Colliers International reports strong results for second quarter

Revenues up 13% (15% in local currency) and solid increase to earnings

Operating highlights:

TORONTO, Aug. 01, 2017 (GLOBE NEWSWIRE) -- Colliers International Group Inc. (NASDAQ:CIGI) (TSX:CIGI) today reported operating and financial results for its second quarter ended June 30, 2017. All amounts are in US dollars.

Revenues for the second quarter were $544.2 million, a 13% increase (15% in local currency) relative to the same quarter in the prior year, adjusted EBITDA (note 1) was $59.6 million, up 13% (16% in local currency) and adjusted EPS (note 2) was $0.76, a 21% increase versus the prior year quarter. Second quarter adjusted EPS would have been approximately $0.03 higher excluding foreign exchange impacts. GAAP operating earnings were $40.6 million, relative to $37.6 million in the prior year period. GAAP EPS was $0.28 per share in the quarter, versus $0.55 per share for the same quarter a year ago, with the current period impacted by a significant increase in the non-controlling interest redemption increment related to the quarterly non-cash balance sheet revaluation of non-controlling interests. Second quarter GAAP EPS would have been approximately $0.03 higher excluding changes in foreign exchange rates.

For the six months ended June 30, 2017, revenues were $967.1 million, a 13% increase (14% in local currency) relative to the comparable prior year period, adjusted EBITDA was $88.9 million, up 19% (21% in local currency) and adjusted EPS was $1.09, a 33% increase versus the prior year period. Year-to-date adjusted EPS would have been approximately $0.03 higher excluding foreign exchange impacts. GAAP operating earnings were $51.5 million, relative to $46.5 million in the prior year period. GAAP EPS for the six month period was $0.28 per share, compared to $0.37 per share in the prior year period. Year-to-date GAAP EPS would have been approximately $0.03 higher excluding changes in foreign exchange rates.

“Colliers generated strong results in the second quarter, with a combination of growth from recent acquisitions and internal growth. Based on results to date and current business pipelines, we remain optimistic about our prospects for the balance of the year,” said Jay S. Hennick, Chairman and CEO of Colliers International. “During the second quarter, we completed the acquisition of Colliers Minneapolis-St. Paul, further strengthening our operations in the US Midwest, and bringing the number of acquisitions completed this year to five. With strong market momentum, a disciplined growth strategy, long-term track record of success and strong balance sheet, we are better positioned than ever to continue capitalizing on growth opportunities and strengthening the Colliers International brand and global platform for the future,” he concluded.

About Colliers International Group Inc.
Colliers International Group Inc. (NASDAQ:CIGI) (TSX:CIGI) is an industry-leading global real estate services company with 15,000 skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.

Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 global outsourcing firms by the International Association of Outsourcing Professionals for 12 consecutive years, more than any other real estate services firm.

For the latest news from Colliers, visit Colliers.com or follow us on Twitter: @Colliers and LinkedIn.

Consolidated Revenues

Consolidated revenues for the second quarter grew 15% on a local currency basis, with robust contributions from each service line. Consolidated internal revenue growth in local currencies was 1% (note 3) affected by a slight decline in lower margin Outsourcing & Advisory activity in the EMEA region relative to strong comparatives in the prior year period. Excluding this difference, consolidated internal revenue growth in local currencies was 3%.

For the six months ended June 30, 2017, consolidated revenues grew 14% on a local currency basis. Year-to-date consolidated internal revenue growth in local currencies was 1% impacted by a decline in lower margin Outsourcing & Advisory activity in the EMEA region relative to very strong comparatives in the prior year period. Excluding this difference, consolidated internal revenue growth in local currencies was 4%.

Segmented Quarterly Results
The Americas region’s revenues totalled $319.8 million for the second quarter compared to $263.0 million in the prior year quarter, up 22% (23% on a local currency basis). Local currency revenue growth was comprised of 22% growth from recent acquisitions and 1% internal growth. Internal growth for the quarter was impacted by a modest decline in Sales and Lease Brokerage revenues in the US, where transaction volume was flat and average transaction size was down slightly. Adjusted EBITDA was $32.2 million, versus $28.4 million in the prior year quarter, up 14% with the margin impacted by (i) recent investments in people to strengthen operations and add service line capabilities and (ii) revenue mix. GAAP operating earnings were $22.2 million, versus $22.6 million in the prior year period, impacted by amortization of intangible assets acquired in connection with recent acquisitions incurred in the current quarter.

EMEA region revenues totalled $118.8 million for the second quarter compared to $117.2 million in the prior year quarter, up 1% (6% on a local currency basis). Local currency revenue growth was comprised of 6% growth from recent acquisitions and flat internal revenues. Internal revenues were impacted by a decline in Outsourcing & Advisory activity, particularly in France with several large project management assignments in the prior year quarter involving the supply and installation of materials at lower margins than other revenue types. Foreign exchange headwinds with respect to the UK pound sterling negatively affected results on a US dollar reporting currency basis. Adjusted EBITDA was $17.3 million, versus $17.1 million in the prior year quarter. GAAP operating earnings were $11.6 million, versus $11.7 million in the prior year quarter, impacted by acquisition-related costs incurred in the current quarter.

Asia Pacific region revenues totalled $105.1 million for the second quarter compared to $102.1 million in the prior year quarter, up 3% (3% on a local currency basis) all from internal growth, particularly Outsourcing & Advisory revenues. Adjusted EBITDA was $12.9 million, up from $10.5 million in the prior year quarter, benefitting from operating leverage. GAAP operating earnings were $11.4 million, versus $9.1 million in the prior year period.

