Colliers International Group Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 6, 2025
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Operator

Welcome to the Colliers International First Quarter 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.

Operator

S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is Tuesday, 05/06/2025. And at this time, for opening remarks and introductions, I would like to turn the call over to the Global Chairman and Chief Executive Officer, Mr.

Operator

Jay Hennick. Please go ahead, sir.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

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 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.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

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. 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. This time is no different. 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.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

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 $1,500,000,000 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 $100,000,000,000 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.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

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 three powerful growth engines, a world class team, and a thirty year record of performance through all market cycles, Colliers is well positioned to continue delivering exceptional value for shareholders.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Now I'll turn things over to Christian for his financial report, and then we'll open up the call to your questions. Christian?

Christian Mayer
Christian Mayer
CFO at Colliers International Group

Thank you, Jay, and 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 first quarter were $1,100,000,000 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 four of our key end markets: property, infrastructure, water and environmental. First quarter adjusted EBITDA was $116,000,000 up 7% over the prior year, with contribution from both internal growth and acquisitions.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

Overall, real estate services net revenue grew modestly for the first quarter. Capital markets activity was up 10% globally. Sales brokerage was up in all geographic regions and all asset classes. Debt finance activity increased nicely, particularly refinancing volume in our U. S.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

Multifamily franchise. Leasing revenues were down 5% relative to a strong prior year first quarter 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 first quarter, 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.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

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. 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 $1,200,000,000 of new capital commitments during the first quarter, which was more than double the amount we raised in the prior year period.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

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 the second quarter with new vintages of existing products as well as new investment strategies entering the market. Assets under management at March 31 were CAD100.3 billion, up CAD1.4 billion from year end. Increases came from fundraising and positive mark to market adjustments, partially offset by portfolio dispositions that returned capital to investors. Our cash flow from operations and free cash flow for the first quarter improved significantly year over year.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

On a trailing twelve month basis, our free cash flow exceeded $400,000,000 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 form a adjusted EBITDA was 2.2 times as of March 31.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

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. 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.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

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. That concludes my prepared remarks. Operator, can you please open the line for questions?

Operator

Thank you. Your first question is from Asty Palynzi from JPMorgan Chase. Please go ahead.

Anthony Paolone
Anthony Paolone
Executive Director at J.P. Morgan

Yes, and 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?

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Wow. That's a loaded question. There's things happening all over the place, and so, you know, I'm trying to zero in on a couple of highlights for you. We're we're seeing sort of better results in Asia. We're seeing some pockets in in Europe.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

I'm talking specifically about capital markets now. New York seems to be strong in terms of new lease new leases at at record rates. But generally speaking, there is still a an uncertainty in the marketplace, which is, which is preventing clients from making longer term decisions on leases in in nonkey markets, let's say. And and we were we were, I would say, the beginning of the quarter, excited that that things were stabilizing. And then, of course, all this tariff stuff started.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

And all of a sudden, transactions that were close to closing had financing lie tied up, and a variety of other things just just were were put on delay. So all of this to say is we're still in a in a in a market, in my view, that's, you know, uncertain and unclear, and only the only a select number of transactions are,

Christian Mayer
Christian Mayer
CFO at Colliers International Group

are getting completed. I 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, 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. So feel, you know, very good about that segment. In terms of investment management, indications to date, you know, given the, you know, trade uncertainty and and volatility is that, activity levels and interest levels and fundraising are proceeding and growing.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

So I think the volatility here should not be a major factor impacting our success in fundraising for the year.

Anthony Paolone
Anthony Paolone
Executive Director at J.P. Morgan

Okay. Thanks. And that actually gets to my follow-up, 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? Like, can you just give us a little bit more about how that's going and kind of where the success lies there?

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

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, and this year is gonna be the telltale. I mean, we're we're forecasting fundraising to be more than double what it was last year. And we started off with the first quarter with a with with a nice start. So I think people are feeling better.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

I think they wanna get back to to completing transactions. So I'm I'm cautiously optimistic that we're at the other side of this on on the investment management component of our business.

Anthony Paolone
Anthony Paolone
Executive Director at J.P. Morgan

Okay. Thank you.

Operator

Your

Operator

next question comes from Daryl Young from Stifel. Please go ahead.

