Colliers Reports Third Quarter Results

Solid growth across all service lines and segments

Re-aligned operating segments to better reflect value and growth

Third quarter and year to date operating highlights:

For the third quarter ended September 30, 2024, revenues were $1.18 billion, up 12% (11% in local currency) and Adjusted EBITDA (note 1) was $154.6 million, up 7% (6% in local currency) versus the prior year quarter. Adjusted EPS (note 2) was $1.32, up 11% from $1.19 in the prior year quarter. Third quarter adjusted EPS would have been approximately $0.01 lower excluding foreign exchange impacts. The GAAP operating earnings were $109.7 million as compared to $70.9 million in the prior year quarter. The GAAP diluted net earnings per share were $0.73, up 38% from $0.53 in the prior year quarter. The third quarter GAAP diluted net earnings per share EPS would have been approximately $0.01 lower excluding foreign exchange impacts.

For the nine months ended September 30, 2024, revenues were $3.32 billion, up 7% (7% in local currency) and adjusted EBITDA (note 1) was $419.0 million, up 6% (6% in local currency) versus the prior year period. Adjusted EPS (note 2) was $3.46, relative to $3.36 in the prior year period. Adjusted EPS were not significantly impacted by changes in foreign exchange rates. The GAAP operating earnings were $267.8 million compared to $168.3 million in the prior year period, favourably impacted by the reversal of contingent consideration expense related to an acquisition. The GAAP diluted net earnings per share were $1.73 compared to a diluted net loss per share of $0.04 in the prior year period. The GAAP diluted net earnings per share were not significantly impacted by changes in foreign exchange rates.

As previously announced, this quarter, Colliers re-aligned its operating segments to better reflect the value and growth potential of its three complementary engines - Real Estate Services, Engineering, and Investment Management. The Real Estate Services segment encompasses the former Americas, EMEA, and Asia Pacific regions, excluding engineering and project management, which are now reported within the new Engineering segment. The Investment Management segment remains unchanged. Comparative periods have been recast to reflect this revised segmentation.

"This quarter, Colliers delivered solid growth across all three segments,” said Jay S. Hennick, Chairman & CEO of Colliers. "Engineering grew by 21%, driven by strategic acquisitions. In Real Estate Services, Capital Markets revenues rose a strong 17%, exceeding expectations. Investment Management revenue, excluding pass-through performance fees, was up slightly though fundraising remained below expectations. AUM was up $2.4 billion during the quarter reaching $98.8 billion, up from $96.4 billion on June 30, 2024.”

"We completed the acquisition of Englobe during the quarter, creating a substantial new growth platform in Canada. After the quarter, we further added GWAL in Canada, and Pritchard Francis and TTM in Australia. With a robust M&A pipeline, we are well positioned to continue growing and strengthening our operations for the long-term.”

"Over the past decade, step by step, Colliers has transformed into a uniquely differentiated global professional services and investment management firm. We have relentlessly focused on expanding and diversifying our global operations, while adding new growth engines that deliver recurring revenue streams. Today, these recurring revenues contribute over 70% of our earnings, bringing unprecedented balance, resilience and predictability - all of which drive greater shareholder value.”

"With experienced leadership, significant inside ownership, and a proven 30-year track record of delivering 20% annualized returns, we are well positioned to sustain mid-to high-single digit growth going forward. As we enter 2025, we anticipate additional upside from an improving capital markets environment, expanded investment strategies and capital raising opportunities in Investment Management and continued incremental growth through acquisitions across all three segments,” he concluded.

About Colliers

Colliers (NASDAQ, TSX: CIGI) is a leading global diversified professional services company, specializing in commercial real estate services, engineering consultancy and investment management. With operations in 70 countries, our 22,000 enterprising professionals provide exceptional service and expert advice to clients. For nearly 30 years, our experienced leadership - with substantial inside ownership - has consistently delivered approximately 20% compound annual investment returns for shareholders. With annual revenues exceeding $4.5 billion and $99 billion of assets under management, Colliers maximizes the potential of property, infrastructure and real assets to accelerate the success of our clients, investors and people. Learn more at corporate.colliers.com, X @Colliers or LinkedIn.

Consolidated Revenues by Line of Service

For the nine months ended September 30, 2024, consolidated revenues increased 7% on a local currency basis, led by Engineering. Consolidated internal revenues measured in local currencies were up 4% (note 4).

Segmented Third Quarter Results

Real Estate Services revenues totalled $734.9 million, up 9% (8% in local currency) versus $677.3 million in the prior year quarter on growth across all services lines, as expected. Capital Markets transaction volumes were up meaningfully against a low base in the prior year, particularly in the Americas and Asia Pacific. Leasing continued to build on last quarter's momentum, notably in EMEA and the US with several large office leasing transactions during the quarter. Adjusted EBITDA was $64.7 million, up 8% (7% in local currency) compared to $59.7 million in the prior year quarter, with continued aggressive investment in recruiting in strategic markets. The GAAP operating earnings were $42.4 million, relative to $40.8 million in the prior year quarter.

Engineering revenues totalled $316.6 million, up 22% (21% in local currency) compared to $259.9 million in the prior year quarter. Revenue growth was primarily driven by the recent acquisition of Englobe. Adjusted EBITDA was $39.8 million, up 23% (24% in local currency) compared to $32.3 million in the prior year quarter. The GAAP operating earnings were $19.7 million relative to $20.0 million in the prior year quarter and were primarily impacted by higher intangible asset amortization expense related to recent acquisitions.

