Q4 2019 Earnings Call
To advise the discussion scheduled to take place today may contain forward looking statements that involve known and unknown risks and uncertainties.
Actual results may be materially different from any future results performance or achievements contemplated in the forward looking statements I.
Additional information concerning factors that could cause actual results to materially differ from those in the forward looking statements is contained in the company's annual information form as filed with the Canadian Securities administrators and in the company's annual report on form 40 F. As filed with the U.S. Securities and Exchange Commission.
As a reminder, today's call is being recorded today Wednesday February 12, 2020, and at this time for opening remarks, and introductions I would like to turn the call over it to the global Chief Executive Officer, and Chairman Mr. Jay Hennick. Please go ahead Sir.
Thank you.
Operator, good morning, and thanks for joining us as the operator mentioned on Jay Hennick, Chairman and Chief Executive Officer Company with me today, as John Fredrickson, Chief Operating Officer, and Christian Mayer Chief Financial Officer.
Before we begin I'd like to congratulate both John and Christian on their recent appointment, they're both well deserved and they demonstrate once again the depth of our leadership team. So congratulations guys.
As always this conference call is being webcast and available in the Investor Relations section of our website. A presentation deck is also available there to accompany todays call.
Earlier today, and Colliers announced another solid year revenue and earnings growth when strong results across each of our service segments.
For the corner revenues were 928 million up 5% in local currency adjusted EBITDA was 144 million up 10% and adjusted earnings per share came in at $2.01 up 14% against a very strong fourth quarter last year.
For the full year revenues top 3 billion milestone for the first time.
10% over the prior year adjusted EBITDA was 360 million up 18% and adjusted earnings per share came in at $4.67 per share up 14 cents.
And a few minutes Christian will have more to say about our financial results and John will offer his comments on our operating performance after which we'll take some questions.
Last year, we completed a total of four acquisitions, including the strategically important acquisition of synergy project management the market leader in India, one of the fastest growing economies in the world.
This acquisition, we welcomed an exceptional team of professionals with deep institutional relationships that we expect to leverage significantly as we expand our operations in this important and growing market.
During the fourth quarter, we also announced an agreement to acquire Doherty financial leading debt finance and loan servicing platform in the U.S. The transaction is expected to close in the second quarter.
And then in January we acquired the our former affiliate in Austin, Texas, adding another important market to where us business.
Boston is one of the fastest growing markets in the U.S. and as always we expect to be able to accelerate its growth as a company owned operation.
As we enter the year fifth year and final year of our growth plan, we are well on track to meet or exceed our goal of doubling the size of the business by the end of 2020.
When we initially established this plan five years ago. Many thought it was ambitious in my view growth plans always should be ambitious at colliers, we target to provide us with a roadmap for the future to rally our troops around and to provide milestones again.
Against which we could measure our success.
We're currently working on our next five year plan, which we hope to announce this coming fall.
I have little doubt that our 2025 plan, our 2025 growth plan I don't know, we're going to call. It just yet we'll be as ambitious as the last one.
Going forward, we will continue to pursue internal growth as we have in the past and as you have seen quietly. We have also been setting our sights on new and related growth engines that will strengthen our overall business for the future.
One example of this strategy in action as the acquisition two years ago, Harrison Street, which established colliers as an important player in the real estate investment management business, primarily alternative investments.
Another example will be the acquisition of Dougherty <unk> company that provides commercial mortgage banking debt financing at mortgage servicing.
Both open vast new opportunities for growth and both will grow faster by being part of colliers than they could have on their own.
And let's not forget something else.
Both also bring more recurring and contractual revenue streams to our platform changing the composition and the fundamentals of our company for the future.
Last year outsourcing advisory and investment management segment of our business represented about 44% of our overall revenues up from 41% the prior year.
As we continue to grow our stable revenue streams colliers is slowly evolving into a different kind of professional services company.
This year, we expect revenues from outsourcing advisory and investment management to approach 50 per cent for the first time.
With a higher percentage of stable revenue streams that colliers business model is much stronger and more resilient than ever.
Our shareholders know that creating value was always being at the forefront of our efforts that's because our leadership owns more than 40% of the equity in our company.
Our exceeding any of our publicly traded competitors.
