Colliers International : Second Quarter 2020 Financial Results
08/06/2020 | 12:59pm EST
Colliers International Group Inc.
Second Quarter 2020 Financial Results
August 6, 2020
Forward-Looking Statements
This presentation includes or may include forward-looking statements. Forward-looking statements include the Company's financial performance outlook and statements regarding goals, beliefs, strategies, objectives, plans or current expectations. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different from any future results, performance or achievements contemplated in the forward-looking statements. Such factors include: economic conditions, especially as they relate to commercial and consumer credit conditions and business spending; commercial real estate property values, vacancy rates and general conditions of financial liquidity for real estate transactions; the effects of changes in foreign exchange rates in relation to the US dollar on Canadian dollar, Australian dollar, UK pound sterling and Euro denominated revenues and expenses; competition in markets served by the Company; labor shortages or increases in commission, wage and benefit costs; impact of pandemics on client demand, ability to deliver services and ensure the health and productivity of employees; disruptions or security failures in information technology systems; and political conditions or events, including elections, referenda, changes to international trade and immigration policies and any outbreak or escalation of terrorism or hostilities.
Additional factors and explanatory information are identified in the Company's Annual Information Form for the year ended December 31, 2019 under the heading "Risk Factors" (which factors are adopted herein and a copy of which can be obtained at www.sedar.com) and other periodic filings with Canadian and US securities regulators. Forward looking statements contained in this presentation are made as of the date hereof and are subject to change. All forward-looking statements in this press release are qualified by these cautionary statements. Except as required by applicable law, Colliers undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Non-GAAP measures
This presentation makes reference to the non-GAAP measures Adjusted EBITDA and Adjusted EPS. Please refer to Appendix for reconciliations to GAAP measures.
Second Quarter 2020 Results
(US$ millions, except per share amounts)
Three months ended
Q2 2020
Q2 2019
%Change
June 30, 2020
USD
LC
(1)
Revenue
550.2
745.5
-26%
-25%
Adjusted EBITDA
60.0
87.3
-31%
-30%
Adjusted EBITDA Margin
10.9%
11.7%
Adjusted EPS
0.70
1.10
-36%
GAAP Operating Earnings
14.5
57.2
-75%
GAAP Operating Earnings Margin
2.6%
7.7%
GAAP EPS
-0.26
0.60
NM
Six months ended
YTD
YTD
% Change
June 30, 2020
2020
2019
USD
LC
(1)
Revenue
1,180.8
1,380.6
-14%
-13%
Adjusted EBITDA
114.4
130.9
-13%
-11%
Adjusted EBITDA Margin
9.7%
9.5%
Adjusted EPS
1.25
1.61
-22%
GAAP Operating Earnings
33.1
70.6
-53%
GAAP Operating Earnings Margin
2.8%
5.1%
GAAP EPS
-0.14
0.63
NM
Highlights
Resilience during pandemic
Majority of earnings now come from Investment Management and Outsourcing & Advisory segments - high value-add professional services that are recurring and contractual
Pandemic uncertainty in Leasing and Capital Markets impacted quarterly results
Diversified business model, strong balance sheet, entrepreneurial culture, and significant insider ownership
Other highlights
Completed a $230 million offering of convertible notes
Completed acquisition of Dougherty (Colliers Mortgage)
Subsequent to quarter end, completed the acquisition of Maser Consulting
Revenues down 16% in local currency on lower Leasing and Capital Markets
Outsourcing & Advisory revenues were up slightly in local currency, including incremental revenues from the recent Synergy acquisition
Revenue
Adjusted EBITDA and Margin
125.1
100.1
67.1
Outsourcing &
65.3
Advisory
12.3
14.2
29.0
Capital Markets
20.3
28.9
12.2%
11.4%
Leasing
14.5
Q2 2020
Q2 2019
Q2 2020
Q2 2019
USD
LC
Revenue Growth
-20%
-16%
GAAP Operating Earnings: Q2 2020
$5.1M at 5.1% margin; Q2 2019
$12.5M at 10.0% margin
8
Investment Management
(US$ millions)
Revenue decline attributable to a $4.3 million reduction in passthrough revenue from legacy carried interest
Lower adjusted EBITDA attributable to changes in the timing of certain European transaction fees
$35.7 billion of AUM (up 2% from $35.1 billion at March 31, 2020; up 18% from $30.3 billion at June 30, 2019)
Revenue
Adjusted EBITDA and Margin
46.9
41.4
17.419.2
41.9%
41.0%
Q2 2020
Q2 2019
Q2 2020
Q2 2019
USD
LC
Revenue Growth
-12%
-12%
GAAP Operating Earnings: Q2 2020
$10.6M at 25.7% margin; Q2 2019
$12.2M at 26.1% margin
9
Balance Sheet & Liquidity
(US$ millions)
Cash
Total Debt
Net Debt
Convertible Notes
Redeemable non-controlling interests
Shareholders' equity
Total capitalization
Net debt / pro forma adjusted
EBITDA
Capital Expenditures
Acquisition Spend (1)
June 30, 2020
December 31, 2019
June 30, 2019
$
147.2
$
115.0
$
102.1
627.2
611.4
692.4
$
480.0
$
496.4
$
590.3
223.5
0.0
0.0
375.1
359.2
338.4
499.0
517.3
428.8
$
1,577.6
$
1,372.9
$
1,357.5
1.5x
1.4x
1.7x
Six months ended
June 30, 2020
June 30, 2019
$
19.0
$
24.1
$
172.1
$
40.2
Highlights
Conservative financial profile with net debt / pro forma adjusted EBITDA leverage ratio of 1.5x at June 30, 2020
Debt agreements permit maximum leverage ratio of 3.5x
$608 million of unused credit under revolving credit facility maturing in April 2024
May 2020 issuance of Convertible Notes further strengthens balance sheet (considered equity for leverage ratio)
Capital expenditures expected at $40-$50 million for 2020
1 Includes business acquisitions, contingent acquisition consideration and purchase of non-controlling interests in subsidiaries.
