Q4 2020 Colliers International Group Inc Earnings Call
Yeah.
Welcome to the Colliers International fourth quarter Investor Conference call. Today's call is being recorded legal counsel requires us to advise that 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 differ.
And from any future results performance or achievements contemplated in the forward looking statements.
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 for them as filed with the Canadian Securities administrators and in the company's annual report from form 40 F as for.
Why would the U S Securities and Exchange Commission as a reminder, today's call is being recorded today February 11 2021.
And at this time for opening remarks, and introductions I would like to turn the call over to the global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead Sir.
Thank you.
Thanks for.
Joining us for our fourth quarter and year end conference.
As the operator mentioned I'm Jay.
Chairman and Chief Executive Officer, and with me today is John Friedrichsen, Chief operating officer.
Officers.
Sure.
All of us.
As always this call is being webcast and is available on our Investor Relations section of our website.
Jack is also available there.
Today's call.
Earlier today, Colliers reported better than anticipated financial results for the fourth quarter and for the full year. Despite the ongoing impact.
Okay.
Our strong finish was a testament to how are you.
Enterprising culture, but also for the bold steps we've taken over the past for years.
Swarm colliers.
Our balance debt.
Professional services and investment management company.
Currently the majority of our revenues and more than 60% of our EBITDA.
From high quality recurring services.
<unk> management.
For any in project management engineering and mortgage servicing.
These continue to grow rapidly and over time will represent an even greater proportion of our revenue and EBITDA.
The balance of our business less than 40% comes from transactional services leasing and capital markets, while market while volumes in these areas were down somewhat they delivered much better than anticipated.
Let's all remember transaction services.
No Sir.
They're not going away and they may be delayed from time to time line.
Pandemic for example.
Lean back and they'll be back strongly when things return to normal.
Colliers has another tremendous advantage in that day.
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Our revenues.
Our non only diversified by service and asset class. They are also diversified by geography.
Having a global platform with multiple revenue streams generated around the world brings significant balance stability and more importantly opportunities for colliers, we can actually grow everywhere.
With all of these characteristics and advantages not to mention our proven track record of more than 25 years strong balance sheet and significant inside ownership. We are confident we will emerge from this pandemic stronger than ever.
Before I turn things over to Christian and John for comment I'd like to say a word about the colliers brand. The acquisitions. We completed this year are continued growth in investment management and our view of the balance of this year and beyond.
First the brand.
As you know we worked we have worked very hard to build the colliers brand into what it is today.
And a global leader in professional services and investment management.
Our brand is respected everywhere, we do business and is supported by our unique enterprising culture and our proven track record.
Earlier this month Colliers, a new visual identity, which was designed for today's evolving global digital era for US. This was a natural evolution of the iconic colliers brand and reaffirms our commitment to accelerating our success as we can.
To lead our company and our industry into the future.
Please take a look at our website or your favorite social media platform and share our excitement.
The blue.
Second acquisitions.
While others were in a holding pattern during the pandemic colliers capitalized by completing four acquisitions, including two larger ones.
As in the past, we took advantage of market dislocation to move forward to complete important strategic steps that would accelerate our long term success.
In total we invested $240 million in acquisitions this year up from 109 glass.
In June we partnered with an exceptional leadership team led by David you ran to enter the mortgage banking business in a major way.
Our new business rebranded as Colliers mortgage provides real estate lending and finance solutions, especially in the areas of multifamily healthcare and seniors housing as one of the select for you can issue debt on behalf of U S government agencies.
Among other things this allows us to leverage our brokerage channel and offer real estate loans to our clients, while strengthening our global platform even further.
And then in July we added another substantial business in major consulting come.
That is also being rebranded as Colliers engineering and design.
This addition marked another important step in our strategy to add more highly valued essential services that continue to diversify our business for the future.
Led by a talented executive team with a significant equity stake our focus is.
Is on engineered solutions for the built environment, which will also benefit in the future as there are additional infrastructure investments contemplated everywhere.
Furthermore, we see this business is highly complementary to our other professional services and something we believe we can scale globally down the road.
Third investment management, our efforts over the past for years to build a global leader in investment management has proved to be another great success story and one that has added significant enduring value for colliers.
