Newmark Group, Inc. · NASDAQ:NMRK
Newmark — Q1 2023 Earnings Presentation
46 slides from Newmark's earnings presentation, May 5, 2023
Slide 1: First Quarter Financial Results Presentation
First Quarter Financial Results Presentation Newmark Group, Inc. (NMRK) May 5, 2023
Slide 2: Disclaimer and Other Useful Information
Disclaimer and Other Useful Information 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
Slide 3: Disclaimer and Other Useful Information (Continued)
Disclaimer and Other Useful Information (Continued) Newmark and Industry Volumes Newmark’s investment sales figures include investment sales and equity advisory transactions, while mortgage brokerage figures include the Company’s debt placement transactions, all measured in notional terms. The Compa
Slide 4: Recent Consolidated Results
Recent Consolidated Results HIGHLIGHTS OF CONSOLIDATED RESULTS ($ in millions, except per share data) 1Q23 1Q22 Change Revenues $520.8 $678.2 (23.2)% GAAP income before income taxes and noncontrolling interests ("GAAP pre-tax income") (19.4) 4.7 NMF GAAP net income for fully diluted shares (10.4) 0.
Slide 5: Leading Global Commercial Real Estate Services Provider
Leading Global Commercial Real Estate (CRE) Services Provider Large Scale Player TTM Revenues TTM AEBITDA 2021 + 2022 Transaction Volume Professionals Global Client Service Locations $2.5B+ $447.1MM ~$1T ~7,300 ~170 Top Global Public Acclaimed 55+ Companies acquired since 2011; CRE Services Company
Slide 6: Leading CRE Services Platform with Diverse Revenue Streams
Leading CRE Services Platform with Diverse Revenue Streams Leading CRE Platform Diversified Revenue Streams Covering a Broad Geography Allows us to be a one-stop shop Multifamily and industrial were 43% of total revenue Increasingly diversified by region for our clients & should benefit from long-te
Slide 7: First Quarter 2023 Highlights
First Quarter 2023 Highlights $0.15 12.1% $520.8MM $62.9MM POST-TAX ADJUSTED REVENUES ADJUSTED EBITDA ADJUSTED EBITDA EPS MARGIN - The FDIC awarded Newmark the mandate to sell the $60 billion Signature Bank loan portfolio. - Newmark hired top capital markets producers across industrial, office, and
Slide 8: Management Commentary on Business Trends
Management Commentary on Business Trends Management Services, Leasing & Other Commissions Investment Sales2 Commercial Mortgage Origination, Servicing Fees and other1 net2 - A majority of Gerald Eve’s FY2022 revenues1 - Companies continue to assess the impact of - Hired some of the industry’s best t
Slide 9: 1Q 2023 Revenue Detail
1Q 2023 Revenue Detail Commercial mortgage Investment sales origination, net Commercial mortgage Investment origination, net -52.7% sales -54.1% $94.1 8.3% $152.1 $43.2 $72.0 13.8% 1Q 2022 1Q 2023 1Q 2022 1Q 2023 40.8% 1Q 2023 Revenue by Management services, Business Leasing and other commissions se
Slide 10: Newmark Quarterly Volumes
Newmark Quarterly Volumes ($ IN MILLIONS) 1Q23 1Q22 % Change 1Q 2023 TTM 1Q 2022 TTM % Change Investment Sales 7,396 18,958 (61.0)% 60,021 95,290 (37.0)% Mortgage Brokerage 2,889 10,193 (71.7)% 30,709 47,141 (34.9)% Total Capital Markets 10,284 29,152 (64.7)% 90,730 142,430 (36.3)% Fannie Mae 616 1,
Slide 11: NMRK Increased its Overall Servicing & Asset Management Portfolio
NMRK Increased its Overall Servicing & Asset Management Portfolio FHA/Other Limited Servicing 3.4% 65.3% Fannie Mae 16.4% Bank 57.7% Servicing Portfolio Limited Servicing Portfolio Composition as Composition as of 3/31/2022 of 3/31/2022 $168.8 B $110.1 B Freddie Mac 13.5% Fund 31.5% Special Servicin
Slide 12: Servicing & Asset Management Provides Recurring, High-Margin Revenues
Servicing & Asset Management Provides Recurring, High-Margin Revenues Portfolio Composition as of 3/31/2022 Newmark Fannie Mae/Freddie Mac Portfolio Maturities by Year 47.3% Limited Servicing 66.0% 36.9% $168.8 Billion FHA/Other 1.7% 14.1% Freddie Mac Fannie Mae 14.8% 16.5% Special Servicing 1.7% 1.
