NMRK - Earnings call transcript Q2 2019

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Operator

My name is Sharon, and I will be your conference operator today. At this time, I would like to welcome everyone to the Newmark Second Quarter 2019 Earnings Conference Call. [Operator Instructions] I'll now turn the call over to Jason Harbes, VP of Investor Relations. Sir, you may begin when ready.

Jason Harbes

Thank you. morning. Good second these results results our a release XXXX summarizing presentation this quarter issued press financial and We morning.

the today's You ir.ngkf.com. can period. compare on year Unless at of only call otherwise stated, with find the results earlier these the second quarter documents XXXX provided

accounting an may today's be GAAP. will accepted also under adjusted Please see on refer release our basis for unless generally this call results to or We earnings on otherwise press results to only referring adjusted principles stated. any We EBITDA. Please why in and results sections items the back for the GAAP of release when see the terms, management these today's uses complete such of corresponding how, press definitions reconciliations them. the of to and non-GAAP

respect on our results our to available on non-GAAP and today's and is with in investor mentioned website GAAP Additional our presentation. call information

this of you are the Section within statements. remind XXE XXA no information not that and as risks XXXX, Such and Act facts also required amended. the are historical Section that I any regarding statements the of Act involve Securities XXXX, Except of forward-looking on our as update forward-looking law, business of to Exchange Securities meaning Newmark securities obligation as by undertakes uncertainties. amended, call of

see XX-K, the For to, most filings. Form our actual Newmark's limited statements, uncertainties, set contained Securities a Form filings, results Exchange but and the factors Form discussion not cause in and XX-Q of which X-K forth to forward-looking recent could additional risks those differ from risk including, and in Commission

CEO Barry over call I'm of turn to now the to Newmark Inc. Group, host, Gosin, our happy

Barry Gosin

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

revenues dividend $X.XX of Directors I all company's share. both a X.X%. We per major as report our At qualified yesterday's growth across post-tax XX% in pleased lines. this in well growth of translates am declared the grew Board yield adjusted EBITDA and of business a earnings. closing adjusted price as XX% to generated Newmark that of common into

talented This growth continue drawn entrepreneurial data. X% by attract who professionals Newmark's is and culture industry's per We front our reflected industry-leading growth and the office headcount technology producer XX% to the to revenue in in in and quarter. most are

to volumes were by X% Turning the that association. are sales Overall, -- to to bankers according Research year-over-year. XXXX commercial NKF the industry; X% increase mortgage investment estimates expected in originations 'XX, up

and in these originations increase metrics. to XX% Newmark's volumes compare investment mortgage brokerage very sales, favorably across

the Our to office vacancies country, vacancy research estimates rose retail steady. the for GDP team that remained average employment rate and improve and continued slightly. growth while industrial across

industry leasing of expect Newmark, exceeded producers continue. revenues hiring increased remain prospects We to Our our and metrics. the and by for about excited very XX% top

happy to over that, call With turn the to I'm Mike.

Michael Rispoli

In you, Barry. quarter, million. second to increased Thank And good revenues morning, our the XX.X% everybody. $XXX.X by

expenses. Exclusive percentage as and professionals. pass-through additional Our expenses our remained of XX%, to increased of higher to industry unchanged. hiring due of these were the leading largely XX.X%, higher ASC non-compensation due up our revenues revenue Non-compensation a compensation continued expenses primarily XXX expenses,

Turning XX.X%, improved up were EBITDA pretax XX.X%. to earnings; adjusted adjusted quarterly our while our earnings

year Our XX.X% earlier. earnings rate XX.X% was versus tax adjusted a for

Our XX%. year-to-date non-GAAP XX.X% XX% outlook tax with to rate of remains consistent of our

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

reduce count stock repurchased count. our share of Newmark by million During XXX,XXX X.X an common quarter average shares expected the These repurchases $XX.X of per fully million $X.XX third second diluted Class $X.X for A reduced quarter share million with the balance approximately our at second quarter the of in XXXX, of price share. to

million. share for and diluted our count XXXX, weighted average was second count period-end XXX XXX.X the share Our fully of million fully diluted was quarter

from cash Moving second in loan on to the of originations and operations $XXX.X million quarter, the sales. balance sheet; activity we from excluding generated

at Our million was June liquidity $XXX.X XXXX. XX, total

unsecured million. $XXX.X was long-term debt Our

our $XXX.X net trailing debt million, adjusted XX-month was net debt Our X.Xx. EBITDA to and remained at

Given credit well cash strong balance business generation leveraged, positioned the the well we from to are our for strength facility, and sheet, flow $XXX to of invest million our continue growth.

our XXXX we Turning remains when unchanged year to full from raised guidance; guidance outlook in May. for our