Today, our investment management business represents about 20% of our EBITDA more than double that of our peers and that's made up of two platforms Harrison Street, a market leader in alternative asset classes and Colliers global investors, a leading European fund manager spec.
<unk> and more institutional real estate assets.
Total we have more than 39 billion of high quality fee generating AUM.
Which has been up over 20% over the last year.
We continue to actively grow our Asia and in turn our recurring management fee streams, both bring additional balance both create more resilience and most importantly, both create significant opportunities for colliers to growth in the future.
Finally, I'll look ahead at the remainder of 2021 for them.
Pandemic is expected to gradually subside over the course of the year the timing and the extent is more difficult to determine.
For us this means business as usual for our recurring revenue streams with a measured rebound when it comes to our transactional services, which we expect later in the year Christian will have more to say about this in just a minute Christian.
Thank you Jay.
Announced earlier today, <unk> reported better than anticipated financial results for the fourth quarter and full year.
My comments will follow the flow of the slides posted on the Investor Relations section of <unk> Dot com to accompany this call.
Please note that the non-GAAP measures referenced on this call are defined in the press release issued today.
All references to revenue growth are calculated based on local currency.
On a full year basis revenues were $2 8 billion down 9% versus 2019 and 16% internally.
Our adjusted EBITDA was $361 million up slightly from one year ago, reflecting two things.
Strong growth in high margin services like investment management, and our recently acquired mortgage and engineering and design platforms and to prudent cost management through the pandemic.
Turning our focus for the fourth quarter revenues were $914 million down 4% relative to the prior year.
Internal revenues were down 15%, primarily due to the impact of the pandemic on our transactional leasing and capital markets operations for.
Quarter consolidated adjusted EBITDA was $155 million.
Up 7% from 144 million, one year ago with margins at 17% versus 15, 5% for the prior year quarter.
During the fourth quarter, we maintained our prudent approach to managing operating costs to match expected and dunnock impacted revenues with margin benefiting as transactional activity strengthened later in the quarter.
Margins were also favorably impacted by acquisitions.
And the Americas regions.
Region fourth quarter revenues totaled $525 million up 8% over the prior year period.
Advisory revenues were up 31% driven primarily by our recent acquisitions.
Capital markets revenues were up 46% driven by strong debt origination revenues from our recent acquisition.
Leasing revenues were down 34%.
<unk> by ongoing deferral up decision, making by occupiers, especially in the office sector.
<unk> EBITDA was $70 million up 40% versus last year with significant contribution from acquisitions as well as the ongoing measures to manage operating costs.
Our EMEA operations generated Q4 revenues of $183 million.
Down 24% from one year ago with each service line impacted by the ongoing pandemic.
Adjusted EBITDA for the region was $36 million.
Compared to $51 million last year.
Asia Pacific fourth quarter revenues were $163 million.
Down 11% relative to the prior year period cash.
Capital markets revenues were down 33% with a drop of two large sales transactions.
Leasing was down 11%.
Sourcing and advisory revenues grew 4%.
Adjusted EBITDA was $36 million compared to 33 million last year.
Investment management revenues for $44 million, reflecting growth of 4%, excluding the impact of pass through carried interest.
Assets under management for $39 5 billion at year end up 9% from September 32020, and reflected strong fundraising activity in both open end and closed end funds for series, including a new closed end fund successfully launched late in the fourth quarter.
Adjusted EBITDA for the quarter was $18 million versus $17 million in the prior year period.
Based on our solid cash flow from operations for the year as well as steps taken to fortify our balance sheet and the <unk>.
Second quarter, we continued to maintain a conservative financial profile.
Our net debt to adjusted EBITDA leverage ratio was one <unk> times at year end at the lower end of our target range relative to a ratio of one four times one year ago.
With $777 million of available unused credit at year end, we have ample dry powder for future acquisition opportunities.
As we look ahead to 2021.
We are expecting the impact of the pandemic to subside.
Although the extent and timing remain uncertain.
And our transactional services, we anticipate a tough first quarter comparison, the pre pandemic level for Q1 2020.
But we anticipate a rebound in the second half of the year as the economy recovers and market confidence continues to build.
