NMRK - Earnings call 4 2023 | Newmark Group, Inc.

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Operator

Good day, and welcome to the Newmark Group 4Q and FY 2023 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jason McRuder, Head of Investor Relations. Please go ahead.

Jason McGruder

Thank you, operator, and good morning.

quarter presentation year this fourth press financial its and release morning. issued and XXXX full results Newmark Unless otherwise XXXX, stated, compare earlier only the results provided X period. ending on months December XX, with year the the today's call as our only to includes term on be adjusted and which results adjusted basis, otherwise earnings specified, non-GAAP EBITDA. Except will the referring we a and reconciliation Please how, corresponding definition of updated for complete refer and/or the management why to the and to non-GAAP when section of terms, uses in GAAP items today's results press release these any them. from with Unless refer otherwise discussed by origination figures cash stated, loan operating net any respect and today to activities, sales. excluding cash flow to provided operations

the impact generated equity from other metric cash receivables flow impact of event. and loans Cash is before and partners the and the employees by XXXX the latter of business the loans, forgivable

flow more presentation, the no our today, our or in items, company's GAAP these and today's mentioned meaningful material Excel stock website, and/or on press supplemental For results statistics today see changes assumes the outlook the discussed tables information industry cash acquisitions and price. non-GAAP our release the

long-term expectations should or changed are various our on social, goals and Our other guidance. of None beyond based political XXXX formal be factors. considered macroeconomic, sub targets

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

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

Barry Gosin

you joining thank and us. morning, Good for

increased every completed XX% sale more in Signature the revenues real with by category. We billion than gains portfolio history. $XX U.S. quarter sale loan across estate Newmark's the in the over double-digit largest revenue

We also office largest building largest tenant leases, in largest and States. industrial occupier the the closed the office lease United sale the

strategy service Newmark its lines. is on the successfully of executing being in its best each of

In completing generated to fees the and management industry, servicing addition than servicing largest continued asset addition billion, XX% transactions organic high-margin in Gerald revenue improvement a from the doubling this $XXX from portfolio management other to of the our we reflected more services, growth and GCE. of growth and

leasing industry improved its revenues XX%, by leasing more activity than by while overall XX%. Newmark declined

strong organic significant growth double-digit was Our outperformance driven and in industrial. by office

We markets. share also capital in market gained meaningful

sales XXXX U.S. $XX portion billion #X transactions. broker Newark fourth #X which the full year, quarter and investment equity in of Signature of was the for the for excludes the the

progress and refused the technology to our world-class entrepreneurial And evolving housing the team. We of complacency Already industry. affordable experienced progress clients. extraordinary in finance analytics we the and our well markets best. talent empower we leasing to capital and some in of #X prolific as the data rapidly of Newmark's of research, the becoming We continue We debt the to one U.S. most the active hired the champion XXXX, this U.S. attract best and We in goal as bring towards teams. innovative with let professionals best adviser most their spirit. preeminent structured impede to

will and restructuring about multifamily an XXXX. mortgage sold. need likely will find likely If record with and and to adviser We you're of be underwater you great, a that are in be Newmark. X/X estimate at to new assistance $XXX million The reasonably should X/X MBA lenders. require X/X expects maturities help or commercial recapitalization

us. not wave face As an this does provider these own double-digit year of maturities seek for clients opportunity The enormous service innovative represent continue multifamily commercial difficulties our that them and is estate, refinancing solutions. next. will increases to expected may originations financing in This drive real and our a to drive to

agency valuation services, asset as We ventures, capital, the and turn sources lenders expect and servicing market's management outside office, long-term activity. office joint Newmark U.S. for equity disproportionate share property and well and leasing, leasing, premium and the both to in to assets existing the remains of property selling who of selling with owners A in remain Quality receive vacancies below properties, for to Class including continue properties as command types challenged foreclosure recaps to of and which new management, respect advisory, except following U.K., averages loans, nearly properties, all finding a

first for all quarter significantly Class fourth growing quarter and but small pipelines peak in The the office are of to construction A office buildings properties percentage leasing other accounted their being have fallen XX% of XXXX of U.S. a converted New from XXXX. uses.

