NMRK - Earnings call transcript Q1 2021

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Operator

Good morning. My name is Jason. I'll be your conference operator today. At this time, I'd like to welcome everyone to the Newmark First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. call Jason the of Vice turn Relations. Investor now over Harbes, to President I'll begin ready. when may you Sir, you're

Jason Harbes

Thank by you, our and on of quarter results of good morning. today's morning. We financial this the press issued call loan the with results compare to unless refer release first results and flow and operations from period, net cash today's to The Any call presentation only these excluding stated. XXXX XXXX otherwise summarizing provided earlier operating cash sales. provided discussed originations year our respect figures quarter activities, first on with

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

website risks of Additional various social, business also Any in within and historical political, our section meaning share macro-economic, information for on non-GAAP our and are mentioned our today's not meaningful other the based call change that changes no you or Exchange subject with are looking Except constitute the purchases, obligation stock call XXE business any uncertainties. remind I amended differ, to and facts These to information may COVID-XX today's results, on position, statements are These Newmark involve Act from statements including expected. subject pandemic. available are the investor on the actual the no expectations financial law, forward that on company's of the as forward forward about GAAP the XXXX include risks. on presentation. regarding by the looking factors call COVID-XX Such amended. Securities materially, of on which price. of Securities the outlook is XXA acquisitions, are statements discussed results statements. as pandemic impact may assumes respect effects and company's required material the and in statements this Act update But looking currently of possibly outlook, and as and section XXXX of to undertakes liquidity is what

For the the approvals. but Exchange cause closing of factors With of statements, NASDAQ that has of NASDAQ in discussion U.S. those the and of to XXQ income number recent XK not risks sale is customary XX-K, Newmark including stock business, NASDAQ conditions, subject shares of will fixed of NASDAQ receipt to timing including, stated earn-out, in form contained respect the closing to satisfaction the forward-looking actual differ our which depend received or form the to at Commission on could by of price required filings, limited the its the regulatory the time, closing and form filings. most Securities additional Newmark, and from forth risk uncertainties, results the see set

Executive can now host to happy provide closing Inc. Newmark as if or the call to over Gosin, no to the will occur. turn Barry assurance when Chief Group, I'm of our Newmark Officer

Barry Gosin

XXXX you joining conference for Newmark's you, call. thank us Jason. and for morning, Good quarter Thank first

Chief Chief Day, Rispoli today Officer Financial Officer Joining Alvarado. Officer Revenue and Strategy our and Mike the me Lou are Newmark's on call Jeff Chief

the million. revenues global quarter strategic share of value onset we Newmark our investments full earned first on the $X.XX pandemic. $XXX record preeminent of the the before service platform Reflecting per and of made

lost time, least adult first than vaccinated than against the the have fully COVID-XX, recovery and received U.S. Nationally, more XXXX And and May XX% at are the same increasingly economic of has accelerating April, of approximately the XX.X% of XX% in during the are XX% XXXX. office. X% with plans population pandemic. X.X% in return growth March, from recovered more confident the annualized dose. now workforce has in announcing been Xth, American quarter. more country's U.S. Businesses to the to the As has jobs is their At one fallen unemployment to the rate

properties gains reopened across easing are fully This before York, demand for welcoming utilization the in on of of offices to have out of all the science their life We space our passed and quarter. long-term will In retail end be by and U.S. first increased was recovery driven revenues second restrictions making half Many have quarter, the the performance first an Xst. New view country. states, to the plan across of second XXXX. as our the last maintain optimistic our We leasing commitments the Companies for industrial traction. year. back all COVID-XX including June sectors. are leasing employees quarter

declined. business markets capital modestly Our

In services contributed Management business of to global to March, a we the Newmarket flex platform market significant However, XX-months, our increased sales top available. fundamentals among continue and of we the servicing provider. There's line second investors on our focus investment improvement as lenders and the capital investment gained growing stabilize largest as during making amounts and confidence Knotel, acquired last Newmark recurring fees are revenue U.S. office share in revenues. record the

to We occupiers XX% our response I'm clients real The expect extremely the market optionality to the to their portfolios. this call next create annually grow to Mike. in over With look decade been acquisition to of that estate corporate flex happy as over turn to has the positive. XX

