Slide 1: Fourth Quarter 2023 Financial Results Presentation
Newmark Group, Inc. (Nasdaq: NMRK) Fourth Quarter 2023 Financial Results Presentation February 22, 2024 Property Type: Industrial NMRK.COM
Slide 2: Disclaimers
Disclaimers Discussion of Forward-Looking Statements References in this document to “we,” “us,” “our,” the “Company” and “Newmark” mean Newmark Group, Inc., and its consolidated subsidiaries. Statements in this document regarding Newmark that are not historical facts are "forward-looking statements"
Slide 3: Recent Consolidated Results
Recent Consolidated Results (USD millions, except per share data) 4Q23 4Q22 Change 2023 2022 Change Total Revenues $747.4 $607.3 23.1% $2,470.4 $2,705.5 (8.7)% GAAP income before income taxes and noncontrolling interests 82.4 18.5 346.6% 103.5 154.6 (33.1)% ("GAAP pre-tax income") GAAP net income fo
Slide 4: Leading Commercial Real Estate Advisor and Service Provider
Leading Commercial Real Estate Advisor and Service Provider 2023 Revenues 2022 + 2023 Transaction Volume Professionals Global Client Service Locations ~$2.5B ~$1.7T ~7,400 ~170 Strong Earnings, Cash Generation Top Global Public Acclaimed & Low Leverage CRE Services Companies Industry Leader Top 3 U.
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 Covering a Broad Geography Diversified Revenue Streams Revenues from “Management services, servicing fees, Increasingly diversified by region The addition of Focused investments driving continued reven
Slide 6: Fourth Quarter 2023 Highlights
Fourth Quarter 2023 Highlights1 $0.46 22.2% $747.4MM $166.2MM POST-TAX ADJUSTED REVENUES ADJUSTED EBITDA ADJUSTED EBITDA EPS MARGIN - Our fourth quarter results demonstrate our strong incremental margins. - Newmark grew revenues from Leasing and other commissions by 19.6% year-on-year in the fourth
Slide 7: 4Q 2023 Revenue Detail
4Q 2023 Revenue Detail Management services, servicing fees, and other Leasing and other commissions 19.9% 19.6% Commercial mortgage $264 origination, net $239 $220 $200 14.3% Investment sales 35.3% 4Q 2022 4Q 2023 4Q 2022 4Q 2023 18.3% 4Q 2023 Revenue Investment sales Commercial mortgage by Business
Slide 8: FY 2023 Revenue Detail
FY 2023 Revenue Detail Management services, Leasing and other servicing fees, and other commissions 6.8% 0.9% $971 $840 Commercial mortgage $909 $832 origination, net Investment sales 11.3% FY 2022 FY 2023 FY 2022 FY 2023 15.4% 39.3% Commercial mortgage FY 2023 Revenue origination, net by Business I
Slide 9: Servicing & Asset Management Provides Long-term and Recurring, High-Margin Revenues
Servicing & Asset Management Provides Long-term and Recurring, High-Margin Revenues Portfolio Composition as of 12/31/2023 Newmark Fannie Mae/Freddie Mac Portfolio Maturities by Year FHA/Other 5% 45% Fannie Mae 37% 17% $175.9 Billion Limited Servicing & Asset Management 63% 16% Freddie Mac 14% 2% Sp
Slide 10: Strong Balance Sheet & Credit Metrics
Strong Balance Sheet & Credit Metrics AS OF 12/31/2023, UNLESS OTHERWISE STATED ($ IN MILLIONS) Cash and Cash Equivalents $164.9 Credit Metrics as of 12/31/2023 Interest Rate Maturity Delayed Draw Term Loan Credit SOFR plus 2.625% 11/15/2026 $417.3 $398.3 million Agreement 2023 Adjusted EBITDA Canto
Slide 11: Strong Financial Position & Cash Generation
Strong Financial Position & Cash Generation Low Risk Strong Financial Profile & Strong Cash Flow Intermediary Credit Metrics – Capital-light model; we do not own real – Operates with investment grade credit – Newmark has a history of strong Cash Flow estate metrics (1.0x net leverage2 ratio as of Ge
Slide 12: 2024 Outlook
2024 Outlook1 Metric FY 2023 Actual Expected YoY Change Total Revenues (millions) $2,470.4 3% to 7% Adjusted EBITDA (millions) $398.3 5% to 9% Adjusted Earnings Per Share $1.05 5% to 9% Adjusted Earnings Tax Rate 15.1% 16% to 18% ‒ Due to the scale of its hiring and Newmark’s significant outperforma
