Q1 2025 Colliers International Group Inc Earnings Call
Operator: Welcome to the Colliers International Q1 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 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 Tuesday, 6 May 2025.
Speaker Change: Welcome to the Colliers International First Quarter Investors Conference call. Today's call is being recorded.
Legal Council requires us to advise that the discussions scheduled to take place today make in pain forward-looking statements that involve known and unknown risks and uncertainties.
Speaker Change: Actual results may be materially different from any future results, performance or achievements contemplated in the foreign-looking statements.
Speaker Change: Additional information concerning factors that could cause actual results to materially differ from those in the four-looking statements is contained in the company's annual information form as filed with the Canadian Securities Administrators and the company's annual report.
Speaker Change: on form 40-F as filed with the U.S. Securities and Exchange Commission.
Speaker Change: As a reminder, today's call is being recorded. Today is Tuesday, May 6, 2025 and at this time for opening marks 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.
Operator: 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.
Jay Hennick: Thank you, operator. Good morning, thanks for joining us for the Q1 conference call. As the operator mentioned, I'm Jay Hennick, Chairman and Chief Executive Officer of Colliers. With me today is Christian Mayer, our Chief Financial Officer. As always, this call is webcast and available in the investor relations section of our website, along with a detailed presentation slide deck. We're pleased with our operating results for the quarter, which met expectations and keep us on track to deliver on our full-year targets. We took a cautious outlook at the beginning of the year, given the macroeconomic and political uncertainty at the time, we're sure glad we did. At Colliers, market volatility has never derailed our focus on creating long-term value. Our leadership team has consistently navigated uncertainty with discipline and has taken the opportunity to seize opportunities when they present themselves.
Speaker Change: Thank you, Operator. Good morning, and thanks for joining us for the first quarter conference call. As the Operator mentioned, I'm Jay Hennick, Chairman and Chief Executive Officer of Colliers, and with me today is Christian Mayer, our Chief Financial Officer. As always, this call has webcast and available in the Investor Relations section of our website, along with a detailed presentation slide deck.
Speaker Change: We're pleased with our operating results for the quarter, which met expectations and keep us on track to deliver on our full year targets.
Speaker Change: We took a cautious outlook at the beginning of the year, given the macro, economic and political uncertainty at the time, and we're sure glad we did.
Speaker Change: At Colliers, market volatility has never derailed our focus on creating long-term value.
Speaker Change: Our leadership team is consistently navigated on certainty with discipline and has taken the opportunity to seize opportunities when they present themselves. This time is no different.
Jay Hennick: This time is no different. That said, we're seeing significant growth across business segments and geographies, which we expect will continue, particularly in H2 of the year. Our newly established engineering segment delivered strong internal growth in the quarter, and combined with acquisitions, posted meaningful gains over the prior year. With more than 9,000 professionals and over $1.5 billion in annualized revenue, we're now one of the top global players in the industry, with additional opportunities for growth. In Investment Management, AUM exceeded $100 billion for the first time. Fundraising is gaining momentum, driven by new vintages and new investment strategies. We're leveraging our scale, our expertise, and our proprietary data and relationships to deliver strong performance and innovative opportunities for our investors.
Speaker Change: That said, we're seeing significant growth across business segments and geographies, which we expect will continue particularly in the second half of the year.
Speaker Change: Our newly established engineering segment delivered strong internal growth in the quarter and combined with acquisitions posted meaningful gains over the prior year.
Speaker Change: With more than 9,000 professionals and over $1.5 billion in annualized revenue, we're now one of the top global players in the industry with additional opportunities for growth.
Speaker Change: In investment management, AUM exceeded $100 billion for the first time.
Speaker Change: Fundraising is gaining momentum driven by new ventages and new investment strategies.
Speaker Change: We're leveraging our scale, our expertise and our proprietary data and relationships to deliver strong performance and innovative opportunities for our investors.
Jay Hennick: Our real estate services segment is a global leader, ranking among the top three worldwide, with a balanced, diversified platform supported by a strong foundation of recurring revenues. With 14,000 professionals globally, this segment has consistently delivered year-over-year growth and strong cash flows, despite obvious tailwinds in capital markets. Once the market stabilizes, we expect activity levels to rise, which will drive even greater profitability to this division. We also advanced our growth strategy with the acquisition of Ethos Urban, adding best-in-class urban planning capabilities in Australia, the pending acquisition of Triovest, which strengthens our leadership in high-value recurring real estate services in Canada, and the recent acquisition of Terra Consulting, further expanding our infrastructure capabilities in our US engineering platform. With 3 powerful growth engines, a world-class team, and a 30-year record of performance through all market cycles, Colliers is well-positioned to continue delivering exceptional value for shareholders.
Speaker Change: A real estate services segment is a global leader ranking among the top three worldwide with a balanced, diversified platform supported by strong foundation of recurring revenues.
Speaker Change: With 14,000 professionals globally, this segment has consistently delivered year over year growth and strong cash flows, despite obvious tailwinds in capital markets.
Speaker Change: Once the market stabilizes, we expect activity levels to rise, which will drive even greater profitability to this division.
Speaker Change: We also advanced our growth strategy with the acquisition of ethosurban, adding best-in-class urban planning capabilities in Australia.
Speaker Change: The pending acquisition of Trio Vest, which strengthens our leadership in high value, recurring real estate services in Canada, and the recent acquisition of terror consulting, further expanding our infrastructure capabilities in our U.S. engineering platform.
with three powerful growth engines.
Speaker Change: A world-class team and a 30-year record of performance through all market cycles, Colliers is well positioned to continue delivering exceptional value for shareholders.
Jay Hennick: I'll turn things over to Christian for his financial report, and then we'll open up the call to your questions. Christian?
Speaker Change: Now, I'll turn things over to Christian for his financial report, and then we'll open up the call to your questions.
Christian Mayer: Thank you, Jay. Good morning, everyone. Please note that the non-GAAP measures discussed here today are as defined in the materials accompanying this call, and all references to revenue growth are on a local currency basis. Revenues for our Q1 are $1.1 billion, up 16% relative to the prior year period, with significant growth coming from our Engineering segment. Internal growth was 4% overall and was led by Engineering, which had robust increases in activity, particularly with public sector clients in all 4 of our key end markets: property, infrastructure, water, and environmental. Q1 adjusted EBITDA was $116 million, up 7% over the prior year, with contribution from both internal growth and acquisitions. Overall real estate services net revenue grew modestly for the Q1. Capital markets activity was up 10% globally. Sales brokerage was up in all geographic regions and all asset classes.
Christian Mayer: Thank you, Jay, and good morning, everyone. Please note that the non-GAAP measures discussed here today are asked to find in the materials accompanying this call, and all references to revenue growth are on a local, guaranteed basis.
