NMRK - Earnings call transcript Q2 2024

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Operator

Good day, and welcome to the Newmark Group Second Quarter 2020 Financial Results.

As a reminder, today's call is being recorded. At this time, I'd like to turn the call over to Mr. Jason McGruder, Head of Investor Relations. Please go ahead.

Jason McGruder

good and operator, you, morning. Thank

net of months excluding quarterly press the including second Newmark period. this to and noted, Unless release, call basis, ] refer otherwise respect sales. figures today [ non-GAAP cash terms otherwise these stated, . Except results economic industry XXXX, GST, a be X results we origination and tables any to of statistics. release uses XXXX why results Unless issued GAAP corresponding operations to provided compare presentation the and by relevant definitions activities, otherwise loan to with the today's supplement earlier the from will [ today's any its on morning. operating results on how, as stated, press reconciliations provided Please XX, items quarter when the year and as adjusted and or June them our cash to ended refer only with management on earnings only for FHA, referring non-GAAP website the terms, EBITDA. flow and adjusted complete as results ] well discussed updated

acquisitions today stock meaningful discusses outlook no material -- assumes in The our changes or price.

are other be to considered guidance. macroeconomic, factors. Our formal or various expectations beyond and subject should XXXX change None political targets social, on based goals of our

to from forward-looking statements, Such uncertainties, expectations. statements differ including any by I also statements limitation forward-looking and actual to remind and you no subject we risks undertake required cause as which results without contains on that our obligation law, call are economic, update information Except concerning statements. could this to outlook business.

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

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

Barry Gosin

and morning, thank us. you joining for Good

line, dry fueled commercial mortgage stable powder Newmark We in to investable a that produced increase happy revenues. U.S. trillion are maturities, We $X report billion multifamily markets by across environment. business nearly of XX% $XXX and a capital of every rate interest near-term delivered growth and

solid We and generated growth from also servicing leasing. management,

Our top and produced line XX% outpaced industry per by leverage which increased improvement growth. earnings investment X% We operating strong XX%, volumes. share sales

Newmark's XX%, debt while down activity over up was industry-wide was by X%. business

growth capital. and deep Newmark's outperformance strong credit markets . was of both mortgage within to our alternative position brokerage sources traditional of led the and by and XX% access

commits office Our up revenues macro office drive is as office continues the Demand including technology, financial of were XX% will at artificial Recapitalization services. outpace intelligence lower and companies space values by properties leasing for across leasing growth. job additional employment the market. to led tailwinds space overall and

X years. fundamentals will full of We our all industrial across retail the X activity, XXXX property guidance as drive our time. growth expect generating leasing next outperform over over XXXX EBITDA confident Solid in and to well remain XX% target and types as year we

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

Michael Rispoli

good and Barry, you, Thank morning.

results quarter leverage. our demonstrated second Newmark's strong operating

These in a offering businesses for since billion XX% fourth strong have revenue our of Total annual of other public X.X% XXXX, grown XX.X%. million. revenues surpassed were CAGR of initial were growth delivered at up growth EBITDA $X and adjusted and of improved growth We revenues. recently X.X%, the Our XX.X% by and adjusted and improvement revenues $XXX.X quarter consecutive services, and EPS year-to-date. management servicing XX.X%

sales gain year. by volume We market by markets revenues increased X% increased continuing investment growth We remainder decline Investment in XX.X%, capital the by the and anticipate improvement sales revenues these Europe. against the U.S. service led leasing X.X%, and fees We both improved in lines XX.X% debt. generating for organic XX.X% to the the solid office. share our in of

debt was mortgage FHA origination. by million the driven the fees, we a origination to comparison last multifamily La GSE decrease a XX.X% origination. X% against and business second a in Park by growth Fees The U.S. the outperformance to from decline offset increased brokerage more our as in activity year well is when industry XX.X%, decline XX% partially than decline in This of as the due Brea closed difficult in quarter originations. $XXX in commercial

of well expenses, addition to expenses X.X%. excluding up items. were the professionals. commissions pass-through Compensational X.X%, expenses as Total Turning variable were as up revenue-generating recent higher reflecting

