Welcome to the Colliers International Fourth Quarter and Year-End Investors Conference Call. Today's call is being recorded. Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance, or achievements contemplated in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company's annual information form, as filed with the Canadian Securities Administrators and in the company's annual report on Form 40-F, as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is February 10, 2022.
At this time, for opening remarks and introductions, I would like to turn the call over to the Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.
Thank you, operator. Good morning, and thanks for joining us for this Fourth Quarter Conference Call. I'm Jay Hennick, Chairman and Chief Executive Officer of the company. With me today is Christian Mayer, Chief Financial Officer. As always, this call is being webcast and is available in the investor relations section of our website. A presentation deck is also available there to accompany today's call. As announced this morning, Colliers delivered very strong fourth quarter financial results, with full year revenues exceeding the $4 billion milestone. Capital Markets, Leasing, and Outsourcing and Advisory were all up significantly across all service lines and across all geographies, while Investment Management delivered record results, raising more than $6 billion in capital and finishing the year with more than $50 billion in assets under management.
With a globally balanced and highly diversified business model, significant recurring earnings, and a sharp focus on global growth opportunities, Colliers is stronger and more resilient than ever. As you know, last month, we announced that we were investing in Basalt Infrastructure, a leading transatlantic investment management firm with more than $8 billion in assets under management, adding another highly differentiated investment business that specializes in the important utility, transportation, energy and renewables, and communication sectors. Together with the previously announced Milan-based Antirion, which we're acquiring to augment our existing operations in Europe, we expect to add more than $12 billion in assets under management to this segment of our business once both of these transactions are completed. As you know, last year, we announced our new Enterprise 2025 growth strategy.
The goal was to double our profitability and generate more than 65% of our EBITDA from recurring revenue streams over the coming five years. We finished year one well ahead of our internal targets, and we continue to make excellent progress. If we're able to achieve our current five-year plan, it will be very good news indeed for our shareholders. With our strong growth plan, strong growth global brand and growth platform, well-balanced and highly diversified business model, unique enterprising culture and significant inside ownership, Colliers is better positioned today than at any time in our history to continue to create value and to generate superior returns for shareholders. However, despite all of these characteristics and unique attributes, our company remains significantly undervalued when compared to others, in my view.
I have been investing in businesses and building companies for many years now, and I say this with very strong conviction. Few companies have our growth prospects. Few have the experienced and financially committed leadership team we do, and fewer still have our long-term record of performance, a track record of greater than 20% annualized returns over more than 27 years. With that said, let me now turn things over to Christian for comment, and then we'll open things up to questions. Christian?
Thank you, Jay. As announced this morning, Colliers reported very strong fourth quarter financial results. My comments follow the flow of the slides posted on the investor relations section of colliers.com to accompany this call. Please note that the Non-GAAP measures referenced on this call are as defined in this morning's press release. All references to revenue growth are expressed in local currency. Our revenues for Q4 were $1.3 billion, up 48% relative to the prior year period, with revenues up strongly across all service lines and geographies. Growth for the quarter was predominantly internally generated. Compared to 2019 pre-pandemic peak levels, Capital Markets revenues were up 60%. Leasing was up 12%, with office leasing recovering to within 5% of 2019 levels.
Fourth quarter consolidated adjusted EBITDA was $192 million, up 25% from $155 million reported one year ago, with margins at 14.3% versus 17% in the prior year quarter. Our margin was impacted by increased performance-based incentive compensation and the reinstatement of variable costs, mainly attributable to the strong growth in transaction activity. The Americas region fourth quarter revenues were $814 million, up 54% over the prior period. Revenue growth was exceptionally strong, with Leasing activity up 77% led by industrial. Capital Markets activity was up 66% and was led by industrial, land, and multi-family asset classes. Office Leasing activity showed steady improvement in Q4, although remained below pre-pandemic levels. Outsourcing and Advisory revenues were up 29%, driven by engineering and design, valuation, and loan servicing, as well as recent acquisitions.
