NMRK - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Julian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Newmark First Quarter 2019 Earnings Conference Call. [Operator Instructions]. I will now turn the call over to Jason McGruder, Head of Investor Relations. when begin may you you're ready. Sir,

Jason McGruder

We press release morning. issued this our results financial XXXX quarter and first morning. Good presentation results summarizing

terms business the when statements are not remind you forward-looking results and these under management them. this of the to of on earnings that today's XXXX these meaning press generally the Unless the an also year undertakes may any to of call except of as You XXXX amended adjusted of EBITDA. release at Act We'll within refer with this only statements our information of the results Securities be GAAP to call to call period. obligation I law, how, terms, amended. GAAP. XXXX uses XXE Such stated, for on today's see corresponding definitions the results for regarding are accounting otherwise referring compare section stated. We Exchange quarter non-GAAP that also find Securities complete by Newmark required risks Please accepted as Please and of why the as Section today's and on adjusted facts any provided involve basis first or forward-looking can press the and unless earlier principles in on results documents uncertainties, see otherwise such the statements. ir.ngkf.com. reconciliations no of historical the the update Section mainly back Act release of XXA

Newmark's host, X-K forth and in in your special note Form call to, Gosin, but Form Group, to additional the XX-K, Inc. happy most our which the Form CEO I'm forward-looking over Newmark now to to Commission or the filings limited Barry differ contained including, those actual of XX-Q Securities statements turn risk filings. of recent regarding cause set Exchange uncertainties, results and risks factors discussion and For forward-looking statements, see not from could

Barry Gosin

Thank Conference us Rispoli. you and Good and Newmark's for Quarter First XXXX With you, Mike Call. today Financial Lutnick; morning, are joining Jason. Officer Chief Howard thank me our for Newmark's Chairman

generated improvement to Board a that in closing translates per adjusted XX% dividends improvement and EBITDA. earnings share. report raised share, X% common yield X.X%. growth, of pleased $X.XX our yesterday's of to in this the At X% Newmark post-tax I'm by Directors revenue an adjusted into a price per company's $X.XX

investment sales, We the continue and quarter. mortgage multifamily leasing, to grow during across brokerage

to pleased are our guidance. XXXX year EBITDA reaffirm We and full adjusted revenue

issuance, our improve X% is reduce to are $X.XX by on increasing share execute earnings adjusted adjusted and $X.XX, per year. for between earnings to our to now the plan we net to full $X.XX. share XXXX we per guidance As We expect higher which XX% share

seasonality service first with consistent are and its peers. quarter normal full results Our Newmark for

turning our Now business. to

We continue many producers Newmark. attract to to leading

For example, by asset senior estate alternative a top-ranked top-ranked added housing team. we significantly expanded housing group real markets adding our We capital healthcare origination senior team. debt and the

Canada. team added leading we addition, In housing in a senior

senior We markets business expect housing the Americas. the to capital leading be in

Denver sales America in Vancouver, and Seattle, to existing commercial over teams also year. and and multifamily platform. professionals and origination enhance debt leading in XXX investment Angeles, the Minneapolis, the industrial added strong have We Los in added Latin past Carolinas teams We've our during

made improvement and led productivity. evidenced front many as professionals, Newmark's continued talented real to of of office us for X company most us a has our XX% the years evolution choice position the in and headcount of over growth the past by strength in estate

making We're our in progress We cross through deployment we innovative investments. extensive of the leveraging technology opportunities. the excited are are technology our improving productivity by our and by selling

XX% in overall originations were volumes. the together that and sales of investment estimate to approximately U.S. Turning market. up industry-wide notional We terms

year across full very in brokerage volumes favorably market. overall sales, increase origination, investment mortgage to XX% and the compares Newmark's

volumes originations, brokerage billion. across This XX% to sales by volumes multifamily. increased compares $X multifamily to the X% year-on-year Newmark's non-originated from increase mortgage and industry of investment for combined an estimated

