Colliers International(CIGI) - 2025 Q2 - Quarterly Report

Executive Summary & Strategic Highlights Colliers reported strong Q2 and YTD 2025 financial results, driven by diversified operations and strategic acquisitions Second Quarter and Year-to-Date Operating Highlights Colliers reported strong Q2 and YTD 2025 results with significant revenue and Adjusted EBITDA growth, driven by a diversified model Q2 2025 Financial Performance | Metric | 2025 (Q2) ($M) | 2024 (Q2) ($M) | YoY Change | | :----------------------- | :---------- | :---------- | :--------- | | Revenues | $1,347.6 | $1,139.4 | +18% (+17% LC) | | Net Revenues | $1,185.9 | $1,018.0 | +16% (+16% LC) | | Adjusted EBITDA | $180.2 | $155.6 | +16% (+15% LC) | | Adjusted EPS ($) | $1.72 | $1.36 | +26% | | GAAP Operating Earnings ($M) | $99.2 | $114.7 | -13.4% | | GAAP Diluted Net EPS ($) | $0.08 | $0.73 | -89.1% | YTD June 30, 2025 Financial Performance | Metric | 2025 (YTD) ($M) | 2024 (YTD) ($M) | YoY Change | | :----------------------- | :---------- | :---------- | :--------- | | Revenues | $2,488.8 | $2,141.3 | +16% (+17% LC) | | Net Revenues | $2,179.6 | $1,908.7 | +14% (+15% LC) | | Adjusted EBITDA | $296.3 | $264.3 | +12% (+12% LC) | | Adjusted EPS ($) | $2.59 | $2.13 | +22% | | GAAP Operating Earnings ($M) | $130.8 | $158.1 | -17.3% | | GAAP Diluted Net EPS ($) | $0.00 | $0.99 | -100% | - Over the past 12 months, 71% of the Company's earnings came from recurring revenues, and free cash flow was converted at a rate of 98% of adjusted net earnings[5] CEO Commentary & Strategic Initiatives CEO Jay S. Hennick highlighted strong Q2 results, driven by diversified strategy, Engineering performance, and strategic acquisitions - Exceeded expectations with strong second quarter results, showcasing exceptional performance of the Engineering division[6] - Long-term strategy to build a diversified professional services and investment management company with high-quality, recurring revenue streams is paying off[6] - Investment Management division rebranded as Harrison Street Asset Management, with Christopher Merrill appointed Global CEO[7] - Acquired a 60% stake in RoundShield Partners, a leading European credit platform with $5 billion in assets under management, expanding credit, student housing, and hospitality capabilities[7] Company Overview Colliers is a global diversified professional services and investment management company with strong returns and significant AUM About Colliers Colliers is a global diversified professional services and investment management company, operating across three platforms with a strong track record and significant AUM - Colliers is a global diversified professional services and investment management company[8] - Operates through three industry-leading platforms: Real Estate Services, Engineering, and Investment Management[8] - Has consistently delivered approximately 20% compound annual returns for shareholders over 30 years[8] - Reports over $5.0 billion in annual revenues and more than $100 billion in assets under management[8] Segmented Performance This section details Q2 2025 financial performance across Colliers' Real Estate Services, Engineering, and Investment Management segments Real Estate Services Real Estate Services reported 4% revenue growth in Q2 2025, driven by Capital Markets, with Leasing declining due to tariff uncertainties, leading to a 1% Adjusted EBITDA decrease Q2 2025 Performance | Metric | 2025 (Q2) ($M) | 2024 (Q2) ($M) | YoY Change | | :---------------- | :---------- | :---------- | :--------- | | Revenues | $785.4 | $751.9 | +4% (+4% LC) | | Net Revenues | $730.8 | $696.9 | +5% (+4% LC) | | Adjusted EBITDA | $87.0 | $88.1 | -1% (-1% LC) | | GAAP Operating Earnings ($M) | $66.9 | $64.3 | +4.0% | - Capital Markets revenues were up 17% (16% in local currency) with solid growth across all asset classes, led by the US, Western Europe, and debt finance[9] - Leasing revenues declined 5% (5% in local currency) globally, impacted by tariff-driven uncertainties, especially in industrial, which more than offset robust growth in office leasing[9] - Adjusted EBITDA decreased due to revenue mix and continued investments in recruiting[9] Engineering The Engineering division achieved exceptional