Adjusted EBITDA was $94 million, up 34% from last year, with the margin impacted by significant incremental performance-based incentive compensation from strong year-over-year growth in operating results, the reinstatement of variable costs, and higher support staffing costs. In EMEA, revenues for Q4 were $233 million, up 32% from one year ago, with robust growth across all service lines led by Outsourcing and Advisory and Capital Markets. Adjusted EBITDA was $42 million, up 19% from last year on higher revenues, although margin was impacted by revenue mix from higher project management activity. In the Asia Pacific region, fourth quarter revenues were $219 million, up 36%, driven by strong capital markets activity across the region, but especially in Australia and New Zealand.
Adjusted EBITDA was $38 million, up 7% relative to the prior year quarter and was affected by higher performance-based incentive compensation. Investment Management revenues were $80 million, up 83% versus the prior year period. After eliminating the impact of pass-through carried interest, revenues were up 45% driven by management fee growth. Assets under management were $51 billion at quarter end, up 29% from one year ago, and capped off a record year of fundraising with $6.1 billion of new capital commitments from investors. Adjusted EBITDA for the quarter was $28 million, up from $18 million in the comparative quarter on solid flow-through from incremental management fee revenue. Our consolidated operating cash flow for the full year was $289 million.
However, adjusting for the non-recurring cash component of the LTIA settlement in April 2021, cash flow was $381 million, more than double the $166 million generated in 2020. Cash flow was positively impacted by a combination of higher earnings and a reduction in working capital usage, which was elevated during the earlier stages of the pandemic last year. Our financial leverage ratio, as defined as net debt to pro forma adjusted EBITDA, was 0.3 times as of December 31, 2021. During the fourth quarter, we issued $300 million in US and euro-denominated senior notes due 2031 and paid down our revolving credit facility in full. As of December 31, we had $397 million in cash on hand, the majority of which is available for investment.
As a result, we now have well over $1.2 billion in liquidity available to fund future acquisitions and ongoing operations, including the recently announced Basalt transaction, which is expected to close later this year. Our debt capital structure includes $530 million of attractively priced long-term fixed rate debt, which positions us well for any inflationary uncertainty ahead. Given our low leverage and significant financial capacity, we continue to be extremely well capitalized for future growth. We are introducing our outlook for 2022, which provides our broad expectations for the year ahead and represents a return to the format we issued historically during more normal times. We expect high single-digit revenue growth consisting of mid-single digit internal growth and the balance from previously completed and recently announced acquisitions, including Antirion, Colliers Italy, and Basalt.
We expect our adjusted EBITDA margin to improve 40-60 basis points relative to 2021 from a combination of internal operating leverage and higher margin acquisitions. Our income tax rate and non-controlling interest share of earnings are expected to be 26%-28% and 18%-20% respectively consistent with historical ranges. Finally, our adjusted earnings per share are expected to grow at mid-teen percentage rate for 2022. This new outlook is subject to risks and uncertainties as outlined in our accompanying slides. That concludes my prepared remarks. I would now like to open the call for questions. Operator, can you please open the line?
Certainly. To ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Our first question comes from the line of George Doumet with Scotiabank .
Good morning, guys. Congrats on a really strong quarter. Jay, I got a two-part question for you. First
Just before you begin, George, you're not at Deutsche Bank, are you?
No, I'm still at Scotiabank. Yeah, Jay, I wanted to ask you about Basalt. Maybe, what attracted you to that, to the asset? Once you integrate it, are there any other alternative asset classes that you'd be interested to offer that we don't offer yet?
Okay, it's hard to hear you. You're asking about Basalt and what attracted us to Basalt.
Correct.