We our data businesses other build top multifamily continue and platform. innovative use to and through time cross-selling, technology to grow and to expect our producers and of attracting over

all prospects We revenues research have building business and in the that property In growing U.S. year-on-year. last year-on-year, spent I by about X leasing Newmark platform. decreased. estimates rents the commissions never increased more activity for excited U.S. increased for types our overall Newmark. X.X% leasing the comparison years our while been from

business. Mike. next for few execute to accelerate We I have that, real years. expect company established attractive of most professionals hiring turn talent estate I'm to With over as our to will top the ourselves the over happy

Michael Rispoli

and Barry, you, of quarter, the Newmark $XXX.X X%. increase revenues In good an million, generated first morning, Thank of everybody.

of Our hires the new and approximately revenues. X.X% of usage impact of acquisitions expenses XX.X% basis compensation recent expenses our $XXX.X facilities. to increased result Non-compensation a and of and improved as GSE by million, to by points X% to million, XXX warehouse increased $XXX.X increased

our quarterly to Turning earnings.

Our $XX.X million. adjusted by to EBITDA X.X% improved

were to earnings Our $XX.X the XX.X% for quarter up pretax by million. adjusted

which for for previous our tax tax XX% outlook of consistent Our rate non-GAAP XX%. adjusted earnings is was in the to XX.X%, with range

Our increased to post-tax XX.X% $XX.X million. earnings

$X.XX. to post-tax Our share per earnings increased XX.X%

hires equity with by fully net using of XX, and of We respect XXXX. reduce expect more million equity number as have deferred acquisitions We from to cash and taken, and issues. less employee steps for XXX to share and new outstanding for X% diluted now the share to include, take These X XXXX to December shares increase compensation. to our count expect a

to future in foreseeable average. on is X% issuance range share the net goal for the Thereafter, maintain count our annual

was March share Year-over-year, versus of Newmark of XXXX the due exchangeable in fourth virtually partnership count units diluted $XX.X to quarter of million. count the of for the quarter approximately XXXX. primarily fully XXXX unchanged BGC first to Our increased sale share limited $XXX million, the

the Moving balance sheet. onto

to year-end for bonuses. change This of the the December million liquidity XXXX. total from $XXX.X payment addition million, of Newmark's reflects XX, $XX.X was down impact in taxes, $XX.X at million corporate

Our EBITDA of as million, unsecured prior $XXX.X our March was trailing versus period. net $XXX.X XX, therefore, XXXX, million. debt the X.Xx company's net debt is year The was X.Xx XX-month in debt to long-term adjusted

Our the NASDAQ not balance expected XXXX does payments XXXX. yet of from reflect million additional approximately through sheet $XXX

Given positioned the that, the back credit With assets, our strong $XXX cash believe on sheet the happy off-balance that our to Barry. over and flow million of strength for low to well from invest facility, we leverage, and to we turn business call are growth. to I'm continue generation

Barry Gosin

you, Thank Mike.

XXXX. be is adjusted in EBITDA the $X.X billion to year XXXX estimate to full in as Our follows: of outlook billion, We $X.X our expect be range billion from generate $X.XXX in revenues for to the of We up range to compared We range XX% XXXX from up XX% XX.X% to XXXX. the adjusted XXXX. $XXX of in anticipate million our for $XXX in million, in $XXX rate with earnings to tax million

the $X.XX, in our guidance We $X.XX to be $X.XX in from earnings XXXX. outlook range and of This per share and a a up previously. to $X.XX $X.XX have raised compares

changes assumes we'd to Our the questions outlook meaningful open Operator, price. acquisitions the material like stock in no or for call

Operator

[Operator Instructions].