Christian Mayer: revenues for our first quarter for $1.1 billion, up 16% relative to the prior year period with significant growth coming from our engineering segment.
Christian Mayer: Internal growth was 4% overall and was led by engineering which had robust increases in activity, particularly with public sector clients in all four of our key end markets.
Property, Infrastructure, Water, and Environmental Ensemble.
Christian Mayer: 1st Porter, Adjusted EBITDA was 116 million, up 7% over the prior year, with contribution from both internal growth and acquisitions.
Christian Mayer: Overall, real estate services net revenue grew modestly for the first porter.
Capital Markets Activity was up 10% globally.
Christian Mayer: Sales brokerage was up in all geographic regions and all asset classes.
Christian Mayer: Debt finance activity increased nicely, particularly refinancing volume in our US multifamily franchise. Leasing revenues were down 5% relative to a strong prior year Q1 that had a couple of larger specialty asset class transactions. We expect leasing revenues to return to year-over-year growth going forward. The segment's net margin declined modestly to 6.6% for the seasonally slow Q1, primarily due to continued healthy investments in recruiting as well as revenue mix. Engineering performed strongly in Q1 with net revenue growth of 63%, attributable to both recent acquisitions and low teens percentage internal growth. The net margin increased to 8.4%, up 110 basis points relative to the prior year period due to improvements in staff utilization and operating leverage. We continue to carefully monitor our clients for potential tariff or government policy related impacts, but to date, are not aware of any significant issues.
Christian Mayer: debt finance activity increased nicely, particularly refinancing volume in our US multi-family franchise.
Christian Mayer: Leasing revenues were down 5%, relative to a strong, prior year first quarter that had a couple of larger specialty asset class transactions.
Christian Mayer: We expect leasing revenues to return to your view of growth going forward.
Christian Mayer: The segment's net margin declined modestly to 6.6% for the seasonally slow first quarter, primarily due to continued healthy investments in recruiting, as well as revenue mix.
Chris Chappell: and the latest in the world, the Los Angeles Times. I'm Chris Chappell. We'll see you next time. Take care. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye.
Chris Chappell: Engineering performed strongly in Q1 with net revenue growth of 63% attributable to both recent acquisitions and lower teens percentage internal growth.
Speaker Change: Benette Margin increased to 8.4% up 110 basis points relative to the prior year period due to improvements in staff utilization and operating leverage.
Speaker Change: We continue to carefully monitor our clients for potential tariffs or government policy related impacts, but to date are not aware of any significant issues.
Christian Mayer: Investment management net revenues, excluding pass-through performance fees, were flat as expected. The net margin was 46.2%, up from 44.2% last year, with lower incentive compensation partially offset by higher headcount. We raised $1.2 billion of new capital commitments during Q1, which was more than double the amount we raised in the prior year period. Notably, three-quarters of the capital commitments raised during the quarter were in traditional real estate strategies, indicating increased investor interest as conditions improve. We expect our fundraising to accelerate in Q2 with new vintages of existing products, as well as new investment strategies entering the market. Assets under management at 31 March were $100.3 billion, up $1.4 billion from year-end. Increases came from fundraising and positive mark-to-market adjustments, partially offset by portfolio dispositions that returned capital to investors.
Speaker Change: Investment management net revenues, excluding pass-through performance fees, were flat as expected.
Speaker Change: The net margin was 46.2% up from 44.2% last year, with lower incentive compensation partially offset by higher head count.
Speaker Change: We raised 1.2 billion of new capital commitments during the first quarter, which was more than double the amount we raised in the prior year period.
Speaker Change: Notably, three quarters of the capital commitments raised during the quarter were in traditional real estate strategies, indicating increased investor interest as conditions improve.
Speaker Change: We expect our fundraising to accelerate in the second quarter with new advantages of existing products as well as new investment strategies entering the market.
Speaker Change: Assets under management at March 31st were 100.3 billion, up 1.4 billion from year-end.
Speaker Change: Increases came from fundraising and positive market adjustments, partially offset by portfolio dispositions that returned capital to investors.
Christian Mayer: Our cash flow from operations and free cash flow for Q1 improved significantly year-over-year. On a trailing 12-month basis, our free cash flow exceeded $400 million and represented a conversion rate of 136% of adjusted net earnings. Across each of our business segments, our operations are working capital light and have modest CapEx, resulting in strong free cash flow that can be reinvested in our growth. Over the long term, we are targeting a conversion rate of approximately 100% of adjusted net earnings. Moving to our balance sheet, our leverage ratio defined as net debt to pro forma adjusted EBITDA was 2.2x as of 31 March. As expected, leverage increased modestly in Q1 given seasonal operating cash outflows. For Q2, we expect leverage to remain in the 2x range, then decline to approximately 1.5x by year-end.
Speaker Change: Our cash flow from operations and free cash flow for the first quarter improved significantly or year over year.
Speaker Change: On a trailing 12-month basis, our free cash will exceeded 400 million and represented a conversion rate of 136% of adjusted net earnings.
Speaker Change: Across each of our business segments, our operations are working capital light and have modest capex, resulting in strong free cash flow that can be reinvested in our growth.
Speaker Change: Over the long term, we are targeting a conversion rate of approximately 100% of adjusted net earnings.
Speaker Change: Moving to our balance sheet, our leverage ratio defined as net debt to perform a non-adjusted even debt was 2.2 times as in March 31st.
Speaker Change: As expected, leverage increased modestly in the first quarter given seasonal operating cash outflows. For the second quarter we expect leverage to remain in the two times range, then decline to approximately 1.5 times by year end.
Christian Mayer: This assumes no material acquisitions. Our full-year financial outlook remains unchanged. As Jay noted in his comments, we took a cautious posture when we set our outlook back in February, knowing that international trade tensions and interest rate volatility could impact our clients and our businesses. We currently expect transactional revenue choppiness to continue in Q2, but see an improvement in operating conditions in the back half of the year. That concludes my prepared remarks. Operator, can you please open the line for questions?
This assumes no material acquisitions.
Our full-year financial outlook remains unchanged.
Speaker Change: As Jay noted in his comments, we took a cautious posture when we set our outlook back in February knowing that international trade tensions and interest rate volatility could impact our clients and our businesses.
Speaker Change: We currently expect transactional revenue choppiness to continue in the second quarter but see an improvement in operating conditions in the back half of the year.
Speaker Change: That concludes my prepared remarks. Operator, can you please open the line for questions?
Operator 2: Thank you. Your first question is from Anthony Paolone from JPMorgan Chase. Please go ahead.
Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and after session.
