Colliers International Group Inc.

Welcome to the Collier's International First Quarter Investor Conference Call. Today's call is being recorded. Legal counsel requires us to advise that the discussions scheduled to take place today may contain forward-looking statements that involve known and unknown risk and uncertainties. Actual results may be materially different from any future results, performance, or achievements contemplated in the 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 in 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 May 4, 2021, and at this time, for opening remarks and introductions, I would like to turn the call over to Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

Thank you, operator. Good morning, and thanks for joining us for this first quarter conference call. As the operator mentioned, I'm Jay Hennick, Chairman and Chief Executive Officer, and with me today is Christian Mayer, Chief Financial Officer. As you know, we recently announced that John Fredrickson, one of my closest allies, has decided to retire after 23 years of service. For most of those years, John has been right here by my side during these conference calls. Today will be different. I want to take this opportunity to thank John once again for his tireless efforts, his dedication, and his support in helping us build a company and its predecessor company, First Service, into the operations they are today, true market leaders in their respective industries. John played a critical role in helping us create massive shareholder value. He has always been a pillar of strength, the ultimate culture carrier. Thank you, John, for all you have done for us. Now let's get on to business. As always, this conference call is being webcast live and is available in the investor relations section of our website, A presentation slide deck is also available to accompany this call. Let me begin today by saying how pleased we are with the first quarter results and the encouraging signs of momentum for the balance of the year. Strength in recurring services, stabilizing transaction revenue, and our highly diversified business model continue to transform Collier's into a more balanced and resilient professional services an investment management company. Although pandemic uncertainty remains, we are increasing our outlook for the balance of the year, as you will hear from Christian in just a few minutes. Today, I'd like to touch on four highlights from the quarter. First, as you know, we recently published our Global Impact Report, highlighting our commitment to embedding environmental, social, and governance across our company. This report can also be downloaded from our website. As leaders in our industry, building a better future for our stakeholders has never been more important. In the coming months, we will complete a materiality assessment to better understand our greatest opportunities. Then we will publish a responsible ESG strategy with measurable goals to ensure that ESG continues to be an important part of how we do business in the future. Second, Harrison Street was the proud recipient of four PERI awards this year, including Alternatives Investor of the Year Global and North America, while capping off its largest fundraising quarter in the firm's history. Harrison Street has a long and successful track record of investing in education, health care, storage, life sciences and social infrastructure, specialty areas of focus that benefit from favorable demographic trends and low volatility. Assets under management in our investment management segment now exceed $41 billion, up a full 19% over the prior year. Third, our newest service line, Collier's Design and Engineering, completed its first acquisition, a specialty transportation and design firm that adds scale and growth opportunities in the U.S. Southeast. We continue to be very excited about the opportunities in outsourcing and advisory as well as our investment management segments. Over the past 12 months, 51% of our revenues and 60% of our EBITDA came from recurring services demonstrating the progress we have made in becoming a more resilient company. Our unique partnership philosophy resonates with leadership teams who want to retain significant equity in the businesses they operate while taking advantage of the many benefits a partnership with Colliers can deliver. Finally, during the quarter, Collier's was named one of the top three global commercial real estate brands in the world by the Lipsy Company in its annual survey of industry professionals. And for the 15th consecutive year, we earned our place as one of the top global outsourcing providers from the International Association of Outsourcing Professionals. Both of these accolades demonstrate the growing power and scale of the Colliers brand as well as our growing global platform. With our proven track record of more than 26 years, a balanced and diversified business model, and an enterprising culture with significant inside ownership, Colliers is in a better position today than at any other time in its history to continue to create value for shareholders. And now let me turn things over to Christian. Christian.

