Q4 2021 Colliers International Group Inc Earnings Call
Welcome to the <unk> International fourth quarter and year end investors 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 different from any future results performance or achievements contemplated in the forward looking statements.
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 is February 10th 2022.
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.
Operator, good morning, and thanks for joining us for this fourth quarter Conference call <unk>, Chairman and Chief Executive Officer of the company and with me today is Christian Mayer Chief Financial Officer.
As always this call is being webcast and is available in the Investor Relations section of our website. A presentation deck is also available there to accompany today's call.
As announced this morning, Colliers delivered very strong fourth quarter financial results.
With full year revenues exceeded $1 billion milestone.
Capital markets leasing and outsourcing and advisory were all up significantly.
All service lines and across all geographies, while investment management delivered record results raising more than six billions of capital and finishing the year with more than $50 billion in assets under management.
With a globally balanced and highly diversified business model.
<unk> recurring earnings and a sharp focus on global growth opportunities colliers is stronger and more resilient than ever.
As you know last month, we announced that we were investing in the salt infrastructure, a leading trans Atlantic investment management firm with more than $8 billion in assets under management.
Adding another highly differentiated investment business that specializes in the important utility transportation energy renewals and communication sectors.
Together with the previously announced my land based Antirion, which we're acquiring to augment our existing operations in Europe , we expect to add more than $12 billion in assets under management to this segment of our business. Once both of these transactions are completed.
As you know last year, we announced our new enterprise 2025 strategy.
Close to double our profitability and generate more than 65% of our EBIT.
From a recurring revenue stream over the coming five years.
We finished year, one well ahead of our internal targets and we continue to make excellent progress.
We were able to achieve our current five year plan it will be very good news indeed for our shareholders.
With our strong growth plan strong local brands and global platform, well balanced and highly diversified business model unique enterprising culture and the significant insider ownership colliers is better positioned today than at any time in our history.
To continue to create value and generate superior returns for shareholders.
However, despite all of these characteristics and unique attributes.
Our company remains significantly undervalued when compared to others in my view.
I have been investing in businesses and building companies for many years now and I say this with very strong conviction.
Few companies have our growth prospects few have the experienced and financially committed leadership team and fewer still have our long term record of performance track record of greater than 20% annualized and annualized returns.
More than 27 years.
With that said, let me now turn things over to Christian.
For comments and then we'll open things up to questions Christian.
Thank you J S.
As announced this morning, <unk> reported very strong fourth quarter financial results My.
My comments follow the flow of the slides posted on the Investor Relations section of <unk> Dot com to accompany this call. Please.
Please note that the non-GAAP measures measures referenced on this call are defined in this morning's press release.
All references to revenue growth are expressed in local currency.
Our revenues for Q4 were $1 3 billion up 48% relative to the prior year period with revenues up strongly across all service lines and geographies.
For the quarter was predominantly internally generated.
Compared to 2019 pre pandemic peak levels.
Capital markets revenues were up 16% and leasing was up 12% with office leasing recovered with five to within 5% of 2019 levels.
Fourth quarter consolidated adjusted EBITDA was $192 million up 25% from $155 million reported one year ago.
With margins at 14, 3% versus 17% in the prior year quarter.
Our margin was impacted by increased performance based incentive compensation and the reinstatement of variable cost mainly attributable to the strong growth in transaction activity.
The Americas region fourth quarter revenues were $814 million up 54% over the prior period.
Revenue growth was exceptionally strong with leasing activity at 77% led by industrial.
Capital markets activity was up 66% and was led by industrial land and multifamily asset classes.
Obviously leasing activity showed steady improvement in Q4, although remain below pre pandemic levels.
Outsourcing and advisory revenues were up 29% driven by engineering and design.
Valuation and loan servicing as well as recent acquisitions.
Adjusted EBITDA was $94 million up 34% from last year with a margin impacted by significant incremental performance based incentive compensation from strong year over year growth in operating results the reinstatement of variable cost and higher support staffing costs.
EMEA revenues for Q4 were $233 million up 32% from one year ago with robust growth across all service lines led by outsourcing and advisory and capital markets.
Adjusted EBITDA was $42 million up 19% from last year on higher revenues, although margin was impacted by revenue mix from higher project management activity.
In the Asia Pacific region third quarter fourth quarter revenues were $219 million.
Up 36% driven by strong capital markets activity across the region, but especially in Australia and New Zealand.
Adjusted EBITDA was $38 million.
Up 7% relative to the prior year quarter and was affected by higher performance based incentive compensation.
Investment management revenues were $80 million up 83% versus the prior year period.
After eliminating the impact of pass through carried interest revenues were up 45% driven by management fee growth.
Assets under management were 51 billion at quarter end.
Up 29% from one year ago, and capped off a record year of fundraising with $6 1 billion of new capital equipments from investors.
Adjusted EBITDA for the quarter was $28 million.
Up from $18 million in the comparative quarter on solid flow through from incremental management fee revenue.