Basalt, like Harrison Street, is an extremely high quality investment management firm that has highly differentiated assets. They focus on areas that require an extra level of expertise. They've been around a long time. Their results have been stellar as compared to others. It's a partnership approach in the same way as Harrison Street. There's lots of synergies between Harrison Street and Basalt, and there's also lots of synergies between Basalt and the rest of the Colliers global platform. You know, it's right zone for us in terms of an additional move for us in our investment management arm, and it really is a model for other similar platforms that we look to add over the coming years.
Okay, that's helpful. Maybe for Christian, the 50% EBITDA margins at Basalt, they're pretty elevated there. Can you maybe walk us through how do you get the number? Maybe it's from a restructure or maybe overhead cost. Would you expect maybe to make some more investment in that business that can maybe lower those margins over the next 12 months?
Yeah. I mean, George, our Investment Management business that we have currently operates in the mid-40% EBITDA margin range, and Basalt is similar to that. These businesses generate you know very strong recurring quarterly management fee revenue streams, and they have relatively low costs. They have obviously management professionals and some fixed costs. The EBITDA margins in these businesses are you know in that 40%-55% range.
Okay. Thanks for that. Just one last one, if I may. On your mid-single digit internal revenue growth guidance that you guys put out for 2022, what do you have baked in for Capital Markets revenue growth?
George, I don't wanna get into any specifics on that. You know, I think across the business, you know, mid-single digit growth rate is something we're very comfortable with.
Okay. Got it. Thanks, guys.
Thank you. Our next question comes from the line of Scott Fromson with CIBC.
Yeah. Good morning. Just a couple questions on results. The results came in much better than the analysts' estimates. Were revenues right at year-end higher than you would have expected? Could there have been some revenues that were brought forward from the current quarter?
Scott, in the transactional business, and the outperformance here was really in the transactional business and a little bit also in the other businesses. The recurring revenue businesses are more steady by their nature and more predictable. Yes, I mean, there are transactions that flow, you know, into December that might have occurred in the first quarter, and similarly, there's transactions that we were expecting in December that may be deferred into a future quarter. That type of you know movement of the fee recognition on these commissions is something that happens regularly in the business, but nothing unusual to note here.
I think we just had a stronger finish really across all of our regions, you know, really in both Capital Markets and Leasing across the board.
It sounds just a reflection of the strong market.
Yeah. Yeah. Stronger than we expected certainly when we met last time a quarter ago here on the call.
That's good news. Just turning to your leverage, your balance sheet. Your leverage ratio is pretty low. What range are you comfortable with? Would you consider increasing the cash back to shareholders by either raising the dividend or through share buybacks, or do you wanna keep dry powder?
Well, Scott, we obviously are very active in the acquisition side of our business, and that's where we prefer to deploy our capital. We have a target leverage range of 1-2 times. Certainly, we're well below that at year-end. You know, we assess our optimal capital structure all the time, and we're, you know, as I said, we're focused on acquisitions. If other ways to properly lever our business and return appreciation to shareholders that are to be considered, we'll look at that as well.
You know, I'd like to add a little something to that as well. One of the things that's becoming glaringly obvious or should be becoming glaringly obvious is that this company generates significant free cash flow, and will continue to do that. Our CapEx is modest compared to the size of our company. Despite having aggressive growth already on the books, not yet closed, and if you roll those things forward, our leverage ratio isn't gonna change much. It'll go up a little bit, but it isn't gonna change much. You know, I think one of the things we are looking at is the amount of cash flow we generate in this business, and as I said in my comments, the relatively modest valuation that a company of our quality is trading at.
I think we do our shareholders a service by looking at all ways to enhance shareholder value.
Sounds good. That's helpful. Just one final question on investment management. How's the fundraising outlook and how's the competitive environment for fundraising? Obviously, alternatives are a pretty hot space.
Well, I mean, we had record fundraising last year, $6.1 billion through our Investment Management arm. I think this year, we think we're going to have another record yet again. As you said, our asset classes that we focus on are in vogue. Obviously, infrastructure is very hot, so we'll see how Basalt does. They've just substantially completed their most recent fund and now that the transaction is announced, the team there will be out raising, I believe, its biggest fund ever, beginning in the next 45-60 days. We're hoping for a very strong fundraising year in 2022.
