Colliers International Group Inc (CIGI) 2009 Q4 法說會逐字稿

Good day ladies and gentlemen, welcome to FirstService Corporation's fourth quarter year-end 2009 results conference call. (Operator Instructions).

Legal counsel requires us to advise that the decision scheduled to take place today may contain forward-looking statements that involve risks and uncertainties. Actual results may be materially different from those contained in these forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the Form 10-K, and in the Company's other filings with Canada and US Security Commissions. As a reminder, today's call is being recorded. Today is Wednesday, February 24, 2010.

At this time, for opening remarks and introductions, I would like to turn the call over to the President and Chief Operating Officer of FirstService Corporation, Mr. Scott Patterson. Please go ahead, sir.

Thank you, and good morning. I'm Scott Patterson, President and Chief Operating Officer of the Company. And with me today is John Friedrichsen, Senior Vice President and Chief Financial Officer. Jay Hennick, Founder, and Chief Executive Officer, will not be on the call today. Jay's father, Sam Hennick, passed away a few days ago, and Jay is with his family this week. As some of you know, Sam had a long history with FirstService. He was always a close confidante and mentor to Jay, But in addition, he was a founding Director of FirstService, and a valuable contributor on the Board for 13 years until his retirement in 2003. Sam will be greatly missed by all of us here at FirstService.

In terms of the call today, I will open with some general comments and highlights from the quarter. John will then provide a review of our financial results, and I will jump back in with more detail around our divisional performance. This morning, FirstService reported solid results for its fourth quarter and year ended December 31, 2009, on the strength of our highly resilient Residential Property Management business, continued growth from Property Services, and a better than expected finish in commercial real estate. For the fourth quarter, revenues were up 12% over the prior year, EBITDA was up 21%, and EPS was down $0.01 due primarily to a higher tax rate during the quarter. For the full year, revenues were just over $1.7 billion, approximately flat with calendar 2008. EBITDA was up 7% to $133 million, and adjusted EPS came in at $1.42, up from $1.37 in the prior year. John will have more to add about our financial results in a few minutes.

Our fourth quarter was very busy, primarily within our commercial real estate division where we took decisive steps to further establish our identity as one of the world's leading companies in global real estate services. Early in the quarter, we participated in a strategic financing by investing $14 million in taking a 29.9% interest in London-based Colliers CRE, a leading player in commercial real estate in the UK, Spain, and Ireland, with 15 offices and more than 700 employees. Becoming the largest shareholder of publicly traded Colliers CRE provide us with an important new hub in Europe's preeminent financial center, and extends our market coverage to several important real estate markets in Western Europe. Colliers CRE is in the process of rebranding as Colliers International to provide brand consistency on a global basis. And we are working very closely with the leadership team in London to integrate their operations into our global platform to better serve their clients, and to better serve our multinational clients with commercial real estate needs in Western Europe.

Another significant event in our commercial real estate division during the quarter, and perhaps the highlight of the year was our securing control of the privately held Colliers International brand. Many of you will recall that back in 2004, we entered the commercial real estate services segment through the acquisition of Colliers McCauley Nichols, or CMN, as we call it, the largest affiliate within Colliers International. Our plan was to build a significant commercial real estate business around CMN to add new geographies and services, and ultimately to gain control of the Colliers International brand globally. Over the last five years, primarily through acquisition we have increased our influence over Colliers International, whereby our countries account for approximately 70% of the Colliers International global footprint.

However, the governance structure, the control of Colliers, did not align with our economic interest. Late in the quarter, the shareholders of Colliers International agreed to better align the governance with our economic interest and influence, which for us meant control of the Colliers International brand and achievement of our goal. The shareholders essentially voted to align with our vision for Colliers International. With more than 228 Company-owned offices in 41 countries, and affiliate partners in 20 more countries, Colliers International is the third largest global player in commercial real estate. Colliers provides FirstService with a unique opportunity to expand our business on an international basis over the long-term. And in the process, continued to create significant value for our shareholders. Now that we have control of the Colliers International brand, we have the opportunity to take one of the most recognized brands in the industry, and begin to unlock the brand value.

Currently we are in the process of rebranding all of our Company-owned, but non-Colliers branded commercial real estate businesses as Colliers International. This includes PGP Property Valuation, PKF Hospitality Research and Consulting, and MHPM Project Management and FirstService Williams. Over the coming months, each of these will move to the Colliers International brand name and global identity. At the same time, in markets we do not own, we are entering into new partnerships and license agreements with best-in-class service providers. The overwhelming majority of the Colliers minority shareholders will remain with us in their existing markets, although each will also rebrand as Colliers International. In a few markets where we think we can upgrade our local presence or service delivery, we intend to add new licensees under the Colliers International banner.

