Earnings call transcript: Bridgemarq Real Estate Services Q1 2025 beats EPS forecast

Bridgemarq Real Estate Services Inc. (BRE) exceeded expectations in its first-quarter earnings for 2025, reporting an earnings per share (EPS) of $0.20 against a forecasted loss of $0.0672. This performance marks a significant turnaround from previous predictions. The company’s revenue reached $77.97 million, reflecting strong financial health. The company maintains an attractive 7.54% dividend yield and trades at notably low valuation multiples. Bridgemarq’s stock saw a decline of 1.11% in pre-market trading, closing at $14.24, down from the previous day’s $14.40.

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Key Takeaways

• Bridgemarq reported a net earnings increase to $6 million, compared to a net loss in the previous year.
• Revenue for Q1 2025 grew significantly to $78 million from $11.9 million in Q1 2024.
• The company launched a national advertising campaign and advanced its AI tools to enhance realtor productivity.
• The Canadian residential real estate market showed mixed performance, with notable declines in Toronto and Vancouver but growth in Quebec.
• The company maintained a strong dividend payout of 11.25¢ per share.

Company Performance

Bridgemarq Real Estate Services demonstrated robust financial performance in the first quarter of 2025. The company’s revenue surged to $78 million, a substantial increase from $11.9 million during the same period last year. This growth was driven by strategic acquisitions and enhanced operational efficiencies. Despite a 1% decline in its realtor network, Bridgemarq’s agents remained more productive than the market average, a testament to the company’s strong brand portfolio and technological integration.

Financial Highlights

• Revenue: $78 million, up from $11.9 million in Q1 2024
• Net Earnings: $6 million, compared to a net loss of $400,000 in 2024
• Adjusted Net Earnings: $3.1 million, up from $2.4 million last year
• Dividend: 11.25¢ per share, annualized at $1.35
• Free Cash Flow: $4.1 million, a slight improvement from $4 million last year

Earnings vs. Forecast

Bridgemarq’s EPS of $0.20 surpassed the forecasted loss of $0.0672, marking a positive surprise for investors. This performance highlights the company’s resilience and ability to outperform expectations in a challenging market environment.

Market Reaction

Despite the positive earnings report, Bridgemarq’s stock price fell by 1.11% in pre-market trading. The stock closed at $14.24, moving away from its 52-week high of $15.79. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics, while demonstrating strong returns over the past five years. This decline may reflect broader market trends or investor caution in the real estate sector.

Outlook & Guidance

Looking ahead, Bridgemarq anticipates modest improvements in market activity in the latter half of 2025. The company remains focused on organic growth and realtor recruitment while exploring potential brokerage acquisitions. Despite current market challenges, Bridgemarq is confident in the underlying demand for housing.

Executive Commentary

"Our realtors are one and a half times more productive than the rest of the market," stated Spencer Enright, CEO. Enright emphasized the company’s commitment to adding high-quality realtors and leveraging AI tools to enhance productivity and client engagement. He also noted, "While affordability is an issue, the demand for housing is very strong."

Risks and Challenges

• Market Volatility: Fluctuations in the real estate market could impact revenue and profitability.
• Realtor Network Decline: A 1% decrease in the realtor network may affect future sales growth.
• Economic Pressures: Broader economic challenges could influence housing affordability and demand.

Q&A

During the earnings call, analysts inquired about the contraction in Bridgemarq’s realtor base and the implementation of AI tools across brands. The company addressed variations in commission payout ratios and highlighted differences in geographic and productivity-based commission splits.

Full transcript - Bridgemarq Real Estate Services Inc (BRE) Q1 2025:

Conference Operator: And for those of you joining us via webcast, if you would like to ask a question, simply type it into the Q and A box on your screen. We will answer these questions following the dial in questions after the presentation, time permitting. I would now like to introduce Mr. Spencer Enright, Chief Executive Officer of Bridgemarq Real Estate Services, Inc.

Mr. Enright, you may begin the conference.

Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services, Inc.: Yes, thank you very much operator and good afternoon everyone and thanks for joining us on the call today. With me today is our Chief Financial Officer, Glenn McMillan. I will begin with a brief overview of our company’s first quarter results. Glenn will then discuss our financial results in more detail, and I’ll conclude by providing some remarks on operational highlights, company updates, and market developments. Following our remarks, 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 and 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 found in our news release and on all our regulatory filings. These can be found on our website and on SEDAR plus. So we’re pleased with the strong momentum we’ve created in the first month of twenty twenty five, especially given the significant slowdowns in our largest housing market and global uncertainty created by recent geopolitical events.

