. We will wait for a brief period of time to allow for the broadcast delay and to allow eligible shareholders to submit their questions related to this motion.

Speaker 3

Madam Chair, there have been no questions specific to this motion nor any additional director nominees proposed at this time.

Speaker 1

Thank you, ladies and gentlemen. I now declare the nominations closed. If you have not already recorded your vote, please record it now remembering that if you have already voted in advance of the meeting and do not wish to change your vote, no further action is required. We will wait a brief moment to allow you to record your vote. The voting for all resolutions brought before the meeting is now closed.

Speaker 1

Now that the voting is closed, I can declare the results of the votes. On the basis of the voting completed prior to the meeting, the proxies received by management and the results of voting received online during this meeting, the motion to reappoint Deloitte LLP as auditors of the corporation is carried. As to the election of directors, as there are 4 directors to be elected and the same number of nominees, I now declare that those nominated have been duly elected as directors of the corporation until the annual meeting or until their successors are elected or appointed. Ladies and gentlemen, that brings us to the conclusion of the formal agenda of the meeting. And as such, may I call for a motion to terminate the meeting?

Speaker 3

Madam Chair, I move that the meeting be terminated.

Speaker 1

Thank you, Glenn. May I have a seconder?

Speaker 2

Madam Chair, I second the motion.

Speaker 1

Thank you, Spencer. I will now ask the secretary to please advise if any questions specific to this motion were submitted or if there are any objections or amendment to this motion. We will wait for a brief period of time to allow for the broadcast delay and to allow eligible shareholders to submit their questions related to this motion.

Speaker 3

Madam Chair, there have been no questions specific to this motion nor any objections submitted.

Speaker 1

Thank you, Gwen. As there have been no questions or comments submitted related to this motion, I declare the motion carried and that this meeting to be is to be concluded. I will now turn the webcast over to Mr. Spencer Enright, Chief Executive Officer of the corporation, who will provide a strategic update on the corporation and present the corporation's 2023 and Q1 2024 financial results. After management's presentation, we will be happy to answer any questions that have been submitted.

Speaker 1

Again, if you wish to submit a question, you can access the Ask a Question tab on your screen. Before the management presentation start, I should caution that in talking about the company's strategic initiatives and financial and operating performance and in answering any of your questions, management may make forward looking statements. These statements are subject to known and unknown risks, and future results may differ materially from those implied or imputed from those forward looking statements. For further information on known or unknown risk factors, I would encourage you to review the Risk Factors section of our annual information form, which is posted on our corporation's website and on SEDAR Plus.

Speaker 2

Thank you, Lorraine. And it's my pleasure to provide an update on the corporation. I'm excited today to share more about recent changes we've undertaken to expand our business and importantly set Bridgemark on a path to deliver more meaningful growth while continuing to leverage the inherent strengths and advantages of our existing business. For today's meeting, I will share our latest operating results as well as some insights into the latest real estate market trends And then I will elaborate further on our newly expanded business and strategic initiatives and what it means for us moving forward. This is an exciting time for our company.

Speaker 2

At the end of the Q1, we successfully closed the transaction to internalize our management team and acquire both the property owned direct business and several Royal LePage and Via Capital Real Estate brokerages. So as a result, Bridgemark today is very much an expanded business with a broader suite of revenue generating assets and operations, which will accelerate which will result in accelerated growth for our business. I will spend some more time today to lay out the unique strengths of our business and how this can translate into more value for all shareholders. Firstly, however, let me share with you our most recent Q1 results, which we have just released in advance of today's shareholder meeting. I'll note that since the transaction closed on March 31 this year, our Q1 results effectively do not reflect the operations of the acquired businesses as yet, but rather will be the last quarter where we have results that reflect only the pre transaction franchise operations.

Speaker 2

Revenues for the quarter were 11,800,000 dollars down slightly compared to the Q1 of 2023, but it does reflect an improved market compared to the last quarter of 2023. It was marginally below the level that we saw in the Q1 last year. Our complement of Realtors operating under our industry leading Royal LePage and Vit Capitale brands grew in the quarter from where we were at the start of this year, which is reflective of the enduring appeal of these long standing brands. For the quarter, cash provided by operating activities amounted to $2,100,000 which includes higher interest expenses as well as some administrative expenses that were incurred as a result of the work done to evaluate and negotiate the terms of the transaction. And this quarter we continued to deliver meaningful value back to shareholders in the form of monthly dividends, which remained consistent on a per share basis throughout the quarter.