Daryl Young
Daryl Young
Managing Director, Equity Research at Stifel Financial

Hey. Good morning, everyone. On the engineering platform, you've been adding a lot of, a lot of new technical capabilities with some of your your smaller tuck under acquisitions. And I I'm just wondering if going forward, will will this be a business that's maybe more centralized than your historical operating model? And is that in part what's driving some of the strong results this year as you're you're maybe integrating these businesses and cross selling more than you you might have historically and under your decentralized model?

Daryl Young
Daryl Young
Managing Director, Equity Research at Stifel Financial

Any color there would be great.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

No. I don't think we're gonna change the Colliers investment model at all. It's it's it's it's proven the test of time for sure. But what is more centralized is that country for country. So for example, The US business operates as one large partnership.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

That's a big differentiator, we think, for us. Same thing in Canada. And these, are larger platforms that, that operate in a centralized way in partnership with the people that make it happen day to day. So, yes, there's huge synergies in the business. You can add product specialties.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

There's strong organic growth opportunities. Christian has has alluded to a few, but it continues. The market is massive. And, you know, the the other thing is the Colliers brand has gone a long way in in enhancing the stature of engineering firms that were otherwise not really well known. They might have been known in a region, but now they have a national presence both both in Canada and in The US and in Australia and New Zealand.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

And 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. So we're very excited about about that business and what we can do with that business over the next five to ten years. You know we're not active in Europe at all yet. We'd love to be active there as well. But, you know, this is a segment that that could dwarf the rest of our our real estate services business as an example.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

So a lot of focus and a lot of energy are are are going into this segment for us.

Daryl Young
Daryl Young
Managing Director, Equity Research at Stifel Financial

That's good color. Thanks, Jay. And 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.

Daryl Young
Daryl Young
Managing Director, Equity Research at Stifel Financial

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 hires would be going forward? Or or is this a a bit of a backfill for maybe some departures you've had last year or through the the last couple of years?

Christian Mayer
Christian Mayer
CFO at Colliers International Group

Yeah, Daryl. You know, we we do have, you know, internal targets we set for growth in our business. We've grown our practice significantly over the last four or five years, both through mostly through organic recruiting, but also a little bit of acquisition activity. There hasn't been a lot of acquisition activity lately. But when we look at our organic growth, in real estate services, I'm talking about the cap rates and leasing practice, in particular here right now.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

You know, we're targeting a 4% to 5% annual growth rate in terms of the number of producers. Net. Net. Net growth rate. And we also are very focused on increasing the productivity of those producers.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

And, you know, through training, technology, tools, you know, a lot of little things go into that to, enhance, their ability to generate revenue and, in turn, profitability, for Calliers.

Daryl Young
Daryl Young
Managing Director, Equity Research at Stifel Financial

Got it. Okay. Thanks very much. I'll I'll hop back in the queue.

Operator

Your next question is from Steven Sheldon from William Blair. Please go ahead.

Stephen Sheldon
Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C

Hey. Thanks for taking my questions. I wanted to, first, 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 so really good growth.

Stephen Sheldon
Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C

And are you seeing any benefits from cross selling, I guess, with other business lines? Is is this more about engineering kinda growing the opportunity in on engineering as stand alone, or is there have we started to see some benefit about taking engineering and have it be a part of, you know, the bigger Colliers platform?

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Well, I mean, there's cross selling in that business in, in a couple of ways. One is internal, as we've discussed. So, you know, if if, 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. And and so there's multiple cross selling opportunities within the platform, not to mention the opportunity to add specialties and then cross sell them.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

And that is a the cross sell within the within the platform is is something that is international in scope. So for example, in engineering, the The US Engineering firm has referred some key global clients to Canada and vice versa. We haven't seen too much yet in Australia, New Zealand, but, you know, we think that that's coming. In terms of the real estate cross selling, that's a whole separate opportunity. I think it is you know, if I'm if I'm being frank, it is smaller in materiality but still quite interesting.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

So, for example, every time every time a client 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 wanna secure land. Before they secure land, they need to do a whole variety of testing.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

So it might be environmental testing. It might be road access. It might be a variety of other things like that. So we can we can do preliminary work with them, and that is happening. And it's happening consistently between the the two different platforms.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

And then once the land is acquired and the and the and the owner of the land chooses to develop, whatever that might be, whether it's a whether it is a civil or whether it is private, there's a need for a project manager or a project or a program manager to execute on behalf of the on behalf of the of the client. So Colliers really has the opportunity to surround these same clients both internally within the platform, but also externally in the in the Colliers' traditional real estate platform. So there's there's lots of opportunity, but we're really still at the 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 residential 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.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

So that's an exciting positive for us.