Our consolidated operating cash flow for the full year was $289 million.
However, adjusting for the nonrecurring cash component of the LTI a settlement in April 2021, cash flow was $381 million more than double the $166 million generated in 2020.
Cash flow was positively impacted by a combination of higher earnings and a reduction in working capital usage, which was elevated during the earlier stages of the pandemic last year.
Our financial leverage ratio as defined.
Defined as net debt to pro forma adjusted EBITDA was 0.3 times as of December 31, 2021.
During the fourth quarter, we issued $300 million in U S and Euro denominated senior notes due 2031 and paid down our revolving credit facility in full.
As of December 31, we had $397 million of cash on hand, a majority of which is available for investment.
As a result, we now have well over $1 2 billion in liquidity available to fund future acquisitions and ongoing operations, including the recently announced <unk> transaction, which is expected to close later this year.
Our debt capital structure includes a $530 million of attractively priced long term fixed rate debt, which positions us well for any inflationary uncertainty ahead.
Given our low leverage and significant financial capacity, we continue to be extremely well capitalized for future growth.
We are introducing our outlook for 2022, which provides our broad expectations for the year ahead and represents a return to the format. We issued historically during more normal times.
We expect high single digit revenue growth.
<unk> of mid single digit internal growth and the balance from previously completed and recently announced acquisitions, including engineering.
Colliers in Italy, and Brazil.
We expect our adjusted EBITDA margin to improve 40 to 60 basis points relative to 2021 from a combination of internal operating leverage and higher margin acquisitions.
Our income tax rate and non controlling interest share of earnings are expected to be 26% to 28% and 18% to 20% respectively consistent with historical ranges.
Finally, our adjusted earnings per share are expected to grow at mid teen percentage rate for 2022.
This new outlook is subject to risks and uncertainties as outlined in our accompanying slides.
That concludes my prepared remarks, I would now like to open the call for questions. Operator can you. Please open the line.
Certainly.
To ask a question you will need to press star one on your telephone.
So withdraw your question press the pound key.
Our first question comes from the line of George <unk> with Deutsche Bank.
Hey, good morning, guys.
Congrats on a really strong quarter.
Jay I got a two part question for you.
We're just being just before you may get chipped Europe , just before you begin youre not at Deutsche Bank how are you.
And confluence Scotia.
Please go ahead Sir.
Yes, yes, I want to ask you about persalt, so maybe what attracted you to that.
Got that.
Once you integrate it are there any other alternative asset classes that you would be interested to offer that we don't know yet.
Okay. So it's hard to hear you are asking about but salt and what attracted us.
<unk>.
Correct.
So the salt, but Salt Lake Harrison Street is a extremely.
Our high quality.
Investment management firm that has highly differentiated asset so.
They focus on areas that require an extra level of expertise they've been around a long time their results have been stellar as compared to others.
It's a partnership approach in the same way as Harrison Street, there's lots of synergies between Harrison Street, and the Salt and there's also lots of synergies between.
But solved and the rest of the Colliers global platform. So.
Its strike zone for us in terms of <unk> and.
In terms of an additional.
A move for us in our investment management are and it really is a model for other similar platforms that we'd look to add over the coming years.
Okay. That's helpful. Then maybe for Christian.
50% EBITDA margins that you saw.
They are pretty elevated or can you maybe walk us through how.
How do we get how do you get that number and maybe some are free structure.
Overhead costs.
And would you expect maybe to make it make some more investments in that business that could maybe lower those margins over the next 12 months.
Yes, I mean storage in our investment management business that we have currently operates in the mid 40% EBITDA.
Margin range and basalt is similar to that these businesses.
Generate.
Very strong recurring quarterly management fee revenue streams.
They have relatively low cost they have.
Obviously management professionals.
And some fixed cost and the EBITDA margins in the business businesses are.
40% to 55% range.
Okay. Thanks for that just one last one if I may.
On your mid single digit internal revenue growth guidance, you guys put out for 'twenty two.
Where do you have baked in for for capital markets revenue growth.
So I don't want to get into any specifics on that.
I think across the business.
Single digit growth rate is something we're very comfortable with.
Okay got it thanks guys.
Thank you Andrew.
Next question comes from the line of Scott <unk> with CIBC.
Good morning.
Couple of question.
Questions on results so.
The results came in much better than the analysts' estimates where revenues.
At year end higher than you would've expected and.
Could there have been some revenues that were brought forward from the current quarter.
Scott in the transactional business and the outperformance here was really.
In the transactional business a little bit also in the in the other businesses, but the recurring revenue businesses are our more steady either by their nature and more predictable.
Yes, I mean, there are transactions that flow into December that might have occurred in the first quarter and somewhat relates to transactions that we were expecting in <unk>.
<unk> that.
May be deferred into future quarters, so that type of.
The movement of the fee recognition on these commissions.
It's something that happens regularly.
And the business, but nothing unusual to note here I think we just had a stronger finish really across all of our regions.
Really.
In both capital markets and leasing.
Across the board.
