Welcome to the First Quarter 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 Friday, April 26, 2019. And at this time, for opening remarks and introductions, I would like to turn the call over to the Chairman and Chief Executive Officer, Mr.
Jay Hennick. Please go ahead, sir.
Thank you, Rob. Operator, good morning, and thanks everyone for joining us I'm Jay Hennick, the Chairman and Chief Executive Officer. And with me today is John Fredericks and Chief Financial Officer. This conference call is being webcast and is available at the information at the Investor Relations section of our website at callers.com. A presentation slide deck is also available to accompany today's call.
Earlier today, Colliers reported solid results for the seasonally slow first quarter paving the way for another strong year of growth. We're confident in our outlook for 2019 and pleased with the impact Harrison Street Real Estate Capital is having on the growth and the diversification of our business. Revenues were US635,000,000 up 19% in local currency. EBITDA was $44,000,000, up 22% and adjusted earnings per share came in $5.1 a share, up 13% over the prior year. John will have more to say about our results in just a few minutes.
As
you
to establishing a new real estate investment management segment, we completed a record 11 acquisitions, including 5 in the Americas, 4 in Europe and 2 in Asia Pacific. In total, we added about $90,000,000 in annualized EBITDA last year alone. Without diluting shareholders at all. That momentum has continued so far this year. To date, we have completed another 3 acquisitions, including the market leader in Virginia, with 340 real estate professionals as well as our former affiliate and top player in the vibrant growth market of Charlotte, North Carolina.
And yesterday, we announced the acquisition of Colliers Sweden, adding another company owned operations in the operation in the Nordics further strengthens our European platform and builds on our market leadership in Denmark and Finland Although our former affiliate has been in Sweden for many years, it did not have the resources to realize the potential We see excellent opportunity Finally, just after the quarter end, we extended our $1,000,000,000 revolving credit facility to 2024, and established a new structured accounts receivable facility, giving us much more flexibility to our capital structure and reducing our overall borrowing costs. John will have more to say about this as well in just a few minutes. With a strong balance sheet, disciplined growth strategy, proven record of performance with greater recurring revenue and diversified as in the massive global real estate market in 2019 and beyond. Now let me turn things over to John for his review, and then we can open things up for questions. John?
Thank you, Jake. As announced in our press release earlier this morning and by Jane's opening remarks, Colliers International Group reported strong consolidated financial results for our first and geographic diversification. I will address our overall consolidated financial results for the quarter. Our operating results by reporting region overall capital usage and financial position, and concluding with our outlook for 2019. For our first quarter of fiscal 2019, consolidated revenues increased to $635,000,000, up 19% in local currencies from 5.5 $3,000,000 in first quarter of 2018, with 8% of our growth generated internally and the balance from acquisitions.
Adjusted EBITDA for the quarter totaled $43,600,000, up from $36,100,000 in Q1 last year, an increase of 22% in local currencies, with our margin of 6.9 percent, up from 6.5 percent last year. And adjusted earnings per share came in at $0.51 compared to 40 $5 per share last year, up 13% in our U. S. Dollar reporting currency, with a $0.01 unfavorable impact of FX on adjusted earnings per share in the quarter. Our adjustments to GAAP EPS and arriving at adjusted EPS are outlined in our press release issued this morning and our composed primarily of non cash charges that we view is largely unrelated to our operating results and are consistent with those presented in store we.
Turning to our operating results, I will now provide a review by major service line and by region with all percentage in revenues based on local currencies. $2,000,000 in sales brokerage, up 10%, while lease brokerage came in at $182,000,000, up 11% over Q1 of twenty 18. Meanwhile, revenues from Outsourcing and Advisory services totaled $258,000,000, up 13% led by property management and with solid contributions from our property management or I should say our project management and valuation and consulting revenues generated by our Outsourcing and Advisory Services segment represented 41% of our overall revenues in the quarter compared to 43% in Q1 2018. Geographically, 56% of our revenues and 55% of our adjusted EBITDA was generated in Americas in our first quarter. Europe generated 19% of consolidated revenues, while Asia Pacific generated 18% and 23% of revenue and adjusted EBITDA, respectively.
