Colliers International Group Inc (CIGI) 2015 Q4 法說會逐字稿

Welcome to the fourth-quarter investors conference call. Today's call is being recorded. Legal counsel requires us to advise that the discussion scheduled to take place may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance, or achievements contemplated in the forward-looking statements.

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 US Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is Friday, February 5.

For opening remarks and introductions, I would like to turn the call over to Chairman and Chief Executive Officer Mr. Jay Hennick. Please go ahead, sir.

Thank you, officer. Good morning, everyone, and thanks for joining us for the fourth-quarter and year-end conference call. I'm Jay Hennick, Chairman and CEO of the Company. And with me today is John Friedrichsen, Chief Financial Officer. This conference call is being webcast and is available on our investor relations section of the website. A presentation deck is also available there to accompany today's call.

Earlier today, Colliers International reported record fourth-quarter results as well as year-end results, continuing the momentum we have had throughout our first year as an independent public company. Revenues for the quarter were $550 million, up 11% in local currency. EBITDA was up 29% in local currency and earnings per share came in at $1.06, up 9% versus the prior-year quarter, itself a record quarter for Colliers.

Excluding the impact of foreign exchange on our earnings per share numbers, we would have been about $0.31 higher, so a great result all around, to say the least. John will have more to say about our quarter and year-end results in just a few minutes.

Without a doubt, 2015 was a transformational year for Colliers. It was our first year as a stand-alone public company. We strengthened our leadership team significantly. We generated record revenues and profits, as I mentioned, despite significant foreign currency headwinds.

The fact is Colliers generates only 36% of its revenues in the US, which is considerably less than its peers. And that means we are impacted much more than the others when it comes to declining local currencies. That masks the strong growth we have achieved in local markets and in local currencies.

EBITDA margins exceeded 10% for the first time in our history. As many of you will recall, about four years ago, we set out to achieve this target by 2016. And I'm pleased we were able to exceed it one year earlier than expected.

During the year, we continued to grow our business internally and through acquisition. We completed a total of nine acquisitions during the year: seven in the Americas and two in the EMEA. During the fourth quarter, acquisitions included Colliers Atlanta, one of the top players in the Atlanta market. With more than 250 professionals, Colliers Atlanta was a natural step for us, given our long history as partners and shared passion for excellence.

The addition of Summit Realty immediately earned Colliers a place among the top players in Indianapolis. With more than 70 professionals, Colliers Indianapolis has a long track record of success in this market, but it has also been incredibly successful helping clients expand to new markets. Our global platform will be a great benefit in the future as we collectively leverage all that Colliers has to offer.

And by adding the brokerage operations of NBG in Portland, we bolstered our existing operations and together have now become the leading market player, with more professionals than any of our peers and a dominant local platform offering a full array of services.

Our balance sheet at year end has never been stronger, nor has the cash flow from our operations. Both of these give us all the ammunition we need to continue pursuing our disciplined and successful growth strategy. Finally, we declared and paid our inaugural dividend on our common shares. A milestone year in every way.

And then we began this year with three more acquisitions. The addition of Colliers Central Florida added another well-known market leader and longtime Colliers partner, with 165 professionals, effectively doubling our revenues in the Sunshine State.

In the UK, we added another leading investment and office agency specialist, extending our practice in the city fringe area, otherwise known as Tech City, a new and emerging area of London and the epicenter of the UK new digital economy. And in Montreal, Quebec, we added a boutique provider of landlord and tenant advisory services to further strengthen our operations in this important Canadian market.

Despite the early momentum, there is cautious investment sentiment out there, especially as it relates to commercial real estate, and navigating this has never been easy. However, our information in the commercial real estate market is that we will continue to do well this year as a number of factors bode in our favor, although we expect slower growth than in 2015.

As you might expect from us, we see uncertain times as a good thing for Colliers. As long as we continue to execute, focus on the long term, and remain disciplined in our approach, we generally look for opportunities in the marketplace to capitalize for the benefit of our shareholders.

As a business leader, I'm always looking for growth opportunities. And right now, I couldn't find a better industry to be in than commercial real estate. The market is huge, with almost $150 billion annually in revenue and growing, and the top five players, of which Colliers is one, have only 17% of the market. With such a highly fragmented market, there's just tremendous opportunities to continue to grow and consolidate for many years to come.