Slide 13: Strong Balance Sheet & Credit Metrics
Strong Balance Sheet & Credit Metrics AS OF 3/31/2023 ($ IN MILLIONS) Cash and Cash Equivalents1 $210.7 Credit Metrics as of 3/31/2023 Interest Rate Maturity $447.1 million TTM Adjusted EBITDA Senior Notes 6.125% 11/15/2023 $548.4 Credit Facility2 3/10/2025 225.0 1.3x Total Debt3 $773.4 Net Leverage
Slide 14: 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 15: Updated Outlook for 2023
Updated Outlook for 2023 Metric (in millions, except tax rate) FY 2022 Actual FY 2023 Guidance Change YoY $2,705.5 $2,500 - $2,700 Total Revenues (8%) - 0% $510.70 $425 - $510 Adjusted EBITDA (17%) - 0% 17.1% ~14% - 17% Adjusted Earnings Tax Rate N/A ‒ The Company expects to be near the low end of i
Slide 16: Newmark has Increased Investment Sales and Debt Volumes Faster than the Market
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 8% Newmark Market Share (%) $60 $50 6%
Slide 17: Record Quantities of Debt Maturing in 2023-2024
Record Quantities of Debt Maturing in 2023-2024 Commercial Mortgage Maturities by Original Loan Term ($B) ~$1.4 T of Debt Maturing $800.00 $727.9 $700.00 $658.7 $600.00 $538.7 $500.00 $400.00 $382.8 $322.0 $300.00 $200.00 $100.00 $0.00 2023 2024 2025 2026 2027 CMBS, CDO or other ABS Life Insurance C
Slide 18: $60B Loan Sale is Largest in U.S. History
$60B Loan Sale is Largest in U.S. History Largest U.S. Real Estate Loan Sales 80 70 Recent Large Loan Sales: 60 NMRK Signature Bank Size Seller On Behalf of Year 50 Signature 60.0 NMRK 2023 40 Bank 23.0 Eastdil Secured GE Capital 2015 30 GE Capital 9.7 Eastdil Secured Anglo Irish 2011 9.0 Citigroup,
Slide 19: GAAP Financial Results
GAAP Financial Results
Slide 20: 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 March 31 Revenues: 2023 2022 Management services, servicing fees and other $ 212,292 $ 233,120 Leasing and other commissions 193,306 198,952 Investmen
Slide 21: 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 March 31, 2023 2022 Per share data: Basic earnings per share Net income (loss) available to common stockholders $ (10,350) $ 362 Basic ear
Slide 22: Condensed Consolidated Balance Sheets
Newmark Group, Inc. Condensed Consolidated Balance Sheets (IN THOUSANDS) (UNAUDITED) (UNDER GAAP) March 31, 2023 December 31, 2022 Assets Current Assets: Cash and cash equivalents $ 210,724 $ 233,016 Restricted cash 83,980 79,936 Marketable securities 441 788 Loans held for sale, at fair value 434,8
Slide 23: 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 March 31, 2023 2022 Net cash provided by (used in) operating activities $ (398,840) $ 502,155 Net cash provided by (used in) investing activities (118,059) 426,79
Slide 24: Appendix 1: Additional Information on Newmark
Appendix 1: Additional Information on Newmark
Slide 25: Fully Diluted Period-End Share Count Summary
Newmark Group, Inc. Fully Diluted Period-End Share Count Summary As of March 31, 2023 Fully-Diluted Shares (millions) Ownership (%) Class A owned by Public 130.3 54% Limited partnership units owned by employees 1 39.6 16% Class A owned by employees 22.9 10% Other owned by employees 2.1 1% Partnershi
Slide 26: Management Services and Leasing Surpass Pre-Pandemic Levels
