Q1 2024 Colliers International Group Inc Earnings Call
Welcome to the Colliers International first quarter Investors Conference call today's call is being recorded.
Legal counsel requires us to advice that the discussion scheduled to take place today may contain forward looking statements that involve known and unknown risks and uncertainties.
Our 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 Companys 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 Thursday may seven 2024 and at this time for opening remarks, and introductions I would like to turn the call over to global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead Sir.
Thank you operator, good morning, and thanks for joining us on our first quarter conference call as the operator mentioned I'm, Jay Hennick, Chairman and Chief Executive Officer of the company and with me today is Chris Mclaren Mcclarnon, Chief Executive Officer of our real estate services business.
And Chris Jim Mayer, our Chief Financial Officer.
As always this call is being webcast and is available in the Investor Relations section of our website along with a presentation slide deck.
During the quarter revenue EBIT.
Outsourcing and advisory investment management and leasing all demonstrated improvement over prior year.
Despite ongoing interest rate uncertainty and geo geopolitical tensions that are affecting everyone. It also affected our capital markets. Our strategic focus however, being on expanding high value recurring service lines that continue to yield positive results for us.
Positioning us extremely well for the future.
We remain committed to the colliers way, emphasizing solid internal growth and strategic acquisitions that enhance our business and create value for our shareholders.
And the most recent quarter, we successfully added $300 million in new equity to support our further expansion.
Are there more our acquisition of Colliers Philadelphia's has expanded our presence in the mid Atlantic region solidifying our position as a key player in the United States.
Over the years Colliers since established a highly respected global brands and growth platform with broad diversification across revenue sources service lines and geography.
With more than 70% of our earnings generated from recurring revenue streams, we have a very robust business model with three distinct growth engines that can continue to allow us to capitalize on growth opportunities, while maintaining resilience in the face of economic fluctuations.
Most importantly, colliers is a seasoned leadership team with a substantial equity stake in our company and an impressive 29 year record of delivering nearly 20% compound annual returns for shareholders.
Chris McLaren: And now let me ask Chris Mclaren and to discuss some highlights from our service business and once he has completed Kristian will provide as usual financial report then we'll open things up for questions Chris.
Chris McLaren: Thank you Jay and good morning, everyone Colliers first quarter 2024 results reflect the strength of our resilience and finally diversified professional services platform.
Chris McLaren: Outsourcing and advisory business delivered robust revenue growth with broad based increases across all services led by engineering and project management.
Chris McLaren: We expect this momentum to continue through the remainder of the year, providing roads balance and stability to our platform.
Chris McLaren: This growth helped offset expected soft transaction volumes and capital markets, which although down we're above market activity levels.
Chris McLaren: We remain cautiously optimistic about improving transaction velocity in the late second half of 2020 for contingent on softening interest rates.
Chris McLaren: The narrowing of the price gap between buyers and sellers and improved lending availability.
Chris McLaren: Leasing globally achieved modest growth year over year with several markets increasing activity in the office sector as occupiers make longer term lease commitments, coupled with the return to office continuing the trend upwards.
Chris McLaren: Shortly after the quarter end, we completed the acquisition of our affiliate in Philadelphia.
Chris McLaren: It's five offices, the company's 130 professionals provide leasing and sales brokerage and property management services as.
Chris McLaren: As a viibryd and influential market our ownership now allows us to significantly increase our presence in the mid Atlantic and expand our capabilities in the eighth largest metropolitan area in the U S.
Chris McLaren: Among our many accolades in February we were named to the Ihop's list of top 100 Global professional services firms are testament to our track record of success in delivering exceptional results.
Chris McLaren: For our clients wherever they do business.
Chris McLaren: We have also been recognized as one of the best workplaces in Canada, this year and up more than 900 companies competing for a spot.
Chris McLaren: The steps, we are taking to strategically invest in our people and business skills gaps and take market share will continue to strengthen our platform and drive long term shareholder value.