Your from first Jade KBW. question Rahmani comes from

Jade Rahmani

you what and drivers in was and fee average, deal large on to quarter. you outlook, you seems to that this due can size of that the deals And overall anything that. of or peers drove secondly, the it Just rate, lower the the the else? comment Can then to markets market outgrow average were talk able terms capital transaction

Barry Gosin

people the that these right. less, group. we commissions talent a Exactly continue hired to also are have as better. deals from companies, Larger better as ramp incredible to enterprise -- congeal The renewed, as of ramp. Many up each other and we the and collaborates day, to gets They and they it talent. just better and continues communicates, continue come

Michael Rispoli

so notional XX% in and more the just GSE as quarter Yes, bit were know, of origination has our a a revenue I'll in add volumes lower of mix that that, to well. you the as little ready business, than stream, ready

Jade Rahmani

percentage you say effort leading, services up? markets from leasing, are or have where there's you What management transactions and teaming folks that a capital team-based would sales of you

Barry Gosin

a that team to linked market. understanding There starters, is the connection team debt projects leasing the for on Well, the sell. in origination generally we side-by-side is arm-in-arm the

also same. so the property buyers, those So and building in understanding, guts bring the a evaluating the they are for management together. are of the the of we and that and important, is mean together understanding bones enhancing management I the the linked people

fully So the the in advantage they're generally platform with ability of a of linked sale. management all leasing real integrated in after the the and together all services, have market to and and capturing the a the is the knowledge sales

Jade Rahmani

flex in of that. wondering to you if the any as office your Newmark's If XX% specific of comments to why do less side, has America's year-on-year, leasing some with leasing peers else? subsectors, such north technology, was or growth up something as On have than it growth put

Barry Gosin

we in Well, thought, XX%, X.X%. were we the Americas, were average about was -- I

first The year, a we had of deals. last quarter large amount significant of

to continue grow. We

one next. from good slipped deals quarter the a that we'll year leasing. Some in have I to expect

Jade Rahmani

Okay.

could year? operating Lastly, free any have do expectations full for cash flow flow the generation cash offer for you or you

Michael Rispoli

hiring producers. our included of and new that new we year, into and that from to business at we look cash you talent back flow last close If million generated reinvested $XXX about operations million $XXX

about cash if you generating investment, So see flow before at $XXX XXXX. the it And in million. it was of similar look that amount we business

Operator

O'Neill. comes question from next Your Goldfarb Sandler from Alexander

Alexander Goldfarb

questions few a Just here.

writing we it the share from hiring count like no for you it that all from First in the if adjusted EBITDA, last remember suffice footnote doing that that you Barry, and very that out it it'd more notes helpful future, can the problem and well was last say, although guess, foot be I is guys have when see stuff. good says quarter, you is business teams. are addressing challenges the the like for to call the clarified, sounds so same guys But guidance the sounds to adjusted

compensating. the You've you're have dramatic adjustment to way that a made

people no So more are your there to based or grow can assume impact as some or has you the ability the compensation that as or just is either ability we to there redone been on revised that retain grow far understand compensation? less when been has effect maybe we're structure, walk to you've your to grow on through,

Barry Gosin

people. We to The accelerate improved. hire to to shortage not people. the at as with company better hire -- as more hiring. no the mature, grow continue much impacted of opportunities evolution is respect ability of all platform the has and compensation we And to The and there's gets so

Michael Rispoli

and now recruiting and that, people, easier simplify going I'll add when Alex, that, and structure it recruit. we're we the to out making comp it's just hiring to

Alexander Goldfarb

Okay. think you can the addressing as helpful, lot dilutions just guys confusing. of and one provide because of releases the doing And obviously, as growth, are that to you be a far a information could a guys lot thing things then, I little good be bit but

if basis, and we make just guys changes release updates the share. on morning, versus simplifying. you're see say, just you can see earnings were then would are lower actual now and I previously So that Because clear when we revenue things but simplify that disclosed per look higher this

stock a As that's far unfortunately as lost good it being guidance, down. gets with thing, the

suggestion, think to forward going you So guys that putting And just stock. a maybe it's good I certainly, be the performance. would helpful in -- it are

see all You're the down right just to this way be the stock the definitely in It's doing things. it morning. is a that shame

that something could So that? if fact is reasonable is sticking some I format be maybe will you or know, something disclose is on in think way just that comment that's if you provide the if to you something don't with this do you

Michael Rispoli

some provide So the earnings as how the the to we some adjustments talked that did public we have how we to last call. numbers and on I information we and the said, show about changes

able our those business that feel are we and the the for these see is is line the revenue top of consistent and with growth numbers year about seasonal, so rest pretty reiterate business, we the the why were changes. pipeline you the which And know, And and good for we as year. to

Operator

from Your Goldman Rosivach next mission comes from Andrew Sachs.