Stephen Sheldon
Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C

Got it. Great to hear. And then as a follow-up on the leasing side, that was a notable slowdown this quarter. I think you talked about some tough comps there. So can you just give some more detail on those tough comps?

Stephen Sheldon
Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C

And what gives you the confidence in the reacceleration over the rest of the year? And within that, I guess, how different do trends look between office and industrial leasing?

Christian Mayer
Christian Mayer
CFO at Colliers International Group

Alright, Steven. So leasing had a tough comp in q one relative to q one of twenty twenty four, as well as q one of twenty twenty three, quite frankly. Both of those prior quarters had specialty asset transactions, a couple of them. And when I say that, I mean data center type transactions. We unfortunately did not have the same type of transaction activity this quarter, and that was the key factor that led to the leasing relative lower performance year on year and, in fact, over the relative to the prior year as well.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

So 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. And in fact, it's, you know, it's impacted directly by some of the tariff stuff that's happening. Industrial leasing was up nicely for us in q one, but on a full year basis, we think industrial leasing will be up more moderately than that, perhaps low to mid single digit growth in leasing in industrial leasing for the full year. So all that to say, we expect on a full year basis our leasing business to be up mid single digits top line revenue.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

I think that still holds despite the tough comp in Q1, which was frankly something we were aware of in our when we set our outlook for

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

the year. I might add something, and this is just the reality. If you pulled out the transactions that were massive transactions in consecutive years. And and and so if you pull them out, our leasing is up actually six and a half percent year over year. So, you know, it's just another data point.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

But Christian is is right. We expect it to to return to normal normal levels in subsequent quarters.

Stephen Sheldon
Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C

Very helpful. Thank you.

Operator

The next question is from Frederic Bastien from Raymond James. Please go ahead.

Frederic Bastien
Frederic Bastien
MD & Head of Industrial Research at Raymond James Financial

Hi, guys. Just wanted to thank you for offering the breakdown of, pass through costs for each segment. I find it quite useful, especially for engineering. On that note, if you you have a good feeling for where your strength lies in Canada with the the big acquisition you did last year. But if if you were to highlight which disciplines your US Engineering business is best at, which which ones would they be?

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Well, that's a good question. We'll come back to you on that. It it is a highly diversified business, which is one of the great benefits of it. And I I think that if I if I comment about, some of the specialties that I think stand out, I might offend my partners in that business. So 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.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

Yeah. I mean, Fredrik, the Canadian business you talked about, Englobe, well known Canadian player, obviously, strengthened in infrastructure, transportation, power, water. The U. S. Business, different business.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

It was acquired five years ago. Core traditional strength areas there, infrastructure, transportation, the departments of transportation of several large states are key clients there in business. And then 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. So it's a very widely dispersed client base with a lot of different activities happening. And yeah.

Frederic Bastien
Frederic Bastien
MD & Head of Industrial Research at Raymond James Financial

Thanks. And with respect to regional strength, I mean, you're you're obviously building a platform. There's I recall you started out at in on The US East Coast. Where would there be opportunities for growth, either through m and a or organic growth?

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Yeah. There's multiple opportunities as you would expect, Fred.

Frederic Bastien
Frederic Bastien
MD & Head of Industrial Research at Raymond James Financial

And how big is your platform now in The US?

Christian Mayer
Christian Mayer
CFO at Colliers International Group

It's, approaching about 600,000,000 in revenue with, headcount is 2,500. That's that's the, the engineering Yes. Yep. In The US.

Frederic Bastien
Frederic Bastien
MD & Head of Industrial Research at Raymond James Financial

Okay. That's great. That's super, useful.

Frederic Bastien
Frederic Bastien
MD & Head of Industrial Research at Raymond James Financial

Thanks. That's all I have

Frederic Bastien
Frederic Bastien
MD & Head of Industrial Research at Raymond James Financial

for now. Thank you.

Operator

Thanks, Trevor.

Operator

Your next question is from Julien Blumen from Goldman Sachs.

Operator

Please go ahead.