Of course, our outsourcing and advisory and investment management revenue streams are expected to remain resilient through the year.
Considering all of these factors.
Our outlook for 2021 revenues and adjusted EBITDA to increase between 10% to 25% versus prior year.
That concludes my prepared remarks.
Now ill turn the call over to John.
Thank you Christian.
From an operational perspective across our platform, both regionally and globally.
Like to highlight a few things that contributed significantly to colliers business continuity during a very challenging 2020 and helped position colliers better than ever before as we enter 2021.
Our decisive action to initiate and quickly implement cost management measures early in the pandemic anchored our resilience in the business continuity that supported our operations kept our employees safe service to our clients during a tumultuous period.
This was tough for all of our people those that remained and those on the sidelines.
Through the strength of our culture, we saw incredible commitment and adaptability from our 15000 employees validating your critical importance for Colliers is our most valuable asset it.
As the year progressed and business conditions approved we were pleased to recall hundreds of them colliers employees back to work with only about 3% remaining furloughed at the end of 2020.
During the past year, we made great strides evolving technology to become more of a strategic asset.
Later adoption and acceptance, we expect to continue investing in digital solutions that deliver real value to our clients. While also helping our people work more productively, including a new transaction in servicing technology platform for Colliers mortgage enhanced data intelligence tools at Harrison Street and.
I will work flow digitization across our operations.
<unk> in and out of the office.
We're excited about the role that technology can play to enhance our services in the future.
Plan to bring a sharper focus for digital innovation across colliers in 'twenty 'twenty, one and beyond as it becomes in a central function within our operations.
Undoubtedly technology will continue to play an important role, but at Colliers, we see it as an enabler of our people led professional services and investment management that we provide to our clients and that our brand is known for.
Some of our peers have decided to put technology first.
Perhaps they see it as the future of their firms more novel and exciting.
Where they believe investors will value them more highly.
What other reason, we see it differently and we will continue to prioritize and invest heavily in our people professionals looking to be part of our high growth digitally supported global platform with an enterprising and collaborative culture that puts people first.
As we continue to see a recovery that builds momentum with greater clarity on the horizon, we expect to reignite some of our investment plans, which were dampened with the uncertainty of 2020.
Our global Occupier services, and corporate solutions business Global capital markets and the other key service lines, including those that we can leverage globally to deliver more value and achieve greater scale.
With additional investment in talent that brings additional capabilities and relationships combined with supporting technology. We are confident in our ability to double the size of this global advisory business over the next five years substantially increasing the most durable of our transaction related advisory <unk>.
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Yes.
We have reinitiate, our investments in global capital markets with the recent addition of new capital markets leaders in Canada and in the UK as we build out our capabilities in key markets globally.
We expect our investments to align with the anticipated recovery in capital markets activity later this year.
Holding and more critical advisory roles that add value in acquisitions dispositions and capital raising for investors leveraging our global platform local knowledge and visibility in the global capital flows all within our global ecosystem awash with more institutional capital.
<unk> targeted at real estate assets than ever before.
Finally, our updated Colliers brand and Couldnt have arrived at a better time as we put 2020 behind us and look forward to a period of renewal and a more prosperous future.
While our brand retained several familiar elements of our legacy visual identity.
Better represents who we are today and provides enhanced support for the sharp increase in digital mobile friendly marketing, we experienced last year and expect in the future as.
As well as several tools to enhance the productivity productivity of our people globally.
Still our brand messaging remains consistent with our culture and client first mindset.
In a world of increasing complexity at Colliers, we strive for simplicity with one overarching and boundless goal to accelerate success.
And along with owning the blue we truly believe the sky's the limit.
That concludes our prepared remarks, and I would now like to turn the call back to our operator to facilitate questions.
Thank you and ladies and gentlemen, as a reminder to ask a question you will need to press Star then one on your telephone to withdraw your question press the pound or hash key.
Please standby, while we compile the Q&A roster.
Our first question is Tom George Dan that with Scotia Bank.
Question for you.
Hey, good morning, guys and congrats on a very strong quarter.
Looking at here.
For your 'twenty 'twenty, one revenue and EBITDA Goalposts can you maybe talk to look for working assumption is.
