Newmark Group (NMRK) Q4 2017 earnings summary

Executive summary

• FY 2017 revenue reached a record $1.596 billion, up 18% YoY; more than 80% of growth was organic, supported by cross-selling and producer productivity.

• Completed the IPO and Berkeley Point acquisition, expanding the multifamily financing and servicing platform; revenue and earnings growth are expected to continue through hiring, acquisitions, technology and cross-selling.

Financial highlights

• Revenue rose 18% to $1.596 billion; leasing and other commissions grew 20%, capital markets 19%, mortgage banking gains 7%, and management services, servicing fees and other 22%.

• GAAP operating income increased 19% to $199.8 million; net income available to common stockholders declined 14% to $144.5 million.

• Adjusted pre-tax earnings rose 74% to $322.8 million and post-tax Adjusted Earnings rose 74% to $264.1 million; Adjusted EBITDA before unit allocations increased 72% to $373.5 million.

• Excluding $76 million of Nasdaq-share income, pre-tax Adjusted Earnings increased 33%; GAAP net income included an approximately $65 million one-time deferred-tax remeasurement charge.

Outlook and guidance

• Expected further revenue and earnings growth from cross-selling, higher productivity, technology and data investment, profitable hiring, and accretive acquisitions.

• Berkeley Point and ARA are expected to drive multifamily financing and sales synergies; greater capture of financing on ARA transactions is a targeted growth opportunity.

• Standalone public equity is expected to support talent recruitment and acquisitions; international expansion is a growth avenue, with less than 1% of FY 2017 revenue generated internationally.