But before I turn things over to John, I'd like to say a few words about why Colliers is actually different than the rest. As one of only four companies who have a global platform, more than 16,000 Colliers people operating in 66 countries around the world are unified by the power of delivering services seamlessly wherever our clients choose to do business.

What sets us apart is not what we do, but how we do it. As you might expect, there's really no difference between a high quality real estate service professional from any of the major firms. Each of them can do an effective job for clients.

But what makes Colliers different is our enterprising culture. As a company, entrepreneurship has been part of our heritage and is built into each one of the Colliers people. The Colliers way encourages Colliers people to think differently, to share great ideas, and to offer thoughtful advice to accelerate our clients' success.

Colliers people can't operate well in environments with layers of management, red tape, and bureaucracy. Instead, they need the autonomy to be creative and passionate about what they do so that they can deliver the best advice possible.

Being enterprising and entrepreneurial is the Colliers difference. And these characteristics of our Company and our people are very difficult to replicate. With our proven management team, significant inside ownership, disciplined growth strategy, and more than 20 year track record of success, Colliers International is in a better position today than at any other time in its history to create additional value for shareholders.

And now let me turn things over to John for an overview of our financial results, and then we will open things up for questions. John?

Thank you, Jay. As announced in our press release earlier this morning and highlighted by Jay his opening remarks, Colliers International Group reported its best quarterly and annual performance ever, with strong consolidated financial results and substantial contributions from most of our operations across our global platform.

I will address our overall consolidated financial results for the quarter and for the full year, our operating results by reporting region for the quarter as well as our capital usage and financial position, all of which relate to continuing operations.

So for our fourth quarter of fiscal 2015, consolidated revenues increased to $556 million, up 11% in local currencies from $542 million in the fourth quarter of 2014, with 8% of our growth generated internally and the balance from acquisitions. Total revenue growth for the quarter in our US dollar reporting currency was 3%.

Adjusted EBITDA for the quarter totaled $79 million, up from $67 million in Q4 of last year, an increase of 29% in local currencies and 18% in US dollars, while our margins grew to 14.2% compared to 12.4% last year. And our adjusted earnings per share came in at $1.06 compared to $0.97 per share reported for the fourth quarter last year, up 9% in US dollars, with FX negatively impacting adjusted earnings per share in the quarter by $0.13.

For the full year of 2015, consolidated revenues increased to $1.72 billion, up from $1.58 billion in 2014, an increase of 18% in local currencies, with 11% internal growth and the balance from acquisitions. Total revenue growth for the year in our US dollar reporting currency was 9%, reflecting the large proportion of our total revenues generated outside of the US and weakness in foreign currencies relevant to the US dollar in 2015.

Adjusted EBITDA for the year totaled $181 million, up from $147 million in 2014, an increase of 34% in local currencies and 24% in US dollars, while our margins grew to 10.5% compared to 9.3% last year. Finally, adjusted earnings per share came in at $2.29 compared to $1.83 last year, up 25% in US dollars, with FX negatively impacting adjusted earnings per share for the full year by $0.31.

Our adjustment to GAAP EPS in arriving at adjusted EPS are outlined in our press release issued this morning and are composed primarily of non-cash charges that we view as largely unrelated to our operating results and are consistent with those outlined historically.

Turning to our operating results, I will focus my comments on our fourth quarter, though there is additional full-year information contained in the appendix to our presentation slides that accompany this call. Our $556 million in revenues for the quarter was comprised of $365 million in sales of leased brokerage and the balance of $191 million from outsourcing advisory services, with growth in the latter category of services increasing 13% over the prior year in local currencies.

Our leased brokerage services delivered strong growth in the quarter, up 15%, while our sales brokerage services delivered a solid 8% increase. The more recurring revenues generated by our outsourcing advisory services segment represented 34% of our overall revenues in the quarter, same percentage as in Q4 of 2014.

Geographically, both revenues and adjusted EBITDA remained well balanced, with half of our revenues and 43% of our adjusted EBITDA generated in the Americas. We believe such a diversification is very desirable and an important part of our growth strategy in building out our global platform as a leading player in a consolidating commercial real estate services industry. However, in the short term, this diversification continues to weigh on our reported results when translated into our US dollar reporting currency.

Turning to the regions, in the Americas, revenues were $276 million, up 13% in local currencies, with 6% internal growth and 7% from acquisitions, led by our US operations. Leased brokerage revenues were up 15% in local currency versus last year, paced by our US operations, up 23%. Sales brokerage revenues were up 10% versus last year, led by a 13% increase in the US.