Our investment management operations, including Harrison Street, generated 7% of our revenues and 22% of of our adjusted EBITDA in the quarter. Turning to Regions and our 1st quarter America revenues, totaled $359,000,000, up 11% with 4% internal growth and 7% from acquisitions. Lease brokerage revenues were 17% versus last year, sales brokerage revenue is down 1% with mid single digit percentage growth in the U. S. Offset by a decline in Canada, subsequent to a very strong finish for 2018.
And Outsourcing and Advisory revenues were up 13% led by strong growth in U. S. Property management and project management in Canada. Adjusted EBITDA came in at $26,200,000, roughly flat with last year and a margin of 7.3% versus 8.1%. Negatively impacted by investment in producer recruitment and revenue mix.
Turning to EMEA, revenues of $121,000,000 in the quarter increased 15% with internal growth of 13% and 2% from acquisitions relative to Q1 of last year. Sales brokerage revenue was up 52% over last year, with lease revenue experiencing a slight decline of 1% Meanwhile, revenues from Outsourcing and Advisory services increased 9% led by a recovery in our Workplace Solutions business France. Adjusted EBITDA was a loss of $2,500,000 relative to a breakeven performance in Q1 of 2018, impacted by incremental planned investment and revenue producers to drive new service line growth, which we expect to see later in the year. In our Asia Pacific business, revenues came in at $112,000,000, up 11% in local currencies with 9% of the growth generated internally. Sales brokerage revenue increased 14%, more than offsetting a decline of 8% in lease brokerage revenue, mainly due to timing factors in our Asia business.
Outsourcing and Advisory revenues increased 18% with strong growth across project management, property management, and consulting and appraisal services. Adjusted EBITDA was 10,900,000 down slightly from $11,200,000 last year with a margin at 9.7% versus 10.4%, primarily due to revenue mix favoring a greater proportion of lower margin recurring services revenues. And finally, in our investment management operations, primarily due to the Harrison Street acquisition completed in the middle of 2018, revenues totaled $43,000,000 compared to just under 3,000,000 in Q1 of last year. Note that our Q1 twenty nineteen revenues included $11,000,000 of carried interest pass through revenues attributable to pre acquisition assets under management and which accrue to employees former shareholders. Adjusted EBITDA came in at $10,200,000, while our margin, excluding the carried interest revenue that I just mentioned, which has no economic effect on callers, came in at 32.1%.
Below our expectation, primarily due to timing related to fund raising and capital deployment. Both the capital raising and deployment pipelines remain robust and we expect to see the positive benefits of these realizations over the coming quarters. Moving to our capital deployment and balance sheet. Our first quarter 2019, capital expenditures totaled $10,400,000, up from $6,200,000 last year, with the increase largely due to timing of spend deferred from 2018, as noted in our Q4 2018 conference call. Our forecasted range of CapEx spends for 2019 is in the $42,000,000 to $45,000,000 range, consistent with the range previously indicated.
We invested $20,000,000 in acquisition activities during the quarter, down from $88,000,000 in Q1 of last year, but with a solid pipeline of strategic opportunities aligned to our enterprise 2020 growth plan. Our net debt position stood at $686,000,000 at the end of the quarter, compared to $545,000,000 at year end, which is typically the seasonal low point in terms of our debt level. And compared to $325,000,000 at the end of Q1 last year. Our leverage ratio expressed net debt to adjusted EBITDA set it two times versus 1.6 at year end and 1.3 at the end of Q1 2018, reflective of the robust acquisition related investment during the past year, currently at a level well within the leverage we are comfortable with. As already mentioned by Jay, after the end of the quarter, we extended our committed availability under our revolver to, under our $1,000,000,000 revolver to 2024 and secured a $125,000,000 structured accounts receivable facility, which further diversifies our sources of financing and reduces borrowing costs.
