Newmark Group (NMRK) Q4 2023 earnings summary

Executive summary

• Q4 revenue rose 23.1% YoY to $747.4M; Adjusted EBITDA increased 62.6% to $166.2M and Adjusted EPS rose 43.8% to $0.46.

• FY 2023 revenue declined 8.7% to $2.47B, Adjusted EBITDA fell 22.0% to $398.3M and Adjusted EPS declined 29.5% to $1.05.

• Q4 growth spanned leasing, investment sales, mortgage origination and management services, supported by Signature portfolio transactions and market-share gains.

Financial highlights

• Q4 GAAP pre-tax income was $82.4M vs. $18.5M; diluted net income was $52.9M, or $0.21/share, vs. $8.9M, or $0.04/share.

• FY GAAP pre-tax income was $103.5M vs. $154.6M; diluted net income was $42.6M, or $0.24/share, vs. $110.4M, or $0.45/share.

• Q4 pre-tax Adjusted Earnings rose 58.3% to $133.9M; post-tax Adjusted Earnings increased 49.5% to $114.4M.

• FY pre-tax Adjusted Earnings fell 31.4% to $302.8M; post-tax Adjusted Earnings declined 29.1% to $258.7M.

• Q4 fee revenue grew 23.8% to $646.9M; growth excluding pass-through and non-cash OMSR revenue reflected gains across categories.

Outlook and guidance

• FY 2024 guidance: revenue growth of 3%–7%, Adjusted EBITDA and Adjusted EPS growth of 5%–9%, and an Adjusted Earnings tax rate of 16%–18%.

• Most YoY earnings improvement is expected in Q2 and Q3 2024; industry volumes are anticipated to accelerate through H2 2024.

• Of the $75M cost-savings plan, ~$35M was realized in 2023, $25M is expected in 2024 and the balance in 2025.

• Guidance excludes potential future acquisitions; adjusted diluted weighted-average shares are expected to grow 2% in 2024.

• Once industry volumes normalize, expected around mid-2025, illustrative annual targets are revenue above $3B and Adjusted EBITDA above $630M; not formal guidance.