Good afternoon, and welcome. I'm Peter Cohen, the Vice Chairman and Lead Director of the Board of Directors Callyers International Group, Inc. I will be acting as chair of this meeting. Before we can begin the official part of the meeting, allow me to introduce the people who are here with me today. Jay Henick, our Chairman, CEO and also Director.
Next to him is John Fredericksen, our Chief Financial Officer as well as Matthew Hawkins, the Corporate Secretary. Let me also introduce the members of our board who are here with us today. We have Cathy Lee, we have, please rise, Cathy, they can see in case they have any questions. The honorable Stephen Harper. And, I can't see is that Mike Harris back there?
And Mike Harris, used to be honorable, but still honorable. Provincial honorable. Okay. I'd like to thank everyone for joining us here today. I would like to welcome those listening to the as the meeting is being webcast live through Colliers website located at www.colliers.com, where it will be archived and accessible for 1 year.
It's now past 4 o'clock, and I would ask that the annual meeting of shareholders have come to order. I would like to remind all those present that this is a meeting of shareholders and that although other persons are present, we are pleased to welcome only shareholders of their proxies are entitled to participate in the business of the meeting. With the consent of the meeting, I will act as chair accordance with the callers bylaws, Matthew Hawkins will act as secretary of the meeting. In addition, I appoint Rose Aviara of TSX Trust to access scrutineer for the meeting. The minutes of the last annual and special meeting of shareholders held on April 10, 2018 are here and are available for inspection with the consent of the meeting We will dispense with the reading of these minutes and a minute shall be taken as read.
I also table a copy of the audited consolidated financial statements of callers for the year ended December 31, 2018 and the auditors report they're on. You will have received them with today's meeting materials and additional copies are here available at the back of the room. With the consent, once again, of the meeting, the reading of the auditor's report will be taken as read, and the financial statement shall be received Please note that after the formal portion of the meeting, you may have. And accordingly, during the formal portion of this meeting, I would ask you to limit your questions to those matters directly related to the specific items being considered. Notice and proxy materials for the meeting were mailed to shareholders and additional copies are available here today as well.
With the secretary, please report on whether a quorum is present.
According to the Biologics Colliers, forms of ABH shareholders, if any 2 shareholders entitled to vote for meeting for the present in person or represented by proxy, accordance of the preliminary and its figures received from the scrutineer. It is clear that we have got 4 of our shareholders with a copy of the final report of the scrutineer
to be Annett committed to this meeting.
You. I'm an advisor as a quorum president. As a quorum is present, I declare that the meeting to be regular called and properly constituted for the transaction of business. In view of the need to attend to a number of formal matters, certain shareholders have volunteered to move will facilitate the handling of the formal matters. Any shareholder or any proxy holder may speak on the matter when the matters before the meeting.
When I recognize you, please give your name, stay with you, or our shareholder, or a proxy holder. The first item of business is to consider resolution appointing PricewaterhouseCoopers LLP as independent auditors of callers at remuneration of efix the directors. In order to be approved, the resolution must be passed by a majority of the votes cast, I have a motion for the approval of this resolution. May I have a secondary? Is there any discussion?
The meeting will now vote on the motion I propose to take the vote by way of a show of hands. Will those in favor of the motion please signify by raising your hand. Those opposed if any. I declare the motion carried. Next number of business is the These directors will hold office until the next annual meeting of shareholders or until their successors are elected or appointed or they otherwise ceased to hold office.
The management information circular states that there are 9 proposed candidates. The secretary will now read their names.
The names of the director nominees are Peter Cohen, Jack Curtin, Christopher Galvin, Stephen Harper, Michael Harris, Jay Hennick, Catherine Lee, Benjamin Stein, Frederick Southerner.
Thank you. I would like to remind shareholders that directors are to be voted on individually in accordance with Collier's majority voting policy. I now recognize Christian Mayer. Thank you. Does any shareholder or proxy holder wish to make any further nominations?
Since there are no further nominations, I declare the nominations closed, may I have a motion in favor of the election of each of the nine persons nominated? Thank you. The meeting will now vote on the election of directors individually. I propose to take the individual votes by way of a show of hands Will those in favor of the election of a director please signify by raising your hands after I call their name in favor of Peter Cohen. Thank you.
Those opposed to, if any, in favor of Jack Curtin, those opposed to, if any, in favor of Christopher Gavin, those opposed if any, in favor of Stephen Harper, those opposed, if any, in favor of Mike Harris, those opposed, if any, in favor of Jay Hennick, those opposed if any. In favor of Cathy Lee, those opposed if any. Excuse me, in favor of Benjamin Stein, those opposed if any. And in favor of Fritz Sutherland. Those opposed if any.
