Jay Hennick - Chairman and CEO John Friedrichsen - CFO.

Anthony Zicha - Scotiabank Marc Riddick - Sidoti & Co Frederic Bastien - Raymond James Josh Lamers - William Blair Stephen MacLeod - BMO Capital Mitch Germain - JMP Group.

Welcome to the First Quarter Investors' Conference Call. Today's call is being recorded. The 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, containing 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 Tuesday, May 2, 2017. At this time for opening remarks and introductions, I would like to turn the call over to Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead..

Thank you, operator. Good morning everyone and thanks for joining us today for the first quarter conference call. As the operator said, I am Jay Hennick, Chairman and Chief Executive Officer; and with me today is, John Friedrichsen, our Chief Financial Officer.

This conference call is being web cast and is being available in the Investor Relations section of our web site. A presentation slide deck is also available to accompany today's call. Earlier today, Colliers International reported strong operating results for the first quarter, with solid revenue growth internally and from acquisitions.

Revenue were $423 million, up 12%. On a reported currency basis, EBITDA was $29 million, up 32% and earnings per share came in at $0.33, up significantly over the prior year. Our pipelines indicates sustained activity across all service lines, with generally stable market conditions in most major markets.

John will have more to say about our financial results in just a few minutes. Strengthened by our record results last year, the momentum so far this year, and the opportunities we continue to see in the markets that we operate in, we have every reason to expect 2017 to be another successful year for Colliers.

So far this year, we completed a total of five acquisitions, two in Europe and three in the Americas. In Europe, we added the operations of Colliers Denmark, with its five offices and 100 professionals, opening up another growth engine for us in the important Nordic region.

We also doubled the size of our hotel consultancy business in the U.K., strengthening this segment and further diversifying our revenues.

In the U.S., we added a total of 12 new office with more than 600 professionals, with leadership positions in Las Vegas, San Jose, the high end lucrative Silicon Valley market, Holland, Michigan, as well as in the twin cities of Minneapolis and St. Paul. A very successful quarter for us in the U.S.

As you know, our current plan is to double the size of our company by the year 2020. We are in the second of our five year plan, and remain on track. If we prove successful as we have in the past, it will translate into significant incremental value for our shareholders.

And because this management team owns such a large stake in our company, we are fully aligned with shareholders when it comes to creating shareholder value, and of course, capitalizing on opportunities. Finally, before I turn things over to John, I'd like to mention that beginning next quarter, we intend to streamline our conference calls.

Since the commentary is already contained in press releases and other public information, we will limit our initial comments in the future to a very few, and then open things up for questions. It's more effective that way, and will obviously cover way more ground.

Now let me turn things over to John for a review of our financial results and then after he is completed, we will take questions.

John?.

Thank you, Jay. As announced in our press release earlier this morning and referenced by Jay in his opening remarks, Colliers International reported strong consolidated financial results for our first quarter, and solid contributions from most of our operations across our global platform, highlighting the benefits of our diversification.

I will address our overall consolidated financial results for the quarter, our operating results by reporting results, as well as our capital usage and financial position.

For our first quarter of fiscal 2017, consolidated revenues increased to $423 million, up 13% in local currencies, from $376 million in the first quarter of 2016, with 1% of our growth generated internally and the balance from acquisitions. Total revenue for the quarter in our U.S. dollar reporting currency is 12%.

Adjusted EBITDA for the quarter totaled $29.3 million, up from $22.2 million in Q1 of last year, an increase of 33% in local currencies, while our margins grew to 6.9% compared to 5.9% last year. Finally, adjusted earnings per share came in at $0.33 compared to $0.19 per share last year of 74%, our U.S.

dollar reporting currency, no impact of FX on adjusted earnings per share in the quarter.

Our adjustments to GAAP EPS [indiscernible] adjusted EPS are outlined in our press release issued this morning and are composed primarily non-cash charges that we view as 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 and revenues based on local currencies. Our $423 million in revenues for this quarter was comprised of $122 million in Sales Brokerage, up 18%, while Lease Brokerage came in at $137 million, up 22% over Q1 2016.

