Welcome to the First Quarter Year End Investors Conference Call. Today's call is being recorded. Legal Counsel requires us to advise that this is 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 U.
S. Securities And Exchange Commission. As a reminder, today's call is being recorded today is Tuesday, May 1, 2018. 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, operator, and good morning, everyone, and thanks for joining us for today's first quarter conference call. As the operator mentioned, I'm Jay Hennon, Chairman, Chief Executive Officer. And with me today is John Fredericks and our Chief Financial Officer. This conference call is being webcast and is available on our Investor Relations section of our website. And a presentation slide deck is also available to accompany the call.
Earlier today, Colliers reported very strong first quarter results with balanced revenue growth, both internally and from acquisitions. Revenues were $552,000,000, up 18% EBITDA was $36,000,000, up 16% and earnings per share came in at $0.45, up 25% over the prior year. Revenue pipelines continue to indicate sustained activity across all of our service lines. With generally stable to positive market conditions in most of our major markets around the world. John will have more to say about these and our other financial results in just a few minutes.
With our operating momentum today to total of 5 acquisitions completed already this year and the growth opportunities we continue to see, we have every reason to expect 2018 to be another ended our revolving credit facility to $1,000,000,000, improving our pricing and extending the term until 20 23, providing us with additional capacity to grow our business. As you know, our current 5 year growth plan is to double the size of our company by the year 2020. We're now in the 3rd year of our plan, and I'm pleased to say that we're on track. If our plan is successful as it has been in the past, We expect this to translate into significant incremental value team and directors holding calliers, more than any of our peers by a country mile, we have every incentive to create value for our shareholders for many years to come. Now let me turn things over to John for his review of the financial results.
Then we'll open things up to questions. John?
Thank you, Jay. As announced in our press release earlier this morning, and Jay his opening remarks, Colliers International reported strong consolidated financial results for our first quarter with solid contributions from most of our across our global platform, highlighting the benefits of our service line and geographic diversification. I will address our overall consolidated financial results for the quarter, our operating results by reporting region, as well as our capital usage and financial position. Please note that both our first quarter 2018 compared to first quarter 2017 results reflect the adoption of the new revenue recognition standards U. S.
GAAP. For our first quarter of fiscal 2018, consolidated revenues increased to $552,000,000, up 14% in local currencies, from $466,000,000 in the first quarter of 2017 with 6% of our growth generated internally and the balance from acquisitions. Total revenue growth for the quarter in our US dollar reporting currency was 18%. Adjusted EBITDA for the quarter totaled 36,100,000 up from $31,300,000 in Q1 of last year, an increase of 14% in local currency and 16% in US dollars. With our margin coming in at 6.5% comparable to 6.7% reported last year.
And adjusted earnings per share came in at $0.45 compared to $0.36 per share reported for the first quarter of last year, of 25% in U. S. Dollars, with a $0.01 favorable impact from 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 are composed primarily of noncash charges that we view is largely unrelated to our operating results and are consistent with those presented historically. Turning to our operating results, I will now provide a review by major service line and by region, with all percentage changes in revenues based on local currencies.
Our $552,000,000 in revenues for the quarter was comprised of $143,000,000 in sales brokerage, up 13% while lease brokerage came in at $168,000,000, up 12% over Q1 of 2017. Meanwhile, revenues from Outsourcing and Advisory Services totaled $242,000,000, up 15%, distributed relatively evenly across project management, property management, and valuation and consulting services. Revenues generated by our Outsourcing And Advisory Services segment represented 44% for our overall revenues in the quarter, up slightly from 43% in Q1 of last year. Geographically, 59% of our revenues and 71 percent of our adjusted EBITDA was generated in the Americas in our first quarter with strong contributions to revenue and adjusted EBITDA from our Americas operation relative to EMEA at the start of the year compared to Q1 of 2017. In our first quarter, revenues in the Americas totaled $329,000,000, up 15% with 7% internal revenue growth and 8% from acquisitions.
