Colliers International(CIGI) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year, revenues were $2.8 billion, down 9% compared to 2019 and 16% internally, while adjusted EBITDA was $361 million, slightly up from the previous year, reflecting strong growth in high-margin services and prudent cost management [22] - In Q4, revenues totaled $914 million, down 4% year-over-year, with internal revenues down 15% primarily due to the pandemic's impact on transactional leasing and capital markets operations [23] - Q4 adjusted EBITDA was $155 million, up 7% from $144 million a year ago, with margins improving to 17% from 15.5% in the prior-year quarter [24] Business Line Data and Key Metrics Changes - The Americas region saw Q4 revenues of $525 million, up 8% year-over-year, with outsourcing and advisory revenues up 31% and capital markets revenues up 46%, while leasing revenues were down 34% [25] - EMEA operations generated Q4 revenues of $183 million, down 24% from the previous year, with adjusted EBITDA at $36 million compared to $51 million last year [26] - Asia-Pacific Q4 revenues were $163 million, down 11% year-over-year, with capital markets revenues down 33% and leasing down 11%, while outsourcing and advisory revenues grew 4% [27] Market Data and Key Metrics Changes - Investment management revenues were $44 million, reflecting a growth of 4%, with assets under management at $39.5 million, up 9% from September 30, 2020 [28] - The company maintained a conservative financial profile with a net debt to adjusted EBITDA leverage ratio of 1.0 times at year-end, down from 1.4 times a year ago [29] Company Strategy and Development Direction - The company has focused on building a global leader in investment management, which now represents about 20% of EBITDA, more than double that of peers [18] - Colliers completed four acquisitions in 2020, investing $240 million, up from $109 million the previous year, to enhance its service offerings and market position [13] - The company aims to increase recurring revenues to 65% to 70% over time, with a focus on diversifying its business and enhancing margins [52] Management's Comments on Operating Environment and Future Outlook - Management expects a gradual subsiding of the pandemic's impact throughout 2021, with a rebound in transactional services anticipated in the second half of the year [30] - The outlook for 2021 revenues and adjusted EBITDA is projected to increase between 10% to 25% compared to the prior year [31] - Management emphasized the importance of technology as an enabler of professional services and investment management, planning to invest in digital solutions to enhance client services [36] Other Important Information - The company has rebranded to better represent its current identity and support digital marketing efforts [12] - Colliers Mortgage has exceeded expectations since its acquisition, with significant growth opportunities identified in multifamily and related asset classes [61] Q&A Session Summary Question: What are the assumptions for the measured rebound in transaction volumes for 2021? - Management expects a rebound in transaction activity in the back half of the year, acknowledging a tough comparison in Q1 due to strong performance in Q1 2020 [44] Question: Can you discuss the strategy for improving margins in the Americas? - The strategy is ongoing, with about halfway progress made, focusing on repositioning cost structures and enhancing productivity [46] Question: What are the chances of a larger deal in investment management this year? - Management is open to opportunities but emphasizes the importance of timing and valuation in potential acquisitions [49] Question: How did the outsourcing and advisory business perform by sub-segments? - Performance varied by region, with some areas like project management in India facing challenges, while overall growth was noted in other segments [51][56] Question: How is the capital markets business expected to evolve in 2021? - The capital markets business performed well in Q4, driven by strong debt origination, but is expected to tone down as refinancing activities complete [59] Question: What is the outlook for Colliers Engineering services platform? - The goal is to achieve about $1 billion in revenue from the engineering services platform over the next five years [81]