So it sounds just like a reflection of the strong market.
Yes, yes stronger than we expected certainly when we met last time in the quarter ago here on the call.
It's good news.
Just turning to your leverage your balance sheet your leverage ratio is pretty low, but what range are you comfortable with it.
Would you consider increasing.
Cash back to shareholders by either raising the dividend or through share buybacks, where do you want to keep dry powder.
Well Scott.
Obviously are very active in the acquisition.
Side of our business and Thats, where we prefer to deploy our capital.
We have a target leverage range of up 1% to two times.
Certainly, we're well below that at year end, and we assess our optimal capital structure, all the time and.
I've set.
Setup for focused on acquisitions, but.
Other ways too.
Properly lever of our business and return.
Appreciation to shareholders.
To be considered we will look at that as well.
I'd like to add a little something to that as well.
One of the things, that's becoming glaringly obvious or should be becoming glaringly obvious that this company generates significant free cash flow.
And we'll continue to do that and our Capex is is modest compared to the size of our company. So despite.
Having aggressive growth already on the books not yet closed.
And if you roll those things forward, our leverage ratio isn't going to change much at all it will go up a little bit, but it isn't going to change much. So.
I think one of the things we are looking at us.
Is the amount of cash flow, we generated in this business and as I said in my in my comments the.
The relatively modest valuation that a company of our quality is trading at and I think we we do our shareholders a serviced by looking at all ways to.
To enhance shareholder value.
Sounds good.
Helpful and just one final question on the investment.
Management, how does the fund raising outlook.
What is the competitive environment.
For fundraising, obviously alternative sort of pretty hot space.
Okay.
Well I mean, we had a record fundraising last year to $6 $1 billion.
Through our investment management arm.
I think this year.
We think we're going to have another record yet again.
As you said are asset classes that we focus on.
In the globe.
Obviously infrastructure is very lot. So we'll see how the salt does they've just substantially completed their most recent fund.
And now with the transactions announced the note there will be out.
Raising I believe it's the biggest fund ever.
Beginning in the next.
45, 60 days so.
We're hoping for a very strong fundraising.
Here in 'twenty two.
Sounds good thanks, Jim Christian ill turn it over a great year.
Great quarter, great year.
Thanks.
Thank you and as a reminder to ask a question you will need to press star one on your telephone.
Again to ask a question please press star one.
Our next question comes from the line of Stephen Macleod with BMO capital markets.
Thank you good morning, guys.
Thanks, Dave.
Good morning.
I just wanted to follow up on the salt, which looks like a very very complementary investment management acquisition.
And Joe you mentioned in your in your comments.
Certainly some.
Some opportunities too.
Could be synergistic with Harrison Street as well as the rest of Colliers Global platform. I was just wondering if you can elaborate a little bit on what some of those synergies look like.
And.
How we can think about that in terms of magnitude between the salt and the existing business.
Well.
There's the obvious which is colliers is a global platform with global relationships, we're marketing.
Transactions all around the world.
And having.
Having the salt as part of the family gives them a.
I would say a first look at assured look at any opportunities that we may be marketing as well as special relationships our job in our markets and our traditional business is to know capital sources and flows of capital and so introducing.
Flows of capital too.
Ericsson Street, or the soles and Colliers global investors has borne nice fruit in terms of fundraising but also.
The types of investors in all of our funds are those investors that values the governance value. The track record of our of our platform companies within investment management and are always asking us what additional asset classes should we.
Be considering and so there is.
There is a.
Growing need I would say on our side to get better at leveraging existing LP relationships between our different.
Different platforms too.
To create additional fundraising sources, so theres just a few.
Theres just a few opportunities there, but there are countless there are countless others.
That will help leverage.
<unk> platforms and enhance the returns for our Lps.
And that's happening really across the board.
Okay. That's that's great color. Thank you.
Sure.
And then I didn't want to get too granular here, but I'm just curious about what youre seeing in terms of the office.
Either capital markets or leasing backdrop across our geographies I know you mentioned Christian in your prepared remarks that office is within 5% of 2019 levels, just curious what youre seeing between geographic regions.
We're seeing more office activity.
In all regions.
I would say.
Probably more in the Americas and coming back.
Probably something we're expecting to see more to come back more in.
In EMEA and Asia Pac in the coming quarters, but certainly things are.
Progressing well and activity is rebounding.
Okay that makes sense and then maybe.
Similar to that.
Are you seeing do you expect to see any any asset classes sort of begin to weaken as we get back to normal if we do end up getting back to normal in 2022 from a pandemic perspective.
Well I'm not sure I would characterize it as weakening, but I think a moderation of activity in classes like industrial.
And retail has been.
Then coming back but.
<unk>.
Industrial has been so strong for us.
For a long time and that I think will moderate.
Over time.
Okay.
That's great well, thanks, guys, congrats on a great quarter, and a year and great performance with pandemic.
Thank you.
Thank you and our next question comes from the line of Daryl Young with TD Securities.
Good morning, guys.
