Slide 1: Fourth Quarter Financial Results Presentation
Fourth Quarter Financial Results Presentation Newmark Group, Inc. (NMRK) February 16, 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) Other Industry Data The speed of interest rate increases is as measured by the change in the Fed Funds Rate as reported by Bloomberg. Preqin estimated that there was approximately $436 billion of investible dry powder held by global closed-end fund
Slide 4: Recent Consolidated Results
Recent Consolidated Results HIGHLIGHTS OF CONSOLIDATED RESULTS ($ IN MILLIONS) 4Q22 4Q21 Change 2022 2021 Change Total Revenues $607.3 $984.5 (38.3)% $2,705.5 $2,906.4 (6.9)% GAAP income before income taxes and noncontrolling interests ("GAAP pre-tax income") 18.5 221.5 (91.6)% 154.6 1,221.1 (87.3)%
Slide 5: Leading Global Commercial Real Estate (CRE) Services Provider
Leading Global Commercial Real Estate (CRE) Services Provider Large Scale Player 2022 Revenues 2022 AEBITDA 2021 + 2022 Transaction Volume Professionals Global Client Service Locations $2.7B $510.7MM ~$1T ~6,700 ~180 Top 5 Global Public Acclaimed 55+ Companies acquired since 2011; CRE Services Compa
Slide 6: Fourth Quarter and Full Year 2022 Highlights
Fourth Quarter and Full Year 2022 Highlights $0.32 16.8% $607.3MM $102.2MM POST-TAX ADJUSTED REVENUES ADJUSTED EBITDA ADJUSTED EBITDA EPS MARGIN - Increased Fees from management services, servicing, and other by 18.3% in 2022. - Grew the percentage of annual total revenues from these businesses by o
Slide 7: Management Commentary on Business Trends
Management Commentary on Business Trends Management Services, Leasing & Other Commissions Investment Sales Commercial Mortgage Servicing Fees and other Origination, net - Structural review of office design and - Companies continue to assess the - Approximately $436 billion of global dry - Over $2.5
Slide 8: 4Q 2022 Revenue Detail
4Q 2022 Revenue Detail1 Commercial mortgage Investment sales origination, net Commercial mortgage Management services, origination, net servicing fees, & other -62.8% -51.7% $305.2 12.1% $151.7 $73.3 $113.5 36.3% 18.7% 4Q 2021 4Q 2022 4Q 2021 4Q 2022 4Q 2022 Revenue by Business Leasing and other com
Slide 9: FY 2022 Revenue Detail
FY 2022 Revenue Detail1 Commercial mortgage Investment sales origination, net Commercial mortgage Management services, origination, net servicing fees, & other -11.9% -20.0% 13.2% $406.0 $357.8 $757.7 $606.4 33.6% FY21 FY22 FY21 FY22 22.4% FY 2022 Revenue by Management services, Business Leasing and
Slide 10: Newmark Quarterly Volumes
Newmark Quarterly Volumes ($ IN MILLIONS) 4Q22 4Q21 % Change 2022 2021 % Change Investment Sales 11,815 36,949 (68.0)% 71,584 88,009 (18.7)% Mortgage Brokerage 6,648 17,968 (63.0)% 38,014 41,324 (8.0)% Total Capital Markets 18,463 54,917 (66.4)% 109,598 129,333 (15.3)% Fannie Mae 429 1,569 (72.6)% 4
Slide 11: Mortgage Servicing Provides Recurring, High-Margin Revenues
Mortgage Servicing Provides Recurring, High-Margin Revenues Servicing Portfolio Composition as of 12/31/2022 Newmark Fannie Mae/Freddie Mac Portfolio Maturities by Year Fannie Mae 39.0% FHA/Other 8.2% 49.7% 35.2% $70.7 Billion Limited Servicing 18.1% 13.6% Special Servicing Freddie Mac 2.4% 1.5% 32.
