Mr. Jay Hennick reports

COLLIERS INTERNATIONAL REPORTS FIRST QUARTER RESULTS

Colliers International Group Inc. has released operating and financial results for its first quarter ended March 31, 2019. All amounts are in U.S. dollars.

Revenues for the seasonally slow first quarter were $635.1-million, a 15-per-cent increase (19 per cent in local currency) relative to the same quarter in the prior year. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $43.6-million, up 21 per cent (22 per cent in local currency) and adjusted EPS (earnings per share) was 51 cents, a 13-per-cent increase versus the prior-year quarter. First quarter adjusted EPS would have been approximately one cent higher excluding foreign exchange impacts. GAAP (generally accepted accounting principles) operating earnings were $13.4-million, relative to $15.7-million reported in the prior-year period, primarily because of significant incremental amortization of intangible assets related to the acquisition of Harrison Street Real Estate Capital LLC in July, 2018. GAAP diluted net earnings per common share were four cents for the quarter, versus 13 cents per share for the same quarter a year ago. First quarter GAAP EPS would have been approximately one cent higher excluding foreign exchange impacts.

"Colliers delivered a solid start to 2019. We remain confident in our outlook for 2019 and are pleased with the impact Harrison Street is having on the growth and diversification of our business," said Jay S. Hennick, chairman and chief executive officer of Colliers International. "Following a record year of acquisitions last year, we have completed three acquisitions so far this year, adding the market leader in Virginia with 340 professionals, our former affiliate and one of the top players in the vibrant growth market of Charlotte, N.C., as well as our former affiliate in Sweden, further strengthening our European platform. Finally, earlier this month, we extended our $1-billion revolving credit facility to 2024 and established a structured accounts receivable facility, diversifying our capital structure and reducing borrowing costs. With a strong balance sheet, disciplined growth strategy, proven track record and greater diversification, Colliers is well positioned to deliver another strong year of growth in 2019," 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, the company's 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 its equity, have 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.

Segmented first quarter results

Americas region revenues totalled $358.8-million for the first quarter compared with $328.5-million in the prior-year quarter, up 11 per cent on a local currency basis. Revenue growth comprised 7-per-cent contribution from recent acquisitions and 4-per-cent internal growth primarily in lease brokerage and outsourcing and advisory. Adjusted EBITDA was $26.2-million, relative to $26.5-million in the prior-year quarter, with the margin impacted by investments in recruiting relative to the prior year as well as revenue mix. GAAP operating earnings were $16.2-million, relative to $20.0-million in the prior-year quarter.

EMEA (Europe, the Middle East and Africa) region revenues totalled $120.5-million for the first quarter compared with $113.0-million in the prior-year quarter, up 15 per cent on a local currency basis, comprising 13-per-cent internal growth and 2 per cent from recent acquisitions. Outsourcing and advisory, especially project management, as well as sales brokerage, contributed significantly to internal revenue growth. Adjusted EBITDA was a loss of $2.5-million, versus break-even in the prior-year quarter, impacted by incremental planned investments in additional revenue producers. The GAAP operating loss was $10.1-million for the quarter, relative to a loss of $9.1-million in the prior-year quarter.

Asia Pacific region revenues totalled $112.3-million for the first quarter compared with $107.8-million in the prior-year quarter, up 11 per cent on a local currency basis. Revenue growth comprised 9-per-cent internal growth primarily in outsourcing and advisory, and 2-per-cent growth from recent acquisitions. Adjusted EBITDA was $10.9-million versus $11.2-million in the prior-year quarter, with the margin impacted by revenue mix favouring lower margin recurring services. GAAP operating earnings were $9.2-million for the first quarter, relative to $9.4-million in the prior-year quarter.

The investment management segment comprises Harrison Street (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 first quarter were $43.1-million, of which $11.2-million represented pass-through revenue from historical carried interest. The carried interest recognized was payable to former owners of Harrison Street and certain long-serving employees, affecting reported margin but having no impact on earnings. Adjusted EBITDA was $10.2-million. Operating earnings were $3.6-million in the quarter because of the significant increase in acquisition-related intangible asset amortization. Assets under management stood at $26.7-billion as of March 31, 2019.

Global corporate costs as reported in adjusted EBITDA were $1.3-million in the first quarter, relative to $1.1-million in the prior-year period. The corporate GAAP operating loss for the first quarter was $5.5-million, relative to a loss of $4.1-million in the prior-year period.

Conference call

Colliers will be holding a conference call on Friday, April 26, 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 on the events section.

Adoption of new lease accounting standard

On Jan. 1, 2019, the company adopted FASB Accounting Standard Codification Topic 842, Leases. ASC 842 requires the recognition of operating lease right-of-use assets and lease liabilities for virtually all premise and equipment leases on the consolidated balance sheet, with no impact on earnings. The company adopted ASC 842 effective Jan. 1, 2019, without adjusting comparative periods and recorded a $278.7-million right-of-use asset and corresponding $316.9-million lease liability as of March 31, 2019.

The recognition of the lease liability did not impact the company's financial covenants under its revolving credit facility or its senior notes, since the underlying debt agreements include provisions that nullify the impact of changes in accounting standards.

Structured accounts receivable facility

In April, 2019, the company entered into a structured accounts receivable facility with committed availability of $125-million (U.S.) to further diversify its capital structure and reduce borrowing costs. Proceeds from the AR facility will be used to repay outstanding indebtedness under the company's revolving credit facility. The company expects that the AR facility will be off-balance sheet, resulting in a reduction in accounts receivable and long-term debt.

             CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS                          
       (in thousands of U.S. dollars, except per-share amounts) 
                
                                                           Three months   
                                                         ended March 31  
                                                         2019      2018

Revenues                                             $635,123  $552,473
Cost of revenues                                      421,349   362,300
Selling, general and administrative expenses          173,073   156,317
Depreciation                                            7,948     7,270
Amortization of intangible assets                      14,720     8,588
Acquisition-related items                               4,635     2,253
Operating earnings                                     13,398    15,745
Interest expense, net                                   7,221     2,915
Other (income), net                                      (501)     (427)
Earnings before income tax                              6,678    13,257
Income tax expense                                      1,215     4,716
Net earnings                                            5,463     8,541
Non-controlling interest share of earnings              1,244       670
Non-controlling interest redemption increment           2,757     2,905
Net earnings attributable to company                    1,462     4,966
Net earnings per common share
Basic                                                    0.04      0.13
Diluted                                                  0.04      0.13
Adjusted earnings per share                              0.51      0.45

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