Over the last 25 years, we've delivered compound annual returns in share price of almost 20%.
That record of performance is impressive by any standard and speaks volumes about our ability to continue to maximize the potential of our business in the future.
When you consider are well known global brand highly diversified global platform and more stable revenue streams that than at any time in the past.
And you couple that with the massive growth opportunities, we have the significant free cash flow, we generate not to mention the proven track record I just spoke of it is clear to me that colliers is significantly undervalued.
Especially when you compare it to that the attributes of other public companies, but of course leave all of that to you to figure road for yourselves.
There are remarkably few companies out there that have the quality and growth potential of a company like colliers.
With that said and looking forward to the company the coming year.
Provided we have stable.
Relatively stable market and you geopolitical conditions, we remain confident that we will deliver again solid revenue and earnings growth in 2020 with that let me turn things over to Christian for his comments Christian.
Thank you Jay.
As announced earlier today.
Colors reported solid fourth quarter and full year financial results My comments will fall the flow of the slides posted on the Investor Relations section of Colliers Dot com to accompany this call.
Please note that my comments reference non-GAAP measures such as adjusted EBITDA and adjusted EPS, both of which are defined in our press release issued today as well as the accompanying slide presentation.
The adjustments are composed primarily of noncash charges that we view largely as unrelated to our operating results.
All references to revenue growth are calculated based on local currency.
Fourth quarter revenues were 928 million up 5% over the prior year with growth led by outsourcing advisory and investment management.
Consolidated adjusted EBITDA was 144 million for Q4, compared to 133 million with our margin at 15.5% versus 15% and the prior year quarter.
Margin growth was led by the Americas and Asia Pac regions as I will discuss in a moment.
Quarterly revenues in the Americas totaled 486 million up 2% with internally generated revenues down slightly.
America's outsourcing and advisory revenues were up 15% continuing robust growth in each of project management property management and valuations.
Sales brokerage revenues were down 6% for the quarter relative to a very strong prior year quarter.
Lease brokerage revenue was down 1% also against a strong prior year quarter.
Adjusted EBITDA was 50 million up 10% versus last year with a 10.3% margin up 70 basis points compared to last year, primarily due to lower costs and operating leverage.
In the EMEA region Q4 revenues for 226 million up 6% almost entirely from internal growth.
Outsourcing and advisory revenues were down 8% impacted by significantly lower project management revenues and our French workplace solutions business.
Sales brokerage revenues, however were up 18% with significant contributions from Germany, the Netherlands in Spain.
Lease brokerage revenues for likewise up 18% aided in part by the closing of transactions that were deferred from Q3 as we indicated on our Q3 conference call.
Adjusted EBITDA for the region was 51 million compared to 40 149 billion last year.
22%, 0.7% margin up 10 basis points from last year.
Asia Pacific Region revenues were 172 million up 11% with 6% internal growth and the balance from the recent acquisition of synergy leading project management firm in India.
Outsourcing and advisory revenues were up strongly at 18% sales brokerage revenues were up 3% and lease brokerage revenues were up 9%.
Adjusted EBITDA was 32 million compared to 29 billion last year with margins at 18.9%.
70 basis points due to operating leverage.
And our investment management operations revenues were 45 million in Q4 up 15% off from internal sources.
Revenue growth reflected incremental management fees from new capital commitments and all FID products.
Assets under management said 32.9 billion as of December 30, Onest 2019.
Up 25% from one year ago adjusted EBITDA in the quarter was 17 million versus 18 million in the comparative period.
Impacted by investments to establish new fund product in both Europe and the use in 2020 as well as timing of transaction fee revenue in our legacy European operation.
Our net debt addition was 496 million as of December 30, Onest 2019, compared to 545 million one year ago.
During the fourth quarter, our debt decreased 94 million as a result from an investment Im sorry, our debt increased 94 million as a result and investment in real estate assets to see the new fund in Europe, We expect to transfer these assets off our balance sheet without gain or loss during the second quarter of 2020.
Our financial leverage expressed in terms of net debt to EBITDA was 1.4 times for the quarter down from 1.6 times reported one year ago.
The reduction in leverage is attributable to debt repayment from operating cash flow as both the proceeds from our accounts receivable facility completed earlier in the year.
