NMRK - Earnings call transcript Q4 2021

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Operator

Welcome to Newmark's Fourth Quarter 2021 Earnings Conference Call. At this time, all participants will be in a listen-only mode. After speaker presentation there will be a question-and-answer session. Please be advised that today's conference call is being recorded. I would now like to turn the call over to Jason McGruder, Head of Investor Relations. go please and you, ahead. Thank

Jason McGruder

good Thank you, and morning.

well call full issued presentation results financial with fourth the on summarizing of unless fourth and its quarter year today's provided press results refer of respect results year-earlier loan provided cash by XXXX morning. XXXX activities excluding otherwise only XXXX this the with flow operations net to stated. Any impact discussed quarter to from Newmark these The and as sales compare Equity release period, Event. as originations cash the figures on the and today's call a operating

the Please on XXXX when will any non-GAAP items current the release exclude results and GAAP of of for basis definitions our today's on terms, methodology, results, complete terms Nasdaq section to referring reconciliations stated. press the of Impact uses and/or them. of a and otherwise why based on these non-GAAP These only and management updated our corresponding We non-GAAP unless earnings be Equity the include which see this the to adjusted and call EBITDA Event. how adjusted

and and call Any political Additional expectations to call factors, assumes mentioned other supplemental today's These and our on change our the today's subject is are no pandemic. macroeconomic and/or discussed price. material outlook COVID-XX acquisitions, stock the to tables social, share on in website available non-GAAP repurchases in information or meaningful including company changes on based excel the quarterly various financial on presentation. results GAAP respect with results

same of facts the information goals XXXX the statements Act within forward-looking Act statements XXA formal as I statements and historical of as amended. forward-looking Company's XXE from subject are assume of meaning COVID-XX are XXXX you our These currently involve do our statements. outlook include as amended remind expected. not the the obligation we forward-looking Section on differ of Such take this Securities should is liquidity about Section XXXX be some and targets of to or XXXX financial they impact that the the through the may may Securities required are regarding are which actual that our business the risks While call statements that uncertainties. targets position, results, to materially on of Exchange operational effects business also change update these constitute for None risks what and and also by considered and guidance. reasons. financial Except possibly to law, subject no any pandemic acquisitions,

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

Barry Gosin

Mike Rispoli; Strategy everyone our joining all Officer, Day. Chief Chief today and Officer, our me Newmark's for morning With Good Chief are you Financial Revenue Jeff thank Alvarado; Lou us. and Officer,

generated we as momentum market the row, gain in and quarterly for to increase share. quarter Newmark record third continue a our revenues

mortgage our and services. and was quarter to produced annual industrial in management lodging, life We mainly due investments all prior also brokerage, record fourth growth commercial Nearly our organic, science, earnings. multifamily,

basis contributing organic to of exceeded annual XXX $X.X producer growth, As point this million our our revenue $XXX,XXX. an example full-year adjusted per in margin. improvement XXXX, In EBITDA XXXX was figure Newmark's

quarterly of record by doubled Newmark's markets, revenue growth million. was which led a capital $XXX to

the billion Fees fourth were up X% commissions were XXXX. volumes and by and markets from leasing origination of than capital XX% other record $XX and better XX%. up quarter Our in

management Corporate other businesses, This Valuation strong to revenue grew from growth recurring led all-time & acquisition. by Global million. record and by fees an improvements of Services, was the Turning XX% to $XXX Advisory, quarterly servicing our and Knotel servicing

Our to was XX% organic the by which $XXX appraisers. revenues full in strong Valuation by technology year growth significantly XXXX the The & productivity grew million. and Engage grew our increased of Advisory our revenues platform, driven

Newmark million a adjusted remains the turn to over we our to very that, in of With EBITDA. XXXX of happy target position, to I'm track Mike. achieve financial strong remain on call financial $XXX

Michael Rispoli

good $XXX.X morning. XXX.X% to million were million, quarterly adjusted ever and and Thank was compared $XXX.X $X.XX best you, and to up Adjusted its up EPS EBITDA revenues $XXX.X earnings. reported $XXX.X million compared million. Today versus Revenues up with Barry, XX.X% XXX.X% Newmark with was $X.XX.

