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 in the company's annual report on Form 40-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today's Thursday, May 2, 2024, and at this time, for opening remarks and introductions, I would like to turn the call over to Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

Thank you, operator. Good morning, and thanks for joining us on our first quarter conference call. As the operator mentioned, I'm Jay Hennick, Chairman and Chief Executive Officer of the company. And with me today is Chris McLernon, Chief Executive Officer of our Real Estate Services business; and Christian Mayer, our Chief Financial Officer. As always, this call is being webcast and is available in the Investor Relations section of our website, along with a presentation slide deck. During the quarter, revenue, EBITDA, outsourcing and advisory, investment management and leasing all demonstrated improvement over the prior year. Despite ongoing interest rate uncertainty and geopolitical tensions that are affecting everyone, it also affected our capital markets. Our strategic focus, however, is on expanding high-value, recurring service lines that continue to yield positive results for us, positioning us extremely well for the future. We remain committed to the Colliers way, emphasizing solid internal growth and strategic acquisitions that enhance our business and create value for our shareholders. In the most recent quarter, we successfully added $300 million in new equity to support our further expansion. Furthermore, our acquisition of Colliers Philadelphia has expanded our presence in the Mid-Atlantic region, solidifying our position as a key player in the United States. Over the years, Colliers has established a highly respected global brand and growth platform with broad diversification across revenue sources, service lines and geography. With more than 70% of our earnings generated from recurring revenue streams, we have a very robust business model with three distinct growth engines that can continue to allow us to capitalize on growth opportunities while maintaining resilience in the face of economic fluctuations. Most importantly, Colliers has a seasoned leadership team with a substantial equity stake in our company and an impressive 29-year record of delivering nearly 20% compound annual returns for shareholders. And now let me ask Chris McLernon to discuss some highlights from our service business and once he's completed, Christian will provide his usual financial report. Then, we'll open things up for questions. Chris?

Thank you, Jay, and good morning, everyone. Colliers first quarter 2024 results reflect the strength of our resilient and highly diversified professional services platform. Our Outsourcing & Advisory business delivered robust revenue growth with broad-based increases across all services, led by engineering and project management. We expect this momentum to continue through the remainder of the year, providing growth, balance and stability to our platform. This growth helped offset expected soft transaction volumes in capital markets, which, although down, were above market activity levels. We remain cautiously optimistic about improving transaction velocity in the late second half of 2024, contingent on softening interest rates, the narrowing of the price gap between buyers and sellers and improved lending availability. Leasing globally achieved modest growth year-over-year with several markets increasing activity in the office sector as occupiers make longer-term lease commitments, coupled with the return to the office continuing the trend upwards. Shortly after the quarter end, we completed the acquisition of our affiliate in Philadelphia. From its five offices, the company's 130 professionals provide leasing and sales brokerage and property management services. As a vibrant and influential market, our ownership now allows us to significantly increase our presence in the Mid-Atlantic and expand our capabilities in the eighth largest metropolitan area in the U.S. Among our many accolades in February, we were named to the IAOP's list of top 100 global professional services firms, a testament to our track record of success in delivering exceptional results for our clients wherever they do business. We have also been recognized as one of the best workplaces in Canada this year, out of more than 900 companies competing for a spot. The steps we are taking to strategically invest in our people and business, fill gaps and take market share will continue to strengthen our platform and drive long-term shareholder value. Now I'll turn things over to Christian who will provide more details on our financials.

