Mr. Jay Hennick reports

COLLIERS REPORTS FIRST QUARTER RESULTS

Colliers International Group Inc. has released operating and financial results for the first quarter ended March 31, 2023. All amounts are in U.S. dollars.

For the quarter ended March 31, 2023, revenues were $965.9-million, down 3 per cent (1 per cent in local currency), adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $104.6million, down 14 per cent (14 per cent in local currency) and adjusted EPS (earnings per share) was 86 cents, down 40 per cent versus the prior-year period. First quarter adjusted EPS was not materially impacted by changes in foreign exchange rates. GAAP (generally accepted accounting principles) operating earnings were $22.1-million as compared with $40.8-million in the prior-year quarter. GAAP diluted net loss per share was 47 cents versus 42 cents in the prior-year quarter. First quarter GAAP diluted net loss per share was not materially impacted by changes in foreign exchange rates.

"During the seasonally slow first quarter, investment management and outsourcing and advisory delivered robust growth; leasing was up slightly; and, as expected, capital markets declined considerably in line with overall market conditions. Since our initial outlook 90 days ago, we have seen higher interest rates and challenging debt markets impact transaction volumes. Now, with the additional stress on the banking system and increasing limitations on debt availability, there is more uncertainty around property valuations. Until interest rates stabilize and financing of real estate transactions becomes more predictable, we expect transaction activity to remain muted," said Jay S. Hennick, global chairman and chief executive officer of Colliers.

"Aside from our capital markets segment, the momentum from the rest of our business is strong. Revenues from investment management and outsourcing and advisory increased 40 per cent and 13 per cent, respectively, and, together, these segments represent more than 60 per cent of our overall adjusted EBITDA. Having a large proportion of our earnings coming from these revenue streams highlights the transformation of Colliers into a much more balanced, diversified and resilient company.

"After quarter-end, Colliers continued to build on its global platform by completing acquisitions in Australia and New Zealand in our engineering and design and project management segments. In addition, we announced the early redemption, effective June 1, 2023, of our outstanding 4 per cent convertible notes. Eliminating the convertible notes will reduce interest costs and simplify our balance sheet.

"Our shareholders know that Colliers has a history of seizing its greatest opportunities during challenging times. We believe that higher interest rates and tighter access to capital gives us a tremendous advantage in completing acquisitions, recruiting key talent and scaling in our newer growth engines that will translate into additional value for shareholders," he concluded.

About Colliers International Group Inc.

Colliers is a leading diversified professional services and investment management company. With operations in 66 countries, our 18,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 28 years, our experienced leadership with significant inside ownership has delivered compound annual investment returns of approximately 20 per cent for shareholders. With annual revenues of $4.5 billion and $98 billion of assets under management, Colliers maximizes the potential of property and real assets to accelerate the success of our clients, our investors and our people. Learn more at corporate.colliers.com, Twitter @Colliers or LinkedIn.

Consolidated revenues decreased 1 per cent on a local currency basis in the seasonally slow first quarter. Investment Management and Outsourcing & Advisory generated robust growth, Leasing was up slightly while Capital Markets declined in line with overall market conditions. Consolidated internal revenues measured in local currencies declined 9 per cent (note 3) versus the prior year quarter.

Segmented First Quarter Results

Revenues in the Americas region totalled $581.6-million for the first quarter, down 9 per cent (8 per cent in local currency) versus $641.7-million in the comparative prior year quarter. The decline was related to the significant fall-off in Capital Markets transaction volumes across all asset classes, relative to a very strong prior year quarter. Outsourcing & Advisory revenues were up high single digits, driven by growth in Engineering & Design and Property Management, while Leasing revenues were flat. Adjusted EBITDA was $53.9-million, down 34 per cent (33 per cent in local currency) relative to the strong prior year quarter. The decline in Adjusted EBITDA was due to lower revenues and a change in service mix. GAAP operating earnings were $32.9-million, relative to $61.3-million in the prior year quarter.

Revenues in the EMEA region totalled $143.4-million, down 6 per cent (2 per cent in local currency) compared to $153.3-million in the prior year quarter. Revenue declined significantly in Capital Markets, in line with overall market conditions. Adjusted EBITDA was a loss of $11.3-million in the seasonally slow first quarter as compared to earnings of $4.9-million in the prior year quarter. GAAP operating loss was $25.0-million, versus $30.8-million in the prior year quarter.

Revenues in the Asia Pacific region totalled $120.1-million compared to $119.4-million in the prior year quarter, up 1 per cent (7 per cent in local currency), with growth in Leasing and Outsourcing & Advisory more than offsetting a decline in Capital Markets. Adjusted EBITDA was $8.0-million, down 21 per cent (15 per cent in local currency) relative to the strong prior year quarter on changes in service mix. GAAP operating earnings were $5.0-million, versus $8.2-million in the prior year quarter.

Investment Management revenues for the first quarter were $120.7-million compared to $86.4-million in the prior year quarter, up 40 per cent (40 per cent in local currency). Passthrough revenue (from historical carried interest) was nil versus $24.7-million in the prior year quarter. Excluding the impact of carried interest, revenue was up 96 per cent (96 per cent in local currency) driven by (i) acquisitions and (ii) management fee growth from increased assets under management. Adjusted EBITDA was $54.9-million, up 105 per cent (105 per cent in local currency) over the prior year quarter. GAAP operating earnings were $14.8-million in the quarter, versus $17.2-million in the prior year quarter with the reduction attributable to contingent acquisition consideration related to recent acquisitions. Assets under management were $97.6 billion as of March 31, 2023, as compared to $97.7 billion as of December 31, 2022, with modestly lower asset values mostly offset by net capital inflows.

Unallocated global corporate costs as reported in Adjusted EBITDA were $0.9-million in the first quarter, relative to $1.5-million in the prior year quarter. The corporate GAAP operating loss for the quarter was $5.5-million relative to $15.1-million in the first quarter of 2022.

Outlook for 2023

In early February, the company provided its initial outlook for 2023. Since then, a significant banking crisis has occurred, availability of credit has tightened further and uncertainty around asset valuations has increased, causing a revision to the outlook. Lower transaction volumes are now expected to persist for the remainder of the year. Capital Markets revenues are expected to be down 30-40 per cent for the second quarter versus the prior year period, with year-over-year comparisons becoming more favourable in the third and fourth quarters.

Robust growth (including the impact of recent acquisitions) is expected to continue in the company's high value recurring service lines, Investment Management and Outsourcing & Advisory, while Leasing is expected to remain flat to down slightly. The company expects higher Adjusted EBITDA margins in 2023 due to the change in service mix (greater proportion of earnings coming from higher-margin Investment Management) offset in part by lower Capital Markets margins, net of cost control measures across the company. Adjusted EPS growth is expected to continue to be impacted by increased interest costs as well as a larger proportion of earnings growth generated from non-wholly owned operations.

The outlook for 2023, including the impact of acquisitions completed in 2022 and to the present date in 2023, is as follows:

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 numerous macroeconomic, health, social, geopolitical and related factors.

Conference Call

Colliers will be holding a conference call on Tuesday, May 2, 2023 at 11:00 a.m. Eastern Time to discuss the quarter's results. The call, as well as a supplemental slide presentation, will be simultaneously web cast and can be accessed live or after the call at corporate.colliers.com in the Events section.

We seek Safe Harbor.