Looking across our global operations, our pipelines in most markets continue to reflect solid commercial real estate activity, with market conditions that include favorable economic growth, across most markets, stable interest rates, accessible debt financing, general stability of the supply and demand for commercial real estate and continued interest in commercial real estate assets by investors, particularly institutional players. Key drivers supporting steady activity in sales, leasing and other commercial real estate services for the balance of 20.19 remain intact And therefore, our outlook for the year presented during our 2018 year end conference call remains unchanged as outlined on Slide 12 of the presentation accompanying our call today. That concludes our prepared remarks. And I would
Your first question comes from the line of George Doumet of Scotiabank. Please go ahead. Your line is open.
Sure. I'd like to
focus a little bit on the EBITDA margins in the Americas. I think they were down 80 basis points year over year. You guys called out some recruiting activity there. Just wondering how much of that is was investment for, I guess, for future scale and how much of that is really guess the reality of a more competitive labor market out there?
I'd say it's generally all related to increased capabilities and recruiting to build our business, and fill gaps, which we've identified at certain
Okay. That's helpful. And on the plan to grow, the margins in that segment by 100 to 200 basis points over the next 2 to 3 years, I guess, how long should we think about investments like what would you just refer to? And when would you expect to see the positive contributions to margins? Maybe any color you can provide there on cadence
George, I mean, it's John here. You know, I hesitate to give quarterly. You know, we're not giving quarterly guidance quarterly outlooks and it's hard to measure quarter by quarter. But you know, the $100.20 basis points that you referenced is is our expectation for this year for the business as a whole. But if you're talking about, the regional margin contribution, which we've talked about in the past, certainly that's something that is doable over the next 2 to 3 years and something that is focused principally in the U.
S. Business. We've talked about this before, and we're focused on that. So don't really want to give you timing on that, but believe we're on it and, I think we'll see progressive increases in margin there over the next 2 to 3 years. Okay.
And just one last one if I may on, I think you referred to this earlier on, but on the AUM growth It's just it's a tough only 1% sequentially. So maybe some thoughts on the expectations for that to kind of improve and maybe an update that you can provide on how the fundraising activities are going?
It's Jay here. I think they're they've already improved. That's a nice sequential bump. And, it's very seasonal in terms of fundraising. So it's probably a more appropriate question to ask at the end of quarter 2 or quarter 3 because that's when That's when the flow, the traditional flow of fundraising happens.
There's a lot of work done in, in the first quarter to generate that kind of that kind of growth. So, I think it's probably a better question for, for next quarter. But, you know, if my mic, George, I'd like to add a little bit, to, to put things into context in the US. We see, as we've talked about historically, we see a nice opportunity for us to move our margins in the U. S.
Business, up by 200 or 300 basis points over the next, let's call it 2 to 3 years. And the reason for that is the U. S. Business for Colliers is something that's relatively new. We've acquired it in 2011 2012, we acquired the control of the U.
S. Business in that, in that timeframe. And since that time, we have made significant acquisitions building the business from something like and I won't have the number, perhaps, John does, but something like $200,000,000 to $300,000,000 in the U. S. To something that with a little luck on just on the brokerage side will exceed a $1,000,000,000 in revenue.
That means that there have been a lot of additions That means that there is a lot of integrations. This is rebranding in the case of new businesses to call years like things like Virginia, which we just did. All of those, we see as huge opportunity for us the margin is there. We just need to capitalize on it. We need to integrate back offices.
We need to streamline our opportunities as we're doing in virtually every other market around the world. If you take a look at the margin performance in places like, Europe, Asia, Australia, even Canada, which I know is not totally broken out. They are all at margins that are in the 300 basis points, increase. So We see the U. S.
Is a huge opportunity for us, but I wanted to provide further color to, previous question you had.
Your next question comes from the line of Stephen Sheldon of William Blair. Please go ahead. Your line is open.
Good morning. First, can you talk about the trends you're seeing now in the Nordics and maybe how the acquisition in Sweden could help you strategically in the region? Are there a lot of companies that operate in all three countries, Sweden, Denmark and Finland, where maybe this opens the door more for you to be the main CRE vendor for these companies relative to before. Just I guess any color on trends in the Nordics and your competitive positioning now? Yes.
