NMRK - Earnings call transcript Q3 2024

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Operator

Ladies and gentlemen, good day, and welcome to the Newmark Group 3Q 2024 Financial Results Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Jason McGruder, Head of Investor Relations. Please go ahead, sir.

Jason McGruder

Thank you, operator. morning. Good

ending cash cash press the results impact of flow metric by terms, complete business, the tables website the provided before for as corresponding third stated, results reconciliation today's used Except today the only X its morning. of release call to updated or measures as XXXX with management results information the otherwise to flow also XXXX, cash on only by sales. to results any and will no Unless industry discussed in figures today's economic stated, employee results months to and adjusted acquisitions otherwise EBITDA. Unless quarter stated, operating changes of loans. Please release, issued on a price. refer stock supplemental non-GAAP earlier assumes our on our be statistics. The press our quarterly for and otherwise financial GSE, refer this definitions excluding basis, activities, compare which why We term the operations including with we material Newmark operating how, uses year and XX, outlook them, is presentation referring the when period. as same non-GAAP for meaningful additional generated to our cash relevant respect September well FHA terms provided the on net and items from cash adjusted use earnings and origination any cash flow today loan these the the and may GAAP

outlook goals and guidance. I no to our based social, by be cause change Except to forward-looking economic of macroeconomics, we update you Such differ beyond forward-looking are or statements. undertake information including, risks uncertainties, also that this remind XXXX None factors. to formal and results on concerning are call business. obligation actual law, expectations. as which should statements, political limitation, Our statements required could expectations statements considered targets subject our to other various contains and without subject from on any

other and our these For but turn statements, Barry recent our forward-looking factors CEO, incorporated to and our risks a complete disclosures see are to discussion SEC Gosin. over host, that filings, filings, of in to, regarding SEC reference. I'm forward-looking risk including, information most by may now the which not the factors call limited impact happy

Barry Gosin

and morning, for joining Good us. you thank

double-digit in during capital growth $X Newmark's over brokerage improved XX%, the every fueled revenues This a XX% by insurance and improvement. matching and increase near of increased of U.S. multifamily was while maturing markets CMBS business are accelerated as We the volumes. With by new major clients, line term, incredibly performance quarter trillion of including debt approximately consecutive quarter. GSEs our mortgage fourth banks. borrowers our private active, mortgages credit, and in the with equity the finding for capital commercial professionals still and sources companies, our

pipeline through we of placement is debt, to transactions continue and and sales capital robust, incredibly equity investment expect XXXX. Newmark's across markets this

broad-based of businesses. trailing the the strong an increased revenue our origination of XX% increase will management with quarter primary Mae In servicing. volumes over consecutive months high-margin XX% year XX generated in fuel business. We which the earlier, and addition, our we servicing Fannie these growth growth services improvement compared by a marked fifth The future organic for

industrial, businesses rents which doubling lines, to X them are expect historic within $X U.S. growth retail climb. X%, and and growth led these several billion over availability fees increased lows leasing of and we We by have across target over strategically continued service years. We the by grown asking continue where We bullish the remains retail on remain years. the of leasing, past to fundamentals at in

for demand benefiting commit to continue to by companies leasing the returning to to of growing at well as more lower centers We North as data American recapitalization the activity. anticipate space further We also leasing mandate drive continues leasing and industrial values increase manufacturing. Office expect of properties the activity as and from near-shoring reshoring provided to tailwinds workplace.

industry's the be to platform continues and of across choice leaders attract continue Newmark for to we professionals service talented most the lines geographies. industry as

we Following services our sustained that, improved I'm for Newmark ever now are happy excited continued about and and recent monetary Germany. call Newmark's are turn demand to our in the environment, Mike expansions Rispoli. France U.K., than share over our in With and market in growth building we gains, to the future. With more macroeconomic