Management Services and Leasing Surpass Pre-Pandemic Levels, While Capital Markets Environment Remained Challenging ($ In millions) & as % of 1Q 2019 Management services, servicing fees and other Leasing and other commissions 233.1 212.3 199.0 165% 193.3 187.8 151% 172.5 115% 165.1 112% 133% 100% 14
Slide 27: Analysis of Adjusted EBITDA Relative to Cash Flow
Analysis of Adjusted EBITDA Relative to Cash Flow and Cash Generated by the Business Strong EBITDA conversion Adjusted EBITDA vs Cash Generated Analysis to Cash Flow Adjusted EBITDA Net cash provided by operating activities excluding activity from loan originations and All Employee loans (Left Axis,
Slide 28: Appendix 2: Additional Industry Information
Appendix 2: Additional Industry Information
Slide 29: Capital Markets Volumes Grew Significantly Following Previous Downturns
Capital Markets Volumes Grew Significantly Following Previous Downturns RCA or MBA US Debt Originations RCA US Investments Sales $1,000 $900 $800 $700 $600 $500 Billions $400 $300 $200 $100 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 -
Slide 30: A Robust Return to Office Could Change Expectations
A Robust Return to Office Could Change Expectations - The Kastle Barometer, which measures daily occupancy in ten large U.S. cities versus pre-pandemic levels, climbed above 50 percent at the end of January for the first time since early 2020. NEWMARK 30 Source: Kastle, Newmark Research.
Slide 31: Appendix 3: Financial Tables & Reconciliations
Appendix 3: Financial Tables & Reconciliations
Slide 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 March 31, 2023 2022 GAAP net income available to
Slide 40: 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 March 31, 2023 2022 GAAP
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 March 31, 2023 2022 GAAP
Slide 42: Reconciliation of GAAP Income to Adjusted EBITDA
Reconciliation of GAAP Income to Adjusted EBITDA (in Thousands) (Unaudited) Three Months Ended March 31, 2023 2022 GAAP net income available to common stockholders $ (10,350) $ 362 Adjustments: Net income attributable to noncontrolling interests (1) (5,999) 352 Provision for income taxes (3,056) 4,0
Slide 43: Reconciliation of GAAP pre-tax income excluding other income and the 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 March 31, 2023 2022 GAAP income (loss) before income taxes and noncontrolling interests ("GAAP pre-tax income") (19,405) 4,718 Other income
Slide 44: Liquidity Analysis Table
Liquidity Analysis Table (in Thousands) (Unaudited) LIQUIDITY ANALYSIS (in thousands) (unaudited) March 31, 2023 December 31, 2022 Cash and cash equivalents $ 210,724 $ 233,016 Marketable securities 441 788 Total (1) $ 211,165 $ 233,804 (1) In addition to the total liquidity figures shown above, New
Slide 45: Other Income
Other Income ($ in Millions) 1Q23 1Q22 Change Nasdaq Impact - ($87.6) (100.0)% Mark-to-market gains on non-marketable investments, net - 1.6 (100.0)% Other items, net (3.0) - NMF Other income (loss), net under GAAP (3.0) (86.0) 96.5% To reconcile from GAAP other income (loss), exclude: Nasdaq-relate
Slide 46: Media and Investor Contact
ME DI A CO NTACT I NV E S TO R CO NTACT Find out more about Newmark For additional insights from Newmark Research, at the following sites: please go to the following websites: Karen Laureano-Rikardsen Jason McGruder t 212-829-4975 nmrk.com nmrk.com/insights John Brennan t 212-829-7124 twitter.com/ne