Julien Blouin
Julien Blouin
Vice President at Goldman Sachs

Yes. 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? And can you help us sort of break that apart?

Julien Blouin
Julien Blouin
Vice President at Goldman Sachs

How much of that low teens growth was top line driven versus versus margin improvement?

Christian Mayer
Christian Mayer
CFO at Colliers International Group

Julian, the low teens growth rate was the top line growth for the quarter on a net revenue basis. And 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 is actually a seasonal slow quarter in engineering as well, so the growth rates get a bit exacerbated there. But no, for a full year, it's going to be mid to high single digits.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

That's the expectation, and we're very comfortable with that.

Julien Blouin
Julien Blouin
Vice President at Goldman Sachs

Okay. Great. And then, you know, I appreciate the comments, you gave on on It sounds like, there was there was really an issue of difficult comps. But 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? And is that an okay outcome if instead you would rather allocate capital to engineering, outsourcing, investment management?

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Well, in terms of allocation of capital, we're we're we're we're quite balanced and have lots of capital available to to deploy. So capital allocation hasn't yet been a problem for us. The one of the one of the things that if if if if you if you look at our business relative to I'm now talking about the real estate services business relative to our peers. You know, we are extremely well balanced on a global basis. You know, market for market, we have wide diversification.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

We have full services. We can service clients wherever they they operate. And I think most importantly, we have a track record of consistent profitability and strong tenure amongst our leadership team. So we're very comfortable more so and we see it as more so than than most of the other peers, this balanced global approach. We're taking share, we believe, across the board.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

It's very difficult it's very difficult in some markets and some submarkets to take share. For example, New York is 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, You know, things like markets like Japan has been has been very good for us in recent years. India has been very good for us in recent years and things like that.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

So, you know, I believe we're taking 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.

Julien Blouin
Julien Blouin
Vice President at Goldman Sachs

Okay. Great. Thank you, Jay.

Operator

Your next question is from Jimmy Shan from RBC Capital Markets. Please go ahead.

Jimmy Shan
Jimmy Shan
Managing Director at RBC Capital Markets

So first, your 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? And then second question is, and could be related to that, is the you talked about integration last quarter, the back office and the fundraising, and I wondered if you could update us on on the progress being made there.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

So, Jimmy, the investment management margin in the first quarter on a net service revenue basis was up a little bit. And, you know, that is, just a factor of, lower, incentive compensation. And we did have some higher, headcount, offsetting that, and that is, you know, 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. We expect over the course of the year for margins to be flat to possibly down slightly in investment management. And we will continue to be investing there.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

We're going to continue to work on integration activities using our scale to become more efficient with some back office processes and become and reduce some redundancies in the in the business. And we'll have more to talk about on that in in you know, as this exercise progresses.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Yeah. And I I'd I'd add, like, this is a segment that obviously we're very excited about. You know, 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 in what they do day to day.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

So the opportunity for us is to bring all of that together and to really 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. So more to say about this over the over the course of the next year, but, you know, it's it's a one step at a time approach. And it's nice to see fundraising up, and it's nice to see, you know, our fee and and EBITDA and margin numbers pretty good relative to previous quarters.

Christian Mayer
Christian Mayer
CFO at Colliers International Group

Okay. Thank you.

Operator

Your next question comes from Nevan Yojum from BMO Capital Markets. Please go ahead.

Nevan Yochim
Nevan Yochim
Analyst at BMO Capital Markets

Yes. 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 we'll need to see in order to resume some of the decision making in a more meaningful way?

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

You know, tariffs are obviously the the subject to sure. I would have said up until yesterday, tariffs were essentially on on hard products. And yesterday, for the first time, our president has decided to put tariffs on movies, which is actually a service. But Collier's operations are decentralized. They're they're country specific.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

We deliver the services that we deliver within country. So as an organization, we're not impacted directly by tariffs. But, you know, indirectly, tariffs could drive up the cost of construction, in in, in that that component of our business, and that, you know, therefore, slow down new developments. That could happen. Engineering, sort of the same thing, you know, depending upon supply chains and other things.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Will it drive up the cost of of production, of construction, and the, therefore, the need of engineering services. Obviously, we're not seeing it, at this point. 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. So we're we're looking forward to to to increased activity around those kinds of things. So 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.