Chris McLaren: Now I'll turn things over to Christian who will provide more details on our financials.
Christian: Thank you Chris good morning.
Christian: As usual I'll provide some additional commentary on our consolidated results.
Christian: Financial outlook and our balance sheet.
Christian: Note that all references to revenue growth made on this call are expressed in local currency and that the non-GAAP measures discussed here today are as defined in the materials accompanying this call.
Christian: For the seasonally slow first quarter revenues were $1 billion up 4% relative to Q1 2023.
Christian: Internal growth was 2% with strength in our diversified recurring services outpacing a decline in capital markets activity.
Christian: Our outsourcing and advisory service line generated strong 9% revenue growth mostly from internal sources.
Christian: Investment management, excluding pass through carried interest was essentially flat with the prior year.
Christian: Leasing revenues were up 2% for the quarter led by modest growth in office leasing.
Christian: First quarter consolidated adjusted EBITDA was $109 million.
Christian: 4% relative to the prior year, but margins holding flat at 10, 8%.
Christian: We continue to closely manage our costs to match the expected pace of revenues, especially in our capital markets business.
Christian: We also remain focused on improving productivity and on selective strategic recruiting.
Christian: And our investment management segment.
Christian: AUM declined modestly during the quarter, mostly attributable to unrealized market value adjustments in our alternative and traditional real estate funds. Despite growing net operating income at the asset level.
Christian: These adjustments totaled one, 5%, which outperformed the benchmark Odyssey index.
Christian: In addition, some funds disposed of long held assets during the quarter, realizing gains and recycling the proceeds back to investors.
Christian: This positions us well for future fundraising.
Christian: Our first quarter fundraising totaled $450 million.
Christian: We continue to see strong interest in our alternatives infrastructure and credit strategies, and we anticipate an acceleration in fundraising momentum as we progress through the year.
Christian: We are maintaining our financial outlook for 2024.
Christian: While interest rate volatility and geopolitical tensions continue to weigh on transaction volumes, we expect a rebound in activity in the third and fourth quarters.
Christian: Although there is a risk that this could be delayed to later in the year, whereas our early 2025.
Christian: And our recurring service lines, both outsourcing and advisory and investment management.
Christian: We continue to expect mid to high single digit revenue growth for the balance of the year.
Christian: Turning to our balance sheet.
Christian: Our financial leverage ratio defined as net debt to pro forma adjusted EBITDA was two times at March 31.
Christian: We expect leverage to rise modestly in Q2 due to seasonal working capital usage, then to decline to approximately one five times by the end of the year.
Christian: No significant acquisitions.
Christian: Okay.
Christian: With the $300 million equity offering we completed during the first quarter, we are well positioned with more than $1 billion in available liquidity to execute on acquisition opportunities.
Christian: The year unfolds.
Speaker Change: This concludes my prepared remarks.
Speaker Change: I'd now like to open the call for questions. Operator can you. Please open the line.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your Touchtone phone you will hear today Telecom technology and you have a question.
Speaker Change: Should you wish to decline from the polling question. Please press star followed by two.
Speaker Change: You are using a speaker phone please lift the handset before pressing any keys.
Speaker Change: First question comes from Stephen Macleod at BMO capital markets. Please go ahead.
Stephen Macleod: Thank you good morning, good morning, guys.
Stephen Macleod: I just wanted to.
Stephen Macleod: Just dial in on the on the outlook for 2024.
Stephen Macleod: I just wanted to confirm or just kind of get your thoughts on the components specifically around I mean, you mentioned outsourcing and advisory up mid single digits to high single digits, just thinking about capital markets and leasing you're still expecting things to be sort of flattish in the first half with some growth in the back half and then on investment management.
Stephen Macleod: Do you still kind of expect the same level of fund raising in 2020 for them that I think it was $5 billion to $8 billion range as you expected with Q4.
Stephen Macleod: Yes.