Outsourcing advisory revenues were up 17% in local currencies, led by strong growth in project management in both the US and Canada and in consulting and appraisal and property management in the US. Adjusted EBITDA came in at $35.2 million versus $32 million last year and a margin of 12.8% versus 12.6% last year.

Turning to EMEA, revenues of $152 million in the quarter increased 13% in local currencies, with 12% internal growth and 1% from acquisitions. Leased brokerage revenues were up 13% over last year, while sales brokerage was up 9%. And in both service lines, led by growth in the UK and Central and Eastern Europe.

Meanwhile, revenues from outsourcing and advisory services increased 18%, led by strong growth in the UK, France, The Netherlands, and Poland. Adjusted EBITDA was $25.5 million, up 12% over the $22.8 million generated in Q4 last year, with our margin increasing to 16.8% versus 15.2% last year.

And finally, in our Asia Pac region, revenues came in at $128 million, up 6% in local currencies, but down 7% in US dollar terms. Revenue growth in local currencies was all generated internally, primarily attributable to strong growth and leasing brokerage revenues across the Asia-Pacific region, up 21% in local currencies, while sales brokerage was up 6% in local currencies, led by our New Zealand operation.

Outsourcing and advisory revenues were down 3% in local currencies, primarily due to a planned reduction in certain valuation services, primarily in Australia. Adjusted EBITDA was $21.1 million, down from $23.4 million last year, with our margin at 6.5% versus 17% last year.

Moving to our capital deployment and balance sheet, in our fourth quarter, capital expenditures totaled $6.7 million, down from $10.1 million last year, and bringing our year-to-date CapEx to $22.5 million, at the low end of our previously estimated range of CapEx spend for 2015. We invested $16.9 million in acquisition activities during our fourth quarter, down from $70.7 million last year, which included the acquisition of our France-based workplace solutions business, and bringing our year-to-date investment in acquisitions to $54.5 million versus $147.4 million last year.

All of this was funded by strong cash flow from operations, which totaled $127 million for the year, up 23% versus 2014 and an all-time high amount for Colliers.

Our net debt position stood at $145 million at the end of the quarter, and our leverage ratio, expressed as net debt to adjusted EBITDA, stood at 0.8 times compared to 1 times at the end of 2014. In terms of our financial capacity, with cash on hand and committed revolver availability, we had over $350 million of liquidity at quarter end, a level ample to fund operations and other capital investments, including acquisitions needed to execute our growth strategy.

Looking across our global operations, our pipelines in most markets continue to reflect solid commercial real estate activity comparing favorably to levels seen in Q1 of 2015, with some continued market challenges in parts of Latin America and in certain parts of Asia, primarily China. Despite headline risk driven by stock market volatility, weak oil and commodity prices, and contained in geopolitical risks, we believe that low interest rates, accessible financing, and the general stability in the supply and demand for commercial real estate in most markets bodes well for continued solid activity in sales, leasing, and other commercial real estate services.

Against this backdrop, we have the following comments regarding our outlook for 2016. We continue to see robust revenue pipelines in most markets. We see some risk to momentum based on market volatility, but believe that the fundamentals impacting commercial real estate will be favorable. We expect foreign-exchange headwinds to continue, but not as pronounced as it was in 2015.

Our best estimate for revenue is mid- to single-digit percentage growth -- mid- to high-single-digit percentage growth, EBITDA margins consistent with 2015, and mid-single-digit percentage growth in adjusted EPS.

Our long-term growth strategy in building and strengthening Colliers' global platform remains intact and focuses on, first, selective recruiting in key markets to fill service line gaps; and two, strategic acquisitions to add services and build our capabilities in major markets. While we are intent on executing on both of these in 2016, we have not included the financial impact of either of these initiatives in our outlook previously outlined.

That concludes our prepared remarks. I would now like to ask our operator to open up the call to questions. Operator?

(Operator Instructions) Anthony Zicha.

Jay, do you see a slowdown in the US commercial real estate markets? And comparing to your -- well, looking at your experience, are we near a peak? What's your feeling on that?

I think my comments that I made in my prepared remarks are probably the best way to put it. Our pipelines are good and access to capital is good. Interest rates are low. But the stock markets are scary. Oil impacts things. So general sentiment is not so good, and so that is slowing things down for us, primarily in the area of investment sales, less so in leasing, although it does impact leasing as well.