Slide 13: Expect to Generate Record Revenue and Earnings When Industry Volumes Normalize
Expect to Generate Record Revenue and Earnings When Industry Volumes Normalize We anticipate strong incremental margins Newmark invested ~$326MM of cash $425 MM+ of Incremental Revenues Expect to Exceed Record 2021 for growth during 2023 Results ‒ Expect investments over the last ~14 ‒ Acquired Gera
Slide 14: Record Quantities of Debt Maturing in 2024-2028
Record Quantities of Debt Maturing in 2024-2028 $1.3T of Outstanding CRE Debt is Potentially Troubled, $670B of this is Maturing in 2024-20261 1000 U.S. Commercial Mortgage Maturities ($B) 900 ~$2T 800 700 Dollars in Billions 600 500 400 300 200 100 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 202
Slide 15: Distress Creates Demand for Newmark Services
Distress Creates Demand for Newmark Services Investment Sales Financing — Loan and REO-disposition and syndication — Sell-downs for loan portfolio acquirers — Loan acquisition financing — Equity recapitalizations — Debt restructuring and syndication — Loan Sales and re-sales — GSE/FHA origination —
Slide 16: GAAP Financial Results
GAAP Financial Results Property Type: Multifamily NEWMARK 16
Slide 17: 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 December 31, Year Ended December 31, Revenues: 2023 2022 2023 2022 Management services, servicing fees and other $ 264,176 $ 220,302 $ 970,877 $ 909,4
Slide 18: Condensed Consolidated Statements of Operations (continued)
Newmark Group, Inc. Condensed Consolidated Statements of Operations (continued) (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) Per share data: Basic earnings per share Net income available to common stockholders $ 36,548 $ 6,427 $ 42,575 $ 83,275 Basic earnings per share $ 0.21 $ 0.0
Slide 19: Condensed Consolidated Balance Sheets
Newmark Group, Inc. Condensed Consolidated Balance Sheets (IN THOUSANDS) (UNAUDITED) (UNDER GAAP) December 31, 2023 December 31, 2022 Assets Current Assets: Cash and cash equivalents $ 164,894 $ 233,016 Restricted cash 93,812 79,936 Loans held for sale, at fair value 528,944 138,345 Receivables, net
Slide 20: 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 December 31, Year Ended December 31, 2023 2022 2023 2022 Net cash provided by (used in) operating activities $ 219,977 $ 931,608 $ (265,961) $ 1,196,343 Net cash
Slide 21: Appendix 1: Additional Information on Newmark
Appendix 1: Additional Information on Newmark Property Type: Office NEWMARK 21
Slide 22: Newmark Volumes
Newmark Volumes1 ($ IN MILLIONS) 4Q23 4Q22 % Change 2023 2022 % Change Investment Sales 31,642 11,815 167.8% 57,686 71,584 (19.4)% Mortgage Brokerage 22,640 6,648 240.6% 35,679 38,014 (6.1)% Total Capital Markets 54,282 18,463 194.0% 93,365 109,598 (14.8)% Fannie Mae 1,054 429 145.4% 3,045 4,076 (25
Slide 23: Long-Term Track Record of Gaining Share in Capital Markets
Newmark Has a Long-Term Track Record of Gaining Share in Capital Markets NMRK Total Debt Volume NMRK Investment Sales Volume Signature Debt 100 Signature Investment Sales NMRK Debt Market Share (line) NMRK Investment Sales Market Share (line) 12.00% 90 10.00% 80 70 8.00% Billions 60 50 6.00% 40 4.00
Slide 24: Management Services and Leasing Equal or Surpass Pre-Pandemic Levels
Management Services and Leasing Equal or Surpass Pre-Pandemic Levels; Capital Markets Environment Remains Challenging Management services, servicing fees Leasing and Other Commissions Non-Capital Markets Total and other 854.8 839.6 826.9 831.9 1,810.5 1,742.7 1,741.4 970.8 100% 97% 98% 97% 1,478.8 1
Slide 25: Newmark Continues to Invest in Industrial and Retail Leasing
Newmark Continues to Invest in Industrial and Retail Leasing Newmark’s overall leasing revenues have remained relatively stable, led by our strength in industrial and retail. Our leasing revenues for these two property types were up by 52% in 2023 compared with 2019. Other Other Industrial 7% 4% Ind
