NMRK - Earnings call transcript Q1 2024

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Operator

Good day, and welcome to the Newmark Group First Quarter 2024 Financial Results Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jason McGruder, Head of Investor Relations. Please go ahead.

Jason McGruder

Thank you, operator, and good morning.

quarter results first morning. release its issued XXXX press financial this Newmark the otherwise on ending three with provided the March period. call XXXX Unless results the today's stated, compare only XX, year-earlier months we Except non-GAAP adjusted a includes EBITDA. will as which otherwise be to only basis, earnings our adjusted terms referring the on results and stated,

sales. operating Unless any today discussed from figures otherwise loan activities, flow cash excluding to refer net with operations origination and stated, provided respect by to cash

supplemental tables updated Please the today's non-GAAP industry refer and release, the and management website to and to presentation how, results complete terms, terms why relevant our or results uses definitions and economic on corresponding these press quarterly any GAAP them statistics. the when as reconciliation as for of of well

today None no in should beyond targets change based XXXX or meaningful discussed price. are political outlook social, of formal be factors. macroeconomic, considered acquisitions assumes and subject changes Expectations material other our on to guidance. stock our goals Our or various

I call expectations. actual without contains could Such and our information which are economic differ our to subject forward-looking on and statements outlook uncertainties, this also statements concerning including, to limitation, cause statements, risks that results from remind you business.

Except any obligation by we to as required forward-looking undertake no law, update statements.

information risks For the most to, our limited by may impact disclosures a risk our incorporated which factors in other including, filings, factors of complete not forward-looking but these regarding SEC discussion reference. that and recent forward-looking filings, are statements, and SEC see

and call to host, Gosin. Executive to Chief Officer, the turn am Barry happy over now I our

Barry Gosin

us. joining for you thank and morning, Good

estimate record multifamily billion business. approximately are opportunity due result X/X these sale. trillion loans likely for XXXX mortgage There property and the to years. of a U.S. of at are is sale to Newmark once-in-a-generation or We and X We grow next beginning a maturities over $X that in in maturing commercial loan of its $XXX a the

likely will to find and with and/or help assistance restructurings need require will new an lenders. recapitalizations, X/X X/X adviser

these Our and substantial continue uniquely the talent on outperforming macroeconomic trends analytics to capitalize data, investments to in and position us industry.

markets multiple for quarter. increase Newmark's fees, XX% led debt capital industry. in greater origination was the This nearly improvement than by in outpaced third XX% times the a the strong consecutive revenues performance industry

markets leading Newmark's business presence leasing, Our in including drive servicing and lines, across capital servicing. will other management

capital are We in #X the toward gains internationally of while all the markets also U.S. making goal service lines. becoming considerable a across expanding adviser

a professionals leasing market. demonstrates some flagship Europe's During France, in office markets transaction of attracted largest the our second industry, and We capital which the opened talented brand. most the quarter, Newmark strength further Continental in of the

results in leasing the activity industry-wide over Newmark's XX% impacted the XX% than of declines in more U.K. and U.S. by were

leasing to attractive office at market. expect more fundamentals the of to a values recapitalization properties improve We leads lower as leasing

industrial fundamentals continue our We over leasing, retail revenues and leasing XX% which expect solid last months. to together Newmark's represent in of XX

high-margin third asset Gerald management revenues increased target of million Due than management environment, We well addition as our growth organic Eve servicing the This from strong growth. as the and reflected other quarter XX%, consecutive of by of from fees EBITDA double-digit platform. generate improving substantial is XXXX. adjusted the and investments our in and more $XXX billion servicing $X to talent and revenue over in to in services,

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

Michael Rispoli

servicing growth to ] our X.X% Gerald Barry, as Eve organic grew Total addition management and Fees other includes the morning. by XX.X% XX.X%. you, $XXX.X Thank as and [ servicing and from This management services, high-margin million. good for asset of well improvement platform. revenues grew

revenues double-digit Our reflecting XX.X%, by leasing declined declines. industry

be down to leasing expect we year, full the For modestly.

were a decline. up fees by industry origination XX% X%. X.X% U.S. XX.X%, were revenues We grew sales compared which investment outperforming debt down to our volumes, industry U.S. by Our approximately

Turning to expenses.

by and pass-through initiatives. down recent were by but cost acquisitions items, lower revenues, offset expenses commissions due These higher to largely savings partially on flat X.X%, the variable our were were of excluding hiring expenses compensation and professionals. Our revenue-generating

sale. $X also Gerald of $XX.X expenses pass-through the lines, in loans million include was savings increase GSE of Non-compensation the on due held remain a addition were Eve. our for second our cost income plan offset track $XX warehouse quarter. the interest to excluding by expense Non-compensation to on items, which complete up expenses on end with We million interest million the GSE

our per EBITDA earnings $XX.X and was Turning were share to million. adjusted earnings. Adjusted $X.XX,

share per the RSUs this share due was compared our average of XXXX. XXX.X under million, price quarter-on-quarter. XX.X% of to the X.X share relates XXX.X quarter fully Our million average recognition diluted to increase the accelerated weighted increase fourth shares count with million of in GAAP in

share of We the for to expect our of fully decline weighted as diluted the average million. weighted average XXX.X approximately our to grow and compared year by count XXXX balance X% to

$XXX Turning notes has through to senior last January, extended million issued $XXX credit the of And million near-term we January XXXX. sheet. balance X.X% facility The of XXXX. In our debt due week, we no April maturities. company

$XXX.X million professionals. by cash the and $XXX business the the change cash equivalents. from million of of million primarily related ended to The hiring offset and of year-end corporate $XXX.X generated We of cash with by incremental million quarter revenue-generating debt, included $XX.X

to Moving guidance.

