Colliers International Group Inc.

Welcome to the Collier's International First Quarter Investors Conference Call. Today's call is being recorded. Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may materially differ from any future results. Performance are achievements contemplated in forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Company's Annual Information Form as filed with the Canadian Securities Administrators and the Company's Annual Report on Form 40F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is Tuesday, April 28, 2020. At this time, for opening remarks and introductions, I would like to turn the call over to the Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

Thank you, Operator. Good morning and thanks for joining us. I'm Jay Hennick, Chairman and Chief Executive Officer of the company. With me today is John Fredrickson, Chief Operating Officer and Christian Mayer, Chief Financial Officer. This conference call is being webcast and is available in the investor relations section of our website. A presentation slide deck is also available there to accompany today's call. Colliers began 2-20 with solid first quarter results despite the initial impact of COVID-19 in Asia early in the quarter with the rest of our operations being affected in March. Given the uncertainty We expect the balance of the year to be challenging, particularly for our brokerage operations. In a few minutes, Christian will talk about our financial results, provide you with our working assumptions for the balance of the year, and discuss our liquidity and conservative balance sheet. John will then offer some operational thoughts, after which we will open the call for questions. Revenues were $631 million, up 1% in local currency. Adjusted EBITDA was $55 million, up 28%, and adjusted earnings per share came in at $0.54, up 6% versus the prior year. Throughout the quarter, our leadership teams at all levels mobilized swiftly and responsibly to protect our people and align our costs while ensuring business continuity for our clients. I'm extremely proud of them and inspired by the work they are doing as we navigate through this unfortunate crisis. Let me take this opportunity to recognize and thank them all for the work they have done and continue to do for our stakeholders. Thank you all. It goes without saying that businesses everywhere have been hit by the crisis. For Colliers, about 45% of our revenues and now more than 50% of our EBITDA comes from outsourcing, advisory and investment management, services that are typically more essential, recurring and contractual, giving us a much more stable business than ever. We have worked diligently over the years to change the nature and composition of our company by increasing revenues that come from more resilient real estate services so that Colliers would have a much more balanced business model, and I'm sure glad we did. The rest of our revenues and EBITDA come from our highly variable brokerage operations, which we expect will decline sharply, as I mentioned. Across the board, we're making tough but necessary decisions to adapt. We have already taken steps to adjust our costs, including eliminating non-essential spending, cutting CapEx, and reducing non-revenue-producing support, administrative, and legal staff. Furthermore, I have opted to not take compensation, and other members of our leadership have made similar decisions notwithstanding the additional volume of work required during these difficult times. And our directors, without being asked, also waived directors' fees to show their support. These are just some of the examples of our unique Colliers culture in action. Fortunately, Colliers also benefits from having globally diverse revenue streams with about 55% of our revenues coming from the Americas and the balance split almost equally between Europe and Asia Pacific. As markets return to normal, those that recover first will generate increasing revenues sooner as we are seeing to some extent in China right now and will also be able to share best methods to return to work among many other things. Without question, we will continue to be tested in the coming months in ways we can't anticipate. However, I'm confident that we're up for the challenge and will weather this storm better than most. Everyone knows that Collier's professionals are more enterprising and collaborative in this business. We continue to see countless examples of our enterprising spirit in action every single day and we deliver important insights to our clients Thank you for joining us. which is the ultimate motivation when it comes to making the right decisions expeditiously. I believe in our diversified business model. I believe in our experienced leadership, decentralized operating structure, and enterprising culture. And I'm confident that when this crisis passes, our economy and colliers will come out better and more unified than ever. Now let me turn things over to Christian

