Slide 1: Second Quarter Financial Results Presentation
Second Quarter Financial Results Presentation Newmark Group, Inc. (NMRK) July 28, 2023
Slide 2: Disclaimers
Disclaimers Discussion of Forward-Looking Statements Statements in this document regarding Newmark that are not historical facts are "forward-looking statements" that involve risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements. T
Slide 3: Recent Consolidated Results
Recent Consolidated Results HIGHLIGHTS OF CONSOLIDATED RESULTS (USD millions, except per share data) 2Q23 2Q22 Change YTD 2023 YTD 2022 Change Total Revenues 585.8 $755.4 (22.4)% $1,106.6 $1,433.6 (22.8)% GAAP income before income taxes and 17.9 80.2 (77.6)% (1.5) 84.9 (101.7)% noncontrolling intere
Slide 4: Leading Global Commercial Real Estate (CRE) Services Provider
Leading Global Commercial Real Estate (CRE) Services Provider TTM Revenues 2021 + 2022 Transaction Volume Professionals Global Client Service Locations ~$2.4B ~$1T ~7,400 ~170 Top Global Public Acclaimed Combination of recently hired professionals and CRE Services Company Industry Leader acquisition
Slide 5: Low Risk Real Estate Services Business with Diversified Revenue Base
Low Risk Real Estate Services Business with Diversified Revenue Base Leading CRE Services Platform Diversified Revenue Streams Covering a Broad Geography Recurring revenues from “Management services, Focused investments driving continued revenue Increasingly diversified by region, and the addition o
Slide 6: Second Quarter 2023 Highlights
Second Quarter 2023 Highlights $0.18 12.4% $585.8MM $72.9MM POST-TAX ADJUSTED REVENUES ADJUSTED EBITDA ADJUSTED EBITDA EPS MARGIN - Newmark hired top producers in capital markets and leasing, as well as other leading professionals across the U.S., U.K., and Canada. - The Company originated a $947 mi
Slide 7: Management Commentary on Business Trends
Management Commentary on Business Trends Management Services, Servicing Fees Leasing & Other Commissions Investment Sales2 Commercial Mortgage Origination, net and other - Our Management Services, Leasing and - The Kastle Barometer, which measures daily - The $13.3 trillion of assets held by global
Slide 8: 2Q 2023 Revenue Detail
2Q 2023 Revenue Detail Investment sales Leasing and other commissions Commercial mortgage Investment origination, net -4.3% -62.9% sales $209.1 $212.8 $203.6 10.9% $77.6 13.2% 2Q 2022 2Q 2023 2Q 2022 2Q 2023 41.1% 2Q 2023 Revenue by Commercial mortgage Management services, Business origination, net
Slide 9: Newmark Quarterly Volumes
Newmark Quarterly Volumes ($ IN MILLIONS) 2Q23 2Q22 % Change YTD 23 YTD 2022 % Change TTM 2Q23 TTM 2Q23 % Change Investment Sales 6,241 26,066 (76.1)% 13,636 45,024 (69.7)% 40,196 104,922 (61.7)% Mortgage Brokerage 5,152 11,559 (55.4)% 8,041 21,753 (63.0)% 24,302 49,111 (50.5)% Total Capital Markets
Slide 10: Servicing & Asset Management Provides Recurring, High-Margin Revenues
Servicing & Asset Management Provides Recurring, High-Margin Revenues Portfolio Composition as of 6/30/2023 Newmark Fannie Mae/Freddie Mac Portfolio Maturities by Year FHA/Other 53.0% 3% Limited Servicing 65% Fannie Mae 34.2% 17% $168.8 Billion 12.5% Freddie Mac 14% 0.3% 2022-23 2024-26 2027-29 2030
Slide 11: Strong Balance Sheet & Credit Metrics
Strong Balance Sheet & Credit Metrics AS OF 6/30/2023, UNLESS OTHERWISE STATED ($ IN MILLIONS) Cash and Cash Equivalents1 $164.4 Credit Metrics as of 6/30/2023 Interest Rate Maturity $360.5 million TTM Adjusted EBITDA Senior Notes 6.125% 11/15/2023 $549.1 Credit Facility2 3/10/2025 225.0 1.7x Total
Slide 12: Strong Financial Position & Cash Generation to Support Growth
Strong Financial Position & Cash Generation to Support Growth Low Risk Variable Cost Average of $346 MM+ of Annual Cash Intermediary Structure Generated by the Business3 - Virtually no balance sheet risk1 - Approximately 70% of expenses are - $2.5 billion of AEBITDA and $2.1billion of variable2 cash
Slide 13: Outlook for 2023
Outlook for 2023 As previously stated, the Company continues to anticipate generating approximately $2.5 billion in total revenues and $425 million of Adjusted EBITDA in 2023. Newmark expects a tax rate of 14% and 17% for Adjusted Earnings. This guidance assumes that the decline in industry-wi
Slide 14: We Expect to Generate Strong Adjusted EBITDA, Trough or Peak
We Expect to Generate Strong Adjusted EBITDA, Trough or Peak Over 2/3 of our revenues expected to be relatively stable in the current environment. Nearly 50% incremental margins on capital markets. Hypothetical Hypothetical Var % Scenario 2: New Var % Scenario 1: Low- Illustrative Financial Model 20
Slide 15: Record Quantities of Debt Maturing in 2023-2025
Record Quantities of Debt Maturing in 2023-2025 Commercial Mortgage Maturities by Original Loan Term U.S. Commercial Mortgage Maturities ($B) 600 ~$1.9 T of Debt Maturing 500 400 300 200 100 0 Bank Insurance CMBS GSE Debt Fund Other - ~$2.6T in CRE/MF mortgages mature over the next five years, of wh