XXXX remains for full-year largely unchanged. Our outlook

quarters. year-over-year and in continue and second earnings the third We expect improvement to in sequential

for And open the would questions. like with call that, to I

Operator

Our with first will Instructions] [Operator Piper from come Sandler. question Goldfarb Alexander

Alexander Goldfarb

Just a questions. few

little how the to side, And for the metrics. we're be First the accounting land, would about And compares more which maybe give seeing REIT a significant a REIT curious, companies off? drop leasing you're in on off, really some what if the could small we're [ subset. leasing number color a But had clouded you good by leasing. just ] bit just of

Lou Alvarado

had of We lot in is Lou lot fourth a Alex, a of timing, quarter. We this transactions really this Alvarado. solid right? quarter. Look, closed large a that is

had First quarter, and slipped. transactions fewer we some

our pipeline activity and solid. year, improvement the and expect sequential as throughout We we is go

first as a see I for for So the us just this issue quarter. timing

Alexander Goldfarb

always products street since the it have question, RTC deluge market. for like to seen the -- the back people seems GFC, see to the to on we in of a there. haven't or in. we days a It's strewn And transact you like distress to transaction really large-scale The Barry, here second go distressed

what product, those are a if at a to to the the least seems it on banks, the lot talking owners transact market all negative from because of it's lately, the transaction realize may aren't with about, really that REITs forcing And even it strong for their want money been has like who sideline, bid a there's thin transact. And seems, leverage.

to you come on to really that front? on not more banks, the the Do of to world going regulators has market? the come about? the transactions transaction happen and think out you what it's see do So how do forcing envision that to start you are easy Or they're think owners playing we therefore, deals the

Barry Gosin

some sell open to they're there want focus This cycle playbook about a the every inside of loans, up a "Okay, one banks uniquely as to each loans," been concern glass Fed to they cycle. has say, magnifying and or different. is would we concerned deposits. level, their on riskier of is these the whether if At is different. the Well, bank there's The because hood designed want for

the of you'll few out. There maturities $XXX is, and play years. sort [ over billion pick are it's business. around specialist the up as little those plays And continue a But of bit all a services into kabuki I trillion $X next dance all going of it -- said, So to ] that. to ultimately, see

considers in should how refinance whether invest give any the for maturities -- owner due, [ keys much -- how back underwater -- have sell. can building -- versus world the the the re-tenanting the keeping come -- he question ] in As is is either and you much or or growing money that makes

about sales, for hitting to And We're for more play and be extend ways that's distressed live properties the keep able seeing borrowers seeing creative from solutions loan market. on lenders more seeing to and their open we're that to creative going are the properties it. the to and we're all discussions out,

seeing it. all of do There are ways and many to that, we're

no how, is it happen. But So there, the is is question fix. just volume a there, the is but of and of will it and when there one business opportunity exactly

Alexander Goldfarb

there yes, that. me tell and let me follow is on So going I'm Alex. to the you're answer -- assuming Is up just

you're if positioned guys are advise absolute in the you're team with trade, not there nothing the comes but loan You helping working of there's of building only and even that getting the owners have advisory also a advisory in help with loans, that even stuff, not a meaning about, correct? property the or it's doesn't transaction, transactions, if working internal or sort of you whether that banks, restructuring but on helps the in to

Barry Gosin

Absolutely.

in banks. looking specializes testing that and We risk have team stress a at within assessment

money loan of flex that of have to screening, experts moment. flex able could at institutions asset management that. are this servicing, of requires lots parts that We built being lot who lending up And down. and help to infrastructure this company We are for different people a and business, our that navigate

able bespoke, creative the money money to from building, the avoid and to fresh get solutions, perspective, get So it's for new unique, be a combination new the into of borrower's to lenders recapture, equation. more the the restructure deals, keep

is in and indications. a money. opening place it's indicates many that opportunity. there you market to sector, a and there where rates moments even levers is maybe money some -- with interest available opportunity of cap the the there it's rates on are are up, which more There floating hit rise, rate triggers and but The there is and Once leverage to negative CMBS create that not decline for private so

of is and stride there looking when positive ready for opportunity the there, But the [ that moment is side the on also money ]. wall sitting is that

Operator

comes next from KBW. Our question Rahmani with Jade

Jason Sabshon

Sabshon you looking interesting beyond you're capital is Jade. that Jason on at to It great actually would growth be touch This hear areas markets. for on

Barry Gosin

we've leasing of markets. not spent markets. the in capital I mean our in we've if all the largest reason in capital talent, talent it's pivoted some to There months. saw and $XXX you Well, last in acquisition ever we X hired million quarter, the a report, the was great

follow-on that business. it, with The business aspect, bring financing ] in we'll along every business, comes leasing we'll Halo bring [

have We some good one Corporate really wins -- Services. in had

footprint, which adding then -- are global with large to us it the to accessible We more clients. makes more global corporate our

things. the all doing we're So

intentional business. determined the build have As a and goal multi-market occupier to goal with to we that focus capital same we #X, and tenant be rep with on leasing markets, advisory

it's we've So it's basically like a done, work-in-progress. everything

of for We the who brand. the place lot coming good talented to It's know We elevate the a system, brokers. us. are people to continue around a seeing we're the in interested interest

elevates, for costly better easier brand actually the and in us it and talent. bring less As is to

work-in-progress. all So a it's

Operator

to back does And Mr. conference time. or no that there you it Gosin, any this are closing Thank for I remarks. at you. appear turn will additional questions further the

Barry Gosin

you the prospects all quarter. joining very and for this about I'm next look forward excited to you us quarter. Thank the future our of in seeing

Operator

Thank your call. today's participation. you concludes This for

may now disconnect. You

Newmark (NMRK) 3 May 242024 Q1 Earnings call transcript