Michael Rispoli

morning. and Barry, Thank good you,

quarter operating third again strong results demonstrated our leverage. Newmark's once

improved including as up revenues GCS, and Leasing by were and fees. Our capital by servicing organic for other valuation generated revenues strong EPS XX.X% million, businesses, all and from servicing of improvement We XX.X%. improved increased our management and across led of growth EBITDA as property total We growth and respectively. Revenues advisory revenues and management well by XX.X%. by services, adjusted $XXX.X XX.X%, growth delivered which markets retail higher in industrial. X.X%, XX%,

share was types, debt expanded market. once across origination commercial the for volume growth mortgage reflecting by of brokerage broad-based mortgage again gained fees considerable property XX.X%. from we Newmark's compared XX% U.S. as business approximately XX.X% market with for This outperformance

grew with platform volumes our X% compared origination by decline. XX.X% a also from We industry FHA GSE

and office sales rose by fees volumes. which higher investment retail Our included X.X%,

up up Turning reflecting excluding to higher servicing expenses, Compensation were and commissions. fees. were items. expenses up management variable Total higher pass-through expenses were X.X%, X%. expenses tied Noncompensation X.X%, to

earnings for year. with tax was last Our XX.X% XX.X% adjusted compared rate

to Moving earnings.

compared fully XXXX. share respect Our XXX was second adjusted up EBITDA was million, count, down to quarter of $X.XX, EPS with count Adjusted our average XX.X%. slightly the up was XX%. With share our diluted weighted million, $XXX.X

which new share fully X.X%. not price the of million count to issuance was average recognition up our stock accelerated higher X.X RSUs, was Newmark's Accordingly, of diluted weighted related the shares.

only RSU this count was share our X.X%. Excluding impact, up

authorized $XXX.X $XX.XX, buyback share at $XXX average program we X.X for Board $XX.XX. $XXX.X shares million year-to-date, increasing price repurchased price an million. an our million and quarter, to the average of During million units and Yesterday, our at of

of Turning debt, This cash return $XXX.X lowest net corporate resulting million $XXX.X $XXX.X to the We $XXX.X cash capital shareholders $XXX.X was in sheet. reflects business amongst offset incremental $XXX.X from movements to X.Xx change the for quarter normal the corporate of the cash the working with equivalents and and generated used in The million industry. in million million in in by of ended year-end headcount, in debt. primarily the balance of from million million cash capital. investments revenue-generating and of and leverage,

guidance. to Turning

Our is $X.XXX between EPS We We revenues up to of X% increase expect X% updated full follows: total XXXX to an and X%. XX%. adjusted XXXX with between compared $X.XX of outlook billion as and of anticipate for the billion, year $X.XX, $X.XXX

XX%. We would X%. more to of on And call anticipate expect our in X% We've our the press that, between range investor like guidance questions. detail XX% presentation. And an we release to be rate for million adjusted open and adjusted EBITDA the in and included of to today's to $XXX $XXX earnings tax I increase million, with

Operator

Our first question comes from Mitchell Instructions] [Operator Connor Sandler. with Piper

Connor Mitchell

in by pretty just recent items, that touched seems was the just You than guys bit leasing and office reported it some some revenue retail on up your we've recently remarks, was from the X.X%, the some line opening growth driven of lower seen earnings. leasing industrial. other healthy leasing and numbers a It little coming

of Newmark's leasing performance then wondering with, just contribution quarter? the should upside is guess, question is, the should retail office how for industrial, too? think first about the I we I commissions So strong we for in the how leasing along commission, was think contribution potential about And office, and

Michael Rispoli

Sure, Connor.

of mandates. Our office leasing year-over-year, to continues We're we'll And performance. big winning I think lot pipeline leasing be have a good strong.

continue If fourth last quarter. mandates market, the and leasing coming But in in We strong into XXXX. think going the that's pipeline, remember, up year, market more and we the see you than particularly back. see we outperformed we leasing average we're office to

Connor Mitchell

on And just a follow-up Okay. then that.

and seems as industrial, on leasing it tailwinds them and like see was some it a quarter in retail center continued types. you for for data side, well pretty property too? the good also Do those maybe For

Lou Alvarado

the Look, Alvarado. industrial Data is on cold we're storage. significant the retail, seeing, this of Yes. the a as as is definitely Connor, sector market and this center active big Lou activity. well

be continue. from that demand think expect in we've down talented We got activity we'll people The some seem that at benefit I that working slowing And for think all. to doesn't business. that I those to and sectors,

