Colliers International Group Inc.
(CIGI-N, CIGI-T) US$144.28 | C$178.43
Q3/21 First Look: Strong Beat, FY2021 Guidance Raised, Again Event
Colliers reported Q3/21 adj. EBITDA of $123.6mm, 21% above consensus $102.5mm and 12% above TD's $110.7mm, reflecting stronger-than-expected revenue partially offset by weaker-than-expected margins (12.1% vs. TD's 13.1%). CC: 11:00 a.m. ET (877-402-8911) (ID: #8998982).
Impact: POSITIVE
Q3 was another blow-out quarter with all business lines/geographies beating revenue expectations and full-year 2021 guidance increased above the high- end of the previous range for 25-35% EBITDA growth. Brokerage continued to be a highlight, with capital markets 34% above pre-pandemic (organic, excluding F/X) and leasing 8% above pre-pandemic (industry leader CBRE reported leasing ~7% above pre-pandemic). IM was also very strong with EBITDA increasing 82% y/y to $27.8mm (TD: $19.5mm), reflecting management fee growth from increased AUM. YTD, IM raised a record $4.9bn (AUM: $46.1bn, +27% y/y). In our view, the release was decidedly positive. However, the share price reaction may be somewhat tempered given the recent strong performance, with CIGI shares up >10% over the past few weeks.
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Revenue increased 48% y/y (45% organic, 1% M&A, and 2% F/X) to $1,022.8mm, 21% above TD's estimate of $844.9mm (cons: $810.5mm). Capital Markets revenue rose 88% y/y to $310.6mm (TD: $201.1mm) reflecting continued robust sales environment. We believe that CIGI continues to outperform the market with sales transactions up 34% vs. the Q3/19 pre-pandemic peak (organic, excluding F/X) while Commercial Real Estate transactions were up ~20%.
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EBITDA margins of 12.1% were 101bps below TD at 13.1% reflecting weaker- than-expected margins in the Americas (10.7% vs. TD: 12.5%). However, we understand that this reflects accruals for incentive compensation after the very strong results, combined with the return of other variable/discretionary costs deferred at the onset of the pandemic. Management had previously indicated that margins could dip y/y but that ultimately they expect margins to continue grinding higher in the years ahead.
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FCF: $69.7mm ($180.7mm after w/c). Leverage declined to ~0.5x ND/EBITDA, positioning CIGI well to execute on its new five-year growth plan to double the business by 2025.
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2021 guidance increased for the third time: expect revenue and adj. EBITDA to exceed the top end of previous guidance ranges: Rev: +20-30% & adj. EBITDA: +25-35%.