Just wanted to follow up a little bit further on the investment management business.
It sounds like more asset classes could be in the works in the future is there a chance that investment management ends up at 50% of EBITDA in the future I mean, youre already at on a pro forma basis around 25%.
Which I think is sort of the.
Goalpost you used to speak to but just given the fund raising and then the potential for more asset classes. It seems like it could be a very big part of the mix here going forward.
That's a pretty ambitious target that youre right, but I think the interesting thing is that as we grow investment management.
So too is our services business growing.
By leaps and bounds I mean internal growth there has been staggering.
I would say anecdotally that a lot of that growth for some of that growth is coming from the enhanced stature, we gain by being in the investment management business and the opportunities that that's creating for us and we've just really scratched the surface. So I don't think anybody here.
Thinking in terms of 25% of our of our or 50%.
<unk> of our EBITDA coming from investment management, but it is growing and our long strategy.
The Colliers partnership philosophy is something that is really resonating with the right targets.
And we're very gratified.
To have the.
The opportunities we have today and we believe that there will be other.
Mike.
Targets that want a permanent long term capital partner somebody who can add value with leverage everything we have to offer.
Let's remember Colliers is global with a globally balanced business with strong leadership teams in every geographic region, meaning we can acquire and grow virtually anywhere in the world.
I sort of mentioned that in my comments, but.
How many companies have that opportunity.
At best.
<unk>.
That comes back to.
Our one step at a time approach the strength of our management teams. The tenure of our management teams. They have been around a long time. They know they know the way we operate so we're very bullish.
About this.
<unk> company and proud of what we have accomplished over many years.
And I think that the.
The future is our oyster.
In many ways as long as we continue to apply the same principles that we've used for many years.
To create shareholder value.
Sure.
Okay terrific and then one other quick one just on the engineering side.
Maybe just a quick up there update there you've been acquisitive in the last 12 months.
Very quickly building a platform but.
What the organic pipeline, maybe it looks like now that you've had a chance to piece all those businesses together under one umbrella.
So Christian may have some additional thoughts here, but again I'm going to emphasize.
Is that our current initiatives around engineering, which has been a very.
<unk> positive, but we have an incredible leadership team there that as integrated several acquisitions.
They have a pipeline of others, let's just remember this is only U S.
There is no reason why we cant advance and grow these businesses in other geographic regions, which we fully intend to do which opens up in the massive.
Growth engine.
Side of our core business, but very much related using a globally institutionally recognized brand and it comes back to my comments again around an exceptional company substantially undervalued or underappreciated for the many opportunities.
I have to double and triple the size of our business in the company in the coming years. So I think engineering is just another great opportunity for our structured the right way.
With multiple consolidation and growth opportunities, which will execute in our usual colliers way.
Okay.
Okay excellent thanks, very much guys and congrats on 2021.
Thanks Derek.
Thank you and our next question comes from the line of Frederic Bastien with Raymond James.
Hi, guys.
Hey, Brad.
Youre outsourcing and advisory segment had a very strong year up some 20% organically across regions wondering.
I'm wondering if you could break that down between now.
What is coming from improving.
End market demand like share gains.
And perhaps in new offerings service offerings that you <unk>.
Clemente.
Yes Fredric.
The Americas interest in Advisory group includes engineering and of course, we've been active there on the acquisition front.
Fronts with a number of acquisitions most recently.
Byrd Amendment in November .
2021.
So that's the story in the Americas.
The Americas project management fitness and these evaluations business.
As well as the property manager business have all had great years.
Turning to organic growth.
I'd say the same.
And Asia Pac valuations practice.
Engineering practices.
I am hearing from valuation practices project management.
And property management.
<unk> grown nicely.
Have have contributed to the organic growth in those two regions regions.
Okay, I get that but do you were coming off a depressed levels in 2021. So just wondering if there was also some did.
Did you notice any market share gains that you were able to accomplish.
Yes, I mean, I don't have any specific information in front of me, but I do think we are growing our market share.
And our growth in those assets have been.
Very very strong.
Just just look just looking at our numbers of brands like.
Outsourcing and advisory being so recurring is generally.
A sub 10% kind of grower.
Through 30% this year overall, so I would say, we're taking significant gains the acquisition.
Bergman was in.
December November so it was we also had the annual inflation.
The major acquisition.
But still it's still not enough to reflect the growth. So I would say, we're taking nice.
<unk>.
Sure.
Not to the same degree perhaps as in some of the other areas.
Very formidable to say the least.
Great I'll leave it at that very hard to poke holes in the story right now the job.
Thanks Brent.
Thank you and I'm showing no further questions I'll now turn the call over to the global Chairman and CEO , Mr. Jay Hennick for any closing remarks.
Thank you operator, and thanks, everyone for participating in this quarter's conference call.
We look forward to the first quarter.
To report again.
In the interim period I believe we will have our annual meeting.
So.
That will be webcast for those that want to participate.
So thanks for joining us.
We look forward to speaking to you again soon.
Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and have a nice day.
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Welcome to the <unk> International fourth quarter and year end investors conference call.
Today's call is being recorded legal counsel requires us to advise that 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.
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 February 10th 2022.
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.
Operator, good morning, and thanks for joining us for this fourth quarter conference call.
<unk>, Chairman and Chief Executive Officer of the company and with me today is Christian Mayer Chief Financial Officer.
As always this call is being webcast and is available in the Investor Relations section of our website. A presentation deck is also available there to accompany today's call.
As announced this morning, Colliers delivered very strong fourth quarter financial results with full year revenues exceeding the $4 billion milestone.
Capital markets leasing and outsourcing and advisory were all up significantly.
All service lines and across all geographies, while investment management delivered record results raising more than 6 billion in capital and finishing the year with more than $50 billion in assets under management.
With a globally balanced and highly diversified business model.
<unk> recurring earnings and a sharp focus on global growth opportunities colliers is stronger and more resilient than ever.
As you know last month, we announced that we were investing in the salt infrastructure, a leading trans Atlantic investment management firm with more than $8 billion in assets under management.
Adding another highly differentiated investment business that specializes in the important utility transportation energy renewables and communication sectors.
Together with the previously announced from a land based Antirion, which we're acquiring to augment our existing operations in Europe , we expect to add more than $12 billion in assets under management to this segment of our business. Once both of these transactions are completed.
As you know last year, we announced our new enterprise 2025 growth strategy. The goal is to double our profitability and generate more than 65% of our EBIT.
From a recurring revenue streams over the incoming five years.
We can any tier one well ahead of our internal targets and we continue to make excellent progress.
We were able to achieve our current five year plan it will be very good news indeed for our shareholders.
With our strong growth plan strong global brand and growth platform, well balanced and highly diversified business model unique enterprising culture, and a significant insider ownership colliers is better positioned today than at anytime in our history.
To continue to create value and to generate superior returns for shareholders.
However, despite all of these characteristics and unique attributes.
Our company remains significantly undervalued when compared to others in my view.
I've been investing in businesses and building companies for many years now and I say this with very strong conviction.
Few companies have our growth prospects few have the experienced and financially committed leadership team, we do and fewer still have our long term record of performance track record of greater than 20% annualized annualized returns.
Over more than 27 years.
With that said, let me now turn things over to Christian.
For comments and then we'll open things up to questions Christian.
Thank you Jay.
As announced this morning, <unk> reported very strong fourth quarter financial results by.
My comments follow the flow of the slides posted on the Investor Relations section of <unk> Dot com to accompany this call. Please.
Please note that the non-GAAP measures measures referenced on this call are defined in this morning's press release.
All references to revenue growth are expressed in local currency.
Our revenues for Q4 were $1 3 billion up 48% relative to the prior year period with revenues up strongly across all service lines and geographies grow.
For the quarter was predominantly internally generated.
Compared to 2019 pre pandemic peak levels.
Capital markets revenues were up 60% and leasing was up 12% with office leasing recovering with five to within 5% of 2019 levels.
Fourth quarter consolidated adjusted EBITDA was $192 million up 25% from 155 million reported one year ago with margins at 14, 3% versus 17% in the prior year quarter.
Our margin was impacted by increased performance based incentive compensation and the reinstatement of variable cost.
<unk> attributable to the strong growth in transaction activity.
The Americas region fourth quarter revenues were $814 million.
Up 54% over the prior period.
Revenue growth was exceptionally strong with leasing activity up 77% led by industrial.
Capital markets activity was up 66% and was led by industrial land and multifamily asset classes.
Office leasing activity showed steady improvement in Q4, although remain below pre pandemic levels.
Outsourcing and advisory revenues were up 29% driven by engineering and design.
Evaluation and loan servicing as well as recent acquisitions.
Adjusted EBITDA was $94 million up 34% from last year with a margin impacted by significant incremental performance based incentive compensation from strong year over year growth and operating results the reinstatement of variable cost and higher support staffing costs.
EMEA revenues for Q4 were $233 million up 32% from one year ago with robust growth across all service lines led by outsourcing and advisory and capital markets.
Adjusted EBITDA was $42 million up 19% from last year on higher revenues, although margin was impacted by revenue mix from higher project management activity.
In the Asia Pacific Region third quarter fourth quarter revenues were $219 million up 36% driven by strong capital markets activity across the region, but especially in Australia and New Zealand.
Adjusted EBITDA was $38 million.
Up 7% relative to the prior year quarter and was affected by higher performance based incentive compensation.
Investment management revenues were $80 million up 83% versus the prior year period.
After eliminating the impact of pass through carried interest revenues were up 45% driven by management fee growth.
Assets under management were 51 billion at quarter end.
Up 29% from one year ago, and capped off a record year of fundraising with $6 1 billion of new capital commitments from investors.
Adjusted EBITDA for the quarter was $28 million.
Up from $18 million in the comparative quarter on solid flow through from incremental management fee revenue.
