Colliers Reports Fourth Quarter Results
Colliers International Group Inc. (CIGI) reported robust revenue growth in high-value recurring services for the fourth quarter and full year of 2023. Revenues for the fourth quarter were $1.24 billion, up 1% compared to the previous year, while adjusted EBITDA was $198.4 million, down 2%. For the full year, revenues were $4.34 billion, down 3%, and adjusted EBITDA was $595.0 million, down 6%. Adjusted EPS for the year was $5.35, a decrease from $6.99 in the prior year. The company attributes the revenue growth to its expansion into recurring revenue streams such as Investment Management and Engineering and Design, which now account for over 70% of its earnings. Colliers anticipates a return to higher transaction velocity in the latter half of 2024 as interest rates and credit conditions stabilize.
Positive
Robust revenue growth in high-value recurring services
Expansion into recurring revenue streams
Anticipation of higher transaction velocity in the latter half of 2024
Negative
Decline in revenues and adjusted EBITDA for the full year of 2023
Decrease in adjusted EPS from the previous year
The reported financial results of Colliers International Group Inc. reflect a mixed picture. While there is a modest increase in quarterly revenue, adjusted EBITDA and EPS show a decline. The mention of robust revenue growth in high-value recurring services is promising, as it indicates a shift towards more stable revenue streams. However, the decrease in adjusted EBITDA and EPS raises concerns about profitability and operational efficiency.
From an investor's perspective, the growth in recurring revenue services like Outsourcing & Advisory and Investment Management is a strong positive, as it suggests a strategic pivot that could lead to more predictable cash flows. On the other hand, the industry-wide declines in transaction volumes, particularly in Capital Markets and Leasing, are troubling, although the CEO's anticipation of a recovery in transaction velocity suggests a potential rebound.
The significant growth in Investment Management services, up 28% year-over-year, is particularly noteworthy. This may reflect a strategic realignment within the company to diversify its offerings and reduce reliance on more volatile revenue streams. The 70% of earnings coming from recurring services is a key metric for investors, as it could imply lower risk and greater valuation multiples.
The financial results of Colliers International Group Inc. indicate a strategic transformation with a focus on diversification. The emphasis on high-value recurring services is a trend that aligns with broader market shifts towards stable and predictable revenue models. The reported growth in Outsourcing & Advisory and Investment Management services suggests successful penetration into markets with long-term growth potential.
However, the overall decrease in revenue and profitability metrics such as adjusted EBITDA and EPS compared to the previous year could be indicative of broader market challenges or internal issues that need to be addressed. The company's performance in the context of the broader industry, particularly in light of the declines in transaction volumes, will be of interest to stakeholders looking to understand the competitive landscape and the company's positioning within it.
Investors will also be keen on the CEO's outlook for a return to higher transaction velocity in the latter half of 2024. This forward-looking statement suggests that Colliers is anticipating market conditions that could favor their business model, potentially leading to an uptick in their Capital Markets and Leasing revenues.
The financial data released by Colliers International Group Inc. provides insight into the company's economic resilience and strategic focus on recurring revenue streams. The slight increase in quarterly revenue amidst a full-year revenue decline suggests that the company may be experiencing cyclical pressures or market saturation. The drop in adjusted EBITDA and EPS points to potential margin compression or increased costs, which could be a concern for long-term profitability.
The company's diversification into services with recurring revenue is a prudent hedge against the cyclical nature of the real estate market. This strategy is reflective of a broader economic trend where companies seek to mitigate risk by evolving their business models towards more stable and predictable revenue streams.
The anticipation of a recovery in transaction volumes in the second half of 2024 indicates an expectation of an improving economic environment, which could be driven by factors such as stabilizing interest rates and credit conditions. The company's nearly 30-year track record suggests resilience, but investors will need to consider macroeconomic factors and industry-specific trends when assessing the company's future performance.