The Nordics is a very interesting part of the world, and I think overlooked by many. If you look, if you look at the population, we now, our company owned in Denmark and Finland and now Sweden. Denmark is by hands down the market leader in an area, which is in a country that has something like 6,000,000 people and 4 of the 6,000,000 people are in the 2 primary markets in that, in that in that market. Same thing in Finland. Sweden is a little bigger than the other 2 from a population standpoint.
Again, consolidate a lot of people living in, in the 2, maybe you'd argue 3 major markets in Sweden, but our affiliate there unlike, Denmark, which we had a very strong position, and then we augmented it, last year. In the case of our affiliate in Sweden, they really have a probably number 6 or 7 position in the marketplace. And those that are And so we see an opportunity for us to take our global brand, put some resources and Moxy behind it in the same way as we've done in Japan as an example. And this isn't, this isn't something that's going to happen miraculous next year. But over the course of the next couple of years, we see a huge opportunity to triple or quadruple the size of the business whether internally or through tuck under acquisitions, giving us the market leader in Sweden.
And together, with our Nordic, practice, we would be number 1 or number 2 in terms of revenue generated. The only other market in the Nordics that is an affiliate is a very strong operation in Norway. And, we have a phenomenal relationship with the principle of that business. And so we see it as an opportunity for us to, to build a very significant and profitable business in that region, which of course is already part of Europe and an important part of our European platform, which has enjoyed some great success over the past couple of years. I probably went on a little bit too long in that answer.
But hopefully, that gives you sort of a flavor of how, our team is thinking about growth in the Nordic.
No, that's great. Appreciate the color. Very helpful. I guess the second is kind of a follow-up in going into the investment management business. I mean, can you just talk some more about the margin performance there?
You called out fundraising and I think some other maybe areas of So any additional color there on those investments, the cadence of those investments? I mean, do you typically kind of see the fundraising happen in 1Q without any revenue contribution and then you see the flow through in 2Q and 3Q. And then I guess just just a broadly, the outlook for margins in Investment Management over the remainder of the year?
Steve, this is John. I mean, there were some costs in the in Q1, which related to building the business adding people, fundraising, some minor amounts related to some compensation stuff that got settled, related to past performance, which was trued up in Q1, normal kind of stuff. So that's, that, that, that's a factor And, so that was relevant for Q1. Obviously, we're going to continue to bear, most of those costs, not all, as we continue to build the business in future quarters, but we'll get the benefit of, fundraising and closing of, current initiatives and funds, which will then result in revenue recognition related to management fees, some of which we'll go back into, periods that were, when the fundraising or when the funds were established when they were originally marketed. So you'll get a bit of a pickup from, certain activities related to that, as well as deployment other funds, which will then attract management fees.
So bottom line is, as we grow this business, there's a very, very significant and solid base of ongoing revenue. It's going to be generated through the management fees, along with, some activity related variance. So, all very positive. Just to go back to your final point around margin expectations, I think we've indicated that those to be in the high 30s to low 40s, I think, in the 40% range is a good number. And that's we're focused on with the Harrison Street business.
And for those numbers for the 40% are you sustained for 2019 or just eventually more of a medium term?
Yes, for 2019.
Okay, great. Thank you.
Your next question comes from the line of Steven McLeod of BMO Capital Markets. Please go ahead. Your line is open.
Good morning, Steve. Good morning, guys. Sorry about that. I just wanted to follow-up on the last a set of questions around the Harrison margins. Do you still see sort of a path to expand margins into the kind of 42%, 45% range over time?
For sure. I mean, we're focused on that. We will continue to have to invest and some of that is going to be a little bit of catch up, Lee as this building, as this company continues to build out and, we tend to, and we see continuing improvement in productivity, and realization on some of the investments made around people and capabilities to continue building. That is absolutely where we would expect the margins to be. So we've talked about 40 from the beginning and then incremental over time as we build scale in this operation, including activities, which we're now building in Europe.
We should be in that range.
Okay.