Each of these new licensees will share our values and commitment to providing the highest levels of service excellence. Adding to our portfolio of services, including corporate services, and institutional asset and property management, and pursuing strategic acquisition opportunities will continue to play an important role in our growth strategy. We are thrilled to finally be in a position to maximize the value of our Colliers International operations on a global basis. The power of this brand, with operations in more than 61 countries worldwide creates many opportunities for FirstService. Other highlights during the quarter included our previously announced $77 million convertible subordinated debenture offering, which further strengthens our financial position. John will talk about this in more detail. And the continued strength of our Residential Property Management and Property Services divisions, which I will spend more time on in my divisional comments. Let me now pass you to John to take you through the financial details for the quarter.

Thank you, Scott. As Scott indicated in his comments, despite economic conditions that remain challenging and that are characterized by tepid consumer demand in the US, and credit markets remain very tight by historical standards, particularly as it relates to the financing of commercial real estate across most major markets, FirstService reported solid overall operating results in our fourth quarter ended December 31st. Here are the highlights of our consolidated results for the quarter, all of which are from continuing operations. Revenues totaled $465,8 million, up 12% from the fourth quarter in 2008. Our foreign revenues were affected much differently in the quarter compared to last year, as the depreciation of the US dollar positively impacted revenue growth by 6%, or about half of our reported growth. Substantially all of our growth in the quarter was internally generated.

EBITDA, which we calculate before cost containment expenses was up 21% to$ 36 million, with cost containment expenses totaling $5.7 million, and all incurred in our commercial real estate operations in connection with further lease terminations and head count reductions. Adjusted diluted earnings per share was $0.27 compared to $0.28 last year, with the decline attributable primarily to higher taxes due to a higher proportion of earnings being generated in higher taxed countries in 2009 compared to 2008. And taxes on foreign exchange gains related to our US dollar denominated debt. As outlined in prior conference calls and detailed in our press release this morning, there are several adjustments made to GAAP earnings per share to determine our reported adjusted earnings per share, all of which we believe better portrays the operating results of FirstService. But in terms of GAAP EPS, we reported a loss of $0.40 for the quarter, compared to a loss of $0.74 cents in the fourth quarter of last year.

The major reconciling items in the quarter between GAAP and adjusted EPS includes $0.50 per share expense, on account of an increase in the valuation of our noncontrolling interest, formerly known as minority interest, and $0.12 on account of cost containment expenses. I would also like to comment on our reported tax rate of 47% for the quarter. As reported in Q4 last year and throughout 2009, we have had to deal with an abnormally high tax rate, due primarily to a tax valuation allowance required in connection with losses incurred in our commercial real estate operations, principally those in the US, along with the good will impairment expense recorded in Q1 of 2009, which was an expense for accounting purposes, but not tax deductible.

In Q4, we actually reversed a small amount of our tax valuation allowance, totaling about $1.2 million, and this lowered our tax, our reported tax rate. Excluding this reversal and downward adjustment, our tax rate would have been 55% for the quarter. This elevated tax rate reflects taxes on a foreign exchange gain on our US dollar denominated debt that we recorded for tax purposes only, and which amounted to approximately $4 million. Excluding the taxes associated with this gain, our normalized tax rate was about 31% for Q4. And the EPS impact of the taxes associated with this foreign exchange gain equated to about $0.13 per share in the quarter.

Changing gears, cash flow from operations, from continuing operations was very strong for the quarter. FirstService generated $58 million in the quarter, compared to $36 million generated in the fourth quarter last year, with working capital changes contributing in a significant way to our strong operating cash flow, and reversing it's drag on our cash flow reported in Q1 of this year. Investment activity during the quarter included $24.4 million invested in new businesses and noncontrolling interests, with the majority of the spend attributable to increasing our stake in existing subsidiaries, and the payment of contingent notes, or earnouts. We also invested about $14 million that Scott outlined in Colliers UK based in London, as part of their financing, providing us with a 29.9% interest in the strategically important business in a key global market.