02/08/2024 - 07:00 AM
Robust revenue growth continues in high-value recurring services
Fourth quarter and full year operating highlights:
Three months ended Twelve months ended December 31 December 31 (in millions of US$, except EPS) 2023 2022 2023 2022 Revenues $ 1,235.2 $ 1,222.4 $ 4,335.1 $ 4,459.5 Adjusted EBITDA (note 1) 198.4 202.7 595.0 630.5 Adjusted EPS (note 2) 2.00 2.31 5.35 6.99 GAAP operating earnings 132.6 103.8 300.9 332.5 GAAP diluted net earnings per share 1.42 0.51 1.41 1.05
TORONTO, Feb. 08, 2024 (GLOBE NEWSWIRE) -- Colliers International Group Inc. (NASDAQ and TSX: CIGI) (“Colliers” or the “Company”) today announced operating and financial results for the fourth quarter and year ended December 31, 2023. All amounts are in US dollars.
For the seasonally strong fourth quarter ended December 31, 2023, revenues were $1.24 billion , up 1% (flat in local currency) and adjusted EBITDA (note 1) was $198.4 million , down 2% (down 3% in local currency) versus the prior year quarter. Adjusted EPS (note 2) was $2.00 , relative to $2.31 in the prior year quarter. Fourth quarter adjusted EPS would have been approximately $0.02 lower excluding foreign exchange impacts. GAAP operating earnings were $132.6 million as compared to $103.8 million in the prior year quarter. GAAP diluted net earnings per share were $1.42 versus $0.51 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 $0.02 lower excluding changes in foreign exchange rates.
For the full year ended December 31, 2023, revenues were $4.34 billion , down 3% (3% in local currency) and adjusted EBITDA (note 1) was $595.0 million , down 6% (6% in local currency) versus the prior year. Adjusted EPS (note 2) was $5.35 , relative to $6.99 in the prior year. Adjusted EPS for the year would have been approximately $0.02 lower excluding foreign exchange impacts. GAAP operating earnings were $300.9 million as compared to $332.5 million in the prior year. GAAP diluted net earnings per share were $1.41 compared to 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 $0.02 lower excluding changes in foreign exchange rates.
“In the fourth quarter, Colliers experienced robust revenue growth in its high-value recurring service lines. Outsourcing & Advisory and Investment Management delivered increases of 10% and 6% , respectively. Over the course of the year, these services achieved even greater growth, with respective increases of 11% and 28% ,” said Jay S. Hennick, Chairman & CEO 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% 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 Colliers (NASDAQ, TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 66 countries, our 19,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 29 years, our experienced leadership with significant inside ownership has delivered compound annual investment returns of approximately 20% for shareholders. With annual revenues of $4.3 billion and $98 billion of assets under management, Colliers maximizes the potential of property and real assets to accelerate the success of our clients, our investors and our people. Learn more at corporate.colliers.com , X @Colliers or LinkedIn .
Consolidated Revenues by Line of Service
Three months ended December 31 Change in US$ % Change in LC % Twelve months ended December 31 Change in US$ % Change in LC % (in thousands of US$) (LC = local currency) 2023 2022 2023 2022 Outsourcing & Advisory $ 580,375 $ 519,084 12% 10% $ 2,082,124 $ 1,872,328 11% 11% Investment Management (1) 129,134 121,307 6% 6% 487,457 378,881 29% 28% Leasing 318,236 335,724 -5% -6% 1,063,088 1,124,106 -5% -5% Capital Markets 207,423 246,290 -16% -16% 702,472 1,084,172 -35% -35% Total revenues $ 1,235,168 $ 1,222,405 1% 0% $ 4,335,141 $ 4,459,487 -3% -3% (1) Investment Management local currency revenues, excluding pass-through carried interest, were up 4% and 38% for the three and twelve months ended December 31, 2023, respectively.
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 & Advisory and Investment Management. Consolidated internal revenues measured in local currencies declined 2% (note 3) versus the prior year quarter.
For the year ended December 31, 2023, consolidated revenues decreased 3% 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 & Advisory. Consolidated internal revenues measured in local currencies were down 8% (note 3).
Segmented Fourth Quarter Results Revenues in the Americas region totalled $677.9 million , flat (down 1% 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 & Advisory revenues as well as the favourable impact of recent acquisitions. Adjusted EBITDA was $78.8 million , down 5% (5% 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 $52.0 million in the prior year quarter.