Thank you, Chris, and good morning. As usual, I'll provide some additional commentary on our consolidated results, our financial outlook, and our balance sheet. Note that all references to revenue growth made on this call are expressed in local currency, and that the non-GAAP measures discussed here today are as defined in the materials accompanying this call. For the seasonally slow first quarter, revenues were $1 billion, up 4% relative to Q1 2023. Internal growth was 2% with strength in our diversified recurring services outpacing a decline in capital markets activity. Our Outsourcing & Advisory service line generated strong 9% revenue growth, mostly from internal sources. Investment Management, excluding pass-through period interest, was essentially flat with the prior year. Leasing revenues were up 2% for the quarter, led by modest growth in office leasing. First quarter consolidated adjusted EBITDA was $109 million, up 4% relative to the prior year with margins holding flat at 10.8%. We continue to closely manage our cost to match the expected pace of revenues, especially in our Capital Markets business. We also remain focused on improving productivity and on selective strategic recruiting. In our Investment Management segment, AUM declined modestly during the quarter, mostly attributable to unrealized market value adjustments in our alternative and traditional real estate funds, despite growing net operating income at the asset level. These adjustments totaled 1.5%, which outperformed the benchmark Odyssey Index. In addition, some funds disposed of long-held assets during the quarter, realizing gains and recycling the proceeds back to investors. This positions us well for future fundraising. Our first quarter fundraising totaled $450 million. We continue to see strong interest in our alternative, infrastructure, and credit strategies and we anticipate an acceleration in fundraising momentum as we progress through the year. We are maintaining our financial outlook for 2024. While interest rate volatility and geopolitical tensions continue to weigh on transaction volumes, we expect a rebound in activity in the third and fourth quarters. Although there is a risk that this could be delayed to later in the year or to early 2025. In our recurring service lines, both outsourcing and advisory and investment management, we continue to expect mid- to high single-digit revenue growth for the balance of the year. Turning to our balance sheet, our financial leverage ratio, defined as net debt to pro forma adjusted EBITDA, was 2x at March 31. We expect leverage to rise modestly in Q2 due to seasonal working capital usage, then to decline to approximately 1.5x by the end of the year, assuming no significant acquisitions. With the $300 million equity offering we completed during the first quarter, we are well positioned with more than $1 billion in available liquidity to execute on acquisition opportunities as the year unfolds. This concludes my prepared remarks.

The first question comes from Stephen MacLeod at BMO Capital Markets.

I just wanted to dial in on the outlook for 2024. I just wanted to confirm or just kind of get your thoughts on the components specifically around - I mean you mentioned Outsourcing & Advisory up mid-single digits to high single digit. Just thinking about capital markets and leasing. Are you still expecting things to be sort of flattish in the first half with some growth in the back half? And then on Investment Management, do you still kind of expect the same level of fundraising in 2024 in that? I think it was $5 billion to $8 billion range as you expected with Q4?

Yes. Steve, let me start with that one. I think you've laid out some of the component pieces here. I think the growth will come from each of those components, about one-third from our Outsourcing & Advisory business, which we have a high degree of visibility on, as Chris mentioned, with backlogs of work in process and to be completed. One-third of the growth will come from investment management, and that's going to roll out through the year. We think it will be weighted more towards the back half of the year, but we have strong activity levels, and we expect hopefully, to secure new capital commitments from investors as the year progresses. And finally, one-third of the growth expected in capital markets. This is going to be weighted, as I mentioned, to the third and fourth quarters. So not expecting anything really in terms of growth in the second quarter in capital markets, but a modest rebound in the third and more likely the fourth quarters.

Steve, let me add something to what Christian is saying. From my perspective, the outlook is really quite straightforward. All of our businesses are doing extremely well with the exception of capital markets, which everybody knows and that's very interest rate driven. So your guess is as good as mine as to when that's going to change. But when it does, it has a material positive impact not only on Colliers, but any other business in the industry. It will really have a significant impact. The balance of our businesses, as I said, are doing extremely well. Fundraising is a touch soft, getting stronger in investment management. So we think we're going to do nicely as the year progresses. But the forecast is really quite simple, at least from my perspective, and I think we're all managing - the key is to manage the business as closely as possible. And as you know, we've done this for many years, and we think we've got our eye on the prize. But it really is going to come down to capital markets when it changes. When investors - and Chris said this just a minute ago, and I'm going on a little bit too long here, but there's also decision-making on the part of sellers. When are they going to sell those assets and there's a lot of pressure on a lot of sellers right now from a financing standpoint to take action. So interest rates will impact it, of course, but there's also other factors that could accelerate capital markets a little bit quicker than just interest rates alone. I offer that only as a means of trying to get a sense of what the balance of the year looks like to us.

Steve, it's Chris here. Just a couple more comments from the field. There was a bright spot this quarter in Asia Pacific. In capital markets, we were up 19% year-over-year. And so we've got some good activity in Japan, Hong Kong, Taiwan, a little bit of Australia. So that's a bright spot. We are starting to see, over the last 18 months, there's obviously low transaction volumes and really below the $50 million threshold. But as Jay was saying, the pressure is starting to build. And the market is starting to test some bigger ticket items, so 200 plus levels. In Q1, Colliers brokered three deals, I can give you examples of more than 200, one in Oslo, Norway; one in Korea and one in Australia. So we're starting to see more activity, more pitches and mandates, but I think it will be incremental activity. And as Christian said, towards the back half of the year, but we'll start to accelerate it.