X.X%. Non-compensation down expenses were

operational This the quarter, million streamlining producers $XX our sustainable long-term improving clients. to delivery on and and their During reductions efficiency completed and consisted we and second plan. our cost expense service of focused savings

we drive enhanced will target, have and technology, every DNA, more intelligence our stable shareholder reimagining achieved ongoing artificial of the previously cash While and announced our transformation is automation business operational delivery operating service excellence flow our through model generation savings of part lens and an results, of value. part

Turning to earnings.

repurchased price $XX.X million Our weighted EBITDA count was the first million share the XX.X%. fully flat million, was repurchased average quarter was up shares of With Year-to-date, adjusted count, respect in compared average shares diluted XX.X%. an $X.XX, with our X $XX.XX. to up quarter. of we XXXX. Adjusted X.X EPS our at $XXX.X share We million,

debt. ended the equivalents balance have generated of cash We the million our from $XXX.X XX.X% cash business, corporate quarter the in $XXX.X and to with Turning of of EBITDA. $XXX.X Year-to-date, million and year-to-date adjusted we representing million sheet. cash

the and cash debt. capital. leverage quarter in year-end partially offset of normal investment increases primarily the million incremental share industry. cash amongst half were strong We in corporate and the generated Changes by used net $XX.X lowest million the expect business, in our $XXX.X million this cash These of continue. generation repurchases $XXX.X the to for ended by working business and from at X.Xx first movements We reflect

Moving to guidance.

unchanged, remains the earnings and outlook and earnings we revenue year. XXXX expect of year improvement for the sequential full Our remainder

growth count share annual over time. target X% less or to of continue We

For in accelerates which higher slightly treasury diluted expect the result XX% method. certain count recognition share fully of growth the price, weighted a average as share stock XXXX, year-to-date RSUs under of our we increase

This reflect questions. equity. and open is with I timing for And like does any the that, call not of to additional the would just issuance

Operator

take [Operator question Instructions] We Sandler. Mitchell our from Connor will first with Piper

Connor Mitchell

So kind of estate rates we've seen across cap especially and industry, coming multifamily the centers. whole with real in, shopping

shopping So seen interested Blackstone transactions. some large some We've might in be apartments, centers.

might think appetite in the of like Just higher favorable about back fees especially half your the investment sales paired more, you on of dry guys the that and types year? and wondering to how for powder institutional property the bidding putting with use the kind pricing impact how

Barry Gosin

about rates rates better look is supply stabilize Many we and have on categories and the Well, as down come at I designed feel hit liquidity. passed demand The better a mean to starting dry Interest And property. to opportunities. We leverage. the to it's rates or really about the interest the buy to invest trough. better at not a way very the is there whole powder ecosystem there of times. stabilized. positive or interest The industry they're inflection is issue. We're It's point. that our least,

there industrial, but population have year those. lot fundamentals have and still the a and terms onshoring, of of guys long are want to the the and underlying where this consumer mean, to nearshoring, in at softer year been be retail lots will looking the leasing smart of where continues that are There I X taken increases invest, things. it So been need, all retail retail as the looking consumers. off the strong, grow, had different in of centers at market you and strong. a a still as brought is market is

the couple all looking of years. forward bodes the over think I next for So that opportunities well

Connor Mitchell

Okay. office. maybe And then turning to

about in the that the office quarter the of leasing out in talked half. first guys and West. Park aware Century well and in the like Avenue the the You We're in broker space City strong #X strength you're then saw now

submarkets submarkets, other of guys spillover see Just the and or regions differentiated? you country starting are closer some then by even investment like are Or of these X the leasing terms any activity. wondering, maybe of other also to truly in the to if

Barry Gosin

the at the of types, pretty think market, bifurcated down property low gateway I a across mean generally market top good. vacancy, I the That's consistent of cities it's the top pretty are markets high the pricing.