Meanwhile, revenues from Outsourcing & Advisory services totaled $164 million, up 3%, with moderately lower revenues from a lower margin turnkey revenues and project management services, offset by higher valuations, project management, property management revenues.

Revenues generated by our Outsourcing & Advisory Services segment, represented 39% of our overall revenues in the quarter, down from 43% in Q1 of 2016, with the outpacing of growth in our transactional revenues in the quarter.

Geographically, 61% of our revenues and 68% of our adjusted EBITDA was generated in the Americas in our first quarter, with strong contributions to adjusted EBITDA from our international operations this year compared to Q1 of 2016. Due largely, to stronger operating profitability in Asia Pacific and EMEA.

In our first quarter, revenues in the Americas totaled $257 million, up 21%, with 12% internal growth and the balance from acquisitions. Lease Brokerage revenues were up 23% versus last year. Sales Brokerage revenues were up 21%, and Outsourcing & Advisory revenues were up 19%, led by strong growth in U.S.

valuations, as well as property management and project management in both Canada and the U.S. Adjusted EBITDA came in at $21.2 million versus $21.6 million last year, a margin of 8.3% versus 10.3% last year. With our margin being negatively impacted by investment spending in people, new service capabilities, and mix impacting cost of revenues.

Though down, our margin from being above to 7.3% reported in Q1 of 2015. Turning to EMEA, revenues of $89 million in the quarter decreased 4%, with an internal decline of 11%, offset by 7% growth from acquisitions, relative to a strong Q1 2016 comparison, especially in lower margin turnkey project management revenues.

Lease Brokerage revenues were up 20% over last year, led by world class growth in the U.K., while Sales Brokerage was up 11% over a strong comparative performance to Q1 of last year. Meanwhile, revenues from Outsourcing & Advisory services decreased 60% opposite [ph] of a strong Q1 2016, led by a decline in turnkey project management revenues.

Offset by strong increases, valuations in property management revenues in the U.K. and Central and Eastern Europe. Despite the decline in revenues, adjusted EBITDA increased to $3.6 million from a loss of $600,000 last year. Finally, in our Asia-Pacific region, revenues came in at $76 million, up 12% in local currencies, 15% in U.S.

dollar currencies, both generated internally. Strong growth in Lease Brokerage and Sales Brokerage, primarily in Australia. Outsourcing & Advisory revenues were up 5% in local currencies, led by solid increases in valuations, property management services across the region.

Adjusted EBITDA was $6.2 million, up sharply from $3.3 million last year, with our margin at 8.2% versus 4.9%.

Moving to our capital deployment and balance sheet, and our first quarter for 2017 capital expenditures totaled $6.7 million, up from $4.2 million last year, and in the level in line with our estimate range of CapEx spend for 2017 of between $40 million and $45 million.

We invested $81.7 million in gross cash and contingent consideration, related to acquisition activities during the quarter, up from $50.4 million in Q1 of last year.

Our seasonally weak first quarter cash usage from operations was $81.5 million, up from our cash usage of $43.1 million in Q1 of last year, and was largely attributable to seasonal working capital usage by acquisitions completed early in the quarter. Our incrementals for the seasonal working capital usage requirements of our operations overall.

Our net debt position stood at $307 million at the end of the quarter, compared to $149 million at year, just typically the seasonal low point in terms of our debt level, and compared to $241 million at the end of Q1 of 2016.

Our leverage ratio, expressed in net debt and adjusted EBITDA stood at 1.4 times, and below our expected level of 1.5 times at the end of our seasonally weakest quarter, despite the robust activity around acquisitions to start the year.

In terms of our financial events [ph], cash on hand and committed availability under our newly increased and extended $700 million five year revolver, we have over $350 million in liquidity at quarter end, a level ample to fund our business and execute our growth strategy.

Looking across our global operations, our pipelines in most markets continue to reflect steady commercial real estate activity, comparing favorably to levels this time last year, with an overlay of geopolitical uncertainty in the EMEA, primarily in the U.K. and of France.