Michael Rispoli

and Barry, morning. good you, Thank

XX.X%, XXX X.X%. revenues first XX.X%. quarter, of record maintain grew our growing up valuation on and in these fees, services advisory increased total revenues as XX% first which points focus and rose Management including $XXX we recurring the quarter million, servicing These revenues generated differences. to fees of Newmark basis

properties. and science increased Our X% life demand increased industrial leasing for revenues driven by retail

in of the revenues return plans office, markets improvement office Capital to their implement the companies leasing, continued half to expect decreased by we more second the year. X.X%. As particularly in

Our market sales as share making significant largest industry RCA. XX% the U.S. investment the increased investment We in during sales compared XX% XX-months GSE gained decreased sales the with by Newmark last and second volumes investment decline volumes to a XX%. platform according

declined due However, origination banking expenses mix. to product mortgage decreased activities X% net Total for by X.X%.

to adjusted earnings, in year million as Turning up and $X.XX earnings was share XX%. of compared $X.XX period, $XX.X to per the prior EBITDA

balance Moving sheet. on to our

strong $XX.X million liquidity operations. flow We Newmark credit generated and cash maintained metrics. of from

XXst, As had revolver. availability liquidity, $XXX.X which of end and on million from XXX our year million of of declined acquisitions, due to March we

ratio leverage net Our remained X.X at times.

of NASDAQ earn-out. closing the in of has $XXX to reflect $XXX the net yet quarter million price. The yesterday's value value Newmark earn-out NASDAQ increased not does sheet million balance Our first and approximately total the of as a

We to expect end payment second the of prior receive this the quarter. to

growth share Our stockholders and in near term capital unit to capital return priorities invest through and margin at allocation repurchases attractive to are returns. expansion and to

We also down facility. pay to intend our revolving credit

Newmark distributions and current balance plans the to or through dividends of at its continue XXXX. levels near

Turning outlook. our to

in relative growth expects expects hotel, to XX% quarter Newmark the the quarter. XX% pipeline second based quarter activity. EBITDA of adjusted strong revenue to company on margins the of in stable second a first Including the

in $XXX based approximately earn-out expects addition, the yesterday's shares NASDAQ second closing from In on of million net quarter the Newmark price. NASDAQ

be For XX% adjusted XX% generate and by will growth are to XX% EBITDA XX% now we These to revenue the our the to full-year, results additional raising growth. and increased expect outlook in shares breakeven NASDAQ to include acquisition adjusted which Knotel, and the anticipate XXXX. post-tax EPS $X.XX NASDAQ net to the era. dilutive of will expectations from million XXXX of These $XXX be we $X.XX

the in XXX,XXX per fully an for of up Newmark's weighted quarter, share. quarter. shares $XX.XX diluted marker the A count for share average X.X% New first Class common earnings stock average adjusted In of million at price was $X.X hosed

the acquisitions, material keep to call for now share to buybacks like Operator, would expects diluted to the company Excluding for XXXX. questions. fully we its count share flat use open

Operator

question [Operator Goldfarb from Piper Alexander is Instructions] Sandler. first Our from

Alexander Goldfarb

Hey, good morning.

questions here, apologies two the is two So, if a parter. first question and

of coming two, just mentioned heavy in, now any share improves taxable capital? in if focus that, settlement? you can so Mike, that NASDAQ count flat, on guys producers. you the the because us you not prioritize of the part in have know $XXX way, first keeping share firm keeping just share there's one, So use a I can investing you curious rank the set the flat that million earnings windfall of you if impact let Or that far it as as count And is And been second, growth? order acquiring in have that this the investing? priority just then as

Michael Rispoli

Great. Thanks for questions, Alex. the

the last In most, rate, if structure, NASDAQ terms the can tax taxable as because believe income all, of not our quarter, the we from shield we partnership of stated we earn-out. favorable of

earnings adjusted our expect below our be that. I we tax say and to EBITDA, tax significantly would rate rate, adjusted below So,

we to do for is flat capital move to or count expect we buybacks more say share the first our that. because at the our in and allocation, as In of share up terms X.X% $XXX And quarter, least of we count buybacks there stock million we'll was did use be through year.

how we're in, we'll going decisions to then. evaluate and business the to comes opportunities to continue money then to buybacks, on invest the obviously the As make share versus our in allocate capital

Alexander Goldfarb

growth to Okay. the far buybacks Hopefully, the as goes improving it as profile.