For Jay you call that measure rebound in transaction volume can you maybe talk about that debt is something could be percentage maybe year over year.
Okay.
Hey, George It's Christian.
It looks like.
We set some pretty wide goalpost that you mentioned for our 2021.
Numbers and broadly.
We do expect a rebound in transaction activity.
Back half of the year.
Here.
We also recognize there is debt.
Tough comp in Q1 Q1 of 2020 was that was a strong quarter for us.
And we expect the transaction activity for the first quarter for 'twenty, one will not be.
At those levels.
So I think there is.
Optimism.
The debt.
Conditions will improve.
We were trying to take a measured approach to that we also in our forecast happy and utilization of the acquisitions either for made in 2020.
And for continued growth of our recurring businesses.
Which.
We expect.
ROE at.
Low single digit mid single digit levels in 'twenty one.
Alright, I think there was some anecdotal survey information that was released suggested.
Now, 50% rebound in transaction volumes I guess that does occur our guidance would be pretty conservative right.
Yes, I think that's right George.
You are referring to our capital markets piece was put in a few weeks ago, which debt it.
It was a survey.
Institutional investors and other market participants.
But yes that is.
I wasn't quite a quite a bullish piece and then certainly we hope that is the case, but.
We are.
We're optimistic.
Okay, that's helpful and maybe for John.
There was a longer term strategy.
Moving to margins in the Americas.
By 300 basis points over the net.
Two to three years prior to the pandemic.
Okay, maybe obviously, we've taken quite a bit of action, but today kind of where does that strategy sits.
How much more can we remove any over how long.
Yes. It is part of a long term strategy I'd say, we're about halfway through that.
A lot of it was.
Round kind of repositioning some of our cost structure as it related to our transaction business and then also over time growing more scale and creating additional productivity.
We estimate to the way we operate so I think we're well on the way and I think we've seen some of the benefits obviously.
Not the best lens to look at given we had to take some pretty hard cost action in some of those costs will come back, but I think we're feeling pretty good about where we're positioned with respect to that business of course growing our occupier service corporate solutions business, which again it was a bit of a challenge for you here, but we still made some decent.
Progress.
Past year that again is going to contribute to margin enhancement I think around our U S business in the Americas generally so we're feeling pretty good about that but more work to do.
That's helpful and maybe one last one for me.
Maybe for Jay.
Balance sheets.
Under Levered by all standards.
Can you maybe handicap the chances of us doing a larger deal maybe in the investment management area. This year, how is the appetite there.
Okay.
I could hardly hear your question I need you to do that in each of the channel.
Asked me the question again, but just before you do I want to tack onto Jon's comment if you take a look at I think we've made great progress.
And margin enhancement in the U S. If you take a look at 19 versus 'twenty were up 200 basis points out of the three.
On the EBITDA margin, so where two thirds of the way there.
And so I think we're well on the way there is more work to do.
But it is moving in the right direction and I'm happy to answer the question.
For some reason it's muffled here so it's hard for me to hear it.
I can try again Jay.
I was just asking you about the balance sheet.
Given that's pretty under Levered, there's room for a large deal I'm just hoping for the odds maybe you can see that this year.
Obviously, we don't want to give you any.
Any color around that because we do this all the time.
Especially the transactions that we work on.
It takes many many years, sometimes to build a relationship with the targets that.
For great companies like Harrison Street.
Doherty now colliers mortgage.
So we have we have several very interesting.
Opportunities, whether the timing is right whether the valuation is right. We will be will be just a function of.
I have a number of things, but we have the capacity currently.
Of course, we always have additional capacity if the greatest opportunity presents itself. So.
It's an area of focus for us, it's an area, where we think we can accelerate our growth in the years to come and there's a lot of opportunity to bring some of the benefits of different platforms together.
Two two advantage so hopefully that gives you some color.
Thank you for your answers and great quarter.
Okay. Thanks George.
Thank you. Our next question is from Stephen Macleod with BMO capital Your question. Please.
Thank you good morning, guys.
Good morning.
Good morning, I, just wanted to dig in a little bit on the on the recurring business the outsourcing advisory and investment management just with two questions. First I was wondering if you could give a little bit of color around.
