Mr. Jay Hennick reports

COLLIERS REPORTS FOURTH QUARTER RESULTS

Colliers International Group Inc. has released its operating and financial results for the fourth quarter and year ended Dec. 31, 2023. All amounts are in United States dollars.

For the seasonally strong fourth quarter ended Dec. 31, 2023, revenues were $1.24-billion, up 1 per cent (flat in local currency) and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $198.4-million, down 2 per cent (down 3 per cent in local currency) versus the prior-year quarter. Adjusted EPS (earnings per share) was $2.00, relative to $2.31 in the prior-year quarter. Fourth-quarter adjusted EPS would have been approximately two cents lower excluding foreign exchange impacts. GAAP (generally accepted accounting principles) operating earnings were $132.6-million as compared with $103.8-million in the prior-year quarter. GAAP diluted net earnings per share were $1.42 versus 51 cents in the prior-year quarter on a reduction in acquisition-related costs and lower non-controlling interest. The fourth-quarter GAAP diluted net earnings per share would have been approximately two cents lower excluding changes in foreign exchange rates.

For the full year ended Dec. 31, 2023, revenues were $4.34-billion, down 3 per cent (3 per cent in local currency) and adjusted EBITDA was $595-million, down 6 per cent (6 per cent in local currency) versus the prior year. Adjusted EPS was $5.35, relative to $6.99 in the prior year. Adjusted EPS for the year would have been approximately two cents lower excluding foreign exchange impacts. GAAP operating earnings were $300.9-million as compared with $332.5-million in the prior year. GAAP diluted net earnings per share were $1.41 compared with earnings per share of $1.05 in the prior year, with the prior year impacted by a loss on disposal of certain operations, including Russia. The 2023 GAAP diluted net earnings per share would have been approximately two cents lower excluding changes in foreign exchange rates.

"In the fourth quarter, Colliers experienced robust revenue growth in its high-value recurring service lines. Outsourcing and advisory, and investment management delivered increases of 10 per cent and 6 per cent, respectively. Over the course of the year, these services achieved even greater growth, with respective increases of 11 per cent and 28 per cent," said Jay S. Hennick, chairman and chief executive officer of Colliers.

"Colliers has strategically transformed into a highly diversified professional services company by expanding its operations to include additional recurring revenue streams such as investment management, and engineering and design. Today, more than 70 per cent of our earnings come from recurring services, which provide our business greater stability and predictability, setting us apart from our competitors.

"Throughout the year, we observed industry-wide declines in transaction volumes, which had an impact on our capital markets and, to a lesser extent, leasing revenues. However, we anticipate a return to higher transaction velocity in the latter-half of 2024 as interest rates and credit conditions stabilize.

"With our nearly 30-year track record of creating substantial shareholder value, coupled with the expectation of increased transactional revenue later this year and a robust pipeline of new opportunities, we are more excited about the future than ever," he concluded.

About Colliers International Group Inc.

Colliers is a leading diversified professional services and investment management company. With operations in 66 countries, its 19,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 28 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 $4.3-billion and $98-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.

For the fourth quarter, consolidated revenues were flat on a local-currency basis. The market-driven transaction slowdown in capital markets and, to a lesser extent, leasing was offset by solid growth in outsourcing and advisory, and investment management. Consolidated internal revenues measured in local currencies declined 2 per cent versus the prior-year quarter.

For the year ended Dec. 31, 2023, consolidated revenues decreased 3 per cent on a local-currency basis on lower capital markets and, to a lesser extent, leasing activity, partly offset by strong growth in investment management, and outsourcing and advisory. Consolidated internal revenues measured in local currencies were down 8 per cent.

Segmented fourth quarter results

Revenues in the Americas region totalled $677.9-million, flat (down 1 per cent in local currency) versus $678.9-million in the prior-year quarter. The decline was driven by lower capital markets and leasing activity, partly offset by higher outsourcing and advisory revenues, as well as the favourable impact of recent acquisitions. Adjusted EBITDA was $78.8-million, down 5 per cent (5 per cent in local currency) relative to the prior-year quarter, due to declines in higher-margin transactional revenues. GAAP operating earnings were $53.3-million, relative to $52-million in the prior-year quarter.

EMEA (Europe, the Middle East and Africa) region revenues totalled $235.7-million, up 3 per cent (down 2 per cent in local currency) compared with $228.3-million in the prior-year quarter, attributable to lower capital markets activity, particularly in Germany and the Nordics, partly offset by growth in outsourcing and advisory. Adjusted EBITDA was $35.7-million, flat (down 5 per cent in local currency) compared with $35.9-million in the prior-year quarter. GAAP operating earnings were $28.9-million compared with $30.4-million in the prior-year quarter.