I declare the motions carried with respect to each individual nominee. Before that I terminate the formal portion of the meeting, I would like to ask if there's any further business to be brought before this meeting. As there is no further business, I declare the formal portion of this meeting terminated.
Now, I would like to
ask our Chairman and CEO, Jay Hennick, to address the shareholders. Jay.
I think that took 6 minutes, Peter. Next year, you can do it in 5. Welcome, everyone, to Collier's International's annual meeting of shareholders. I'd like to thank Peter again for doing a great job as Chairman of the meeting. He always does such a great job and brings some nice anti antique to the table.
And, we always appreciate your involvement, Peter. Thank you. I'm also pleased to be joined on the day as by our Global Chief Financial Officer, John Fredrickson, and our Chief Legal Counsel, Matt Hawkins. Today, we begin with an overview of 2018 and the tremendous growth we've achieved and continue to see as we enter 2019. In a few minutes, John will review our financial performance and then I'll return with some additional observations and thoughts about our future.
As you've heard in the past, Colliers is a company that is enterprising. We set ambitious plans. We attract and develop industry leaders, and we focus on accelerating the success of our clients our people and our shareholders. Colliers' people are passionate about what they do. They take personal responsibility, and they always strive to do what's right.
Our entrepreneurial culture is what sets us apart and that philosophy is reinforced by our leaders who own more than 40% of the equity in our company significantly more than any of we are perfectly aligned creating value about 20% compound annual returns over the past 24 years. That record of performance is truly extraordinary and speaks volumes about the Collier's way of capitalizing on opportunities and converting them into value The global market for our services exceeds $240,000,000,000 a year and yet the top 5 players only represent about 15% In late 2015, we established a 5 year plan to double When we announced the plan, many thought it ambitious. To achieve the goal, we had to grow our business internally by about 5% a year, on average over 5 years, and we had to add about 10% of the prior year's EBITDA in acquisitions. I'm pleased to say with hard work and a little bit of luck, we may even be able to exceed the target this year 1 year earlier than expected. No guarantees, but we hope we can.
We have already begun planning for the next 5 years plan that we're going to call our enterprise 2020, 2025 plan, although it's really still early days. Given our remarkable growth, I'm not sure we're going to be able to double the size of our company once again, but I can assure you that our plan, whatever it is, will be bold and ambitious because that's what we're all about at Colliers. Without a doubt, 2018 was a defining year for our company. Revenues were $2,800,000,000, up 16%. EBITDA was $311,000,000, up 28% and earnings per share came in at $4.09 a share up 29% over the prior year period.
We established a new investment management platform with the acquisition of Harrison Street Real Estate Capital, a pioneer in demographic based investing with a proven track record of delivering best in class Returns. By the end of last year, our new platform had in excess of $26,000,000,000 in assets under management, quite incredible. In addition to Harrison Street, we completed a record 11 acquisitions, including 5 in the Americas, 4 in Europe and 2 in Asia Pacific, strengthening our businesses in each of those regions. And just the market leader in Virginia with more than 340 real estate professionals. All of these additions solidified our place as the world's fastest growing global real estate services firm.
One of the keys to our success has been a focus on increasing recurring revenue streams while continuing to diversify both bring balance and stability to our business and provide us with a strong foundation to continue growing. Currently, about 75 percent of our earnings come from ongoing revenue streams and geographically about 60% of our revenues come We also know that technology enables professionals to deliver smarter, more specialized services to our clients by better enabling decision making, streamlining processes we're midway through a global initiative to augment our online presence, providing for greater access and functionality for our clients and for our people. Furthermore, our proprietary Colliers 360 for corporate users Callyers' office expert for occupiers and tenants, Call Your's insight for industrial users, and Colliers CRM, for our real estate professionals are just a few of the examples of We also believe that we especially those that might affect the way the first ever Collier's PropTech Accelerator in partnership with Techstars, a world leader in building accelerators, and then investing in early stage technology companies. Our partnership is part of our focus on targeted innovation to create solutions, to shape technologies, and to find opportunities at the intersection of real estate services and the technologies surrounding them.