That's great color from all three of you. I just wanted to shift gears a little bit and just talk a little bit about the acquisition pipeline. Just sort of what you're seeing out there. You have lots of strong liquidity right now, strong leverage. And so just wondering what you're seeing there and where your interests lie currently.

I'll take that. We have a very interesting pipeline of acquisitions, some larger and several smaller virtually across the board. But having three growth engines gives us lots of places to grow and having a global platform with strong management teams that have been around a long time and have operated the Colliers way for a long time gives us the confidence that we can execute wherever the opportunities are. So we're quite excited. Obviously, we've got to take one step at a time, but the pipeline is solid, I would say.

The next question comes from Daryl Young at Stifel.

First question is just around the investment management business and maybe a little bit of color you can provide on some of the costs you're adding for fundraising, and you called it distribution capabilities in the Middle East, just put my interest there.

Yes. Daryl, we've been building our fundraising capabilities, and in particular, in the Middle East, and that's an area that we have and Asia. But in the Middle East, our share of LPs is quite low. So the opportunity set for us in the Middle East is big. Asia is an area we've been active in for longer, and we have more LPs there, but still room for growth as well in terms of attracting new investors and new sources of capital for our fundraising. The other part that we're focusing effort on which is taking some - adding some expense is building out our capabilities to launch new strategies and new funds. We've got a few things in the works that are going to launch this year, and we've had to staff up and incur some costs to make that come to reality.

And then it sounds like you're targeting sort of net new LPs, but what kind of receptivity have you seen from existing LPs re-upping on funds? And then also cross-sell of LPs between the various boutiques that you acquired over the last couple of years?

In terms of re-ups, we're seeing the same percentages as prior years or prior fund re-ups. What we are seeing is we're seeing adjustments in the allocation. So some of them, if they're tight or they're not balanced properly, will increase or reduce the amount of commitment to the next fund, but virtually 92% or 93% of re-ups has been sort of a consistent theme for us for many years and then introducing - and that's one of the great things about this business. It's so recurring as long as your investors are happy with the results and the way in which their investments are being managed and then we're introducing new investors, especially during these times and especially to the types of assets that we focus on, which are alternative asset classes, which are very much in demand. And so I would say there's a softness in fundraising generally. It's changing but it's changing for the better. But in terms of re-ups, we're where we need to be. The other thing that we've invested in is the RIA channel through one of our platforms that has a very significant presence. We've doubled our investment around raising capital up through the RIA channel. And - so we're quite excited about the asset management component of our business and think that all these investments, particularly in times like this, will pay dividends down the line. And it's not just going to be this year, it's going to be next year and beyond. So new products in the marketplace, more investment in distribution capabilities. All of those types of things are the things that you do to build a great platform, which we're doing. We're also investing in - I should say - I should have said this at the outset, topgrading our people. We've got some exceptional people, but there are opportunities to add different asset classes, which means you need to bring in different expertise around data centers and a variety of other things that we're working on that just make our platform that much better.

The next question comes from Stephen Sheldon at William Blair.

I want to start with Chris. Curious what you're seeing in terms of industrial leasing activity. It sounds like the 2% overall leasing growth in the quarter was driven by pickup in office. So it would just be great to get some color on what you're seeing on the industrial side and whether things are weakening there. Just kind of how the trajectory is looking on the industrial side for leasing?

So I think in the industrial leasing, there's been a natural cooling after the record-breaking run up after the COVID boom in e-commerce in '21 to '23. Occupiers today are generally concerned about economic conditions and the geopolitical concerns and they're also focused on looking at efficiencies and looking at their existing locations and what can automation do to their facilities. There's also been an increase in vacancy in a number of markets, and so there's more options for occupiers to look at. And so they're taking some more time to analyze what their footprint should look like going forward. So I think it's a natural pause in the cycle. The market is still a good market. But I guess the level of velocity of leasing transactions in industrial is not the same as it was in the record-breaking times just after COVID. The one outlier is that in Canada, we had considerable leasing growth in industrial up 41% year-over-year. So that was the one bright spot. Most of the places around the world, industrial leasing was down. In talking to our operators in the field, I think there's also a little bit of a delay from quarter to quarter, so some slippage. I've heard of some larger deals in Australia, Poland, and the U.S., notably that could show up in Q2.