Speaker Change: Should you have a question, please press the star followed by the number one on your touch
Speaker Change: You will hear prompt that your hat has been raised.
Speaker Change: Should you wish to decline from the Polone process, please press the star followed by the number
Speaker Change: If you are using a speaker phone, please lift a headset before pressing any keys.
One moment please for your first question.
Speaker Change: Your first question is from Anthony Paolone from J.P. Morgan Chase. Please go ahead.
Anthony Paolone: Yeah, thanks. Good morning. I guess first question is, can you just talk about what you have seen unfolding more recently in the market and where, whether it's by region or property type or business line, where maybe you've seen some impact from the macro environment?
Christian Mayer: Wow, that's a loaded question. There's things happening all over the place, and so I'm trying to zero in on a couple of highlights for you. We're seeing sort of better results in Asia.
Speaker Change: Wow, that's a loaded question. There's things happening all over the place and so I'm trying to zero in on a couple of highlights for you.
We're seeing sort of better results in Asia.
Jay Hennick: We're seeing some pockets in Europe. I'm talking specifically about capital markets now. New York seems to be strong in terms of new leases at record rates. Generally speaking, there is still an uncertainty in the marketplace, which is preventing clients from making longer term decisions on leases in non-key markets, let's say. We were, I would say at the beginning of the quarter, excited that things were stabilizing, then, of course, all this tariff stuff started and all of a sudden, transactions that were close to closing had financing tied up, and a variety of other things just were put on delay. All of this to say is we're still in a market, in my view, that's uncertain and unclear. Only a select number of transactions are getting completed.
We're seeing some pockets in Europe .
Speaker Change: I'm talking specifically about capital markets now. New York seems to be strong in terms of new lease.
Speaker Change: which is preventing clients from making longer-term decisions on leases in non-key markets let's say and and we were we were I would say at the beginning of the quarter excited that that
that things were stabilizing, and then of course all this.
Speaker Change: Tariff stuff started and all of a sudden transactions that were close to closing.
Speaker Change: had financing light tied up in a variety of other things just were put on delay so all of this to say is we're still in a in a market in my view that's. [inaudible]
Speaker Change: You know, uncertain and unclear, and only a select number of transactions are getting completed.
Christian Mayer: I'd add to that, Jay, in terms of, we talked about our capital markets business. When you switch over to looking at our engineering segment, activity levels there continue to be very robust, Tony. We have strong pipelines of work. We are seeing the public sector clientele, particularly, engaging on new and enhanced projects and assignments. Feel very good about that segment. In terms of investment management, indications to date, given the trade uncertainty and volatility is that activity levels and interest levels in fundraising are proceeding and growing. I think the volatility here should not be a major factor impacting our success in fundraising for the year.
Speaker Change: I'd add to that, Jay, in terms of, you know, we talked about our capital markets business, but when you switch over to looking at our engineering segment, activity levels there continue to be very robust.
Tony: Tony, and we have, you know, strong pipelines of work. We are seeing the public sector clientele particularly engaging on new and enhanced projects and assignments.
Tony: So, feel very good about that segment. In terms of investment management, indications to date, given the trade uncertainty and volatility is that activity levels and interest levels and fundraising are...
Tony: Proceeding and rowing, so I think the volatility should not be a major factor in impacting our success and fundraising for the year.
Anthony Paolone: Okay, thanks. That actually gets to my follow-up, which was going to be in investment management, because you all did, I think you mentioned, doubled your fundraising in the quarter there. What do LPs want right now or not want? Can you just give us a little bit more about how that's going and kind of where the success lies there?
Speaker Change: Okay, thanks, and that actually gets to my follow-up, which was going to be an investment management, because you all did, I think you mentioned double your fundraising in the quarter there. What do LPs want right now or not want? Can you just give us a little bit more about how that's going and kind of where the success lies there?
Jay Hennick: I think there's a lot of pent-up demand across all the strategies. I think there's been such a softness in fundraising across the board for the past couple of years. This year is going to be the telltale. We're forecasting fundraising to be more than double what it was last year. We started off with Q1 with a nice start. I think people are feeling better. I think they want to get back to completing transactions. I'm cautiously optimistic that we're at the other side of this on the investment management component of our business.
Speaker Change: I think there's a lot of pent-up demand across all the strategies. I think there's been such a softness in fundraising.
across the board for the past couple of years.
Speaker Change: and this year's going to be the telltale. I mean, we're forecasting fundraising to be more than double what it was last year. And we started off with the first quarter with the with the nice start. Thank you very much.
Speaker Change: So, I think people are feeling better. I think they want to get back to completing transactions. So, I'm cautiously optimistic that we're at the other side of this on the investment management component of our business.
Anthony Paolone: Okay. Thank you.
Okay, thank you.
Operator 2: Your next question comes from Daryl Young from Stifel. Please go ahead.
Thank you very much.
Speaker Change: Your next question comes from Daryl Young, from Stafel, please go ahead.
Daryl Young: Hey, good morning, everyone. On the engineering platform, you've been adding a lot of new technical capabilities with some of your smaller tuck-under acquisitions. I'm just wondering if going forward, will this be a business that's maybe more centralized than your historical operating model? Is that in part what's driving some of the strong results this year as you're maybe integrating these businesses and cross-selling more than you might have historically and under your decentralized model? Any color there would be great.
Speaker Change: Operating Model, and is that in part what's driving some of the strong results this year is you're maybe integrating these businesses and cross selling more than you might have historically and under your decentralized model any color there would be great.
Jay Hennick: No, I don't think we're going to change the Colliers investment model at all. It's proven the test of time for sure. What is more centralized is that country for country. For example, the US business operates as one large partnership. That's a big differentiator, we think, for us. Same thing in Canada. These are larger platforms that operate in a centralized way in partnership with the people that make it happen day to day. Yes, there's huge synergies in the business. You can add product specialties. There's strong organic growth opportunities. Christian has alluded to a few, but it continues. The market is massive. The other thing is the Colliers brand has gone a long way in enhancing the stature of engineering firms that were otherwise not really well-known.
Speaker Change: No, I don't think we're going to change the Colliers investment model at all. It's proven the test of time for sure.
Speaker Change: But what is more centralized is that country for country. So for example, the US business operates as one large partnership.
That's a big differentiator we think for us.
Same thing in Canada.
Speaker Change: And these are larger platforms that operate in a centralized way.
in partnership with the people that make it happen day-to-day.
Christian Mayer: So, yes, there's huge synergies in the business. You can add product specialties. There's strong organic growth opportunities, Christian as alluded to a few, but it continues. The market is massive.
and you know, the other thing is the Colliers brand.
has gone a long way in enhancing the stature.