10
Impact of COVID-19 Pandemic
Working assumption for full year 2020 (relative to 2019)
• Working assumption previously provided updated to reflect: (i) better than anticipated results for the second quarter across all service lines and regions; and (ii) the recently completed acquisitions of Colliers Mortgage and Maser Consulting
Updated with
Previous
Updated
Add acquisitions
acquisitions
Revenue
-15% to -25%
-15% to -25%
+5%
-10% to -20%
Adjusted EBITDA
-25% to -35%
-20% to -30%
+5%
-15% to -25%
• Transactional Leasing and Capital Markets revenues are expected to remain below 2019 levels, although the scale of decline should moderate in the third and fourth quarters.
• Outsourcing & Advisory and Investment Management are expected to remain relatively stable for the balance of the year with some variability depending on market conditions.
• Significant steps taken to adjust costs to expected revenues across all service lines, including reductions to support, administrative and leadership and related costs; May take further cost reduction measures in future quarters.
11
Appendix
Reconciliation of non-GAAP measures
Appendix
1
3
Reconciliation of net earnings to adjusted EBITDA
Three months ended
Six months ended
(US$ thousands)
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Net earnings
$
6,483
$
35,575
$
12,942
$
41,039
Income tax
2,127
13,187
7,326
14,402
Other income, net
(266)
179
(970)
(322)
Interest expense, net
6,179
8,257
13,763
15,476
Operating earnings
14,523
57,198
33,061
70,595
Depreciation and amortization
25,940
23,778
50,830
46,447
Gains attributable to MSRs
(509)
-
(509)
-
Equity income from non-consolidated entites
414
-
969
-
Acquisition-related items
3,784
5,263
6,534
9,898
Restructuring costs
13,839
275
19,307
314
Stock-based compensation expense
1,971
809
4,224
3,640
Adjusted EBITDA
$
59,962
$
87,323
$
114,416
$
130,894
13
Appendix
1
4
Reconciliation of net earnings and diluted net earnings per common share to adjusted net earnings and adjusted EPS
Three months ended
Six months ended
(US$ thousands)
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Net earnings
$
6,483
$
35,575
$
12,942
$
41,039
Non-controlling interest share of earnings
(4,265)
(6,586)
(7,642)
(7,831)
Interest on Convertible Notes
1,059
-
1,059
-
Amortization of intangible assets
17,089
15,238
33,101
29,958
Gains attributable to MSRs
(509)
-
(509)
-
Acquisition-related items
3,784
5,263
6,534
9,898
Restructuring costs
13,839
275
19,307
314
Stock-based compensation expense
1,971
809
4,224
3,640
Income tax on adjustments
(7,442)
(4,212)
(13,247)
(8,216)
Non-controlling interest on adjustments
(2,447)
(2,346)
(4,597)
(4,592)
Adjusted net earnings
$
29,562
$
44,016
$
51,172
$
64,210
Three months ended
Six months ended
(US$)
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Diluted net (loss) earnings per common share
$
(0.25)
$
0.60
$
(0.14)
$
0.63
Interest on Convertible Notes, net of tax
0.02
-
0.02
-
Non-controlling interest redemption increment
0.30
0.13
0.27
0.20
Amortization expense, net of tax
0.25
0.23
0.49
0.46
Gains attributable to MSRs, net of tax
(0.01)
-
(0.01)
-
Acquisition-related items
0.10
0.12
0.17
0.22
Restructuring costs, net of tax
0.24
-
0.35
0.01
Stock-based compensation expense, net of tax
0.05
0.02
0.10
0.09
Adjusted EPS
$
0.70
$
1.10
$
1.25
$
1.61
Diluted weighted average shares for Adjusted EPS
41,901
39,954
41,021
39,887
(thousands)
Adjusted EPS is calculated using the "if-converted" method of calculating earnings per share in relation to the Convertible Notes, which were issued on May 19, 2020.
Colliers International Group Inc. published this content on 06 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 August 2020 16:58:04 UTC
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