Our consolidated operating cash flow for the full year was $289 million.
However, adjusting for the nonrecurring cash component of the LTI a settlement in April 2021, cash flow was $381 million more than double the $166 million generated in 2020.
Cash flow was positively impacted by a combination of higher earnings.
And a reduction in working capital usage, which was elevated during the earlier stages of the pandemic last year.
Our financial leverage ratio as defined.
Defined as net debt to pro forma adjusted EBITDA was 0.3 times as of December 31, 2021.
During the fourth quarter, we issued $300 million in U S and Euro denominated senior notes due 2031 and paid down our revolving credit facility in full.
As of December 31, we had $397 million of cash on hand, the majority of which is available for investment.
As a result, we now have well over $1 2 billion in liquidity available to fund future acquisitions and ongoing operations, including the recently announced <unk> transaction, which is expected to close later this year.
Our debt capital structure includes a $530 million of attractively priced long term fixed rate debt, which positions us well for any inflationary uncertainty ahead.
Given our low leverage and significant financial capacity, we continue to be extremely well capitalized for future growth.
We are introducing our outlook for 2022, which provides our broad expectations for the year ahead and represents a return to the format. We issued historically during more normal times.
We expect high single digit revenue growth consisting of mid single digit internal growth and the balance from previously completed and recently announced acquisitions, including anterior.
Colliers in Italy and for Salt.
We expect our adjusted EBITDA margin to improve 40 to 60 basis points relative to 2021 from a combination of internal operating leverage and higher margin acquisitions.
Our income tax rate and non controlling interest share of earnings are expected to be 26% to 28% and 18% to 20% respectively consistent with historical ranges.
Finally, our adjusted earnings per share are expected to grow at mid teen percentage rate for 2022.
This new model subs.
Subject to risks and uncertainties as outlined in our accompanying slides.
That concludes my prepared remarks, I would now like to open the call for questions. Operator can you. Please open the line.
Certainly.
To ask a question you will need to press star one on your telephone.
So withdraw your question press the pound key.
Our first question comes from the line of George <unk> with Deutsche Bank.
Good morning, guys.
That's on a really strong quarter.
Jay I got a two part question for you.
We anticipate just before you may get chipped Europe , just before you begin youre not at Deutsche Bank how are you.
Confluence Scotia.
Please go ahead Sir.
Yes, so I wanted to ask you about the assault so maybe what attracted you to that.
Asset.
Once you integrate it are there any other alternative asset classes that you'd be interested to offer that we don't offer yet.
Okay. So it's hard to hear you are asking about the salt and what attracted us to solve.
<unk>.
Sure so the salt, but Salt Lake Harrison Street is a extremely.
High quality.
Investment management firm that is highly differentiated asset so.
They focus on areas that require an extra level of expertise they have been around a long time their results have been stellar as compared to others.
It's a partnership approach in the same way as Harrison Street.
Loss of synergies between Harrison Street, and the Salt and there's also lots of synergies between <unk>.
The salt and the rest of the Colliers global platform. So.
Its strike zone for us in terms of <unk> and.
In terms of an additional.
A move for us in our investment management arm and it really is a model for other similar platforms that we'd look to add over the coming years.
Okay. That's helpful. Then maybe for Christian.
50% EBITDA margins that result.
They are pretty elevated there can you maybe walk us through how.
How did we get how do you get that number and maybe from a restructure or.
Overhead costs.
Would you expect maybe to make it make some more investments in that business that could maybe lower those margins over the next 12 months.
Yes, I mean, George in our investment management business that we have currently operates in the mid 40% EBITDA.
<unk> range and the end result is similar to that these businesses.
Generate.
Strong recurring.
Quarterly management fee revenue streams, and they have relatively low cost they have.
Obviously management professionals.
And.
And some fixed costs and the EBITDA margins in the midstream businesses are.
<unk>.
40% to 55% range.
Okay. Thanks for that just one last one if I may.
On your mid single digit internal revenue growth guidance, you guys put out for 'twenty two.
What do you have baked in for for our capital markets revenue growth.
So I don't want to get into any specifics on that.
But I think across the business.
Single digit growth rate is something we're very comfortable with.
Okay got it thanks guys.
Thank you.
Next question comes from the line of Scott <unk> with CIBC.
Good morning.
Couple of.
Questions on the results.
The results came in much better than the analyst estimates where revenues.
At year end higher than you would've expected and.
Could there have been some revenues that were brought forward from the current quarter.
Scott in the transactional business and the outperformance here was really it.
In the transactional business, but also in the in the other businesses, but the recurring revenue businesses are our more steady either by their nature and more predictable.
Yes, I mean, there are transactions that flow into December that might have occurred in the first quarter and somewhat relates to transactions that we were expecting in December that may be deferred into future quarters. So.
That type of.
Movement of the fee recognition on these commissions.
It's something that happens regularly.
And the business, but nothing unusual to note here I think we just had a stronger finish really across all of our regions.
Really.
In both capital markets and leasing.
