Colliers International Group Inc. (CIGI) on Q3 2021 Results - Earnings Call Transcript
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Operator: 00:07 Hello and welcome to Colliers International Third Quarter twenty twenty one Investors Conference Call. Today's call is being recorded. Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may materially differ from any future results, performance or achievements comp contemplated in the forward-looking statements. 00:36 Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company's annual information form as filed with the Canadian Securities Administrators and in the company's annual report on Form 40-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is November two, twenty twenty one. 01:02 And at this time for opening remarks and introductions, I would like to turn the call over to the Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.
Jay Hennick: 01:13 Thank you, operator. Good morning and thanks for joining us for the third quarter conference call. As the operator mentioned, I'm Jay Hennick, Chairman and Chief Executive Officer of the company and with me today is Christian Mayer, Chief Financial Officer. As always, this call is being webcast and is available in the Investor Relations section of our website. A presentation slide deck is also there to accompany today's call. 01:43 Earlier today, Colliers delivered strong results for the third quarter with continued momentum across all service lines. Here are some of the highlights. Investment management again generated strong results for the quarter, raised a record four point nine billion dollars in capital commitments so far this year and finished the quarter with AUM or assets under management of more than forty six billion dollars. 02:13 Capital markets and leasing were both up significantly over the prior year, while our recurring outsource and advisory segment including engineering and design, property and project management and mortgage servicing and valuation also delivered solid internal growth. Given these strong results and the continued momentum we are seeing, we now expect Colliers to exceed the top end of the previously provided outlook as you'll hear from Christian in just a few minutes. 02:48 During the quarter, we released our Elevate the Built Environment framework designed to embed ESG practices across our organization. We are implementing specific targets to reduce carbon emissions and we have committed to net zero in our own operations by twenty thirty, expect more of our ESG efforts coming in the upcoming quarters. 03:16 Last week, Colliers formally announced its new Enterprise '25 Growth Strategy setting of ambitious growth targets for twenty twenty five. Over the next five years, we will strive to double our profitability and generate more than sixty percent of our adjusted EBITDA from recurring services. As shareholders know, our five-year plans have always been an important road map for our company. If we're able to achieve our new enterprise twenty twenty five growth plan, it will be very good news for shareholders. 03:55 After quarter end, we announced two acquisitions, Antirion and Colliers Italy, both of which are expected to close by the end of the first quarter of twenty twenty two. Antirion, one of the largest investment management firms in Italy with more than four billion dollars in AUM, will augment our Colliers Global Investors platform while Colliers Italy adds another market leader to our strong company-owned services business in Europe. 04:28 And yesterday, we completed the previously announced acquisition of Bergmann, which provides additional scale and further diversifies our rapidly growing engineering and design business. The bottom line is this, Colliers continues to seize opportunities and to think differently, as we lead our company and our industry into the future. 04:53 We are one of the top global players in the business with a global brand and platform second to none and we have a highly diversified business model diversified by revenue, by client, by asset class, and by geography. And we're also more resilient than ever, with more than fifty percent of our revenues coming from higher value recurring revenue streams. 05:19 With our proven track record of more than twenty six years, unique enterprising culture, differentiated and diversified business model and significant inside ownership, Colliers is better positioned than ever to continue to create value for its shareholders one step at a time. 05:41 Now let me turn things over to Christian for comment. Christian?