Lease brokerage revenues were up 14% versus last year with sales brokerage revenues up 15% led by mid teens percentage growth in Canada and mid single percentage growth in the U. S. And outsourcing and advisory revenues were up 14% led by strong growth in Canadian valuations as well as property management and project management in both Canada and the US. Adjusted EBITDA came in at $26,500,000, up 18% versus $22,400,000 last year, and a margin of 8.1% versus 7.9% last year. Turning to EMEA, Revenues of $116,000,000 in the quarter increased 11% with an internal decline of 2% offset by 13% growth from acquisitions relative to Q1 of last year.
Reporting revenue growth in our U. S. Dollar reporting currency was 27%, based on the appreciation of both the euro and town currencies. Both lease brokerage and sales brokerage revenues were up 1% over strong comparative quarter last year, we saw a rebound in activity, particularly in the UK, arising from the temporary Brexit related slowdown in the latter part of 2016. Meanwhile, revenues from Outsourcing And Advisory Services increased 20% led by revenues generated from our finished acquisition completed in January, accompanied by strong increases in valuations and project management revenues in the UK and Netherlands.
Adjusted EBITDA increased to a loss of 400,000 of a positive $3,700,000 in Q1 2017, impacted by planned investment and professional staff to drive new service line growth, as well as revenue mix. Despite the lower revenue growth and adjusted EBITDA performance to start the year, our pipeline of transact as your revenue remains strong, and we expect solid growth in revenue and EBITDA for the balance of
the year.
And finally, in our Asia Pacific region, revenues came in at $108,000,000, up 14% in local currencies and 18% in U. S. Dollar terms. 12% growth in local currencies revenue generated internally and the balance of growth across with balanced growth across service lines including robust growth in sales brokerage revenues, primarily in Hong Kong and China, and lease brokerage revenues across the entire region. Growth in Outsourcing and Advisory revenues were led by project management revenues, increases across the region, including the favorable impact to small acquisitions, made in Australian late 2017 and in China earlier this year.
Adjusted EBITDA was $11,200,000, up sharply from 6 $900,000 last year with our margin at 10.4% versus 7.6% as we benefited from greater scale and operating leverage. Moving to our capital $200,000, largely in line with the $6,700,000 last year. Our estimated range of CapEx spend for 2018 is 40,000,000 to 42,000,000. We invested 88,000,000 in acquisition activities during the quarter, up significantly from 56,000,000 in Q1 of last year. Turning to our balance sheet, our net debt position stood at $325,000,000 at the end of the quarter, compared to $141,000,000 at year end, which is typically the seasonal low point in terms of our debt level and $307,000,000 at the end of Q1 last year.
Our leverage ratio expressed as net debt to adjusted EBITDA stood at 1.3 times versus 1.4 times at the end of Q1, twenty seen despite the robust acquisition related investment at the start of the year. As already mentioned by Jay, after the end of the quarter, we increased our committed availability under our revolver to $1,000,000,000 and extended our maturity to 2023. While improving pricing and providing greater flexibility to achieve our targets under our enterprise 2021. Looking across our global operations, our pipelines in most markets continue to reflect solid commercial real estate activity comparing, comparing favorably to levels at this time last year. We continue to believe that modestly rising, but still low interest rates Successible debt financing and general stability and supply demand in commercial real estate in most markets remains supportive of steady activity sales, leasing and other commercial real estate related services for the balance of 20.18.
And therefore, our outlook for the year remains largely unchanged, adjusted only for the impact of acquisitions completed to date. That concludes our prepared remarks. And I would now like to ask our operator to open the call to questions.
Your first question comes from the line of Stephen Sheldon of William Blair. Your line is open.
Hey, good morning. Thanks for taking my questions. I guess 1st year, can you talk some about expectations in EMEA over the remainder of the year you saw a modest decline in the first quarter, but it also sounds like there were some timing issues. So can you provide some more detail on those issues And does the push out of some activity in the solid pipeline with that could EMEA be an above average grower, I guess, over the remainder of the year?