EMEA region revenues totalled $235.7 million , up 3% (down 2% in local currency) compared to $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 & Advisory. Adjusted EBITDA was $35.7 million , flat (down 5% in local currency) compared to $35.9 million in the prior year quarter. GAAP operating earnings were $28.9 million compared to $30.4 million in the prior year quarter.
Revenues in the Asia Pacific region totalled $192.4 million compared to $193.6 million in the prior year quarter, down 1% (flat in local currency), due to lower Capital Markets activity offset by recent acquisitions. Adjusted EBITDA was $32.3 million , down 6% (5% in local currency) primarily on changes in service mix. GAAP operating earnings were $26.0 million , versus $29.0 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% (6% in local currency). Passthrough 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% (4% in local currency) driven by management fee growth from increased assets under management (“AUM”). Adjusted EBITDA was $53.8 million , up 1% (1% in local currency) compared to 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 December 31, 2023 compared to $97.7 billion as of December 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 to $2.76 billion in the prior year, down 9% (9% 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 & Advisory revenues and the favourable impact of recent acquisitions. Adjusted EBITDA was $270.9 million , down 18% (18% 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 to $715.1 million in the prior year, up 2% (down 1% 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 & Advisory (including recent acquisitions). Adjusted EBITDA was $38.4 million , down 44% (50% 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 to $9.9 million in 2022.
The Asia Pacific region generated revenues of $610.3 million for the year, which were flat (up 4% in local currency) compared to $608.5 million in the prior year. Both Leasing and Outsourcing & 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% (4% 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 to $378.9 million in the prior year, up 29% (28% 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% (38% 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% (46% in local currency), relative to $146.0 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 $45.0 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 & 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 as follows:
Measure Actual 2023 Outlook for 2024 Revenue growth -3% +5% to +10% Adjusted EBITDA growth -6% +5% to +15% Adjusted EPS growth -23% +10% to +20%
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, February 8, 2024 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.
Forward-looking Statements This press release 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 consumer spending, particularly in regions where our business may be concentrated; commercial real estate and real asset values, vacancy rates and general conditions of financial liquidity for real estate transactions; trends in pricing and risk assumption for commercial real estate services; the effect of significant movements in capitalization rates across different asset types; a reduction by companies in their reliance on outsourcing for their commercial real estate needs, which would affect revenues and operating performance; competition in the markets served by the Company; the ability to attract new clients and to retain clients and renew related contracts; the ability to attract new capital commitments to our Investment Management funds and retain existing capital under management; the ability to retain and incentivize employees; increases in wage and benefit costs; the effects of changes in interest rates on the cost of borrowing; unexpected increases in operating costs, such as insurance, workers’ compensation and health care; changes in the frequency or severity of insurance incidents relative to historical experience; the effects of changes in foreign exchange rates in relation to the US dollar on the Company’s Canadian dollar, Euro, Australian dollar and UK pound sterling denominated revenues and expenses; the impact of pandemics on client demand for the Company’s services, the ability of the Company to deliver its services and the health and productivity of its employees; the impact of global climate change; the impact of political events including elections, referenda, trade policy changes, immigration policy changes, hostilities, war and terrorism on the Company’s operations; the ability to identify and make acquisitions at reasonable prices and successfully integrate acquired operations; the ability to execute on, and adapt to, information technology strategies and trends; the ability to comply with laws and regulations related to our global operations, including real estate investment management and mortgage banking licensure, labour and employment laws and regulations, as well as the anti-corruption laws and trade sanctions; and changes in government laws and policies at the federal, state/provincial or local level that may adversely impact the business.
Additional information and risk factors are identified in the Company’s other periodic filings with Canadian and US securities regulators (which factors are adopted herein and a copy of which can be obtained at www.sedar.com ). Forward looking statements contained in this press release 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.
Summary financial information is provided in this press release. This press release should be read in conjunction with the Company's consolidated financial statements and MD&A to be made available on SEDAR+ at www.sedarplus.ca .
This press release does not constitute an offer to sell or a solicitation of an offer to purchase an interest in any fund.
