Bridgemarq Real Estate Services Inc.

Good morning. My name is Casey, and I would like to welcome everyone to the Bridgemark Real Estate Services Inc. 2020 Fourth Quarter and Annual 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 Silper, President and CEO of Bridgemark Real Estate Services, Inc. Mr. Silper, you may begin your conference call.

Thank you, Casey, and good morning, everyone. With me today is our Chief Financial Officer, Glenn McMillan, and we welcome you to our 2020 results call. Following the usual format of our quarterly conference call, I will begin with a brief overview of the fourth quarter and annual results. And afterwards, Glenn and I will discuss financial results as well as remarks on recent business operational highlights 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 knowing 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 look at the cautionary language found in our news release and all of our regulatory filings with respect to forward-looking statements. All these documents can be found on our website and on CDAR. may you live in interesting times viewed as an ancient curse, the implication being that steady and boring is preferable. If my team and I were chasing a dull, predictable life, we would have chosen a different industry. 2020 was a rollercoaster year. It began on a very positive note, in fact. The most promising start two years since the middle of the last decade. Then the economic tsunami that was the pandemic-induced recession hit the industry and the economy as a whole. For several weeks in the spring of 2020, sales plummeted in major markets by up to 70%, and the company and industry risked material attrition. At Bridgemark, we responded with the pandemic fee relief plan, temporarily replacing our fixed fees with variable fees and sharing the risk with our frontline agents and our brokerage owners. we released an important forecast at that time, the end of the first quarter, important that it laid out our views as to how the year would unfold. Simply put, we saw parallels to 2009 in the wake of the Great Recession and financial crisis of a dozen years ago. We forecast that prices would soften during the 2020 spring lockdown of the economy, that policymakers would respond with monetary stimulus and financial support for Canadians and that the lower home prices and lower mortgage rates that would ensue would encourage young buyers into the market. We suggested that the catalyst of young buyers acquiring entry-level homes would trigger a second half recovery and that home prices would end the year up, not down. 2020 did unfold as we expected. The recession and our efforts to safeguard the long-term health of the business with the pandemic fee relief plan did result in lower revenues for the year, but it produced the desired results. Total agent attrition was held to less than half of 1%. Our businesses did not fail and our franchisees met their commitments to Bridgemark. Of a rise, the rise, in overdue or uncollectible accounts never materialized. For the full year 2020, revenue is $40.3 million, down $4 million compared to $44.3 million in 2019. And during the fourth quarter, revenue was $7.1 million compared to $10.7 million during the fourth quarter of the previous year. As capping introduced with the temporary fee plan kicked in, Glenn will provide a more detailed view shortly. The year ended strongly with activity levels that more closely resembled summer months and the start of winter and the traditionally very slow holiday season. With 2021 off to a strong start, we are set up for a very successful campaign this year. Yesterday, the directors of our board approved a dividend payable on April 30th of 11.25 cents per share to shareholders of records on March 31st. This indicates an annualized dividend of $1.35 per share. In the spring, the company launched RLP Sphere, our new digital ecosystem. This highly anticipated front-of-the-curve technology platform was well received by the network, and early results are very encouraging. I'll speak later on our developments in the products and services area. I'll also speak in more detail regarding the real estate demand we are seeing from Canadians coast to coast and what factors we are watching closely. The buyer demand that resulted in strong property appreciation and sales volume increases in key markets that extended into 2021. And with that, I'm going to turn things over to Galan for a look at our fourth quarter and full year financial performance.

Thank you, Phil, and good morning, everyone. Net earnings for the year were $0.8 million compared to $3.1 million in 2019. The primary driver of the reduction, as Phil mentioned, is lower revenue resulting from the implementation of the Pandemic Fee Relief Plan. In March of 2020, as real estate market sales volumes were poised to drop dramatically below historical levels, the company introduced the Pandemic Fee Relief Plan as a temporary alternative to its standard fixed fee plan. The company suspended franchise fees for approximately 82% of its network of realtors and implemented an increased variable fee of 3 to 4.2% of gross commission income, subject to a cap. After a dramatic drop in volumes in April and May, real estate markets rebounded in the last half of the year, with many markets reaching all-time highs. These strong real estate markets in the third and fourth quarters contributed to a large number of realtors reaching their cap, at which point they paid no franchise fees for the rest of the year, negatively impacting Q4 revenues relative to 2019. As of January 1, 2021, Bridgemark has reverted to its traditional fee plan, which is biased towards fixed franchise fees. As a company that relies on fixed fees from its network, it was critical that Bridgemark support its brokerages while lockdown and stay-at-home orders were in effect to reduce the potential for significant attrition. There was an immediate concern that realtors, who were seeing a significant drop in sales volumes, and in some cases as much as two-thirds of their business, would not be able to meet these fixed fee commitments and could prematurely leave the real estate services industry. The fee relief plan not only limited net attrition to approximately 0.3%, it has generated significant goodwill from our network, who saw us as true partners when they were in crisis. In May of 2020, the company announced an agreement with Brookfield Business Partners and the manager, which operates the business on behalf of the company, to defer the payment of a portion of management fees and interest on exchangeable units owned by Brookfield Business Partners. Under this agreement, the company deferred payments of $6.6 million for a period of up to five years. These deferrals provided financial support for the company and allowed it to maintain its distributions to shareholders in 2020 at the same level as 2019. In the fourth quarter, the company had a net loss of $8 million compared to earnings of $1.3 million last year in the fourth quarter. The change was driven by lower revenues and by a loss on the fair valuation of the company's exchangeable units of $6.6 million in the quarter. This loss was due to an increase in the price of the company's restricted voting shares from $12.81 per share at September 30th to $14.80 at the end of the year. Distributable cash flow for the full year amounted to $13.9 million, $3.3 million lower than the $17.2 million generated in 2019. Similarly, for the fourth quarter, distributable cash flow amounted to $1.9 million compared to $4 million last year. The lower distributable cash flow numbers are as a result of the lower revenues, which I previously mentioned. As Phil noted in his opening comments, 2020 was a remarkable year in the Canadian real estate industry. For the full year, the Canadian market was up 28% at $313 billion, reflecting a 13% increase in the number of units sold and a 13% increase in the average selling price. The Greater Toronto Area market, representing 28% of the country, was at $88.5 billion, an increase of 23% compared to 2019. The Greater Vancouver market was up 33% and the Greater Montreal market was up 25%. Growth in the markets for the quarter was even more dramatic, with the Canadian residential market up 57% compared to Q4 of last year. The increase was driven by a 36% increase in unit sales and a 21% increase in average selling price. The Toronto market rose 50%, driven by a 33% increase in unit sales, and a 13% increase in average selling price. Vancouver was up 47% with 33% increase in units and a 10% increase in average selling price. And Montreal was up 55% with a 33% increase in units and a 23% increase in price. Now I'll turn it over to Phil who will provide additional insights into the markets and an update on our operations.