Andrew Rosivach

be on GAAP for the getting if But for little and you this you earnings I'm between comp do sorry, a stock earlier. 'XX? is, line my equity question stated adjusted earnings anticipate compensation biggest your your and adjustment and what died bit The will is stock

Michael Rispoli

stock specific compensation those We units shooting the rate will that generate charges the remember, for provided haven't stock, still convert company. were on And to gets LPUs they the that, as company's get non-GAAP from we the past have stock but into right the the guidance that you deductions. if tax benefit the units,

last -- GAAP and our X that fully said, have amount the But to end at maintain when the to XXX X% limit way XX% issuance million so we count charges And for diluted in share were will between are GAAP tax would structure of of a similar rate the we comp a stock the measured non-GAAP between compensation all XX%, changing that year. against comp. shares outstanding that the

Andrew Rosivach

it know was make comp that year, your because will it year? if stated So what case, employ that's this -- previous we -- flows does the be last what add cash does stock your back that lower

Michael Rispoli

it think would amount a little bit maybe would I a similar or be higher.

Andrew Rosivach

then one on And Okay. follow-up this.

and just adding it are for other do stock not They the merger-related it back, What this back whether By back you their is is comp to way, brokers, multiple aren't If earnings. at companies. they necessarily companies, compensation. necessary look add or they other adding stock adjusted though, is cash. for is

to number, going associated how doing go M&A, lock companies so for a ups of of ton the you we need that And Newmark's the teams how at of is of compensation that end out that look or is And much my with given just it do in? potentially equity much time? to to for when question bring been you,

Michael Rispoli

hire, as we just give bring we past. and over our equity know, When So for have upfront sheet we you then the of compensation that population. of the the time as promptly goes we to continue we through buy paid compensation. the similar hiring as to in rest that when they'll balance really just come get the will earnings past equity But compensated onto used they normally we've in and the goodwill companies, is on part the the in them the teams past, as

Andrew Rosivach

of lockups, Just the I to adding back. about mitigate, segregating. JLL if are other believe, And it look comp companies they throw worried might Push of Because you some at of for lockups, if they're HF, I might it essentially worth concern will, be think, people if the are and that this market? now, is out, some with taking equity it you

Michael Rispoli

pay the Yes, producers through right all now, the of to join our that statement. income the company's coming we is to compensation company

a it's our So part of earnings.

Andrew Rosivach

is stock stock But the some of recurring comp is is, question or Right. comp just one time? the

Barry Gosin

the contracts for With can't contracts. we of time their signed begin companies generally acquire, significant They with. non-reconstitutes. non-competes, all period a long-term the of do non-solicit that after to principle business They sign

that in can. is being of there actually control in some business, So to respect significant their and the a of be able likely amount compete they

Operator

KBW. from Your Jade question next comes Rahmani from

Jade Rahmani

your ask guidance. to wanted I a follow-up related to

So the XXX for up up to implied million flat share X% and the the shares issuance now flat count of your I on think X%. around outstanding, to guidance prior XX million you're shares

loans item? a to So that anywhere. how would amount either are or that does expensed as being million $XXX to employee value it my show have of that going Where of in value. And go an it's is equated Is that terms cash amortized? up item expense is, about question

Michael Rispoli

contracts come of of through we our And the that Well statement through our time to we're over come the well. income will the giving as length course, item, over statement over time extent course it that it's will with of compensation stock producers. our them the a cash income sign

Jade Rahmani

be in going form But that you $XXX of of value, essentially be anticipated to million and issued to likely the previously it's issued in now the form shares cash? of it