Notes Non-GAAP Measures 1. Reconciliation of net earnings to adjusted EBITDA
Adjusted EBITDA is defined as net earnings, adjusted to exclude: (i) income tax; (ii) other expense (income); (iii) interest expense; (iv) loss on disposal of operations; (v) depreciation and amortization, including amortization of mortgage servicing rights (“MSRs”); (vi) gains attributable to MSRs; (vii) acquisition-related items (including contingent acquisition consideration fair value adjustments, contingent acquisition consideration-related compensation expense and transaction costs); (viii) restructuring costs and (ix) stock-based compensation expense. We use Adjusted EBITDA to evaluate our own operating performance and our ability to service debt, as well as an integral part of our planning and reporting systems. Additionally, we use this measure in conjunction with discounted cash flow models to determine the Company’s overall enterprise valuation and to evaluate acquisition targets. We present Adjusted EBITDA as a supplemental measure because we believe such measure is useful to investors as a reasonable indicator of operating performance because of the low capital intensity of the Company’s service operations. We believe this measure is a financial metric used by many investors to compare companies, especially in the services industry. This measure is not a recognized measure of financial performance under GAAP in the United States, and should not be considered as a substitute for operating earnings, net earnings or cash flow from operating activities, as determined in accordance with GAAP. Our method of calculating adjusted EBITDA may differ from other issuers and accordingly, this measure may not be comparable to measures used by other issuers. A reconciliation of net earnings to adjusted EBITDA appears below.
Three months ended Twelve months ended December 31 December 31 (in thousands of US$) 2023 2022 2023 2022 Net earnings $ 81,221 $ 61,972 $ 144,691 $ 194,544 Income tax 29,974 24,976 68,086 95,010 Other income, including equity earnings from non-consolidated investments (912 ) (2,329 ) (5,919 ) (5,645 ) Interest expense, net 22,347 19,163 94,077 48,587 Operating earnings 132,630 103,782 300,935 332,496 Loss on disposal of operations - (524 ) 2,282 26,834 Depreciation and amortization 51,087 51,542 202,536 177,421 (Gains) losses attributable to MSRs (5,436 ) 6,829 (17,722 ) (17,385 ) Equity earnings from non-consolidated investments 707 1,856 5,078 6,677 Acquisition-related items (6,406 ) 26,406 47,096 77,144 Restructuring costs 15,435 5,023 27,701 5,485 Stock-based compensation expense 10,361 7,772 27,087 21,853 Adjusted EBITDA $ 198,378 $ 202,686 $ 594,993 $ 630,525
2. Reconciliation of net earnings and diluted net earnings per common share to adjusted net earnings and adjusted EPS
Adjusted EPS is defined as diluted net earnings per share as calculated under the “if-converted” method, adjusted for the effect, after income tax, of: (i) the non-controlling interest redemption increment; (ii) loss on disposal of operations; (iii) amortization expense related to intangible assets recognized in connection with acquisitions and MSRs; (iv) gains attributable to MSRs; (v) acquisition-related items; (vi) restructuring costs and (vii) stock-based compensation expense. We believe this measure is useful to investors because it provides a supplemental way to understand the underlying operating performance of the Company and enhances the comparability of operating results from period to period. Adjusted EPS is not a recognized measure of financial performance under GAAP, and should not be considered as a substitute for diluted net earnings per share from continuing operations, as determined in accordance with GAAP. Our method of calculating this non-GAAP measure may differ from other issuers and, accordingly, this measure may not be comparable to measures used by other issuers. A reconciliation of net earnings to adjusted net earnings and of diluted net earnings per share to adjusted EPS appears below.
Similar to GAAP diluted EPS, 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 and fully converted or redeemed by June 1, 2023. As such, the interest (net of tax) on the Convertible Notes is added to the numerator and the additional shares issuable on conversion of the Convertible Notes are added to the denominator of the earnings per share calculation to determine if an assumed conversion is more dilutive than no assumption of conversion. The “if-converted” method is used if the impact of the assumed conversion is dilutive. The “if-converted” method is dilutive for the adjusted EPS calculation for all periods where the Convertible Notes were outstanding.