Christian Mayer: 05:45 Thank you, Jay. As announced earlier today, Colliers reported strong third quarter financial results. My comments follow the flow of the slide posted on the Investor Relations section of colliers.com to accompany this call. Please note that the non-GAAP measures referenced on this call are as defined in the press release issued today. All references to revenue growth are expressed in local currency. 06:13 Third quarter twenty twenty one revenues were one point zero two billion dollars, up forty six percent relative to the prior year period with continued momentum from earlier quarters. Revenues were up strongly across all service lines, particularly capital markets and investment management. 06:31 Growth for the quarter was virtually all internally generated. Compared to twenty nineteen pre-pandemic levels, capital markets revenues were up thirty four percent and leasing was up eight percent with office leasing recovering into within five percent of twenty nineteen levels. 06:51 Our Q3 consolidated adjusted EBITDA was one hundred and twenty four million dollars, up thirty two percent from ninety two million dollars reported one year ago, with margins at twelve point one percent versus thirteen point three percent in the prior year quarter. Our margin was impacted by performance based incentive compensation, the reinstatement of variable costs and higher support staffing costs all due to the strong rebound in transaction activity levels. 07:22 Americas Q3 revenues were six hundred and seventeen million dollars, up forty five percent over the prior year period. Capital markets revenues were up ninety two percent driven by significant increases in industrial and multifamily sales transaction activity. 07:41 Leasing revenues were up thirty four percent largely due to stronger industrial and office leasing activity across the region versus the prior year period. Office leasing activity showed steady improvement in Q3, although remained below pre-pandemic levels. 07:59 Outsourcing and advisory revenues were up twenty four percent driven by strong internal growth in engineering and design, valuation and mortgage services. Adjusted EBITDA for the region was sixty six million dollar, up twenty percent from last year with the margin impacted by performance based incentive compensation from strong year-over-year growth and operating results. The reinstatement of certain variable costs and higher support staffing costs. 08:30 Third quarter EMEA revenues were one hundred fifty five million dollars, up twenty nine percent with strong revenue increases in each service line, particularly leasing and capital markets. Adjusted EBITDA for the region was fifteen million dollars, up from eight million dollar last year on higher revenues and continued savings from pandemic related cost measures. 08:55 In the Asia-Pacific region, third quarter revenues were one hundred seventy two million dollar, up fifty one percent relative to the prior year period with all service lines reporting robust growth led by capital markets and leasing. On a geographic basis, growth was led by Australia, New Zealand and China. 09:18 Adjusted EBITDA was twenty one million dollars compared to thirteen million dollars last year with the increase attributable to operating leverage and continued cost management in light of the pandemic. Certain parts of Australia, New Zealand and Japan were under pandemic stay-at-home orders during the quarter, which made our operating results all the more impressive. 09:40 Investment management revenues were seventy eight million dollars, up eighty seven percent versus the prior year period. After eliminating the impact of pass-through carried interest, revenues were up fifty percent driven by management fee growth, assets under management were forty six billion dollars at quarter end, up twenty seven percent from one year ago and reflected another record quarter of fundraising following on the record capital commitments achieved in the first and second quarters. 10:11 Adjusted EBITDA for the quarter was twenty eight million dollars, up from fifteen million dollars generating greater period reflecting solid operating leverage on incremental management fee revenue. Our consolidated operating cash flow for the first nine months of twenty twenty one was two hundred and eleven million dollars. However, adjusting for the non-recurring cash component of the LTIA settlement, cash flow was almost triple, a one hundred and four million dollars generated in the same period in twenty twenty. 10:45 by a combination of higher earnings and a reduction of working capital usage which was elevated during the pandemic last year. Capital expenditures for the nine months ending September thirty, twenty twenty one were forty four million dollars, a significant increase from the prior year and reflected in investments and leaseholds in several markets, including certain markets where we deferred relocations and expansions during the pandemic. 11:14 For the full year twenty twenty one, we expect CapEx to be in the range of fifty five million dollars to sixty million dollars. Almost one-third of this CapEx will be landlord funded leasehold improvements, reducing the net, cash, capital expenditures to approximately forty million dollars. 11:31 Turning to our debt capital structure, our leverage ratio, defined as net debt to pro forma adjusted EBITDA was zero point five times at September thirty, twenty twenty one. After quarter end, we issued three hundred million in US and Euro denominated Senior Notes due twenty thirty one and paid down our revolving credit facility in full. 11:57 As a result, we now have well over one billion dollar of liquidity available to fund future acquisitions and ongoing operations. In addition to this liquidity, our capital structure has low leverage, low borrowing rates and laddered debt maturities, extending to twenty thirty one. With all this in place, we believe we are perfectly positioned to execute on our Enterprise '25 Growth Plan. 12:25 Given the strong results reported for Q3 and continued momentum, we are updating and increasing our financial outlook for the full year twenty twenty one. We now expect to exceed the top end of the previous outlook. We expect that adjusted EBITDA could be forty percent to forty five percent above twenty twenty levels. The new outlook includes two months of the burden acquisition completed yesterday and a subject to the risks and uncertainties as outlined in the accompanying slides. 12:59 That concludes my prepared remarks, I would now like to open the call for questions. Operator, can you please open the line?
