Colliers International(CIGI) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q4 revenues were $1.2 billion, down from $1.3 billion in the prior year period, with strong growth in recurring Outsourcing & Advisory and Investment Management service lines [14][96] - Adjusted EBITDA for Q4 was $203 million, up 6% from the previous year, with margins at 16.6%, an increase of 230 basis points [15] - Financial leverage ratio as of December 31 was 1.8x, expected to remain in the 1.8x to 2x range for the first half of 2023, declining to the 1.5x range in the second half [19] Business Line Data and Key Metrics Changes - Investment Management revenues for Q4 were $121 million, up 53%, with adjusted EBITDA of $53 million, an increase of 88% [97] - Americas Q4 revenues were $679 million, down 16%, with Outsourcing & Advisory up 9% and capital markets down 51% [25] - EMEA revenues were $228 million, up 8%, but adjusted EBITDA decreased to $36 million from $42 million due to service mix [17] Market Data and Key Metrics Changes - Fundraising across the platform totaled $8 billion for the full year 2022, with a strong fundraising pipeline expected to drive internal AUM growth of 10% to 15% in 2023 [18] - Asia-Pacific revenues were $194 million, down 3%, with capital markets impacted by interest rate volatility and COVID restrictions [26] Company Strategy and Development Direction - The company is focused on its Enterprise '25 growth strategy, aiming to double profitability and generate over 65% of earnings from high-value recurring revenues [7] - The company completed a record $1 billion in acquisitions in the previous year, strengthening its core and creating additional shareholder value [5] - The company expects capital markets activity to decline by 20% to 40% in the first half of 2023, with a return to growth in the second half [28] Management's Comments on Operating Environment and Future Outlook - Management noted significant pent-up demand for real estate assets, which is expected to translate into additional volumes as conditions stabilize [3] - The company anticipates disciplined cost control and careful management of discretionary expenses during the challenging operating environment [20] - Management expressed confidence in the stability of revenues from long-dated funds, which make up 85% of assets [6] Other Important Information - The company has a strong track record of delivering 20% annual growth in shareholder value over 28 years [13] - The company is actively looking for acquisition opportunities, particularly in the services sector, to augment operations globally [60] Q&A Session Summary Question: What is the outlook for capital markets activity? - Management indicated that capital markets activity has been challenged, with significant declines expected in the first half of 2023, but noted a pent-up demand for transactions [34][42] Question: How much of the 2023 revenue and earnings guidance is driven by acquired businesses? - Approximately $75 million of EBITDA is expected from the annualization of acquisitions completed in 2022, with a significant portion coming from Investment Management [84] Question: What are the expectations for margins in Investment Management? - Margins are expected to improve primarily from organic growth and operating leverage, with a target of reaching 45% in 2023 [78] Question: How is the company managing costs in the current environment? - The company is implementing disciplined cost management strategies, similar to those used during the pandemic, to maintain margins despite revenue declines [31] Question: What is the expected impact of financing costs on engineering and property management? - Management reported robust construction activity driven by infrastructure spending, indicating that financing costs have not significantly slowed growth in engineering [80]