Q2 2025 growth, with revenues up 67% and net revenues up 73%, driven by acquisitions and internal growth, leading to a 145% Adjusted EBITDA surge Q2 2025 Performance | Metric | 2025 (Q2) ($M) | 2024 (Q2) ($M) | YoY Change | | :---------------- | :---------- | :---------- | :--------- | | Revenues | $436.0 | $261.3 | +67% (+65% LC) | | Net Revenues | $337.3 | $195.0 | +73% (+70% LC) | | Adjusted EBITDA | $46.3 | $18.9 | +145% (+142% LC) | | GAAP Operating Earnings ($M) | $19.2 | $9.6 | +100% | - Growth was driven by the favorable impact of recent acquisitions and strong internal growth[10] - Adjusted EBITDA margin expansion was driven equally by acquisitions and improved productivity and efficiency in core operations[10] Investment Management Investment Management revenues were flat in Q2 2025, with net revenues down 7% due to prior year catch-up fees, while AUM increased to $103.3 billion, with proforma AUM at $108 billion Q2 2025 Performance | Metric | 2025 (Q2) ($M) | 2024 (Q2) ($M) | YoY Change | | :---------------- | :---------- | :---------- | :--------- | | Revenues | $126.1 | $126.1 | Flat (Flat LC) | | Net Revenues | $117.7 | $126.1 | -7% (-7% LC) | | Adjusted EBITDA | $50.0 | $50.5 | -1% (-1% LC) | | GAAP Operating Earnings ($M) | $29.3 | $55.0 | -46.7% | - Net revenues were impacted by catch-up fees recognized in the prior year quarter[11] - Assets Under Management (AUM) was $103.3 billion as of June 30, 2025, up from $100.3 billion at the end of the first quarter, driven by solid fundraising, strong capital deployment, and modest valuation increases[11] - Including RoundShield, proforma AUM is approximately $108 billion[11] Unallocated Global Corporate Costs Unallocated global corporate costs in Adjusted EBITDA increased to $3.1 million in Q2 2025, with the corporate GAAP operating loss widening to $16.2 million Corporate Costs | Metric | 2025 (Q2) ($M) | 2024 (Q2) ($M) | | :-------------------------- | :---------- | :---------- | | Adjusted EBITDA | $(3.1) | $(1.9) | | Corporate GAAP Operating Loss ($M) | $(16.2) | $(14.2) | Financial Outlook Colliers has updated and increased its 2025 financial outlook, projecting growth across key metrics, contingent on market stability Updated 2025 Outlook Colliers updated its 2025 outlook, projecting low-teens revenue growth, mid-teens Adjusted EBITDA growth, and mid to high-teens Adjusted EPS growth, contingent on market stability Updated 2025 Consolidated Outlook | Metric | Previous Outlook | New Outlook | | :-------------------- | :----------------------------- | :-------------------------- | | Revenue Growth | High single-digit to low teens | Low-teens percentage | | Adjusted EBITDA Growth | Low-teens | Mid-teens | | Adjusted EPS Growth | Low-teens | Mid to high-teens | - The outlook is contingent on (i) lower global trade uncertainty, and (ii) lower interest rate volatility in the second half of the year[14] - The outlook does not include future acquisitions[15] Financial Statements This section presents Colliers' condensed consolidated statements of earnings, balance sheets, cash flows, and detailed segmented financial results for Q2 and YTD 2025 Condensed Consolidated Statements of Earnings (Loss) Condensed consolidated statements of earnings show a decrease in GAAP net earnings for Q2 and YTD 2025, influenced by acquisition-related items, while Adjusted EPS increased significantly Condensed Consolidated Statements of Earnings (Loss) - Q2 2025 vs Q2 2024 | Metric | 2025 (Q2) (US$ thousands) | 2024 (Q2) (US$ thousands) | | :-------------------------------- | :---------- | :---------- | | Revenues | $1,347,649 | $1,139,368 | | Operating earnings | $99,183 | $114,748 | | Net earnings | $63,971 | $71,927 | | Net earnings (loss) attributable to Company | $4,009 | $36,724 | | Diluted Net EPS ($) | $0.08 | $0.73 | | Adjusted EPS ($) | $1.72 | $1.36 | Condensed Consolidated Statements of Earnings (Loss) - YTD June 30, 2025 vs YTD June 30, 2024 | Metric | 2025 (YTD) (US$ thousands) | 2024 (YTD) (US$ thousands) | | :-------------------------------- | :---------- | :---------- | | Revenues | $2,488,819 | $2,141,348 | | Operating earnings | $130,787 | $158,075 | | Net earnings | $72,889 | $86,063 | | Net earnings (loss) attributable to Company | $(250) | $49,381 | | Diluted Net EPS ($) | $0.00 | $0.99 | | Adjusted EPS ($) | $2.59 | $2.13 | - Acquisition-related items include contingent acquisition consideration fair value adjustments, contingent acquisition consideration-related compensation expense, and transaction costs[22] Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows total assets increased to $6.46 billion, with net debt rising to $1.56 billion, resulting in a 2.3 net debt/pro forma adjusted EBITDA ratio Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (US$ thousands) | Dec 31, 2024 (US$ thousands) | June 30, 2024 (US$ thousands) | | :-------------------------------- | :-------------- | :------------- | :-------------- | | Total assets | $6,460,605 | $6,100,617 | $5,671,766 | | Total liabilities and shareholders' equity | $6,460,605 | $6,100,617 | $5,671,766 | | Total debt (excluding mortgage warehouse credit facilities) | $1,740,274 | $1,508,475 | $1,363,859 | | Total debt, net of cash and cash equivalents | $1,556,931 | $1,332,218 | $1,201,234 | | Net debt / pro forma adjusted EBITDA ratio | 2.3 | 2.0 | 2.0 | - Goodwill and intangible assets totaled $3.573 billion as of June 30, 2025[24] - Restricted cash consists primarily of cash amounts set aside to satisfy legal or contractual requirements[25] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $39.9 million for YTD June 30, 2025, with investing activities using cash for acquisitions, and financing activities providing $183.1 million from increased long-term debt Net Cash Flow Summary | Activity | 2025 (Q2) (US$ thousands) | 2024 (Q2) (US$ thousands) | 2025 (YTD) (US$ thousands) | 2024 (YTD) (US$ thousands) | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | | Net cash provided by (used in) operating activities | $44,563 | $141,189 | $(39,913) | $3,574 | | Net cash used in investing activities | $(101,566) | $(167,463) | $(111,392) | $(217,315) | | Net cash provided by financing activities | $63,684 | $63,888 | $183,062 | $239,797 | - Key investing activities for YTD 2025 included $59.7 million for acquisition of businesses and $121.7 million for purchases of warehouse fund assets[28] - The primary driver for financing activities in YTD 2025 was a $260.8 million increase in long-term debt, net[28] Segmented Financial Results (Detailed Tables) This section provides detailed revenue, net revenue, Adjusted EBITDA, and operating earnings for each segment for Q2 and YTD periods Segmented Revenues and Adjusted EBITDA - Q2 2025 vs Q2 2024 | Segment | 2025 (Q2) Revenues (US$ thousands) | 2024 (Q2) Revenues (US$ thousands) | 2025 (Q2) Adjusted EBITDA (US$ thousands) | 2024 (Q2) Adjusted EBITDA (US$ thousands) | | :-------------------- | :----------------- | :----------------- | :------------------------ | :------------------------ | | Real Estate Services | $785,389 | $751,875 | $87,014 | $88,063 | | Engineering | $435,977 | $261,338 | $46,320 | $18,934 | | Investment Management | $126,134 | $126,051 | $49,989 | $50,489 | | Corporate | $149 | $104 | $(3,114) | $(1,862) | | Total | $1,347,649 | $1,139,368 | $180,209 | $155,624 | Segmented Revenues and Adjusted EBITDA - YTD June 30, 2025 vs YTD June 30, 2024 | Segment | 2025 (YTD) Revenues (US$ thousands) | 2024 (YTD) Revenues (US$ thousands) | 2025 (YTD) Adjusted EBITDA (US$ thousands) | 2024 (YTD) Adjusted EBITDA (US$ thousands) | | :-------------------- | :------------------ | :------------------ | :------------------------- | :------------------------- | | Real Estate Services | $1,422,361 | $1,393,150 | $126,093 | $132,492 | | Engineering | $813,851 | $499,399 | $70,344 | $31,994 | | Investment Management | $252,336 | $248,572 | $105,085 | $103,339 | | Corporate | $271 | $227 | $(5,269) | $(3,506) | | Total | $2,488,819 | $2,141,348 | $296,253 | $264,319 | Non-GAAP Measures & Reconciliations This section defines and reconciles various non-GAAP financial measures, including Net Revenues, Adjusted EBITDA, Adjusted EPS, and Free Cash Flow, for clearer performance insights Reconciliation of Revenues to Net Revenues Net Revenues are defined as revenues excluding subconsultant and other reimbursable direct costs, and historical pass-through performance fees, with a reconciliation table provided - Net revenues are