Three months ended Twelve months ended December 31 December 31 (in thousands of US$) 2023 2022 2023 2022 Net earnings $ 81,221 $ 61,972 $ 144,691 $ 194,544 Non-controlling interest share of earnings (17,593 ) (16,222 ) (56,560 ) (53,919 ) Interest on Convertible Notes - 2,300 2,861 9,200 Loss on disposal of operations - (524 ) 2,282 26,834 Amortization of intangible assets 36,269 39,111 147,928 128,741 (Gains) losses attributable to MSRs (5,436 ) 6,829 (17,722 ) (17,385 ) Acquisition-related items (6,406 ) 26,406 47,096 77,144 Restructuring costs 15,435 5,023 27,701 5,485 Stock-based compensation expense 10,361 7,772 27,087 21,853 Income tax on adjustments (13,313 ) (19,835 ) (48,359 ) (42,486 ) Non-controlling interest on adjustments (5,534 ) (3,804 ) (22,667 ) (15,262 ) Adjusted net earnings $ 95,004 $ 109,028 $ 254,338 $ 334,749 Three months ended Twelve months ended December 31 December 31 (in US$) 2023 2022 2023 2022 Diluted net earnings per common share( 1) $ 1.42 $ 0.48 $ 1.38 $ 0.97 Interest on Convertible Notes, net of tax - 0.04 0.04 0.14 Non-controlling interest redemption increment (0.08 ) 0.49 0.47 1.97 Loss on disposal of operations - - 0.05 0.56 Amortization expense, net of tax 0.47 0.50 1.92 1.63 (Gains) losses attributable to MSRs, net of tax (0.07 ) 0.08 (0.21 ) (0.20 ) Acquisition-related items (0.14 ) 0.51 0.83 1.45 Restructuring costs, net of tax 0.24 0.08 0.43 0.08 Stock-based compensation expense, net of tax 0.16 0.13 0.44 0.39 Adjusted EPS $ 2.00 $ 2.31 $ 5.35 $ 6.99 Diluted weighted average shares for Adjusted EPS (thousands) 47,582 47,215 47,504 47,897 ( 1) Amounts shown reflect the "if-converted" method's dilutive impact on the adjusted EPS calculation.
3. Reconciliation of net cash flow from operations to free cash flow
Free cash flow is defined as net cash flow from operating activities plus contingent acquisition consideration paid, less purchases of fixed assets, plus cash collections on AR Facility deferred purchase price less distributions to non-controlling interests. We use free cash flow as a measure to evaluate and monitor operating performance as well as our ability to service debt, fund acquisitions and pay of dividends to shareholders. We present free cash flow as a supplemental measure because we believe this measure is a financial metric used by many investors to compare valuation and liquidity measures across companies, especially in the services industry. This measure is not a recognized measure of financial performance under GAAP in the United States, and should not be considered as a substitute for operating earnings, net earnings or cash flow from operating activities, as determined in accordance with GAAP. Our method of calculating free cash flow may differ from other issuers and accordingly, this measure may not be comparable to measures used by other issuers. A reconciliation of net cash flow from operating activities to free cash flow appears below.
Three months ended Twelve months ended December 31 December 31 (in thousands of US$) 2023 2022 2023 2022 Net cash provided by operating activities $ 157,103 $ 238,501 $ 165,661 $ 67,031 Contingent acquisition consideration paid 469 285 39,115 69,224 Purchase of fixed assets (24,113 ) (25,874 ) (84,524 ) (67,681 ) Cash collections on AR Facility deferred purchase price 33,106 (57,052 ) 124,313 288,004 Distributions paid to non-controlling interests (9,578 ) (8,193 ) (77,400 ) (62,926 ) Free cash flow $ 156,987 $ 147,667 $ 167,165 $ 293,652
4. Local currency revenue and adjusted EBITDA growth rate and internal revenue growth rate measures
Percentage revenue and adjusted EBITDA variances presented on a local currency basis are calculated by translating the current period results of our non-US dollar denominated operations to US dollars using the foreign currency exchange rates from the periods against which the current period results are being compared. Percentage revenue variances presented on an internal growth basis are calculated assuming no impact from acquired entities in the current and prior periods. Revenue from acquired entities, including any foreign exchange impacts, are treated as acquisition growth until the respective anniversaries of the acquisitions. We believe that these revenue growth rate methodologies provide a framework for assessing the Company’s performance and operations excluding the effects of foreign currency exchange rate fluctuations and acquisitions. Since these revenue growth rate measures are not calculated under GAAP, they may not be comparable to similar measures used by other issuers.
