Mr. Jay Hennick reports

COLLIERS INTERNATIONAL REPORTS STRONG FOURTH QUARTER AND FULL YEAR RESULTS

Colliers International Group Inc. has released its fourth quarter and full-year operating and financial results for the year ended Dec. 31, 2018. All amounts are in U.S. dollars.

For the quarter ended Dec. 31, 2018, revenues were $889.9-million, a 16-per-cent increase (18 per cent in local currency) relative to the comparable prior-year period, adjusted EBITDA (research and development) was $133.2-million, up 39 per cent (39 per cent in local currency), and adjusted EPS (earnings per share) was $1.77, up 30 per cent versus the prior-year period. Fourth quarter adjusted EPS would have been approximately one cent higher excluding foreign exchange impacts. GAAP (generally accepted accounting principles) operating earnings were $98.1-million, relative to $78.9-million in the prior-year period. GAAP EPS was $1.33 per share, relative to 82 cents per share in the prior-year period, with the prior period impacted by a one-time charge of $13.3-million (34 cents per share) to remeasure U.S. deferred income tax assets at lower corporate tax rates upon the enactment of the Tax Cuts and Jobs Act in the United States. Fourth quarter GAAP EPS would have been approximately one cent higher excluding changes in foreign exchange rates.

For the year ended Dec. 31, 2018, revenues were $2.83-billion, a 16-per-cent increase (15 per cent in local currency) relative to the comparable prior-year period, adjusted EBITDA was $311.4-million, up 28 per cent (27 per cent in local currency), and adjusted EPS was $4.09, up 29 per cent versus the prior-year period. Full-year adjusted EPS would have been approximately three cents lower excluding foreign exchange impacts. GAAP operating earnings were $201.4-million, relative to $167.4-million in the prior-year period. GAAP EPS was $2.45 per share, compared with $1.31 per share in the prior year, with the prior year impacted by the remeasurement of U.S. deferred income tax assets as noted above. Full-year GAAP EPS would have been approximately three cents lower excluding changes in foreign exchange rates.

"Colliers delivered robust revenue and earnings growth for the fourth quarter to cap off an outstanding year, with each of our operating units contributing excellent results," said Jay S. Hennick, chairman and chief executive officer of Colliers International. "In 2018, we established our investment management platform with the acquisition of Harrison Street Real Estate Capital, which together with our existing European investment management business has $26.4-billion of assets under management as of Dec. 31, 2018. We also completed 11 other transactions in markets around the world to strengthen our core real estate services business. With 2018 now complete, we are well on track to achieving our ambitious five-year growth plan to double our size by 2020. Looking ahead, despite a number of ongoing geopolitical events, we are confident in our business prospects for 2019 with expectations of continued organic growth in most markets and the completion of strategic acquisitions to strengthen our highly respected brand and global platform that is recognized among the best in the industry," he concluded.

About Colliers International Group Inc.

Colliers International is a leading global real estate services and investment management company. With operations in 68 countries, its 14,000 enterprising people work collaboratively to provide expert advice and services to maximize the value of property for real estate occupiers, owners and investors. For more than 20 years, the company's experienced leadership team, owning more than 40 per cent of the company's equity, has delivered industry-leading investment returns for shareholders. In 2018, corporate revenues were $2.8-billion ($3.3-billion including affiliates), with more than $26-billion of assets under management.

Consolidated revenues

Consolidated revenues for the fourth quarter grew 18 per cent on a local currency basis, with strong contributions from lease brokerage and outsourcing and advisory services. Consolidated internal revenues measured in local currencies were up 7 per cent, led by strong lease brokerage activity in the Americas region.

For the year ended Dec. 31, 2018, consolidated revenues grew 14 per cent on a local currency basis, led by strong growth in lease brokerage and outsourcing and advisory services. Internal revenue growth in local currencies was 6 per cent led by lease brokerage in all three geographic regions, with the balance from acquisitions completed during the past year.

Segmented fourth quarter results

Americas region revenues totalled $474.5-million for the fourth quarter compared with $419.7-million in the prior-year quarter, up 14 per cent on a local currency basis. Internal growth in local currencies was 9 per cent and recent acquisitions contributed 5 per cent to growth. Internal growth was generated primarily from lease brokerage activity, led by Canada. Adjusted EBITDA was $45.6-million, versus $37.5-million the prior-year quarter, with margins positively impacted by operating leverage on existing operations. GAAP operating earnings were $34.3-million, relative to $31.2-million in the prior-year quarter.

EMEA (Europe, the Middle East and Africa) region revenues totalled $216.9-million for the fourth quarter compared with $181.1-million in the prior-year quarter, an increase of 21 per cent on a local currency basis. Acquisitions contributed 15-per-cent growth with internal growth at 6 per cent. All three service lines contributed to internal growth, particularly in Germany and France. Adjusted EBITDA was $48.9-million, up from $35.4-million, with margin expansion from improved results in France and the favourable impact of recent acquisitions. GAAP operating earnings were $38.9-million, up from $29.2-million in the fourth quarter of 2017.