defined as revenues excluding subconsultant and other reimbursable direct costs in Real Estate Services and Engineering segments, and historical pass-through performance fees in Investment Management segment, to better reflect operating performance[30] Q2 2025 Net Revenues Reconciliation | Segment | Revenues (US$ thousands) | Subconsultant & Other Direct Costs (US$ thousands) | Historical Pass-through Performance Fees (US$ thousands) | Net Revenues (US$ thousands) | | :-------------------- | :--------- | :--------------------------------- | :------------------------------------- | :----------- | | Real Estate Services | $785,389 | $(54,588) | - | $730,801 | | Engineering | $435,977 | $(98,717) | - | $337,260 | | Investment Management | $126,134 | - | $(8,400) | $117,734 | | Corporate | $149 | - | - | $149 | | Total | $1,347,649 | $(153,305) | $(8,400) | $1,185,944 | Reconciliation of Net Earnings to Adjusted EBITDA Adjusted EBITDA is defined as net earnings adjusted for non-cash and non-recurring items, used to evaluate operating performance and debt servicing ability - Adjusted EBITDA is defined as net earnings, adjusted to exclude: income tax, other income, interest expense, depreciation and amortization, MSR gains, acquisition-related items, restructuring costs, and stock-based compensation expense[32] - This measure is used to evaluate operating performance, ability to service debt, and as an integral part of planning and reporting systems[32] Q2 2025 Adjusted EBITDA Reconciliation | Item | 2025 (Q2) (US$ thousands) | 2024 (Q2) (US$ thousands) | | :------------------------------------------------ | :---------- | :---------- | | Net earnings | $63,971 | $71,927 | | Income tax | $25,244 | $24,377 | | Interest expense, net | $15,515 | $19,376 | | Depreciation and amortization | $61,686 | $49,845 | | Acquisition-related items | $16,059 | $(15,221) | | Stock-based compensation expense | $9,153 | $7,446 | | Adjusted EBITDA | $180,209 | $155,624 | Reconciliation of Net Earnings and Diluted Net Earnings Per Common Share to Adjusted Net Earnings and Adjusted EPS Adjusted EPS is a non-GAAP measure that adjusts diluted net earnings per share for various non-cash and non-recurring items, providing a clearer view of underlying operating performance - Adjusted EPS is defined as diluted net earnings per share adjusted for the effect, after income tax, of: non-controlling interest redemption increment, amortization expense related to intangible assets, MSR gains, acquisition-related items, restructuring costs, and stock-based compensation expense[34] - This measure is useful to investors because it provides a supplemental way to understand the underlying operating performance of the Company and enhances the comparability of operating results from period to period[34] Q2 2025 Adjusted EPS Reconciliation | Item | 2025 (Q2) ($) | 2024 (Q2) ($) | | :------------------------------------------ | :---------- | :---------- | | Diluted net earnings (loss) per common share | $0.08 | $0.73 | | Non-controlling interest redemption increment | $0.86 | $0.48 | | Amortization expense, net of tax | $0.53 | $0.41 | | Acquisition-related items | $0.21 | $(0.36) | | Stock-based compensation expense, net of tax | $0.14 | $0.12 | | Adjusted EPS | $1.72 | $1.36 | Reconciliation of Net Cash Flow from Operations to Free Cash Flow Free cash flow is defined as net cash flow from operating activities, adjusted for various items, and used to evaluate liquidity and ability to fund acquisitions and dividends - Free cash flow is defined as net cash flow from operating activities plus contingent acquisition consideration paid, less purchases of fixed assets, plus cash collections on AR Facility deferred purchase price less distributions to non-controlling interests[37] - This measure is used to evaluate and monitor operating performance as well as the ability to service debt, fund acquisitions, and pay dividends to shareholders[37] Q2 2025 Free Cash Flow Reconciliation | Item | 2025 (Q2) (US$ thousands) | 2024 (Q2) (US$ thousands) | | :------------------------------------------------ | :---------- | :---------- | | Net cash provided by (used in) operating activities | $44,563 | $141,189 | | Contingent acquisition consideration paid | $5,680 | $300 | | Purchase of fixed assets | $(16,428) | $(12,480) | | Cash collections on AR Facility deferred purchase price | $35,556 | $34,930 | | Distributions paid to non-controlling interests | $(37,015) | $(38,521) | | Free cash flow | $32,356 | $125,418 | - Trailing twelve months ended June 30, 2025 free cash flow was $308.421 million[38] Local Currency Revenue and Adjusted EBITDA Growth Rate and Internal Revenue Growth Rate Measures This section explains local currency and internal growth rates for revenue and Adjusted EBITDA, excluding foreign currency and acquisition impacts for clearer performance - Percentage revenue and Adjusted EBITDA variances on a local currency basis are calculated by translating current period results of non-US dollar denominated operations to US dollars using prior period foreign currency exchange rates[38] - Internal revenue growth rates are calculated assuming no impact from acquired entities in the current and prior periods, with acquisition growth treated separately until respective anniversaries[39] - These methodologies provide a framework for assessing performance excluding the effects of foreign currency exchange rate fluctuations and acquisitions[39] Assets Under Management (AUM) Definition AUM is defined as the gross market value of operating assets and projected gross cost of development assets for funds and accounts managed by Colliers, including callable capital - AUM is defined as the gross market value of operating assets and the projected gross cost of development assets of the funds, partnerships and accounts to which Colliers provides management and advisory services, including capital that such funds, partnerships and accounts have the right to call from investors pursuant to capital commitments[40] - AUM is used as a measure of the scale of Investment Management operations[40] Adjusted EBITDA from Recurring Revenue Percentage This metric, computed on a trailing twelve-month basis, represents the proportion of Adjusted EBITDA from Engineering, Outsourcing, and Investment Management, considered recurring revenue streams - Adjusted EBITDA from recurring revenue percentage is computed on a trailing twelve-month basis[41] - It represents the proportion of Adjusted EBITDA derived from Engineering, Outsourcing, and Investment Management service lines[41] - These service lines represent medium to long-term duration revenue streams that are either contractual or repeatable in nature[41] Additional Information This section provides details on the Q2 results conference call, important forward-looking statements, and company contact information Conference Call Details Colliers will host a conference call on July 31, 2025, at 11:00 a.m. ET to discuss Q2 results, with a simultaneous webcast available - Conference call to discuss Q2 results will be held on Thursday, July 31, 2025, at 11:00 a.m. Eastern Time[16] - The call will be simultaneously webcast and accessible live or after the call at corporate.colliers.com in the Events section[16] Forward-looking Statements This section contains a standard disclaimer regarding forward-looking statements, noting that actual results may differ materially due to various known and unknown risks - Forward-looking statements include the Company's financial performance outlook and statements regarding goals, beliefs, strategies, objectives, plans or current expectations[17] - These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different from any future results, performance or achievements contemplated[17] - Risk factors include economic conditions, commercial real estate and real asset values, competition, ability to attract and retain clients and employees, interest rates, foreign exchange rates, pandemics, climate change, political events, and acquisition integration[17] - Forward-looking statements are made as of the date of the press release and are subject to change; Colliers undertakes no obligation to publicly update or revise them[18] Company Contacts Provides contact information for key company executives, including the Chairman & CEO and Chief Financial Officer - Jay S. Hennick, Chairman & Chief Executive Officer[42] - Christian Mayer, Chief Financial Officer[42] - Contact Phone: (416) 960-9500[42]