Speaker 2

Our franchise business is underpinned by some very strong fundamental key business drivers. First is the stability of the franchise fee revenues that we generate, where for example in 2023 approximately 82% of our franchise fee revenues were fixed in nature. We periodically increased fees charged to agents in our networks and we did so at the start of 2024, which is expected to generate approximately a 3% increase in annualized revenues related to this portion of our business. While much of our franchise related revenues are tied to the number of Realtors we have in our networks, we do generate revenues on the transactions that our Realtors are party to. Here, one of our keys to success is our productivity, which essentially means how successful our agents are at doing transactions in the marketplace.

Speaker 2

Accordingly, we focus much of our efforts on providing superior services and products to our franchisees and our Realtors to help them improve their productivity. This ultimately translates into more transactions and more revenues for us. With those key business drivers in mind, we saw an increase in the number of Realtors in the quarter versus where we were at the start of the year. The momentum that this growth shows is a testament to both the strength and success of our existing Realtor network and the appeal of our industry leading brands led by our 110 year strong iconic Royal LePage brand as well as our Quebec based brand Via Cabital. The stability of our franchise business is underpinned by a loyal group of close to 300 franchise affiliates who operate across the country.

Speaker 2

We operate under primarily 10 year long franchise agreements, which is significantly longer than the industry norm of 5 years. As a result, our contract renewals are spread out over a longer timeframe and we continue to realize a very high renewal rate which has remained consistent for over 20 years. Moving on from the results of the quarter, I will now provide a brief update on the residential real estate market for the past quarter. The trajectory of home sales is improving in most markets from the trough we saw in the Q2 of 2022 when the Bank of Canada first began increasing interest rates. However, the road has been uneven and market specific and home resale volumes are still 5% below where we were at the beginning of this decade before the pandemic related effects began.

Speaker 2

For the Q1, home sales grew 12.9% year over year nationally, with Toronto and Vancouver lagging slightly at 10.8% and 9.4% growth respectively. And Montreal outperformed the rest of the country at 19.4% growth. The number of listings available did continue to increase in the quarter. However, markets remained tight overall with current inventory at 3.8 months of sales versus a long term average of around 5 months. New listings are being absorbed into the market, notwithstanding the tentative behavior of buyers waiting to see what happens to borrowing costs.

Speaker 2

The Bank of Canada maintained rates at its most recent meeting, which was held on April 10. While we can't predict exactly what will happen to interest rates over the balance of this year, it is widely expected amongst industry analysts that we should see a reduction in the rates over the course of the year. This will help encourage buyers to consider getting back into the market and ultimately we expect home resale transactions to continue to rise, albeit gradually. All right, let's turn our attention to the recently completed acquisition of new businesses, brands and business models. We successfully closed the transaction to acquire Property Direct and several Royal LePage and B Capital brokerages on March 31.

Speaker 2

As a reminder, we completed a transaction to acquire these brokerage operations from Brookfield Business Partners and we internalized the management team, retaining our top talent who have been instrumental in building the Bridgemark business into the industry leader it is today. This transaction has the effect of immediately transforming our company into a much broader and larger enterprise, and I want to elaborate further on what this means for our business and our shareholders. I've already mentioned that our base is a very strong one. Our business is led by our iconic Royal LePage brand founded over 100 years ago by industry legend A. E.

Speaker 2

LePage and which is known today as the voice of real estate in Canada. We also benefit from the strength inherent in our community of franchise affiliates and nearly 20,000 successful Realtors. Together with our Via Capital business and several luxury brands such as Johnson and Daniel, we have a solid, proven and reliable foundation from which to build upon. This transaction now adds some key elements to an emerging growth strategy for us. Our addition of direct brokerage operations under our existing Royal LePage and Vincapital brands adds an important new dimension to our business.

Speaker 2

Up until now, our franchising model focused on enabling our affiliate partners to grow in their individual markets. This is still the case for areas where we operate with the franchise model. Now, however, in key large urban markets such as Greater Toronto and Greater Vancouver, we are directly driving growth for our business through a blend of franchised and company owned brokerage offices. This helps us grow on a more accelerated pace in several ways. 1st, for every transaction that we are party to, we capture a higher proportion of the associated revenues.

