NEWMARK GROUP, INC. Q4 FY2024 earnings call

• Investments in talent and platform over the past two years drove double-digit top line growth in all major business lines. - Capital markets platform outpaced the industry, with mortgage brokerage volumes up 209% excluding the 2023 Signature transaction, GSE origination up 85%, and investment sales up 71%. - Increased U.S. debt market share to 9% from 1.5% in 2015. - Anticipated industry trends include stabilization of interest rates, near-term U.S. debt maturities, narrowing bid-ask spreads, strength in U.S. economy, institutional allocation to real estate, outsourcing of real estate services, improving industrial fundamentals with reshoring and data center investment due to AI. - Positive factors in office sector: return to workplace, growth in office employment, reduction in new construction pipeline, and conversion of office space to alternative uses. - Pipeline across all major business lines remains robust, and momentum is expected throughout 2024.

Newmark Group saw double-digit top line improvement across major business lines. Management and servicing grew by 21%, capital markets by 20%, and leasing by 15%. Revenues increased 18.8% to $888.3 million. Management and servicing revenues grew 21.1%, leasing revenues 15.1%, and capital markets revenues 20%. In terms of revenue contribution, specific percentages weren't explicitly stated but the growth across these segments was highlighted as driving the overall revenue increase.

• For full year 2025, expects total revenues between $2.9 billion and $3.1 billion (9% increase at midpoint). - Anticipates adjusted EPS between $1.40 and $1.50 (up 14%-22%). - Expects adjusted EBITDA in the range of $495 million to $545 million (11%-22% increase). - Targets at least $630 million of adjusted EBITDA by 2026 and aims for $1.75 of adjusted EPS by 2026, expecting margin expansion from 2024 to 2026 with at least 220 basis points improvement in EBITDA margin.

• Forward-looking statements are subject to risks and uncertainties from macroeconomic, social, political and other factors. - Information on the call contains forward-looking statements which are subject to risks that could cause actual results to differ from expectations. For a complete discussion, see SEC filings including risk factors and disclosures regarding forward-looking information.

Q: Just on the G&A front, how much of the earnings outlook benefits from Howard not being in G&A anymore and any material change in D&O premiums?

A: Howard moving on is reflected in the guidance, as is continuing to invest in the business and AI to drive efficiencies, and any premium increases in D&O are included.

Q: On data centers, perspective on hype vs challenges?

A: Did over $17 billion in data centers last year, expects more due to reshoring, CHIPS Act, infrastructure investment, and AI. Power issues are being dealt with, and the company is well-positioned to capture market share in this space.

Q: Only $2 million of forgivable loan spend in 4Q, why low and expectations for 2025?

A: For the year, over $200 million was spent on growth, 4Q is a point in time, and expects to continue investing at least that amount into growth in 2025, whether via employee loans or acquisitions.

Q: Leadership turnover at FHFA and impact on multifamily activity?

A: Historically, changes have had limited impact, caps were same, and doesn't think it will change much anytime soon.

Q: Views on large loan portfolio sales from banks?

A: Basel requires banks to reserve capital if overweight in CRE, many banks are overweight, CRE overweight will trickle out over 5 years, so yes, but not in accelerated fashion, and debt market is moving to private capital.

Q: How capital markets activity is trending and outlook for 2025 after strong end to 2024?

A: Pipelines remain strong across businesses, see double-digit growth in capital markets over next 2 years despite market headwinds.

Q: Views on trade policy uncertainty impacting industrial activity?

A: Reshoring and investment in U.S. jobs will have positive effect, encouraged by industrial as metrics are good and advanced manufacturing, chips will replace any oversupply issues.

Q: Overseas expansion and profit comparability to U.S.?

A: Continuing to build international business, U.K. revenue up 50% YOY in 4Q, profit margins expected to be equal or better internationally than in U.S.