Colliers International Group, Inc. Q4 FY2024 earnings call

• Colliers has three growth engines: real estate services, engineering, and investment management, with recurring revenues making up over 70% of earnings.
• Engineering platform has 8,000 professionals, strong recurring revenue base and contractual backlogs.
• Real estate services capital markets showing cyclical recovery as interest rates and asset valuations stabilize.
• Investment management has improved fundraising efforts and new fund vintages launching, with plans to accelerate operational integration for synergies.

Real Estate Services: Q4 revenue grew 13%, led by capital markets up 25%. Europe and Americas drove capital markets gains, while Asia Pacific had mixed results. Leasing revenues rose 14%. Margin was flat vs prior year. Engineering: Q4 revenue grew 61%, bulk from acquisitions and high single-digit internal growth. Net revenue margin decreased to 12.8% due to weather-related seasonality in recently acquired businesses. Investment Management: Revenues were up 6% excluding past due performance fees. Q4 EBITDA was up 1% with margin flat. Raised $3.8 billion in 2024, expects $5-$8 billion in 2025 for new fund vintages. Assets under management at year-end were $98.9 billion.

• Real estate services revenues expected to grow mid-single-digit with modest margin increase.
• Engineering revenues forecasted to be up ~30%, ~20% from internal growth, margins to increase from higher margin acquisitions.
• Investment management 2025 margins expected to be flat or modestly down, with significant step change in EBITDA and margins in 2026.
• Consolidated 2025 outlook: high single-digit to low teens revenue growth, low teens adjusted EBITDA and EPS growth.

• Foreign exchange rates acting as a headwind to US dollar reported results.
• Uncertainty from trade issues and rate fluctuations impacting deal activity in real estate services.
• Competitive landscape in investment management affecting fundraising and potential M&A activity.

Q: Can you give more color on engineering integration, margin impact?

A: Integration has been relatively simple. Margin improvement expected from higher margin acquisitions and organic margin expansion. Q4 margin was impacted by newly acquired businesses with weather-related seasonality.

Q: What are the capital raising goals for investment management in 2025?

A: Expect to raise between $5 and $8 billion of capital in 2025 from new vintages of funds, with first closes in mid to late 2025 and acceleration in 2026.

Q: How do recruiting investments in real estate services translate to returns?

A: Colliers has a unique culture and leading market positions globally. Returns expected as capital markets recover and other opportunities within the business are leveraged.

Q: What's the cadence of margin improvement in engineering for 2025?

A: Seasonality in engineering, with margin improvement expected to be seen in Q2-Q3 2025, benefiting from full-year effect of recent acquisitions.

Q: Can you elaborate on investment management operational integration?

A: Focus on back office synergies, fundraising streamlining to avoid multiple brand fundraising. Keep front-line investors focused on delivering results while streamlining ancillary back office functions.

Q: What's the purpose of the small architectural design acquisition (MG2)?

A: To augment engineering services, as it provides project program management for large logistics providers, complementing engineering offerings.

Q: What's the potential for investment management spin-off?

A: Optionality created, but need to see momentum in revenue growth and profitability from new vintages and capital deployment before considering spin-off.

Q: How is the capital markets growth outlook for 2025?

A: Cautious due to macro uncertainties, but buying mentality exists; expect cyclical recovery as market stabilizes.

Q: How much fundraising is expected for investment management in 2025 and details on new funds?

A: Expect $5-$8 billion in fundraising, with several new vintage funds launching, including products like Harrison Street's data center fund and others in solar/wind, multifamily, and debt initiatives.

Q: What's the FX impact on real estate services guidance?

A: Guidance for real estate services mid-single-digit growth is net of 2-3% negative impact from foreign exchange rates due to international operations.

Q: What's the trend in private market valuations for investment management acquisitions?

A: Buoyant and competitive, making it challenging to acquire, but Colliers is well-positioned with a strong platform built since 2018.