Offset by the temporary increase in debt related to the real estate assets noted above.
In terms of financial capacity with cash on had committed availability under our revolving credit facility, we had more than $700 million liquidity at year end and amount sufficient to fund operations capital investments and future acquisitions.
In terms of our 2020 outlook, we expect low to mid single digit internal revenue growth in local currency combined with growth from recent acquisitions for total revenue growth in the high single digit percentage range.
We anticipate a full year adjusted EBITDA margin improvement of 50 to 80 basis points compared to 2019, including operating leverage and the favorable impact of the acquisition of Dougherty financial which generates higher margins than our consolidated average.
We expect mid teens percentage growth in adjusted EPS when compared to 2019.
This excludes the impact of any future acquisitions completed between now and the ended the year.
Finally during 2020, we expect to to make incremental investments in our global capital markets and occupier services businesses to further expand these important revenue streams.
These costs are expected to be in the 12 million range and will be reported on separately going forward.
John will discuss our capital markets and occupier services strategies in more detail shortly.
That concludes my prepared remarks, I'd now like to pass the call over to John.
Thank you Christian.
As announced a couple of weeks ago I stepped into a newly created a rule as global Chief operating officer.
In this role I will provide executive oversight and leadership the global level for a number of growth initiatives, including strengthening our occupier services corporate solutions and capital markets businesses with a particular focus on driving further internal growth greater collaboration among reestablish teams.
Across the business globally, while also providing oversight for a few key functional business support areas.
You need to assist with Colliers investor debt capital relations.
I'd like to share. Some recent notable highlights from our occupier services and capital markets initiatives as well as briefly outline some of our priorities and supporting future growth in these important areas.
Later in the third quarter of 2019, we appointed Scott Nelson.
Ill global Occupier services and rolled out a new global operating model for occupier services and corporate solutions businesses.
Accelerate growth.
With 10 years of experience, leading our us occupier services business deep industry knowledge, Scott was the natural choice lead our global initiatives.
We are already achieving significant success, having added a renewed 58 client mandates in 2019, mostly in the back half of the year, including new major multimarket clients, Nestle Alcon and I WG.
The latter being the most established flexible workplace provider globally.
Just to name a few.
Setting us up well for increased activity in 2020.
We also released the next Gen version of Colliers 360, and added flexible work place consulting as a global offerings.
With our unique call. Your 360 technology offerings, we continue to evolve the platform has the most agile can customize double portfolio analytics and dashboard technology in the industry.
With more than 600 multimarket clients, we have an established well established occupier services business with an exceptional regional leaders in teams yet for the very early stages of developing this into a much more robust global business.
In the fourth quarter of 2019, we also initiated a plan to accelerate the growth Colliers capital markets globally, and the success of more than 1000 professionals focused on driving exceptional outcomes for our clients wherever they choose to do business.
Our goal is simple drive more cross border collaboration leveraging our local knowledge and expertise across our global platform.
The number of clients we serve.
Out of business, we deal with them.
The fourth quarter and size of capital markets transactions was larger than ever, particularly in Europe. As we made further inroads with institutional clients.
Despite the impact of Brexit Colliers capital markets and very strong.
Fourth quarter 2019 in M&A with over 25 transactions valued at more than 100 million euros greater.
An all time high in aggregate investment volumes advised by our company, representing a diverse selection of property types and portfolios across a multitude of markets.
Looking ahead to 2020, we plan to make significant investments in both our global occupier services and our capital markets platforms as Chris noted earlier.
These investments, which will mostly be made in the form of additional professionals will deepen our expertise in client service capabilities, adding incrementally to leverage our existing global platforms and significantly increased the amount of revenue multimarket referrals in the coming years.
These teams will be focused on identifying servicing and retaining key global clients, providing a seamless interface with our local knowledge expertise.
However, consistent with our capital allocation decisions at Colliers is long term investments.
Dynamic and rigorous process review analysis and decision making.
Sure, we maintain our discipline generate acceptable returns for shareholders.
That concludes my prepared remarks, I would now like turn the call back to the operator for questions operator.
You asked a question you want me to press Star one on your telephone withdraw your question press the powder Husky. Please standby will be compiled acuity roster.