I would add a little bit to that. That is, to me, that same store that same store growth for Harrison Street. I think, I think, moving the margins up, 100 to 200, maybe 300 basis points is going to happen naturally. But one of the things we're looking at from a growth standpoint is, ways in which we can more rapidly scale our business in different geographic regions, for example, in, in, in Europe. If we're able to do that, we're going to go back probably in margin in order to accomplish that growth.
That's just the reality of this business. And, but, but that creates further scale and opportunity in a different market and on balance will move the margins back up. But every time you enter a new market, it's very costly. And, you either run a business, which is we're making some educated bets on growing into a new market, doing some extra hiring, maybe doing a modest acquisition to help accelerate the growth, all of those things, will negatively impact, I believe, the margins in the near term not in a material way, but, it won't take us up to the 40two-forty 3. And this is just sort of me giving you more color around the growth prospects for Harrison Street vis a vis operating it on a same store sales kind of basis.
So With that caveat in mind, yes, we can move it to 43, but, we are aggressively looking at growing that business. It's a tremendous platform, an exceptional management team. And I think most importantly, they've been very successful over a lot of years being very focused. So they're not all things to all people. They think only, seniors and students and medical and infrastructure.
And if somebody calls them with a great office building or an industrial building, or something for sale at $0.50 on the dollar, their answer couldn't be a faster no because they consider themselves to be expert in their business and, have unique competitive advantages that help them get a better yield on their assets. So again, further color. And I'd like to give that color to you because it is new days for this new segment of our business. And it's important that that, that you understand a little bit about what's motivating us to, move this thing forward and a little bit of the excitement we have on.
Yes. Okay, that's great. That's really good color. Thank you. When you talk about, just follow-up, when you talk about aggressively looking to get scale in different markets, would that be via acquisition or is that via investment that would push the margins back
or potentially both?
It's probably both. We're probably open to, like, we have been aggressively hiring in Europe. As you know, Harrison Street has a European platform it's relatively small. It manages a lot of money, but it's relatively small. We believe that we want to take it to another level.
We have to ramp up the size of the business. And so there's 2 ways to do that. 1 is to do a massive hire. And one is to do a tuck in acquisition. I think we're looking at both options.
Jay. I just wanted to follow-up on one other thing, which the numbers certainly don't bear it. But when you look at the EMEA regions, very strong organic growth of 13 percent. I would have maybe expected that to be a little bit weaker just given the Brexit impact. But could you talk a little bit about what you saw in the UK market related to Brexit?
And I guess, perhaps was any potential weakness offset by strength in other parts of the EMEA region?
Yes, that's, I mean, you know, I think the UK fared reasonably well for what is typically a relatively slow quarter. It it was decent. I think the rest of, the rest of Europe, we saw some pretty good results. Germany was was strong. Denmark and shake on a reference before, the nerd discussion was strong.
We had a positive turn of events in France, which we hope we can sustain, around the Workplace Solutions business. So lots of good things happening. I mean, there's still a level of uncertainty. And, I think that the UK, particularly, certainly around, primary to capital markets. There's going to be, I think a period of probably somewhat more muted activity than what otherwise be generated just because until there's more clarity around Brexit, it's, it's going to hold things back.
But at the same time, if you take a longer term perspective,
they're going to,
they're going to figure this out And for those that have a long term perspective on the UK, which would include us, we're looking for opportunities and taking advantage of some uncertainty you've seen it already. And we've spoken about, you know, our incremental producers that we have, attracted because we do have a long term view. And I think that others don't necessarily. They're asked to have a different perspective on the impact of Brexit on their own business. And what might happen.
So that's the way we see it. Okay.
Because market data indicated this quarter, capital markets were down 12% in the first quarter. We were up 10%. In market data indicated leasing volumes were down 8%. We were up 8%. So we're quite bullish on our internal growth across the board.
And that includes, that includes Europe in a big way. As you can see with, with very strong, very strong growth across the board. So, I thought those, those metrics were very interesting and it's clear that we're picking up lots of market share in a lot of places
Yes. Okay. That's very good. Thank you.
Your next question comes from the line of Matt Logan of RBC Capital Markets. Please go ahead. Your line is open.