are addition to their of end pretend The -- In mortgages. in extend and ability the recapitalization owners activity. leasing these will values properties to stronger reset addition, to and reaching to a and lenders lead of in respect with

which XX% with just XX% XXXX. fundamentals XXXX in over and continue over Newmark's We in industrial to revenue represented to of leasing, solid together respect leasing with compared expect retail

volumes second We to growth. in Mike happy our accelerate over revenue call expect that, CFO, With industry-leading of to the investments half Newmark's XXXX, which, coupled drive the turn will I'm in Rispoli. to our transaction talent with

Michael Rispoli

in to XX.X%, $XXX.X growth XX.X%. This improved high-margin services, strong an $XXX.X management double-digit management million, servicing and Thank you, from organic revenue million other every XX.X% we Barry, growth continued by Fees asset category. by from increase and grew increased good by portfolio double-digit servicing growth and addition improvement and organic morning. of categories. industry reflected the by in down down in total by driven our our improved fourth and respectively, Gerald This XX.X%, revenues of revenues We leasing GCS. producing We gains Newmark investment XX%. the and by was while industrial. leasing outpaced commercial decreased and as activity share XX%. by Europe, was XX.X% consecutive U.S. Industry-wide sales market these our origination investment originations the over and leasing the office by revenues was activity in quarter of over sales multifamily and and in to overall U.S. and XX% each market for

origination XX% We gained GSE the share also activity. in compared market to by approximately in declined our XX% as reduction industry-wide volumes

expenses expenses were million a of XX.X%, the expenses XXXX. expenses. revenue-generating savings million balance to Turning as to to by up $XX.X Newmark due X% due in to hiring in expects tied $XX higher companies to Non-compensation in to long-term under increase as million with mainly savings Compensation and expenses. to an professionals and and the the acquired expenses $XX well revenue cost commissions up XXXX XX.X%. up pass-through related were Total the of were realized initiative, approximately incremental million XXXX With $XX reduction recognized realize respect in in company's contracts.

earnings. to Turning

share Our our up XX.X%. improved by grew adjusted $X.XX, and EBITDA XX.X% adjusted to to earnings per $XXX.X million,

year was Our XX.X% quarterly adjusted tax earnings compared earlier. with X.X% rate a

adjusted XX.X% to rate earnings in year XXXX was compared full as XXXX. and Our tax XX.X%

$XXX of weighted share count year. our full approximately diluted million and was average for the guidance quarter fully $XXX previous the with million for Our consistent

cash balance million and by XXXX change of the reflects sheet. the to equivalents. business of from to The ended $XXX.X redemption the $XXX.X $XXX.X capital cash from venture. by year capital Turning the generated cash and We offset year-end of with of These cash million expenditures cash of Other and return invested were cash a of shareholders. receipts acquisitions and $XXX.X joint included producers. partially for of million uses million

of X.X refinancing $XXX Last we issuing notes was of long-term ratio completed successfully Our at net million month, year-end debt leverage as senior XXXX. X-year our by X.X%. of the

full outlook to compared year XXXX our to XXXX. for the Moving

total and X%. EBITDA X% anticipate revenues and to to to earnings X%. between expect We share both grow We adjusted grow X% per between

diluted outperformance scale fully we share approximately the to occur weighted and to our average second our XXXX. quarters in fourth earnings of be in in significant and the our We XX% by expect third expect the expect XX%. improvement and of count and XXXX Due we earnings quarter rate hiring of year-over-year increase to to tax the adjusted majority our and between our of

volumes and to to an basis, on substantial normalize, billion generate and which over discussed, into over expect annual once call fully expect to questions. I EBITDA. business middle revenue of we our to industry XXXX our would the for around in volumes up million we in And with As investments adjusted XXXX, half open the back the in be XXXX pick $X we $XXX that, given like of expect Barry and

Operator

our And Mitchell first come Piper with Connor from Sandler. Instructions] will [Operator question