Speaker Change: Steve Let me start with that one.
Speaker Change: I think you laid out some of the component pieces here.
Speaker Change: I think.
Speaker Change: The growth will come from each of those components.
Speaker Change: Third for our outsourcing and advisory business, which.
Speaker Change: We have a high degree of visibility on as Chris mentioned.
Speaker Change: With backlogs of work in process and to be completed.
Speaker Change: One third of the growth will come from investment management.
Speaker Change: That's going to rollout through the year.
Speaker Change: We think it will be weighted more towards the back half of the year.
Speaker Change: But we have.
Speaker Change: Strong activity levels and we expect.
Speaker Change: Hopefully to secure new capital coming from investors as the year progresses.
Speaker Change: And finally third of the growth is expected to capital markets. This is gonna be weighed as I mentioned to the third and fourth quarters.
Speaker Change: Not expecting anything.
Speaker Change: Really in terms of growth in the second quarter in capital markets.
Speaker Change: But.
Speaker Change: A modest rebound in the.
Speaker Change: The third and fourth.
Speaker Change: Likely the fourth quarters.
Speaker Change: Okay.
Speaker Change: Steve Steve Let me add let me add something to what Christian to say.
Speaker Change: From my perspective.
Speaker Change: The outlook is really quite straightforward all of our businesses are doing extremely well.
Steve: With the exception of capital markets, which everybody knows it.
Speaker Change: And that's very interest rate driven.
Steve: So your guess is as good as mine as to when that's going to change, but when it does it has a material positive impact not only on colliers, but any other like business in the industry.
Speaker Change: Really will have a significant impact.
Speaker Change: At least from my perspective and.
Speaker Change: And I think.
Speaker Change: We're all managing stick the key is to manage the business as closely as possible and as you know we've done this for many years and we think we've got our eye on on the on the price but.
Speaker Change: It really is going to come down to capital markets when it changes when investor and Chris said. This is just a minute ago and I'm going on a little bit too long here, but there.
Speaker Change: There is also decisioning.
Speaker Change: On the part of sellers when are they going to sell those assets.
Speaker Change: And Theres a lot of pressure on a lot of sellers right now from a financing standpoint too to take action. So.
Speaker Change: Interest rates will impact that of course, but there's also other factors that could accelerate capital market's a little bit quicker.
Speaker Change: And then just interest rates are low I offer that only us as a means of trying to get a sense of.
Speaker Change: Of what what the the balance of the year looks like to us.
Speaker Change: Thanks, Steve Chris.
Speaker Change: Thanks, Dave It's Chris here, just a couple more comments from the field.
Chris: There was a bright spot this quarter in that in Asia Pacific and capital markets were up 19% year over year and so we've got some.
Chris: Some good activity in Japan, Hong Kong, Taiwan little bit Australia, So that's a bright spot.
Speaker Change: We are starting to see over the last 18 months. There is obviously low transaction volumes and really below the $50 million, but as Jay was saying the pressure starting to built and the market is starting to test some bigger ticket items, So 200 plus.
Speaker Change: Level and in Q1 Colliers brokerage three three deals I can give you examples of more than 201 in Oslo, Norway, One in Korea, and one in Australia.
Speaker Change: Australia so.
Speaker Change: We're starting to see more and more activity more.
Speaker Change: Pitches and mandates, but I think it will be incremental.
Speaker Change: Activity and as Christian said towards the back half of the year, but we'll start to accelerate it.
Speaker Change: Okay. That's great that's great color from all three of you. Thank you.
Speaker Change: I just wanted to just shift gears, a little bit and just talk a little about the acquisition pipeline.
Speaker Change: Just sort of what youre seeing out there.
Speaker Change: <unk> strong liquidity right now strong leverage and so just wondering kind of what youre seeing there and where your interests lie currently.
Speaker Change: And I'll take that.
Speaker Change: We have a very interesting pipeline.