Yeah. I mean, couple of things impacting EMEA, you know, in terms of, overall growth and performance, a little bit lower level of transaction related revenues, but as I indicated in my prepared comments, pipelines are strong across most markets, particularly in the major markets in Europe. So we expect to see a reversal certainly going into, into the next quarter. Beyond that, every indication is that's, you know, stable to up supportive of growth in that region. We also continue to invest in Europe in particular around, additional professional staff, which came on onboard late last year and early this year and has impacted our costs.
And we expect revenue related to, to that investment to start occurring in the back half of the year. So overall, we feel very good about where Europe is notwithstanding a little bit of a slower start of the year.
Okay, very helpful. And then wanted to ask about growth within your multinational client base and maybe how conversations they're going. Are those conversations getting progressively easier as you continue to scale your business and could growth there become, I guess, an even more important overall growth driver over the next few years?
Absolutely. I mean, I think that this is, somewhat of a, an incremental, but in other outcome of what we have been building within Colliers over the last several years. I mean, it's still relatively early days, certainly compared to many of our competitors around our capabilities, around our corporate services offerings. And, you know, we've gained significant momentum, have, have captured some significant business with major multinationals around the world. And we're going to continue to, to pursue that.
And we believe that we're really well positioned to execute in virtually every major market around the world. So, I think we are a compelling alternative to companies that I think historically have been used to dealing with only
a couple of providers. Just to augment that. We see it as a big opportunity for us, for the point that John made just near the end. This, this, this business was primarily dominated by 1 or 2 players on a global basis. And then some regional players, there for the first time in the past 2 years, we've been invited for the party many times and have been very successful winning some very important mandates.
We don't really announce those mandates. As some of our peers do. But, if you follow the, the growth in that segment of the business, you'll see that a lot of that growth is coming from, winning winning business, that are, that's global in nature. And of the highest quality. So we're, we're quite excited about it.
And, it'll it gives us an opportunity to offer something different than the others.
Okay, very helpful. And then I guess last one for me. Within the sales brokerage business in the Americas, you put up good growth in the quarter. Did you see any delays or timing shifts particularly in kind of larger transactions closing in the U. S?
Nothing, Steven of note. I mean, it would be the usual, you know, you get the odd transaction that you expect closed in the quarter and for whatever reason circumstances arise, that's, gets pushed into a quarter. But nothing that, I would worthy of commenting on in our case.
Got it. All right. Thanks.
Your next question comes from the line of Stephen MacLeod of BMO. Your line is open.
Thank you. Good morning, guys.
Good morning.
I just wanted to follow-up on the Americas. Obviously, some very good growth in sales and lease brokerage as well as alternative advisor pretty broad based. And in terms of the operating leverage, the Americas has had sort of a lower margin base Would you expect that through the year, you would continue to see ongoing incremental operating leverage in the Americas?
Absolutely. I mean, it's, it's something that we're focused on. And, as we have continued to build, I mean, it's been part of, I guess, a longer term story, particularly around our U. S. Operation.
You know, we're getting incremental gains in Canada, which, does operate a higher margin business. And, the outcomes in the U. S. Around our continued investment in building a scale, is, is going to pay off is paying off And we expect that to continue through the balance of this year and right through the 2020 plan that Jay referenced earlier on.
Okay. That's that's great. And and do you have any, you know, is that is that predicated on significant investment in new hires over the next several years? Do you feel that you have a pretty good, plan in place to build off of?
Well, we we, a key part of our strategy is to hug our our a players into continue to recruit market for market. Recruiting is, in fact, a small percentage of our movement on an annual basis where we've been very selective as you've seen in terms of recruiting around gaps that we might have in a in a different g in in any particular geographic region. So if we want to build up our capital markets in Chicago, we'll focus specifically on capital markets in Chicago And so, we've been very specific about recruiting. The other area, that we have spent a lot of time on And we think it's going to pay off in dividend and, in, in heavy dividends over the years is on our senior leadership team at all levels, particularly in the United States because, as you know, Steven, we, we have, we worked, very hard at, and bringing together that platform, streamlining, trying to build, build leverage wherever we can. Our revenues have gone through the, through the roof, the accelerated growth in that business has been really, exceptional.