Slide 26: Strong Growth in Recurring Revenues
Strong Growth in Recurring Revenues Provides Stable Base of Revenues ($ in millions) Pass through revenues Fees from management services, servicing, and other 17% & 19% Our fees from these businesses have respective grown 179% between 2017 and 2023. Total & Fee Revenue CAGRs 32% 39% $916 $971 28% $6
Slide 27: Increasing Percentage of International Revenue
Increasing Percentage of International Revenue Newmark’s Non-U.S. Revenue 12.5% We continued to make progress towards 67% increasing international revenues. Revenue CAGR 7.1% With our recent international hires, we expect to further increase our non-U.S. revenues over time. 4.5% Our full service U.S
Slide 28: Fully Diluted Period-End Share Count Summary
Newmark Group, Inc. Fully Diluted Period-End Share Count Summary As of December 31, 2023 Fully Diluted Shares (millions) Ownership (%) Class A owned by Public 133.1 54% Limited partnership units owned by employees1 47.3 19% Class A owned by employees 19.5 8% Other owned by employees 2.7 1% Partnersh
Slide 29: Newmark's Commitment to ESG
E N V I R O N M E N T AL , S O C I AL & G O V E R N AN C E Newmark’s Commitment to ESG For Our Company For Our Clients Our ESG policies and practices generate sustainable Newmark’s property and facility management teams long-term value for Newmark as a global citizen. improve client’s workplace sust
Slide 30: Certain Revenue Terms Defined
Certain Revenue Terms Defined Fee and non-fee revenues The Company’s total revenues include certain management services revenues that equal their related expenses. These revenues represent fully reimbursable compensation and non-compensation costs recorded as part of Newmark's Global Corporate Servi
Slide 31: Other Useful Information: Signature Transactions
Other Useful Information Signature Transactions The book value of the overall loan portfolio was approximately $60 billion when Newmark was retained as an advisor by the FDIC and approximately $53 billion when the Company began marketing the loans, while the completed transactions had a combined not
Slide 32: Other Useful Information (continued)
Other Useful Information (continued) Cash Flow Conversion Ratios and Cash Generated by the Business Net cash provided by operating activities under GAAP has totaled ~55% of Adjusted EBITDA and ~76% of Post-tax Adjusted Earnings from 2017 (our IPO Year) through 2023. Net cash provided by operating ac
Slide 33: Other Useful Information (continued)
Other Useful Information (continued) Other Industry Data Preqin estimates that there was approximately $405 billion of investible dry powder held by global closed-end funds at real estate focused institutions as of December 2023, of which $259 billion was held by North American focused funds and $71
Slide 34: Appendix 2: Additional Industry Information
Appendix 2: Additional Industry Information Property Type: Office NEWMARK 34
Slide 35: Return to Workplace Continues to Improve Year-Over-Year
Return to Workplace Continues to Improve Year-Over-Year While workplace utilization has not reached pre-pandemic levels, year-over-year change suggests improvement As a % of 2019 levels 77% 76% 76% 75% 71% 61% 59% 58% 51% 48% Kastle U.S. Freespace (Americas) Freespace (EMEA) Freespace (APAC) SWAA* 4
Slide 36: Retail and Industrial Fundamentals Are Expected To Remain Solid
Retail and Industrial Fundamentals Are Expected To Remain Solid Office expected to begin recovering next year. Green Street Market Rental Income Per Available Foot: Baseline Forecast Multifamily Industrial Office Retail1 14.0% 12.5% 12.0% 10.0% 8.0% 6.0% 4.7% 4.2% 4.0% 2.6% CAGR 1.8% 1.8% 1.4% 2.0%
Slide 37: Appendix 3: Financial Tables & Reconciliations
Appendix 3: Financial Tables & Reconciliations Property Type: Multifamily NEWMARK 37
