Newmark Group, Inc.

and the Newmark Group Second Quarter 2020 Financial Results Conference Call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Jason Hargs, Vice President of Investor Relations. Please go ahead.

Thank you and good morning. We issued our second quarter 2020 financial results press release and a presentation summarizing these results this morning. Unless otherwise stated, the results provided on today's call compare only the second quarter of 2020 with the year earlier period. Any figures with respect to cash flow from operations discussed on today's call refer to net cash provided by operating activities excluding activity from loan originations and sales. We will be referring to our results on this call only on an adjusted earnings basis unless otherwise stated. We may also refer to adjusted EBITDA and cash flow from operations before lending activities. Please see today's press release for results under generally accepted accounting principles or GAAP. Please see the sections in the back of today's press release for the complete definitions of any such non-GAAP terms, reconciliations of these items for the corresponding GAAP results, and how, when, and why management uses them. Additional information with respect to our GAAP and non-GAAP results mentioned on today's call is available on our website and in our investor presentation. Any outlook discussed on today's call assumes no material acquisitions, share or purchases, or meaningful changes in the company's stock price. unless otherwise stated, the estimated value of the NASDAQ earn-out is based on the closing price on August 5, 2020. I also remind you that information on this call regarding our business that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements involve risks and uncertainties. These include statements about the effects of the COVID-19 pandemic on the company's business, results, Financial position, liquidity, and outlook, which may constitute forward-looking statements and are subject to the risk, but the actual impact may differ, perhaps materially, from what is currently expected. Excess is required by law. Newmark undertakes no obligation to update any forward-looking statements. for discussion of additional risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements. See Newmark Securities and Exchange Commission filings including but not limited to the risk factors set forth in our most recent Form 10-K, Form 10-Q, or Form 8-K filings. I'm now happy to turn the call over to our host, Barry Gosin, CEO of Newmark Group, Inc.

Thank you, Jason. Good morning and thank you for joining us for Newmark's second quarter 2020 conference call. Joining me virtually on the call today are Newmark's Chief Financial Officer, Michael Rispoli, our Chief Strategy Officer, Jeff Gay, and our Chief Revenue Officer, Luis Alvarado. The second quarter was challenging for the company and the industry. We moved rapidly to protect the health and well-being of our employees. While our offices slowly begin to reopen, we continue to support remote working. Our professionals remain focused on the needs of our clients, providing strategic advice, consulting service, and market-leading analytics to help them navigate the current environment. I'd like to take a moment to applaud our employees for their tireless work, dedication, and ingenuity. I would also like to thank our clients for the trust they've placed in Newmark as a strategic real estate advisor. Despite significantly lower industry transaction volumes, we generated $47 million of cash flow from operations. We finished the quarter with over $300 million in cash and a cash equivalent. Nearly $450 million in mortgage servicing rights and approximately $680 million of expected proceeds from NASDAQ that are not yet reflected on our balance sheet. These significant assets, taken together with Numark's operating earnings potential, represent a very attractive investment. As we referenced in our earnings release, we attribute our results to three competitive advantages. Our strength in management services, our strong growth in GSE originations, and our outperformance in investment sales. We continue to improve our market share in U.S. investment sales in the second quarter. According to RCA data, our industry ranking improved to number three in the first half of 2020 from number five in the first half of 2019. We believe that the low interest rate environment, the significant available investment capital for real estate, and improving real estate credit markets coupled with the occurrence of price discovery will drive capital markets activity going forward. Taking a look at the landscape across our industry, we expect multifamily and industrial to outperform other property types in the second half of the year. These asset classes are a strength of NMARC's platform and have historically represented nearly 40% of our revenues. Newmark is well-positioned to benefit from periods of market disruption and its recovery due to the strength of our platform and the significant amount of talented professionals that have joined the firm over the past several years. A professional's creativity, inventiveness, and drive provide us with a competitive advantage as economic activity accelerates. Remote working is likely to be more prevalent in the future, but our research shows that most companies' employees favor a return to the collaborative environment of the office. We expect lower office density to largely offset the increased amount of remote working. Regardless of the environment, we are prepared to seek out, create, and advise on opportunities for our clients. We continue to prove that we are adaptable to current and future market conditions. The strength of Numark's culture and platform attracts and retains highly skilled revenue generators. As a company built on talent, we believe that diversity and inclusion makes us stronger and more competitive. We see this as a time to redouble our recruiting efforts to further enhance both the specialization and the diversity of our workforce. We are committed to broadening and expanding programs and initiatives to train, support, and advance our employees. We believe this creates sustainable organic growth for the company and its shareholders. With that, I'm happy to turn the call over to Mike.