But with that exceptional growth, you need better leadership, stronger leadership, leadership for the future and we've made some significant hires, many of whom we've announced. Some of whom, we have not because they happen to be in smaller, not major markets, but we are, we would, based on the momentum that we have, and the culture that we have in Colliers, we've been a very attractive place for the, for the, most professional, advisors. And the business leaders that want to make a difference in in growing a business. So we're very excited about, about, the new additions. But, as I remind everybody here, the most important thing is to hug our key people every single day because, they've been with us and, and continue to grow their own practice and deserve our support as well.
Right. Okay. That's great. Thank you. And then just, just finally, in Asia Pacific, You know, we've talked a little bit about Japan, and I know Japan was a negative contributor in 2017.
I think for 2018, you were expecting it to be a positive contributor you just talk a little bit about how that, market is going and how your recent investment in that market is evolving?
Yes. I mean, Japan is, it was a, was a new story for us in, in, in, in, 2017. It actually was a small positive contributor. We've expected it to be a bit of a drag, but it was actually a small positive contributor to the year. But, we have continued to focus on building it, organically.
And, it's really through headcount and, attracting people that want to be part of I think a new story in Japan. And as we've talked about, I think, on the previous, call, 4th quarter call, it is a big opportunity for us one that we're going to pursue, vigorously through, trying to attract top notch professionals that can join our business. You know, acquisitions are always an option, but, that may not be until a little bit later. So it's a key component of our agent strategy. And, you know, I think you're not really seeing much of an impact of that, operation in our results.
The results really in Asia for us in first quarter. Were due in large part to the hard work that, David Ann and his team have done over the last, you know, 2 to 3 years. And, it's really a rebirth for Collier. We've been there for a long time. We've got a lot of great new people that now, generate a lot of momentum.
And with a small, very small, but interesting acquisition recently. We think that, you know, there's a new era for our Asian business and we're excited about it. And that does include Japan.
Okay. That's great color. Thank you very much.
Your next question comes from the line of Frederick Bastien of Raymond James. Your line is open.
Thanks and good morning. You already invested more than $100,000,000 in M and A so far year. Now I know you can't time acquisitions, but how you're feeling about the rest of the year? Do you think you can meet or perhaps even exceed what you've achieved already, this year?
Well, I don't know about that, but I mean, you know, I'm, I'm cautiously optimistic. Last year was a record year in acquisitions for us. So, I'm cautiously optimistic. We'll do better than last year in positions. We had a, great start to the year.
And we have some interesting, opportunities in the pipeline. But as you know, They're always, they're always, they're always, there's always issues. There's They're strategic. Sometimes they happen. Sometimes it's too early for the target.
There's all kinds of reasons why an acquisition might or might not, be completed, but we do have, we do have a nice pipeline And, I we're hoping to at least do as well as we did last year.
Well, certainly, seems that with the, I guess, the beginning of the year you've had in terms of organic growth and what you're seeing right now, what you've already accomplished on the M and A front, you should be able to exceed the EBITDA growth that you achieved in 2017? That wasn't a question.
We're surely we're surely budgeting that. That's for sure.
All right. Awesome. That's all I have. Thank you.
Your next question comes from the line of Mark Riddick of Sidoti. Your line is open.
Hi, good morning. I wanted to maybe follow-up a little bit on the acquisition type question. I was curious about whether if you could sort of give a sense of, granted, there's always different types of things going
on, but I wanted to get
a general sense of maybe what bid ask spreads look like vis a vis a year or so ago. And maybe if you give maybe a little greater color as to if there's any differences as to some of the things that are driving you know, what you're seeing in the pipeline? Is it any different than what you've seen historically?
