Mr. Jay Hennick reports
COLLIERS INTERNATIONAL REPORTS THIRD QUARTER RESULTS
Colliers International Group Inc. has released its operating and financial results for its third quarter ended Sept. 30, 2019. All amounts are in U.S. dollars.
Revenues for the third quarter were $736.9-million, a 3-per-cent increase (5 per cent in local currency) relative to the same quarter in the prior year, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $84.3-million, up 16 per cent (18 per cent in local currency) and adjusted EPS (earnings per share) was $1.04, a 13-per-cent increase versus the prior-year quarter. Third quarter adjusted EPS would have been approximately three cents higher excluding foreign exchange impacts. GAAP (generally accepted accounting principles) operating earnings were $48.2-million, relative to $42.0-million in the prior-year period. GAAP diluted net earnings per common share were 74 cents in the quarter, up 80 per cent versus 41 cents per share for the same quarter a year ago with the increase impacted by a reduction in non-controlling interest redemption increment stemming from translation of euro-denominated non-controlling interests. Third quarter GAAP EPS would have been approximately three cents higher excluding changes in foreign exchange rates.
For the nine months ended Sept. 30, 2019, revenues were $2.1-billion, a 9-per-cent increase (12 per cent in local currency) relative to the comparable prior-year period, adjusted EBITDA was $215.2-million, up 21 per cent (23 per cent in local currency) and adjusted EPS was $2.65, a 14-per-cent increase versus the prior-year period. Year-to-date adjusted EPS would have been approximately eight cents higher excluding foreign exchange impacts. GAAP operating earnings were $118.8-million, relative to $103.3-million in the prior-year period. GAAP diluted net earnings per common share for the nine-month period was $1.37, compared with $1.13 per share in the prior-year period. Year-to-date GAAP EPS would have been approximately eight cents higher excluding changes in foreign exchange rates.
"Colliers delivered solid operating results with higher margins for the third quarter. Year-to-date internal revenue growth was 4 per cent, in line with our full-year expectations. Given our performance over the first nine months and our current outlook, we expect to finish the year strongly," said Jay S. Hennick, chairman and chief executive officer of Colliers International. "Earlier this month, we completed the strategic acquisition of Synergy Property Development Services, the leader in project management services in India. Synergy will merge with our existing operations in India under the Colliers International brand and will take its place as one of the top players in one of the world's fastest-growing economies. So far this year we have completed four acquisitions which, together with internal growth, puts us on track to meet or exceed our five-year target to double our size by the end of 2020," he concluded.
About Colliers International Group Inc.
Colliers 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.
Consolidated revenues by line of service
Consolidated revenues for the third quarter grew 5 per cent on a local currency basis, with significant contributions from outsourcing and advisory and investment management. Consolidated internal revenue growth in local currencies was 2 per cent, led by outsourcing and advisory as well as investment management, offset by modest declines in lease brokerage against a strong prior-year quarter.
For the nine months ended Sept. 30, 2019, consolidated revenues grew 12 per cent on a local currency basis, with significant contributions from investment management and outsourcing and advisory. Year-to-date consolidated internal revenue growth in local currencies was 4 per cent, led by outsourcing and advisory and lease brokerage.
Segmented third quarter results
The Americas region's revenues totalled $424.3-million for the third quarter compared with $404.6-million in the prior-year quarter, up 5 per cent (5 per cent in local currency). Local currency revenue growth was 5 per cent all from acquisitions, with 8-per-cent internal growth in outsourcing and advisory offset by a decline in lease brokerage. In the comparative prior-year quarter, internal revenue growth was a very strong 9-per-cent balanced among service lines. Adjusted EBITDA was $38.8-million, versus $33.3-million in the prior-year quarter, with margins higher due to service mix and lower discretionary expenses. GAAP operating earnings were $26.5-million, versus $24.4-million in the prior-year period.
EMEA (Europe, Middle East and Africa) region revenues totalled $138.8-million for the third quarter, down 5 per cent (minus 1 per cent in local currency) compared with $146.3-million in the prior-year quarter, comprising a local currency internal decline of 3 per cent offset by 2-per-cent growth from acquisitions. Internal revenues were impacted by a decline in lease brokerage for the quarter mostly due to timing, with a significant number of transactions expected to be recorded in the fourth quarter. Adjusted EBITDA was $12.6-million, versus $17.3-million in the prior-year quarter, with the decline attributable to lower revenues and service mix. GAAP operating earnings were $5.1-million, versus $9.4-million in the prior-year quarter.
Asia Pacific region revenues totalled $133.5-million for the third quarter compared with $132.5-million in the prior-year quarter, up 1 per cent (5 per cent in local currency). Local currency internal revenue growth was 4 per cent, led by outsourcing and advisory, with 1-per-cent growth from acquisitions. Adjusted EBITDA was $18.6-million, relative to $17.8-million in the prior-year quarter. GAAP operating earnings were $17.2-million, versus $16.2-million in the prior-year quarter.
Investment management revenues for the third quarter were $39.9-million compared with $31.8-million in the prior-year quarter, up 25 per cent. Local currency revenue growth of 26 per cent was all internally generated and reflected incremental management fees from new capital commitments completed year to date. Pass-through revenue from historical carried interest represented $500,000 for the third quarter versus $2.1-million in the prior-year quarter. Adjusted EBITDA was $15.9-million relative to $9.6-million in the prior-year quarter. Operating earnings, which are impacted by acquisition-related intangible asset amortization, were $9.3-million in the quarter, versus $2.4-million in the prior-year quarter. Assets under management stood at $30.6-billion as of Sept. 30, 2019, up 18 per cent from $25.9-billion in the third quarter of 2018.
Unallocated global corporate costs as reported in adjusted EBITDA were $1.7-million in the third quarter, relative to $5.3-million in the prior-year period. The corporate GAAP operating loss for the third quarter was $10.0-million, relative to $10.4-million in the prior period.
Colliers will be holding a conference call on Tuesday, Oct. 29, 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.
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 $261.3-million right-of-use asset and corresponding $294.6-million lease liability as of Sept. 30, 2019.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands of U.S. dollars, except per-share amounts)
Three months Nine months
ended Sept. 30 ended Sept. 30
2019 2018 2019 2018
Revenues $736,883 $715,721 $2,117,523 $1,935,544
Cost of revenues 477,365 472,079 1,382,933 1,265,104
Selling, general and administrative expenses 179,640 172,254 527,773 497,601
Depreciation 7,957 7,906 24,446 22,679
Amortization of intangible assets 14,878 15,255 44,835 32,624
Acquisition-related items 8,867 6,271 18,765 14,265
Operating earnings 48,176 41,956 118,771 103,271
Interest expense, net 7,298 6,896 22,775 13,753
Other income (loss) (663) (581) (985) (1,041)
Earnings before income tax 41,541 35,641 96,981 90,559
Income tax expense 12,868 10,257 27,270 27,832
Net earnings 28,673 25,384 69,711 62,727
Non-controlling interest share of earnings 6,069 4,073 13,900 8,290
redemption increment (loss) (7,043) 5,125 919 9,439
Net earnings attributable to company 29,647 16,186 54,892 44,998
Net earnings per common share
Basic 0.75 0.41 1.39 1.15
Diluted 0.74 0.41 1.37 1.13
Adjusted earnings per share 1.04 0.92 2.65 2.32
We seek Safe Harbor.
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