Speaker Change: Acquisitions.
Speaker Change: Some larger.
Speaker Change: And several smaller.
Speaker Change: Virtually across the board.
Speaker Change: But.
Speaker Change: Having three growth engines.
Speaker Change: <unk> us.
Speaker Change: Lots of places to grow and having a global platform with strong management teams that have been around a long time.
Speaker Change: <unk> operated the Colliers way for a long time gives us the confidence that we can execute.
Speaker Change: Wherever the opportunities are so.
Speaker Change: We're quite excited.
Speaker Change: Obviously, we've got to take one step at a time, but the pipeline is.
Speaker Change: Is solid I would say.
Speaker Change: That's great. Thank you Jay I appreciate the color guys.
Speaker Change: Thank you. The next question comes from Daryl Young of Stifel. Please go ahead.
Daryl Young: Hey, good morning, everyone.
Daryl Young: First question just around the investment management business.
Daryl Young: Maybe a little bit of color you can provide a little bit of color on on some of the costs are added for fund raising and you called out capability distribution capabilities in the middle East.
Daryl Young: Firstly interest there.
Speaker Change: Yes.
Speaker Change: We've been building our fundraising capabilities and in particular in the Middle East and Thats an area that we have in Asia, two in Asia, but in the middle East our share of Lps is quite low so the opportunity set for us in the middle East is as big.
Speaker Change: Asia is an area we've been act event.
Speaker Change: For longer and we have more Lps, there, but still room for growth.
Speaker Change: Well in terms of attracting new investors and new sources of capital for our fundraising the other part that we're focusing effort on it and which is taking some.
Speaker Change: Adding some expense is building out our capabilities to.
Speaker Change: Watch new strategies and new funds have got a few things in.
Speaker Change: In the works.
Speaker Change: We're going to launch this year and we've had to staff up and incur some costs to make that come to reality.
Speaker Change: Got it Okay, and then it sounds like you're targeting sort of net new Lps, but what kind of receptivity of have you seen from existing Lps.
Speaker Change: <unk> on funds and that also cross sell of Lps between the various boutiques that you acquired across the last couple of years.
Speaker Change: In terms of re ups.
Speaker Change: We're seeing.
Speaker Change: At the same percentages as prior years or prior fund re ups.
Speaker Change: What we are seeing is we're seeing.
Speaker Change: Adjustments in the allocations. So some of them. If they are if they are tight or theyre not balanced properly, we will increase or reduce the amount of commitment to the next fund, but virtually 92% or 93%.
Speaker Change: Re ups has been sort of a consistent theme for us for many years and then introducing and that's one of the great things about this business. It so recurring as long as your investors are happy with where they're at with the results and the way in which their investments are being managed.
Speaker Change: And then we're introducing new investors.
Speaker Change: Especially during these times and especially to the types of assets that we focus on which our alternative asset classes, which are very much in demand.
Speaker Change: And so.
Speaker Change: I would say.
Speaker Change: There is a softness in fund raising generally it's changing but.
Speaker Change: It's changing for the better but in terms of re ups, we're where we need to be.
Speaker Change: Other thing that we've invested in is <unk>.
Speaker Change: <unk> channel through one of our broad platforms that has a very significant presence we've doubled our investment around raising capital up through the RIAA channel and.
Speaker Change: So we're quite excited about the the.
Speaker Change: The asset management component of our business and think that.
Speaker Change: All these investments, particularly in times like this.
Speaker Change: We will pay dividends down the line and it's not just going to be this year, it's going to be next year and beyond.
Speaker Change: So new products in the marketplace.
Speaker Change: More investment in.
Speaker Change: In distribution capabilities.
Speaker Change: You know.
Speaker Change: All of those types of things are the things that you do to build a great platform.
Speaker Change: Which is which we're doing we're also investing it I should say should have said this at the outset.
Speaker Change: Grading our people, we've got some exceptional people but.