How the outsourcing and advisory business performed by the sub segments within that so project management property management valuation and advisory and then in the past you've talked about recurring revenue as an aggregate potentially reaching 65% to 70% of revenues over time and I'm. Just wondering if is that target still holds and.
Maybe if there's potential to move that even higher.
So I'll just give you a more general more general responses and Christian can dig into the details, yes that that kind of.
Our goal is still is still there we can move our our recurring earnings to 65% hopefully a little bit better over the next few years that would be terrific.
That's probably a good balance of our business to be Frank.
No.
Youll see growth in all areas of our business, but if the recurring portion of 65, maybe even as much as 70 over time that would be a good result for us and Christian can give you some color on the individual pieces, but I would remind you that diversification is diversity.
Acacia.
For the beautiful part of our business in particular, so within outsourcing and advisory Youll have segments that outperformed in different geographic regions and sub debt underperformed in other geographic regions and so when you look at for.
<unk> management or engineering or mortgage servicing.
What you really give us an amalgam look the results some good.
By region. So for example, using up using.
A weaker example, India.
We have a tremendous.
Project management business is obviously huge locked down right now it is a business that could generate just our project management piece could generate $10 million to $15 million of EBITDA on an annualized basis only delivered approximately five this year.
<unk>.
The difficulties in India. The overall project management piece for our business was up.
But that was.
Taking into consideration the negative impact of India. So.
As you look at each one of the diversified service lines bear in mind, it's different in different regions up and down so theres puts and takes all over the place, but directionally, which is important it's up nicely over the prior year. So Christian I don't know if you want to add.
Add anything Jeff.
I can add a couple of thanks for that.
You may have noticed.
Net.
Yeah.
EMEA.
Outsourcing and advisory revenues were down for the.
For the quarter. So we had some impacts in our to our French business, which is primarily.
Workplace project management.
So they were impacted by the pandemic as well really.
As Jay mentioned, India, France for the two areas around the world, where we saw an impact on our.
Management business the rest was up.
Other parts of the World I would say property management was up around the world are valuations practice had a record year in the Americas performed strongly elsewhere.
Our engineering business that we recently acquired in July.
It also had an exceptional an exceptional for six months and has a great pipeline.
Going forward, So I think as Jay mentioned, it's better for geographic noise.
Noise, but that's part of diversification and that's one of our benefits.
Okay, Yeah, great. Thank you Jay Thanks for Shannon, Yeah, absolutely understanding and appreciating the diversification that's very good color.
And then maybe just maybe just finally.
Could you talk a little bit about the strength in the capital markets business in the Americas segment.
Seem to be a bit of a bit of a.
A nice tailwind for the quarter I'm, just wondering how you see that evolving.
For Q1 and potentially for the rest of the year like is that really isolated to Q4 at this point in time.
Capital markets performed really well in the Americas and part of that.
Acquisition.
Colliers mortgage.
And the debt origination.
This debt, we have which is a government agency.
Origination practice around multifamily and related.
Our properties hospitals originations were strong refinancing activities on agency business was also very strong given the low interest rate environment.
In the third quarter and it was pronounced as well in the fourth quarter.
That will continue.
The first and second quarter, but will come down here as refinancings.
Our completed and then left for that work is done.
As we proceed through.
'twenty one.
Our internal growth.
Internal revenue.
Capital markets for the Americas.
Were down they were down about 12%, but that is less than what the market stats would show and less debt.
Some of our competitors as well we think so we've performed well there.
Great well. Thank you so much for the great color and congratulations.
Thanks, Steve.
Thank you. Our next question comes from Dario Young with TD Securities. Your question. Please.
Good morning, guys just following up on Stephen's question with respect to Colliers mortgage.
Could you maybe just tell us how that's performed relative to your expectations at acquisition and I think.
At acquisition, you talked about that being.
Double digit growth business.
Could you, maybe just give us a bit of an update on the outlook for that.
Yes.
It's been a it's been a pleasant surprise for a number of areas first of all the leadership team. There is just terrific.
They were constrained under prior ownership not in a bad way. It was just a privately held company.
Founded many many years ago Bye bye.