Slide 16: Distress Will Create Demand for Newmark Services
Distress Will Create Demand for Newmark Services Valuation & Advisory Property Management — Property valuation and property-type specific strategic advisory — Receivership — Real estate property tax advisory — Building operations and maintenance — Loan documentation compliance audit — Property accou
Slide 17: GAAP Financial Results
GAAP Financial Results
Slide 18: Condensed Consolidated Statements of Operations
Newmark Group, Inc. Condensed Consolidated Statements of Operations (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) Three Months Ended June 30, Six Months Ended June 30, Revenues: 2023 2022 2023 2022 Management services, servicing fees and other $ 240,660 $ 233,685 $ 452,952 $ 466,804
Slide 19: Condensed Consolidated Statements of Operations (continued)
Newmark Group, Inc. Condensed Consolidated Statements of Operations (continued) (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Per share data: Basic earnings per share Net income available to common stockholder
Slide 20: Condensed Consolidated Balance Sheets
Newmark Group, Inc. Condensed Consolidated Balance Sheets (IN THOUSANDS) (UNAUDITED) (UNDER GAAP) June 30, 2023 December 31, 2022 Assets Current Assets: Cash and cash equivalents $ 164,365 $ 233,016 Restricted cash 87,339 79,936 Marketable securities 310 788 Loans held for sale, at fair value 936,97
Slide 21: Summarized Condensed Consolidated Statements of Cash Flows
Newmark Group, Inc. Summarized Condensed Consolidated Statements of Cash Flows (IN THOUSANDS) (UNAUDITED) (UNDER GAAP) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net cash provided by (used in) operating activities $ (500,638) $ (163,121) $ (899,478) $ 339,034 Net cash
Slide 22: Appendix 1: Additional Information on Newmark
Appendix 1: Additional Information on Newmark
Slide 23: Newmark Transaction Volume
Newmark has Increased Investment Sales and Debt Volumes Significantly Faster than the Market NMRK Total Debt Volume NMRK Investment Sales Volume NMRK Debt Market Share NMRK Investment Sales Market Share $100 12% $90 10% $80 Newmark Transaction Volume ($Bn) $70 Newmark Market Share (%) 8% $60 $50 6%
Slide 24: Management Services and Leasing Surpass Pre-Pandemic Levels
Management Services and Leasing Surpass Pre-Pandemic Levels, While Capital Markets Environment Remains Challenging ($ In millions) & as % of 1H 2019 Management services, servicing fees and Leasing and Other Commissions Non-Capital Markets Total other 411.8 389.9 396.9 878.6 466.8 845.9 453.0 106% 76
Slide 25: Strong Growth in Recurring Revenues
Strong Growth in Recurring Revenues Provides Stable Base of Contractual Revenues ($ in millions) Pass through revenues Fees from management services, servicing, and other 14% & 16% Our fees from these businesses have respective 38% grown 159% between 2017 and the TTM, Total & Fee 32% Revenue CAGRs $
Slide 26: Fully Diluted Period-End Share Count Summary
Newmark Group, Inc. Fully Diluted Period-End Share Count Summary As of June 30, 2023 Fully-Diluted Shares (millions) Ownership (%) Class A owned by Public 130.9 54% Limited partnership units owned by employees1 43.8 18% Class A owned by employees 21.3 9% Other owned by employees 1.3 1% Partnership U
Slide 27: The Impact of Nasdaq and of the 2021 Equity Event
Other Useful Information The Impact of Nasdaq and of the 2021 Equity Event The receipt of shares from Nasdaq may also be referred to as the “Earn-out”. In the second quarter of 2021, Newmark recorded a gain of $1,093.9 million related to the final Earn-out, based on the June 30, 2021, closing price
Slide 28: Revenues by Geography and Property Type
Other Useful Information Revenues by Geography and Property Type For the chart with revenues broken out by geography: East U.S. includes Connecticut, Delaware, Florida, Georgia, Massachusetts, Maryland, Maine, North Carolina, New Hampshire, New Jersey, Pennsylvania, Rhode Island, South Carolina, Vir
Slide 29: Other Useful Information (Continued)
Other Useful Information (Continued) Preqin estimated that there was $409 billion of investible dry powder held by global closed-end funds at real estate focused institutions as of July 2023. This is in addition to the significant amount of real estate assets held by other types of investors and own
Slide 30: Appendix 2: Additional Industry Information
Appendix 2: Additional Industry Information
Slide 31: Investors Garnered High Returns Following Prior Resets in Values
Investors Garnered High Returns Following Prior Resets in Values There is strong latent investor demand for real estate investment, waiting for an indication that values have reset. This has historically been the signal for a period of above-average returns. Real Estate Closed-End Fund Returns by Vi
Slide 32: Appendix 3: Financial Tables & Reconciliations
Appendix 3: Financial Tables & Reconciliations
Slide 33: Non-GAAP Financial Measures
