Newmark Group (NMRK) Q4 2020 earnings summary

Executive summary

• FY 2020 revenue fell 14.1% to $1.905B as COVID-19 depressed leasing and capital markets activity; lower costs and stronger mortgage origination partly offset the decline.

• GAAP net income available to common stockholders was $80.1M and diluted EPS was $0.39; Adjusted EBITDA was $357.7M.

Financial highlights

• Revenue was $1.905B versus $2.218B in 2019; operating income was $184.0M versus $246.2M, and net income available to common stockholders was $80.1M versus $117.3M.

• GAAP diluted EPS was $0.39 versus $0.58; Adjusted Earnings per share was $0.93 versus $1.61, and Adjusted EBITDA was $357.7M versus $564.2M.

• Operating expenses declined 15.4% to $1.736B; compensation and benefits fell 10.1% and operating, administrative and other expenses fell 18.6%.

• Adjusted for non-cash and other excluded items, FY 2020 pre-tax Adjusted Earnings were $296.8M and post-tax Adjusted EPS was $0.93.

Outlook and guidance

• Management expected U.S. capital markets activity to improve, led by multifamily, life sciences and industrial; leasing was expected to remain challenged pending greater clarity on office returns.

• 2021 GSE multifamily lending caps were $70B each for Fannie Mae and Freddie Mac; management expected GSE volumes to remain strong.

• Management anticipated demand growth across industrial, multifamily, life sciences, medical office, seniors housing and self-storage, alongside further expansion of recurring revenue.

• Economists surveyed projected U.S. GDP growth of 4.3% in 2021, 3.0% in 2022 and 2.4% in 2023, with low rates and inflation expected to support activity.