So, that. we hopefully see that's

the are sort a sort big The mom hand, of On XXXX. the of that is pop discussion second heaters believe on of brokerage XXXX the lot I the and space not guess is of one to affected, tax tax of deferred in really or whereas are lot your a traffic time. lot question a that institutions my smaller are

happen? but of, that have size? suspension you for view take. do of your So, at at your implications? Or the bigger what of sales Would maybe would end, sort low the on could just this we broader thoughts think see, curious unaffected Just a

Barry Gosin

that, because that's mostly it doing equity was lot be in and The when don't business. changing those and XXXX passed. of rule, Having on amount institutional, that's I an can buyers, transactions, not anything Washington, air. the income institutional, won't think evaluated a private transactions, business count smaller less impact being really of things is the properly in our be on being up will Washington. There's have the doesn't by large the analyzed Well, assumption lot we capture people federal by an with a who part said of government still XXXX a our it's

Alexander Goldfarb

Barry. you, Thank Okay.

Operator

question Jade comes KBW. next from Rahmani from The

Unidentified Analyst

property Obaidi quarter. of main helpful. Hi, on line, outperformance? Sarah and by strong what were this geography color My business Jade. Congrats be Any on is for first question is would the type drivers the

Luis Alvarado

pickup have sure. life retail Yes, sectors had last science, and we our outperformed and industrial This this Alvarado. that a strong multifamily is had, obviously, quarter. Look, the in capital Luis markets,

uses, those As sectors people driving multifamily were made reflect office, had as more driven result, decisions are But we life ability results to all Those sectors did industrial, in that the are markets, supine to improvements. science, it's markets return the across better. key heavier a But are the end there. that markets those activity. being and saw active as that the

BarryGosin

And on that talent we and XXXX, great onset to add XXXX, the the XXXX is and that, to at deal hired first a pandemic. quarter talent, XXXX, of of in came board the

addition will normalization talent that So, up the ramp the are in the for of to beginning market the to play. the and that itself, come growth organically we're we seeing into impact of company, gestation period

Unidentified Analyst

any And color Thanks. on geography?

Luis Alvarado

Yes.

better California, the as think science those that now. a quarter. those in we geographies, Markets favorite key stated, a all were driver right that investors did that. saw across the the I Northern of was of lines Boston like in business areas one think improvement result I of And proof life have as in I

Unidentified Analyst

is, for very for revenue Thanks much. your strong and of in drivers question my expectations the the are what growth And the full second year? second increased quarter main

Michael Rispoli

continued Sure. that discussed. We're in we're pipelines we of growth one. the a I'll lot markets sectors capital the and leasing, seeing take that seeing build in

business and over which We continue continues our to now is we billion as originate services book, continue to to servicing win $XX debt. management grow

and many we're short, many in in of the of seeing growth geographies. across So, our businesses in the board

Unidentified Analyst

taking my for much so you Thank question. Great.

Operator

question from next Coffey comes from The Henry Wedbush.

Henry Coffey

me. Good morning. excuse Yes,

buyback the on issue. First,

a of or you high past some very in to debt that tied I last buy-back the quote, XXXX, discussions we the the that once think if to spin, pretty listened aggressive tax related expectation program. was year aggressive, the had more issues the got

or money the way. buy You've driving What's got pay both grand hold down coming million, or money, debt which this way? either lot a that back? of using it about thought What's big, $XXX your a just to stock the very in and is back corporate

Michael Rispoli

Yes. Good not is morning, We're of Henry. any backing This those Michael. off statements.

buybacks lot get quarter. can We've a for in, what see or in at as the whether we the second the would And and increase I and do think we you opportunities. the that set a business will number. both. money be for look the to believe, opportunities, our a be or year pretty that's floor in money decide We coming of material we'll we invest see the

Barry Gosin

years mature you with that should five, and that markets. markets an have markets six by note cost infrastructure talent a have incremental incredible for matured support that building also allow with white those markets Henry, of benefits amount infrastructure out will runway, the that last and we into acquiring enormous to those those space fixed in spent margin and

Henry Coffey

So, back, weigh capital a and the have time sort build think that's out the to productive to each is using or those buy the either you hire, idea you acquire, issues. of about decision teams

Barry Gosin

our Three, down debt. it. the from and best the for market. One, to that pile go Two, occurs on, performing back stock. gearing scaling are you in that buy pieces where acquire are and a talent There pay and infrastructure benefit mature three businesses the our

Henry Coffey

general. And that reinforce you you. about shoots, of I well space the Knotel thank optimism looking here? as this activity in seen office Have as at Good, green your ask Knotel any I then, early question would signs heavily, think and