Jay Hennick: They might have been known in a region, now they have a national presence both in Canada, in the US, in Australia, and New Zealand. Let's not forget that our engineering segment also includes both our project management and our program management capability, which are also consolidating, which also have great cross-sell opportunities to the same client base. We're very excited about that business and what we can do with that business over the next five to 10 years. You know we're not active in Europe at all yet. We'd love to be active there as well. This is a segment that could dwarf the rest of our real estate services business, as an example. A lot of focus and a lot of energy are going into this segment for us.
Christian Mayer: of engineering firms that were otherwise not really well known. They might have been...
Christian Mayer: Known in the region, but now they have a national presence both in Canada and in the US and in Australia, New Zealand.
And let's not forget that our engineering segment also includes...
Christian Mayer: Both our project management and our program management capability which are also consolidating.
Christian Mayer: which also have great cross-sell opportunities to the same client base. So we're very excited about that business and what we can do with that business over the next five to ten years.
Christian Mayer: You know we're not active in Europe at all yet, we'd love to be active there as well [inaudible]
but
Christian Mayer: You know, this is a segment that could dwarf the rest of our real estate services business as an example, so a lot of focus and a lot of energy are going into this segment for us.
Daryl Young: That's good color. Thanks, Jay. One more on the real estate services side, the margins were a little bit lighter than I would have thought. Talent acquisition, obviously short-term pain for long-term gain. I'm just wondering, can you give us some color on how many net hires you have today? What the expectation for growth in hires would be going forward, or is this a bit of a backfill for maybe some departures you've had last year or through the last couple of years?
Christian Mayer: That's good color, thanks Jay. And one more on the real estate services side that the margins were a little bit lighter than I would have thought at talent acquisition, obviously short-term pain for long-term game, but I'm just wondering, can you give us some color on how many net hires you have today and is this, or what the expectation for growth in the hires would be going forward, or is this a bit of a backfill for maybe some departures you've had last year or through the last couple of years?
Christian Mayer: Yeah, Daryl. We do have internal targets we set for growth in our business. We've grown our practice significantly over the last four or five years, mostly through organic recruiting, but also a little bit of acquisition activity. There hasn't been a lot of acquisition activity lately. When we look at our organic growth in real estate services, I'm talking about the capital markets and leasing practice in particular here right now. We're targeting a 4% to 5% annual growth rate in terms of the number of producers-
Speaker Change: Yeah, Daryl, you know, we do have, you know, internal targets we set for growth in our business.
Christian Mayer: We've grown our practice significantly over the last four or five years.
Christian Mayer: Both through, mostly through organic recruiting, but also a little bit of acquisition activity that hasn't been.
Christian Mayer: A lot of acquisition activity lately, but when we look at our organic growth in real estate services, I'm talking about the cat markets leasing practice, particularly right now.
Christian Mayer: We're targeting a 4% to 5% annual growth rate in terms of a number of producers in that growth rate and we also are very focused on increasing the productivity of those producers.
Daryl Young: Net
Christian Mayer: Net growth rate. We also are very focused on increasing the productivity of those producers through training, technology, tools. A lot of little things go into that to enhance their ability to generate revenue, and in turn, profitability for Colliers.
Christian Mayer: and, you know, through training, technology, tools, you know, a lot of little things going to that to enhance their ability to generate revenue and, in turn, profitability for Colliers.
Daryl Young: Got it. Okay. Thanks very much. I'll hop back in the queue.
Okay, thanks very much. I'll hop back in the queue
Operator 2: Your next question is from Stephen Sheldon from William Blair. Please go ahead.
Speaker Change: Your next question is from Stephen Sheldon, from William Blair, please go ahead.
Stephen Sheldon: Hey, thanks for taking my questions.
Operator 2: Sure
Stephen Sheldon: just to follow up on the prior engineering question. Would love an update on how that business has kind of been performing relative to your expectations. I think you mentioned low teens internal growth this quarter, so really good growth. Are you seeing any benefits from cross-selling, I guess, with other business lines? Is this more about engineering kind of growing the opportunity on engineering as standalone, or have we started to see some benefit about taking engineering and have it be a part of the bigger Colliers platform?
Stephen Sheldon: Hey, thanks for taking my questions. I wanted to pursue just a follow-up on the prior engineering question.
Speaker Change: We love an update on how that business has kind of been performing relative to your expectation, but I think you mentioned low teams internal growth this quarter, so really good growth.
Stephen Sheldon: And are you seeing any benefits from cross-selling, I guess, with other business lines? Is this more about engineering kind of growing, the opportunity on engineering as stand-alone owners there that we started to see some benefit about taking engineering and have it be a part of the bigger Colliers platform?
Jay Hennick: Well, there's cross-selling in that business in a couple of ways. One is internal, as we've discussed. If one specialty, say water, has a client that needs a different specialty, there's lots of cross-selling. It's built into the DNA of that organization. There's multiple cross-selling opportunities within the platform, not to mention the opportunity to add specialties and then cross-sell them. The cross-sell within the platform is something that is international in scope. For example, in engineering, the US engineering firm has referred some key global clients to Canada and vice versa. We haven't seen too much yet in Australia and New Zealand, but we think that that's coming. In terms of the real estate cross-selling, that's a whole separate opportunity. I think it is, if I'm being frank, it is smaller in materiality but still quite interesting.
Thank you.
Thank you.
Speaker Change: has a client that needs a different specialty. There's lots of cross-selling. It's built into the DNA of that organization.
and so there's multiple cross-selling opportunities within the platform.
Speaker Change: Not to mention the opportunity to add specialties and then cross-sell them and that is a the cross-sell within the platform is something that is international in scope. So, for example,
Speaker Change: In engineering, the US engineering firm has referred some key global clients to Canada and Vice
Speaker Change: We haven't seen too much yet in Australian New Zealand, but we think that that's coming.
Speaker Change: In terms of the real estate cross-selling, that's a whole separate opportunity. I think it is, you know, if I'm being frank.
Jay Hennick: For example, first of all, it's the same client base, essentially the same client base across the board. They know the Colliers name, they know the Colliers brand. They may want to secure land. Before they secure land, they need to do a whole variety of testing. It might be environmental testing, it might be road access, it might be a variety of other things like that. We can do preliminary work with them, and that is happening, and it's happening consistently between the two different platforms. Once the land is acquired and the owner of the land chooses to develop whatever that might be, whether it is as civil or whether it is private, there's a need for a project manager or a program manager to execute on behalf of the client.
Speaker Change: Every time a client, first of all, it's the same client base, essentially the same client base across the board, they know the Collier's name, they know the Collier's brand, they may want to secure land before they secure land, they need to do a whole variety of testing. Thank you.