Revenue for Q1 was 78,000,000 compared to 11,900,000.0 last year, which, you know, reflects the addition of the brokerage businesses that we acquired on 03/31/2024. At its meeting yesterday, our board of directors approved a dividend of 11.25¢ per share payable on June 30 to shareholders of record on May 30. This indicates an annualized dividend of $1.35 per share, which is consistent with last year’s rate in 2024. And with that, I’ll turn the call over to Glenn for a closer look at our first quarter financial performance.

Glenn McMillan, Chief Financial Officer, Bridgemarq Real Estate Services, Inc.: Thank you Spencer, and good afternoon everyone. As Spencer mentioned, revenue during the first three months of the year was 78,000,000, a significant increase over the 11,900,000.0 reported in the first quarter of last year, reflecting the gross commission income from our brokerage operation. Franchise fees did increase marginally due to the benefit of fee increases that we implemented on January 1. The number of realtors in our franchise and brokerage network sits at 20,845, a decline of 1% since the end of last year, a better performance than the overall market, which is down 3% as far as total agent. Our agent count includes nineteen thirty one agents operating at the Royal LePage and Via Capital brokerages and seven zero eight at our Proprio Direct brokerage.

In the first quarter, the company generated net earnings of 6,000,000 compared to a net loss of $400,000 in 2024 and the higher earnings are largely driven by a gain of $5,700,000 on the fair valuation of the exchangeable unit. Our adjusted net earnings, which considers our operating earnings before certain non cash, non operating adjustments and payments to holders of exchangeable units amounted to $3,100,000 for the first quarter, up from $2,400,000 in the same quarter last year. The improvement reflects the addition of the operating results of the brokerage operations, lower interest expenses and lower impairment of intangible assets. Cash used in operating activity amounted to $1,300,000 in the first quarter as a result of a $4,400,000 seasonal increase working capital. Last year, we generated cash from operating activities of 2,100,000.

We also generated $4,100,000 in free cash flow in Q1, a modest improvement from the $4,000,000 generated in the same quarter last year. The Canadian residential real estate market contracted in the first quarter of twenty twenty five closing at $66,000,000,000 a decrease of 7% compared to the same period in 2024, driven by a 2% decline in the average selling price and a 5% decrease in unit sales. The Greater Toronto area market was down 23% year over year, closing at $13,800,000,000 During that time, sales decreased 21%, while the average selling price dipped 2%. The Greater Vancouver market was down 12% year over year, closing at $6,700,000,000 driven by a 7% decrease in unit sales and a 5% decline in average selling price. And meanwhile, in the province of Quebec, the residential real estate market reported an increase of 22% in the first quarter compared to last year.

This reflects a 13% increase in unit sales and a 9% increase in average selling price. Spencer will now provide some additional insights into the market and an update on our operations. Thanks very much, Glenn.

Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services, Inc.: In the first quarter, market activity dropped by double digits, Canada’s Two most expensive real estate regions, as we previously mentioned. The Greater Toronto and Greater Vancouver markets experienced a much softer than usual spring season. The slowdown is largely tied to weakened consumer confidence driven by ongoing trade tensions in The United States that have raised concerns about country’s economic outlook. The Quebec market, as we said, showed strong growth in the quarter with significant improvements in both price and volume. It appears that the uncertainty created by recent trade talks has spurred the market expect unlike the impact on the rest of the country.

The Bank of Canada left the key lending rate unchanged at its last meeting, marking the end of nearly a year of consecutive interest rate cuts. Central Bank emphasized that amid ongoing global economic uncertainty, forecasting GDP growth has become increasingly challenging and at the risk of inflation reaccelerating as risky. The overnight lending rate currently sits at 2.75% as the bank awaits greater clarity on the direction of the economy and how best to respond. In March, Canada’s consumer price index increased 2.3% year over year, down slightly from the 2.6% recorded in February, but mainly due to the lower cost of travel and gasoline. This remains within the bank’s target range of 2% to 3%.

In its latest labor force survey, Statistics Canada reported that the national unemployment rate rose by 0.2 percentage points to 6.9% in April, followed by a 0.1 percentage point increase in March. With these consecutive increases, the jobless rate has returned to levels last week in November, the highest since January 2017. Given the current trade conflict with our southern neighbor, it is unclear what the Bank of Canada’s next rate announcement will be, however, if consumer confidence improves, the modest increase in market activity could emerge in the latter half of the year. Now I’ll give you a few updates on the company’s operations. Over the last twelve months, our business has expanded significantly, with the acquisition of several brokerages including Villa Capital and Proprio Direct, as well as our corporately owned Royal LePage branch.