You know, we've talked about this on previous calls. I think that the bid ask spreads, for I'd say third party companies, not companies that are part of Colliers, which, is, is a little higher. Than it has been historically. But we try and compensate for that in many ways because, it allows us, given, given, a variety of factors, it allows us to, perhaps build an earnout structure that might be a year longer, than we would otherwise, expect And, for that, we're prepared to pay, you know, a quarter point, quarter turn of EBITDA higher on average or something like that. So we have been, and as you can see, most of the, most of the acquisition now have been more, significant in size.
So there's a lot of people that you're bringing over at one given time. And, and so having a clawback, over a longer period of time gives us lots of, downside protection around the acquisitions that we complete. So in a long, in a in a in a long way, I would say, yes, there is a push up in value, in, in ex expected value. We do try and compensate in deal structure. But I would also say that more often this year than last year and, and in subsequent years, The targets wanna be part of Colliers.
They're coming to us because they believe they need to be part of a global platform. They're coming to us because they believe they want to be in an entrepreneurial environment where we focus on adding value to clients rather than building infrastructure and bureaucracy and things like that. So our business is conducive to, on an entrepreneurial environment. So, we, we have we have been finding that the targets are more keen to join us today than ever before and it just seems to have gotten easier and easier over the past 3 years. So, you know, all of that to say We've got lots of room to grow here.
Okay.
Excellent. And then one last follow-up for me. You had you talked about earlier, being able to compete for wider ranging and deeper assignments. I was wondering If you could touch a little bit on where you feel you are. I know we've seen some of the announcements made with the additions of leadership and the commentary earlier in the call about additional personnel.
I wanted to get a sense specifically around those type of opportunities where you can have broader and deeper relationships how you feel about your current, level of staffing to take advantage specifically of those type of opportunities and where you may need to go vis a vis maybe where you would like to be? Thank you.
Well, if you're talking about, our corporate Solutions business in particular, I would say that, if you're asking where do we stand versus CB and Jones Lang, I, we, we are well behind them. They've been around 100 years, both of them, and they've been in the business 100 years. And so where the Johnny come lately in 20 odd years of trying. But I would say that, Again, our momentum is picking up our growth percentage growth in that segment of our businesses above the highest of any other segment internal is about the highest of any other segment in our business. And obviously, when you win that business, these are, These are big contracts and they're global contracts and there's multiple services to be provided all over the place.
So you know, and the segment itself is growing. So there's a good, there's there's a greater push to outsourcing today than there was 5 years ago. So, it's a big part of our business. You know, candidly we could really dedicate more time, effort, and energy to that segment of our business if we wanted. And, it's something that we'd like to do.
But, there's only so much growth you can take on at any given time, you don't want to screw up the relationship, the new relationship that you form with a major corporate. So it's once you win one of these mandates is the good news is you celebrate for 5 minutes, and the bad news is it's a year and a half of implementation. And so that implementation has to be done flawlessly or as flawlessly as possible. And it takes a lot of people takes a lot of time. And frankly in the 1st year or year and a half, it's probably not profitable.
For us. I'm I'm looking at John. It isn't profitable for us. And so, we're trying to take more of a 2 step at a time approach on that. And it's been successful for us and we see it as an opportunity.
So we're going to continue to pursue that. But we're going to do it cautiously. Okay. Thank you very much. And I really appreciate the color on it.
Thank you.
And your final question comes from the line of Michael Smith of RBC. Your line is open.
Thank you, and, good morning. I just wanted to touch up on, touch on Europe. So your investments in Europe I take it they started a couple of quarters ago, and they're ongoing as of Q1. Could you just remind us of of how that, flows to the to the revenue stream. I mean, you've got some, I guess, expenses that, burn off after after a period of time and then you the revenue starts kicking in?