Our inaugural class in 2018 represented solutions from the real estate value chain sourced from around the world. More than 150 mentors work closely with our 10 cohort companies, and the program culminated in final presentations to an audience of more than 600 Colliers clients professionals, real estate industry leaders, and of course, technology investors. In February, we formally launched the 2019 program as we continue to look for new insights and perhaps even industry disrupting technologies that will accelerate the success of our business and accelerate the success I'd like to share with you a short video Please take
Thank you to all 800 guests with its here at the Eagle Kerner Hall in Toronto. And thank you to the thousands that are joining us from abroad. We are live streaming areas across 60 nine countries. Around the world. Welcome all to the 1st callers, PropTech sellers powered by TaxTrust.
This is imminent. What we're about to share with you today is a culmination of a 13 week journey for 35 brave entrepreneurs that represent 10 companies and 7 countries around the world. Half of them have joined us from outside of North America. You're in for a truly amazing day.
Our group of mentors at the most senior levels of our organization, including our global CFO, our strategic investments team, and our regional CEOs have been consistently impressed with the enterprise and spirit, quick thinking and openness. From our change in our inaugural clouds.
But of course, the journey is just beginning. They are going to get plugged into a worldwide network and techstars is the worldwide network that helps entrepreneurs succeed. And our mission is to then help them along their journey, wherever they choose to go.
All of you
have been invited here as part of the callers or Techstars community, and we want you to have a chance to be able to sit down and get to know the founders themselves. Give a big round and applause for all of you entrepreneurs. It worked so hard. Thank you all for being with us. Here today.
Thank you to the 150 mentors that participated in this program. You are what may techs are so special. Thank you so much. Come on, guys. Let's give one big round of applause for the the founders.
Can't forget that.
It's an amazing group of entrepreneurs trying to define the future. So I'm going to bring it back to the hearing now. So thank you, Jay, and good afternoon, everyone. As highlighted by Jay and his opening address callers delivered yet another strong year of financial performance in 2018. Our 3rd full year as an independent public company reaching all time highs across a series of key financial metrics driven by strong contributions from our operations across our global platform.
During my address today, I'll review our 2018 operating results, cash flow from operations, capital allocation, financial position, and financial capacity. I'll then conclude with some perspective, on how your executive management team and inside shareholders see the road ahead. In 2018, Consolidated revenues increased to more than $2,800,000,000, an increase of 15% in local currencies. With 6% internal growth and the balance from acquisitions. Adjusted EBITDA for the year totaled $311,000,000, an increase of 27% with our adjusted EBITDA margin up 100 basis points to 11% and adjusted earnings per share of $4.09, up 29%.
Revenues from our Principal Service Groups were all up in 2018. Sales brokerage revenues totaled $781,000,000, up 7%. Leasing brokerage revenues totaled $904,000,000, up 17%. And outsourcing and advisory revenues came in at 1 $066,000,000, up 14% over the prior year. Our new Investment Management business established in 2018 with the acquisition of Harrison Street contributed $76,000,000 of revenues establishing our operating platform in this important area, one that will be more about contribution to adjusted EBITDA in the years to come.
Geographically, both revenues and adjusted EBITDA remained well balanced in 2018. Americas generated 59% of our revenues and 51% of our adjusted EBITDA. 22 percent of revenues and 27% of adjusted EBITDA came from Europe and Asia Pacific contributed 19 percent of revenues and 22 percent of adjusted EBITDA. Our global platform with this geographic and service line diversification continues to be an important part of our service line capabilities, as well as our growth strategy while mitigating our performance risk from a decline in market related activity.
Each of
our major regional operations delivered solid growth and revenues and EBITDA as measured in local currencies. In the Americas, revenues were $1,600,000,000, up 13%. Adjusted EBITDA came in at $142,000,000, up 14% with a margin of 8.9%. Our results in the Americas included a record performance by our market leading Canadian operation, led by David Bowden and Scott Addison, with revenues and adjusted EBITDA up 17% 16%, respectively, including organic revenue growth of 13 revenues of $623,000,000 increased another 17% over our record performance in 2017. Led by solid growth across the region, except in the U.
K, where Brexit related uncertainty limited our growth. But this was more than offset by a robust performance in Germany, Denmark, Spain and a recovery in our business in France. Adjusted EBITDA was $89,000,000, up 27% with our margin coming in at 14.2%. Turning back to our regional results for 2018 and our Asia Pacific region, revenues came in at $528,000,000, up 8% led by growth across all three excellent results in New Zealand and another solid performance in our market leading Australian operation. Adjusted EBITDA was $73,000,000, up 22%, reflecting strong operating leverage in Asia.