Sounds good. Thanks, Jay and Christian. I'll turn it over. Great year or great quarter. Great year.
Thanks.
Thanks.
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. Once again, to ask a question, please press star one. Our next question comes from the line of Stephen MacLeod with BMO Capital Markets.
Thank you. Good morning, guys.
Hey, Steven.
Morning.
I just wanted to follow up on Basalt, which looks like a very complementary investment management acquisition. Jay, you mentioned in your comments, you know, certainly some opportunities to be synergistic with Harrison Street as well as the rest of Colliers' global platform. I was just wondering if you can elaborate a little bit on what some of those synergies look like and, you know, how we can think about that in terms of magnitude between Basalt and the existing business.
Well, you know, there's the obvious, which is Colliers has a global platform with global relationships. We're marketing transactions all around the world. Having Basalt as part of the family gives them a look. I wouldn't say a first look, but an assured look at any opportunities that we may be marketing, as well as special relationships. You know, our job in our markets and our traditional business is to know capital sources and flows of capital. Introducing flows of capital to Harrison Street or Basalt and Colliers' global investors has borne nice fruit in terms of fundraising.
The types of investors in all of our funds are those investors that value the governance, track record of our platform companies within Investment Management, and are always asking us what additional asset classes should we be considering. There's a growing need, I would say, on our side to get better at leveraging existing LP relationships between our different platforms to create additional fundraising sources. There's just a few opportunities there, but there are countless others that will help leverage existing platforms and enhance the returns for our LPs and that's happening really across the board.
Okay. That's great color. Thank you. I didn't wanna get too granular here, but I'm just curious about what you're seeing in terms of the office, either Capital Markets or Leasing backdrop across your geographies. I know you mentioned, Christian, in your prepared remarks that office is within 5% of 2019 levels. Just curious what you're seeing between geographic regions.
We're seeing more office activity in all regions. I would say probably more in the Americas and coming back, and probably something we're expecting to see more and it to come back more in EMEA and Asia Pac in the coming quarters. Certainly, you know, things are progressing well and activity is rebounding.
Okay. That makes sense. Maybe similar to that, do you expect to see any asset classes sort of begin to weaken as we get back to normal if we do end up getting back to normal in 2022 from a pandemic perspective?
Well, I'm not sure I would characterize it as weakening, but I think a moderation of activity in classes like industrial, you know, and retail have been coming back. But you know, industrial has been so strong, for a long time, and that I think will moderate, over time.
Okay. That's great. Well, thanks, guys. Congrats on a great quarter and a year and great performance through the pandemic.
Thank you.
Thank you. Our next question comes from the line of Daryl Young with TD Securities.
Good morning, guys. Just wanted to follow up a little bit further on the Investment Management business. It sounds like more asset classes could be in the works in the future. Is there a chance that Investment Management ends up at 50% of EBITDA in the future? I mean, you're already at, on a pro forma basis, around 25%, which I think is sort of the goalpost you used to speak to. Just given the fundraising and then the potential for more asset classes, it seems like it could be a very big part of the mix here going forward.
You know, that's a pretty ambitious target that you're outlining. The interesting thing is that as we grow Investment Management, so too is our services business growing by leaps and bounds. I mean, internal growth there has been staggering. I would say anecdotally that a lot of that growth or some of that growth is coming from the enhanced stature we gain by being in the Investment Management business and the opportunities that that's creating for us, and we've just really scratched the surface. So I don't think anybody here is thinking in terms of 25% of our or 50% of our EBITDA coming from Investment Management. It is growing, and our long strategy, the Colliers partnership philosophy, is something that is really resonating with the right targets.