We continue to believe, that low interest rates, accessible debt financing, general stability in supply and demand for commercial real estate in most markets, supported with steady activity, sales, leasing and other commercial real estate services for the balance of 2017. Therefore, our outlook for the year, remains largely unchanged.

That concludes our prepared remarks. And I would now like to ask our operator to open the call for questions..

Okay. Thank you. [Operator Instructions]. Our first question comes from Anthony Zicha. Please go ahead..

Hi, good morning gentlemen. Good morning Jay..

Hey Anthony. Speak up a little bit, we can hardly hear you, if you don't mind..

Yes, okay.

Jay, how do you see the pace of acquisitions going forward and what do you see in terms of pricing, and what are your expectations on the cycle for it to continue?.

So let me start with the cycle. As John has mentioned, I mentioned it as well; we continue to see very stable results really across the board. Real estate is a great category. There is lots of allocation of dollars for real estate.

Capital is generally readily available in most markets, and although we are not seeing enormous growth in some places, overall, we are still achieving circa 5% give or take internal growth, and we are very happy with that, and believe that, at that level we are actually taking share from our competitor.

So it's not, so I would say stable, but nice growth still, in a market that still continues to grow. Acquisitions, look, we have been successful over the past couple of years with the acquisitions. We had a great start to the year this year. Our pipelines continue to be strong.

They are strong not just in core brokerage operations, but in important areas like project management, workplace solutions, and a variety of other, I would call, a white collar C-Suite advisory services that we could provide to our clients, ancillary to the other services that we perform.

So you know, we continue to see this as a large category, and that's a category that's large virtually on a global basis. So we continue along one step at a time, and we are very disciplined, as you know better than most, in what we are prepared to pay and the returns we expect to get with the acquisitions. So we continue to be prudent along the way..

Good.

And then, in terms of the multiples, okay, can you make any comments on that? Still the same metrics as before?.

You know, I think with larger acquisitions, the multiple on a weighted average basis for us has ticked up a little bit. I think that's because we have done a couple of larger acquisitions. But generally speaking for our stripe zone size of acquisitions, I would say the range is pretty much what it has been historically.

It's obviously natural when you wire a larger or a well balanced business that might have geographic diversification, etcetera, you are going to pace slightly more, as a valuation metric..

Good.

And then last question; Jay, how do you think of technology? What do you think about it? Is it a big plus delivering that information to clients?.

Well we have been spending a lot of money and time, as much time as money on technology. We talked about it at the annual meeting in some length.

Just after year end, we added something called Colliers Insight, which gives us a unique competitive advantage in the market, as it relates to anything done that is industrial, logistics, the types of services we have had for many years.

Something called Colliers Office, which helps decision making of our clients, who are making decisions on long term leases, where to locate, impact of changes on their people, is there any governmental assistance that they might obtain.

And then we have something called Colliers 360, again, another exceptional piece of technology that we use around the world, to help corporates make similar types of decisions, but also to manage their extensive capabilities through web.

So when it comes to technology, we are spending most of our time, effort and energy on technology, that will help our advisors do a better job in the field, differentiate us from our competition and add true and real value to the services that we perform. We are monitoring, as we always do.

You know the new technology, whatever that is, is it going to just intermediate, we don't see it. We are not a commodity business. Every transaction is different than commercial real estate. It's not like buying houses, same thing, different size, different square footage. In commercial real estate, there are every single transaction.

Almost without exception is difference, it's sizeable, it requires market knowledge that we bring to the table, and it requires also, we think, an intermediary to help bring two parties together on a relatively large transaction. So you know, we are very close to technology and it's not just -- it's very deep in our organization.

But again, the primary focus is to make our people better and to create a Colliers difference every single day..

Okay. Well thank you very much..

Okay, thank you. Our next question comes from Marc Riddick. Please go ahead..

Hey good morning..

Good morning..

Hey Marc..

I wanted to follow-up on a couple of things, given a nice overview on the technology investing, and I wonder if you could give us sort of a similar read through on the commentary around the investments and service lines in the U.S.

and the investments in people there, and if you could sort of provide a little more greater detail around the opportunity set that you see there?.