Across the board.
So it sounds just like a reflection of the strong market.
Yes, yes stronger than we expected certainly when we met last time a quarter ago here on the call.
It's good news.
Just turning to your leverage your balance sheet. Your leverage ratio is pretty low what range are you comfortable with it.
And would you consider increasing.
Cash back to shareholders by either raising the dividend or through share buybacks, where do you want to keep dry powder.
Well Scott.
Obviously are very active in the acquisition.
Side of our business and that's where we prefer to deploy our capital.
We have a target leverage range of up 1% to two times.
Certainly, we're well below that at yearend and we assess our optimal capital structure, all the time and.
I have set up our focus on acquisitions, but.
Other ways too.
Properly lever our business and return.
Appreciation to shareholders.
Our.
To be considered we will look at that as well.
I'd like to add a little something to that as well.
One of the things, that's becoming glaringly obvious or should be becoming glaring obvious at this company generates significant free cash flow.
And we will continue to do that and our Capex is is modest compared to the size of our company. So despite.
Having aggressive growth already on the books not yet closed.
And if you roll those things forward, our leverage ratio isn't going to change much at all it will go up a little bit, but it isn't going to change much. So.
I think what are the things we are looking at us.
Is the amount of cash flow, we generated in this business and as I said in my in my comments the.
Relatively modest valuation that a company of our quality is trading at and I think we will.
Do our shareholders a service by looking at all ways to.
To enhance shareholder value.
Sounds good.
Helpful and just one final question on the investment.
Management, how does the fund raising outlook.
Is the competitive environment.
For fund raising obviously alternative sort of pretty hot space.
Okay.
Well I mean, we had a record fundraising last year $6 $1 billion.
Through our investment management arm.
I think this year.
We think we're going to have another record yet again.
As you said are asset classes that we focus on are.
In Vogue.
Obviously infrastructure is very broad so we will see how the salt does they've just substantially completed their most recent fund.
And now with the transactions announced the note there will be out raising I believe its biggest fund ever.
Beginning in the next.
45, 60 days so.
We're hoping for a very strong fundraising.
Year in 'twenty two.
Sounds good thanks, Jay Christian.
Turn it over and great year.
Great quarter, great year.
Thanks.
Thank you and then as a reminder to ask a question you will need to press star one on your telephone.
Again to ask a question please press star one.
Our next question comes from the line of Stephen Macleod with BMO capital markets.
Thank you good morning, guys.
Hey, Steve.
Good morning.
I just wanted to follow up on the salt, which looks like a very very complementary investment management acquisition.
Joe You mentioned in your in your comments.
Certainly some.
Some opportunities too.
Could be synergistic with Harrison Street as well as the rest of Colliers Global platform. I was just wondering if you can elaborate a little bit on what some of those synergies look like.
And how we can think about that in terms of magnitude between the salt and the existing business.
Okay.
Well.
There is the obvious which is colliers is a global platform with global relationships, we're marketing.
Transactions, all around the world and having.
Having to solve as part of the family gives them.
I would say a first look but an assured look at any opportunities that we may be marketing as well as special relationships.
Our job in our markets and our traditional businesses to no capital sources and flows of capital and so introducing flows of capital too.
Arison Street, or the soles and Colliers global investors has borne nice fruit in terms of fundraising but also.
The types of investors in all of our funds are those investors that value the governance value of the two.
<unk> record of our of our platform companies within investment management and are always asking us what additional asset classes should we be considering.
So there is.
There is.
A growing need I would say on our side to get better at leveraging.
<unk> existing LP relationships between our difference.
Our different platforms to.
To create additional fund raising sources, so theres just a few.
Theres just a few opportunities there, but there are countless there are countless others.
That will help leverage.
<unk> platforms and enhance the returns for our Lps.
And that's happening really across the board.
Okay. That's that's great color. Thank you.
And then I didn't want to get too granular here, but I'm just curious about what youre seeing in terms of the office either capital markets or leasing backdrop across our geographies I know you mentioned Christian in your prepared remarks that office is within 5% of 2019 levels, just curious what youre seeing between geographic regions.
We're seeing more office activity.
In all regions.
I would say.
Probably more in the Americas and coming back.
Probably something we're expecting to see more to come back more in.
In EMEA and Asia Pac in the coming quarters, but certainly things are.
Progressing well and activity is rebounding.
Okay that makes sense and then maybe.
Similar to that.
Are you seeing do you expect to see any any asset class will sort of begin to weaken as we get back to normal if we do end up getting back to normal in 2022 from a pandemic perspective.
Well I'm not sure I would characterize it as weakening but I think a moderation of activity in places like industrial.
And retail has been been coming back but.
Industrial has been so strong for us.
For a long time and that I think will moderate.
Over time.
Okay.
That's great well, thanks, guys, congrats on a great quarter, and a year and great performance with the pandemic.
Thank you.
Thank you and our next question comes from the line of Daryl Young with TD Securities.
Good morning, guys.