Slide 12: Strong Balance Sheet & Credit Metrics
Strong Balance Sheet & Credit Metrics AS OF 12/31/2022 ($ IN MILLIONS) Cash and Cash Equivalents1 $233.0 Credit Metrics as of 12/31/2022 Interest Rate Maturity $510.7 million TTM Adjusted EBITDA Senior Notes 6.125% 11/15/2023 $547.8 Credit Facility N/A 3/10/2025 - 0.6x Total Long-term Debt2 $547.8 N
Slide 13: Strong Financial Position & Cash Generation to Support Growth
Strong Financial Position & Cash Generation to Support Growth Average of $345 MM+ of Annual Cash Low Risk Variable Cost Generated Intermediary Structure by the Business3 - Virtually no balance sheet risk1 - Approximately 70% of expenses are - $2.5 billion of AEBITDA and $2.1 billion of variable2 cas
Slide 14: Updated Outlook for 2023
Updated Outlook for 2023 1Q 2023 FY2022 FY 2023 Metric (in millions, except tax rate) 1Q 2022 Actual Change YoY Change YoY Guidance Actual Guidance Total Revenues $678.2 $500- $550 (26% - 19%) $2,705.5 $2,500 - $2,700 (8% - 0%) Adjusted EBITDA $126.5 $55 - $75 (57% - 41%) 510.7 $425 - $510 (17% - 0%
Slide 15: Newmark Has Used its Significant Cash Generation to Fuel Returns of Capital to Shareholders
Newmark Has Used its Significant Cash Generation to Fuel Returns of Capital to Shareholders Newmark's Shareholder Return by Category 600 23 500 400 294 99 300 200 210 295 100 105 203 88 7 0 42 2018 2019 2020 2021 2022 2021 Equity Event Share Repurchases Dividends and Distributions - Since our IPO, N
Slide 16: Newmark has Increased Investment Sales and Debt Volumes Times Faster than the Market
Newmark has Increased Investment Sales and Debt Volumes 10 Times 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% $40 4
Slide 17: Record Quantities of Debt Maturing in 2023-2024
Record Quantities of Debt Maturing in 2023-2024 Commercial Mortgage Maturities by Original Loan Term U.S. Commercial Mortgage Maturities ($B) 600 ~$1.1 T of Debt Maturing 500 400 300 200 100 0 Bank Insurance CMBS GSE Debt Fund Other - Nearly $2.3 trillion (according to Newmark Research and RCA) or $
Slide 18: GAAP Financial Results
GAAP Financial Results
Slide 19: 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: 2022 2021 2022 2021 Management services, servicing fees and other $ 220,302 $ 263,986 $ 909,485 $ 915,7
Slide 20: Condensed Consolidated Statements of Operations (continued)
Newmark Group, Inc. Condensed Consolidated Statements of Operations (continued) (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) NEWMARK 20
Slide 21: Condensed Consolidated Balance Sheets
Newmark Group, Inc. Condensed Consolidated Balance Sheets (IN THOUSANDS) (UNAUDITED) (UNDER GAAP) December 31, 2022 December 31, 2021 Assets Current Assets: Cash and cash equivalents $ 233,016 $ 191,332 Restricted cash 79,936 75,168 Marketable securities 788 524,569 Loans held for sale, at fair valu
Slide 22: 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, 2022 2021 2022 2021 Net cash provided by (used in) operating activities $ 931,608 $ 277,848 $ 1,196,343 $ (48,709) Net cash p
Slide 23: Appendix 1: Additional Information on Newmark
Appendix 1: Additional Information on Newmark
Slide 24: Fully Diluted Period-End Share Count Summary
Newmark Group, Inc. Fully Diluted Period-End Share Count Summary As of December 31, 2022 Fully-Diluted Shares (millions) Ownership (%) Class A owned by Public 127.4 54% Limited partnership units owned by employees 1 37.2 16% Class A owned by employees 23.0 10% Other owned by employees 2.3 1% Partner
Slide 25: Analysis of Adjusted EBITDA Relative to Cash Flow and Cash Generated by the Business
Analysis of Adjusted EBITDA Relative to Cash Flow and Cash Generated by the Business Strong EBITDA conversion to Cash Flow Adjusted EBITDA vs Cash Generated Analysis Adjusted EBITDA Net cash provided by operating activities excluding activity from loan originations and All Employee loans (Left Axis,