Howard Lutnick

issuing are no. now diluted form It no, happened issuing fully units time. it will equity, and is we long so current deferred we be what the over No, of come -- in were will equity,

virtually a X%. of we issuance, just now it no instead count it's time. so So today, going X share less slowly to it shares, just in is mathematically net comes our into long But over expect

to cash, say for we less that target fully count foreseeable issuance our Mike why share So after being was which and to shares X% diluted just to year, of shares actually of X to this expect able growth that's it's it's be not converted future the X%. is

it's not So hurt just it's more we giving them. and going earnings, are shares cash, deferring it's less not our to

Jade Rahmani

curtailed? growth hiring have that expectations Does net your that been imply

Howard Lutnick

not. Absolutely

Jade Rahmani

just have over you've term previously? than longer So deferred the agreements restructured to equity a hiring

Howard Lutnick

effectively. Yes,

Jade Rahmani

lower the count. Okay. there was share sense. guidance That a no wondering were why of impact result adjusted the We as makes EBITDA to

Operator

Raymond from comes question Patrick O'Shaughnessy next Your from James.

Patrick O'Shaughnessy

taking Curious optimism GSE what that around is that any [indiscernible] the took of on have your Committee it's said some whether in of hearing the place been business? reform, that about the Senate change multifamily or your place, have conversations things Banking take long-term

Barry Gosin

No. We're pretty comfortable with it.

Patrick O'Shaughnessy

Okay.

With your or well think the sense JLL a key kind that result HFF, be they of of be some job you acquisition do of as it of might there pretty locking their did that Is seems deal? like talent. available that a good might as talent up

Barry Gosin

market, taken player it's Any good time the is that's everybody. out of a there for

about there in to company less the business. beauty one happy are is and We get the merger contest

Patrick O'Shaughnessy

might share going And previous response does also account hiring then Okay. count might do. you than you into in level? forward, growth if take acquisitions that X% question, particularly deal, for might be share greater a is that a Does think do X% I to that that also said you reflect dilution see do any that outlook that that or any we large you

Michael Rispoli

Yes, acquisitions, could target a our so it time. if excludes we said we big material I transaction over think change, do

Operator

Instructions]. [Operator

question from next comes Wedbush. from Coffey Your Henry

Henry Coffey

Tough day.

of you've below I are if changes for can EPS. summarize, the line some So made good sort that

that are the I company, is same the of REIT residential I'd good business lower say, your on you real Can I is When seems growing, the or all that mortgage -- you a that observation rates mortgage Dunlop to well, and side anything residential for today, people Walker make commercial this obviously, down or a if you? good. & are like recruiting any impediment at fine. your business see key hiring, don't You and look the which are way treasuries a

Barry Gosin

and the our us. businesses, encouraged we're optimistic. pretty pretty And in all commercial we in the Lower of Absolutely. are for multi, are rates good

Henry Coffey

work business great. drives a good, X going important JLL dividend lose going fundamentals. building And So from debt? Philadelphia to for of let's the And going you their what your the going the now, to the guy that's HF be Philadelphia in ability companies, guy pay months the they're other down is and increase key to major or then is to are either talk in probably about And leave to your the that is competitor come or jobs. one variable

Barry Gosin

broker, emphatically, hire. couldn't I company never, that Look, conversation, as I about end accelerating. per in in profile productivity people us our of people everyone the of better level The the that X have years is I platform talked at couldn't the to optimistic us. of Everyone the are of more interested my is level be brokers, the ability of said, ago, profile been and talking to us. this say the about more The to have The talking is shape. never may team, our not

We momentum. because have cash to in continue will Literally, at when you statement, in Every private senior good in flow, We the country #X the hired market. firm, the interested we really equity -- every of look just the we housing good team is in very housing. investor our own senior demographics.