XX.X% margin acquisitions. activity EBITDA to higher of pass the versus to $XXX.X and in impact $XX.X business was Consolidated to XXX XX.X%. variable million revenues. related by to due adjusted by million increased improved expenses $XXX.X growth points due which compensation of basis the was commission-based remainder higher million and expenses Our through

balance liquidity We year-end $XXX.X million and the to $XXX.X $XX.X in million were no sheet. million and from XXXX in compared million of flows Cash debt. with Moving net $XXX.X had operations XXXX.

to net to Before were million, impact $XXX payable with years would significant Nasdaq like I review to the the Nasdaq present over business. shares to our asset lower nominally IPO, significantly we provided value. economic XXXX XX guidance, we In receive our approximately a expected has turn

billion our structuring, received and well The debt. value of $X.X superior which cash created of totaled hedging delivering Company's open later, the consideration company bonus in rather our in to liquidity including have years invest paid as issue active with shares than our buy to his over payable results. position, chose year million this for monetizing in with return pay monetization capital and to growth, the the Chairman, program XXXX. amounts as four $X.X $XXX of shares a billion is in Howard significant XXXX. in quarter shares of stockholders in part Howard to This GAAP and to and four committee hedging with for Lutnick. award the based results Nasdaq connection Now financial buyback net XXXX due over to intends one-time the the years fourth our full balance Class Nasdaq our new Howard non-GAAP Board maintain Directors on The of has yesterday's price, shareholders Compensation included to million portion bonus Committee and received this the after-tax enabled market the of no in our of in pursuant $XX The sheet to you A Newmark award costs. we closing strong common awarded in

guidance. to on moving Now

expect year between with organically For EBITDA adjusted versus We the XXXX, revenues $X,XXX.X million. X% X% full compared million. to and X% increase grow XXXX between compared to X% we $XXX.X and with anticipate organically

be and We XX% between expect compared tax adjusted XX.X%. to with our earnings XX% rate

our continue We towards our on of EBITDA. XXXX of goal $XXX path million adjusted

Turning to our stock buyback.

average the XX.X in $XX.XX. units During an at price we of shares million repurchased year

revenue, leading growth. Newmark adjusted has market and EPS EBITDA

forward a of for yesterday, our would peers reason Operator, multiple service As fundamental This we now of our call times. seven buy questions. was times our back EBITDA open is to as XX to compared the full shares. like we

Operator

our Alexander Sandler. comes And go first from Piper Instructions] Goldfarb ahead. from [Operator question Please

Alexander Goldfarb

morning. Good

Howard here questions first bonus Lutnick. the is So for but payment the few on

just bonus, Just all a on? more bonus receive a him? top what management color onetime or did bonus, based of this that's around And not why he voice, executives of all was why, why whatever

Michael Rispoli

Good morning, Alex. question. Sure. the for Thanks

the a spin-off and do It transaction unique well we to we you've move needed But to of shares. of the and we either had, very where range the down shares Nasdaq of debt of upside. on time pay think than to refinance many the to the sheet. time. remember IPO, related because understand, was strong the And shares view as and was over pay take downside I that balance all And balance that successful probably had million use $XXX of a were and approach the $XXX to were the we you four I people think time take debt the the the $X within that just understand the down it present no if to rather what billion and at participants period its tax-free at million market context that of advising time, the short of net did it Nasdaq is to and years many the Newmark relatively of that, is the which at should we with sheet, value forward. monetize off in just company

he And the all those trades instrumental billion asset, to successfully trades, no that So present lower today, refinancing, the on cost upside allowed appropriate sheet, the for to of instrumental get we to was of company. value. our well remainder the on been in because an those the of company it Equity XXXX. We as on instead And which do in caps, the Howard trade, the performance in no rewarding of able it opposed on were $X.X successfully our that, structuring. discounted for to us success capital we categorized committee and we the that compensation of shares. Nasdaq as recognized as did was debt it was callers the those felt what of it's value of and the as as maintain balance the

