Bridgemarq Real Estate Services Inc.

Good morning. My name is Christina, and I would like to welcome everyone to the Bridgemark Real Estate Services Inc. 2020 First Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would like to introduce... you to Mr. Phil Soper, President and CEO of Bridgemark Real Estate Services, Inc. Mr. Soper, you may begin your conference call.

Thank you, Christina, and good morning, everyone. With me today is our Chief Financial Officer, Nick Dillon. We appreciate you joining the call. I will begin with a brief overview of the company's first quarter results and business updates. Afterwards, Glenn will discuss our financial results in more detail. And I'll conclude by providing some remarks on the operational highlights, company updates, and market developments. Following our remarks, both 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. I encourage everyone to review the cautionary language found in our news release and in our regulatory filings with respect to forward-looking statements. All of these documents can be found on our website and on CDAR. Also, on today's call, we will be making reference to the impact of the COVID-19 pandemic on the real estate market of the company. This pandemic started to negatively impact our business near the end of the first quarter and is continuing to negatively impact us in the second quarter. It is important to note that due to the uncertainty in the duration and the magnitude of the medical and financial crisis, the company cannot reasonably determine the impact to the company's results on operations or financial position. The company had a strong first quarter, which was a result of a vibrant real estate market. The market did see a sharp decline in sales in the second half of March when social distancing and mandated shelter at home measures were introduced across Canada. However, the strength of the quarter leading up to those the majors produced healthy financial results to begin the year. Revenue in the first quarter was up 10% over the first quarter of the previous year, rising to $11.1 million. The strong national market was the primary driver of the increase, as well as the increase in franchise fees, which were announced last year and took effect on January 1st. The company's network grew marginally during the quarter to 19,120. The Board of Directors has approved a dividend payable on June 30th of 11.25 cents per share to shareholders of record on May 29th. This indicates an annualized dividend of $1.35 per share, which is consistent with 2019. Today, the company announced that it has taken supportive measures to protect business continuity and support distributions to shareholders. These measures include entering into an agreement with Brookfield Business Partners, LP, the company's largest investor with a 28% stake in the company, and Bridgemark Real Estate Services Limited, the manager of the company, to support the company's liquidity strategy. at this time of uncertainty. Under the terms of this agreement, the company can defer management fee payments and distributions on the exchangeable units held by Brookfield Business Partners from April to September. There is an option to extend this deal to December 2020, subject to mutual agreement. Amounts deferred under this agreement are non-interest-bearing and are due five years from the date of the deferral. any point during that time, the company can elect to pay the deferred balances in cash or by issuing additional exchangeable unit companies option. These accommodations increase Bridgemark's financial flexibility to manage through a period of uncertainty and expected market disruption while protecting distributions to existing shareholders in the short term. And with that, I'd like to turn the call over to Glenn for a look at our first quarter financial performance.

Thank you, Phil, and good morning, everyone. As Phil mentioned, revenue in the first quarter was up 10% over last year, rising to $11.1 million. Net earnings for the quarter were $20.1 million, or $0.05 per fully diluted share, compared to a loss of $8.4 million, or 88 cents per share for the same period in 2019. The primary driver of the significant improvement in net earnings is the determination of the fair value on the exchangeable units issued by the company. The spread of COVID-19 contributed to a substantial fall in equity markets, which saw the company's share price drop to $8.43 at the end of March. The valuation of the exchangeable units is a direct function of the market value of the company's restricted voting shares. The drop in the share price drove a significant reduction in the liability associated with those exchangeable units, triggering a large gain in the company's earnings. Distributable cash flow during the first quarter rose 11.4% to $3.9 million, compared to 3.5 million in the first quarter of 2019. The increase was driven by higher revenues, partly offset by higher management fees. As Phil mentioned earlier, at the close of the second quarter, the network was comprised of 19,120 realtors, up nine compared to the end of last year. These realtors operated out of nearly 700 locations across Canada. Bill also noted that our largest investor, Brookfield Business Partners, has provided us with a deferral on our management fees and our payment of distributions on the exchangeable units on very favorable terms. This accommodation increases Bridgemark's financial flexibility to manage through this period of near-term uncertainty and expected market disruption while protecting dividends to existing shareholders in the short term. In the first quarter, the Canadian real estate market closed up 30% compared to Q1 of 2019. The increase was driven by a 15% increase in unit sales and a 13% increase in average selling price. The total transactional dollar volume during the first quarter was just under $58 billion. The Greater Toronto Area saw significant year-over-year improvement during the first quarter, rising 41%. to $17.7 billion. The primary driver was a 23% increase in unit sales compared to Q1 last year, while the average selling price increased 15%. And just as a point of reference, the Greater Toronto Area represents approximately 30% of the national housing market. The Greater Vancouver market closed up 54% at $6.5 billion in the first quarter compared to last year, driven by a 45% increase in units sold and a 6% increase in average selling price. In the Greater Montreal area, the market closed up 25% at $6 billion compared to the same period last year, driven by a 13% increase in units sold and a 12% increase in average selling price. Bill will now provide additional insights into the markets and an update on our operations.