Slide 38: 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 39: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) - Charges with respect to preferred units. Any preferred units would not be included in the Company’s fully diluted share count because they cannot be made exchangeable into shares of common stock and are entitled only to a fixed distribution. Preferred units
Slide 40: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) Excluded Compensation-Related Items with Respect to the 2021 Equity Event under Adjusted Earnings and Adjusted EBITDA Newmark does not view the cash GAAP compensation charges related to 2021 Equity Event (the "Impact of the 2021 Equity Event") as being reflect
Slide 41: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) Calculation of Other income (loss) for Adjusted Earnings and Adjusted EBITDA Adjusted Earnings calculations also exclude certain other non-cash, non-dilutive, and/or non-economic items, which may in some periods include: – Unusual, non-ordinary or non-recurrin
Slide 42: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) METHODOLOGY FOR CALCULATING ADJUSTED EARNINGS TAXES Although Adjusted Earnings are calculated on a pre-tax basis, Newmark also reports post-tax Adjusted Earnings to fully diluted shareholders. The Company defines post-tax Adjusted Earnings to fully diluted sha
Slide 43: 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 44: 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 45: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) MANAGEMENT RATIONALE FOR USING ADJUSTED EBITDA Newmark’s calculation of Adjusted EBITDA excludes certain items discussed above because they are either non-cash in nature, because the anticipated benefits from the expenditures are not expected to be fully reali
Slide 46: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) – Certain equity-based compensation charges that may be determined at the discretion of management. – Unusual, non-ordinary, or non-recurring items. – The impact of gains or losses on certain marketable securities, as well as any gains or losses related to ass
Slide 47: 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 December 31, Year Ended December 31, 2023 2022 20
Slide 48: 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) GAAP Net income available to common stockhol
Slide 49: 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 December 31, Year Ended D
Slide 50: Reconciliation of GAAP Income to Adjusted EBITDA
Reconciliation of GAAP Income to Adjusted EBITDA (in Thousands) (Unaudited) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 GAAP net income available to common stockholders $ 36,548 $ 6,427 $ 42,575 $ 83,275 Adjustments: Net income attributable to noncontrolling interests
Slide 51: Reconciliation of GAAP pre-tax income excluding other income
Reconciliation of “GAAP pre-tax income” to “GAAP pre-tax income excluding other income” (in Thousands) (Unaudited) Three months ended December 31, Year Ended December 31, 2023 2022 2023 2022 GAAP income (loss) before income taxes and noncontrolling interests ("GAAP pre-tax income") 82,425 18,456 103
Slide 52: Liquidity Analysis Table
Liquidity Analysis Table (in Thousands) (Unaudited) December 31, 2023 December 31, 2022 Cash and cash equivalents $ 164,894 $ 233,016 Marketable securities (1) 99 788 Total (2) $ 164,993 $ 233,804 (1) Since the majority of the Company's marketable securities have been sold, liquidity is primarily co
Slide 53: Other Income
Other Income ($ in Millions) Three Months Ended Year Ended December 31, December 31, 2023 2022 2023 2022 Nasdaq Impact $- $- $- ($87.4) Mark-to-market gains (losses) on non-marketable investments, net (2.8) 1.0 1.7 (12.9) Other items, net 12.5 2.7 12.1 2.6 Other income (loss), net under GAAP 9.7 3.7
Slide 54: Media and Investor Contacts
M E D IA C ON T AC T IN V E S T OR C ON T AC T 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