And our first question comes from the line of George to me of Scotiabank. Please go ahead. Your line is open.
Good morning, guys.
Right.
Do your previous 2019 outlook called for low single digit organic growth.
For 2020, you guys are calling out low to mid.
Im just wondering where the modest incremental bullishness is coming from maybe back to your by geography.
You know I have a view on internal growth, which I'm going to share with you, which which is I don't think it really matters, which geography, we generate internal growth from a market perspective, because what you really need to understand is what is the internal growth company wide. So I think the.
The.
The the outlook that we provided as a good proxy for overall internal growth that we're expecting a 2020, we're hoping.
That these new investments that John described and Christian described to some degree will help accelerate our internal growth.
Beyond where that what our expectations are but we're also looking forward to driving internal growth in our new growth engines that I talked about so.
Internal growth is going to be an interesting I.
An interesting area for the company, especially in light of our planning for for our growth plan 2025, So hopefully that gives you a little color.
No. It's all fine I guess shifting over the investment management segment.
Can you maybe quantify the level of investment we made in the quarter and I guess the go forward nature of that investment do we expect it to me that pace for the remainder of 2020 or into 2020 always.
George its Christian.
Good question, we had.
Smell of it costs in the in the fourth quarter and investment management in anticipation of the launch of a couple of fund products.
Those fund products are now are not launched.
And we don't expect the.
Impact of.
Those cost to be.
Very significant going forward, it's as more of a step.
Process when we develop.
When we develop.
New new funds and.
This was just another step in the growth of the business.
That's helpful. Thanks, just one last one if I may.
On the krona virus, obviously pretty topic can you maybe help us frame.
Direct impact in Q1 from China and.
And maybe some commentary on what extent you would expect at the spillover into other operations in the APAC region.
Sure George.
The.
Trainees business for us generates about 100 million revenue per annum.
Half of that revenue as property management, which has an extremely resilient revenue stream for us.
We are seeing a little bit of.
Timing.
Issues around some of our transactional revenue.
Could impact the quarterly pacing.
What we're.
What we will generate in China, but like I said property management is a big part of that business, which is going to be resilient.
In terms of the other parts of Asia, Hong Kong as a small part of our overall.
Business.
And we could see some impact there, but it won't be significant.
The overall results.
Okay. Thanks your answers.
Our next question comes from the line of Stephen Macleod of BMO Capital markets. Please go ahead. Your line is open.
Thank you good morning, everyone.
Hey, good morning.
I just wanted to talk a little bit of both the Dougherty business, which is a new which do you highlighted as sort of a new.
From every business line.
Can you just talk a little bit about what benefits you you expect this to bring to the table and is there any difference in the underlying seasonality of dougherty relative to the the Americas business overall.
I would say that the seasonality just to finish that one quickly, we'll probably follow the rest of the seasonality of our business simply because doherty is involved in financing transactions whenever they occur.
There'll be some refinancings that might take place January 1st quarter second quarter et cetera, but.
Doherty strength for US is that number one it has this it's called the DUS license a designated underwriter under government assisted loans. So we're able to we have the power of the Pan in certain cases to fund senior housing multi.
Family housing loans, and and so the opportunity for us in part of the Doherty business is to be able to take all of the transactions that we currently do that our multifamily and seniors and student housing and affordable housing and provide.
As part of it. So in addition to getting the brokerage fee on the placement of that debt. We would also earned the fees to originate that debt and then service. It for a 20 year period, the beauty of Fannie Mae loans is that they're generally long term 20 year type terms and so.
Theres long term servicing capability. The other pieces of Dougherty that are very interesting as they themselves have.
A sort of a separate parallel that originates traditional debt.
On commercial real estate from banks from institutions from.
Pinder net worth individuals so they have a number of real estate professionals mortgage brokers operating across the country. There were originating debt everyday now they have an opportunity to access all the transactions that we use at colliers.
And.
So over the course of the next couple of years. The idea is to really penetrate our existing flow of business and be a debt provider on any transaction that is either bought or sold in any of our offices. There is also a third piece of the business, which is a broker dealer.
Which which offers us yet further opportunities although that is that's relatively small for us right now and not really worth talking about it until we're able to execute on our plant, but we're quite excited about the growth prospects for Doherty, it's not going to be without a lot.