Connor Mitchell

I Okay. like just looks there. And color then healthy pretty adjusted switching EPS. maybe appreciate revenue, guidance, updated the gears. it in increase The

adjusted and prior EPS I reconcile change outlook. EBITDA. was It the from versus just help think year-over-year change the down revenue, increased change the to slightly for looks like came the year-over-year the guys if you could me

and EPS there? that know changing -- differently settlement EBITDA, help Just something me for could the there that is is there's in outlook reconcile other there's I might if legal one treated divergence the between you anything there? versus but be the the else guys

Michael Rispoli

that. I'll take Sure, This Mike. Connor. is

correct. You're

revenue increased markets adjusted Our is result mandates. just really a the a for costs about performance of of and last EPS a we our guidance $XX.X versus settlement adjusted of how and capital fourth function million. we you favorable very related as treat year-to-date adjusted for activity The and quarter and it the EBITDA pipeline had growing EBITDA. if adjusted strong leasing how EPS settlements legal year, in for remember, we And large treat litigation

Connor Mitchell

squeeze just if Okay. one And I could then in. more

to continue You guys grow overseas.

XX%. was revenue the X% in about than it's think versus now, XXXX I less

is what set guys hasn't continued learned markets to and Newmark continuing looking have currently the you bit maybe investments countries yet? growth? more that regions current that lessons so you're in? curious on shop Or in at you a about Just regions and deepening Are of little kind to really up far other operating expand and focus the markets

Barry Gosin

significant then to thoughtful, our have We U.K. seems seem that Paris Germany and It ago in the continue that weeks amount in be be wanting we U.K. going in working. States, in learned Europe, goal the there the X an plan plan. that -- we we're X and office be every in careful and people to had ago, The to doing way. the incredible best and have along France, launched hire X X throughout We XX weeks months verticals in is presence and we're people to growing. United join lesson. of now same to interest we geography, enormous of people an it an companies We've ago, intentional, Well, us. And we a bought in We've in is opened the our

you great You results. hire great people, and have will

Operator

question Rahmani next KBW. our comes with And Jade from

Jade Rahmani

dynamic that slightly in you're color what any markets more give debt investors anticipate you Can going first. forward? the piece interested and on back or perhaps capital coming came of investment and how the the market below in cycle the viewing you the we while In quarter, mortgage commercial came And reflects I in in marketplace my are above. sales that think estimate, where around in

Barry Gosin

a We sales. see very pipeline active of

Our really we've been to debt a enough just amount significant hire fortunate market, people. of great

We complex market share transactions. more in larger are winning

and So market we the in us piece have significant well. area, a serving really that is that of

side, the of On you've sales X had headwinds. years

We we're of trades, months puts ago, short-term capitulation lot on and there but a We are -- discovery the the damper that of a little of pricing pricing once interest the that it will on started appropriate values, in -- couple a amount of a rates bit of be always think and and activity. seeing now. over move

hard lot predict see activity. we to So exactly but of it's when, a

Jade Rahmani

follow-ups. Two

seeing data when acquisitions or maybe storage, even asset sales, the secondly, then mortgage you centers, increase multifamily growth new are office? don't? And be eclipse in and business for growth from would might aside commercial classes, investment you Firstly in demand cold traditional you in an expect to

Barry Gosin

feet That those top-of-the-line mean, to to category. quality, interest housing. continue, the Vacancy It multifamily rate mean, has will That on doing shortage I almost I properties near driven. retail. be a the the is probably multifamily, buildings residential, depends going only market. to years. have X, All et being a and so is data office the cities category to that to complicated continued these closer seeing of are been will million on that specific activities of every kind most office, fine. cetera, inventory, for market cities, put X are of the for be Yes. fine. The in square the bunch going New are starting the to right on queue -- vacancy of remove in the certainly, conversions. In York rate, alone, the nothing do XX next gateway is rate which is centers, shoring. certainly we're Industrial, segment us converted seem we equilibrium in be next bring and at A there of

So I the thing is all think the happening over country. same

States. And interest. of acquire. create demand lot one of investing in the start there's to is still So we're lot and seeing same, there to every the a People categories of United are a liquidity the

Jade Rahmani

the on strong specific more business volumes Mae growth? to debt up any growth pick mortgage there side, Mac. Newmark, really transactions, that and and seeing you Are had their Fannie Or commercial with Freddie the them the multifamily you the Within get were active? particular GSE, drove

Barry Gosin

have fairly to multifamily sales robust continue a We business. investment

to lot we debt. people market as that of over will We've next a won We hire continue year. for continue more capture do share. We sales the the we

Our has capture rate increased.