During the quarter, we also invested $5.7 million in CapEx compared to a reduced amount of $2.5 million in the December quarter last year, bringing our total capital expenditures spend for 2009 to $24.2 million versus $21.8 million last year. And note in both years, below our internal guideline of limiting CapEx to not greater than 20% of EBITDA. Turning to our balance sheet, the most significant change is the new convertible unsecured subordinated debentures of $77 million, which was completed in the fourth quarter. As previously announced, and mentioned earlier by Scott, we completed this financing on attractive terms, with a fixed interest rate of 6.5% for five years, and convertible into FirstService common shares at $28 per share. Proceeds of this financing reduced our draw under our revolver, and financed our investment in Colliers UK. Inclusive of this convertible debt, our net debt position at the end of the quarter was $213.2 million, up from $186.7 million at the end of 2008.

While our leverage ratio expressed in terms of net debt to trailing 12-month EBITDA was 1.7 times, approximately flat with the year-ago, and down from just over two times at the end of our third quarter. Excluding the convertible debentures from our debt, our leverage ratio was 1.12 times. Needless to say, our leverage remains well below our historical peak of three times, and considerably below the 3.5 maximum permitted by our loan covenants. With combined cash on hand and availability under our revolving credit facility at the end of the quarter of over $200 million, and our modest leverage, we continue to have ample financial capacity to fund our operations and investment activity to support our future growth. Now I would like to turn things back over to Scott for his comments on our operations. Scott?

Thank you, John. Let me start my divisional review with Residential Property Management, where we generated revenues of $156 million for the quarter, up 8% from the prior year, driven primarily by increases in management fee revenue, as revenues from ancillary services were approximately flat. Regionally, our management revenue growth was again driven by contract wins in the Northeast and Southwest, primarily Nevada, Arizona, and Texas. And continuing the trend that we have experienced for several quarters now, revenues in California and Florida, two of our largest regions, were approximately flat with the year-ago. In terms of ancillary service revenue, we continue to experience modest declines in our landscape and HVAC services. But this quarter these declines were offset by increased revenues from collection and other more administrative ancillary services.

Maintenance fee delinquencies are affecting many of our community association clients nationally, putting pressure on their operating cash flows. This has led to a reduction in certain of the Property Services that we provide, but increasingly has allowed us to assist our clients with collection and consulting services. Over the last several months, we have invested in expanding our collection services, and now offer it nationally. We began to see the results of this expanded offering in the fourth quarter. Our EBITDA margin in the quarter was 9.5%, compared to 7.4% in the prior year quarter. The 200-basis point increase primarily reflects an unusually low margin in the prior year quarter, due to severance and other one-time costs incurred, but also the impact of the higher margin ancillary service revenue generated during the current quarter. Looking forward in Residential Property Management, we see more of the same, continued modest growth for market share gains, with margins that are comparable to prior year, or up slightly.

Let me now turn my attention to our Property Services division, which comprises field asset services, Paul Davis Restoration and several consumer-oriented franchise systems. Revenues in this division grew by 14%, led by 20% year-over-year growth at field asset services, but somewhat tempered by flat results for our franchise systems as a group, relative to the prior year. FAS revenues for the December quarter, while up over prior year, were approximately 12% lower than that achieved for the September and June quarters, the first sequential revenue decline we have seen since acquiring FAS in late 2007. Several of our large customers chose not to initiate foreclosures from late November through to early January, which impacted activity and revenues during December, and will also impact our first quarter. During our third quarter call, we reported that we were starting to see the number of foreclosures slow, as our clients struggled to implement the Obama administration's mortgage modification plan.

The plan effectively lengthens the foreclosure process, while mortgage delinquencies continue to build during the third quarter, a lower proportion of delinquent mortgages ended up in foreclosure. This trend continued into the fourth quarter through October and November, before the self-imposed seasonal moratorium in December. This has all served to create a significant backlog or inventory of delinquent mortgages estimated at greater than $7 million across the US. Industry analysts believe that most of these delinquent mortgages will ultimately transition into foreclosure, which when compared to the total number of foreclosures in 2009 represents over two years of shadow inventory, or backlog. In recent discussions with our customers, we believe that the backlog will begin to work its way through the foreclosure process. And although we may not see it in the first quarter, we are expecting volumes to increase in the latter part of the year.

Looking now at our franchise systems, as I mentioned, revenues for the quarter were flat with the prior year. We see this as a positive sign. It compares to a September quarter, which was off 25% from the prior year, and represents the first quarter in the past seven without some level of revenue decline. We have seen revenues stabilize across all our systems, and while we have not seen any indication of a sustainable uptick in revenues, we do believe we are through the bottom. As I have mentioned in prior calls, it is important to note that each of our franchise systems has been consistently profitable throughout the downturn. As a group, revenues are up approximately 35% from 2007 levels, but margins are off only modestly. EBITDA margins for the December quarter in this division were 10.7%, which is consistent with the prior year.