Hard work to roll this through to integrated throughout Colliers.
But the opportunity is significant on many fronts. So we're excited about it.
That's helpful. Thank you and I guess would you expect that the growth than Dougherty would roughly mimic the underlying Americas business.
No I think it's going to grow much more rapidly as my hope.
Because in addition to the Colliers business first of all we don't do this today. So this is all net new growth all what I just described as all net new growth. So we're hoping it's got to accelerate our growth by providing additional.
Additional services and capabilities for our clients. The other piece of the business, which is very interesting. If you recall Harrison streets focus is on seniors in students and it dovetails beautifully into into dordies capabilities and in particular their ability to.
Underwriting loans in the Harrison Street funds, so we see a big opportunity to penetrate that as well so I think that there's.
Big growth opportunities.
That will experience from Dougherty as it integrates throughout our us business and throughout the Harrison Street portfolios.
That's great that's super helpful. Thank you.
And then maybe just turning to John some of your comments around occupier services and capital markets.
Can you just talk a little bit about.
So what.
Where are the growth opportunities lie in the investments that you're talking about implementing in 2020, just maybe just some more.
Changeable color around what what these investments do for you and provide for you.
Sure I mean at the end of the date is very much a people driven capabilities business and we have spent you know obviously the last 15 plus years building out this global platform that we have we call colliers.
Along the way, obviously, we have local market capabilities and some top notch professionals, what we really haven't done to date is captured the collaborative opportunity of really focusing much more significantly on multi market accounts and we see.
We have some as I mentioned, but the opportunity for US now with some of focus attention on this some additional investment capabilities, maybe some a little bit of technology, if that can help.
As to really ramp up our capabilities.
We have we're in some respects noted this business and I think where a breath of fresh air I think we come out this things slightly differently a lot less rigidly than some of our competitors and we've been really delighted by the wins that weve generated to date, but we know that there's a lot more.
Down the road and all its going to take a lot of hard work, but some real focus on trying to drive global capabilities demonstrating this to the market much through the success, we've already have a ramping that up in a much more significant way and this is on the cost of the 2025 plan and will really be.
Critical component of that as we mature overall business.
Okay. That's that's very helpful and congrats on your appointment.
Thank you.
Our next question comes from a line of Frederic Bastien of Raymond James. Please go ahead. Your line is open.
Good morning, everybody.
Morning.
First question, you've been gradually expanding global service offering with companies like Harrison Street synergy and now Dougherty over the past couple of years, having said that are there any attractive disciplines, where you're currently.
Sub scaled way you'd like to significant ramp up over the next few years.
Well I think I heard some of that so I'll try and answer what I think I heard our we subscale in many areas absolutely I mean, one of the great things about.
About a global business.
As your subscale in virtually every market, including those markets in which you have a dominant market position. So I would say that.
Where subscale in debt.
We just described in Doherty.
We do we do dead in Europe.
In all markets in Europe, but in some of them.
All of jaws.
The areas Occupier services capital markets, we do a lot of it today, we have a thousand professionals, but as John said do do we are we able to take.
Asia money and and allocated in different geographic regions seamlessly our position to our clients would be yes has the has the process of plan been fully developed I think we've got some work to do there so.
Across the board.
We have multiple opportunities to expand share to develop additional services. Once we project manager is another Great example, we started in Canada, we have a.
40, 50 million dollar business in the us out of nowhere, we just added synergy up almost 100 million dollar business in India in Asia, We now do something like 25 or $30 million worth a project management all from the example that was said initially.
In Canada so.
Taking existing service lines, where we operate well and transferring them to other geographic regions, where there's a market for the services and there's an opportunity to sell them and cross sell them to our clients all are part of the the ethos.
That we're trying to create at colliers.
Thanks for that very detailed answer.
Dougherty.
The expertise portable to other global regions or would you need to acquire that expertise through M&A.
It's probably more local theres expertise, but theres all kinds of licensing that Fred that sort of part of the delay in the transaction not only.
Theres multiple regulators that have to approve the transfer including the U.S. government among other among other regulators and so.
It's not as transferable as you would otherwise hope you need to be separately licensed in Canada. For example, unknown and in other markets, but that doesn't mean to say that tuck tuck in acquisition. Another geographic regions that have the same types of qualities as doors.
