Colliers International(CIGI) - 2023 Q4 - Annual Report

Financial & Operating Highlights Colliers' 2023 full-year revenues decreased 3% to $4.34 billion, with Adjusted EBITDA down 6%, driven by transactional service slowdowns despite strong recurring revenue growth Full Year 2023 vs 2022 Key Financial Metrics (in millions of US$, except EPS) | Measure (in millions of US$, except EPS) | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $4,335.1 | $4,459.5 | -3% | | Adjusted EBITDA | $595.0 | $630.5 | -6% | | Adjusted EPS | $5.35 | $6.99 | -23% | | GAAP operating earnings | $300.9 | $332.5 | -9% | | GAAP diluted net earnings per share | $1.41 | $1.05 | +34% | Q4 2023 vs Q4 2022 Key Financial Metrics (in millions of US$, except EPS) | Measure (in millions of US$, except EPS) | Q4 2023 | Q4 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $1,235.2 | $1,222.4 | +1% | | Adjusted EBITDA | $198.4 | $202.7 | -2% | | Adjusted EPS | $2.00 | $2.31 | -13% | | GAAP operating earnings | $132.6 | $103.8 | +28% | | GAAP diluted net earnings per share | $1.42 | $0.51 | +178% | - The company has strategically transformed, with over 70% of its earnings now coming from recurring services like Investment Management and Engineering & Design, providing greater stability compared to competitors[42] - The company anticipates a return to higher transaction velocity in the latter half of 2024 as interest rates and credit conditions are expected to stabilize[17] Consolidated Results by Line of Service Consolidated revenues decreased 3% in 2023, primarily due to declines in transactional services, despite strong growth in recurring service lines like Outsourcing & Advisory and Investment Management Full Year 2023 Revenue by Service Line (in thousands of US$) | Line of Service | 2023 Revenue | 2022 Revenue | Change (%) | Change (LC) (%) | | :--- | :--- | :--- | :--- | :--- | | Outsourcing & Advisory | $2,082,124 | $1,872,328 | +11% | +11% | | Investment Management | $487,457 | $378,881 | +29% | +28% | | Leasing | $1,063,088 | $1,124,106 | -5% | -5% | | Capital Markets | $702,472 | $1,084,172 | -35% | -35% | | Total revenues | $4,335,141 | $4,459,487 | -3% | -3% | - For the full year, the 3% local currency revenue decrease was driven by lower Capital Markets and Leasing activity, which was partially offset by strong growth in Investment Management and Outsourcing & Advisory[19] Segmented Results Segment performance varied in 2023, with Americas revenue down 9% and EMEA profitability dropping 44%, while Investment Management significantly grew revenue by 29% and Adjusted EBITDA by 47% Full Year 2023 Segment Performance (in thousands of US$) | Segment | 2023 Revenues | 2023 Adjusted EBITDA | 2022 Revenues | 2022 Adjusted EBITDA | | :--- | :--- | :--- | :--- | :--- | | Americas | $2,510,002 | $270,902 | $2,756,345 | $332,347 | | EMEA | $726,900 | $38,373 | $715,140 | $68,501 | | Asia Pacific | $610,313 | $79,238 | $608,460 | $85,092 | | Investment Management | $487,457 | $213,925 | $378,881 | $145,955 | Americas Americas revenues decreased 9% to $2.51 billion in 2023, with Adjusted EBITDA falling 18% to $270.9 million, primarily due to challenging market conditions in Capital Markets and Leasing - Full-year revenue declined 9% to $2.51 billion, driven by market conditions in Capital Markets and Leasing, partly offset by growth in Outsourcing & Advisory and acquisitions[14] - Adjusted EBITDA for the year was $270.9 million, down 18% from $332.3 million in the prior year[14] EMEA EMEA revenues increased 2% to $726.9 million in 2023, but Adjusted EBITDA fell 44% to $38.4 million due to a shift away from higher-margin Capital Markets - Full-year revenue was $726.9 million, up 2% (down 1% in local currency), as growth in Outsourcing & Advisory almost fully offset declines in Capital Markets and Leasing[22] - Adjusted EBITDA for the year fell 44% to $38.4 million due to significantly lower higher-margin Capital Markets revenues[22] Asia Pacific Asia Pacific revenues were flat at $610.3 million in 2023, with Adjusted EBITDA down 7% to $79.2 million, as growth in Leasing and Outsourcing & Advisory was offset by declining Capital Markets activity - Full-year revenue was flat at $610.3 million, as growth in Leasing and Outsourcing & Advisory was offset by a decline in Capital Markets activity[2] - Adjusted EBITDA for the year was $79.2 million, a decrease of 7% (4% in local currency) from $85.1 million in the prior year[2] Investment Management Investment Management revenues increased 29% to $487.5 million in 2023, with Adjusted EBITDA up 