Asia Pacific region revenues totalled $159.2-million for the fourth quarter compared with $158.3-million in the prior-year quarter, which represented a 5-per-cent increase on a local currency basis. Internal revenue growth was 3 per cent and recent acquisitions contributed 2 per cent. Adjusted EBITDA was $29.0-million, up from $26.2-million, with margin improvement in the Hong Kong and Singapore markets. GAAP operating earnings were $27.2-million, up from $24.3-million in the prior-year quarter.

The new investment management segment comprises Harrison Street which was acquired in July, 2018, and the company's existing European investment management business which was previously reported within the EMEA segment. Investment management revenues for the fourth quarter were $38.9-million and adjusted EBITDA was $17.7-million. GAAP operating earnings were $11.1-million relative to $1.7-million in the prior-year quarter and were impacted by significant acquisition-related intangible asset amortization. Assets under management increased to $26.4-billion as of Dec. 31, 2018, reflecting solid growth since the date of acquisition of Harrison Street.

Global corporate costs as reported in adjusted EBITDA were $8.1-million in the fourth quarter, relative to $4.8-million in the prior-year period, with the increase attributable to higher insurance costs as well as performance-based management incentive compensation accruals. The GAAP operating loss was $13.4-million, relative to $7.6-million in the fourth quarter of 2017.

Segmented full-year results

The Americas region's revenues totalled $1.6-billion for the full year compared with $1.41-billion in the prior year, which equated to a 13-per-cent increase on a local currency basis. Revenue growth comprised 8-per-cent internal growth and 5-per-cent growth from acquisitions. Internal growth for the year was led by lease brokerage. Adjusted EBITDA was $141.5-million, up 14 per cent from $123.7-million in the prior year. GAAP operating earnings were $105.5-million, versus $88.0-million in 2017.

EMEA region revenues totalled $623.2-million for the year compared with $514.9-million in the prior year, which represented a 17-per-cent increase on a local currency basis. Revenue growth comprised 14 per cent from acquisitions and 3-per-cent internal growth. Internal growth was concentrated in lease brokerage, primarily in Germany, with other service lines flat due to a strong prior-year comparative. Adjusted EBITDA was $88.5-million, versus $67.0-million in the prior year, an increase of 32 per cent, with margins favourably impacted by recent acquisitions. GAAP operating earnings were $53.9-million, up from $45.6-million in 2017.

Asia Pacific region revenues totalled $528.4-million for the year compared with $496.2-million in the prior year, which equated to an 8-per-cent increase on a local currency basis, with 5-per-cent internal growth and 3 per cent from recent acquisitions. Adjusted EBITDA was $73.4-million, up from $61.3-million in the prior year, an increase of 20 per cent, attributable to operating improvements in Asian markets and the turn to profitability of the company's new Japan operations which were founded in 2017. GAAP operating earnings were $66.2-million, up from $55.1-million in the prior year.

Investment management segment revenues totalled $76.0-million for the year, compared with $12.7-million in the prior year with the increase attributable to the acquisition of Harrison Street in July, 2018. Adjusted EBITDA was $26.1-million relative to $2.4-million in the prior year. GAAP operating earnings were $12.3-million relative to $2.3-million in the prior year.

Global corporate costs as reported in adjusted EBITDA were $18.1-million for the year, versus $11.6-million in the prior year, with the increase attributable to higher insurance costs and performance-based compensation accruals. The GAAP operating loss for the year was $36.5-million versus a loss of $23.5-million in 2017, impacted by higher acquisition-related costs and stock-based compensation in addition to the items noted above.

Conference call

Colliers will be holding a conference call on Wednesday, Feb. 13, 2019, 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.

                         CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS                                           
                           (in thousands, except per-share amounts)
                                         
                                                          Three months               12 months         
                                                         ended Dec. 31           ended Dec. 31     
                                                      2018        2017        2018        2017

Revenues                                          $889,883    $763,907  $2,825,427  $2,435,200
Cost of revenues                                   552,422     496,872   1,817,526   1,585,865
Selling, general and administrative expenses       208,195     173,315     705,798     614,040
Depreciation                                         7,894       7,099      30,573      26,334
Amortization of intangible assets                   15,534       6,511      48,157      26,658
Acquisition-related items                            7,710       1,260      21,975      14,927
Operating earnings                                  98,128      78,850     201,398     167,376
Interest expense, net                                7,093       2,188      20,845      11,895
Other income (loss)                                   (240)      1,868      (1,281)       (500)
Earnings before income tax                          91,275      74,794     181,834     155,981
Income tax                                          25,428      33,839      53,260      61,907
Net earnings                                        65,847      40,955     128,574      94,074
Non-controlling interest share of earnings          14,917       7,564      23,207      20,319
Non-controlling interest
redemption increment (loss)                         (1,730)      1,012       7,709      22,393
Net earnings attributable to company               $52,660     $32,379     $97,658     $51,362
Net earnings per common share
Basic                                                $1.34       $0.83       $2.49       $1.32
Diluted                                              $1.33       $0.82       $2.45       $1.31
Adjusted EPS                                         $1.77       $1.36       $4.09       $3.16

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