Slide 26: Appendix 2: Additional Industry Information
Appendix 2: Additional Industry Information
Slide 27: 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 28: Industry Activity Concentrates in Apartment and Industrial Sectors
Industry Activity Continues to Concentrate In The Apartment and Industrial Sectors, Though Retail Investment Has Also Outperformed—Office Share Continues to Decline Share of U.S. Investment Sale Volume 45% 41% 40% 38% 35% 34% 32% 32% 31% 30% 27% 25% 23% 24%24% 19%19% 20% 20% 19% 17% 16% 14% 15% 14%
Slide 29: A Robust Return to Office Could Change Expectations
A Robust Return to Office Could Change Expectations 1.2 1 0.8 0.6 0.4 0.2 0 10-Market Averag Market Minimum Market Maximum - 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 sin
Slide 30: Appendix 3: Financial Tables & Reconciliations
Appendix 3: Financial Tables & Reconciliations
Slide 31: 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 32: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) - Allocations of net income to limited partnership units and FPUs. Such allocations represent the pro-rata portion of post-tax GAAP earnings available to such unit holders. The amount of certain quarterly equity-based compensation charges is based upon the Com
Slide 33: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) Calculation of Non-Compensation Expense Adjustments for Adjusted Earnings Newmark’s calculation of pre-tax Adjusted Earnings excludes non-cash GAAP charges related to the following: - Amortization of intangibles with respect to acquisitions. - GAAP gains attri
Slide 34: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) Newmark's calculations of non-GAAP “Other income (loss)” for certain prior periods includes dividend income on its Nasdaq shares, as these dividends contributed to cash flow and were generally correlated to Newmark's interest expense on short term borrowing ag
Slide 35: 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 36: 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 37: 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 38: Reconciliation of GAAP Net Income to Adjusted Earnings and Post-Tax Adjusted EPS
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, 2022 2021 20
Slide 39: 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 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 December 31, Year Ended D
Slide 41: 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, 2022 2021 2022 2021 GAAP net income available to common stockholders $ 6,427 $ 149,331 $ 83,275 $ 750,728 Adjustments: Net income attributable to noncontrolling interes
Slide 42: 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 December 31, Year Ended December 31, 2022 2021 2022 2021 GAAP income before income taxes and noncontrolling interests ("GAAP pre-tax income"
Slide 43: Liquidity Analysis Table; Reconciliation of Adjusted EBITDA to Operating Cash Flows
Liquidity Analysis Table (in Thousands) (Unaudited) LIQUIDITY ANALYSIS (in thousands) (unaudite d) December 31, December 31, 2022 2021 Cash and cash equivalents $ 233,016 $ 191,332 Marketable securities 788 524,569 Repurchase agreements and securities loaned - (140,007) Total (1) $ 233,804 $ 575,894
Slide 44: Other Income
Other Income ($ in Millions) Nasdaq Impact - $46.1 (100.0)% ($87.4) $1,203.1 (107.3)% Mark-to-market gains (losses) on non-marketable investments, net 1.0 (0.9) 211.1% (12.9) 1.6 (906.3)% Other items, net 2.7 - NMF 2.6 27.8 (90.6)% Other income (loss), net under GAAP 3.7 45.2 (91.8)% (97.7) 1,232.5
Slide 45: 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: Karen Laureano-Rikardsen Jason McGruder t 212-829-4975 nmrk.com nmrk.com/insights John Brennan t 212-829-7124 twitter.com/newma