With our margin increasing to 13.9 percent, up 150 basis points versus 2017. I'd like to take since becoming an independent public company in 2015, led by an executive leadership team comprised of David Hand, Paul Baxter and Leo Wong, his Hong Kong based business that spans from China to Singapore and the Philippines to India. Including an important startup operation in Japan finished 2018 with $230,000,000 in revenues and $18,000,000 in adjusted EBITDA, all time highs, generating a compound annual growth since 2015 of 12% 36%, respectively, virtually all organic, demonstrating the operating leverage and scale advantage from efforts focused on recruiting top talent and delivering service excellence to Colliers, growing local, regional and global client base in the region. Callers generated strong cash flow and again in 2018 totaling $257,000,000, up 21% and another all time high for our company. We redeployed this cash flow by investing in acquisitions to expand our market coverage, service line debt and to establish our investment management platform, while continuing to invest in our infrastructure to support our professionals and their client service delivery.
We deployed a record level of capital related to the acquisition of our 75 percent interest in Harrison Street compared to $104,000,000 invested in 2017. The balance last year was invested in several key strategic acquisitions based on important metro markets such as Madrid, Copenhagen, Frankfurt, and Salt Lake City. Meanwhile, our capital expenditures came in at 36,000,000 down slightly from $39,000,000 in 20 17 and in line with our anticipated level of investment. To augment our strong cash flow in supporting our high level of investment in callers, in early 2018, we increased and extended our multi currency revolving credit facility to $1,000,000,000 provided from a syndicate, revised syndicate of 12 banks, for a period of 5 years. This was followed by an inaugural issuance Euro denominated senior unsecured notes placed privately with a group of significant institutional investors.
These notes were issued at an attractive fixed rate Our balance sheet at the end of 2018 remained strong with our net debt position of $545,000,000 and leverage ratio expressed as net debt to adjusted EBITDA at 1.6 times. Despite a year in which we far outpaced our level of investment compared to any year in the history of callers. With available liquidity of more than $600,000,000 we are well positioned to fund internal growth initiatives and acquisitions going forward Before looking ahead, I'd like to recap Collier's compound annual growth rate in 2 key operating metrics over the past 5 years. Revenue up 17% with the growth split evenly between internal growth and acquisitions and adjusted EBITDA up 24%. As most of you are aware, acquisitions are a key component of our growth strategy.
Our disciplined approach to strategically acquiring and effectively integrating these acquisitions into our operations are critical factors to being successful in this important area. While there's no one metric to measure success, we think the best one to use is return on invested capital. Since establishing Colliers is an independent public company in 2015, I'm pleased to report that we have generated a superior return on invested capital compared to our public company peers, averaging 15.4% over this 4 year period, a record we are very proud of. This is good context for our current enterprise 2020 plan that Jay has already referenced. Entering our 4th year since the spin off we are on pace and confident in our ability to achieve our targets, which are revenues of $3,400,000,000, adjusted EBITDA of $390,000,000.
And adjusted earnings per share of over $5. Clearly, we can't guarantee this outcome, but with global and regional executive teams having the highest level of inside ownership in our industry, we are highly aligned with our shareholders focused on successfully completing our plan and generating above average return for shareholders in the future With that, I'd like to pass things over to Jay. Jay?
Thank you, John. Of course, none of this success could be accomplished without a strong leadership team and a way Given our rapid growth over the last few years, we decided to appoint Dylan Taylor as the CEO of Colliers Real Estate Services. His promotion recognizes his dedication to our vision and his success in working so collaboratively with the rest of the team over the past decade. I will dedicate and continue to be responsible We also strengthened our Board of Directors with the appointment of Chris Galvin, who previously serves as the Chairman and co founder of Harrison Street. Before establishing himself in the Investment Management business, Chris served as the CEO of Motorola for several years.
Earlier today, when I spoke of our unique entrepreneurial culture at Colliers, I was reminded of the famous quote by the late great Peter Drucker who said culture eats strategy for breakfast. Culture is really hard to replicate, and it's one of our greatest competitive advantage. We perpetuate it by proactively engaging our employees, focusing on collecting and analyzing employee feedback, and then cascading that down through best practices across our great company. In 2018, we were recognized once again by AAON's best employer in Canada and Australia, and received the prestigious HR Asia award for Greater China. While we value these accolades, the importance is really the work behind them and the rigor that we place around achieving best in class people practices.