Operator: 13:06 Thank you. Our first question comes from the line of Stephen MacLeod with BMO Capital Markets. Your line is open.
Stephen MacLeod: 13:30 Thank you. Good morning, guys.
Jay Hennick: 13:35 Hey Steve.
Stephen MacLeod: 13:36 Good morning. I just had a couple of questions that I wanted to follow up on, specifically around the operating cost, I mean I know the operating cost came down a lot through the pandemic and the previously questioned, you've given numbers around sort of where you are on a run rate basis. Can you talk about how many of those -- how much of those costs have actually come back into the system?
Christian Mayer: 13:57 Yes, Steve. I think the majority of the costs are back in the system, particularly in the Americas as we saw, the EMEA and Asia Pac regions are still benefiting from some of those operating cost reductions, and you can see that in the margins in the quarter. Yeah. We made -- I think a very prudent -- we've managed very primly over the past year and a half and we're trying to remain just in terms of returning cost to the system, as we emerge from the pandemic.
Stephen MacLeod: 14:45 Great. Thanks. That's helpful. And then my second question is wanted to -- is more high level, here you released your five-year plan last week which is another great -- has a great five-year outlook. And I'm just wondering, if you can talk a little bit about sort of some of the key drivers that may lead you to potentially outperform that five-year outlook and where you're seeing the majority of growth when you think about doubling EBITDA over that time period?
Jay Hennick: 15:19 Well, first of all, we think it's an ambitious plan over the next five years and we think it speaks for itself. Steve, you've been with us for a long time. We've done this two or three times in the past and there is a lot of rigor that goes around the plan and we're pleased that we're able to issue it now. We wouldn't normally issue it earlier given the pandemic, we slowed the ball down a little bit, but I think we have a very clear path on growing internally and through acquisition, we are going to differently than in the past, we are going to be more strategic around the additions that we make to our business, focusing on more recurring and long duration revenue streams because we think that it enhances the value of our overall company, we have not -- and I think our peers are in the same boat. 16:25 We have not been particularly pleased with the market valuation of companies in our sector and believe that part of the reason for that is the less or lower level of recurring revenue streams and as you can see over the past two years, ours is elevated considerably. And if we continue to do that we're hoping that in addition to driving great results operationally, we can also attract a better valuation for a great global business with unlimited growth opportunities. We just see so many so many ways to grow this business and having a global platform allows us to do that very well in the coming years.
Stephen MacLeod: 17:20 That's great color. Thank you, Jay. And then maybe just finally, with respect to the Engineering and Design business, you cited it as a good contributor to this year -- this quarter's Americas growth and I'm just wondering what you're seeing in terms of engagements and the pipeline in that business?
Jay Hennick: 17:42 Pipelines have been higher than prior year and one of the benefits of continuing to grow the business is that you add credibility, you add disciplines, you add additional service potential to the business. So we believe the addition of Bergmann will open up some existing doors within the Colliers Engineering and Design business and vice versa. And so we're seeing or expect to see the pipelines grow for that reason, but also with all of the stimulus discussions that you're reading about it in the paper virtually in every country, in every budget, we believe that we are going to be a beneficiary of that as we move forward.
Stephen MacLeod: 18:49 Great. Thank you, guys. That's it for me. Thank you.
Operator: 18:52 Thank you. Our next question comes from the line of Stephen Sheldon with William Blair. Your line is open.
Stephen Sheldon: 19:00 Hey. Thanks. Good morning. I guess, first relative to what you were previously expecting with your guidance, what have been the biggest surprises on the way things have progressed over the last two months to three months, especially across different service lines and then also across the geographies?
Christian Mayer: 19:18 Stephen, we have, as you know pretty good visibility on the recurring revenue side of our business. So not any significant surprises there, but certainly on the transactional side, we have been continuing to see very strong capital markets activity and a rebound in leasing activity, industrial leasing, office leasing stronger than expected when as we said here three months ago certainly, so those have been very strong contributors to our performance.
