Newmark Group, Inc.

Greetings and welcome to the Newmark Group second quarter 2022 financial results call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jason McGruder, head of investor relations for Newmark Group. Please go ahead.

Thank you, operator, and good morning. Newmark issued its second quarter 2022 financial results press release in a presentation summarizing these results this morning. The results provided on today's call compare only the second quarter of 2022 with a year earlier period unless otherwise stated. Any figures with respect to cash flow from operations discussed on today's call refer to net cash provided by operating activities, excluding loan origination and sales, as well as the impact of the 2021 equity event. We will be referring to our results on this call only in a non-GAAP basis, unless otherwise stated. These non-GAAP terms include adjusted earnings and adjusted EBITDA. Please see the section of today's press release for the complete and or updated definitions of any non-GAAP terms, reconciliation of these items to the corresponding GAAP results, and how, when, and why management uses them. Additional information with respect to our GAAP and non-GAAP results is available on our website in today's press release. the supplemental Excel tables, and the quarterly results presentation. Any outlook discussed on today's call assumes no material acquisitions, share purchases, or meaningful changes in the company's stock price. These expectations are subject to change based on various macroeconomic, social, political, and other factors, including the COVID-19 pandemic. While our 2025 financial and operational targets do assume acquisitions, they are also subject to change for these same reasons. None of our targets or goals through 2025 should be considered formal guidance. 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. Except as required by law, Newmark undertakes no obligation to update any forward-looking statements. For complete discussion of additional risks and uncertainties which could cause actual results to differ from those contained in forward-looking statements, see Newmark's Securities and Exchange Commission filings, including but not limited to the risk factors set forth in the most recent 10-K, 10-Q, or 8-K filings, which are incorporated by reference. I'm now happy to turn the call over to our host, Barry Gossin, Chief Executive Officer of Newmark Group, Inc.

Good morning, everyone, and thank you for joining us. With me today are Newmark's Chief Financial Officer Mike Rispoli, our Chief Revenue Officer Lou Alvarado, and our Chief Strategy Officer Jeff Day. In the second quarter, we achieved record revenues up 20%, record adjusted EBITDA up 32%, and record earnings per share up 48%. This is our fifth quarter in a row that we've achieved such quarterly records. Our average revenue per producer of $1.3 million and our average revenue per all employees of $538,000 have both increased by over 40% since 2019. That is the definition of organic growth and is the clearest indication of the quality of our business, caliber of our people, and the strength of our platform. Our culture of collaboration and use of data and technology enhances our cross-selling of services, which in turn has led to superior client experience and increased productivity per employee. Since the onset of the global pandemic, Newark has substantially increased its revenues and earnings while gaining market share. We believe that our clients appreciate the expertise of our professionals, especially in times of uncertainty. and we are well positioned for further market share gains. We are confident that we will reach our 2025 targets, which include generating $4.5 billion of total revenue and $900 million of adjusted EBITDA. We also are reiterating our 2022 outlook, despite the near-term macro economic headwinds. Numark has been the fastest growing commercial real estate services company for the past decade, and we expect to continue to outperform the industry. I want to highlight some of the areas that are contributing to our growth. Year to date, we are the number two U.S. investment sales company compared to a decade ago when we were number 25. Ten years ago, we announced that we were going to focus and grow our investment sales and debt business, and our success speaks for itself. Using capital markets as the tip of our spear, we will continue to drive growth across agency leasing, servicing, property management, and valuation advisory. We are now focused on replicating our growth internationally and recently purchased BH2, a leading capital markets firm based in London. Like our U.S. strategy, we will leverage our capital markets business to drive growth across our platform globally. Our full service peers generate an average of 40% of their revenue from outside the US compared to approximately 5% for us. Our growth opportunity is massive. Part of the international strategy will be to replicate US success in valuation and advisory. We grew this business from less than $20 million of revenue in 2017 to $179 million for the trailing 12 months. This dramatic growth was fueled by our proprietary technology, which has driven a 49% year-on-year increase in average revenue per appraiser. In addition to international growth, we expect to expand our portfolio and entity investment sales business, which represents approximately 30% of the overall market. We expect to be in the top three. We are expanding our multifamily business into workforce housing, single-family rental housing, and we expect our flexible workspace business, Notel, to grow its revenues by $200 million to $300 million over the next several years. Obviously, with these opportunities, you can understand why we are so excited about our future. With that, I'm happy to turn the call over to Mike.