Speaker Change: There's opportunities to add different asset classes, which means you need to bring in.
Speaker Change: <unk> expertise around data centers and variety of other things that we're working on that just make our platform that much better.
Speaker Change: That is great color.
Speaker Change: Jump back in the queue. Thanks, very much guys.
Speaker Change: Thank you. The next question comes from Stephen Sheldon with William Blair. Please go ahead.
Stephen Sheldon: Hey, Thanks for taking my questions I wanted to start with Chris Im curious what youre seeing in terms of industrial leasing activity. It sounded like the 2% overall leasing growth in the quarter was driven by.
Stephen Sheldon: A pickup in office. So it would just be great to get some color on what youre seeing on the industrial side and whether things are weakening there just kind of how that trajectory is looking on the industrial side.
Speaker Change: Thank you.
Speaker Change: Sure.
Speaker Change: So I think it.
Speaker Change: In the industrial leasing there has been a natural cooling after the record breaking.
Speaker Change: Run up after the Covid booming e-commerce in 'twenty, one to 'twenty three.
Speaker Change: Occupiers today are generally concerned about economic conditions and the geopolitical concerns.
Speaker Change: And they're also focused on looking at efficiencies and looking at their existing locations and what can automation due to their facilities.
Speaker Change: There's also been an increase in vacancy.
Speaker Change: In a number of markets. So there's more options for occupiers to look at and so they are taking some more time to analyze what that footprint should look like going forward. So I think it's a natural pause in the cycle the market is still.
Speaker Change: Good market, but.
Speaker Change: The level of velocity at leasing transaction in industrial is not the same as it was in the <unk>.
Speaker Change: Record breaking times just after COVID-19.
Speaker Change: The one.
Speaker Change: Buyer is that in Canada, we had.
Speaker Change: Suitable.
Speaker Change: Leasing growth in industrial up 41% year over year.
Speaker Change: So that was the one bright spot most of the places around the world.
Speaker Change: <unk> leasing was down.
Speaker Change: In topic in talking to our operators in the field I think theres also a little bit of a delay from quarter to quarter. So some slippage I've heard.
Speaker Change: <unk> heard of some some larger deals in the Australia, Poland and the U S, notably that.
Speaker Change: Could show up in Q2.
Speaker Change: Got it that's really helpful. I appreciate that.
Speaker Change: And maybe just thinking about the U S.
Speaker Change: How are you thinking about your producer capacity and positioning for when capital markets activity picks up I think you talked last quarter over quarter about record recruiting in the U S. During 2023, you know I'll also have some more scale with the Philadelphia acquisition.
Speaker Change: So are you getting closer to the scale that you'd like in the U S and how important is it to continue adding scale I guess through acquisitions, specifically in the U S.
Speaker Change: So I think we continue to recruit top talent.
Speaker Change: And we've got lots of white space in the U S.
Speaker Change: Our market share is still quite low compared to our major competitors. So this is a priority focus of management to continue to bolster our team and we will do that through either acquisitions like our affiliate in Philadelphia or teams or individuals. So it is still very much a priority.
Speaker Change: In addition, we're looking at productivity, how do we get more production out of our existing.
Speaker Change: Talent.
Speaker Change: And making sure that if there is any non performers that.
Speaker Change: We're moving them out and then are our high potentials, we're investing in those people to make sure that they can.
Speaker Change: When the market comes back. So this is still a major initiative of ours to continue to push into into capital markets in the U S.
Speaker Change: Got it makes sense.
Speaker Change: Then just one last one for Christian as you think about our models tax rates were a little elevated relative to at least what we had modeled for the quarter. So.
Christian: Just curious if you have any framework for how we should think about the tax rate over the rest of the year.
Christian: And what we've assumed in the guidance.
Christian: Yes, Stephen there was a onetime item in Q1.
Christian: For a couple of million dollars, so absent that the rate would have been 30% in the quarter and.