Speaker Change: So it might be environmental testing, it might be road access, it might be a variety of other things like that. So we can do preliminary work with them and that is happening and it's happening consistently between the two different platforms.
and then, once the land is acquired and the...
and the owner of the land chooses [inaudible]
Speaker Change: to develop whatever that might be, whether it's a civil or whether it is private.
Speaker Change: There's a need for a project manager or a program manager to execute on behalf of the client.
Jay Hennick: Colliers really has the opportunity to surround these same clients, both internally within the platform, but also externally in the Colliers traditional real estate platform. There's lots of opportunity, but we're really still at the early stages. I would say in terms of cross-selling, we've seen more cross-selling between engineering internally and engineering with the real estate services segment. We've seen more of it than in most other cross-selling opportunities across our company over the years. That's an exciting positive for us.
Speaker Change: So, Colliers really has the opportunity to surround these same clients both internally within the platform, but also externally in the Colliers traditional real estate platform. [inaudible]
Speaker Change: So there's lots of opportunity, but we're really still at the early stages, but I would say in terms of cross-selling, we've seen more cross-selling between engineering and engineering internally and engineering with the Real Estate Services segment.
Speaker Change: We've seen more of it than in most other cross-selling opportunities across our company over the years. So that's an exciting positive for us.
Stephen Sheldon: Got it. Great to hear. As a follow-up on the leasing side, that was a notable slowdown this quarter. I think you talked about some tough comps there. Can you just give some more detail on those tough comps, and what gives you the confidence in the re-acceleration over the rest of the year? Within that, I guess, how different do trends look between office and industrial leasing?
Speaker Change: God, great to hear. And then as a follow up on the leasing side, that was a notable slow down this quarter. I think you talked about some tough comps there. So can you just give some more detail on this tough comps and what gives you the confidence and the re acceleration over the rest of the year within that I guess how different do trends look between office and industrial leasing?
Christian Mayer: All right, Stephen. Leasing had a tough comp in Q1 relative to Q1 of 2024, as well as Q1 of 2023, quite frankly. Both of those prior quarters had specialty asset transactions, a couple of them. When I say that, I mean data center type transactions. We unfortunately did not have the same type of transaction activity this quarter. That was the key factor that led to the leasing relative lower performance year-on-year, and in fact, relative to the prior year as well. As we look ahead, Jay mentioned office leasing is strong in many markets. Some markets more than others. Industrial leasing, we're keeping a close eye on, in fact, it's impacted directly by some of the tariff stuff that's happening. Industrial leasing was up nicely for us in Q1.
All right, Stephen, so.
Leasing Had A Tough Comp
in Q1 relative to Q1 of 2024.
Speaker Change: as well as Q1 of 2023, quite frankly. Both of those prior quarters had specialty asset transactions, a couple of them. And when I say that, I mean, you know, data center type transactions.
Speaker Change: We unfortunately did not have the same type of transaction activity this quarter, and that was the key factor that led to the leasing, you know, relative lower performance year on year, and in fact, over the relative to the prior as well.
Speaker Change: So, you know, as we look ahead, Jay mentioned office leasing is strong in many markets, you know, some markets more than others.
Speaker Change: Industrial leasing, we're keeping close eye on, and in fact it's impacted directly by some of the tariff stuff that's happening. Industrial leasing was up nicely for us in Q1, but on a full-your-basis.
Christian Mayer: On a full year basis, we think industrial leasing will be up more moderately than that, perhaps low to mid single-digit growth in industrial leasing for the full year. All that to say, we expect, on a full year basis, our leasing business to be up mid single digits, top line revenue. I think that still holds, despite the tough comp in Q1, which was frankly something we were aware of when we set our outlook for the year.
Speaker Change: We think industrial leasing will be up more moderately than that perhaps.
Speaker Change: Automate Single-digit growth in industrial leasing for the full year.
Speaker Change: Despite the tough comp in Q1, which was frankly something we were aware of in our, when we set a real look for the year. You know, I might add something in, in...
Jay Hennick: I might add something, and this is just the reality. If you pulled out the transactions, and they were massive transactions in 2 consecutive years. If you pull them out, our leasing is up actually 6.5% year over year. It's just another data point. Christian is right. We expect it to return to normal levels in subsequent quarters.
Speaker Change: You know, this is just the reality. If you pulled out the transactions, there were massive transactions in two consecutive years.
Speaker Change: And so if you pull them out, our leasing is up actually six and a half percent year over year.
Speaker Change: It's just another data point, but Christian is right, we expect it to return to normal levels
Stephen Sheldon: Very helpful. Thank you.
Very helpful. Thank you.
Operator 2: The next question is from Frederic Bastien from Raymond James. Please go ahead.
Frederick Bastion: The next question is from Frederic Bastien from Raymond James, please go ahead.
Frederic Bastien: Hi, guys. Just wanted to thank you for offering the breakdown of pass-through costs for each segment. I found it quite useful, especially for engineering. On that note, we have a good feeling for where your strength lies in Canada with the big acquisition news last year. If you were to highlight which disciplines your US engineering business is best at, which ones would they be?
Frederick Bastion: Hi guys, I just wanted to thank you for offering the breakdown of past through costs for each segment. I found it quite useful, especially for engineering on that note, if you will, we have a good feeling for where your strength lies in Canada with the big acquisition is last year, but if you were to highlight which disciplines your US engineering business is best at which which ones would they be?
Jay Hennick: Well, that's a good question. We'll come back to you on that. It is a highly diversified business, which is one of the great benefits of it. I think that if I comment about some of the specialties that I think stand out, I might offend my partners in that business. We'll get back to you on that, Fred, and give you two or three that we all believe are significant, although Christian's got some input for you.
Speaker Change: Well, that's a good question. We'll come back to you on that.
Frederick Bastion: It is a highly diversified business, which is one of the great benefits of it.
Speaker Change: and I think that if I comment about some of the specialties that I think stand out.
I might offend my partners in that business. This is so much.
Speaker Change: We'll get back to you on that, Fred, and give you a 2 or 3, then.
Christian Mayer: We all believe are significant, although Christian's got some input for you. Yeah, I mean, Frederic, you know, the Canadian business you talked about, you know, Enlub, you know, well known Canadian player obviously Strengthen.
Christian Mayer: Yeah, Frederic, the Canadian business you talked about, Englobe, a well-known Canadian player, obviously strength in infrastructure, transportation, power, and water. The US business, different business. It was acquired 5 years ago. Core traditional strength areas there, infrastructure and transportation. The departments of transportation of several large states are key clients there in that business. We also have a number of commercial infrastructure type clients and programmatic type clients in our project management and program management business that are both public sector and private sector. It's a very widely dispersed client base with a lot of different activities happening. Yeah.