Speaker 2

So our revenues will increase even with our current complement of Realtors in our network. 2nd, we can directly influence the pace of growth in these markets. As was disclosed in the materials shared with shareholders as part of the transaction, these brokerage operations have had a successful track record of recently growing acquisitively within their local market areas. We expect to continue to aggressively seek out such opportunities moving forward and are constantly looking out for opportunities to grow our agent base, both organically through recruiting as well as acquisitively where we see lucrative transaction opportunities. And thirdly, having our own brokerage operations in house increases our capabilities to develop and drive best in class operating practices, which we can and will share with our affiliates to accelerate their own growth potential.

Speaker 2

In the end, our whole network benefits from us having this capability in house, which should translate into better growth across our entire business. We also acquired the Proprio Direct business as part of this transaction. Now this might be a new brand to Bridgemark, but this is a proven successful business that has been in operation for over 35 years. With Prop Real Direct, we have added a unique business model, which operates as both a full service brokerage and a compelling consumer focused website, which has become a trusted name for consumers all across the province of Quebec. Our brokerage under Proper Direct in a nutshell is a unique way to provide services to agents across the province in a manner that works best for them as they choose to do business in their respective communities.

Speaker 2

So for these realtors who prefer operating in a manner that is perhaps a bit different than the traditional model, our solution works perfectly. We now have the ability to expand this solution into more areas of the country and hence attract more Realtors to our business that perhaps haven't been accessible before. Our website propiodirect.com has become a trusted mainstay in the Quebec market for several decades. With this website, we have added to our portfolio of direct to consumer portals where we already leverage high traffic counts with our royalopage. Ca and viacapitalvangju.com websites.

Speaker 2

As Canadian consumers evolve their preferences in how they prefer to interact with real estate firms and real estate professionals, we now have a more diverse arsenal of brands, websites and brokerage solutions to meet the varied and changing needs of consumers in Canada. We consider ourselves a bit unique today in our industry to now offer such a diverse suite of solutions, which will inevitably attract a larger percentage of Realtors and ultimately more Canadians to our brands and business. And we're excited to leverage this competitive advantage moving forward. Before I conclude my remarks, I do want to refer you to our website, where we have recently published an updated report on our ESG that is environmental, social and governance related initiatives. Overall, across all industry sectors, the housing market does have an important role to play in contributing to a better carbon footprint in Canada.

Speaker 2

As an industry, all real estate related corporations have a duty to be leaders in effecting a better outcome for all Canadians and should lead the way in helping us find a better way to live in Canada with a smaller environmental footprint. At Bridgemark, we are making strides to not only improve our own operations footprint, but to also offer solutions to the industry and Canadians which can help everyone make a positive difference. And lastly, we are all extremely proud of our network's efforts to improve the lives of vulnerable Canadians through our charitable foundation, the Royal LePage Shelter Foundation. It is the largest public foundation in Canada, focused on eradicating violence in our communities and supporting the women and children who fall victim to it. In this, our 26th year of operation of the Foundation, we've raised over $40,000,000 since inception, which goes directly to aid women's shelter organizations in communities all across Canada.

Speaker 2

To sum up then, Bridgemark is built on a solid foundation of long standing brands, proven business fundamentals and above all remarkable people, our franchise partners, our realtors and our employees. And we are now set up to deliver more growth than ever before with the addition of direct brokerage operations and new exciting business models such as PropCo Direct. And with that, we'll be pleased to take your questions.

Speaker 1

Thank you, Spencer, for your presentation. I would now like to open the proceedings to questions or comments concerning the corporation or its operations. Again, if you would like to ask a question,

Speaker 3

No, there are no questions from shareholders or guests at this time.

Speaker 1

Thank you, Glenn. Seeing that there are no questions to be answered, I would like to thank all of you for participating in today's call on behalf of management and your Board of Directors. I would like to thank you for your support and participation here today. Thank you.

Operator

Ladies and gentlemen, thank you for attending today's meeting. You may now disconnect.

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Bridgemarq Real Estate Services Q1 & AGM 2024
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