Alexander Goldfarb

pursue the new wasn't it part this XXXX that was sounds original correct. done today, not it mean, the of I that is made at something new bonus guys this in contemplated a is time Right. right. to original This like route, you exercise, decision the -

Michael Rispoli

their at the we recommended of filed meetings the was approved. Compensation that time path with connection end Yes, competition that's a of the this you legal came Committee, over to X-K period they the look I advisors, and in and their if conclusion what December, that and the think best towards many

Alexander Goldfarb

post the guys and you just of issues just of it was That's the few that remind some the job, from mean, but have overhang. have improvement, years really I people separating amazing the an in and past well. the done, stem guys of IPO simplification remind that Okay. of that done it from amazing the just, truly original addressed that, stuff you everyone IPO, obviously

or next you the just guidance, on make a just leave it and So through X% that that just make not So EPS things range? either there X% literally growth, the provide delta, range. or But EBITDA XX% to the walk should on EPS that EPS are positive? would than between on The what of can Mike, grow I'll didn't to there. could impacts adjusted XX%, if lower that formal are EPS growth is you translate higher with question EBITDA the the negative either or

Michael Rispoli

Sure.

because think I the than answer amount in is, stock we our grow our equity should bought in significant short back faster of XXXX EPS the of EBITDA.

Alexander Goldfarb

right. Okay. you. EPS faster EBITDA, Thank than

Barry Gosin

Alex. Thanks,

Operator

Jade comes question KBW. Please ahead. from go next Rahmani from Our

Your line is open.

Jade Rahmani

Thank you much. very

adjusted for used what on the question tax rate, drives the rate EPS adjusted EPS? Just the tax

Michael Rispoli

we Well, that the GAAP over expected it's time. tax payments expect would under

compensation So the the time over from non-GAAP - time rate pretty similar. and GAAP that. company tax should earnings deductions and the Obviously and stock GAAP drive be over for of the tax

As we to expect about have our tax rate said, the function structure and going is a year will earnings commission and up of reason of or the time. the become to up we less from total, we went time XX% And company prior equity that's a over as over this Tax that continue years grow. because to company. continue earnings number to less expense is to decline of we expect percentage tax of

revenue revenue PowerPoint next think billion equity XXXX. haven't we between the X%, commission said year X% that as commission around commission-based and I we expect percentage a base was - $X in in of and presentation,

comp down, our come our drive comes will tax to it feel rate down. to time. the about good the pretty range drive the EBITDA XX% continues We the equity EBITDA XX% margins over So higher as will and equity in

Jade Rahmani

tax more around look what tax would period Okay. Over like Newmark's have over peers think rate what that narrow your gap peers? do - XX% with you period typically rate

Michael Rispoli

think change there as for the would in a stay XX% expect foreseeable tax which is the unless We in future. XXXX to we for XX% law, place

Barry Gosin

the some on And all deferred Equity deferred of at with have assets deferred to the tax billion our it's have assets, a able back the those because we to look you we they for value comp, event, were owning it's could in profitable over $X.X our for more also limit just were reducing our It an come stock deferring by It the is of equity of renewing and attraction comp than retention the in build they just brokers provides wealth and brokers. not a merely value, tax gain. tax Jade, comp. long-term.