The iconic business later, but they were constrained in terms of growth opportunities and joining with Colliers immediately gave them national scope immediately gave them the opportunity to to mine, our brokerage channel to originate multifamily seniors.
And affordable housing opportunities at a time when interest rates were very attractive and.
That those asset classes are also key asset classes for Harrison Street, So theres been sort of a twofer on that because both call yourself to originate but also Harrison Street, which does this for a living every single day buying.
And refinancing assets that comply with.
With the types of asset classes that colliers mortgage funds created a great opportunity and we really have only scratched the surface. Our collective teams are actively working together to mine the flow of opportunities both through Harrison Street at both.
And also through the Colliers network. So it's performed much better than we expected.
Hope for this we anticipated this but we only model that based on.
Same store sales and modest growth as we always do an acquisition. So we're quite excited about the future of that business and think it could be double or triple over the next over the next three to five years.
Okay, Great and then just one more on the office side with respect to your advisory services and some of the outsourcing coming out of the financial crisis, we saw a.
A big pickup in the outsourcing activity attempts to shed costs.
Would you say the pandemic.
Maybe accelerated those trends further and maybe you could just give us a little bit of color on pipeline.
From a potential work that's coming through that and then I guess would that translate into potentially the brokerage market share wins as well.
Those relationships.
John here.
Look.
This is Ben.
A real catalyst around companies again, reevaluating the workplace and the role it plays in their operations. So at least for the time being.
Our teams are working very closely with many of our clients and prospective clients and new clients around thinking through how best to optimize the workplace from their perspective and companies have different objectives. Some are very calm.
Focus some look at the workplace as being an asset and attracting talent and you have a whole wide spectrum of things, but I think more than ever before.
The current crisis, and I think where we're going into the future.
<unk> is very conducive to professional advisory services that we can provide we can provide insights best practices.
Debt in isolation companies are finding it difficult to access and were able to mobilize our professionals who are experts in this field and who have the market intelligence from advising so many clients on things that really matter. So we are really bullish on the opportunity and ultimately.
That kind of work does seed transactions whatever that might be and I think that latter part remains to be played out there's still lots of activity that is on the sidelines as companies think through what works best for them in terms of their own and this is primarily around the office footprint obviously.
Whole industrial sector and two.
To a lesser extent for us retail have different dynamics across the space, but.
Very bullish on the opportunity there and that outsourcing trend I think we're going to continue.
Excellent.
Ill get back in the queue. Thanks, guys.
Thank you. Our next question comes from right.
With Goldman Sachs. Your question. Please.
Alright, Thank you and good morning, just to follow up maybe a question for Jay on the acquisition side.
As you look at your footprint, whether it be by business line or geography are there places, where you see white space or opportunities that you think you should be bigger or opportunities to scale the business. Thanks.
So.
That's the beauty of our business, we have so much white space virtually everywhere, even in markets, where we are.
The hands down market leader.
This category.
And so why.
It is.
Having a variety of real estate services transactions are small for becoming a small part of our platform and it's becoming a smaller part of the platform of the other peers out there.
It's the other services that just offer so many opportunities to grow and when Europe Global platform. You have exceptional management teams that know how to operate that colliers way know how to integrate acquisitions. Once they are completed gives us a huge huge advantage to grow.
Our business, so I can't point to any specific area, because I would say to you we have white space in every market.
We'd like to grow. This this particular portion of our business better bigger than it is today, we see we see opportunities to fill gaps in other areas. So.
That's the beauty of the.
A platform that we have.
And.
And the leadership teams, we have on a global basis.
Thank you just a second question.
For topic, just in terms of the leasing pipeline across the portfolio and how you see leasing evolving relative to the transaction in 2021. Thank you.
As you know and as.
It's been talked about a lot there has been.
Lots of deferral around leasing.
I expect or we expect some of that to continue.
As again companies sort through trying to determine what works best for them and they are as a bridge to making those longer term decisions, often looking to defer leasing and obligations or ground space for say a year, we expect that to continue with the uncertainty while diminished.
It has not gone away in 2021, so we expect that some of that to continue but there are other companies that are looking through the pandemic and looking at other factors that are important for them and making long term decisions and we've certainly been involved in many of those transactions. So we think there'll be less deferral of decision.