Barry Gosin

the the the Yes. that hybrid we combination for and flexibility Post will employees owner back to work of hybrid for work. their narrative reception both and had attracting any based It large purposes the be the by community. from workspace to agility, on be need for part owners around were as a requirement pandemic, agility flex will We've amenitize believe the of accelerate well activity enterprise of a conversation, work and space from amenities on part users optionality, very work on as and that believer allows of very corporate a will the level. hubs the their a in beginning. by work, flexible level, good We hybrid

Henry Coffey

and idea as been the has to opposed of this subleasing product, as of the having at the capital actually a What WeWork's in assets? the reception offering model managed risk and you to buying

BarryGosin

and the as durable business firstly, managed So business. more flag a sustainable is

release, people hotel, we hospitality-related. executive are If Marriott. One the ran Morgan's senior all other you follow of the hired the a was

as combination We brings that one. the work, that we So, think the be it's our with flex very will it it the the only will structure right new and part. owners hotel and a for hospitality of solution, going not very appeal aspect to And of business. it a co-working, to for owners think forward, favorable of managed the favorable us on minimal flavor risk

light is So, will capital. a it lease, a to our capital be not management a be heavy This release, plan crack business. be business, to

Henry Coffey

conversion they've is calling competitors, changing upgrade the associate's really of sort of converting multifamily, in competitor rent, Newmark? no, lot does us. of a family, markets Just this estate Zelman and our see for and good ongoing gears, Associates, they're them a an only build that activity as one an Is of mall the space talking But about to space, how and dead real retail impact dead sort etc. that something opportunity single you into of that been

Barry Gosin

work flex hub part a on of spoke we're and it, So, strategy. a

a to the have week, the element in You'll home think or working ability spend combination it's XX the time hybrid one local around three in for and two and core rings in it. Knotel a that having the environment, driving of urban days the mile malls. whether you some making the We e-commerce. office part the more to from minutes of some a last something The could to more more will to be conversation, some of for not and add? experiential going solution and even is of have for certainly of the solution the Luis, mention it the be do be to continue attractive diversified malls question

Luis Alvarado

Yes.

that. has a as Henry, in just think is Life being I player multi-family. other well malls, of cases, big become in player Medical what as big we're the has in assets that, types not academics a of a seeing repurposed. science become lot but

role So, with and that some investment see a repurposed of we in sales significant somewhat our that are I play being you'll those think obsolete teams.

Henry Coffey

to really the seemingly it's There's this these could It think side. point places are we beyond neighborhood estate. all great real an So, we for repurpose potential dead I brokerage one in is have opportunity to. the houses. And our just on

Luis Alvarado

Absolutely.

Henry Coffey

Great, thank you.

Operator

comes question Michael Please next Bank from The Funk of from America. go ahead.

Michael Funk

Yes. taking Good my morning, Thanks for questions. guys.

So, a couple, if could. I

I June. number from large in thinking think Just similar clients or with return and pushing hearing terms comments about about return a some a that allocate how office, your and you've are leasing larger decisions a so returning estate to you're that their fully mentioned of ago, lot in off maybe And he companies. to call Luis I of month after hosted trying was noting to think decisions. a until of to real office, We're

So, with an update that clients with you're the maybe office, plans. about now having that the we're point office there approaching that leasing conversations on turn to

Luis Alvarado

Yes.

definitely activity, in with tours, place actually So, and have to in in and speak plans an plans We the seeing we be that of uptick we as in more in the believe and certainly uptick are end we people that summer, similar an in by are return to place that there'll that companies a in being put number significant back are offices September, more folks, in that. the that of office. are the the back increase operationally to

to back environment the believe is is that office office. here, the out, the are way, employers of active which of is non-active, was we've are the to people become that be necessary. retail. result seen much rolled returning all and result has going very as also a the an comfortable realizing to more stagnant Retail, a of that, pretty As vaccine on uptick kind in sudden people is the a return and And

So, from time even that been last than at spoke, I time. greater has I the you the anticipated uptick and

Michael Funk

No, on additional could centers, it's of obviously heard Maybe I a data growing attractive. then, teams hot maybe be earlier capital to hear. growth very And expanding of great investment. Thank be maybe helpful. were been into the property about the that has about I there's property your last We of some maybe York, thinking thinking faster types. example, on property detail question outside And some then, for that'd that even types had, those regionally, type. regions, in some expanding you. comments, New

Luis Alvarado

Yes, Michael.

