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 discussions 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 did cause actual results to maturely differ from those in the forward-looking statements is contained in the company's annual information form that's filed with the Canadian Securities Administrators and in the company's annual report on Form 40F that's filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is Tuesday, May 5, 2026. And at this time, for opening remarks and introductions, I would like to turn a call over to the Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

Thank you for joining us. With me today is Christian Mayer, our Global Chief Financial Officer and also Chief Executive Officer of our Commercial Real Estate Division. This call, as always, is being webcast in the presentation materials are available on our website. Collier's delivered strong results for 2026 for the first quarter, underscoring the durability of our company. We have made solid progress in a still uneven market, supported by continued strength in our resilient businesses and improving activity in commercial real estate. Collier's is built to compound shareholder value through three growth engines across the built environment, commercial real estate, engineering and project management, and investment management. From an earnings perspective, more than 70% of our earnings come from resilient businesses, engineering, project management, investment management, property management, and mortgage servicing. This mix gives Collier's greater stability through market cycles, and more growth opportunity than others. These attributes together with our enterprising culture and meaningful insight ownership has supported a 31-year record of delivering 17% compound annual growth in per share value. Importantly, we achieved these performance numbers at a time when our shares are trading well below their intrinsic value creating significant upside potential for shareholders. During the quarter, we strengthened our leadership team to better capture growth opportunities in engineering, appointing Elias Malamuto as the CEO and Christian as the CEO of our commercial real estate business. We also increased our financial flexibility through a $400 million long-term debt financing program and an extension of our revolving credit facility, supporting the acquisition of IESA Engineering, which we expect to close later this quarter. In commercial real estate, the recovery continues to gain momentum. Transaction services, including both capital markets and leasing, were up an industry-leading 25%. reflecting market share gains across the globe for colliers and improved investor sentiment industry-wide. Engineering also delivered strong performance, providing highly technical support across attractive end markets like infrastructure, transportation, property and buildings, water, and environmental. This work also has strong visibility and consistent margins while creating meaningful opportunities for growth and for collaboration across our other businesses. The acquisition of IESA will accelerate our momentum in engineering even further by expanding our geographic reach, adding in-demand capabilities, and extending our growth runway into new markets. In investment management, assets under management increased 9% year-over-year to almost $1.9 billion. At Harrison Street, we invest capital along institutional and high-net-worth individuals across high-growth infrastructure-related assets, including data centers, as well as demographic-driven defensive sectors such as senior housing, student housing, medical office, and healthcare delivery. Over more than two decades, our differentiated investment strategies have delivered strong returns for investors and are supported by powerful secular and demographic tailwinds that continue to support our growth. We are very excited about Harrison Street's prospects as we continue to scale the business and capitalize on the many opportunities ahead. We believe we are well positioned to continue to generate attractive growth opportunities for our investors and for our shareholders. With that, I'll turn things over to Christian, after which we'll open the line for questions. Christian?

Good morning, everyone. Following up on Jay's overview of our strategic progress this quarter, I will now dive into the financial details that support our strong start to 2026. Please note that the non-GAAP measures discussed are defined in our press release and quarterly presentation. Unless otherwise noted, all revenue growth figures are presented in local currency. We have realigned our engineering and commercial real estate segments. This realignment resulted in a modest increase in CRE segment revenue with an offsetting decrease in the engineering segment. Prior periods have been recast, and a historical comparative Excel file is available on our investor relations site. Our first quarter consolidated revenues were up 12%, and net revenues also increased 12% to $1.15 billion. Adjusted EBITDA was $125 million, up 8%. Adjusted EPS increased 5% to $0.91, and was tempered by a higher-than-expected tax rate related to certain European operations. We expect our tax rate to moderate in the coming quarters. The solid performance met our expectations and reflects effective execution across our business. First quarter of the real estate segment net revenue was up 13%. Capital markets revenues increased 43%. led by market share gains in the U.S. and in parts of Europe, both in sales and debt finance. We reported sales growth in all property types, but most notably data center development land and office. The UK, Germany, and Japan also posted strong year-over-year gains in office and industrial sales. Leasing revenues were up 9%, with U.S. industrial property leading the growth. Segment net margin was 6.3%, up 20 basis points over the prior year first quarter, with operating leverage from higher transactional revenues partially offset by investment and recruiting across the segment. Third quarter engineering segment net revenue was up 13% from a mix of recent acquisitions and solid internal growth. End market demand continues to be strong, especially in infrastructure and related areas. Net margin was 9.5%, slightly lower than last year, reflecting lower workforce utilization in residential development and telecommunications, both of which we expect will improve as we progress through the year. Our overall engineering backlog continues to be robust. Investment management net revenues increased 8%, driven by a recent acquisition and internal growth from new capital deployed. Net margin declined to 37.4%, as expected, as a result of planned investments to integrate and streamline under the Harrison Street asset management brand. These costs will continue to impact margins for the next couple of quarters, after which we expect to return to a low 40s. net margin profile. The IM segment raised just under $1 billion in new capital commitments during the first quarter, and we expect increasing momentum as the year progresses. Our fundraising target for 2026 remains unchanged at $6 to $9 billion. Our balance sheet is strong with leverage at 2.3 times, reflecting seasonal working capital usage and with $1.5 billion in total credit availability as of March 31st. We expect to complete the acquisition of AESA Engineering in the coming weeks, funded from available credit. We are maintaining our full-year 2026 outlook for mid-teens revenue, EBITDA, and EPS growth. Our solid Q1 performance, which met our expectations, is the foundation for this outlook. Our continued confidence stems from robust pipelines and commercial real estate transactions and sustained momentum in our resilient businesses. While we acknowledge the recent increase in geopolitical risk and macroeconomic volatility, these risks are not expected to materially impact our 2026 results at this point, reflecting the inherent geographic service line and client diversification of our platform. That concludes my remarks. Operators, can you please open the line for questions?