That we saw in 2020.
We don't believe they're going away in 2021 day will diminish significantly and it will be a year or two I think before we're back to.
I guess patterns of.
Thinking and.
Obligations.
Companies are prepared to take on down the road.
Thank you.
Thank you. Our next question comes from Matt Logan with RBC capital Your question. Please.
And good morning.
Good morning.
Good morning, Jay earlier in some of your commentary you mentioned that Colliers is several very large interesting opportunities and thats. The business has additional capacity if the greatest opportunity presents itself.
Can you tell us what colliers greatest opportunity is at the moment.
Good question.
We don't have any greatest opportunities, we're open minded to anything.
As long as what I would say.
Is that if you look at the engines for growth that we have the day, we're very comfortable with those engines.
We're actively looking to growth globally.
I don't see in our pipeline anything new.
Because we just see so much opportunity in those existing areas. So.
We happen to be in a fortunate position to have extremely low leverage lots of capacity to capital. So there really isn't anything.
And reason we couldn't buy.
As long as long as it enhances our platform, which is something that we think about all the time.
I think people think about this as much.
No.
The integration of the business and the impact it might have on the culture of the organization is always a key consideration for us.
That's a market by market business by business kind of decisions, so that would be something that would be a limiting factor but capital no.
And the.
In our existing areas for growth no.
So we're open minded.
If anybody in your.
In your investment banking area as a great opportunity for us to consider I'll give you my home phone number my wife's phone number.
And even my kids phone number.
Correct.
Okay.
Great color.
Maybe just in terms of those growth engines.
Would those be Harrison Street, Colliers mortgage and Colliers engineering platforms really as the main growth engines.
Great, but also that.
The traditional transaction services Theres lots of markets one of the other what are the other people on the call mentioned this.
There's a lot of markets, where we're undersized and there is there is opportunity there too.
<unk> enhanced our presence we're doing.
I hope to be a very successful job in France, we entered that market five to seven years ago, It's been a rough go to be Frank.
But the last couple of years, we've really gained momentum you haven't seen it yet in the results and there's other markets like Spain, where you are seeing it in the results. Despite a very difficult pandemic in Spain, and we're excited about India and Asia.
If you take a look at our our results in China.
We're doing extremely well in China and the debt.
Jim There is exceptional and very bullish about the opportunities there as we open as we opened some new doors that previously weren't open to us so.
There is excitement there is excitement internally I think theres also.
Yes.
A desire to get beyond that.
<unk> for everybody, but also our leaders who feel like it's our time at Colliers and it's our time to really.
Hence our market position and accelerate our success, so they're anxious to do that.
I appreciate all the commentary and maybe just one last one for me before I turn the call back.
When I think about your goalposts for 2021, we have revenue and EBITDA growing at the same clip.
Would it be fair to say that.
There's no margin expansion potential for 2021, and maybe some of those cost saving initiatives that we talked about last quarter are more of a longer term story or is it simply too early to quantify any potential margin expansion at the current juncture.
Well, Matt I mean, I can take it through it kind of service line by line by service line.
If you want.
Obviously for brokerage, we're going to have some operating leverage from higher revenues, we hope in the back half of the year.
We also have some costs that were going to reinstate from the significant cost management initiatives. We took in 2020 and off for investments in people that John talked about.
In terms of.
Capital markets and occupier.
And.
We can.
That amendment is going to be.
Similar to.
Prior year of our costs are going to go up.
Obviously, you can't we took significant cost actions.
Actions on the corporate side, you can see that it would be in the numbers I'm happy to take you through more detail offline on that but there is a number of moving parts in our and our and our and our outlook in terms of the margin, but on a net effect.
Relatively flat.
I'll leave it there Christian I appreciate the commentary I will turn the call back. Thank you.
Thank you. Our next question is from Stephen Sheldon with William Blair. Your question. Please.
Thanks, This is actually Josh lamers on for Stephen.
First wanted to ask about head count.
You noted some appointments in key markets and Thats for the most part that's very few professionals that are furloughed.