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

our million shares year-end versus X% per to XXX anticipate diluted XX, December count increase the between to our expect XXXX to outstanding $X.XX share earnings from share fully $X.XX We X% XXXX. $X.XX We of be XXXX. and in as by

material meaningful or stock assumes the Our no price. outlook acquisitions changes in company's

$X.XX expect and Based $X.XX each the of balance earnings and be our on between adjusted our of will third fourth for quarters we visibility the of in year, XXXX. the

to revenues as third and year. quarter $XXX expect $XXX.X $XXX between million $XXX between We And million revenues $XXX as year million we million last compared to million expect and $XXX.X earlier. compared of million a fourth quarter

questions. Operator, would now to the we like open for call

Operator

Your Sandler comes Instructions] with O'Neill. first from question [Operator Goldfarb Alexander

Alexander Goldfarb

obviously, great the buyback, to see. Just first,

this. just So two-part a on

your ownership want with tax-free to guys didn't had you mentioned on limitations status, violate. and you stakes some that were that, had before the maintain you there to First,

back good and tax-free curious, and you do the you then, when at buyback Can room status, the program? obviously, at to execute? you went had looked do pricing the entire ownership have guys $X.XX. you much And how So

Now the attractive? you still the buyback still are at it is in is $XX.XX, mode, up stock

Michael Rispoli

our growth very of we part, December do as between the through our stated have manage we attractive. Alex, our But about variety of tools we think stock know, X% we've X% on I'll expect I future, buybacks With expect count and the -- X% said, public we being for say, and we do past, to thereafter, And And average. as remain for guidance, XXXX XXXX. you It's grow So first one think we in yes. still I them. the still to foreseeable as to a count but growth. of of constrained said share in be share

the it's attractive that's there, So constraints think at prices. are -- very these still we still but

Alexander Goldfarb

if Right. there -- But give constraint the it's status? constraints to the the not deal. Even anything until you additional X.X the shares, this sense just to flexibility of maybe regards How approximate, Mike, million in a it an have a won't much one-shot laid and versus after you you bought in buyback? how -- us have program, more think within we $XXX was ownership much tax-free guys do guys million what back a was I how exact much out, buyback an next And be out XXXX. buying number, see December could you

Michael Rispoli

say amount. buybacks, call. So Alex, I a do our and update everybody next to would certainly, some it's we we'll not buy large some but when shares, earnings on still if we do And have room back more

Alexander Goldfarb

second same take there And of comments some heard then question the have from seen space, the from we've challenges, Street is retail, at Ulta obviously, REITs, some on time, Puma. the the been we've that

back team far as give us spot leasing an is your still or of is markets activity? just to this sort coming update you capital and this seeing retail life as can seeing, Street area what a are they So of weak

Barry Gosin

rents, still adjusted. retail street high the but prices have The

discovery, and trading. owners period tenants reduce of price of So uncertainty in There and for are In the acceptance full less price will of period their that's a rent. space. pricing,

it's and food, the the is still market need out But There's more talent Companies health -- talent best part lifestyle retail, an entertainment, also to the and their by they is take when way more even in is different. of questionable, we to more mix growth. host think expand or and times active. of the changes. advice, general, of business either opportunity flat tenants powers need of is there's a Some best in roll

So good the and we brands think and talent expand. country an to it's opportunity around grow, hire will

Operator

Wedbush. from have And a question Henry we Coffey with Instructions] [Operator

Henry Coffey

Yes.

forms at thoughts more to about for simplify As you have then the particularly, of how the you business. -- your do sort you any investors? capital equity has question ownership. second look structure, with do Have my various to And of that

Michael Rispoli

equity for one additional the a that with drives the think above it estate that get And a in of the and of things is partnerships lot stakeholders benefits act, beyond partners, Act. it to is XXXX have real do of structure, our and of an Tax we our good provides of producers. And our beneficial. that structure look all get company. retention you for Even ownership income tax retention partnerships all in additional they which a is The it, we Henry, the lot company. does very When unique structure at in deduction. other

Barry Gosin

It's like own like around the part owning the -- together They brokers where piece building a but something comradeship they're and The of of they retentive, the only work. There's that company. structure. feel something of company. they a level not

having structure gives that ability also them us but retain because the work company gives is in retentive So stickiness piece of stock. at it a it the some both that they to the by

Henry Coffey

we multifamily things rate? to be what's issue back other looking rest whole the And is with? you're the number On then multifamily of is not, just And the question -- I little and one of business, from Freddie there and of at looking point get stock your Fannie the one just, for there matter? there any partnership a Or the from Fannie, real best when units, go mean, is of that other's seems and that specific view. at a the quarter accelerated and the appetite simple people I it well. front, indifferences from in start Is doesn't they it getting the voting business, the first was seemed to bit. really always which who they instead for doing the Is if year? really messages to of and GSEs buying general is item. hey, their kind about originations. pull clients' and about talking non-voting your