Christian Mayer: In infrastructure, transportation, power, water, the US business, different business was acquired five years ago.
Christian Mayer: Corps, traditional strength areas there, you know, infrastructure, transportation, the departments of transportation of several large states, our key clients there in that business. And then we also have a number of commercial infrastructure type clients.
Christian Mayer: and programmatic tech clients in our project management and program management business that are both public sector and private sector. So it's a very widely dispersed client base with a lot of different activities happening.
Frederic Bastien: Thanks. With respect to regional strength, you're obviously building a platform. I recall you started out on the US East Coast. Where would there be opportunities for growth, either through M&A or organic growth?
and yeah.
Speaker Change: Thanks. And with respect to regional strength, I mean, you're obviously building a platform. There's a recall you started out on the US East Coast.
Speaker Change: Where would there be opportunities for growth, either through M&A or organic growth?
Jay Hennick: Yeah, there's multiple opportunities, as you would expect, Fred.
Yeah, there's multiple opportunities as you would expect, Fred.
Frederic Bastien: How big is your platform now in the US?
and how big is your platform now in the US?
Christian Mayer: It's approaching about $600 million in revenue with headcount is 2,500.
It's approaching 600,000,000 in revenue, with headcount is-
2,500.
Frederic Bastien: Okay
Christian Mayer: engineering. Yeah, in the US.
Okay, yeah, the engineer...
Frederic Bastien: Okay. That's great. That's super useful. Thanks. That's all I have for now. Thank you.
Yes, yep, in the US.
Okay, that's very, that's super useful.
Christian Mayer: Thanks, Frederic.
Thanks, that's all I have for now.
Thank you.
Thanks for having us.
Operator 2: Your next question is from Julien Blouin from Goldman Sachs. Please go ahead.
Your next question is from Julien Blouin, from Goldman Sachs.
Julien Blouin: Yeah. Thank you for taking my question. For the engineering segment, that low teens internal growth feels quite a bit stronger than I think the organic growth rates we had previously talked about for the business of mid-high single digits. Do you feel like that's sustainable? Can you help us sort of break that apart? How much of that low teens growth was top-line driven versus margin improvement?
Please go ahead. Yeah, thank you for taking my question.
Julian Bluen: For the engineering segment, that low-teens internal growth feels, you know, quite a bit stronger than I think the organic growth rates we'd previously talked about for the business of mid-high single digits.
Speaker Change: Do you feel like that's sustainable and can you help us sort of break that apart? How much of that low teens growth was top line driven versus margin improvement?
Christian Mayer: Julien, the low teens growth rate was the top line growth for the quarter on a net revenue basis. What you said is exactly right. Mid to high single digit organic growth is the expectation for the full year. We had a few things accelerated in Q1, and Q1's actually a seasonal slow quarter in engineering as well, the growth rates get a bit exacerbated there. No, for a full year, it's going to be mid to high single digits. That's the expectation, we're very comfortable with that.
Speaker Change: Julian, the low-teens growth rate was the top-line growth for the quarter on a net revenue basis.
Speaker Change: And what you said is exactly right. You know, mid-high single-digit organic growth is the expectation for the full year.
Speaker Change: We had a few things accelerated in Q-1 and Q-1 is actually a...
Speaker Change: a seasonal slow quarter in engineering as well, so that the growth rates get a bit exacerbated there. But no, for a failure, it's going to be a bit of single digits. That's the expectation, and we're very comfortable with that.
Julien Blouin: Okay, great. I appreciate the comments you gave on leasing. It sounds like there was really an issue of difficult comps. I guess, sort of when you zoom out, do you feel like you're sort of holding or potentially losing share in leasing versus some of your peers who have reported generally better than that in terms of leasing results? Is that an okay outcome if instead, you would rather allocate capital to engineering, outsourcing, and investment management?
Thank you.
Okay, great. And then...
Speaker Change: There was really an issue of difficult comms but I guess sort of when you zoom out do you feel like?
Speaker Change: You know, reported generally better than that in terms of leasing results. And is that an okay outcome if instead you would rather allocate capital to engineering, outsourcing, investment management? No, no, no, no.
Jay Hennick: Well, in terms of allocation of capital, we're quite balanced and have lots of capital available to deploy, so capital allocation hasn't yet been a problem for us. One of the things that if you look at our business, I'm now talking about the real estate services business relative to our peers. We are extremely well-balanced on a global basis. Market for market, we have wide diversification. We have full services. We can service clients wherever they operate. I think most importantly, we have a track record of consistent profitability and strong tenure amongst our leadership team. We're very comfortable, and we see it as more so than most of the other peers, this balanced global approach. We're taking share, we believe, across the board. It's very difficult in some markets, and some sub-markets to take share.
Well,
Speaker Change: In terms of allocation to capital, we're quite balanced and have lots of capital available to deploy, so capital allocation hasn't yet been a problem for us.
Speaker Change: One of the things that if you look at our business relative to, I'm now talking about the real estate services business relative to our peers, we are extremely well balanced on a global basis.
You know, market for market, we have...
Wine diversification. We have full services.
We can service clients wherever they operate.
and I think...
most importantly,
We have a track record of consistent profitability.
Speaker Change: and Strong tenure amongst our leadership teams. So, we're very comfortable, more so, and we see it as more so than most of the other peers, this balanced global approach.
Speaker Change: We're taking share, we believe, across the board. It's very difficult, it's very difficult in some markets.
Jay Hennick: For example, New York is a very mature market, difficult to take share. We're doing our best. There's other markets in which there's huge opportunity for us to grow. Markets like Japan has been very good for us in recent years. India has been very good for us in recent years, and things like that. I believe we're taking share, and we're taking share mostly from the secondary players in the industry that are having trouble with their global operations.
Speaker Change: and some markets to take share. For example, New York is a very mature market, difficult to take share. We're doing our best.
Speaker Change: There's other markets in which there's huge opportunity for us to grow.
Speaker Change: You know, things like markets like Japan has been very good for us in recent years. India has been very good for us in recent years and things like that so. And it's been very good for us in recent years and things like that so.
I believe we're taking ...
Speaker Change: We're taking share and we're taking share mostly, mostly from the secondary players in the industry that are having trouble with their global operations. [inaudible]
Julien Blouin: Okay, great. Thank you, Jay.
Okay, great. Thank you, Jay.
Thank you very much. Thank you.
Operator 2: Your next question is from Jimmy Shan from RBC Capital Markets. Please go ahead.
Speaker Change: Your next question is from Jimmy Shan, from RBC Capital of Markets. Please go ahead.