Thank you, Jay. As announced earlier today, Colliers reported strong financial results for the first quarter. My comments follow the flow of the slides posted on the investor relations section of Colliers.com to accompany this call. Please note that the non-GAAP measures referenced on this call are as defined in the press release issued today. All references to revenue growth are expressed in local currency. For our first quarter of 2021, revenues were $775 million, up 18% relative to the prior year, and included the positive contribution from acquisitions completed in the past year. Internal revenues were up 4%, primarily due to the stabilization of transactional activity especially in capital markets. This marks our first quarter of positive internal growth since pre-pandemic Q4 2019. Consolidated adjusted EBITDA Q1 was $92 million, up 69% from $55 million one year ago, with margins at 11.9% versus 8.6% in the prior year quarter. Our margin benefited from the stabilization of transactional revenues and a continuation of prudent operating cost management, considering the ongoing pandemic. Margins were also favorably impacted by acquisitions. In the Americas region, first quarter revenues were $476 million, up 27% over the prior period. Outsourcing and advisory revenues were up 34%, driven by recent acquisitions. Capital markets revenues were up 49%, driven by strong debt origination revenues from a recent acquisition, as well as significant increases in industrial and multifamily sales transaction activity. Leasing revenues were up 4%, in part due to a recent acquisition, and in part due to stronger industrial leasing activity across the region. Adjusted EBITDA was $57 million, up 82% versus last year, significant contribution from acquisitions and ongoing measures to manage costs. Our EMEA operations generated first quarter revenues of $126 million, down 3% from one year ago, with activity returning to near prior year levels in each service line. Adjusted EBITDA for the region was $4.5 million relative to a loss of $3.6 million last year. with the improvement attributable to cost savings from measures implemented due to the pandemic. Asia Pacific revenues were $128 million, up 19% relative to the prior year period. Capital markets revenues were up 70%, with notable large sale transactions occurring throughout the region while leasing, Transactions were driven by a rebound in activity relative to the sharply reduced levels experienced during the early stages of the pandemic in the first quarter of 2020. Adjusted EBITDA was $16 million compared to $5 million last year. Investment management revenues were $45 million, reflecting growth of 2%, excluding the impact of pass-through carried interest. The prior year quarter included transaction fees in Europe which positively impacted prior year results. Assets under management were 42 billion at quarter end, up 19% from one year ago, and reflected the strongest quarter for fundraising in Harrison Street's history. Management fee revenues from the increased AUM will start being realized in the second quarter. Adjusted EBITDA for the quarter was 18 million, similar to the 18 million generated in the prior year period. Turning to cash flow, cash flow before working capital for the first quarter of 2021 was 74 million, almost double the prior year level, well exceeding the growth rate of adjusted EBITDA. After considering working capital, cash usage in the seasonally slow first quarter was 38 million, a significant improvement from the usage of 120 million in the comparative period for two major reasons, higher earnings and incremental working capital flows from our recently acquired mortgage operations. Capital expenditures for the first quarter were $22 million, a significant increase from the prior year, and reflected investments and facilities in several markets, including certain markets where we deferred relocations and expansions given the events of 2020. For the full year 2021, including the amount deferred from last year, we expect CapEx to be in the range of $65 to $75 million. About one-third of this capex will be landlord-funded leasehold improvements. Spending on acquisitions during the quarter was modest and included only one business acquisition and two contingent payments related to prior acquisitions that exceeded underwriting expectations. We target ongoing investments and acquisitions across our global service lines to complement internal growth. Acquisitions are by their nature opportunistic, and we continue to pursue high-value-add transactions that meet our criteria. Colliers has always maintained a conservative financial profile. Net debt to pro forma adjusted EBITDA was 1.1 times as of March 31, 2021, a slight increase relative to year-end. At quarter-end, we had $724 million of unused credit on our $1 billion revolving credit facility available to fund future acquisitions and ongoing operations. Given our strong results for the first quarter, we are updating and increasing our financial outlook for 2021. The updated outlook for both revenue and for adjusted EBITDA is an increase of 15% to 30%, which reflects a 5% increase to both the upper and lower bounds of the previously provided range. This outlook is of course subject to risks and uncertainties as outlined in our accompanying slides. That concludes my prepared remarks and I would now like to turn the call back to the operator for questions.