I'd, which will be re brand that is colliers mortgage.
Our all viable opportunities for us and so when I talk about the vast opportunities. It is mindboggling in many ways that we just have so many opportunities for growth. The key for us has to be disciplined and apply great rigor to the.
Moves that we make.
Over the next few years, but if we're if work if we continue to manage our business one step at a time I think the that Theres loss, we can do.
Alright. Thanks last question for me at Christian You you responded earlier to a question about the investment you made in your investment management platform, but I don't believe you quantified it was that a million bucks 10 or somewhere in between.
And then the range of Glenn maybe a bit more and of course, we also had some timing and then any investment management fees.
Fees in our European business.
So that was the other.
Driver of the the variance in the quarter.
Got it thank you very much.
Our next question comes from the line of Stephen Sheldon of William Blair. Please go ahead. Your line is open.
Thanks, guys. This is actually Josh sitting in for Stephen.
Congrats as well, it's a Christian and John.
First just wanted to ask Yep.
You know during your prepared remarks that youre benefiting from strong operating leverage in the outsourcing business.
So I'm wondering if it's a specific service line within that segment.
What's the potential for that operating leverage to carry forward.
Yes, Josh we're really seeing it across.
All of the services property management project management.
And the valuations consulting business.
Will that continue I think we have more room to go there.
And we were pleased to see what we saw in in 2019.
Good thanks.
And then within the Americas I know that you did quite a bit of hiring in late 2018 or 2019.
So I'm wondering if you're still expecting to see some good productivity gains from the first half of this year from those producer hires and then just generally speaking I'm wondering how sales pipelines look to start this year versus the beginning of last year.
Yeah definitely we did some significant recruiting.
For the past couple of years.
We started to see traction with that.
In Q3, and four and we definitely expect to see productivity gains as we roll into 2020.
Gotcha Okay.
And then I guess last from me.
Just curious where your comfort level sits right now with.
Trailing leverage at 1.4 turns.
Are you comfortable with that I know, you're balancing a few things right now and I guess, what's the expectation for capital allocation in the or had.
Beyond some of the investments that you noted of course, yet JJ and speak to the acquisition.
Strategy going forward, but certainly we're comfortable with 1.4 times leverage and we will.
Generate significant free cash flow in 2020, we will naturally de lever and really the.
The driver will be our future deployment of capital into two accretive acquisitions.
Yes.
Ali we okay.
We always want to have a sufficient dry powder. That's the way we manage this business for for all these years, we always want to have capital available.
If as and when others run into trouble, but as Christian said, you know from our perspective.
You know, we're at relatively low leverage rate of rate right now.
And but if if we.
Start to add to some of the acquisitions from our pipelines we might look.
At doing doing some equity, but at all it's all predicated on.
Opportunities that present themselves and.
And so forth so we'll always maintain a.
A prudent leverage ratio I'm sure John and Christian both come from a more prudent leverage ratio.
Then I would but.
Yes.
It's the the Colliers strategy has worked well for many years. So I don't think we're going to change much going forward.
Yes.
Our next question comes from the line of Mt. Logan of RBC capital markets. Please go ahead. Your line is open.
Thank you and good morning.
Good morning, Matt.
Jay you mentioned that the recurring revenues from outsourcing and advisory as well as investment management could reach 50% this year.
Can you tell us what that would be as a percentage of EBITDA and maybe your thoughts on where you see that those percentages trending over the next two or three years.
Well, that's a great question I think theres, a real theres a real chance.
That.
EBIT, although revenues would be 50 50.
That EBITDA might be 55, 60% of the recurring revenues, we have you're on a year on a very interesting point that we discussed internally here quite a bit we actually generate.
More EBITDA from our recurring revenue streams than we do.
From that I don't I have described this right from a from a percentage basis. When you look at the revenue percentage because some of the recurring revenue streams investment management, Doherty et cetera have a higher EBITDA percentage margin that we actually generate more from our recur.
Moving pieces of our business than we do.
From the non trends from the from the transactional side of our business. So I hope that gives you a little color.
Certainly does and I guess with.
Daughtry being a big part of your growth plan as well as Harrison Street.