Global corporate costs as reported in adjusted EBITDA were $2.8 million in the second quarter, relative to $3.1 million in the prior year period. The corporate GAAP operating loss for the second quarter was $4.6 million, relative to $5.8 million in the prior period, with the prior period impacted by restructuring costs related to the consolidation of global leadership to Toronto.

Conference Call
Colliers will be holding a conference call on Tuesday, August 1, 2017 at 11:00 a.m. Eastern Time to discuss the quarter’s results. The call, as well as a supplemental slide presentation, will be simultaneously web cast and can be accessed live or after the call at www.colliers.com in the “Shareholders / Newsroom” section.

Forward-looking Statements
This press release includes or may include forward-looking statements. Forward-looking statements include the Company’s financial performance outlook and statements regarding goals, beliefs, strategies, objectives, plans or current expectations. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different from any future results, performance or achievements contemplated in the forward-looking statements. Such factors include: economic conditions, especially as they relate to commercial and consumer credit conditions and business spending; commercial real estate property values, vacancy rates and general conditions of financial liquidity for real estate transactions; the effects of changes in foreign exchange rates in relation to the US dollar on Canadian dollar, Australian dollar, UK pound sterling and Euro denominated revenues and expenses; competition in markets served by the Company; labor shortages or increases in commission, wage and benefit costs; disruptions or security failures in information technology systems; and political conditions or events, including elections, referenda, changes to international trade and immigration policies, and any outbreak or escalation of terrorism or hostilities.

Additional factors and explanatory information are identified in the Company’s Annual Information Form for the year ended December 31, 2016 under the heading “Risk Factors” (which factors are adopted herein and a copy of which can be obtained at www.sedar.com) and other periodic filings with Canadian and US securities regulators. Forward looking statements contained in this press release are made as of the date hereof and are subject to change. All forward-looking statements in this press release are qualified by these cautionary statements. Except as required by applicable law, Colliers undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Summary financial information is provided in this press release. This press release should be read in conjunction with the Company's quarterly financial statements and MD&A to be made available on SEDAR at www.sedar.com.

Notes
1. Reconciliation of net earnings to adjusted EBITDA:

Adjusted EBITDA is defined as net earnings, adjusted to exclude: (i) income tax; (ii) other expense (income); (iii) interest expense; (iv) depreciation and amortization; (v) acquisition-related items; (vi) restructuring costs and (vii) stock-based compensation expense. We use adjusted EBITDA to evaluate our own operating performance and our ability to service debt, as well as an integral part of our planning and reporting systems. Additionally, we use this measure in conjunction with discounted cash flow models to determine the Company’s overall enterprise valuation and to evaluate acquisition targets. We present adjusted EBITDA as a supplemental measure because we believe such measure is useful to investors as a reasonable indicator of operating performance because of the low capital intensity of the Company’s service operations. We believe this measure is a financial metric used by many investors to compare companies, especially in the services industry. This measure is not a recognized measure of financial performance under GAAP in the United States, and should not be considered as a substitute for operating earnings, net earnings or cash flow from operating activities, as determined in accordance with GAAP. Our method of calculating adjusted EBITDA may differ from other issuers and accordingly, this measure may not be comparable to measures used by other issuers. A reconciliation of net earnings to adjusted EBITDA appears below.

2. Reconciliation of net earnings and diluted net earnings per common share to adjusted net earnings and adjusted earnings per share:

Adjusted earnings per share is defined as diluted net earnings per common share, adjusted for the effect, after income tax, of: (i) the non-controlling interest redemption increment; (ii) amortization expense related to intangible assets recognized in connection with acquisitions; (iii) acquisition-related items; (iv) restructuring costs and (v) stock-based compensation expense. We believe this measure is useful to investors because it provides a supplemental way to understand the underlying operating performance of the Company and enhances the comparability of operating results from period to period. Adjusted earnings per share is not a recognized measure of financial performance under GAAP, and should not be considered as a substitute for diluted net earnings per share, as determined in accordance with GAAP. Our method of calculating this non-GAAP measure may differ from other issuers and, accordingly, this measure may not be comparable to measures used by other issuers. A reconciliation of net earnings to adjusted net earnings and of diluted net earnings per share to adjusted earnings per share appears below.

3. Local currency revenue growth rates and internal revenue growth rates

Percentage revenue variances presented on a local currency basis are calculated by translating the current period results of our non-US dollar denominated operations to US dollars using the foreign currency exchange rates from the periods against which the current period results are being compared. Percentage revenue variances presented on an internal growth basis are calculated assuming acquired entities were owned for the entire current period as well as the entire prior period. Revenue from acquired entities is estimated based on the operating performance of each acquired entity for the year prior to the acquisition date. We believe that these revenue growth rate methodologies provide a framework for assessing the Company’s performance and operations excluding the effects of foreign currency exchange rate fluctuations and acquisitions. Since these revenue growth rate measures are not calculated under GAAP, they may not be comparable to similar measures used by other issuers.

Notes to Condensed Consolidated Statements of Earnings (Loss)
(1) Acquisition-related items include transaction costs, contingent acquisition consideration fair value adjustments, and contingent acquisition consideration-related compensation expense.
(2) See definition and reconciliation above.