Investment Management revenues were $127.4 million, relative to $118.7 million in the prior year quarter, up 7% (7% in local currency) including historical pass-through performance fees of $7.8 million relative to $0.6 million in the prior year quarter. Excluding performance fees, revenue was up 1% (1% in local currency) driven by new investor capital commitments, which were lower than expected - a trend anticipated to continue through year-end. Adjusted EBITDA was $56.0 million, up 1% (1% in local currency) compared to the prior year quarter with continued investments in new products and strategies as well as additional investments to scale fundraising efforts. The GAAP operating earnings were $67.2 million in the quarter versus $20.4 million in the prior year quarter, with the variance largely attributable to the reversal of contingent consideration expense related to a fundraising condition in a recent acquisition. AUM was up $2.4 billion during the quarter to $98.8 billion from $96.4 billion as of June 30, 2024.

Unallocated global corporate costs as reported in Adjusted EBITDA were $5.9 million in the third quarter relative to $2.3 million in the prior year quarter, primarily from additional claim reserves taken in the Company's captive insurance operation. The corporate GAAP operating loss for the quarter was $19.6 million compared to $10.3 million in the prior year quarter.

Outlook for 2024

The Company has revised its 2024 outlook to reflect year-to-date results and updated fundraising expectations in its high-margin Investment Management segment for the remainder of the year.

Conference Call

Colliers will be holding a conference call on Tuesday, November 5, 2024 at 11:00 a.m. Eastern Time to discuss the quarter's results. The call, as well as a supplemental slide presentation, will be simultaneously web cast and can be accessed live or after the call at corporate.colliers.com in the Events section.

Forward-looking Statements

This press release includes or may include forward-looking statements. Forward-looking statements include the Company's financial performance outlook and statements regarding goals, beliefs, strategies, objectives, plans or current expectations. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different from any future results, performance or achievements contemplated in the forward-looking statements. Such factors include: economic conditions, especially as they relate to commercial and consumer credit conditions and consumer spending, particularly in regions where the business may be concentrated; commercial real estate and real asset values, vacancy rates and general conditions of financial liquidity for real estate transactions; trends in pricing and risk assumption for commercial real estate services; the effect of significant movements in capitalization rates across different asset types; a reduction by companies in their reliance on outsourcing for their commercial real estate needs, which would affect revenues and operating performance; competition in the markets served by the Company; the ability to attract new clients and to retain clients and renew related contracts; the ability to attract new capital commitments to Investment Management funds and retain existing capital under management; the ability to retain and incentivize employees; increases in wage and benefit costs; the effects of changes in interest rates on the cost of borrowing; unexpected increases in operating costs, such as insurance, workers' compensation and health care; changes in the frequency or severity of insurance incidents relative to historical experience; the effects of changes in foreign exchange rates in relation to the US dollar on the Company's Canadian dollar, Euro, Australian dollar and UK pound sterling denominated revenues and expenses; the impact of pandemics on client demand for the Company's services, the ability of the Company to deliver its services and the health and productivity of its employees; the impact of global climate change; the impact of political events including elections, referenda, trade policy changes, immigration policy changes, hostilities, war and terrorism on the Company's operations; the ability to identify and make acquisitions at reasonable prices and successfully integrate acquired operations; the ability to execute on, and adapt to, information technology strategies and trends; the ability to comply with laws and regulations, including real estate investment management and mortgage banking licensure, labour and employment laws and regulations, as well as the anti-corruption laws and trade sanctions; and changes in government laws and policies at the federal, state/provincial or local level that may adversely impact the business.

Additional information and risk factors identified in the Company's other periodic filings with Canadian and US securities regulators are adopted herein and a copy of which can be obtained at www.sedarplus.ca. Forward looking statements contained in this press release are made as of the date hereof and are subject to change. All forward-looking statements in this press release are qualified by these cautionary statements. Except as required by applicable law, Colliers undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Summary financial information is provided in this press release. This press release should be read in conjunction with the Company's consolidated financial statements and MD&A to be made available on SEDAR+ at www.sedarplus.ca.

This press release does not constitute an offer to sell or a solicitation of an offer to purchase an interest in any fund.

Notes

Non-GAAP Measures

1. Reconciliation of net earnings to Adjusted EBITDA

Adjusted EBITDA is defined as net earnings, adjusted to exclude: (i) income tax; (ii) other income; (iii) interest expense; (iv) loss on disposal of operations; (v) depreciation and amortization, including amortization of mortgage servicing rights ("MSRs”); (vi) gains attributable to MSRs; (vii) acquisition-related items (including contingent acquisition consideration fair value adjustments, contingent acquisition consideration-related compensation expense and transaction costs); (viii) restructuring costs and (ix) stock-based compensation expense. We use Adjusted EBITDA to evaluate our own operating performance and our ability to service debt, as well as an integral part of our planning and reporting systems. Additionally, we use this measure in conjunction with discounted cash flow models to determine the Company's overall enterprise valuation and to evaluate acquisition targets. We present Adjusted EBITDA as a supplemental measure because we believe such measure is useful to investors as a reasonable indicator of operating performance because of the low capital intensity of the Company's service operations. We believe this measure is a financial metric used by many investors to compare companies, especially in the services industry. This measure is not a recognized measure of financial performance under GAAP in the United States, and should not be considered as a substitute for operating earnings, net earnings or cash flow from operating activities, as determined in accordance with GAAP. Our method of calculating Adjusted EBITDA may differ from other issuers and accordingly, this measure may not be comparable to measures used by other issuers. A reconciliation of net earnings to Adjusted EBITDA appears below.