It's John. We continue to focus on our principle service areas and strengthening those, and as Jay alluded to, I mean, we are very much in a people service business, despite the opportunity that the technology represents to enhance our productivity, in the way we deliver services to our clients.

But at the end of the day, people and relationships is an important part of the business. You will note, that we announced at the end of last year, an addition to our New York operations, both in retail area, and just focus on core retail as opposed to suburban -- about retail in that market nationally, as well as the capital markets team.

Those were just a few of the additions that we have made to our team. There many-many others that are occurring in the U.S. and other markets around the world.

But we are intent on identifying where we have gaps and what we are providing in terms of services to market, what will actually enhance our global platform and allow us to continue to focus on multi-market transactions, and we are pursuing high quality people to bring into our business as a result.

So that's predominantly, where we are focused, with respect to our investment in people..

Okay, great. And then I was wondering, just switching over to the EMEA region, a couple of things.

I guess maybe one, if you could sort of provide a, maybe a more broad overview around sort of the general thoughts there, as far as the markets, but then more specifically, I guess you touched on the -- in the slide deck that there were some specific projects that had an impact on margins there.

I was wondering if you can -- how much visibility you may have into those particular projects, and when the margin impact might end up abating over time?.

Well I think the big news around EMEA in the first quarter was, the positive performance we have around margins, and that's very much about the mix of revenues, which in our first quarter had much less, what we call turnkey revenues associated with our project management with workplace solutions business, normally [ph] out of France.

And that's somewhat timing related, and as evidenced with our results, that revenue does not have a high margin attached to it.

So notwithstanding the fact that those margins declined in Q1, our EBITDA performance was very strong, and benefitted from not only the acquisitions we have made, including Colliers Denmark, which started very strongly, but also additional strong performance in our existing operations in the U.K., which we have been building for a number of years now.

So when we look at Europe, we are notwithstanding the noise around local uncertainty, we are very bullish on the opportunity that we see in Europe, not only the larger opportunity in the market itself, but the opportunity for Colliers.

And as you may know and others on the call who have been [ph] us, if you go back five years ago, we really did not have much of a Western European operation at all. It has become a sizable part of our business, and with tremendous growth value [indiscernible] for this year and beyond..

Okay, great. And is there a way to sort of generally quantify, maybe the impact that was specific to the large projects and the supply and installation of materials, expenses that were --.

Yeah. It was about $17 million U.S., would be the revenue associated with that. I think if you kind of work it through, had we -- sort of if you kind of remove that from your equation, the other revenues associated with the other service we provide in that market, we were actually up internally, year-over-year..

Okay, perfect. That's what I was looking for. Excellent. Thank you very much..

Thank you. Our next question comes from Frederic Bastien. Please go ahead..

Hi, good morning..

Good morning..

Hey guys.

You highlighted an increase in Lease Brokerage activity in the U.K., but I'd be curious to know, how the other areas of activity, sales, outsourcing, etcetera, are behaving in that particular area?.

Well, we are seeing -- we were seeing, in Europe, good gains around -- outside of our Outsourcing & Advisory, specifically the turnkey business. But absent that, and we do project management predominantly in the U.K., had we cleared a couple of acquisitions over the last six, seven months.

So good activity, internal growth, plus contribution from acquisitions on that side of it. We already spoke about the leasing activity in the market. Sales were roughly flat in the EMEA quarter-over-quarter. Sales revenues..

The only thing I would add to that is, that the German business is very solid, and we are quite excited about some of the things that they are working on. We have got some initiatives there to further accelerate their growth, and they are already one or two in the German marketplace, with lots of opportunities to grow.

The French business is a good solid business, but also as great growth opportunities, you will recall, we bought that business several years ago, and it was primarily a workplace solutions project management business, and we merged in our agency business, and set out on a plan to build the agency business, including not only leasing and brokerage, but also property management and others, and we did an acquisition, a successful one there, in asset and property management, so that's performing well.

So again, when we look at the market in Europe, we virtually across the board, we see lots of growth opportunities, lots of ways to add and fill gaps, service line gaps, market for market. There are certain cities that we either have small operations in, but see that they could support much larger operations.