Jade Rahmani

Okay, thank very you much.

that change characterize confidence top in could the business, sentiment, been lease confidence you rates do starting in nature inflation to be in to of to Think is whether whether of the Turning now markets, at environment impact with, on interact capital that the or the early expect to in leasing underwriting. on Barry clearly ability it'd and folks asset for higher you're you of pricing has environment multi-year to are we're execution, space, impacting it's think to do there any too rates or the a market some level impact mind. have the right start sentiment? commit side, you the you

Barry Gosin

increase Well, Omicron I in and office. fourth of the gives confidence around elimination mean, to the activity a the leasing in view get of quarter back more

think can or respect cost clips XX%, of be back lease a you the here finance of liquidity rates, in you space elements long in were That's Interest and at leases long-term at terms gets. time. X% basis few no hybrid money and forward as and or with on borrow people office bumps value. buying two would the term for multi to points XX%, asset at in three XX but change about space. are terms and a time. over average virtually the properties companies the for There they people in will long-term. being allow interest it long-term, taking drives the I still leasing looking to committed are between of the working rates the X.X% do, of been are on and it depending Also coming what some I've people Even to market the to enormity that over weighted as in good anywhere depending sub-X%, of

in people remains positive issues less demand effect respects up go things the But rents and supply the so the up. have the less and as go some - more build that on people - cost of chain And build, issue of to into those market. a values it build come same question

people the even it's so, those the create look we'll So out value in lessening will they of advantage to of take or capture year bought derived the opportunities supply. last

Jade Rahmani

Okay.

revenue so faster above are expect expect growing XX% since a COVID they still business faster? than very expect been any growth GSE you grow to by strong capital on And parse year, XX% their grow up our could line XXXX, far the you growth you Do leasing leasing. trend Do side, about outlook, that Wondering was then down post you perhaps the On outlook business has if expectations. constraint. for multifamily to color reverse? markets housing GSE but as as caps to this leasing affordable XXXX have well in XXXX? Do

Barry Gosin

Well, we year spectacular markets. in had capital a

to continue and continue share gaining gain momentum. market We

and We marketplace. and the also to have grow platform in our space develop credibility of eyes continues as white the

The ramping buying more to talent. we is up as continue locations - respect add to opportunity talent We speak. a heavily those to share more we continue metrics and homes life, in - still where good. for see we life, good marrying In we'll look market 'XX, later multi, later in to multifamily. and invested things With that talent, people continue are buying to buy remain in the multi multi opportunity for homes,

insurance think the companies On is announced debt the GSE, and of fact caps multifamily solid. I funds the the caps think flat, cap, banks - that and pretty the have I the market clearing this through And despite seem that roof. the with our they've was

every we'll So take of be segment talent our compensating and continue of share. to and there them advantage grow market in and will factors the grow market,

Jade Rahmani

very Thank much. you

Jeff Day

able one lever sales our dominance such is show this investment multifamily and Specific to the platform of shown we've is of to Jeff. that that that. that is that, And things Jade, we're the continue to

with caps origination to to do fill of investment least market have so at we strength to spaces And Barry over time increase because commensurate geographically as overall expect, with the the grow in the we and of obviously, the white expect exceed still platform. loan And sales growth multifamily said, some the team. our of

Operator

Instructions] from ahead. [Operator Patrick James. comes Please Raymond O'Shaughnessy our go question next from And

Patrick O'Shaughnessy

than Board of publicly those substantially Newmark's is Directors smaller traded. its of

experience. of the Newmark's real shareholders Newmark's Why of have confidence with think limited most the public members of of also long-standing estate Chair. most have directors non-employee have three relationships Board in the governance Board? or members the I abilities Two should

Barry Gosin

we're this are but is estate. commercial they're expect, business on is McIntyre person we Bauer] Mike Ken experience. in independent. loans. Board I financial, year. real real a beg originating another adding MetLife long-term are What in knowledge differ member has of That career. and have at time experience real these Snow [Jenny and to well-known people that spent under Even

Patrick O'Shaughnessy

your you can that update post then And on provide and workspace an Knotel progressing? Okay. flexible

Barry Gosin

Yes.