In commercial real estate, revenues for the quarter were $206 million, up 13% from the prior year, 7% after adjusting for OpEx. We experienced strong gains in Asia, Australia, and North America, offset in part by year-over-year declines in Central and Eastern Europe and Latin America. While we are still showing year-over-year declines in certain countries and regions, we do believe we are through the bottom of the recessionary cycle across all regions, and currently at various stages of recovery. Sequentially, our December quarter was up 33% over the September quarter, which is more reflective of our historical seasonality pattern, and in stark contrast to the prior year December quarter, which declined relative to the September 2008 quarter.

Let me now spend a minute focusing on each of our major regions. In the Americas revenues were up 10%, driven by strong 20% plus growth in the US, but tempered by a modest revenue decline in Canada, and a significant decline in Latin America. The US performance was driven by sharp increases in investment sales activity, particularly in New York City, Boston, Phoenix, and the US Northwest. Noting however, that the year-over-year improvement is off a very weak comparative quarter. Across the Americas, investment sales were up 15%, leasing was up 5%, and other services including appraisal, project management, and property management were up in the aggregate 14%. During the quarter in the Americas, we took further action around cost containment, incurring $3 million in lease exit costs, and $1.3 million in severance. Adjusting for these costs, we generated a mid single-digit EBITDA margin, similar to that generated in the prior year quarter. Looking forward in the Americas, we expect to see modest year-over-year improvement over the next few quarters, in part a reflection of the extremely low activity levels in the US in early 2009.

In our Asia-Pac region, revenues were up almost 50% in US dollars, and approximately 20% in local currency, driven by dramatic increases in China, Hong Kong, and Singapore, and supported by a solid 10% year-over-year increase in Australia. Across Asia and Australia, increased investment sales activity was the primary driver of the revenue increase, although leasing, appraisal and property management were also up across the region. We generated a solid double-digit EBITDA margin in this region for the quarter, up from a single-digit margin in the prior year, reflecting the operating leverage achieved from the significant increase in volume. Looking forward in Asia-Pac, we expect to see continued year-over-year gains through the next couple of quarters.

In our Europe region, including Russia, revenues were off 45% from the December 2009 quarter -- 2008 quarter, but up sequentially from the September 2009 quarter by 35%. With the exception of Poland, the operating environment remains difficult throughout Central and Eastern Europe, particularly in Russia, Romania, and Hungary, which historically have been three of our largest businesses in this region. Investment sales activity remained at very low levels in these markets through the quarter, and leasing and appraisal revenues declined significantly from prior year levels. As I mentioned, Poland was the exception for us in this region, with year-over-year revenue growth of close to 50%, driven by a fast-growing property management business in several large sales transactions.

In general, the economy is more buoyant and activity is at a higher level in Poland, but we believe our operations in joining above market success and building share. We had a break-even result in our Europe region for the quarter, compared to a mid single-digit margin in the prior year. Looking forward in this region, we expect the market to continue to be difficult. But as mentioned earlier, we do believe we are through the trough and are looking for a modest year-over-year improvement in our results, throughout the year, beginning in the first quarter. And with that, operator, I would now ask you to open the call to questions.

(Operator Instructions).

Your first question comes from Frederic Bastien of Raymond James. Please go ahead.

Thank you. First, I would like to offer our condolences to Jay and his family. Scott, I might have missed this, but what was the growth of the revenues at the commercial real estate division in constant currency?

I'm sorry, in where?

Constant currency, in same currency?

Oh, 13%. In local currency, it was 7%.

7%.

In US dollars, 13%.

Got it, okay, thanks. You noted you had some cost containment efforts, again, at Colliers. Are these now largely behind you?

Yes, Frederic, it's John. Those are largely behind us. We don't expect anything of note, anything material. The only caveat would be if there was a significant downturn from where we expect volumes to be, in terms of this modest recovery we're expecting. We would have to relook at things, but we're through it.

Okay, and are you seeing any, any type of distressed sales, like is there a lot of, I guess, a few months ago or few quarters ago, anticipation that those kinds of sales, or that kind of activity on a commercial real estate side would pick up? Are you seeing that, or is that actually not, not picking up as anticipated?