Thank you, and good morning. In terms of your market share, could you talk a little bit about your investment in U. S. Secondary markets over the last 2 years and how you see your competitive positioning relative to your peers?
Yes, I can. Again, I sort of alluded to this earlier, the buildup of our U. S. Business, which is now more than a $1,000,000,000 took place basically by buying market leaders in different geographic regions, some of them affiliates, some of them non affiliates, some were strong market leaders, like the actual number 1 or 2 market leader in a region, some like, some markets like we, like we've recently acquired, in Pittsburgh and potentially Cincinnati, and even St. Louis, were markets that were owned by an affiliate.
We're underperforming the market. We use the opportunity to buy them back with a view of strengthening the business over time. And so we're seeing that in some of the internal growth And, but we're, it's still a work in process to be frank. You know, I can give you a list of some markets where we're the absolute leader. I can give you some list of the markets where we're top 2 or 3.
And I can give you a list of some that we are well down the list, but at least we're in the game and have an opportunity to to, ramp up the Colliers brand. So there's not a clear answer. Really right now, but I would say on balance, our service fee revenue in the U. S. At $1,000,000,000 puts us number 4 on an aggregate basis, and maybe number 3, if you factor out janitorial revenues, from some of our peers.
And we see, we see nice growth happening, and we don't own all the regions still. There's still affiliates out there that total probably $300,000,000 or $400,000,000 in revenue that, that we could acquire over time. So the U S is still a work in process. It's they're doing well. But there is 300 basis points in margin that is opportunity for us and we're keenly focused on that.
Yes, it's John. Just let me add right, to what Jay was saying. Just comment generally, and you probably know that and people that are, you know, observers of the U. S. Market probably know this, but the secondary markets, you know, are significant, in the U.
S. Ticketer, significant size. And, as the U. S. Economy, as we saw this morning, with the growth that was published, economic growth is pretty significant.
And, I think that the opportunities in the secondary markets, are probably better than they have been through this entire business cycle. We know that, investors in real estate and companies, in secondary markets, a key factor in their decision to transact or do business in those markets is the health and U. S. Economy. And I think we've seen that.
It continues to be, relatively constructive in terms of supporting our activities and being well positioned in those secondary markets is a good place to be.
And more movement of corporations than ever before to different secondary markets. You're seeing markets that are specializing in health care. You're seeing different markets that are specializing in tech whereas before, it was very concentrated in certain markets. Now secondary markets with that are great places to live, become a magnet for corporations that want to either reestablish their head office there or establish a very significant portion of their business, making, as John says, all the secondary markets very, very interest
That's great color. And with, I guess, continued population growth in the U. S. Sunbelt, would you see the risk reward trade off as more favorable in secondary markets?
Well, I think traditionally the Sunbelt has been secondary markets that are becoming major markets. Just think of South Florida, I think starts at Miami and doesn't end until Jacksonville. That's so, that's Florida now. And that market is massive. And, there's no land available for construction.
There's corporations moving in there. And I'm pleased to say that Colliers is number 2 right now in Florida in every category. And 5 years ago, I wouldn't be able to say that.
That's pretty impressive. Maybe just changing gears slightly. With your outsourcing and advisory business performing well and lower interest rates globally, do you see any potential for organic growth to surpass your low single digit expectations this year?
No, I think I think we're good based on our visibility of what we see now. I would keep it there. I mean, you know, look, if circumstances change or we gain greater visibility, which is likely to happen as we progress here during the year, We would change that view, but I think for now, we're good at where we are.
Well, I appreciate the color guys. That's all for me. Thank you very much.
Thank you.
Your next question comes from the line of Mitch Germain of JMP Securities. Please go ahead. Your line is open.
Good morning. Jay, I know that, Harris, thank you. I know Harris is pretty sizable alternative like student housing, other sectors like that. Any idea or any plans to grow into more traditional sectors like office where there may be a greater cross sell opportunity?
You know, we're very opportunistic as you know, Mitch. We've looked at a lot. There's a there's a couple out there that we have been dating for several years, we'll see if some come to fruition. But you know, I think it's safe to say, that we, we have a bit of a debate internally time to time. What is the best, what is in the best interest of our investment management platform?