Jimmy Shan: First, the Q1 margin was up a decent amount this quarter. You're still guiding to sort of flat to modest decline in the margin for the year. I guess first, can you maybe elaborate on that or square that for us a little bit? Second question is, and could be related to that, you talked about integration last quarter, the back office, and the fundraising, and I wondered if you could update us on the progress being made there.
Speaker Change: So, first year, the Q1 margin was up a decent amount of this quarter. You're still guiding to sort of flat the modest decline in the margin for the year. I guess first can you maybe elaborate on that or square that for us a little bit. And then second question is, it could be related to that, is you talked about integration last quarter, the back office and the fundraising, and I wonder if you could update us on the progress being made there.
Christian Mayer: Yeah, Jimmy, the investment management margin in the Q1 on a net service revenue basis was up a little bit, and that is just a factor of lower incentive compensation. We did have some higher headcount offsetting that, and that is continuing the themes of prior calls we had where we talked about the additional resources that we've been adding into our investment management practice. We expect over the course of the year for margins to be flat to possibly down slightly in investment management. We will continue to be investing there. We're going to continue to work on integration activities using our scale to become more efficient with some back-office processes and reduce some redundancies in the business. We'll have more to talk about on that as this exercise progresses.
Yeah, so Jimmy, the investment management, um...
Speaker Change: Margin in the first quarter on a net service revenue basis.
Speaker Change: was up a little bit, and that is just a factor of lower incentive compensation. We did have some higher headcount setting that, and that is, you know, a-
Speaker Change: Continuing the themes of prior calls we've had where we talked about the additional resources that we've been adding into our investment management practice.
Speaker Change: We expect over the course of the year for margins to be flat, possibly down, slightly an investment management.
Speaker Change: And, you know, we will continue to be, you know, investing there and we're going to continue to work on.
Integration Activities, you know, we're using...
Speaker Change: are scale to become more efficient with some back office processes and become and reduce some redundancies in the business. So we'll have more to talk about on that as this exercise progresses.
Jay Hennick: I'd add, this is a segment that obviously we're very excited about. We have so many opportunities to leverage the scale that we have, the talent, proprietary data that we have across the platforms. The talent that we have are all experienced investors in specialized areas, and they're actually partners in the business, so they have a vested interest in what they do day to day. The opportunity for us is to bring all of that together and to really focus on delivering performance and new investment ideas to our LPs by using some of that unique talent that we have across the platform. More to say about this over the course of the next year.
Speaker Change: Yeah, and I'd add like this is a segment that obviously we're very excited about [inaudible]
Speaker Change: You know, we have so many opportunities to leverage a scale that we have the talent for a proprietary data that we have across the platforms.
The talent that we have are all experienced investors.
Speaker Change: in specialized areas, and they're actually partners in the business, so they have a vested interest.
Speaker Change: in what they do day to day. So the opportunity for us is to bring all of that together.
Speaker Change: and to really focus on delivering performance and new investment ideas to our LPs.
by using some of that.
Speaker Change: The unique talent that we have across the platform. So, more to say about this over the course of the next year.
Jay Hennick: It's a one step at a time approach, and it's nice to see fundraising up, and it's nice to see our fee, EBITDA, and margin numbers pretty good relative to previous quarters.
But, you know, it's a one step at a time approach [inaudible]
Speaker Change: and it's nice to see fundraising up and it's nice to see, you know, our fee and EBITDA and margin numbers pretty good relative to previous quarters.
Jimmy Shan: Okay. Thank you.
Thomas, thank you.
Operator 2: Your next question comes from Nevin Yochim from BMO Capital Markets. Please go ahead.
Speaker Change: Your next question comes from Nevin Yochum from BMO Capital Market. Please go ahead.
Nevin Yochim: Yeah, thanks, guys. Just maybe high level, you touched on some of the tariff uncertainty impacting your clients. In the discussions you've had, what have your clients cited they'll need to see in order to resume some of the decision-making in a more meaningful way?
Speaker Change: Thanks, guys. You just maybe high level. You know, you touched on some of the terrifying certainty impacting your clients. In the discussions you've had, what have your clients cited only to see or to resume some of the decision making in a more meaningful way?
Jay Hennick: Tariffs, obviously, the subject du jour. I would've said up until yesterday, tariffs were essentially on hard products. Yesterday, for the first time, our president has decided to put tariffs on movies, which is actually a service. Colliers operations are decentralized. They're country-specific. We deliver the services that we deliver within country. As an organization, we're not impacted directly by tariffs. Indirectly, tariffs could drive up the cost of construction in that component of our business and therefore slow down new developments. That could happen. Engineering, sort of the same thing, depending upon supply chains and other things. Will it drive up the cost of production, of construction, and therefore the need of engineering services? Obviously, we're not seeing it at this point.
Speaker Change: I would have said up until yesterday, tariffs were essentially on hard products.
Speaker Change: Colliers operations are decentralized. They're country specific. We deliver the services that we deliver within country. So as an organization, we're not impacted directly by tariffs.
but
Speaker Change: You know, indirectly tariffs could drive up the cost of construction.
Speaker Change: in that component of our business and that therefore slow down new developments that could happen.
Speaker Change: Engineering, sort of the same thing, you know, depending upon supply chains and other things.
Speaker Change: and the, therefore, the need of engineering services, obviously, we're not seeing it at this point, in fact.
Jay Hennick: In fact, we're seeing a lot of positive news there because there's lots of talk about infrastructure build and things like that, which is right in our sweet spot virtually across the board. We're looking forward to increased activity around those kinds of things. We're monitoring it very closely but have really no certainty now other than we really don't see it impacting us in any material way at this point.
Speaker Change: We're seeing a lot of positive news there because there's lots of talk about infrastructure build and things like that which is right in our sweet spot, virtually across the board.
Speaker Change: So we're looking forward to increase the activity around those kinds of things. So we're monitoring it very closely.
I'm going to have really no-
Speaker Change: Certainty now, other than we really don't see it impacting us in any material way at this point.
Nevin Yochim: Great. Thanks, Jay. Just one more on M&A. You've completed several transactions in engineering as well as real estate services recently. Just wondering what the areas are where you're seeing the greatest opportunities in the market today.
Speaker Change: Great, thanks Jay. And then just one more on M&A. You've completed several transactions in engineering as well as real estate services recently. Just wondering what the areas are where you're seeing the greatest opportunities in the market today.
Jay Hennick: Well, we continue to see lots of opportunity, as I said, in engineering and project management and related specialties. Our pipelines are full. The challenge/opportunity for us is to curate the right ones and then integrate them effectively. The other thing that we're seeing is a widening of the lens around what is real estate services. For example, there is a whole world out there around fundraising, raising capital for infrastructure projects, data center projects, things like that, which is something that I don't think traditional real estate firms had thought about three years ago. Those are the kinds of areas that are really expanding what we could be doing within that real estate component of our business. In addition to the usual opportunities, which are more capital markets, more leasing, more property management, more valuation, things like that, all of which are vast categories.