Good to see but to start the year, where does headcount stand in the leasing and capital markets businesses relative to the start of 2020.
We'd be at similar.
Number at this point I mean, there have been some puts and takes we may be up marginally obviously some.
People as I as I indicated were about 3% for a load and thats predominantly servicing in the transaction market, which we expect to come back but.
At this point, we certainly are ambitious of added to that head count in the right way and we've already started early this year and doing so would expect to do more of that as the year progresses.
Sure.
Thanks for that and I. Appreciate also the guideposts on revenue and EBITDA guidance are you able to provide and the expected cadence of EBITDA contribution throughout the year.
Soon it is going to be heavily second half weighted but.
What extent would you expect it to be second half weighted would be helpful.
Josh I mean, I think right a little bit of color around around our expectations for the transaction from the first quarter. Obviously, we have a tough comp on the transaction.
And we expect transactional business really.
The rebound in the second half of the year and the.
The recurring businesses.
Or has it been advisory businesses remain steady.
Through the year so.
That's what the most.
Commentary, we can give on that.
Again, the guideposts are wide because we have still a lot.
From uncertainty out there.
And on that.
Kind of where we're at.
Yes, yes that makes sense and then Jon touched on it a bit when his prepared remarks, but with the hire of Tony Clark I'm wondering if you could give us.
Maybe another sense or a little bit more insight into what the initial agenda and what are <unk>.
Some of the major focuses.
Early on in his and his appointment.
He has been a great addition to our U S team and he'll work very closely within our North American shared services, we kind of try and pool somewhere our resources around technology.
Crossing North American business, because theres, so many leverage points that we can share costs.
I have some scale benefits in doing that but I think his focus is going to be largely on.
A number of our proprietary tools and some of the technology, we access from third parties.
Sure that we're using.
On an effective basis.
Certainly from a cost perspective, but more from an adoption utilization ensuring that.
The people in our business that can best benefit from technology have access to it and that we are very focused on using technology in the delivery of our service to our clients. Our colliers 360 is.
Is it really a portfolio management.
Industry, leading tool for occupiers.
We're going to continue to evolve that product and theres lots of things that we can do with that including.
Augmenting additional services that are relevant to occupiers that can be channeled through that colliers 360, so that will certainly be an area.
Some other tools that we're currently using them.
It's hard to put his mark on the future of those as it relates to really market intelligence and <unk>.
Activity based tools that more of our sales brokerage team uses in the U S. The infrastructure is very very sound and solid and.
Thank you.
Most of that will be dealt with by a separate group, but Tony will certainly been a welcomed addition of real veteran around technology, having also been with other public companies. So that's that's an added bonus. So we're excited to have him on board.
Great.
Thanks for the insight and great quarter gentlemen, thank you.
Thank you for them.
Our next question is from Patrick Best Channel.
With Raymond James Your question. Please.
Hi, guys. Jay you gave some great color on the potential for.
Colliers mortgage I'd like to now.
Now maybe switch to <unk> and then in your opinion.
How big can the engineering services platform you just gain I get in the next five years.
Well.
The goal here.
Probably.
Ahead of myself here. The goal is probably to have about a $1 billion in revenue from that service line over the next five years.
I think it's I think it's achievable and it's.
It's probably on a global basis.
So we see it as a.
As a support and complementary to some of the other services that we offer is just a natural extension for us.
Okay Cool and then within the U S. Just curious if.
If maser is well positioned to capitalize on the bite and administrations plan to invest in green infrastructure. We know it's quite quite a hot topic right now, but just curious if they have any opportunities.
Yes, they are very focused on that.
The one thing that you know is that laser is concentrated in the northeast.
Very concentrated in the northeast so.
That both creates opportunity for us to augment the platform across the U S. But yes. They are set up they are set up for that because that is probably 30 or 40% of their business today.
Okay awesome. Thank you.
Thank you.
And I will turn the call back to Jay Hennick.
In our remarks.
Okay. Thank you everyone for attending this conference call, we look forward to the next one.
And thank you operator for <unk>.
For coordinating the call on behalf of everyone.
Thank you Pam.
And thank you ladies and gentlemen. This concludes the conference call. Thank you for your participation have a great day.
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Yes.
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