Christian: And we expect the rate to be 30% on a full year basis as well.
Stephen: Perfect. Thank you.
Stephen: Thank you. The next question comes from Himanshu Gupta with Scotiabank. Please go ahead.
Himanshu Gupta: Thank you and good morning.
Himanshu Gupta: So just on the 2020 for guidance.
Himanshu Gupta: Do you have M&A baked into this guidance and then I know you have done the equity offering now which was previously <unk> at the time of guidance.
Himanshu Gupta: He managed through I think you were asking about acquisitions in the guidance.
Himanshu Gupta: It is now.
Speaker Change: The answer is no there's no acquisitions built into the guidance and the guidance does include the impact of the recent equity offering.
Speaker Change: Okay. Okay. Thank you.
Himanshu Gupta: And then given that the guidance is unchanged has the outlook changed the segment.
Himanshu Gupta: Are you still expecting one total downloads from I M.
Himanshu Gupta: One third of the growth from capital markets business last quarter as well.
Himanshu Gupta: Yes, <unk> I think the.
Himanshu Gupta: The components of that outlook are the same.
Himanshu Gupta: One third from outsourcing and advisory one third for investment management and one third from.
Himanshu Gupta: The transactional business, that's consistent with what we thought.
Himanshu Gupta: Back in February.
Speaker Change: Got it and any incremental weakness baked into the capital markets business I mean, it looks like the the leasing looks to be performing better than.
Speaker Change: Our expectation then maybe capital markets given the industry could be a bit softer. So again two segments any change in direction.
Speaker Change: I mean, not meaningfully Himanshu I mean this is.
Speaker Change: Yes.
Speaker Change: I think we do the best we can and then we look at our.
Himanshu Gupta: Various components.
Himanshu Gupta: Every time, we update our.
Himanshu Gupta: And look at our.
Himanshu Gupta: Forecast for it.
Speaker Change: Nothing meaningful to call out at this time.
Speaker Change: Got it okay.
Speaker Change: Ben.
Speaker Change: Just looking at the valuation on.
Ben: Hey, listen management, the evolution of the adjustment in Q1.
Ben: Was it mostly related to office can.
Ben: Can you elaborate a bit there.
Ben: And so it was primarily related to our.
Ben: Oh, sorry to our alternative portfolio.
Ben: And that.
Ben: That is not related to the actual portfolio performance itself.
Himanshu Gupta: Income coming off these assets is the same or better than it was previously what's happened is that cap rates have gapped out and have driven a reduction in the.
Himanshu Gupta: Sort of the values that the outside appraisers attached to these assets.
Himanshu Gupta: As it relates to our office portfolio, it's quite small.
Himanshu Gupta: One one third or one quarter of our traditional portfolio, which is a small piece overall.
Himanshu Gupta: And we've taken cumulatively over the last year and a half.
Himanshu Gupta: 27% I believe.
Himanshu Gupta: Mark to market adjustment.
Himanshu Gupta: On that office portfolio already so that is not a driver in the quarter, but certainly its been something thats been weighing.
Himanshu Gupta: On AUM over the past year and a half.
Speaker Change: Alright, thank you.
Speaker Change: Maybe just the last question on <unk>.
Himanshu Gupta: Our global opportunities. So how close are you on the capital deployment.
Himanshu Gupta: Sure.
Himanshu Gupta: Anything you want to elaborate on that.
Himanshu Gupta: So the question is how close are we on capital deployment in terms of acquisitions or other opportunities.
Himanshu Gupta: Okay.
Speaker Change: Not yet.
Himanshu Gupta: Not something that we would normally talk about.
Himanshu Gupta: Number one number two we are actively involved in many transactions right now.
Himanshu Gupta: And.
Himanshu Gupta: A big close when they close and I can't really give you any further color.
Speaker Change: Got that.
Himanshu Gupta: They're all opportunistic.
Himanshu Gupta: They happen when they happen, but we have a track record of of.