Revenues in the Asia Pacific region totalled $192.4-million compared with $193.6-million in the prior-year quarter, down 1 per cent (flat in local currency), due to lower capital markets activity offset by recent acquisitions. Adjusted EBITDA was $32.3-million, down 6 per cent (5 per cent in local currency) primarily on changes in service mix. GAAP operating earnings were $26.0-million, versus $29-million in the prior-year quarter.

Investment management revenues were $129.1-million relative to $121.3-million in the prior-year quarter, up 6 per cent (6 per cent in local currency). Pass-through revenues (from historical carried interest) were $6.2-million versus $3.6-million in the prior-year quarter. Excluding the impact of carried interest, revenue was up 5 per cent (4 per cent in local currency), driven by management fee growth from increased assets under management (AUM). Adjusted EBITDA was $53.8-million, up 1 per cent (1 per cent in local currency) compared with the prior-year quarter. GAAP operating earnings were $41.5-million in the quarter, versus a GAAP operating loss of $18.8-million in the prior-year quarter, which was impacted by contingent acquisition consideration expense related to recent acquisitions. AUM was $98.2-billion as of Dec. 31, 2023, compared with $97.7-billion as of Dec. 31, 2022.

Unallocated global corporate costs as reported in adjusted EBITDA were $2.4-million in the fourth quarter, relative to $3.5-million in the prior-year quarter. The corporate GAAP operating loss for the quarter was $17.1-million, versus earnings of $11.2-million in the fourth quarter of 2022.

Segmented full-year results

Revenues in the Americas region totalled $2.51-billion for the year compared with $2.76-billion in the prior year, down 9 per cent (9 per cent in local currency). The revenue decline was largely driven by market conditions in capital markets and, to a lesser extent, leasing. The decline was partly offset by internal growth in outsourcing and advisory revenues, and the favourable impact of recent acquisitions. Adjusted EBITDA was $270.9-million, down 18 per cent (18 per cent in local currency) from $332.3-million in the prior year, impacted by (i) changes in service mix and (ii) an $11.4-million gain on the termination of a lease which favourably impacted the prior year. GAAP operating earnings were $174.6-million, versus $254.4-million in 2022.

EMEA region revenues were $726.9-million for the full year compared with $715.1-million in the prior year, up 2 per cent (down 1 per cent in local currency). Local currency revenue mix shifted significantly, with capital markets and leasing lower due to difficult macroeconomic conditions, almost fully offset by growth in outsourcing and advisory (including recent acquisitions). Adjusted EBITDA was $38.4-million, down 44 per cent (50 per cent in local currency) versus $68.5-million in the prior year on significantly lower higher-margin capital markets revenues. GAAP operating earnings were $5.5-million as compared with $9.9-million in 2022.

The Asia Pacific region generated revenues of $610.3-million for the year, which were flat (up 4 per cent in local currency) compared with $608.5-million in the prior year. Both leasing, and outsourcing and advisory revenues (including recent acquisitions) were up, partly offset by a continued decline in capital markets activity, consistent with the market conditions in the region. Adjusted EBITDA was $79.2-million, down 7 per cent (4 per cent in local currency) versus $85.1-million in the prior year. GAAP operating earnings were $62.7-million, versus $72.3-million in the prior year.

Investment management revenues were $487.5-million compared with $378.9-million in the prior year, up 29 per cent (28 per cent in local currency). Pass-through revenue from historical carried interest was $6.8-million in the current year, versus $30.3-million in the prior year. Excluding the impact of pass-through revenue, revenues were up 38 per cent (38 per cent in local currency) and were positively impacted by (i) acquisitions and (ii) fundraising across all investment strategies, which led to increased management fees. Adjusted EBITDA was $213.9-million, up 47 per cent (46 per cent in local currency), relative to $146-million in the prior year. GAAP operating earnings were $103.1-million versus $37.1-million in 2022.

Unallocated global corporate costs as reported in adjusted EBITDA were $7.4-million in 2023, relative to $1.4-million in the prior year, with the difference primarily attributable to foreign exchange gains in the prior year. The corporate GAAP operating loss was $45-million, relative to $41.1-million in 2022.

Outlook for 2024

For 2024, the company expects capital markets and leasing conditions to remain challenging in the first half of the year, followed by year-over-year growth in the second half, with market sentiment improving, and interest rates and credit conditions stabilizing. Outsourcing and advisory revenue growth is expected to remain resilient. Investment management revenues are expected to grow in line with fundraising, which is expected to improve relative to 2023.

The outlook for 2024 is shown in the associated 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, geopolitical, health, social and related factors. Continued interest rate volatility and/or lack of credit availability for commercial real estate transactions could materially impact the outlook.

Conference call

Colliers will be holding a conference call on Thursday, Feb. 8, 2024, at 11 a.m. ET 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.

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