Just wanted to follow up a little bit further on the investment management business.
It sounds like more asset classes could be in the works in the future is there a chance to investment management ends up at 50% of EBITDA in the future I mean, youre already at on a pro forma basis around 25%.
Which I think is sort of the goalpost you used to speak to but just given the fund raising and then the potential for more asset classes. It seems like it could be a very big part of the mix here going forward.
That's a pretty ambitious target that you're outlining.
The interesting thing is that as we grow investment management.
So too is our services business growing.
By leaps and bounds I mean internal growth there has been staggering.
I would say anecdotally that a lot of that growth or some of that growth is coming from the enhanced stature, we gain by being in the investment management business and the opportunities that that's creating for us and we've just really scratched the surface. So I don't think anybody here.
Thinking in terms of 25% of our of our or 50% of our EBITDA coming from investment management, but it is growing and our long strategy.
The Colliers partnership philosophy is something that is really resonating with the right targets.
And we're very gratified.
To have the.
The opportunities we have today and we believe that there will be other.
Mike.
Targets that want a permanent long term capital partner somebody who can add value.
You would leverage everything we have to offer.
Let's remember Colliers is global with a globally balanced business with strong leadership teams in every geographic region, meaning we can acquire and grow virtually anywhere in the world.
I sort of mentioned that in my comments, but.
How many companies have that opportunity.
Best and.
That comes back to.
Our one step at a time approach the strength of our management teams. The tenure of our management teams. They have been around a long time. They know they know the way we operate so we're very bullish.
About this.
As a company are proud of what we have accomplished over many years.
And I think that the.
The future is our oyster.
In many ways as long as we continue to apply the same principles that we've used for many years.
To create shareholder value.
Sure.
Okay terrific and then one other quick one just on the engineering side.
Maybe just a quick up there update there you've been acquisitive in the last 12 months.
Very quickly building a platform but.
What the organic pipeline, maybe it looks like now that you've had a chance to piece all those businesses together under one umbrella.
So Christian may have some additional thoughts here, but again I'm going to emphasize that our current initiatives around engineering, which has been very positive we have an incredible leadership team there that as integrated several acquisitions.
<unk>.
They have a pipeline of others, let's just remember this is only U S.
There is no reason why we cant advance and grow these businesses in other geographic regions, which we fully intend to do which opens up in the massive.
Growth engine.
Side of our core business, but very much related using a globally institutionally recognized brand and it comes back to my comments again around an exceptional company substantially undervalued or underappreciated for the many opportunities.
We have to double or triple the size of our business in the company in the coming years. So I think engineering is just another great opportunity for our structured the right way.
With multiple consolidation and growth opportunities, which will execute in our usual colliers way.
Okay excellent thanks, very much guys and congrats on the 2021.
Thanks Derek.
Thank you and our next question comes from the line of Frederic <unk> with Raymond James.
Hi, guys.
Hey, Brett.
Youre outsourcing and advisory segment had a very strong year up some 20% organically across regions wondering.
I'm wondering if you could break that down between now.
What is coming from improving.
End market demand like share gains.
And perhaps some new offerings service offerings that you <unk>.
Clemente.
Yes Fredric.
The Americas interest in Advisory group includes engineering and of course, we've been active there on the acquisition.
Upfront with a number of acquisitions most recently.
<unk> in November .
2021.
So that's the story in the Americas.
In the Americas, the project management fitness in knees.
<unk> business as well as the property manager business have all had great years.
Contributing to organic growth.
I would say the same in EMEA and Asia Pac values.
Valuations practice.
Engineering practices I'm, sorry, not engineering for valuation practices project management.
And property management.
Have all grown nicely.
Have have contributed.
Contributing to your organic growth in those two regions regions.
Okay, I get that but do you were coming off a depressed levels in 2021. So just wondering if there was also some did.
Did you notice any market share gains that you were able to accomplish.
Yes, I mean, I don't have any specific information in front of me, but I do think we are growing our market share.
And our growth in those assets have been.
Yes.
Very very strong.
Just just look just looking at our numbers of brands like <unk>.
Outsourcing and advisory being so recurring is generally.
A sub 10% kind of grower.
Grew 30% this year overall, so I would say, we're taking significant gains the acquisition.
Bergman.
December or November so it was sort of the utilization.
The major acquisition.
But still it's still not enough to reflect the growth. So I would say, we're taking nice.
Nice.
Sure.
Not to the same degree perhaps as in some of the other areas but.
Very formidable to say the least.
Great I'll leave it at that very hard to poke holes in the story right now John .
Thanks Brent.
Thank you and I'm showing no further questions I'll now turn the call over to the global Chairman and CEO , Mr. Jay Hennick for any closing remarks.
Thank you operator, and thanks, everyone for participating in this quarter's conference call.
We look forward to the first quarter.
To report again.
In the interim period I believe we will have our annual meeting and so that will be webcast for those that want to participate.
So thanks for joining us and we.
We look forward to speaking to you again soon.
<unk>.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and have a nice day.