Stephen Sheldon: 19:54 Got it. That's helpful. And then I just wanted to ask about the labor supply challenges out there, is that a notable headwind as you think about this quarter, are you, I guess, could it become more of one as you think about the next few quarters, would let's just give your thoughts on that topic?
Christian Mayer: 20:16 Yeah. It's definitely an issue that we are noticing. There are more broad economic and I guess demographic social trends post-pandemic that are happening, so there are elevated levels of turnover across all sections of the economy and in the professional services sector as well and that doesn't affect our employee base. We're managing as best we can through that, but it has not had a material impact on our business to date, although when you think about some of our professionals, it's difficult to recruit engineers and project managers and those types of folks. 21:07 So one of our -- the biggest factors constraining our growth will be the recruitment of those tax professionals going forward because the certainly, as Jay mentioned, the pipelines are very strong and the business activity is going to be very strong and so matter of getting the staff to complete those assignments.
Jay Hennick: 21:26 I'd add something else, Stephen. As you know, a lot of our business is performance driven and our people are generally paid at the higher levels of compensation scale. When you're in the business of janitorial and other markets like that where you're a duty bound to provide a whole bunch of low level employees to a building, it's a serious. There is a serious gap in providing those services. So I think, we are -- everybody's impacted but I think we are structured, Colliers, and our focus on higher value services has really held us in good stead versus others who are or duty bound to be providing thousands and thousands and thousands of low level employees building -- on the building side.
Stephen Sheldon: 22:37 Makes sense. Thank you.
Operator: 22:40 Thank you. Our next question comes from the line of Daryl Young with TD Securities. Your line is open.
Daryl Young: 22:49 Good morning, guys.
Jay Hennick: 22:49 Hey, Daryl.
Daryl Young: 22:51 Just with respect to the five-year plan, I'm just wondering if there is a focus embedded in there on returning to some of the gateway cities, I know you've been somewhat over indexed to the secondary markets historically, but just wondering if that's a core part of the plan going forward?
Jay Hennick: 23:09 Hi. And always is, we do it market for market where do we have gaps, where is their growth opportunities, where can we top rate our people to perhaps generate better returns and the other thing that we're in the early stages of and I think it's very exciting is cross-market opportunities and how do we invest cover clients that are multi-market clients globally, nationally, regionally and we've made great progress there. But I think we've got on a lot of room to grow in our occupier services business, in our capital markets, in our debt capital markets, it's the same groups of clients that are operating in the United States and Europe in a variety of other markets and how best to cover those occupiers, how best to cover those investors in real estate is an opportunity and a big gap for all of the players in this industry and we see big opportunity there.
Daryl Young: 24:28 Okay, great. And then just thinking about the growth in that strategy. You've historically had a really nicely balanced organic and M&A mix, would you see more M&A going forward or M&A contributing a greater proportion of the growth in this next five-year plan and historical?
Jay Hennick: 24:47 I think maybe that's a fair comment. Not materially different, but I think it is different and as we've grown and matured and become really global in our M&A activities, one of our competitive advantages is our great leadership teams around the world and they are actively looking market for market to accelerate their own growth and meet their own five-year plans and they are all heavily incentivized to do that. So, more so than ever, so I think M&A will play a bigger role in the execution of our five-year plan, yes.
Daryl Young: 25:36 Okay, perfect. And then one just last one on margins, in the quarter, was there anything unique in terms of incentive accruals or anything that would have pushed margins down further, or is this sort of more than run rate going forward now that all the discretionary costs have come back and that we would see kind of margins higher over the next couple of years?
Christian Mayer: 26:00 Well, Daryl, our incentive plans are based on year-over-year EBITDA growth and because of the low base from twenty twenty, the accrual this year are elevated. The plans haven't changed, it's just the baseline is lower and the growth this year is higher and you're seeing that in the results.
Jay Hennick: 26:22 There were no bonuses.
Christian Mayer: 26:24 And there were no bonuses paid last year to anyone, in fact people took pay cuts last year when we were in the depths of the pandemic. So going forward, those incentive accruals in twenty twenty two will be less as things return to more normal growth conditions. This year, we're just seeing the impact of the elevated level of growth year-over-year.