Where do investors want to allocate their company in the years ahead. And if that, if we keep our eye on that, it's closer to alternative investments, more complicated, types of investments. Yes, there is fewer cross sell opportunities that our, some of our peers have the benefit of, of enjoying. But, strategically, is that the right approach or is the right approach to just buy the same old, for the benefit of leveraging the, potentially, potentially leveraging, additional real estate services. I think in 5 years, we probably have both.
But right now, I think we're leaning towards focusing on best strategy for the division.
Got you. And just one for, for John the clean number on investment management that would or the clean revenue number would be to remove the $11,000,000 of carried in right? Is that kind of the way that
we should be thinking about?
Yes. That's kind of just it's in revenue and it's in cost of sales. It's it's nothing in terms of EBITDA, but it does gross up the revenue. So, yeah, that would be the way to adjust and just take out.
So it's in both items. I got you. Okay, great. Yes. Excellent.
Thank you.
Your next question comes from the line of Frederic Bastien of Raymond James. Please go ahead. Your line is open.
You mentioned that you had lots of opportunities still to acquire affiliates in the U. S. Wondering what the situation is outside the U. S? Are there still a lot of affiliates that you don't currently own that you would like to get your hands on?
A fewer, fewer, Fred, because we we really believe that we own the key markets that we need to own and several of the, other I don't know the exact number today. I didn't do the recalculation. I would say we own 47 of the most important countries around the world. And there are several that Greece, Turkey places like that that are affiliates. They pay us a nice affiliate fee.
But I'm not sure we're running to buy those. But in the U. S, there are, there are some interesting potential opportunities which we have, of course, the right first refusal on at any time. And so those are, obviously, of keen interest Sweden was interesting because it helped to fill out the Nordics. Obviously, Norway would be a the final, the final piece of that equation, we love what we're what we've got building in the Nordics.
But we also have an exceptional affiliate in Norway that's doing a terrific job. And is essentially integrated in our business. So we're happy to have him as an affiliate. We'd be a touch happier if he was a company owned operation. I'm probably happiest if he was our partner going forward because he's so exceptional at what he does.
But But we'll have to we'll just have to see how that rolls out.
Okay, great. And then initially, you compared the Sweden affiliate to the Tokyo 1. Can you give us an update on how the Tokyo business is going? Sorry, not to talk about the Japanese business is going? I know you acquired it 2, 3 years ago.
Yeah, it was really last year. I mean, it was, you know, we kind of settled things out in late 2017, but it wasn't until last year that we really were able to establish basically a Greenfield operation with, some people experienced people who wanted to continue to, to operate underneath the caller's brand name. So we built it up to, thirty people, which, is pretty significant, in in the space of a year. There's plans to continue adding through this year to that team. It is focused today on Tokyo, and I think that opportunities are down the road.
There will be other major cities in Japan. Obviously, it's one of the biggest economies in the world and we have a business there that generating very positive EBITDA, pretty significant relative to where we were at the beginning, which was breakeven situation out of the gate in late 2017. So there's tremendous opportunity. And this is interesting. The Sweden situation, there are some parallels.
And, both businesses had been in the market for a long time had not grown significantly. Japan was a little trickier, the way we had to do that. But ultimately, we're successful and there's going to be big upside there. Obviously, suite in a smaller market, but twice the size of that market in terms of population, GDP growth and so forth. So you can think, about what the potential is there.
Big upside.
And one step at a time, right?
Yes.
All right, thanks.
There are no further questions in the queue. I'll turn the call back over to the presenters for final remarks.
Okay. Thank you everyone for participating. I hope we gave you a little bit more color this quarter. Than we have historically. And I would just underline the fact that this is a seasonally slow quarter.
And so, based on the growth we're enjoying, we're feeling very confident that the balance of the year will be solid. Thanks for joining us and looking forward to the next time we speak.
Ladies and gentlemen, this concludes the quarterly investors conference call. Thank you for your participation and have a nice