Colliers International Group Inc.

Welcome to the College 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 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 10-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded today, May 3, 2022. And 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 for the first quarter conference call. I'm Jay Hennick, Chairman and Chief Executive Officer of the company, and with me today is Christian Mayer, our Chief Financial Officer. 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. Today, Collier's delivered very strong first quarter results across all service lines, building on the momentum from last year. Revenue, EBITDA, and earnings per share were all up sharply, and we were pleased to see that assets under management in our investment management segment was also up considerably. Last week, we announced the promotion of Chris McLernan to Chief Executive Officer of our real estate services global business. Over the past 12 years as the leader of our EMEA business, Chris delivered some very exceptional results. In his new role, Chris will oversee our capital markets, leasing and outsourcing and advisory businesses globally, reporting to me. Having him on board will provide us with the bench strength we need to successfully pursue our ambitious 2025 growth plan. During the quarter, we were also busy on the acquisition front. We added our affiliate operations in Cincinnati and Cleveland. We completed the previously announced acquisition of our affiliate in Italy, and Collier's Engineering and Design expanded its operations in the US Southwest. And just after quarter end, we completed the acquisition of Anterion, which is currently being integrated into our global investors platform in Europe. Once we complete the new partnership with Basalt Infrastructure Partners, our IM business will represent almost 25% of our consolidated EBITDA. This marks an important milestone in our service line diversification, increases our recurring revenue streams, and represents another step in the transformation of Colliers into a very different kind of company. In the future, we expect our IM segment to represent an even greater proportion of our overall EBITDA. So far this year, we completed or announced acquisitions totaling more than $400 million, and our pipeline remains strong. If we're successful, 2022 should be a record year of capital allocation for Colliers. The bottom line of all of this is this. The leadership team of Colliers has a proven 27-year track record of creating significant value for shareholders. The Collier's business model is balanced, highly recurring, and diversified, and generates a lot of free cash flow that we reinvest in our growth. All of these characteristics, together with our unique enterprising culture, growth mindset, and significant inside ownership position us very well to continue delivering superior returns for our shareholders. And let me be clear on one other thing. At its core, Colliers is an extremely well-managed service business. Because of this, we're able to weather the various macro events that might impact others, like inflation, interest rates, pandemic, regional conflicts, and supply chains, to name a few. Our results over the past number of years have demonstrated this in spades. With that said, I'll now turn things over to Christian. Christian?

Thank you, Jay. As announced this morning, Colliers reported strong first quarter financial results. 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 this morning's press release. All references to revenue growth are expressed in local currency. First quarter revenues were $1 billion, up 31% relative to the prior year period, with revenues up strongly across all service lines. Growth of the quarter was primarily internally generated. Compared to 2019 pre-pandemic levels, capital markets revenues were up 52% and leasing was up 27%, with office leasing recovering to within 5% of Q1 2019 levels. Q122 adjusted EBITDA was $121 million, up 33% from one year ago, with margins at 12.1%, up slightly from 11.9% in the prior year quarter, driven by the Americas region. First quarter, Americas revenues were $642 million, up 35% over the prior year. Leasing activity was up 41%, led by industrial. Capital market activity was up 35% and was led by industrial, land, and multifamily asset classes. Office leasing activity was within 2% of Q1 2019 pre-pandemic levels. Outsourcing and advisory revenues were up 31%, driven by engineering and design, including recent acquisitions, as well as valuation and loan servicing. Adjusted EBITDA was $81 million, up 43% from last year, with the margin up 60 basis points to 12.6% on favorable operating leverage from higher revenues in all service lines. First quarter EMEA revenues were $153 million, up 30% from one year ago, with robust growth across all service lines, led by outsourcing and advisory in capital markets. Adjusted EBITDA was $5 million, up 23% on higher revenues, although margin was impacted by revenue mix from increased project management activity, which runs at lower margins than other services. First quarter, Asia Pacific revenues were $119 million, down 3%, driven by COVID-19 lockdowns in several Asian markets, as well as a tough prior year comparison, which benefited from a number of high margin capital markets transactions. Adjusted EBITDA was $10 million, down from $15 million in the prior year quarter. Investment management revenues were $86 million, up 94% versus the prior year period. After eliminating the impact of pass-through carried interest, revenues were up 38%, driven by management fee growth. Asset under management were $52 billion at quarter end, up 26% from one year ago. Adjusted EBITDA for the quarter was $27 million, up 51% versus the comparative quarter on solid flow-through from incremental management fee revenue. Our financial leverage ratio, as defined as net debt to pro forma adjusted EBITDA, was 0.9 times as of March 31, 2022. Most of our debt is locked in at attractive fixed interest rates, averaging less than 3%. During the first quarter, we invested in acquisitions and we utilized our normal course issuer bid for the first time as a public company. We repurchased just under 1 million shares in March and April. Given our stock's current trading price, our low leverage, future growth prospects, and significant financial capacity, we believe it is prudent to make modest share repurchases at this time. With our strong balance sheet, disciplined capital deployment and solid operating cash flow, we continue to be very well capitalized for future growth. We are increasing our outlook for the full year 2022 to reflect our strong Q1 results as well as recent acquisitions. The outlook is subject to risks and uncertainties as outlined in the accompanying slides. Now expect low double-digit revenue growth consisting of high single-digit internal growth and the balance from previously completed and recently announced acquisitions. We expect our adjusted EBITDA margin to improve 40 to 80 basis points relative to 2021 from a combination of internal operating leverage and higher margin acquisition. Finally, our adjusted earnings per share are expected to grow at a high teens percentage rate for 2022. That concludes my prepared remarks. I would now like to open the call for questions. Operator, can you please open the line?