So we are fast at work, trying to get our mix around, what is in fact the global opportunity major market by major market in Europe, and the numbers are compelling..

Okay, thanks for that color. Is Brexit a cause for concerns for the U.K.

business, or do you expect other markets to benefit as a result?.

I think the whole Brexit thing, you know, people and I think the market is kind of digesting yet. But I would expect that, along the way until those negotiate kind of formal exit, and kind of a rebalancing of negotiations with the rest of Europe, with respect to trade, which are going to happen.

I think there maybe some little -- a bit of noise around that as events unfold. Based on our initial read right now, we don't -- there is a lot of talk about potential business that is currently done in U.K., being done in other parts of Europe.

But I think it's a lot of talk at this point, and I think it's probably going to be lesser than people are speculating, that's our sense..

Okay. And just want to turn to Asia; the region performed stronger than we had expected, which I find quite encouraging for the rest of the year. Did you experience any unusual trophy sales, or was there a region that showed particular strength, or was it just broad based momentum? And I appreciate the seasonally weak Q1.

So anything might influence positively or negatively in the quarter, but would be interested in getting your color there?.

Well I think the -- I mean, it was a very good quarter for Asia Pacific, and as we said in our comments. I mean, it was predominantly Australia-New Zealand that led the way. We had stable operations the rest of Asia, and I think a good outcome for Q1 in that market.

But we had looked across the region, certainly the performance year-over-year attributable primarily to activity in Australia-New Zealand..

Great. Awesome. I will turn it over. Thank you..

Thanks..

Okay, thank you. Our next question comes from Josh Lamers. Please go ahead..

Good morning guys. Thanks for taking the question. Maybe will just look at a couple of modeling questions here. I understand we are coming off, maybe a tough comp in the Americas, and then later in the acquisition for the current year-to-date.

Just wondering for or just looking for some guidance on Americas margin, over the balance of the year, and whether or not, we could expect any expansion in EBITDA margin, or whether that's going to be about flat to down on the year?.

We made comments overall, Josh, we are not providing guidance per se. We certainly gave some commentary around general outlook, where we indicated that, margins overall will be consistent from 2017 with 2016, and I would expect that to translate that into the same thing in the Americas..

Okay. All right. That's fine. Thank you. I guess secondly, we will just -- I will look at the leverage ratio that you put out. Just kind of doing some quick math on that, it would imply, any couple of things. Either an upside to EBITDA expectation, or maybe the differences just in, in increase in interest expense.

Is it likely the latter of those two?.

Maybe a slight increase in interest expense, but it would be slight..

Okay.

And then maybe one last kind of bigger picture question; if you could comment on the difference between what you are seeing in kind of the primary tier-1 markets, and whether or not there is higher expectations for growth in the secondary markets, given some of the acquisitions that you just completed, it would seem to be the case?.

Yeah. I think that's fair, but that has been going now for probably 18 months. Things are very expensive in the -- let's call the tier-1 markets.

I think there is also a blurring at the lower end of the tier-1 markets and the tier-2 markets, because a lot of the tier-2 markets including markets like we acquired this quarter, or since the beginning of the year.

You think of the twin cities, several major Fortune 100, Fortune 500 companies are there, probably more than their share, which creates a great opportunity. Although I think people would consider the twin cities to be not a major market, but a secondary market. The same thing is the chase in the whole San Francisco Bay Area.

San Francisco has been strong for us, but now, we have augmented the entire region with market leader position -- leadership positions around California and also in the Nevada, Las Vegas in particular.

So I think, because real estate is becoming much more strong as a category for investment, investors looking for yield are looking at multiple places, and there is nothing wrong with the secondary markets, which have historically been way more stable, and consistent over the years. Yeah, I think your thoughts are right..

Okay, great. Thanks for the help..

Thank you. Our next question comes from Stephen MacLeod. Please go ahead..

Thank you. Good morning..

Good morning Steve..

Just circling around on the Americas; you cited kind of a onetime impact from new hires in Q1, and I am just wondering, is that sort of isolated to Q1, and then, when would you expect these new hires to be revenue generators, as you look out through the sort of 12 to 18 months?.