Nevan Yochim
Nevan Yochim
Analyst at BMO Capital Markets

Great. Thanks, Jay. And then just one more on m and a. You've completed several transactions in engineering as well as real estate services recently. Just wondering what the the areas are where you're seeing the greatest opportunities in the market today.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Well, we continue to see lots of opportunity, as I said, in in engineering and project management and related specialties. Our pipelines are full, and and, you know, the the challenge slash opportunity for us is to 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. So for example, there is, you know, 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. But those are the kinds of areas that are really expanding what we could be doing within that real estate component of our business.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

So 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. They've got lots of growth opportunities both in taking share and making acquisitions. So we we we feel like we're in two you know, aside from I'm we're in two very, very large segments of the overall economy and on a global scale. And the thing I I haven't mentioned or or emphasized is we have a strong management team with a long tenure with us that have done acquisitions globally for thirty years. So we can take advantage of opportunities virtually anywhere in the world that makes sense.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Ethos Urban was a great example this past quarter, and there's others, where where for us, it's just a natural next step to augmenting our internal growth strategies wherever we're doing business.

Nevan Yochim
Nevan Yochim
Analyst at BMO Capital Markets

Thanks for the detail.

Operator

Your next question comes from Maxim Sytchev from National Bank Financial. Please go ahead.

Maxim Sytchev
Managing Director at National Bank Financial

Hi, good morning gentlemen. Jay, you made an interesting comment around engineering potential dwarfing real estate services. And when I look at the sort of the nature of fragmentation engineering versus like, for example, leasing, mean, there's dramatically more fragmentation in engineering space. How do you I mean, can you think about sort of the upper bound where you'd want to be, 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?

Maxim Sytchev
Managing Director at National Bank Financial

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 NA perspective? Thanks.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Yeah. So, Maxim, I mean, you've 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 our engineering segment looks like five years from now? So first, I would say it's not called engineering.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

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. So that's the first thing. So the category just can continue to widen and widen.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Secondly, you know, if we can continue to grow that business globally, as Christian said in I'm 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 year's EBITDA in that segment to our engineering group and roll that number out five years, it'll blow you away. And that's and that is, you know, that is sort of consistent with our, you know, our five year thinking. And we we haven't yet, you know, refined our next five year plan, but that's kind of the way we see it. The the the segment is so damn big.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

And for us, it is it's all about curating the right pieces and management teams that wanna 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 a a significant equity stake in that platform. And that has proven for us to be, you know, a great, a great, competitive advantage, which I'm sure others will copy tomorrow after I've just said it.

Maxim Sytchev
Managing Director at National Bank Financial

Appreciate the call, Jay. Thank you so much.

Operator

There are no further questions at this time. I will turn it over to Jay Hennick with closing remarks.

Jay Hennick
Jay Hennick
Director, Founder, Global Chairman & CEO at Colliers International Group

Okay. I want to thank everybody, for joining us this morning, and, we look forward to our second quarter conference call and probably canvassing many of the same questions we've covered today. So thanks for participating.

Operator

Ladies and gentlemen, this concludes the conference call. Thank you for your participation, and have a nice day.

Executives
    • Jay Hennick
      Jay Hennick
      Director, Founder, Global Chairman & CEO
    • Christian Mayer
      Christian Mayer
      CFO
Analysts
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Key Takeaways

  • Management reported Q1 revenues of $1.1 billion (up 16% YoY) with results in line with expectations and reiterated full‐year targets despite a cautious macroeconomic outlook.
  • The Engineering segment delivered net revenue growth of 63% in Q1—driven by acquisitions and low‐teens internal growth—with net margins expanding 110 bps; full‐year organic growth is guided to mid‐high single digits.
  • Investment Management saw Assets Under Management surpass $100 billion for the first time and raised $1.2 billion of new commitments in Q1—more than double last year—with fundraising expected to accelerate in Q2.
  • Real Estate Services remains a top‐three global platform, recording 10% growth in capital markets activity; Q1 leasing dipped 5% due to tough comps but is expected to return to mid‐single digit revenue growth.
  • Strong cash generation continues, with Q1 free cash flow conversion at 136% of adjusted earnings and net debt/EBITDA at 2.2x (targeting ~1.5x by year end), providing ample capacity for reinvestment and M&A.
AI Generated. May Contain Errors.
Earnings Conference Call
Colliers International Group Q1 2025
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