Colliers International(CIGI) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported Q2 revenues of $1.1 billion, up 23% year-over-year, with internal growth of 15% and the remainder from acquisitions [15] - Adjusted EBITDA for Q2 was $161 million, up 21% from the previous year, with margins at 14.3%, roughly flat compared to the prior-year quarter [15] - The financial leverage ratio as of June 30 was 1.4 times, expected to be 2 times including announced acquisitions, within the company's comfort zone [24] Business Line Data and Key Metrics Changes - Investment Management revenues for Q2 were $75 million, up 48% year-over-year, with adjusted EBITDA of $29 million, up 36% [20] - Americas revenues were $741 million, up 8%, with Outsourcing & Advisory growing 34% and Capital Markets activity up 28% [16] - EMEA revenues were $169 million, up 20%, but adjusted EBITDA decreased to $14 million due to geopolitical uncertainties [18] - Asia-Pacific revenues were $143 million, down 1%, impacted by COVID-19 lockdowns [19] Market Data and Key Metrics Changes - The company ended Q2 with $68.7 billion in assets under management (AUM), expected to rise to $87 billion with upcoming acquisitions [22] - New capital commitments from investors in the first half of the year were solid, although decision-making times have increased due to current market conditions [22] Company Strategy and Development Direction - The company aims to become a major player in the alternative private capital industry, with a focus on growing its Investment Management segment [7] - The strategy includes leveraging acquisitions to enhance service capabilities and expand into rapidly growing sectors like alternatives and infrastructure [12] - The company expects to invest over $1 billion in capital deployment for the first time in its history [12] Management's Comments on Operating Environment and Future Outlook - Management noted strong organic growth of approximately 20% year-to-date but expects a slowdown in the second half due to tough comparisons [30] - The company remains confident in meeting its fundraising objectives despite longer decision-making times from investors [22] - Management highlighted the importance of diversification across asset classes and global markets to mitigate risks [42] Other Important Information - The company completed two acquisitions during the quarter and announced a third, enhancing its capabilities in investment management and engineering [8][11] - The company renewed its revolving credit facility, increasing capacity to $1.5 billion and extending the term to 2027 [25] Q&A Session Summary Question: Outlook for transaction volumes in Q4 - Management indicated that while they had a strong first half, they expect organic growth to slow in the second half due to tough comparisons [30] Question: Fundraising objectives for the year - Management did not disclose specific numbers but mentioned multiple engines for fundraising across various platforms [33] Question: Performance of non-recurring revenue businesses - Management reported strong organic growth in capital markets and leasing, with expectations of tougher comparisons in the second half [36] Question: Impact of rising interest rates on transactions - Management confirmed that rising rates are impacting transaction velocities, requiring more cash for sales and putting downward pressure on pricing [45] Question: Margin expansion expectations - Management indicated that the majority of margin expansion would come from acquisitions, particularly in investment management businesses [47] Question: Overall exposure to office space - Management noted that office space performance varies significantly by region, with strong internal growth across most asset classes except traditional office [57] Question: Future acquisitions in investment management - Management expressed ongoing interest in acquiring businesses that align with their strategic goals, particularly in high-margin sectors [55]