47% to $213.9 million, driven by acquisitions and fundraising, with AUM reaching $98.2 billion - Full-year revenue increased 29% to $487.5 million, and Adjusted EBITDA rose 47% to $213.9 million, positively impacted by acquisitions and fundraising[48] - Assets under management (AUM) were $98.2 billion as of December 31, 2023, compared to $97.7 billion at the end of 2022[46] Outlook for 2024 Colliers forecasts a positive 2024 outlook, expecting revenue growth of 5-10%, Adjusted EBITDA growth of 5-15%, and Adjusted EPS growth of 10-20%, with transactional markets improving in H2 2024 Financial Outlook | Measure | Actual 2023 | Outlook for 2024 | | :--- | :--- | :--- | | Revenue growth | -3% | +5% to +10% | | Adjusted EBITDA growth | -6% | +5% to +15% | | Adjusted EPS growth | -23% | +10% to +20% | - The company expects Capital Markets and Leasing conditions to be challenging in H1 2024, followed by growth in H2 2024[49] - Outsourcing & Advisory revenue growth is expected to remain resilient, and Investment Management revenues are expected to grow in line with fundraising[49] Financial Statements Colliers' 2023 financial statements show $4.34 billion in revenue, $144.7 million in net earnings, total assets of $5.48 billion, and $165.7 million in cash from operations, reflecting improved liquidity Condensed Consolidated Statements of Earnings Colliers' 2023 consolidated earnings show total revenues of $4.34 billion, operating earnings of $300.9 million, and diluted EPS increasing to $1.41, despite a slight revenue decline Consolidated Statement of Earnings Highlights (Year ended Dec 31, in thousands of US$) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Total revenues | $4,335,141 | $4,459,487 | | Operating earnings | $300,935 | $332,496 | | Net earnings | $144,691 | $194,544 | | Net earnings attributable to Company | $65,543 | $46,253 | | Diluted net earnings per common share | $1.41 | $1.05 | Condensed Consolidated Balance Sheets As of December 31, 2023, Colliers' balance sheet shows total assets of $5.48 billion, total liabilities of $4.63 billion, and a significant increase in shareholders' equity to $850.5 million Consolidated Balance Sheet Highlights (As of Dec 31, in thousands of US$) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $181,134 | $173,661 | | Total assets | $5,482,126 | $5,098,177 | | Total debt | $1,502,639 | $1,439,099 | | Total liabilities | $4,631,636 | $4,604,803 | | Shareholders' equity | $850,490 | $493,374 | Condensed Consolidated Statements of Cash Flows In 2023, net cash from operating activities significantly increased to $165.7 million, with net cash used in investing activities at $134.0 million, resulting in free cash flow of $167.2 million Consolidated Statement of Cash Flows Highlights (Year ended Dec 31, in thousands of US$) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $165,661 | $67,031 | | Net cash used in investing activities | ($133,983) | ($872,844) | | Net cash provided by (used in) financing activities | ($7,806) | $612,917 | | Free cash flow | $167,165 | $293,652 | Non-GAAP Financial Measures Colliers utilizes non-GAAP measures like Adjusted EBITDA, Adjusted EPS, and Free Cash Flow to assess operating performance and provide supplemental investor information, with detailed definitions and reconciliations provided - Adjusted EBITDA is used to evaluate operating performance and ability to service debt, excluding items like income tax, interest, depreciation, amortization, acquisition-related items, and stock-based compensation[27] - Adjusted EPS provides a supplemental understanding of underlying operating performance by adjusting diluted net earnings per share for items such as amortization, acquisition-related items, and restructuring costs, net of tax[54] - Free cash flow evaluates operating performance and the ability to service debt, fund acquisitions, and pay dividends, calculated from net cash from operating activities adjusted for certain items like asset purchases and distributions[55] Reconciliation of Net Earnings to Adjusted EBITDA (Year ended Dec 31, in thousands of US$) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Net earnings | $144,691 | $194,544 | | Adjustments (Tax, Interest, D&A, etc.) | $450,302 | $435,981 | | Adjusted EBITDA | $594,993 | $630,525 | Reconciliation of Diluted EPS to Adjusted EPS (Year ended Dec 31, in US$) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Diluted net earnings per common share | $1.38 | $0.97 | | Adjustments (Amortization, Acq. items, etc.) | $3.97 | $6.02 | | Adjusted EPS | $5.35 | $6.99 |