Our diverse brand portfolio led by our one hundred and twelve year strong flagship Canadian brand Royal LePage continues to attract and retain top real estate professionals across the country, and while our agent count was lower in the quarter, the reduction of 1% in our agent count was better than the 3% overall drop in the number of agents in the industry. We remain dedicated to advancing our industry leading technology platform, particularly those designed for lead generation and client engagement, and we continue to improve our offering in best in class training and coaching program for our superior realtor network. During the first quarter, we launched the new Proudly Canadian national advertising campaign, highlighting Royal LePage’s uniquely Canadian value proposition to both clients and prospects. In addition to a comprehensive digital advertising strategy, the campaign provides agents in our network with a suite of digital assets, to showcase and amplify the brand’s Canadian identity across various platforms. We continue to invest in enhancing our realtors productivity through education and the use of artificial intelligence, a key focus for enhancing productivity, efficiency and client service.

For example, realtors at Proprio Direct and those operating under the luxury banner Johnson and Daniel benefit from new and ongoing support for AI integration, including marketing tools and recruiting resources. To enhance its public visibility, our Quebec based Via Capital brand launched a comprehensive advertising campaign, including sponsorship of a popular television show, which has earned millions of impressions across a range of media platforms. By continuing to invest in these areas, we’re driving the growth of our top performing brands, opening new avenues for success and increasing value for our shareholders. Through our broadened businesses and service offerings, we are well positioned to continue to expand our reach across the Canadian real estate industry. Our ability to attract and support high performing real estate professionals remains a key driver of the long term value we offer our shareholders, And we are confident we are equipped to continue to thrive and grow regardless of the market dynamics at play.

With that, I’ll turn the call back over to our operator and open the call to any questions you may have.

Conference Operator: Thank you, sir. Please type it in the appropriate box on your screen. First question will be from Jeff Fenwick at Cormark Securities. Please go ahead, Jeff.

Jeff Fenwick, Analyst, Cormark Securities: Hi, good afternoon, everyone.

Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services, Inc.: Hey, Jeff.

Jeff Fenwick, Analyst, Cormark Securities: I wanted to start my questioning off with the realtor base that’s out there. And if you look over the last few quarters, that’s been fully contracting. And just wondering if you could comment a little bit on the factors that might be driving that. And then looking forward, much of a focus are you putting there on growing either the franchise network or potentially the broker network here?

Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services, Inc.: Yeah, for sure Jeff. So first of all, if you dial back a couple years, we saw a significant increase in registrants in the industry, a lot of that was driven post pandemic to people looking at this as a new career, and so we saw a huge intake of new people looking to make a realtor profession their new career. Since then, we’ve seen some moderation for that, you know, it’s not an easy business to be successful in, and so we’ve seen some moderation of that. I’d say from our network standpoint, and I mentioned this at our AGM this morning, our realtors are one and a half times more productive than the rest of the market. We have we have, you know, such an outstanding caliber of productive and successful realtors that we’re not nearly as impacted by, you know, new entrants that have tried and not made a goal of it.

We certainly do have, you know, some attrition in our network, but not anywhere near to the extent of what you see industry wide and so that’s one of the major, I think, factors that’s impacting the industry and much less so ourselves.

Jeff Fenwick, Analyst, Cormark Securities: And then, obviously, the new structure, I think part of the business plan was to be a bit more focused on driving growth here. So just how do you approach business development? Is it any different now or are you a bit more active in recruiting? Would you contemplate acquiring other brokerage platforms to expand your presence?

Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services, Inc.: Yeah, recruiting is an ongoing effort by all of our brokerage operations, so every individual entrepreneur who’s a franchisee for us recruits on a daily basis, as well as our own employees in our company, corporately owned branch operation. That’s kind of what I call organic recruiting, and you’ll see in any given time additions there all across the country. From a franchising standpoint, we do add new franchises, we added several in the last quarter across both Via Capital and Royal LePage, they factor into the total agent count numbers that we show, we don’t necessarily highlight that as a separate growth path, but we’ve seen good success in new franchises across the country. And then in terms of any acquisitive growth, I wouldn’t say that that’s our core strategy for growth, it’s certainly opportunistic if it makes sense, but we’ve got the brands we need to cover every, I would say every need that either realtors or consumers are looking for in Canada, So we’re not looking necessarily to add brands, but we’re looking to always add high quality realtors to our brand and our network. And then, so I would say more of the organic side is our core focus and will continue to be for the balance of the year.

And then from time to time, we will look at acquisitions of other brokerage operations, but those are, as they happen, and we validate assess those on a case by case basis, there isn’t necessarily a consistency to that or a predictability to that, it’s when opportunities arise.