5. Assets under management
We use the term assets under management (“AUM”) as a measure of the scale of our Investment Management operations. AUM is defined as the gross market value of operating assets and the projected gross cost of development assets of the funds, partnerships and accounts to which we provide management and advisory services, including capital that such funds, partnerships and accounts have the right to call from investors pursuant to capital commitments. Our definition of AUM may differ from those used by other issuers and as such may not be directly comparable to similar measures used by other issuers.
6. Adjusted EBITDA from recurring revenue percentage
Adjusted EBITDA from recurring revenue percentage is computed on a trailing twelve-month basis and represents the proportion of adjusted EBITDA (note 1) that is derived from Outsourcing & Advisory and Investment Management service lines. Both these service lines represent medium to long-term duration revenue streams that are either contractual or repeatable in nature. Adjusted EBITDA for this purpose is calculated in the same manner as for our debt agreement covenant calculation purposes, incorporating the expected full year impact of business acquisitions and dispositions.
Colliers International Group Inc. Condensed Consolidated Statements of Earnings (in thousands of US$, except per share amounts) Three months ended Twelve months ended December 31 December 31 2023 2022 2023 2022 Revenues $ 1,235,168 $ 1,222,405 $ 4,335,141 $ 4,459,487 Cost of revenues 731,254 732,045 2,596,823 2,749,485 Selling, general and administrative expenses 326,603 309,154 1,185,469 1,096,107 Depreciation 14,818 12,431 54,608 48,680 Amortization of intangible assets 36,269 39,111 147,928 128,741 Acquisition-related items (1) (6,406 ) 26,406 47,096 77,144 Loss on disposal of operations - (524 ) 2,282 26,834 Operating earnings 132,630 103,782 300,935 332,496 Interest expense, net 22,347 19,163 94,077 48,587 Equity earnings from unconsolidated investments (707 ) (1,856 ) (5,078 ) (6,677 ) Other income (205 ) (473 ) (841 ) 1,032 Earnings before income tax 111,195 86,948 212,777 289,554 Income tax 29,974 24,976 68,086 95,010 Net earnings 81,221 61,972 144,691 194,544 Non-controlling interest share of earnings 17,593 16,222 56,560 53,919 Non-controlling interest redemption increment (3,805 ) 23,246 22,588 94,372 Net earnings attributable to Company $ 67,433 $ 22,504 $ 65,543 $ 46,253 Net earnings per common share Basic $ 1.42 $ 0.52 $ 1.43 $ 1.07 Diluted (2) $ 1.42 $ 0.51 $ 1.41 $ 1.05 Adjusted EPS (3) $ 2.00 $ 2.31 $ 5.35 $ 6.99 Weighted average common shares (thousands) Basic 47,333 42,968 45,680 43,409 Diluted 47,582 47,215 46,274 43,918
Notes to Condensed Consolidated Statements of Earnings (1) Acquisition-related items include contingent acquisition consideration fair value adjustments, contingent acquisition consideration-related compensation expense and transaction costs. (2) Diluted 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 and fully converted or redeemed by June 1, 2023. As such, the interest (net of tax) on the Convertible Notes is added to the numerator and the additional shares issuable on conversion of the Convertible Notes are added to the denominator of the earnings per share calculation to determine if an assumed conversion is more dilutive than no assumption of conversion. The “if-converted” method is used if the impact of the assumed conversion is dilutive. The “if-converted” method was anti-dilutive for the year ended December 31, 2022. (3) See definition and reconciliation above.