We aspect disciplines to our continue various every business. expand our of -- in expand and

Henry Coffey

So to question. me let my go back

Okay. that. We got

a others here. some two perspectives which company from from a very to right, -- are took said, So very complex your And we're simple and numbers out and if then those company. circle again you all what pencil, number -- couple a it's of going

interested affect at affect debt So both. items your the ability I'm buyback you to or in buyback, or the or positively for -- a, -- are And raise which obviously, down to these either really stock of pay not going dividend levels. those line

But should -- drive your really increasing better and key you're are items on? think your that, I reducing dividends. interest the we what focus expense that growing that the off

Michael Rispoli

increase dividend our about So and Barry of $X.XX quarter, continue as as with guidance to our and the comfort we did We'll you level the recruit with grow as first talked our the talented saw, business hire cross And our perform to ability top guidance year. with that in to together good the and and have line result the a this our on within professionals of ability feel the that platform. we put range sell and give that just tools ability that to the provided we technology them the we about year. we for

Operator

comes question Patrick Raymond next from O'Shaughnessy Your from James.

Patrick O'Shaughnessy

Just follow-up me. a quick from

versus the think to cash doing big capital do So pretty minimal you this coming. about NASDAQ apply if potentially or trying you you think the some have that about the How that you're the shares in leverage that still company? other growing have, sheet, a your special liquidity to you return balance dividend at point, capital

Barry Gosin

the and and brokers have acquiring, to We'll hiring in the many and use We continue hiring company. grow professionals so to opportunities acquiring of companies. cash great

we'll So in see opportunity use the market, amount we money wisely. so that of an enormous

Michael Rispoli

XX-plus-percent that grow And and of with and the on money professionals we returns we revenues the ability of target course, better. cash makes our that return put we we platform, the to on the that that acquired that our invest on only companies investment

Operator

question from next Rosivach from Your Goldman comes Sachs. Andrew

Andrew Rosivach

to thought, Because nice Sorry, the value at you And have are you callers as highlighted, the way other X.Xx last the sheet ask buyback earnings did year. balance I guys, now. would question. adjusted up a take if you job really I right you shoring as do

an return, we better any do and be right? because here than other Is way it spread should to a just -- X.Xx be it's too repurchases free share announced difficult there or makes thinking would a here have and tax place. here just about. issue the the it by XX% the in Is factor buyback the You is program issue be

Michael Rispoli

primary year Yes, that's to factor. that. in at evaluate so continue we'll look still our spin, the two early And for we're and process

Howard Lutnick

X to X% the we -- foreseeable constrain of and a figured tools X% to that goal our this of variety to to reduce the tools to it allowed year net have share out share figured us our -- future. for We've issuance for

has our the until to tools using we're the about after be I the think of this company XX% those X lapsed. had revenues during buybacks years quarter. has of high the would But expected first very why period in anyone priority first on list thought time, The so at quarter. else of operated our for than spin XX% share were that in years, We available revenues us idea have other are very have well. would And always X levels. no our have these I

do All of of in about their our quarter. peers XX% revenue first the

what do expected guidance. to we for doing exactly our are We

to so just I $X.X We things these how the understand $X.X and a we constrained earnings, all misaligned future. count, our and out don't of increased our between take variety share variety of we expect won't but took listen And misaligned, things, got be employee in that -- the suggested they do revenues, you EBITDA have from billion to do in loans out. billion

think performing hit all is our of so tones the right And we've business and I tried well. to

Andrew Rosivach

summarize, there. to of terms $X.XX price in shares -- from be now, people hang you pieces, in same the shares now, position in liquidity the a are target repurchasing would at if you So be if repurchasing prior can but year today year X.X you'll

Howard Lutnick

certainly management our if the Given for could for back now, of and to our and around one buying change it shares right the I would this buying me, for levels sure. stock change our would view be at outlook you calender the everyone shares,

Operator

call for We to closing like Group I'd turn Barry over questions. CEO of to Gosin, have further the Newmark no remarks.

Barry Gosin

you, again, forward for to we all quarter. and look speaking joining you Thank to next today, us

Operator

call. This concludes today's conference

You disconnect. may now

Newmark (NMRK) 12 May 192019 Q1 Earnings call transcript