We're proud of our culture, a culture that empowers our people to do their best work and to maximize the power of property wherever our clients choose to do business. Finally, our brand, the Colliers International brand, continues to grow from strength to strength. It's critically important that when we go to market, we have a clear articulation who we are and why we're different. Last year, I shared with you that Becky Findlay joined us to help in the area of leadership around brand and people strategies. Together with her team, she has now conducted a thorough analysis of our brand practices globally, not an easy task, and has identified several opportunities to bring us to the next level.
Beginning next month, we'll be introducing several new elements to our brand strategy that will enhance our global presence even more. The Colliers business is stronger today than ever, particularly with the addition of our investment management platform which gives us another very Looking to 2019, I'm optimistic we will have another great year of success continuing our long record of that has now become one of the best in our industry. And people for their exceptional work over chapter in the history of Colliers International. Any questions that you have. There's microphones in the in the aisles, so please feel free to ask any questions.
That you have. We got 1. This is the first time in 3 years, sir. So we really do appreciate it. Hopefully, we sent you a $10 bill for this question.
Okay. You're speaking of Harrison Street as if we know what it is.
Just a little bit further explanation on what do
you mean by those two words?
Sure. So Harrison Street is a, an extremely well known investment management platform that has operations in the U. S. Across the U. S.
And a relatively new, I would say four or five year old business in Europe. They're focused on buying, we'll call them alternate assets. So this is health care assets, These are seniors, assets. These are student assets. Very specialized strategy.
And they've enjoyed great returns for shareholders for their LPs over a long period of time. And I think part of the key to their assess in addition to them being great allocators of capital around those real estate assets is that they stayed focused on those assets unlike many others who, decide to be in every different asset class. So Harrison Street is a very unique business model and, limited partners and other investors have been supportive of them for many years. Their returns have been, have been top quartile or better, depending upon the funds that they, they manage. So hopefully, that gives you a little bit of a background.
Another question. Well, Bill, you should have a good question. You've researched us for many years.
Chade. Yeah, basically, I'll give you a analytical type question. I look at your 3 businesses. You have Europe, Asia Pacific and North America. The profitability of Asia Pacific and Europe was consistently much higher than North America.
Is that due to a different mix or less structural progress in that North American market that doesn't allow you to earn as much as you do in
the rest of the world.
Or in other words, my question is, is it conceivable to the profitability of the Americas collaborized the possibility of it, Asia and Europe.
Well, I'd love to answer that, but John, do you want to answer that?
That's all opportunity, Bill. That's the way we look at it. And, it's, you know, it's primarily a function of the way we, build our business in the U. S. It's a legacy of many, many operations that have been put together over a period of time.
And we're taking some steps now to effectively become more productive, streamline our costs and increase our margins. And our senior team there has got, great incentive plan to do that over the next several years. There's no structural impediment. To why, our margin should be any lower over the long term in the Americas relative to Asia and Europe. And we're intent on, on getting them there.
So stay with us. Can't do it overnight, but, we're making progress.
You know, and I'd add a little bit. Just to give you some context, and many of you will remember this, we only acquired control of the U. S. Business in 2011. And since that time, our strategy was to consolidate the U.
S. Market and you need a lot of, scale in order to get the leverage that John's talking about. So the business today is a $1,000,000,000 business. And so if you think about a margin and the Canadian margins are very strong, so the U. S.
Margins are, are less than the Canadian margin. On a $1,000,000,000 business, if we're able to move that up by 200 or 300 basis points, which we think we can, especially now as we continue to build scale. It's a huge opportunity for the company. But it is something that takes time, and it takes focus and we're on it, but we see it as an opportunity. A real estate professional now asks a question.
I'll turn the callers and we're broker and also a shareholder. My question is great, great presentation, Jay. Looking back now, since the spin off, which was about going into the 4th year, knowing what you know now, there anything you would have tweaked or done differently? I mean, it's been a great success story, but I'm just curious if there's anything you're looking back, you might say, we might have done that a little differently.
Well, I've always been a great believer in not looking back because there's roads that you take that had you gone a different direction, it might have had a different result. So looking back, every step that we took along the way, I'm comfortable with today. Were there some that we could have executed better? Yes, Are there some mistakes that we made along the way? Yes.
But on balance, you can see the results are pretty spectacular. And I think when you when you look at it in total, the results speak for themselves. And, so going back and could we or should we, is not really in my Rubicon of, of, of, of thought processes. So I would say the answer is no. But there were a few there were a few opportunities we could have capitalized on and didn't.
Anyway, thank you very much, everyone, for attending. We'll be, we'll be around. And please feel free to ask. There's a lot of managers in the room, please feel free to ask any questions that you'd like.