Colliers International Group Inc. Condensed Consolidated Balance Sheets (in thousands of US$) December 31, December 31, 2023 2022 Assets Cash and cash equivalents $ 181,134 $ 173,661 Restricted cash (1) 37,941 25,381 Accounts receivable and contract assets 726,764 669,803 Warehouse receivables (2) 177,104 29,623 Prepaids and other assets 306,829 269,605 Warehouse fund assets 44,492 45,353 Current assets 1,474,264 1,213,426 Other non-current assets 188,745 166,726 Warehouse fund assets 47,536 - Fixed assets 202,837 164,493 Operating lease right-of-use assets 390,565 341,623 Deferred tax assets, net 59,468 63,460 Goodwill and intangible assets 3,118,711 3,148,449 Total assets $ 5,482,126 $ 5,098,177 Liabilities and shareholders' equity Accounts payable and accrued liabilities $ 1,104,935 $ 1,128,754 Other current liabilities 75,764 100,840 Long-term debt - current 1,796 1,360 Warehouse credit facilities (2) 168,780 24,286 Operating lease liabilities - current 89,938 84,989 Liabilities related to warehouse fund assets - 1,353 Current liabilities 1,441,213 1,341,582 Long-term debt - non-current 1,500,843 1,437,739 Operating lease liabilities - non-current 375,454 322,496 Other liabilities 151,333 139,392 Deferred tax liabilities, net 43,191 57,754 Liabilities related to warehouse fund assets 47,536 - Convertible notes - 226,534 Redeemable non-controlling interests 1,072,066 1,079,306 Shareholders' equity 850,490 493,374 Total liabilities and equity $ 5,482,126 $ 5,098,177 Supplemental balance sheet information Total debt (3) $ 1,502,639 $ 1,439,099 Total debt, net of cash and cash equivalents (3) 1,321,505 1,265,438 Net debt / pro forma adjusted EBITDA ratio (4) 2.2 1.8
Notes to Condensed Consolidated Balance Sheets (1) Restricted cash consists primarily of cash amounts set aside to satisfy legal or contractual requirements arising in the normal course of business. (2) Warehouse receivables represent mortgage loans receivable, the majority of which are offset by borrowings under warehouse credit facilities which fund loans that financial institutions have committed to purchase. (3) Excluding warehouse credit facilities and convertible notes. (4) Net debt for financial leverage ratio excludes restricted cash, warehouse credit facilities and convertible notes, in accordance with debt agreements.
Colliers International Group Inc. Condensed Consolidated Statements of Cash Flows (in thousands of US$) Three months ended Twelve months ended December 31 December 31 2023 2022 2023 2022 Cash provided by (used in) Operating activities Net earnings $ 81,221 $ 61,972 $ 144,691 $ 194,544 Items not affecting cash: Depreciation and amortization 51,087 51,542 202,536 177,421 Loss on disposal of operations - (524 ) 2,282 26,834 Gains attributable to mortgage servicing rights (5,436 ) 6,829 (17,722 ) (17,385 ) Gains attributable to the fair value of loan premiums and origination fees (5,422 ) (1,764 ) (16,335 ) (16,582 ) Deferred income tax 10,522 (9,799 ) (9,924 ) (25,997 ) Other 17,374 32,909 112,450 115,951 149,346 141,165 417,978 454,786 Increase in accounts receivable, prepaid expenses and other assets (70,451 ) (52,907 ) (203,727 ) (469,062 ) Increase in accounts payable, accrued expenses and other liabilities 15,118 47,655 9,036 39,166 Increase (decrease) in accrued compensation 54,793 78,095 (70,395 ) (85,547 ) Contingent acquisition consideration paid (469 ) (285 ) (39,115 ) (69,224 ) Mortgage origination activities, net 6,633 4,722 20,667 25,639 Sales to AR Facility, net 2,133 20,056 31,217 171,273 Net cash provided by operating activities 157,103 238,501 165,661 67,031 Investing activities Acquisition of businesses, net