Well if history is any indicator, it would be later in the year. Now whether that's Q3 or Q4, can't say precisely; and believe me, they have motivation to generate business since possible. But the reality is, based from our own experience and expectations, we would see that during Q3 or Q4..

Okay, that's great. Thank you. And then, in terms of the long term margin profile in the U.S., which you have talked about in the past, do you still see progression towards getting that gap closed between the U.S.

and Europe and Asia Pacific, over the longer term?.

Yes. I think that there is no structural impediment to generating a higher margin. In the U.S. for us, it's about scale and continuing to build the business, which we have been doing over the last several years.

So we are on track, more or less, where we expect it to be, and certainly our expectations are to generate double digit margins here in that U.S. market..

Okay. Okay, that's great. And then, on Europe, would you characterize Q1 sort of as a more normalized quarter, relative to last year, in terms of the portion of sales between, Outsourcing & Advisory sales, and lease and the margin profile.

Would Q1 2016 be the anomaly in that relationship?.

I would say so. The turnkey projects, the nature of those in our business can tend to move between quarters, it's based on timing. So it's not to say that we couldn't see a repeat down the road. We have some large projects converging in a particular quarter. But Q1 this year eliminated the impact of a significant turnkey project during that quarter.

But having said that, we have very-very strong, as I said, growth in leasing in the U.K. in particular, which is not necessarily at that level we would be, but unbalanced, I would say, that the Q1 of this year represents something that's more normalized..

Yeah, okay. And then just one last one, in terms of the CapEx outlook, it looks like the spend expectation for 2017 was increased from where it was in Q4.

Just curious, if you could provide some color around where that incremental spend is going and how you are prioritizing your thoughts around CapEx for 2017? I mean, is it around technology for the most part, as per your previous comment?.

Yeah. I mean it's -- some of it does relate -- obviously, we have been very active in terms of acquisition. So they do come with some degree of CapEx investment. But our CapEx is really focused around the two areas.

First of all, on the technology side, which is either productivity related technology and to assist our professionals in delivery service to our clients. And also, engaging our clients to use the technology more directly, and -- or into some things within our web site.

As we achieve the next evolution of that, we are investing in, and we will see it develop over the next year or 18 months.

The other principal use of CapEx is around premises and investing in our premises again around productivity, and attracting talent, that's what we are focused and this year we expect to spend a little bit more certainly than we did last year. And it's a little bit elevated for 2017, but likely recede somewhat in 2018.

But it's higher than last year for sure..

Okay, that's great. Thank you very much..

Thank you. Our next question comes from Mitch Germain. Please go ahead..

Good morning and congrats on the quarter. Jay, a lot of your peers in the property services sector have been investing heavily into outsourcing.

And I recognize that it's 40% of your revenues today, but thinking out in terms of your 2020 plan and the execution of that, how much is investing in kind of these recurring revenues -- how important is that to you, in terms of executing on this strategy?.

First of all, great to hear you Mitch. I would say that, we think our balance of Outsourcing & Advisory to transaction services is about right now. Like obviously, if we can find the right add-ons to move or skew the percentages to 45% instead of 40%, that would be helpful. Those are generally lower margin businesses.

Although we do have some ideas of adding to that segment, that are I would say, not traditional in the commercial real estate space, or not usual for some of our peers. We will see what happens with that.

But as our peers also point out, when you look and add leasing transactions to the Outsourcing & Advisory, on the basis that leasing transactions are, although not recurring, they are very competitive in markets like Hong Kong, average lease rates might be 3%. They are different in North America, etcetera.

But they offer another form of recurring revenue. So if you add those two together, where give or take 70% in recurring or recurring like revenues, which is -- I think a good mix for us, and way better than we were, let's say 10 years ago, when we were essentially a transaction services organization..

Excellent. Thank you..

Okay. Thank you. We have no more questions in the queue for now..

Okay. Ladies and gentlemen, thanks for joining us and we look forward to the next conference call..

Ladies and gentlemen, this concludes the quarterly investors' conference call. Thank you for your participation and have a nice day..