Mr. Jay Hennick reports

COLLIERS REPORTS THIRD QUARTER RESULTS

Colliers International Group Inc. has released operating and financial results for the third quarter ended Sept. 30, 2022. All amounts are in U.S. dollars.

For the quarter ended Sept. 30, 2022, revenues were $1.11-billion, up 8 per cent (12 per cent in local currency), adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $145.1-million, up 17 per cent (21 per cent in local currency), and adjusted EPS (earnings per share) was $1.41, up 11 per cent versus the prior-year period. Third quarter adjusted EPS would have been approximately six cents higher excluding foreign exchange impacts. GAAP (generally accepted accounting principles) operating earnings were $84-million as compared with $76-million. GAAP diluted net earnings per share were 27 cents versus 40 cents in the prior-year quarter. Third quarter GAAP EPS would have been approximately seven cents higher excluding changes in foreign exchange rates.

For the nine months ended Sept. 30, 2022, revenues were $3.24-billion, up 18 per cent (21 per cent in local currency), adjusted EBITDA was $427.8-million, up 21 per cent (24 per cent in local currency), and adjusted EPS was $4.69, up 20 per cent versus prior year. Nine months ended Sept. 30, 2022, adjusted EPS would have been approximately 13 cents higher excluding foreign exchange impacts. The GAAP operating earnings were $228.7-million and included $27.4-million loss on disposal of the company's operations, primarily in Russia. The prior-year GAAP operating loss of $269.9-million included $471.9-million settlement of the long-term incentive arrangement (LTIA) with the company's chairman and chief executive officer. The GAAP earnings per share were 54 cents as compared with diluted loss per share of $10.19. Year-to-date GAAP EPS would have been approximately 14 cents higher excluding changes in foreign exchange rates.

"Colliers reported solid third quarter results with outsourcing and advisory, investment management, and leasing all up strongly, more than offsetting the softness in capital markets which is being impacted by higher interest rates, availability of capital and other geopolitical uncertainties," said Jay S. Hennick, global chairman and CEO of Colliers. "Growing recurring revenues and earnings, now at 55 per cent of our pro forma EBITDA, together with broader diversification across service lines, geography and client types means the Colliers diversified services business model has more balance and resilience than ever.

"With the recent additions of Rockwood and Versus, our investment management business now represents nearly 30 per cent of our pro forma EBITDA and total assets under management has surpassed $92-billion, firmly establishing Colliers as one of the top players in the rapidly growing alternative private capital industry. In addition, about 85 per cent of our AUM [assets under management] are in perpetual or long-dated strategies with 70 per cent invested in highly defensive asset classes like alternatives and infrastructure, creating long-term revenue streams that further fortify our business. Importantly, each of our investment platforms has delivered top-tier returns over the long term and is led by best-in-class leadership teams who hold significant equity in their own operations thereby creating perfect alignment with our investors and shareholders.

"In our core service business, we acquired Peakurban during the quarter, adding significant engineering capabilities and a new growth engine to our business in Australia. We also bolstered our presence in the Nordics with an agreement to acquire Pangea Property Partners, a leading real estate advisory firm in Norway and Sweden. Together with our existing operations in Denmark and Finland, Colliers will be the No. 1 player in the Nordic region once the transaction is completed. Finally, just after quarter-end, we added Arcadia Property Management to our strong U.S. business, creating further scale and capability in our property management operations.

"With our highly respected global brand, balanced and diversified business model with significant recurring revenues, a unique enterprising culture, and a proven track record of more than 27 years, Colliers continues to be well positioned to deliver exceptional returns for shareholders in the years to come," he concluded.

Segmented third quarter results

Revenues in the Americas region totalled $695.1-million for the third quarter, up 13 per cent (13 per cent in local currency) versus $617.1-million in the prior-year quarter. Revenue growth was led by outsourcing and advisory, particularly engineering and design (including recent acquisitions) and leasing, which benefited from increased activity in office and industrial asset classes. Capital markets revenues were impacted by rising interest rates and market uncertainty, which reduced sales brokerage and debt origination and financing activity. Adjusted EBITDA was $66.8-million, up 1 per cent (2 per cent in local currency) from the very strong prior-year quarter. The margin was impacted by (i) higher discretionary and variable costs as well as (ii) changes in revenue mix with a reduction in higher-margin capital markets transactions. GAAP operating earnings were $59.9-million, relative to $48.9-million in the prior-year quarter.