Barry Gosin

more in sometimes It the various They're market. the market, or It times. more fairly Freddie aggressive sometimes indifferent, changes Fannie. Fannie and in aggressive ebbs is at Freddie flows, is

think couple you there moments over -- a when the it's good look really -- doing year in we're more don't there's multifamily more of multifamily. Fannie good really think any debt a I Freddie. I If lot then business and we're doing we side. you'll see it, feel moments our about -- are period, way that we're feel still And about still we implication on when

Henry Coffey

Who biggest Freddie? now, right appetite has Fannie the or

Michael Rispoli

transaction. particular seeing a But that time, Freddie. lot same. just we've past, think our in for in best Freddie. both our It's We been -- see year Fannie weighted. this we'll what weighted of activity, is numbers the our be towards more what's clients you'll is, that about and What to heavily over We're similar from evenly more our

Henry Coffey

Yes. clients the And there's talking years? how you ask couple have in around play rent your to are the the insights at much I over been rules looking out or to just so business, because into York control any have had definitive New real discussion going of it, to next

Barry Gosin

It in Southeast, the Southwest created New a around of spate in of to alternatives whole There that interested new Interesting. York and buyers country. the very are strolling lot a investors they're looking has for invest. the are

opportunities creating us of variety portfolios. it's for in So a

luxury, new -- in impact rent that has -- So that, control values. doesn't has it an impact that the In have on the we're seeing on players. really

picking some the people and environment. So New multi advantage they reset, are in York, coming actually new they're accumulating you'll interested there in buying, and of in have this under And opportunity and players. taking

Henry Coffey

can Has of you that City there in the or... been York in a kind quantify value New environment drop

Barry Gosin

has value. impacted that rent the and MAIs the diminution Yes. anything has I been would the control of IAIs by a and say, had

Operator

Jade question Next comes with from KBW. Rahmani

Jade Rahmani

-- for of building suggesting terms expect and is can would On acceleration is markets? pipeline capital share. the market remainder talk The you the to of sequential capital outlook the there you pickup, you a growth that year? transactions Newmark and velocity markets continued just nice capital in gained markets, healthy, In leasing, that for

Barry Gosin

increase. share market expect to continue We

not in that the invested We platform. little figure is pretty sidelines think think my of if might There's monies are really it. someone That's be -- a where are low. that real The as I'm investment I'm where Real a in on is are the pretty a investing Most now. great rates attract estate, to enormous the opportunity. talent cash to the investments remaining alternative who put good. good. to about Interest looking more pipeline good What's as continue alternative? real opportunities, estate to I estate, environment, Treasuries of say, real for trying amount looks [ph] higher. good capital out much invest estate I still would to may global of for X.X%, an generally investing. sitting

Jade Rahmani

leasing RKF acquisition? quarter's this you the sector? the on would of And what give an much tax side, also to on the you attribute And can drove growth, how update it

Barry Gosin

We business. business tells our continue to is win their share, organic. of ramping our market brokers you XX% that growing up and are Which

good that's leasing business, have lot companies have Lease, however markets, as play companies -- So tech lease look regardless. expanded. and it for you space in of good us. it the at A Companies bad cyclical, people to move. but

part are it. And are of growth there of of lots so startups that's their when people opportunities. So space, and lots growing leasing

Jade Rahmani

the top producer the RKF how on op going is of And that terms of talent? integration in side,

Barry Gosin

XX Newmark company. their days fully moving them integrating say about it's from and in well. gone the We're into I'd offices pretty

excited So of and in York expansion retail is domination the the they're the all market. excited. pretty New about Everybody

So them. it's exciting for

Jade Rahmani

to adjusted like And would if was if you look a baseline lastly, consider And to out easy if like consider estimate of EBITDA you an for investors just to would a then peers? or about kind compare wondering with firm accounting? CBRE's or I it EBITDA. what adjusted of adopted you have would you that disclosure JLL make results set the putting there more

Michael Rispoli

taken to certainly EBITDA. what's out what's compare in try we're adjusted but past, business, it flow things some Jade, other cash -- which in things to Well, we're I EBITDA. adjusted put know we're line our provide I from clear and think in in we how report adjusted EBITDA. generating disclosure pretty on we a companies, comfortable in you've lot And of And with the with and not is our and the some

Operator

there to now point, questions. remarks. are Gosin it for over Barry this will I further At no closing turn

Barry Gosin

in all and next thank joining to look quarter. this to conversations like the you for forward call I'd I our

Operator

call. This concludes conference today's

now may You disconnect.

Newmark (NMRK) 4 Aug 192019 Q2 Earnings call transcript