Mr. Jay Hennick reports

COLLIERS REPORTS SECOND QUARTER RESULTS

Colliers International Group Inc. has provided its operating and financial results for the second quarter ended June 30, 2023. All amounts are in US dollars.

• High value recurring revenues continue to scale;
• Maintains full year financial outlook.

For the quarter ended June 30, 2023, revenues were $1.08-billion, down 4 per cent (4 per cent in local currency) and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $147.1-million, down 9 per cent (8 per cent in local currency). Adjusted EPS (earnings per share) was $1.31, relative to $1.84 in the prior year quarter, and was primarily impacted by higher interest expense. Second quarter adjusted EPS would have been approximately one cent higher excluding foreign exchange impacts. The GAAP (generally accepted accounting principles) operating earnings were $75.3-million as compared with $103.9-million in the prior year quarter. The GAAP diluted net loss per share was 16 cents versus earnings of 67 cents in the prior year quarter primarily due to lower operating earnings and higher interest expense. The second quarter GAAP diluted net loss per share would have been approximately one cent lower excluding changes in foreign exchange rates.

For the six months ended June 30, 2023, revenues were $2.04-billion, down 4 per cent (3 per cent in local currency), adjusted EBITDA was $251.7-million, down 11 per cent (11 per cent in local currency) and adjusted EPS was $2.16, relative to $3.28 in the prior year period. Six months ended June 30, 2023, adjusted EPS would have been approximately one cent higher excluding foreign exchange impacts. The GAAP operating earnings were $97.4-million as compared with $144.7-million in the prior year period. The GAAP diluted net loss per share was 61 cents as compared with earnings per share of 26 cents in the prior year period. Six months ended June 30, 2023, GAAP diluted net loss per share would have been approximately one cent lower excluding changes in foreign exchange rates.

"During the second quarter, Colliers's recurring revenues continued to grow, accounting for 65 per cent of adjusted EBITDA. Having significant recurring revenues highlights our balanced and resilient business model, enables us to withstand market fluctuations and sets us apart from the others. While investment management and outsourcing and advisory experienced robust growth during the quarter with revenues up 58 per cent and 10 per cent, respectively, capital markets and, to a lesser extent, leasing declined compared to the prior year's record revenue levels. Lower transaction volumes were caused by rising interest rates, challenging debt availability and continued price discovery, which we expect will rebound once market conditions stabilize. Since most of our business is performing well, we are maintaining our financial outlook for the year," said Jay S. Hennick, chairman and chief executive officer of Colliers.

"In the quarter, Colliers continued to complete strategic investments across the board, adding engineering and project management companies in the U.S., Australia and New Zealand. Since 2015, Colliers has transformed into a highly diversified and global professional services company with significant recurring revenue streams and a proven record of creating value for shareholders," he concluded.

For the second quarter, consolidated revenues decreased 4 per cent on a local currency basis. Investment management and outsourcing and advisory generated robust growth. Capital markets and, to a lesser extent, leasing declined as expected relative to the prior year's record levels, consistent with the overall market. Consolidated internal revenues measured in local currencies declined 10 per cent versus the prior year quarter.

For the six months ended June 30, 2023, consolidated revenues decreased 3 per cent on a local currency basis. Investment management and outsourcing and advisory were up strongly while capital markets and, to a lesser extent, leasing declined in line with overall market conditions. Consolidated internal revenues measured in local currencies were down 10 per cent.

Segmented second quarter results

Revenues in the Americas region totalled $631.3-million down 15 per cent (14 per cent in local currency) versus $740.7-million in the comparative prior year quarter. The decline was attributable to lower capital markets activity and, to a lesser extent, leasing relative to a record prior year quarter. Outsourcing and advisory revenues were up, led by engineering and design and project management. Adjusted EBITDA was $69.6-million, down 31 per cent (31 per cent in local currency) relative to the prior year quarter, which was favourably impacted by an $11.7-million gain on the termination of a lease. GAAP operating earnings were $46.5-million, relative to $81.1-million in the prior year quarter.

Revenues in the EMEA (Europe, Middle East and Africa) region totalled $173.8-million, up 3 per cent (1 per cent in local currency) compared with $169.3-million in the prior year quarter on higher outsourcing and advisory revenues (including recent acquisitions), while capital markets and leasing declined, consistent with market conditions in the region. Adjusted EBITDA was $6.3-million compared with $14.4-million in the prior year quarter, attributable to the reduction in higher margin transactional revenues. The GAAP operating loss was $5.1-million compared with earnings of $4.2-million in the prior year quarter.

Revenues in the Asia Pacific region totalled $153.9-million compared with $142.6-million in the prior year quarter, up 8 per cent (14 per cent in local currency), with growth in leasing and outsourcing and advisory (including recent acquisitions) more than offsetting a modest decline in capital markets. Adjusted EBITDA was $23.0-million, up 18 per cent (24 per cent in local currency) primarily on changes in service mix. GAAP operating earnings were $19.6-million, versus $17.6-million in the prior year quarter.

Investment management revenues were $118.9-million compared with $75.1-million in the prior year quarter, up 58 per cent (58 per cent in local currency). Passthrough revenue (from historical carried interest) was nil versus $1.9-million in the prior year quarter. Excluding the impact of carried interest, revenue was up 62 per cent (62 per cent in local currency) driven by both acquisitions and management fee growth from increased assets under management (AUM). Adjusted EBITDA was $50.0-million, up 71 per cent (71 per cent in local currency) over the prior year quarter. GAAP operating earnings were $26.4-million in the quarter, versus $19.2-million in the prior year quarter. AUM (assets under management) were $99.0-billion as of June 30, 2023, compared with $97.7-billion as of Dec. 31, 2022.

Unallocated global corporate costs as reported in adjusted EBITDA were $1.9-million in the second quarter, relative to $3.4-million in the prior year quarter. The corporate GAAP operating loss for the quarter was $12.1-million relative to $18.2-million in the second quarter of 2022.

Outlook for 2023

The company is maintaining the outlook previously provided in May, 2023. Lower capital markets and leasing transaction volumes are expected to persist for the remainder of the year. 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 and advisory. 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 expense 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 displayed in the attached table.

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 Wednesday, Aug. 2, 2023, 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 at the company's website in the events section.

About Colliers International Group Inc.

Colliers is a leading diversified professional services and investment management company. With operations in 66 countries, the company's 18,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 28 years, its 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 $99-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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