Non-GAAP Financial Measures NON-GAAP FINANCIAL MEASURES This document contains non-GAAP financial measures that differ from the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"). Non-GAAP financial mea
Slide 34: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) - Charges related to amortization of RSUs and limited partnership units. - Charges related to grants of equity awards, including common stock or partnership units with capital accounts. - Allocations of net income to limited partnership units and FPUs. Such al
Slide 35: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) - Newmark views the fully diluted share count reduction related to the 2021 Equity Event to be economically similar to the common practice among public companies of issuing the net amount of common shares to employees for their vested stock-based compensation,
Slide 36: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) - Realized gains or losses and unrealized mark-to-market gains or losses with respect to Nasdaq shares received prior to the Earn-out acceleration. - The impact of any unrealized non-cash mark-to-market gains or losses on “Other income (loss)” related to the N
Slide 37: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) The share count for Adjusted Earnings excludes certain shares and share equivalents expected to be issued in future periods but not yet eligible to receive dividends and/or distributions. Each quarter, the dividend payable to Newmark’s stockholders, if any, is
Slide 38: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) ADJUSTED EBITDA DEFINED Newmark also provides an additional non-GAAP financial performance measure, “Adjusted EBITDA”, which it defines as GAAP “Net income (loss) available to common stockholders”, adjusted for the following items: – Net income (loss) attribut
Slide 39: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) Since Newmark’s Adjusted EBITDA is not a recognized measurement under GAAP, investors should use this measure in addition to GAAP measures of net income when analyzing Newmark’s operating performance. Because not all companies use identical EBITDA calculations
Slide 40: Reconciliation of GAAP Net Income to Adjusted Earnings
Reconciliation of GAAP Net Income Available to Common Stockholders to Adjusted Earnings Before Noncontrolling Interests And Taxes And GAAP Fully Diluted EPS to Post-Tax Adjusted EPS (in Thousands, Except per Share Data) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023
Slide 41: Reconciliation of GAAP Net Income to Adjusted Earnings (continued)
Reconciliation of GAAP Net Income Available to Common Stockholders to Adjusted Earnings Before Noncontrolling Interests And Taxes And GAAP Fully Diluted EPS to Post-Tax Adjusted EPS (continued) (in Thousands, Except per Share Data) (Unaudited) (Continued) Three Months Ended June 30, Six Months Ended
Slide 42: Reconciliation of GAAP Net Income to Adjusted Earnings (continued)
Reconciliation of GAAP Net Income Available to Common Stockholders to Adjusted Earnings Before Noncontrolling Interests And Taxes And GAAP Fully Diluted EPS to Post-Tax Adjusted EPS (continued) (in Thousands, Except per Share Data) (Unaudited) (Continued) (1) Newmark’s GAAP provision (benefit) for i
Slide 43: Reconciliation of GAAP Income to Adjusted EBITDA
Reconciliation of GAAP Income to Adjusted EBITDA (in Thousands) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 GAAP net income available to common stockholders $ 6,429 $ 48,519 $ (3,921) $ 48,881 Adjustments: Net income attributable to noncontrolling interests(
Slide 44: Reconciliation of GAAP pre-tax income excluding other income and 2021 Equity Event
Reconciliation of “GAAP pre-tax income” to “GAAP pre-tax income excluding other income and the 2021 Equity Event” (in Thousands) (Unaudited) Three months ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 GAAP income (loss) before income taxes and noncontrolling interests ("GAAP pre-tax in
Slide 45: Liquidity Analysis Table
Liquidity Analysis Table (in Thousands) (Unaudited) June 30, 2023 December 31, 2022 Cash and cash equivalents $ 164,365 $ 233,016 Marketable securities 310 788 Total (1) $ 164,675 $ 233,804 (1) In addition to the total Liquidity figures shown above, Newmark's undrawn amount on the Credit Facility wa
Slide 46: Other Income
Other Income ($ in Millions) 2Q23 2Q22 Change YTD 2023 YTD 2022 Change $- Nasdaq Impact $- $0.30 (100.0%) $(87.4) 100.0% Mark-to-market gains on non-marketable investments, net - (15.5) 100% - (13.9) 100.0% Other items, net 3.9 - NMF 0.9 - NMF Other income (loss), net under GAAP 3.9 (15.2) 125.7% 0.
Slide 47: Media and Investor Contacts
MEDIA CO NT ACT INVEST O R CO NT ACT Find out more about Newmark For additional insights from Newmark Research, at the following sites: please go to the following websites: Deb Bergman Jason McGruder t 303-260-4307 nmrk.com nmrk.com/insights John Brennan t 212-829-7124 twitter.com/newmark nmrk.com/s