So that of we're beneficiary of a kind business.

Michael Rispoli

Jade, well would as a GSE the I seeing in Newmark. for as across And the we're pickup big add, business at whole demand market

much to biggest I how be the next and challenge is closed get year to going pushed much year. think get this out how going can is to

Jade Rahmani

But all Okay. at recognize lock rate revenue close. than you rather

fourth be quarter a could potentially So that driver? positive

Michael Rispoli

and lock, before Freddie through the much huge the to be demand remains market, year-end there's could the be. just rate Fannie can it getting and in pipeline seen. But how Yes, again, push

Jade Rahmani

Okay. business sound Well, like picked up. it has does certainly, that

Operator

Our Patrick with next Raymond question James. comes O'Shaughnessy from

Patrick O'Shaughnessy

to on up want your I the adjusted follow EBITDA guidance. updated with question

the But think, an on $X So million. the million absolute prior the million dollar $XXX settlement to guidance I $XXX $XXX year-over-year peculiarities million, get was with fell, it's adjusted your million ago to in math now EBITDA $XXX your $X year It I the guidance. versus to period. basis, million of

XX% to And prior so that that the margins implies XX% be are versus your going around XX.X%. to

a revenue you lower of So seeing leading terms are this what profile? margin in to incremental

Michael Rispoli

Sure.

last point the out year XX-plus favorable thing the included million $XX.X percent is settlement. I'll legal first The

maybe take you that the little you're higher. a out, probably range, If XX.X% in

nothing full to So for million could for And unfavorable dollars there million but and adjusted year, legal for year [indiscernible] to improve. margins few GAAP the non-GAAP this guidance and adjusted settlements just EBITDA EPS, we a see year-over-year, year-to-date, for expect material, few was would too then year, last this a the in favorable you moving on it dollars the year.

Patrick O'Shaughnessy

guess, Okay. bigger I then And picture. maybe

margins As we're to the are year, you fourth the ahead how business? for incremental about looking and quarter next thinking

Barry Gosin

lot A markets. relies on capital

We the in and have athletes verticals. all all on the the the field geographies

it's dollar in footprint, incrementally for the As we same under add $X.XX we the line. the said past, that to every bottom

$X.XX -- to expect $X.XX the we line. So to bottom

we sequentially We ecosystem time when stabilizes, stated of of improving buying when gave expect robust market, which we moment to we market the earnings 'XX where also back think the these is happening between 'XX going the and and to next couple opens to that 'XX. they're we a over guidance That's you until because margin why to happen years property selling that us market our position improve up. We've and an come normalizes, going get the it's it's to projected. the going and back we think in had back general are for be in the in think

Patrick O'Shaughnessy

availability sources right for one shift last lending? debt then has a financing been there characterize in And do Great. now? me. of How you And

Barry Gosin

which concerned -- some the are from energy taking that's lender, are the the CRE of of banks category new the books. is their whole of who a funds size There's debt

debt funds them capital are firms of the private in to real companies, the the are insurance which equity many building estate. to So long-term and have captive gives opportunity proliferating, invest

that's replacing the -- So debt of older some players. the other

a about is So money for of finding fortunately, markets lot for the we're us, it we're quality not out estate. came market. problem And a year liquidity The market a CMBS there. those good back having And real seeing in in ago.

Operator

turn I'd and back over any this appears remarks. no for time. there closing questions or conference ladies And are like further to it the additional gentlemen, at

Barry Gosin

still you the us on call. quarterly look and about Thank forward remain company's excited updating the you joining next to future, I today. for

Newmark (NMRK) 5 Nov 242024 Q3 Earnings call transcript