We're very gratified to have the opportunities we have today. We believe that there will be other, like, targets that want a permanent long-term capital partner, somebody who can add value and leverage everything we have to offer. You know, let's remember, Colliers is global, with a globally balanced business, with strong leadership teams in every geographic region, meaning we can acquire and grow virtually anywhere in the world. I you know sort of mentioned that in my comments, but you know, how many companies have that opportunity? Few at best. You know, that comes back to you know, our one step at a time approach, the strength of our management teams, the tenure of our management teams. They've been around a long time. They know the way we operate.
We're very bullish about this company and proud of what we have accomplished over many years. I think that the future is our oyster in many ways, as long as we continue to apply the same principles that we've used for many years to create shareholder value.
Okay. Terrific. One other quick one, just on the engineering side. Maybe just a quick update there. You've been acquisitive in the last 12 months and very quickly building a platform. What the organic pipeline maybe looks like now that you've had a chance to piece all those businesses together under one umbrella.
So, you know, Christian Mayer may have some additional thoughts here, but, you know, again, I'm gonna emphasize that our current initiatives around engineering, which have been very positive. We have an incredible leadership team there that has integrated several acquisitions. They have a pipeline of others. Let's just remember, this is only U.S. There is no reason why we can't advance and grow these businesses in other geographic regions, which we fully intend to do, which opens up a massive growth engine outside of our core business, but very much related, using a globally institutionally recognized brand. It comes back to, you know, my comments again around an exceptional company, substantially undervalued or underappreciated for the many opportunities we have to double and triple the size of our business in the coming years.
I think engineering is just another great opportunity for us, structured the right way, with multiple consolidation and growth opportunities which we'll execute in our usual Colliers way.
Okay, excellent. Thanks very much, guys, and congrats on 2021.
Thanks, Daryl.
Thank you. Our next question comes from the line of Frederic Bastien with Raymond James.
Hi, guys.
Hey, Fred.
Your Outsourcing and Advisory segment had a very strong year, up some 20% organically across regions. Wondering if you could break that down between, you know, what is coming from improving market demand, like share gains and perhaps some new offerings, service offerings that you implemented.
Yeah, Frederic, the Americas outsourcing advisory group includes engineering. Of course, we've been active there on the acquisition front with a number of acquisitions, most recently Bergmann in November of 2021. So that's the story in the Americas. Of course, in the Americas, the project management business and the valuations business, as well as the property management business have all had great years, contributing to organic growth. I'd say the same in EMEA and Asia Pac, valuations practice, engineering practices. Sorry, not the engineering. Valuation practices, project management, and property management have all grown nicely, and have contributed to the organic growth in those two regions.
Okay, I get that, but you were coming off depressed levels in 2021, so just wondering if there was also some, you know, did you notice any market share gains you were able to accomplish?
Yeah. I mean, I don't have any specific information in front of me, but I do think we are growing our market share, and our growth in those business have been, you know, very strong.
You know, just looking at our numbers, Fred, like, you know, Outsourcing and Advisory being so recurring is generally a sub-10% kinda grower. It grew 30% this year overall, so I would say we're taking significant gains. The acquisition of Bergmann was in December or November, so it was
It was the annualization of the Maser acquisition.
Oh, okay.
Yeah.
Okay. Still not enough to reflect the growth. I would say we're taking nice share. Not to the same degree perhaps as in some of the other areas, but very formidable, to say the least.
Great. I'll leave it at that. Very hard to poke holes in the story right now. Good job.
Thanks. Thanks, Fred.
Thank you. I'm showing no further questions. I'll now turn the call over to Global Chairman and CEO, Mr. Jay Hennick, for any closing remarks.
Thank you, operator, and thanks everyone for participating in this quarter's conference call. We look forward to the first quarter to report again. In the interim period, I believe we'll have our annual meeting. That will be webcast for those that wanna participate. Thanks for joining us, and we look forward to speaking to you again soon. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and have a nice day.