Yeah. I mean, it's really, it's really around, people and, taking on headcount that, where we made financial commitments to help transition people from, where they previously were. There's always a ramp up period and, there's a cost associated with that, and we're happy to, you know, provide, I guess, effectively a make whole to the individuals that decide to come on board. So, you know, we're paying, some staff and related compensation costs and not really seeing any revenue being generated currently. Certainly, pipelines are building and, and opportunities to be pursued and secured.
But we're not likely to see the, positive impact of revenue generation from that until the back half of this year.
Okay. And just switching gears, Jay, can you just highlight some of the reasons or get into some more specific of why a lot of these, smaller shops want to join a global platform, particularly for sales and leasing.
You know, it's actually very basic because a, a successful professional works with a client. And as the client matures, the client wants to do business, not just in his home market or her home market, in markets in different parts of the country or North America or around the world. And you need fulfillment to execute on those transactions, And the client itself, who has built a relationship with our advisor, wants our advisor to ensure that there's a streamlined and consistent approach to looking for leased, locations or asset purchases in different geographic regions. So what we find is the smaller firms, even if the smaller firm wants to stay smaller, the professionals that want to enhance their, their, their practice have to be at 1 of the global firms in order to be able to deliver, on all there's more sophisticated, transactions. The size of the transactions are, and velocity are, are bigger and much more lucrative.
So, ultimately, the best advisors need to be at, at, at, at a global firm. Not to mention all of the other, resources and, and differentiators that that large firm can bring to the party and they're different, whether they, whether they join one of our peers or ours.
Okay. Thank you. That was helpful. And just lastly, just on Asia, I mean, you've already talked about Japan, but you had a very big quarter in Asia. I wonder if you could just give us a little more granularity on it.
Michael, it's, it's just, it's something we have talked about, I guess, for the last couple of years. I mean, we've made you know, 1st of all, we made a pretty significant leadership change there about two and a half years ago. And, you know, our regional CEO has in turn brought in, some senior people, both in Hong Kong and in China in particular, And that has generated a fairly significant amount of additional business for us. So it's a, you know, it's a work in progress. And, we previously had, noted that, when we were generating results there, that's, you know, we're not in line with where we expected those results to be longer term.
So we're now seeing some of the positive, outcome around that market conditions,
I think, in that, in those regions, have been supportive of activity. And, you know, we're taking advantage of that. David David Hand himself, who's the leader of our Asia business, he is there has done a strategy, done a culture, very similar to ours. He's very entrepreneurial. He's aggressive.
He's the one that initiated the activity in, in Japan. This is, this is, this was something as, as many of you now know, was a 2 year process to, to, to make Japan a company owned operation. He's, he's got his fingers all over the growth in China. Hong Kong has never seen better results. And, I think David deserves a lot of credit for bringing the entrepreneurial flare to a market that has not historically been entrepreneurial.
So, we, we hope for more, they did, they did their first their first acquisition this year, this, this, this, this was in the quarter's quarter or in the first quarter or just after if it's a project management business that's, Xin Shanghai, Chengdu, and a little bit in Hong Kong, although there's no people in Hong Kong. And so, it's a great tuck, tuck under for, for David, the business, our business in, in China never did project management. It was, it was a business that was owned by a British, group. And we had done lots of business together over many years. And when they decided that it was time for a change, we were the natural, a buyer.
It's not a significant business. It's, it's circa $12,000,000 in revenue, U. S. Dollars in revenue. But that's fee revenue.
So they manage large projects, but get paid as the landlord rep on those projects. So As you know, we have similar operations in Canada, the US, Australia, New Zealand, and project management. So it's a good first addition for David. And, you know, obviously we see lots of future opportunity in Asia, in the year to come. But again, we're going to take a one step at a time and approach and, and, and, hopefully, hopefully have a much bigger business there in the years to come.
There are no further questions in the queue.
Okay. Thank you very much. Ladies and gentlemen, for joining us on the conference call and we hope to speak to you again soon. I guess, the next conference call end of July, end of July. Okay.
Thanks again. Have a good, have a good day.
Ladies and gentlemen, this concludes quarterly investors conference call. Thank you for your participation and have a nice day.