Next, as activity. that see next gets start year to rented, the

that say could you you want to that? other think cities. add to for I Lou,

Lou Alvarado

commitments Yes, before, for demand yes, longer of I the would making whereas we're I Certainly, a think what agree, mean, Connor. commitment. across seeing term, I much are is shorter-term people more was it up. consistent is market.

and TIs, other the competitive the the opportunities weren't competitive as think capital creates recapitalized, buildings seeing it become these is you're that in these make having are the in by buildings these issue big provide as tenants for for attractive to get today well the to that the the to that market. a market I thing is competitive buildings looking there amenitize as which leasing to them out

I in So couple of things impacting seeing growth we're office. the a think

look, going looks good were, and making strides the and to but and certainly certainly And good good we're good back where we're looks not but we pipeline growth forward. activity

Connor Mitchell

Okay. And maybe just well. me as X more for

some how curious is Just progressing Paris. recently your new the international take to business of on get most with launches, wanted and the

Barry Gosin

Fantastic. in Yes, great people exciting. It's incredibly we've hired Paris.

opened ago. X have months We

team the months. then leasing, in side. short the We grow we months We Paris, in people partner, office thing very our a to expect from office in And of excited about sitting and have and next very in since a We're and tenant both Europe. do the the X retail throughout U.K. going team XX broke a We've in had the in we're foundation just on we're U.K. capital good our to alliance the well brokerage, markets, business a time, France. XX XX in doing up XX #X to hired we built same relatively now and over that great agency

Operator

[Operator Instructions] question KBW. . from next our with We Jade Rahmani take will

Jason Sabshon

growth is Jade. do in rates actually leasing Jason expect XXXX? on in Sabshon markets for capital see What to you of and kind This

Michael Rispoli

Jason.

we're in think I a clear we've market. look, pretty seeing been So the turn that

Our pipelines are building.

which back over that XX% growth EBITDA Exactly a half as clear to throughout activity target into to all difficult going little We that the we're years. move predict certainly, of markets. plays out of back the to into bit XXXX, would expect 'XX but a by each 'XX, And improvement have we X for the I year how through imagine we moment, about is at robust 'XX pretty as is and move the half we 'XX. see continue

Jason Sabshon

estate Great. employment interest for employment really rates? higher paired up, lower real rates with commercial And transaction weaker see would and pick you rather to or volumes stronger

Barry Gosin

leverage, if or is CMBS for leverage rates to investing a I to of anticipation where the the back are takes of the you positive rate will terms that's fixed and biggest employment be lower that's capital I there's the lower transactions. arbitrage or to invest. that the office. think are anticipation hard Lower free reality people mean SASB got And interest return. mean come takeout looking inflection markets fear rate get would it's People loans rate interest floating carefully even at titrated. people point relating you for probably at the in taking of as of Yes, out is inflation, result. can't the single of loans driver shorter to on a a returns

driver employment growth establishes want on you higher that biggest lower one the really that's because employment, hand, employment demand. and So

rates be population get then makes and will more It's you interest because low It's would they up, inflation so cheaper valuable respects, buildings going be growth build So and that have Inflation the value. you to too existing would never and optimum some be inventory to the an higher in it's reside inventory in with rates. it at stock would subject valuable population build to replacement never office office, tricky. get more would condition you to expensive if the have inflation, existing to filled tricky. growth have

complex And we a set market, runway. have levers that our from so it's of good but perspective, very a drive the

numbers not have increasing last hired We've a market entered the an our of have who few production. over years are We lot into gestating even that share. people

really are both the to position in market improvement a good from So market all and stabilization aspects we -- increase. and of benefit runway

Jason Sabshon

question, last leasing office my started has pick Great. though up a for volume seems to bit. And it

all? jobs on changed factors July sentiment weaker than hear So how curious at see expected, your and to occupier was how the view how be you has report, which that in I'd

Barry Gosin

issue and doing of the from are the the in digital doing terms well, declines are on are but people the Well, well. has shoots really that there to is are place. financial declining service office mean, for the only space in been I those that the home, and cities working kind Data productivity green all businesses, intelligence, mean, businesses workers office. industry starting over show businesses even soft metrics the are I Bitcoin, of don't centers, to where people young more come opportunity artificial

is people for the cities Coming to a anecdotal. and is it's it retail, demand our multifamily. of The real the growth. lot going only of in a in a build because more that belief business. up of industry There's office, of respect the every a that supply-demand multifamily, from to better. -- the young timing, Consumer It's and come down the work interest further industries build has estate the coming get tremendous there -- need other category will get population jobs will and really always back, careers, And hybrid lot we high get COVID, of an work. people nature but relationships rate-driven and to information of it's of certain will be been that office and come a the and work is complicated oversupply of excitement to their away experience to in

believe in are -- the office. it people our is. And I We've

companies course, all be to know terms to better. are in people beneficial real Of but services office because the have culture. estate it's there, the are we're back their it's office. the in their they into that going Financial trying people of business. They get to really to CEOs bringing get

wanted part, and gives fact it CEOs employer and the have a but most a to positive lever that more the the employment so CEOs little the power people lower back their a bring back bring people of for to office, to the office. always, is The that power between of one employee to the provides