Daryl Young: 26:52 Got you. Perfect. Thanks very much guys. Congrats on good results.
Jay Hennick: 26:56 Thanks.
Operator: 26:57 Thank you. Our next question comes from the line of Frederic Bastien with Raymond James. Your line is open.
Frederic Bastien: 27:06 Hey. Good morning, guys.
Jay Hennick: 27:08 Hey, Fred.
Frederic Bastien: 27:10 The EBITDA you generated by investment management represented a step change over what we've seen in the past. Now, given your successes in fundraising and also the acquisition that you're hoping to close early next year, how should we think about the segment's performance over the next four quarters to five quarters?
Jay Hennick: 27:32 Well, as you probably know it's all a function of capital raised. And about half the business currently is open-ended funds. So there is very, very great consistency quarter-over-quarter, depending upon how much money is deployed. And as we raise additional opportunistic funds, it also drives the revenue and because it's a high margin business to EBITDA up as well, so I think as long as, as we continue to raise capital and we're hitting new records for the organization, it bodes well for continued increases in revenue and EBITDA in that segment.
Frederic Bastien: 28:27 Okay. But if I just straight line the quarterly performance, you're now over one hundred million dollars, an EBITDA annually, is that a fair kind of run rate that we should be thinking about with added growth?
Christian Mayer: 28:40 And there is one point I should make here before I jump to that conclusion and that is that we completed fundraisings for one of our opportunistic funds, Fund VIII during the quarter. So when that happens, there are management fees that are earned going back to the first close, which was in Q4 twenty twenty two. So there was a very pronounced -- a more pronounced amount of management fee earned in the third quarter because of that completion, the catch-up fees in the completion of that fundraising activity. So I think while the growth trajectory is going to be very strong, I would not at this point straight-line out your projections, the growth will occur on a more normalized flow.
Frederic Bastien: 29:30 Okay, awesome. Thanks for that clarification. Switching gears to Colliers Engineering and Design is the focus over the next five years to gain continued mass -- critical mass in the U.S. or do you see this business potentially extending its footprint to other regions like ?
Jay Hennick: 29:50 Yes. It's very much a growth story. We have great critical mass on the East Coast of the U.S. So there's lots of opportunity in the U.S., but we believe that we -- it fits beautifully within what we do at Colliers. We are being approached by other engineering firms around the world that are intrigued by the unique partnership philosophy that we offer. And so I wouldn't be surprised over the five-year plan that you would see Engineering continue to accelerate its growth in other regions around the world under a brand that's truly a global and institutionally recognized brand, which is becoming more and more helpful with clients around the world.
Frederic Bastien: 30:46 Great. Thanks. Last one from me. Christian, can you repeat where you expect to end the year in terms of EBITDA growth, my line cut off when you said that?
Christian Mayer: 30:56 Yeah. So we expect to exceed the top end of our previous outlook and in terms of EBITDA that could be in the forty percent to forty five percent range relative to twenty twenty.
Frederic Bastien: Okay. Thanks for clarifying this. Thanks and have good quarter.
Christian Mayer: 31:13 Thanks, Frederic.
Jay Hennick: 31:16 Thanks.
Operator: 31:23 Thank you. Our next question comes from the line of George Doumet with Scotiabank. Your line is open.
George Doumet: 31:31 I think last call you guys mentioned that office leasing was down twenty nine percent from pre-pandemic levels, do you have a number as to where we are today and maybe some color there, Jay, is to when you expect or maybe you can possibly see that number surpass pandemic overall, any color on that office category?
Christian Mayer: 31:57 Yeah, George. I think if I -- you're hitting it out a little bit on the call, but I think if I heard your question right, you're asking about office leasing and yes, it was down significantly versus prior year levels in Q2 and Q3 obviously had recovered to seventy five percent of twenty nineteen levels and if that answers your question.
George Doumet: 32:22 Yeah. Thank you. And would you expect that to maybe surpass those levels next year, any thought there?
Christian Mayer: 32:29 Well, we certainly, our optimistic that that will occur. We don't know what the timing of that is going to be, but certainly next year is within reason that we will see the full rebound in office leasing around the world.
