Colliers International(CIGI) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported Q3 revenues of $1.46 billion, a 23% increase year over year, driven by growth in engineering and real estate services segments [7][10] - Adjusted EBITDA for the quarter was $191 million, reflecting a 24% increase from the previous year [7] - Assets under management reached $108 billion, a 10% increase from the previous year [6][10] Business Line Data and Key Metrics Changes - Engineering segment revenues increased by 36%, with internal growth of 6% and significant contributions from acquisitions [9] - Real estate services segment revenues rose by 13%, with capital markets up 21% and leasing revenues increasing by 14% [8][9] - Outsourcing revenues grew by 8%, led by valuation and advisory practices [9] Market Data and Key Metrics Changes - Strong sales growth was noted in the U.K., Japan, and Canada, particularly in capital markets and leasing [8] - Debt finance activity was robust, especially in U.S. multifamily originations [8] Company Strategy and Development Direction - The company is focused on unifying operations under the Harrison Street Asset Management brand, which is expected to strengthen the business and enhance shareholder value [5][10] - The engineering sector is seen as a significant growth opportunity, with plans to double revenue and profitability in the coming years [29][101] - The company maintains a decentralized operating model that allows for flexibility and responsiveness to market opportunities [5][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting full-year guidance despite slight expected declines in investment management margins due to integration costs [10][41] - The capital markets recovery is viewed as a multi-year process, with expectations for continued growth in Q4 and beyond [48][50] - Management highlighted the importance of long-term value creation over short-term margin pressures [41][42] Other Important Information - The company raised $1 billion in new capital commitments during the quarter, with total year-to-date fundraising reaching $4.4 billion [10] - The leverage ratio was reported at 2.3 times, with expectations to decline to just under two times by year-end [11] Q&A Session Summary Question: Inquiry about engineering margins and service mix - Management noted that engineering margins were slightly impacted by service mix, with a net margin decrease of 20 to 30 basis points [16][18] Question: Discussion on investment management business and future margins - Management indicated that integration costs would impact margins for the next two to three quarters, but they remain focused on long-term growth [20][21] Question: Organic growth in engineering - Year-to-date organic growth in engineering was reported at around 8%, with expectations for continued growth in the mid-high single-digit range [24][25] Question: Capital markets activity and fourth-quarter outlook - Management expressed confidence in exceeding last year's capital markets performance, with a solid pipeline for Q4 [43][46] Question: Leasing activity and geographical performance - Strong leasing activity was noted in the U.S., particularly in industrial and office sectors, with expectations for continued growth [37][38] Question: Feedback on integration of investment management - Client feedback on the integration process has been positive, with increased capital allocations from investors [34][36] Question: Construction activity outlook - Management indicated that construction activity is currently soft, particularly in condominiums, but there is ongoing activity in data centers and related infrastructure [66][67] Question: Future growth potential in engineering across regions - Management highlighted significant growth opportunities in the U.S., Canada, Australia, and Europe, emphasizing the fragmented nature of the engineering market [100][101]