Operator

next question Raymond take O'Shaughnessy will James. our Patrick We with from

Patrick O'Shaughnessy

general then you pipeline loan to your particular? speak Can in outlook the origination in and multifamily

Barry Gosin

function demand. Well, demand to people the and there there where some these multifamily is in -- some just a is I be high at there's have it mean be situations But purchased and a tremendous strong. recaps, still markets growth will continues refinanced of many -- prices.

we're for and but ] Some have of real pipeline, an a the [ we're Bs that's and oversupply But interesting things too in opportunity. have of normal it. lot housing, markets much business. have optimistic the a seeing which just a lot of We're nature affordable about and cyclical you that doing is bids about then

I the about the sides mean, more world the Democrats coming want affordable affordable private and is income good light into is housing credits there for the people. affordable low on affordable Republicans Democrats thing housing really no Republicans both on of and aisle, it's building and the because like and workforce -- tax between

[ CRE Freddie institutions. ] -- and that's So it's and for and mission-critical credits Fannie or

around we're I So the a affordable and space a Lite. the think growing country, And that's player industry. all-time big Section X certainly in

all good housing. So that's for

Michael Rispoli

debt the multifamily year-to-date is half our healthy look look pretty pipelines and of caps industry is good strong. year, while GSE hit pipelines and our going that going look would up add the I should to pretty the it our in forward, back Patrick, business the XX% . not Yes, about

Barry Gosin

saying just is or going originations -- loans general? through you generally roof. Because Are the our business debt in GSE we

business. I've we financings an enormous never our every of never much aspect had have We have of we've amount pipeline and for as in enormous as recaps an -- now.

Patrick O'Shaughnessy

is structures Got to York's answered maybe in question participate off you into ability multifamily? you. that, the office know conversion I of building my what New

Barry Gosin

couldn't I can get your I question.

Patrick O'Shaughnessy

to properties participate the . multifamily office in option Newmark's is into What outdated of properties?

Jason McGruder

largest New and by downtown, project the was Water sold sold everywhere been in Water in which and New creating side York. feet, certainly both raised country. XX by financed XX actively the just XXX,XXX we financed, programs, and which the much Broadway, Newmark, is in -- York is XXX pretty large by -- programs in legislative equity in Newmark the on country another Newmark, State recommending very the we think X alone, We've of the I New involved in York which were Well, City

in many in we're respects. . it So involved

certainly around are repurpose suitable like to that this in So first-class into -- and is a New as for but where that's other the an are country incredible affordable office the there outdated inventory not cities at either office looking is multifamily. markets -- York, that's or opportunity hotels buildings

what really the how depending Some -- so and they're and you will a the situated the is cost are deep, to the create so developing hard, determine but amount yield those some buildings wells. of that. of and the of It's the light cost buildings light and building is on in Florida deep, can function

Patrick O'Shaughnessy

last then And it. me. Got for one

So at versus process was the macro backdrop maybe seems this The quarter. said your you raising unchanged the thought point. behind full favorable a second more outlook, strong to pretty outlook? becoming year What

Michael Rispoli

Sure.

you probably outperformed and, history. in had year remember, peer really pretty the in loan U.S. with a as last So particular, quarter sale we the by a group largest fourth strong we wide margin

little start seeing So We in bit throughout is never when predict of good up We're businesses. close. good can where against really will guidance our these of a time to feel fourth about build the comp right a And you transactions now. quarter. we're the pipeline obviously

good about we years, the feel next great certainly, So few forward. the And really things look over business. going

Operator

like do close to not currently have back out We to turn Barry would the questions. call. to the any further I Mr. Gosin call

Barry Gosin

about joining . you to and from quarter. again. for to Thanks. next again. future the hear forward you our Look Thank very excited us I'm hope

Operator

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

disconnect. now may You

Newmark (NMRK) 2 Aug 242024 Q2 Earnings call transcript