George Doumet: 32:54 Okay. Thanks. And I think earlier you mentioned the operational costs were back in the Americas, but I believe prior to the pandemic, there was a plan to improve those margins in the Americas by two hundred fifty basis points plus. So I'm just wondering how much of that is left, maybe how much of that is baked into our five-year plan and if you can provide on maybe timing there?
Christian Mayer: 33:19 Yeah, George. As I mentioned the elevated operating costs in the third quarter are a function of the year-over-year performance based incentives that are very strong, very high this year given the low base last year. As we look ahead for the next five years, we certainly expect margin enhancement, modest enhancement each year in the Americas region as we become more efficient and as we execute on some of our operating plans.
George Doumet: 34:01 Okay. And just one last one if I may. Looking at the five-year plan we have, what's baked in for organic revenue growth for the transactional business excluding this year's recovery, so just kind of wondering maybe on a more normalized basis or maybe from next year onwards to twenty twenty five. How should we think of that organic growth for that business line?
Jay Hennick: 34:21 Yeah, George. It will be in the low to mid-single digits range for the transactional business and that's consistent with where our expectations in our last five-year plan. Certainly, we can exceed that, but that's the thinking in the plan.
George Doumet: 34:45 Okay, great. Thanks for the answers. Good luck.
Operator: 34:47 Thank you. Our next question comes from the line of Scott Fromson with CIBC. Your line is open.
Scott Fromson: 35:00 Thank you and good morning, gentlemen.
Christian Mayer: 35:02 Hey.
Scott Fromson: 35:03 Just wondering, are you seeing market share gains in any particular regions or business lines?
Jay Hennick: 35:10 I think we're seeing market share gains all over the place. When we look at our peers results and we see market comps, we are -- we continue to take share. Our revenues are up significantly as you heard in most markets, but in this business, it's always about market for market and some markets that used to be strong, I'm not as strong for a variety of reasons, and it's a constant battle to top grade our professionals and to ensure that we get our fair share, and hopefully more, but I would say, market share continues to grow and brand, the quality of the brand continues to get enhanced. We hear constantly from clients that they're using Colliers more and more, and I think some of our more sophisticated service lines investment management, our debt capital operations have all helped to elevate the stature of the Colliers brand and markets all around the world.
Scott Fromson: 36:34 This also reflects the composition of the buyers and sellers or maybe, in other words, are you seeing more activity from global investors?
Jay Hennick: 36:45 Global investors are way more active and the opportunity to take a Canadian global investor to a different market is bigger today than ever before. So capital flows market for market and it was sort of a comment I made earlier today. We see it as a big opportunity, a big white space for us and probably for most of our peers because I think capital flows today market for market are way more than ever before.
Scott Fromson: 37:24 Thanks, Jay. I'll leave it there.
Operator: 37:30 Thank you. Our next question comes from the line of Matt Logan with RBC Capital Markets. Your line is open.
Matt Logan: 37:36 Thank you and good morning.
Jay Hennick: 37:39 Hey Matt.
Matt Logan: 37:42 Jay, since this will be my last conference call, I'm wondering, if you could humor me and talk about some of the lessons you've learned building successful companies over the past twenty five years and how these lessons will help you achieve your ambitious twenty twenty five targets?
Jay Hennick: 37:59 Well that's loaded, that's loaded, do you have an hour? Do you have an hour? Look, I think it all comes down to culture and one of the things that we've been able to accomplish both in the other company for service and Colliers, is a unique operating culture that's very, very hard to replicate, and we have exceptional teams of people. In the case of Colliers, they are global, they're placed globally. They have compensation systems that pay them handsomely for delivering handsome results and all of these types and our way of operating is very entrepreneurial so it attracts the kinds of people that want to make a difference and don't just want to punch a clock and move the chairs around on the Titanic. 39:04 So I think that it's culture more than anything else that makes the difference and if I were buying clever in the business of allocating capital to public companies, I think it all comes down to the culture of the ethos of the company and how they've delivered over a lot of years and we're very proud of our performance and continue to believe that our culture will sustain us over our five-year plan and beyond.