Speaker Change: Well, we continue to see lots of opportunity, as I said, in engineering and project management and related specialties.
Speaker Change: and the challenge slash opportunity for us is to
to curate the right ones and then integrate them effectively.
Speaker Change: The other thing that we're seeing is a widening of the lens around what is real estate services. So, for example, there is, you know, a whole world out there around...
Fundraising Capital for Infrastructure
Projects, Data Center, Projects, things like that.
Speaker Change: 3 years ago. But those are the kinds of areas that are really expanding what we could be doing.
within that real estate component of our business, so...
in addition to the usual...
Speaker Change: Opportunities, which are more capital markets, more leasing, more property management, more evaluation, things like that, all of which are vast.
Jay Hennick: They've got lots of growth opportunities, both in taking share and making acquisitions. We feel like we're in two, aside from IM, we're in two very large segments of the overall economy and on a global scale. The thing I haven't mentioned or emphasized is we have a strong management team with a long tenure with us that have done acquisitions globally for 30 years. We can take advantage of opportunities virtually anywhere in the world that makes sense. Ethos Urban was a great example this past Q. There's others, where for us, it's just a natural next step to augmenting our internal growth strategies wherever we're doing business.
Speaker Change: You know, aside from I am, we're in two very, very large segments of the overall economy and on a global scale, and the thing I haven't mentioned or emphasized.
Speaker Change: is we have a strong management team with a long tenure with us that have done acquisitions globally for 30 years.
Speaker Change: So, we can take advantage of opportunities virtually anywhere in the world.
Speaker Change: that makes sense, Ethos Urban was a great example this past quarter.
and there's others.
Speaker Change: We're for us, it's just a natural next step to augmenting our internal growth strategies wherever we're doing business.
Nevin Yochim: Thanks for the detail.
Operator 2: Your next question comes from Maxim Sytchev from National Bank Financial. Please go ahead.
Speaker Change: Thank you. Your next question comes from Maxim Sychev from National Bank Financial. Please go ahead.
Maxim Sytchev: Hi everyone, gentlemen.
Jay Hennick: Hey.
Either one German. More info at www.pinterest.com
Maxim Sytchev: Jay, you made an interesting comment around engineering potentially dwarfing real estate services. When I look at the nature of fragmentation engineering, versus like for example, leasing, I mean, there's dramatically more fragmentation in engineering space. Can you think about the upper bound where you'd want to be, I don't know, like in 5 or 10 years, depending on how things evolve on that side? Can you maybe comment on that, how you guys are thinking about this internally? Just what is the right balance and the right opportunity in terms of going into the most fragmented market possible from an M&A perspective? Thanks.
Speaker Change: Okay. Jay, you made an interesting comment around engineering potential dewarfing real estate services and when I look at the sort of the nature of fragmentation engineering versus like, for example, leasing, I mean, there's dramatically more fragmentation in engineering
How do you?
Speaker Change: I don't know, like, in five or ten years, depending on sort of how things evolve on that side. Can you maybe comment on that, how you guys are thinking about this internally, just what is sort of the right balance and the right opportunity in terms of kind of going into the most fragmented market possible from an administrative sense?
Jay Hennick: Yeah. Maxim, you've followed our progress for a long time. We have these five-year plans and, as I think about your question and try and respond, I immediately defer to what do we think our engineering segment looks like five years from now? First, I would say it's not called engineering. It's probably called engineering and other. I don't know what other is, but that whole segment is not just engineering, it's project management, program management, and a variety of other related services. That's the first thing. The category just can continue to widen and widen. Secondly, if we can continue to grow that business globally, as Christian said, in high single digits internal growth, that's pretty damn good for a company of our size.
Speaker Change: Yes, so Max, I mean, you've followed our progress for a long time. You know, we have these five-year plans and, you know, as I think about your question and try and respond, you know, I immediately defer to, you know, what do we think are engineering. We're ready.
Speaker Change: Segment looks like five years from now. So first I would say it's not called engineering, it's probably called engineering and other. I don't know what other is.
Speaker Change: But that whole segment is not just engineering, it's project management, program management and a variety of other related services, so that's the first thing. So the category just can continue to widen and widen.
Speaker Change: Secondly, if we can continue to grow that business globally, as Christian said, and I'm
Speaker Change: High single digits, internal growth. That's pretty damn good for a company of our size. And if we can add, if we can add at least, at least 10 or 12% of the prior years, he bidah in that segment.
Jay Hennick: If we can add at least 10% or 12% of the prior year's EBITDA in that segment to our engineering group and roll that number out 5 years, it'll blow you away.
Speaker Change: to our engineering group and roll that number out five years, it'll blow you away.
Maxim Sytchev: Yeah
Jay Hennick: sort of consistent with our five-year thinking. We haven't yet refined our next five-year plan, but that's kind of the way we see it. The segment is so damn big, and for us, it's all about curating the right pieces and management teams that want to be partners in our business, which is our key differentiator from some of the others. Those that as they merge their operations in with us, they take a significant equity stake in that platform. That has proven for us to be a great competitive advantage, which I'm sure others will copy tomorrow after I've just said it.
Speaker Change: and that is sort of consistent with our five-year thinking. We haven't yet refined our next five-year plan, but that's kind of the way we see it. The segment is so damn big.
and for us it is it's all about curating the right.
Pieces,
Speaker Change: and management teams that want to be partners in our business which is our key differentiator from some of the others. Those that, you know, as they merge their operations in with us, they take a significant equity stake in that platform.
Speaker Change: And that has proven for us to be, you know, a great competitive advantage.
Speaker Change: which I'm sure others will copy tomorrow after I've just said it.
Maxim Sytchev: Appreciate the call, Jay. Thank you so much.
Appreciate the call, Jay. Thank you so much.
Operator 2: There are no further questions at this time. I will turn it over to Jay Hennick with closing remarks.
Speaker Change: There are no further questions at this time. I will turn it over to Jay Hennick with closing remarks.
Jay Hennick: Okay. I want to thank everybody for joining us this morning. We look forward to our Q2 conference call, probably canvassing many of the same questions we have covered today. Thanks for participating.
Jay Hennick: Okay, I want to thank everybody for joining us this morning and we look forward to our second quarter conference call and probably can be singing many of the same questions.
We've covered today, so thanks for participating.
Operator 2: Ladies and gentlemen, this concludes the conference call. Thank you for your participation, and have a nice day.
Speaker Change: Ladies and gentlemen, this concludes the conference call. Thank you for your participation and have a nice day.