Connor Mitchell

Barry the them, provide about a year know how you few total the on about So that thinking can revenue guys on bit item's growth order of line maybe outlook I over of X% outlined, achieve or your further you little to some some numbers thinking touched number. outline each growth just you're total it X%? reach more a thinking that you to revenue growth could just in share to the guys of

Michael Rispoli

had leasing performance in Sure. Yes, I great that, say would certainly, we 'XX.

even businesses. somewhat is year, in gained maybe Our continue because down much from those we markets a And that our item will businesses our come grow this businesses. could 'XX, management line little. we growth expectation flat capital the and to that be as so share market

more or we I because activity sales think of debt up think more, see coming. XX% wall Barry maturity mentioned be debt that's we'll industry-wide some will probably and the

Connor Mitchell

Okay. remarks. the on Barry That's opening then helpful. And in touched

area. structured of guys brought affordable you have debt and housing great anywhere depth talent, advisory product finance. increase advisory some or kind of cetera, a affordable top eyeing lot specialty, Is geography, there team you guys -- that to your that some that more the You are in guys sector, the next add maybe in just moves, bench maybe or et lines want

Barry Gosin

talent. implications business. Freddie portable, adding mission-critical mean a added It's always I to GSE which our the adding really has Fannie. talent strategy and That is we're we about with

maturing bench. offer we our years. in that that So strengthened will are we the across many But U.S. to we're with We've white loans look debt help that strengthened brought next structured a so Europe. $X.X then opportunity. certainly some the about in and and of trillion always of spot. few debt us builds spaces are growing need to that There these for excited and we're opportunities and talent going over finance continue

Operator

Jade from KBW. next Rahmani Our come Instructions] will question with [Operator

Jade Rahmani

I rates confirm roughly do too disclose, fourth know brokerage commission much commission realize percentage to speaking, quarter? the can XXXX. be in you there's but Signature, rates signature I sales where expectation would on debt no in investment there's ex revenue and not you And want percentage

Michael Rispoli

without within I would share say this. historical that Signature the averages transaction without they're market

Barry Gosin

signature without We the gained market transactions. share

Jade Rahmani

you Did we've a on phone markets sales that hear. It be little was and the Wanted Yes. be more say to investment and XX% bit volumes capital that again the or way ask would that the leasing seen. certainly up would bit. in appears be about data would difficult down a that based there outlook to growth

Michael Rispoli

said because year that's a correct. could expectation little. of Yes, our be is 'XX, in generally leasing the I for somewhat down flat into 'XX, going it outperformance our

to in to continue well. around to management XX% would there. servicing share up and is activity expects up as business. be business our And expect then expect would growth expect year-over-year The grow to sales We be year-over-year we see to our generally Services maintain Management or debt market our MBA we and

Jade Rahmani

the historical And then & to XXXX within their what Do judicious Dunlop expect that mean be accept countercyclical and terms but think origination. I role they flattish? you volumes & both GSE business be and of much to go your in relatively Cushman does expect for flat in in I volumes they're against being more the Walker market, GSEs Wakefield

Barry Gosin

think the We get hit hit business will We disagree that. to with that their closer or on GSE caps offering caps.

of We that private into we share, will a certainly space business. we market which also part are now gain our the affordable building getting out as believe client

of the offer deals Fannie. quality mission-critical and institutional Freddie smaller more some So up will for

Jade Rahmani

to of recruit there's that recruit? just the focused. you looking lastly, on that so-called would folks superstar does to the characterize front, And smaller -- types more niche be infill some high-profile are late, teams been Or you're recruitment producers. looking departures of

Barry Gosin

talent. for that's brings looking mean great results. I people always exceptional We're Lebot. exceptional

Operator

that session. question-and-answer And I'll conference back does the hand now the over conclude you. to

Barry Gosin

joining for forward look thank quarter. next us and want I to Thanks. today everybody to

Operator

an participation. you. conclude excellent for Thank you today's That do We day. thank Have does your conference.

Newmark (NMRK) 22 Feb 242023 Q4 Earnings call transcript