of cash acquired 952 (413,208 ) (60,343 ) (1,007,297 ) Purchases of fixed assets (24,113 ) (25,874 ) (84,524 ) (67,681 ) Purchases of warehouse fund assets (73,039 ) (44,000 ) (122,604 ) (161,042 ) Proceeds from disposal of warehouse fund assets 24,258 89,073 74,627 137,578 Cash collections on AR Facility deferred purchase price 33,106 (57,052 ) 124,313 288,004 Other investing activities (17,656 ) (18,337 ) (65,452 ) (62,406 ) Net cash used in investing activities (56,492 ) (469,398 ) (133,983 ) (872,844 ) Financing activities Increase (decrease) in long-term debt, net (117,779 ) 254,000 92,046 929,041 Purchases of non-controlling interests, net (8,072 ) (189 ) (32,661 ) (31,622 ) Dividends paid to common shareholders - - (13,517 ) (13,100 ) Distributions paid to non-controlling interests (9,578 ) (8,193 ) (77,400 ) (62,926 ) Repurchases of Subordinate Voting Shares - (39,362 ) - (165,728 ) Other financing activities 15,981 3,617 23,726 (42,748 ) Net cash provided by (used in) financing activities (119,448 ) 209,873 (7,806 ) 612,917 Effect of exchange rate changes on cash, cash equivalents and restricted cash (679 ) 4,626 (3,839 ) (33,333 ) Net change in cash and cash equivalents and restricted cash (19,516 ) (16,398 ) 20,033 (226,229 ) Cash and cash equivalents and restricted cash, beginning of period 238,591 215,440 199,042 425,271 Cash and cash equivalents and restricted cash, end of period $ 219,075 $ 199,042 $ 219,075 $ 199,042
Colliers International Group Inc. Segmented Results (in thousands of US dollars) Asia Investment Americas EMEA Pacific Management Corporate Consolidated Three months ended December 31 2023 Revenues $ 677,854 $ 235,699 $ 192,379 $ 129,134 $ 102 $ 1,235,168 Adjusted EBITDA 78,841 35,747 32,341 53,825 (2,376 ) 198,378 Operating earnings (loss) 53,271 28,894 25,982 41,540 (17,057 ) 132,630 2022 Revenues $ 678,878 $ 228,346 $ 193,631 $ 121,286 $ 264 $ 1,222,405 Adjusted EBITDA 82,933 35,920 34,253 53,070 (3,490 ) 202,686 Operating earnings (loss) 52,015 30,364 29,022 (18,831 ) 11,212 103,782 Asia Investment Americas EMEA Pacific Management Corporate Consolidated Twelve months ended December 31 2023 Revenues $ 2,510,002 $ 726,900 $ 610,313 $ 487,457 $ 469 $ 4,335,141 Adjusted EBITDA 270,902 38,373 79,238 213,925 (7,445 ) 594,993 Operating earnings (loss) 174,613 5,483 62,709 103,139 (45,009 ) 300,935 2022 Revenues $ 2,756,345 $ 715,140 $ 608,460 $ 378,881 $ 661 $ 4,459,487 Adjusted EBITDA 332,347 68,501 85,092 145,955 (1,370 ) 630,525 Operating earnings (loss) (1) 254,375 9,891 72,256 37,055 (41,081 ) 332,496
Notes to Segmented Results
(1) Operating earnings (loss) include loss on disposal of certain operations, primarily in EMEA.
COMPANY CONTACTS: Jay S. Hennick Chairman & Chief Executive Officer
Chris McLernon Chief Executive Officer, Real Estate Services
Christian Mayer Chief Financial Officer (416) 960-9500
What were the revenues for Colliers International Group Inc. in the fourth quarter of 2023?
The revenues for the fourth quarter of 2023 were $1.24 billion.
What was the adjusted EBITDA for Colliers International Group Inc. in the fourth quarter of 2023?
The adjusted EBITDA for the fourth quarter of 2023 was $198.4 million.
What was the adjusted EPS for Colliers International Group Inc. for the full year of 2023?
The adjusted EPS for the full year of 2023 was $5.35.
What percentage of earnings come from recurring services for Colliers International Group Inc.?
More than 70% of earnings come from recurring services for Colliers International Group Inc.
What is the ticker symbol for Colliers International Group Inc.?
The ticker symbol for Colliers International Group Inc. is CIGI.