Jeff Fenwick, Analyst, Cormark Securities: Yeah, that’s helpful, thank you. And then maybe you could comment just on your comfort with the run rate of the business versus the payout ratio. I know we’ve just come through a couple of seasonally weaker quarters, so we’re hoping that see a nice step up in activity here through the spring and summer. But I did note that you drew $4,000,000 on your operating line, payout ratio is still running above 100%. So I guess you have options of looking to obviously work on things like marketing and broker productivity, but how comfortable are you there?

Are areas maybe for some cost savings that might help you out as well?

Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services, Inc.: Yeah, so for sure Jeff, I think what we see on a quarter by quarter basis, this is a cyclical business, each quarter in a fiscal cycle will be different from the other ones, and what we see in the first quarter typically does have a robust spring market, we haven’t seen as much of that as perhaps we would have liked to have seen or thought we would see in Toronto and Vancouver, but like, as I mentioned, Quebec is very strong, outperforming expectations from a market standpoint. The majority of our cash flow is driven off of our franchise fee structures with our franchisees, very stable month by month, and so as we go through the year, we’ll see each quarter contribute in a slightly different way to our full year cash flows, but at this point, we’re on target with where we expect it to be for the quarter, and we have to wait and see how quickly the markets rebound in Toronto and Vancouver, we’re still very confident and bullish on the underlying macro factors affecting demand, supply is still a constraint, still an issue, and while affordability is an issue, the demand for housing is very strong, so we do expect the markets to improve versus what we saw in the first quarter, and that’ll definitely help us generate more cash flow, certainly in our brokerage operations as we go through the balance of the year.

Jeff Fenwick, Analyst, Cormark Securities: Great, thanks for that. And then maybe one, I guess it’s related to broker productivity, which you mentioned you have a strength in, and I noted your commentary on the AI tools that you’ve been rolling out at Proprio. What are the sort of plans there? That sounds like something that could certainly be very helpful and is it a solution that you could roll out in time across the rest of your operations?

Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services, Inc.: Yeah, in fact we’ve launched AI tools across all of our brands, I highlighted what we did on one, but really it’s happening everywhere. What

Glenn McMillan, Chief Financial Officer, Bridgemarq Real Estate Services, Inc.: we’ve

Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services, Inc.: seen of course is realtors, as they go about their business of securing clients, servicing those clients, and helping Canadians find home of their dreams, that they’re looking to engage and leverage technology as much as anyone. There’s lots of ways to do that in the real estate industry, and so we’re providing access tools, access to functionality, training those realtors on those, so they don’t have to go through that learning and discovery phase on their own each individually. We’re doing all that heavy lifting for them, and then kinda giving it to them in terms of best practices and some guided training, but it’s happening across the board. So, you know, in Royal LePage, for sure, we’re doing a lot of that, so I highlighted one, but we’re doing it everywhere.

Jeff Fenwick, Analyst, Cormark Securities: That’s great to hear. Then maybe just one last one here, I noticed it looks like the commission payout ratio was a little less than expected, meaning Bridgemarq retained a bit more of that those gross commission dollars in the quarter. Can you just remind us what the factors are there? Is it I guess it’s maybe the mix of which brokerage groups are generating the revenue and they all have slightly different commission rates or is there some other factor there that would be impactful?

Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services, Inc.: Yeah. I’ll turn it to Glenn for some details. In broad terms, given quarter compared to another, you’re gonna see mixed variances. Mix in geography because, you know, how much we get in terms of commission splits varies by region, mix in which realtors are the ones that are doing the deals, because we have different agreements with different realtors depending on their success and their productivity, but that’s just more of a general sense. Glenn, do you wanna add to that?

Glenn McMillan, Chief Financial Officer, Bridgemarq Real Estate Services, Inc.: Yeah, the only thing I would really add is, talked on the franchise side of the business that there is, for variable franchise fees, there is the impact of capping that happened And while it’s much less common on the brokerage operations, we do have some and as Spencer said, the the brokerage split plans are different by brokerage, by brand, by geography. It’s a it’s a very complicated web, and we do have some that are subject to capping. And so that capping, we tend to see that in the fourth quarter, no capping in the first quarter. That’s that’s one.

Jeff Fenwick, Analyst, Cormark Securities: Okay, great. Thanks for that color. I’ll requeue.

Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services, Inc.: Appreciate it, Jeff. Thanks, Jeff.

Conference Operator: And at this time, Mr. Enright, we have no other phone questions.

Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services, Inc.: Yeah, terrific. Thanks, operator. Do we have any other questions?

Glenn McMillan, Chief Financial Officer, Bridgemarq Real Estate Services, Inc.: There’s no questions.

Spencer Enright, Chief Executive Officer, Bridgemarq Real Estate Services, Inc.: Okay, thanks guys. Well, with that, first of all, I’d like to thank everybody once again for joining us on today’s call. Look forward to speaking to you again after we release our Q2 results in August. Take care.

Conference Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines.

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