Revenues in the EMEA (Europe, Middle East, Africa) region totalled $164.2-million for the third quarter, up 6 per cent (23 per cent in local currency) compared with $154.9-million in the prior-year quarter with growth across all service lines, although unevenly distributed across countries. Revenues were particularly strong in the United Kingdom (including a recent project management acquisition), which more than offset the impact of higher interest rates and geopolitical uncertainty. Adjusted EBITDA was $13.3-million, down 11 per cent (up 1 per cent in local currency) relative to the prior year, primarily due to changes in revenue mix. GAAP operating earnings were $6.1-million versus operating earnings of $11.4-million in the prior-year quarter.

Revenues in the Asia Pacific region totalled $152.8-million for the third quarter compared with $172.3-million in the prior-year quarter, down 11 per cent (down 4 per cent in local currency). Revenues were impacted by higher interest rates, geopolitical uncertainty and COVID-19 restrictions in several Asian markets, especially China. Adjusted EBITDA was $21.1-million, up 2 per cent (up 12 per cent in local currency) relative to the prior year on a lower-cost structure. GAAP operating earnings were $17.5-million versus $18.3-million in the prior-year quarter.

Investment management revenues for the third quarter were $96.1-million compared with $78.3-million in the prior-year quarter, up 23 per cent (23 per cent in local currency). Passthrough revenue from historical carried interest was nil in the quarter versus $18.6-million in the prior-year quarter. Excluding the impact of carried interest, revenue was up 61 per cent (62 per cent in local currency), driven by (i) acquisitions and (ii) management fee growth from increased assets under management. Adjusted EBITDA was $36.9-million, up 33 per cent (33 per cent in local currency) over the prior-year quarter. GAAP operating earnings were $19.5-million in the quarter versus $19.8-million in the prior-year quarter. Assets under management were $86.2-billion as of Sept. 30, 2022, up 87 per cent from $46.1-billion on Sept. 30, 2021. Including Versus Capital (completed on Oct. 12, 2022), assets under management are now $92.2-billion.

Unallocated global corporate earnings as reported in adjusted EBITDA were $7-million in the third quarter, relative to unallocated global corporate costs of $5.6-million in the prior-year quarter due to a reduction in performance-based compensation accruals in the current period and foreign exchange impact. The corporate GAAP operating loss for the quarter was $19-million relative to a loss of $22.5-million in the third quarter of 2021, with the prior-year period impacted by higher contingent acquisition consideration expense related to acquisitions.

Outlook for 2022

The company is adjusting its outlook for the full year 2022 to reflect year-to-date operating results, contributions from recent acquisitions, the operating impact of rising global interest rates and geopolitical uncertainties, as well as adverse foreign exchange impacts on AEPS. The income tax rate and NCI share of earnings also reflect updated expectations relating to the earnings mix for the year. The financial outlook is based on the company's best available information as of the date of this press release, and remains subject to change based on, but not limited to, numerous macroeconomic, health, social, geopolitical (including escalation of hostilities, outbreak of war, elections, disruption of supply chains) and related factors.

Repurchase of subordinate voting shares

During the period from Sept. 28, 2022, to Oct. 28, 2022, the company purchased 372,888 subordinate voting shares for total consideration of $34.6-million in connection with the company's normal course issuer bid (NCIB) at a weighted average purchase price of $92.59 per U.S. share. Under the NCIB, all shares are purchased for cancellation.

Since the beginning of the year, the company has purchased for cancellation 1.37-million subordinate voting shares for total consideration of $160.9-million at a weighted average purchase price of $120.17 per U.S. share.

Colliers may purchase its subordinate voting shares, from time to time, if it believes that the market price of its subordinate voting shares is attractive and that the purchase would be an appropriate use of corporate funds and in the best interests of the company.

Conference call

Colliers will be holding a conference call on Tuesday, Nov. 1, 2022, at 11 a.m. Eastern Time to discuss the quarter's results. The call, as well as a supplemental slide presentation, will be simultaneously webcast and can be accessed live or after the call on the Colliers website in the events section.

About Colliers International Group Inc.

Colliers is a leading diversified professional services and investment management company. With operations in 63 countries, its 18,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 27 years, the company's experienced leadership with significant inside ownership has delivered compound annual investment returns of approximately 20 per cent for shareholders. With annual revenues of $4.6-billion and $92-billion of assets under management, Colliers maximizes the potential of property and real assets to accelerate the success of its clients, its investors and its people.

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