Could we see that going from 55% to 60% up to maybe 70 or 75% in the near term or is that may be a part of the 2025 planned down the road.
I think it's I think it's the 2025 plan look we have a very viable and profitable transaction business globally.
But it is becoming less as a percentage, but I think over time.
Michael for sure is to transform colliers into a different type of.
Professional services firm as I mentioned in my prepared remarks.
In doing this for a long time and it is hard to find companies that have the same growth prospects that we do with the same percentage of recurring revenue.
And this is one of them and sooner or later.
A light will go on for some people and realize that.
The composition of our business and frankly, some of our peers as well.
Our son significantly undervalued relative to other companies that we analyze out there.
And maybe just lastly in terms of the 2025 plant being just as ambitious as your last one.
Should we take that to me that you plan to double the size of the business again my 2025.
I wouldn't take I wouldn't take it as that because of course, where a lot bigger today than we were then.
But we might be able to double the profitability of the business over the next five years, but you know we still we still have a lot of work to do to get there but.
Just if you run the profitability numbers out over that period of time and I'm not committing to that it's a it's a huge huge opportunity at this company as global.
This is global and so.
Theres opportunities with exceptional management teams in so many different parts of the world and.
As we look forward to 2025.
Theres lots of opportunities for at two up for us to add shareholder value.
Well I appreciate the color were looking forward to hearing more in the fall.
Good.
Our next question comes from the line of some essays of RBC. Please go ahead. Your line is open.
Thanks, Good morning, just firstly to touch on the leasing side.
There was some deal timing impact that pushed from Q3 deals into Q4, so that those come into Q for Q4, as you were expecting or are there any spill over into Q1.
Well we.
We had.
The transaction that we expected in Q4 closed in Q4.
Of course is always spill over.
And then there were some transactions that might it would have been nice to close the Q4 that will happen in Q1, but.
Two tier to your question.
The transaction that we'd expected on our Q3 call certainly all that close in Q4.
Okay, Great and then just sticking to leasing.
Thats what are you seeing in terms of trends for office absorption, maybe from a year ago and how do you see that impacting the segment this year.
John Here look I think I think it's a relatively healthy leasing market I mean, certainly there's challenges, but they are isolated calibrating is an example of one that is challenging with the oversupply there, but I think in most other markets.
You know the the the balance between demand for space and and that that's coming on is pretty much in check. So we expect there to continue to be relatively.
Solid stream of leasing activity that we're going to benefit from an advisor clients on going into 2020.
Sounds good.
That is moving on to the outlook for sales brokerage, obviously comping against a very strong 2018, how do you see the segment shaping out in 2020.
Yes, sorry, you were talking specifically about sales brokerage, yes correct.
Look I mean again prefaced on market conditions remaining consistent with where they are today.
And as Christian indicated earlier, there's going to be situations, perhaps in Asia, where our corona viruses going that have a dampening impact I think probably short term, but certainly could impact.
Since 2020.
And.
Delay some of the activity, but I think if you look fundamentally at the demand for real estate and the amount of capital is interested in being deployed into this asset class, which we've talked before and a secular trend around institutional ownership around real estate. We think we're in a good spot to continue to see activity.
It may be a little bit lumpy from quarter to quarter, but I think the long term trend remains intact and that's one of the reasons or we're focused on building up this business colliers.
Okay. Thank you.
Lastly from me just on that Capex expectation of 65 million plus higher than previous years does that just tied to the greater focus on occupy services going forward, just where are those investments being mostly allocated.
At the.
The main driver for the elevated Capex is really.
Few significant.
Investments in new office space and in particular in New York City, and 2020 some of that.
Expenditure will be landlord funded so it.
The Capex we show there is that the gross number.
But.
It on net basis, not much different than what we would.
What would you spent 2019, which is around the 44 million dollar Mark.
Okay. That's helpful. Thank you.
Okay.
There are no further questions in the queue I turn it back over to management for closing remarks.
Well, there's no closing remarks other than to thank everyone for participating and we look forward to speaking again at the at our first quarter. So thanks, everyone for participating and we'll speak to you soon.
Ladies and gentlemen, this concludes the quarterly investors conference call. Thank you for your participation and have a nice day.
[music].