Matt Logan: 39:42 Agreed. And turning to your recurring services. One thing that I don't think gets enough credit is the quality of your EBITDA. Can you remind us what the organic growth was for the outsourcing and advisory business in twenty twenty as well as the investment management segment?
Jay Hennick: 40:02 We'll get you those numbers right now.
Matt Logan: 40:03 Or maybe looking forward, how you expect the organic growth for outsourcing and investment management trend over the next couple of years?
Christian Mayer: 40:18 Yeah. Matt, the organic growth in the outsourcing advisory and IM business were in the high-single digits, not the number directly in front of us right now. But, certainly strong organically in twenty twenty and as it relates to Enterprise '25, we have high expectations for those businesses, high-single digits or better and due to a number of factors, our Engineering Design business is a business that operates in a sector where there are tremendous tailwinds for infrastructure spending and development. Our investment management business is very well situated with its focus on alternatives. 41:04 I'll turn the assets that isn't real assets and that we think is going to translate into outsize growth as well. Mortgage is an area we got into last year again high opportunities. Therefore, for growth as we are successful in integrating it into Colliers and increasing the amount of transaction flow that we were able to put through that very strong multifamily channel that we have. So we feel very -- in summary, we feel very good about the prospects in our outsourcing and advisory and IM businesses for the next five years,
Jay Hennick: 41:51 Just looking at outsourcing and advisory this year, year-to-date all internal growth, it's up thirty two percent that includes Engineering and Design acquisitions, but even Engineering acquisition was modest, just the Bergmann one. Anyway it's significant and growing much faster than the other areas, but I'm glad you pointed it out.
Matt Logan: 42:25 Great color guys. Jay, earlier you had mentioned Bergmann opening doors. Can you talk about how Bergmann and the Antirion acquisitions are kind of a one plus one equals three scenario and how that relates to driving cross-sell opportunities across the business?
Jay Hennick: 42:47 Well, they're really different. Bergmann is in our Engineering and Design segment and that is a business all about continuing to do more for clients. And if you have the credibility in one segment of an engineering practice, it's often a great segue into offering more services and especially when Colliers is also involved in the acquisition of the land or in the project management of a project surrounding the client around our various services helps. 43:25 Antirion is really an addition to our European Investment Management platform which we are trying to grow. It's a small business right now obviously relative to Harrison Street and this is an exceptional operator who we've known for many years because he is actually also the owner of Colliers Italy, the services business and so we've watched him grow this business over the past fifteen years one step at a time and believe that this is a natural addition to our business and will only strengthen it. 44:07 So having relationships with multiple LTEs, (ph) multiple investors and having probably most importantly a great track record of delivering returns to these investors, all helps to allow us to continue to raise additional capital as real estate opportunities present themselves and I would say that it's more competitive out there for real estate -- traditional real estate asset opportunities than ever before, but our teams are up for them.
Matt Logan: 44:50 And maybe one last question from me before I turn it back. You've got a lot of white space in your business. If there's one vertical that you're not in currently, that you could see yourself entering over the next five years, what would that be?
Jay Hennick: 45:08 Well, we have, we think we've got a full plate with our existing verticals. We have so much run away room everywhere. I think that in our five-year plan, one assumption is that in year four or year five, we bring on another platform. We have some ideas around some that might make some sense for us, but that's well down the list right now. We just want to -- we like our balance of our business across the board. And what we really want to do is continue to double and triple the size of these opportunities because we have great leadership in place. We know how to integrate them well. We think we can buy them well and our unique partnership philosophy helps us, I think, grow and find the right businesses better than most.
Matt Logan: 46:09 Thanks, Jay. Thanks, Christian. I will turn the call back.
Christian Mayer: 46:13 Hey Matt, congratulations on your new role and wish you all the best in the future.
Jay Hennick: 46:19 Sure, Matt. You've done a great job for us. Thank you.
Matt Logan: 46:22 Appreciate it guys.
Jay Hennick: 46:31 Operator, are there any more questions? If there are no more questions, we will say thank you everyone for participating and look forward to the next conference call. Thank you.
Operator: 47:00 I'm showing no other questions in the queue. I would now like to turn the call back over to Jay for closing remarks.