Frederic, we're actively engaged with several banks in discussions, but we have not seen any material level of activity in this market yet.

Okay. Do you -- what's your -- what are your expectations?

Well, I think we would have expected to see it by now, but I think now we're looking at towards the end of 2010.

Okay. With respect to, I guess, the noncontrolling interest share of earnings, historically as a percentage of earnings, it's been around the 30% range. But it's obviously fluctuated a lot in the last couple of years. Is there any guidance you can provide us to how we can model that going forward?

Yes, it does move around. Unfortunately it's not the easiest thing to predict because it does depend on where the earnings are coming from, and what level of noncontrolling interest we have in that particular business. But I think the -- a good starting point for this year will be around 20%. We have been active in terms of buying in some of this, increasing our stake in our various businesses. So I think on a go-forward basis, though it can fluctuate from time to time, 20% would be a good base number to use.

Okay, thanks. I'll leave it to others.

Thanks.

Thank you. Your next question comes from Sarah O'Brien, RBC Capital Markets. Please go ahead.

Hi, guys.

Hi.

Can you just talk a little bit about that noncontrolling interest redemption cost, and how that's calculated, and how we should expect that to move forward. I guess, I'm trying to get a sense of whether you can -- are you expecting to report GAAP EPS that's positive in 2010?

The, the, the noncontrolling interest, again, just to talk about how we calculate this. It's basically driven off of the valuations for these interests that our noncontrolling partners have in the various businesses. To the extent that there's fluctuation in the, the EBITDA, these businesses, that would then be captured in the valuation of these businesses, though the valuations tend to be --run off of a trailing 24-month calculation, 24-month EBITDA. So there's somewhat of a dampening effect based on sort of current earnings, current EBITDA levels. So you need to factor that in. Again, I would remind you that these are -- it's a mark-to-market. It's a valuation exercise, it's a noncash charge which runs through the P&L, so it's really not indicative of the earnings of the business per se, and something that we have to deal with, and will -- will fluctuate.

So basically as EBITDA improves over the next year, would -- you're going to expect that valuation, reval to increase?

Yes, and unfortunately, yes. To the extent that our our businesses are successful and growing EBITDA, and we have minority interest like we do in most businesses. Depending on that level, it will have -- it will increase the value of the noncontrolling interest, and result in a charge through this noncontrolling interest redemption increment line item on the P&L. Which, again, we are adjusting through our adjusted EPS, because it's noncash, not something that's actually has any direct cash impact on the performance of the business, or the operating results of the business.

Okay, and can you talk about how much you did actually buy back in the quarter, of your noncontrolling interest?

Yes, I can get that for you in a second here. Noncontrolling interest in the quarter, let's see, we totaled --

I guess is there like a trend--

About, we got about $13 million in the quarter was attributable to noncontrolling interest.

Okay, and should we expect that kind of like 10 to 15 to continue through 2010 per quarter?

I think it's probably a little bit lower going forward. We've been through a fairly significant period of activity over the last 12 to 18 months, and I would expect it to be somewhat lower.

Okay. Do you record like a gain or loss on these, like I know it's a fixed formula and that sort of factors into your revaluation, but have you been recording gains or losses on the buybacks?

No.

Okay. And then just wondered, maybe on the acquisition front, what -- what's your comfort level is. I know you're at 1.7 times EBITDA. Are you happy to go back to the two to three times, if there's the right acquisition, and what kind of services would be most appealing to you guys now?

Okay. I'll take the first part of that. In terms of leverage, as you've seen and our shareholders have watched, for a considerable amount of time, we have kind of managed the business between sort of 1.5 to maybe 2.25 times recently, certainly since we entered the commercial real estate space. And we're comfortable taking our leverage up to the mid 2s and maybe a touch beyond, given the type of businesses we have today. We wouldn't probably want to push it beyond that, but certainly for the right type of opportunity to leverage the business to that level, which is obviously still well below what our covenants permit us to do, we would do for the right, right kind of opportunity.

Okay, and then maybe, Scott, do you want to talk about the opportunities that you would look at?

Yes, sure. I think that the our acquisition strategy really hasn't changed from that articulated by Jay over the years. In commercial real estate, we'll continue to seek out opportunities to expand our geographic footprint, and to fill out our service offering globally. It will be very strategic in focus. Residential Property Management continued to look for opportunities to, again, expand our geographic footprint in North America, strategic in focus. Property Services, perhaps a bit more opportunistic in nature, looking to add property service providers with, through franchise systems or contractor networks as they arise.