So Knotel an what and out good them price. we buy XXX an of a bankruptcy to thought had opportunity incredibly bought we is plan. We

either $XXX will breakeven be Our positive 'XX. invested in and EBITDA is cash The business million. around certainly

very of the provide world and obviously attract terms going buildings to this market. in going require opportunity. market. are added grow that of retail that to flexible a is we're could hybrid companies spaces, hospitality, that estate how the estate more we employees think for look We've work conference, their combined activating to is amenities, it. order value but we building to more be the both going and wanting indicated in and the category growth it done Knotel continue we common here environment real at and as to is think We stay carefully that resonate. real our we're obviously, to methodology think a great a And part So is that way flexibility and and doing working, careful. has in a it's be of to variability We that bigger more think we and think And the

Patrick O'Shaughnessy

up leasing? under that would news well, that she that? Is the income Knotel statement? in where would see that been Would and performs What we To be for show the fees? you there management services on extent look is

Michael Rispoli

spaces from our fees To services. clients Knotel into the the specifically producers extent come line. The through would obviously Patrick. - are through Sure, to a the Knotel that's leasing office management clients, space that their flex related run putting

Barry Gosin

should that - you world. thing other another one the Yes, in point flex

So we on to clients flex allow have us work advise developed technology, and will that globally. corporate

not - their have are They'll work the give they the will maintain some their to only a that And flexible of great Knotel environment footprint flexible benefit. that we in spokes part companies form that work reduce a of some by offer opportunity to way, and companies amount hubs. - So have. back going think

it's We we technology have to [Opcality], us seats, and and years the going mature where open then up to clients environment allows they the think if market, open - need a later, could they or they need two which call flexible in to move market into advise when And they they're and on a they three not if they a market is work grow want. hub seats. a in want

out a leasing side the on business. of that's both So our part we are going business on advisory flex to and the Knotel a be side, building

Patrick O'Shaughnessy

And then me. Great. from last

- type. what handy, property XX%, was your of do got And XX%. I industrial XXXX? have a breakdown you in don't was but revenue it by like think XX%, that I looked you a office it have was guys gave for two think that sense time multifamily I at

Michael Rispoli

know, have as historical. as But And in we multifamily, of multifamily today. Yes. industrial, We growing driving it markets, we overall. participating are March imagine, a component the into office. retail can as them. in in But the in don't the you We'll is bit that we all investor well than classes strength a put were industrial is you asset little probably activity available in, strength smaller that have XXXX have Office put deck the that as out.

recover. able office advantage to as we'll to be that of market So the take continues

Operator

we KBW. follow-up question from And Jade a from Rahmani have

Your line is open.

Jade Rahmani

a could you international? opportunity approach? any you trying Or markets build foothold? much. very way to thinking buy you more see an an as insight gain you build you expansion international the Thank do approach market, is to the think to How are give use that a Wondering where plan strategy. are and out a the into if hub-and-spoke you there Is do to where infrastructure in about of the into

Barry Gosin

be excited of the more world. opportunity couldn't We the about rest the for

great a to for So us that grow. is opportunity

our talent we be We strategy historic our deadly - are to focused the where and elevating been best brand can. on markets in has

- opened real we a we're So acquire And bolt-ons, are both there we us We've clearly, several already over growth will people we've to talent in opportunity markets. lots for XX next us. see the other you months, that opportunities and to of tuck-ins XX very Hong in and and companies, think for hired doing see we it. Kong,

Jade Rahmani

derived do was have And sources? of revenue international that in you any from terms targets mix

Michael Rispoli

overall mix, think I our want Investor by that. we revenue to Jade, we little better do we'll said November Presentation, than of about Yes, get a in maybe XX% to XXXX our

Jade Rahmani

Okay.

Operator

Thank Jade, question. you, for your Perfect.

concludes to As Gosin there more like no are this the Mr. turn conference back our question-and-answer session. questions, for I remarks. closing would over to

Barry Gosin

you today, forward we and updating quarter. Thank next Thank to you. joining our you look us for business on

Operator

for you, call. today's Thank joining everybody,

lines. your disconnect now may You

Newmark (NMRK) 11 Feb 222021 Q4 Earnings call transcript