Colliers International Group Inc.

Welcome to the Collier's International Second 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 40F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is Thursday, July 30, 2026. 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, and good morning. I'm Jay Hennick, Global Chairman and Chief Executive Officer of Colliers. Joining me today is Christian Mayer, our Chief Financial Officer and Chief Executive of Colliers Commercial Real Estate. Today's website and presentation materials are available on the investor relations section of our website. Collier's delivered another strong quarter with double-digit revenue growth across all three platforms, healthy internal growth, and continued improvement in earnings quality. In commercial real estate, we are seeing a broader recovery across our markets. Capital markets and leasing revenues each increased by more than 20%, supported by improving transaction activity, better financing conditions, and market share gains in most of our major markets. Engineering continues to be an important strategic differentiator for Colliers. Revenue increased 30%, driven by strong demand across critical infrastructure, Transportation, Water, Property, and Buildings. The acquisition of IESA expanded our global capabilities and strengthened our position across Europe, Latin America, the Middle East, and Australia. Engineering gives colliers recurring revenue, stronger visibility, and new ways to grow our enterprise. Harrison Street continued to add strength and differentiation as well. with assets under management reaching $110 billion and revenues increasing by 17%. Having built two large global platforms at Colliers in commercial real estate and in engineering, we are now building our third. We are bringing our investment management capabilities together across real estate, credit, infrastructure, and private wealth. We are creating more investment opportunities for our clients and greater long-term value for our shareholders. Together, the recovery in commercial real estate, the growth of engineering, and the expansion of our Harrison Street business are changing the quality and composition of our earnings. Today, approximately 70% of our earnings come from resilient, recurring revenue streams giving Colliers greater flexibility, greater stability, stronger cash flow, and perhaps most importantly, more ways to grow our business. What further differentiates Colliers is how our platforms are working together. Commercial real estate gives us market intelligence and deep client relationships. Engineering adds technical expertise and execution capability. Harrison Strait brings capital formation, investment discipline, and ownership expertise. Together they create a much more integrated Colliers, one that can engage clients earlier, serve more of the value chain, and replicate that model across high growth ecosystems. Data centers is just one example. We can help clients identify and acquire sites, provide engineering and technical services to design, build and operate these facilities, and deploy capital through Harrison Street, which over the past six years has invested more than $6 billion in digital infrastructure and data centers already. And after the fact, we can deliver leasing, sales, facility management and other advisory services as those facilities come on stream. That same opportunity exists across many other ecosystems within our business. By combining client relationships with specialized platform capabilities, we can create additional avenues for growth beyond the standalone opportunities inherent in each of our businesses. So in summary, our second quarter results reinforce the confidence that we have in our future. Step by step, we are building Colliers into a stronger global company with broader capabilities, more resilience in our performance, and better position to create lasting value for our clients, our professionals, and our shareholders. Now let me turn things over to Christian to review our financial results in more detail. Christian?

Thank you, Jay, and good morning, everyone. Please note that the non-GAAP measures discussed in this call are defined in our press release and quarterly presentation. Unless otherwise noted, all revenue growth figures are presented in local currency. Our second quarter consolidated revenues were $1.6 billion, up 16%, and net revenues also increased 16% to $1.4 billion. Adjusted EBITDA was $205 million, up 14%. adjusted EPS increased 6% to $1.83 and was tempered by higher interest expense. These results met our expectations and our momentum gives us confidence as we enter the second half of the year. Commercial real estate segment net revenue for the quarter was up 12%. Capital markets rose 23% with growth across all geographies led by the Americas and Asia-Pacific Activity in industrial property sales was up notably in all geographies. Leasing revenues were also up 23% led by U.S. Industrial with all global regions contributing to growth. The segment net margin was 11.9% up slightly over the prior year. Engineering second quarter net revenue was up 27% from a mix of recent acquisitions including a partial quarter of IESA and solid 5% internal growth. Our net margin is 14.5% up slightly over last year. Our engineering backlog stood at 12 months as of June 30th, indicating strong momentum for the back half of the year. Investment management net revenues increased 15% driven by a recent acquisition and internal growth from New Capital. The net margin was 36.5%, as expected, given ongoing planned global platform building under the Harrison Street Asset Management brand. These costs will continue to impact margins for the second half of the year, and we expect margins to stabilize in the low 40% range for 2027. During the quarter, Asset realizations generated strong gains and resulted in the return of $1.9 billion of capital to our limited partners and $3 billion year-to-date. Our demonstrated ability to monetize high-quality portfolios at attractive prices and make meaningful distributions to investors has always been a key differentiator for us. We raised $2.2 billion in new capital commitments in the second quarter and just under $3 billion for the six-month period. Year-to-date fundraising is on plan and we expect an acceleration in the second half. Our annual fundraising target for 2026 remains unchanged at $6 to $9 billion. Turning to our balance sheet, we completed the IESA acquisition late in the quarter and despite significant capital deployment for this strategic platform, we finished the second quarter with leverage of 2.8 times. We expect to deleverage significantly in the second half of the year as the majority of our seasonal cash flows come in and should finish the year in the 2.3 times range. Given this leverage profile and given the current undervaluation of our shares, We may choose to deploy capital on a stock buyback as we progress through the second half of the year. We are reaffirming our full year 2026 outlook. The key forward-looking indicators across our business segments being transaction pipelines, engineering backlogs, and fundraising pipelines are up nicely over the prior year. Geopolitical risk and macroeconomic volatility continue to be elevated, as we all know. However, we believe that these risks should not materially impact our overall results. That concludes my prepared remarks. Operator, can you please open the line for questions?