Christian, thank you, Jay. As announced earlier today, Colliers reported solid financial results for the seasonally slow first quarter despite the initial impact of a global COVID-19 pandemic. My comments follow the flow of the slides posted on the investor relations section of colliers.com to accompany this call. Please note that my comments reference non-GAAP measures such as adjusted EBITDA and adjusted EPS both of which are defined in our press release issued today as well as the accompanying slide presentation. The adjustments are composed primarily of non-cash charges that we view as largely unrelated to our operating results. All references to revenue growth are calculated based on local currency. First quarter revenues were $631 million, up 1% over the prior year. Internal revenue declined 1%. primarily due to the initial impact of the pandemic on brokerage operations in the Asia Pacific region throughout the quarter and in other regions toward the end of the quarter. First quarter consolidated adjusted EBITDA was 54 million compared to 44 million with our margin at 8.6% versus 6.9% in the prior year quarter. The margin improvement was led by investment management in the Americas region as I will discuss in a moment. Q1 revenues in the Americas totaled $370 million, up 4%. America's outsourcing and advisory revenues were up 12%, with strong growth in each of project management, property management, and valuations. Sales and lease brokerage revenues were down 3%, impacted by a noticeable slowdown in the month of March attributable to the pandemic. Adjusted EBITDA was $31 million, up 19% versus last year, with an 8.4% margin, up 110 basis points, primarily due to lower costs and operating leverage in outsourcing and advisory. In MIA region, Q1 revenues were $117 million, flat relative to the prior comparative period, and were also roughly flat in each service line. Brokerage revenues were adversely impacted by the pandemic late in the quarter. Adjusted EBITDA for the region was a loss of $4 million compared to a loss of $3 million last year. Asian Pacific region revenues were $97 million, down 9%, impacted by sharply reduced brokerage activity in China and other countries in Asia, attributable to the pandemic beginning early in the quarter, partially offset by incremental revenues from the recent acquisition of Synergy Project Management in India, which contributed significantly to the increase in outsourcing and advisory revenues, which were up 16%. Adjusted EBITDA was on lower revenues and service mix. Investment management revenues for Q1 were 46 million, up 7%. Revenue growth was positively impacted by management fee growth across open and closed-end products, as well as the timing of certain European transaction fees, offset by a reduction in pass-through carried interest. Assets under management were 35.1 billion as of March 31, 2020, up 31% from a year ago. Adjusted EBITDA for the quarter was $18 million versus $10 million in the comparative period with a decrease attributable to base management fee growth as well as the timing of transaction fees. Our consolidated income tax expense for the first quarter included a charge to reverse a $2 million benefit recorded in 2019 due to a change in tax law applied retroactively. Absent this charge, our adjusted EPS would have been 59 cents, up 16% versus the prior year period. Colliers maintains a conservative financial profile with a net debt to adjusted EBITDA leverage ratio of 1.8 times as of March 31, 2020. Our leverage includes $91 million of debt drawn under our revolving credit facility attributable to an investment in real estate assets We expect to transfer these assets off our balance sheet without gain or loss during the second quarter of 2020, favorably impacting our leverage ratio. As of March 31, 2020, we had $478 million available under our $1 billion revolving credit facility maturing in April 2024 and together with cash on hand, We have 580 million of liquidity to fund operations, working capital, capital expenditures, and acquisitions. We recently renewed our $125 million structured accounts receivable facility for another one-year term extending to April 2021. We also have outstanding 210 million euros of 2.23% senior notes maturing in May 2028. The COVID pandemic is having an unprecedented impact on global health and economic output. In light of this uncertainty, we have developed a working assumption for our company that is based on the best available information at this time, but is subject to changes based on numerous ongoing macroeconomic, health, social, political, and related factors. Our working assumption for the full year 2020 is a 15% to 25% decline in consolidated revenues and a 25% to 35% decline in consolidated adjusted EBITDA relative to 2019, excluding the impact of acquisitions not yet completed. Brokerage revenues, which have a highly variable cost structure, are expected to decline sharply in the second quarter and then gradually improve sequentially in the third and David Hennick. I'm going to go ahead and get started. With a weighted average debt maturity of 4.7 years and significant available liquidity, we believe we are well positioned to weather the economic and financial effects of the pandemic. That concludes my prepared remarks, and I would now like to turn the call over to John.