That's really helpful. I appreciate that. And maybe just thinking about the U.S., how are you thinking about your producer capacity and positioning for when capital markets activity picks up? I think you talked last quarter about record recruiting in the U.S. during 2023. You now also have some more scale with the Philadelphia acquisition. So are you getting closer to the scale that you'd like in the U.S.? And how important is it to continue how do you scale, I guess, through acquisitions, specifically in the U.S.?

So I think we continue to recruit top talent, and we've got lots of white space in the U.S. Our market share is still quite low compared to our major competitors. So this is a priority focus of management to continue to bolster our teams, and we'll do that through either acquisitions like our affiliate in Philadelphia or teams or individuals. So it is still very much a priority. In addition, we're looking at productivity, how do we get more production out of our existing talent and making sure that if there's any nonperformers that - we're moving them out and then our high potentials, we're investing in those people to make sure that they can perform when the market comes back. So this is still a major initiative of ours to continue to push into capital markets in the U.S.

Got it. Makes sense. And then just one last one for Christian. As we think about our models, tax rates were a little elevated relative to at least what we had modeled for the quarter. So just curious if you have any framework for how we should think about the tax rate over the rest of the year and what you've assumed in the guidance.

Yes, Stephen, there was a one-time item in Q1 for a couple of million dollars. So absent that, the rate would have been 30% in the quarter, and we expect the rate to be 30% on a full-year basis as well.

The next question comes from Himanshu Gupta at Scotiabank.

So just on the 2024 guidance, just clarifying, do you have M&A built into in this guidance? I mean, I know you have done the equity offering now, which was previously not there at the time of original guidance.

Himanshu, I think you're asking about acquisitions in the guidance? The answer is no. There's no acquisitions built into the guidance. And the guidance does include the impact of the recent equity offering.

And then, I mean, given that the guidance is unchanged, has the outlook changed within the segments? I mean are you - were you still expecting 1/3 of the growth from IM and 1/3 of the growth from capital markets business last quarter as well?

Yes, Himanshu. I think the components of that outlook are the same, 1/3 from outsourcing and advisory, 1/3 from investment management and 1/3 from the transactional business. That's consistent with what we thought back in February.

And any incremental weakness baked into the capital markets business? I mean, it looks like the leasing looks to be performing better than expectation and maybe capital markets given the interest rate could be a bit softer. So within two segments, any change in direction?

I mean not meaningfully, Himanshu. I mean this is - I think we do the best we can, and we look at our various components. Every time we update our and look at our forecast, but there's nothing meaningful to call out at this time.

Got it. Okay. Then just looking at the valuation on IM, investment management, the valuation adjustment in Q1, was it mostly related to office? I mean can you elaborate a bit there?

Himanshu, it was primarily related to our - sorry, to our alternative portfolio, and that is not related to the actual portfolio performance itself. I mean, the income coming off these assets is the same or better than it was previously. What's happened is the cap rates have gapped out and have driven reduction in the sort of the values that the outside appraisers attach to these assets. As it relates to our office portfolio, it's quite small. It's 1/3 or 1/4 of our traditional portfolio, which is a small piece overall. And we've taken cumulatively over the last 1.5 years, 27%, I believe, mark-to-market adjustment on that office portfolio already. So that is not a driver in the quarter, but certainly, it's been something that's been weighing on AUM over the past 1.5 years.

Maybe just a last question on M&A outlook or opportunities. So how close are you on the capital deployment? And anything you want to elaborate on that?

So Jay the question is how close are we on capital deployment in terms of acquisitions or other opportunities?

I'm not - that's not something that we would normally talk about, number one. Number two, we're actively involved in many transactions right now and they close when they close. And I can't really give you any further color than that. They're all opportunistic and they happen when they happen, but we have a track record of completing multiple transactions over many years.

The next question comes from Jimmy Shan at RBC.

Maybe just a follow-up on the M&A. I know not so much you could share, but can you give us a sense of the deal sizes that you may be looking at across? You mentioned looking at small and big deals. And also, I think we talked about pricing last quarter. Has that - has there been any change in that given the change in continuously changing rate environment? Have you seen any change in sort of pricing expectations?