Okay, great. And maybe just on the margin for commercial real estate, do you expect that your losses are over at this point? I mean if the slight pickup we've seen continues, could you go through Q1 with a positive contribution?

Well, Q1 is traditionally a low quarter, and even in some of our stronger years, we've lost money in Q1. So I wouldn't expect a profit in Q1.

Okay, and beyond that, though, you would expect it to pick up?

We expect to be profitable in 2010.

Okay, great. Thanks a lot.

Thank you. Your next question comes from David Gold of Sidoti. Please go ahead.

Hey, how are you?

Hi, David.

It's Sidoti, of course. Let's see, just a couple of quick questions for you. One, with the -- let's say with consolidating control or taking control of Colliers brand, can you speak a little bit about what happens from here, say, differently by way of, you know, both expansion? And how we should think about what the, what the plan is from here, and now that you have sort of, the brand that, that makes -- or control of the brand, let's say?

Most importantly, it's a move from a network of affiliates within consistent branding to one cohesive global firm. One consistent brand globally. One consistent message globally. Really it's our opportunity to begin to truly create brand equity in one of the most recognizable real estate brands in the world. In the near term, as I mentioned in my comments, we are in the process of changing our brand at Colliers International, wherever it isn't today, and we will be looking to continue to invest. We're in a better position now to invest in our global service delivery platform, so that we can better serve global clients, multi-market clients, who are looking for consistent and seamless delivery around the world. And we have been challenged to provide that under the old Colliers system.

Aside from, say the US, where it seems like you guys have been filling in holes, say, in the Colliers brand, are there other areas or other sort of holes in the network that you would like to fill in, that you can talk about?

There is nothing that is strategically critical for us now. The key thing for us was alignment. And so we have some very strong affiliates around the world, and today we are strategically aligned with those affiliates. And that's the most important thing. We may over time make more acquisitions. I mean we will. But there is, there is nothing that is strategically critical for us outside the US right now.

Got you. And then just one other question. John, on the field asset services, can you just give us a sense for how the moratorium that you saw this year compares to, say what you saw a year ago?

Well--

In other words, is that a seasonal factor that we'll see every year, or still hard to say, or ?

We were in a more rapid growth phase last year, and so while there were certain clients that chose not to initiate foreclosures through the Thanksgiving-Christmas period, it was a bit blurred because we were ramping up so quickly with other clients. We reached a more stable level of activity late in 2009. So it was, it was a more dramatic falloff in the month of December. So I think on a go-forward basis, this will be a recurring theme for sure.

Okay, and then as January subsides, and we move into February, essentially did things -- did business revert, are we clear that it was just this moratorium?

Well, because they weren't initiated until the new year, there is a little bit of a, a ramp up. So we're expecting our first quarter to resemble our fourth quarter of 2009.

Okay. But as you see it, though, I mean the business has returned. It's started to pick back up. It just didn't happen in January?

Oh, yes. Yes.

Got you. Perfect. Thank you, both.

You're welcome.

Thank you. Your next question comes from Frederic Bastien of Raymond James. Please go ahead.

Scott, when you mentioned that you expected volumes to pick up at FAS in the second half of this year, were you talking about a sequential pickup, or some year-over-year growth?

Well, practically it will be both. Right now our volumes are lower than we were experiencing in the second and third quarter of 2009. We -- what is unclear is timing, but I think we, we would expect to get back to those levels. It's just a matter of when.

Okay. So just to confirm, like -- so you would expect to get back to Q2, Q3 levels of 2009?

Yes.

And then my last question is regarding margins at the Colliers. I guess you finished the end of the year close to 6%. What's your comfort level going forward, with respect to margins? You've had all of these cost containments. Are you comfortable, are you going to be in the high single digits, or, like, can you give us some, a bit of color here?

It's -- I don't think we're in a position to really predict that for 2010. I mean there's, there's several things happening. We will see some leverage when revenues return. But tempering that, we are investing right now in the US and corporately, in recruiting to fill out our teams around corporate solutions and institutional asset and property management. Really, we're recruiting around the globe. Virtually every region, every office has made a high level recruit in the last quarter. And we are also investing aggressively in our, our technology platform. So we will see some leverage, but we also are investing at the same time, which will counteract that.

Okay, thank you.

Thank you.

(Operator Instructions).

There are no further questions at this time.

Thank you.

Ladies and gentlemen, this does conclude the conference call for today. You may now disconnect your line, and have a great day.