Himanshu Gupta: Of completing multiple transactions over many years.
Speaker Change: Fair enough. Thank you for that I'll turn it back.
Speaker Change: Thank you.
Speaker Change: Thank you. The next question comes from Jimmy Chen at RBC. Please go ahead.
Jimmy Chen: Thanks, maybe just a follow up on the M&A.
Jimmy Chen: I know, it's not so much you could share, but can you give us a sense of the deal sizes that you may be looking at across you mentioned looking at small and big deals.
Speaker Change: And also I think we talked about pricing last quarter.
Himanshu Gupta: Is that has there been any change in that given the changing continuously changing rate environment.
Himanshu Gupta: Have you seen any changing sort of pricing expectations.
Speaker Change: Yes, that's a good question.
Speaker Change: I mentioned earlier, there are large transactions and there are smaller transactions.
Speaker Change: I'd say that the large transaction pricing is high.
Speaker Change: And it's just the nature of the Beast.
Speaker Change: And.
Speaker Change: And.
Speaker Change: What's also happening is especially in the large transaction.
Speaker Change: Environment.
Speaker Change: These are businesses that are extremely well managed and have great long term prospects and thats getting reflected in evaluation.
Speaker Change: When it comes to smaller deals and of course as you had hoped.
Speaker Change: Moller has always relative.
Speaker Change: The pricing is materially lower than it is on the larger transactions.
Speaker Change: And it also depends on.
Speaker Change: What segment, you're talking about whether it's.
Speaker Change: Whether it's our more traditional service lines.
Speaker Change: Right now you can you can buy more traditional real estate service businesses at relatively low valuations for obvious reasons capital markets as an example.
Himanshu Gupta: But in the other two areas.
Himanshu Gupta: The evaluations I think are fair valuations give or take on the smaller transactions.
Himanshu Gupta: And the beauty of that.
Himanshu Gupta: We have is that.
Himanshu Gupta: We can we can integrate those acquisitions in different parts of the world.
Himanshu Gupta: And different segments of the country that add different.
Himanshu Gupta: Capability service capabilities to US for example in engineering.
Himanshu Gupta: We might want to augment one or two components of our business.
Himanshu Gupta: In a particular region. So there's a nice opportunity for us to just strengthen our business and widen our capabilities I'm, probably giving you too much detail here, but.
Himanshu Gupta: You know.
Himanshu Gupta: Having.
Himanshu Gupta: Three distinct growth engines being able to execute on a global basis, having a strong balance sheet, having a management team thats done this for a number of years old.
Himanshu Gupta: It puts us in an excellent position to capitalize.
Himanshu Gupta: And in markets like this there are pockets.
Himanshu Gupta: Eric of areas to capitalize on so.
Himanshu Gupta: We're very excited about some of the opportunities we have if we can bring them home.
Himanshu Gupta: I think that it just takes us to an entirely new level as a company.
Himanshu Gupta: Okay.
Speaker Change: Okay. Thanks, and then maybe just Christian.
Christian: A quick follow up or clarification.
Speaker Change: AUM growth on the investment management business to $5 billion to $8 billion I think I heard you correctly, you Q1, yet.
Speaker Change: $450 million of fundraising.
Speaker Change: Until if I just look at the annual number for 2024.
Christian: Simple math, 1% on five to eight.
Speaker Change: The thinking is that.
Speaker Change: The additional revenue on an annualized basis will be $50 million to $80 million.
Speaker Change: Weighted towards second half of the year.
Speaker Change: Is that how we should think about it.
Speaker Change: Yeah, I think thats right generally I mean, there's a few strategies like credit where the capital does not generate fees until it gets put to work.
Speaker Change: But generally in the traditional alternative infrastructure categories when that capital is raised theirs.
Speaker Change: Our fee clock starts running immediately.
Speaker Change: Okay, and then sorry, and then some of the new capabilities that you talked about fundraising.