Yes, that's a good question. As I mentioned earlier, there are large transactions and there are smaller transactions. I would say that the large transaction pricing is high and it's just the nature of the beast. And what's also happening is, especially in the large transaction environment, these are businesses that are extremely well managed and have great long-term prospects, and that's getting reflected in valuation. When it comes to smaller deals, and of course, smaller is always relative, the pricing is materially lower than it is on the larger transactions. And it also depends on what segment you're talking about, whether it's our more traditional service lines. Right now, you can buy more traditional real estate service businesses at relatively low valuations for obvious reasons, capital markets as an example. But in the other two areas, the valuations, I think, are fair valuations, give or take, on the smaller transactions. And the beauty that we have is that we can integrate those acquisitions in different parts of the world in different segments of the country. That add different capabilities - service capabilities to us. For example, in engineering, we might want to augment one or two components of our business in a particular region. So there's a nice opportunity for us to just strengthen our business and widen our capabilities. I'm probably giving you too much detail here. But having three distinct growth engines being able to execute on a global basis, having a strong balance sheet, having a management team that's done this for a number of years, all puts us in an excellent position to capitalize. And in markets like this, there are pockets of areas to capitalize on. So we're very excited about some of the opportunities we have, if we can bring them home. I think that it just takes us to an entirely new level as a company.

And then maybe just Christian, a quick follow-up or a clarification. The AUM growth on the investment management business, $5 billion to $8 billion. I think I heard you correctly, you - in Q1, you had $450 million of fundraising. And so if I just look at the annual number for 2024, simple math, 1% on 5% to 8%, the thinking is that the additional revenue on an annualized basis would be $50 million to $80 million, but weighted towards second half of the year. Is that how we should be thinking about that?

Yes, I think that's right, generally. I mean there's a few strategies like credit where the capital does not generate fees until it gets put to work. But generally, in the traditional alternative infrastructure categories, when that capital is raised, there's a fee, clock just starts running immediately. Yes. There are charges against EBITDA in the first quarter and some costs were incurred late last year as well on these additional mostly staffing costs.

The next question comes from Frederic Bastien at Raymond James.

You just added the Colliers affiliate in Philadelphia, but I was wondering if there are other non-owned affiliates or regions that are of interest to you, whether that's in the U.S. or globally?

Yes. It's Chris here. To answer your question, there's a couple potentials in the future. So Houston, Denver, South Carolina, those are kind of - and Columbus maybe. So just a couple. And internationally, there are not really any affiliates. The markets aren't really big enough.

And maybe switching gears, still on M&A. But on the engineering side, you've been up to now pretty much active in the U.S. and started - established a footprint in Australia. Are these sort of the regions you're going to continue to focus on in the short term?

We're open to other regions as well, Fred. There are several markets that are western-type markets that are conducive for growth. You know this better than most other analysts on this call. So yes, there's a number of opportunities and a number of different areas that we're pursuing.

Next question is the follow-up from Daryl Young at Stifel.

Just on the engineering and the project management. Can you remind us the high-level mix of public versus private? And the context of the question just being some of the slowdowns we've seen in construction activity and the commercial real estate end markets, multifamily, industrial, all those areas. And just anything we should be aware of or considering on that front?

Yes, Daryl. Good question. Across our business, the mix is roughly 50-50 public sector and private sector, and we target that for precisely the reason that you're mentioning because the public sector stuff is extremely stable. It tends to be longer term in nature. The private sector stuff is great work, has long-term contracts, but can be a bit more sensitive to economic conditions. So we try to balance it on that basis.

Genuinely, a little more profitable.

And more profitable. Yes. So we like that balance, and that's what we try to work towards across the business and to keep those backlogs of work at sort of levels that give us great confidence in terms of our next 12 to 18 months out.

So things are still sort of motoring along and you're not seeing sort of any major impacts from some of these headlines we're reading?

No. But if you have any business, you'd like to refer our way, please give us the name, phone number, and we will be all over it.

There are no further questions. You may proceed with closing comments.

Thanks, everyone, for participating in the first quarter conference call. It’s a very interesting year, with great opportunities we have in front of us. But as always, we'll have to continue to deliver one step at a time. So we look forward to speaking to you again during the second quarter conference call, and thanks for participating.

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