continue talent our in space lot of of a we're by we lot means, the But, lot five spent amount add the building a we in types. in platform. up platform added to product to of So, significant or done. mentioned a talent leading to different white pandemic, last four years the we any have that geographies, a Barry and out of not,

we to go. a way think have I long

So, don't Barry, may that. know, to I expand you want on

Barry Gosin

market We've housing, XX% in years. one science, been number in six gone share in literally, mean, Number year. the capital X% markets, for maturing alternatives. We've student last in in the mean, one. from gone manufactured two from self-storage, multi-family, Life virtually two number U.S. capital senior we've U.S. I housing. I no to number to the markets housing,

friendly drive we that's that the out spend. in to with institutions all the space, be to very billion part of and $XXX dominate and to have alternative plan or So, market, partner the

could local and buyers. reach. for I'll global so, that say institutional asset an a of when are to has only the you'll can Meaning times. world the that, solution. firms, firm, firm, it the an cycles portfolio more rely your or And asset only provide assets, in that, a of of in most domestic the of come as to different buyers, appropriate few, expertise And at bank, forsakes there you is and buyers one classes, ability who buyer class, And, premium. sell only we're an the and on type and but property, portfolio but a local a you go provide investment like one the I the

the understand all the wants buyers. sovereign of we investors, the somebody to have have reach a to equity when and ability funds, domestic the So, and desk, the we portfolio private international local wealth the on local the put an market, we and market, investors, all

relationships So, we to building we've we're get- of global the pricing, the-best-price. can traction our out and doing what local is the been And break-it-up, institutional elevating where that to the capability, offer go. geographic now viewed place point premium or as

you sale. or structure a finance, portfolio structured sell want a If a you and have to complicated complicated

Luis Alvarado

the you, Thank for questions.

Operator

[Operator Instructions] Patrick from Next question O'Shaughnessy from Raymond comes James.

Patrick O'Shaughnessy

morning. good Hey,

days. the how topic impact Can So, industry? me inflation would seems these to remind the typically inflation be you

Barry Gosin

Historically doing generally this a quite is for Inflation I've friendly. years. real-estate few been

increased do to you fixed If and rent, have you value you're well. have and financing going

it could rates. sheet a going up. interest You have of of without the continually amount raise inflation amount balance U.S. will interest make the mean, beyond rates the to certain I hard set

for I you'll have interest think they'll low long a while. rates

inflation, have actually good spectacular. Low is you interest If would real very be and for rates it estate. inflation

Patrick O'Shaughnessy

very the potentially What's are talking of brokers it, that to environment in of helpful. teams looking terms Got to join like right now Newmark?

Barry Gosin

share, as level, our we as bigger to to every way institutional attractive to markets to Well, respect, have we elevate, felt at is the recruits. be as presence continues in our more continue continue brand

people people and We're And producers. for continue game-changers looking to are per large we're looking so, very that who We're capita. we'll are rev for high selective, hire.

that regard, to to getting we appraiser, in be better. improve that seems on with selective basically started are one every continue have and XXX. only it as we we So, area, we And

critical better So, you're safe you better. and just mass once and a gets it achieve choice, and

Patrick O'Shaughnessy

dig be of that them, how to reaching efforts you that, Newmark, a out reaching versus in to identifying on teams for Got it. guys, good out fit you're maybe then, is folks to recruiting proactively And unsolicited? would your you and you much think

Barry Gosin

the who in market are, right are. I mean, who the hard people every players real not find it's to

I produce goes generally, are ways. to people We're they happy. and that mean, it people doing who are. not are where miserable think hire looking probably both I are well,

them our to out understand fully explain don't people but it's and both. reach who are, Some it's to to company, our we job

Patrick O'Shaughnessy

you Thank it. very Got much.

Operator

This to queue. remarks. I'd questions our and closing conference Gosin to over for the session. any were the answer back in concludes turn like Barry There more no question

Barry Gosin

We're million mature our extremely buying of from This and of debt, shares, back And markets $XXX in opportunity the about quarter, those excited million focus next net that we income on paying our XXXX. grow. is $XXX to trade, NASDAQ least gives which and objectives, focusing not core us an the cash. down on

So a we're and forward are we and I position the quarter, the look good in speaking rest about in optimistic extremely of the the you day. enjoy to to year. next

Operator

conference attending concluded. The today’s presentation. now Thank you for is

may You disconnect. now

Newmark (NMRK) 8 May 212021 Q1 Earnings call transcript