Speaker Change: New capabilities in the Middle East.
Speaker Change: And then the RIAA channel those expenses are already running through.
Speaker Change: In the current quarter, yes, there are there.
Speaker Change: There are charges against EBITDA in the first quarter and some costs were incurred late last year as well.
Speaker Change: On these on these additional mostly staffing.
Speaker Change: Cost.
Speaker Change: Great. Thank you.
Speaker Change: Thank you. The next question comes from Bastian at Raymond James. Please go ahead.
Bastian: Good morning, guys. You just added the colors affiliate in Philadelphia, but I was wondering if there are other non owned affiliates or regions that are of interest to you whether that's in the U S or globally.
Speaker Change: Yes.
Speaker Change: It's Chris here to answer your question Theres, a couple potentials in the future So Houston Denver.
Chris: South Carolina.
Chris: Those are kind of in Columbus, maybe.
Chris: Just a couple and internationally, there's not really any affiliates.
Chris: The markets aren't really big enough.
Chris: Okay.
Chris: And maybe switching gears still on M&A, but on the engineering side, you've been up to now pretty much active in the U S and started.
Chris: <unk> established a footprint in Australia are these sort of the regions youre going to continue to focus on in the short term.
Speaker Change: We are open to other regions as well Fred.
Fred: There is there are several markets that that are.
Speaker Change: Western type markets that are conducive for growth do you know this better than me.
Speaker Change: Most other analysts on this on this call.
Speaker Change: So yes, there is a number of opportunities differ.
Speaker Change: Different areas.
Speaker Change: That we're pursuing.
Kevin: Kevin Thank you.
Kevin: Thanks Bruce.
Kevin: Ladies and gentlemen, as a reminder, should you have any questions. Please press star one.
Kevin: Next question is a follow up from Julien at Stifel. Please go ahead.
Julien: Yes, thanks, guys.
Julien: On the engineering and the project management can you remind us the high level mix of public versus private in the context of the question does being some of the slowdowns, we have seen in construction activity in the commercial real estate debt markets multifamily industrial all those those areas.
Julien: Just any anything we should be aware of or considering on that front.
Speaker Change: Yes Darryl.
Speaker Change: Good question across our business. The mix is roughly 50 50 public sector and private sector.
Speaker Change: And we target that for precisely that reason that youre mentioning because the public sector stuff is extremely stable tends to be longer term in nature.
Speaker Change: <unk> sector stuff is great work.
Kevin: <unk> has long term contracts, but can be a bit.
Kevin: More sensitive to economic conditions, so we try to balance it on that basis, but genuinely a little more profit and more profitable.
Kevin: So we like it.
Kevin: We like that balance and that's what we try to work towards.
Kevin: Across across the business and to keep those backlogs of work.
Kevin: At that sort of.
Kevin: Level that give us great confidence.
Kevin: In terms of our.
Kevin: Next 12 to 18 months out.
Speaker Change: Got it okay. So things are still sort of motoring along and youre not youre not seeing sort of any major impacts from some of these headlines we're reading.
Speaker Change: No, but if you have any business you would like to refer our way please give us the name.
Speaker Change: And we will be all over it.
Speaker Change: Perfect. Thanks, guys.
Speaker Change: Okay. Thanks.
Speaker Change: Yeah.
Speaker Change: Thank you there are no further questions you may proceed with closing comments.
Speaker Change: Thanks, everyone for participating in the first quarter conference call.
Speaker Change: Very interesting year, great opportunities, we have in front of us.
Speaker Change: But as always we will have to continue to deliver one step at a time. So we look forward to speaking.
Speaker Change: Speaking to you again during the second quarter conference call and.
Speaker Change: Thanks for participating.
Speaker Change: Yeah.
Speaker Change: Ladies and gentlemen, this concludes the conference call. Thank you for your participation and have a nice day.
Speaker Change: Okay.
Speaker Change: Hum.