So I think our view from specifically around the US is that 2016 should be an okay year. May not be as frothy in terms of growth as we've seen in, say, 2015. But the markets are still pretty good, and allocating capital to real estate is something that a lot of people are talking about as an alternate form of investment. So we are feeling pretty good about it, to be honest.

Okay, great. And could you talk a bit about your branding and in terms of what you're seeing out there in the marketplace, in terms of acquisition multiples? You are saying that there is some uncertainty, but is this providing some opportunities for Colliers?

First of all, our brand continues to get stronger. That's not just in the US, it's globally. The professionals that are joining us are finally getting it that we have one of the great platforms. We're more entrepreneurial and enterprising. And if you want to make a difference and be part of a firm that's on the rise, Colliers is the right place to be.

But Tony, you have followed us for a lot of years. And you know that we look for uncertainty in the marketplace to capitalize. And so -- and we are long-term investors and heavily invested in our business. Unlike many of our peers, this management team owns a significant amount of equity in the business.

And it's not just the people that you are talking to here. There's 300, 400, 500 people within Colliers that own significant equity in the business.

And so from our perspective, this is a long-term game. And when markets are uncertain, this is exactly the time to take advantage of them. And as you know, there's countless examples of that over the years as markets have fluctuated in commercial real estate. So we look for these kinds of times to capitalize.

Okay. And just one last question. With reference to your UK operations, it was the main driver in the EMEA. How much more room do you have there in terms of opportunity? And do you have other opportunities for international market expansion? Thank you, Jay.

The UK is a great example of capitalizing on a market when everybody else was down on the market. We bought that asset at a time when the markets were in the doldrums. And I would say that we would be number three or four in the marketplace if you take out residential revenues generated by this player or that player.

But having said that, there's lots of runaway room for us in the UK. There's a tremendous opportunity for us in France and the rest of Western Europe, particularly because the platform that we acquired last year, the AOS platform now rebranded as Colliers, is in revenue terms more than 50% workplace solutions, giving us a great opportunity to graft onto that great platform much more traditional commercial real estate services that we provide in other markets.

And I haven't even started to talk about Asia, where there's great opportunities for us. Australia, there's some interesting things. In the US, we think 2016 could be the year for us in the US, for a number of reasons.

So all in all, we are trying to keep our head down and focus on building our business one step at a time and navigating around this negative sentiment that we read about every day in the newspaper and watching stock fluctuations in our industry and among our peers. We are in a great place to capitalize.

Okay, excellent. Well, thank you very much. Thank you.

(Operator Instructions) Anthony Jin.

Thank you for taking my question. When I'm looking at the EMEA margins, they were much stronger year over year, while revenues were relatively flat. Were there any specific boosts from AOS this quarter, as we have seen in the past? Or is this more broad-based improvement that's masked by FX?

Yes, our workplace solutions business performed very well; had a very strong finish to the year. So absolutely positively impacted margins. I would say the UK business, as well, in terms of mix. And you know that we have made significant investments in the sales and leasing side there, and we saw the benefits of that with a strong finish to 2015. So I would say both those things contributed to the increased margins in EMEA.

Okay. And then can you just comment on the sustainability of, I guess, the margin boost from AOS, out of Colliers France, then?

Absolutely sustainable. As we've talked about before, from quarter to quarter, there will be some fluctuation in margins that we experience in that business as we finish out projects and earn completion fees based on success. So that will play out from time to time.

But this is a very, very solid business, which will generate, on average, upper-single to low-double-digit margins going forward. And we are intent on continuing to grow the business, not only in France, but in other areas of EMEA and internationally.

Okay, great. And if I get perhaps a broader commentary, one of your competitors this week discussed a cooling in the buying sentiment with respect to pricing, while seller expectations remain relatively high. This is in respect to commercial real estate investments.

Now, are your guys seeing any of this dynamic? And perhaps you can comment on how this buyer-seller behavior has changed over the last couple quarters?

I don't know exactly who you are referring to or what they were saying. I can say that, Anthony, certainly in certain key global markets -- we all know which ones they are -- over the last few years, we have seen some very, very high prices paid for trophy properties and so forth. That probably has cooled off slightly.

But I would say that that's a very small part of the market and I think pricing stability has been pretty consistent over the last year, for sure. And I don't think we see any degradation around that, other than what I just referred to.

So we feel that it's intact. And I think whenever you have some headline risk that we are seeing now, there may be a pause. But I think once we get through that, as I said earlier on, we believe the fundamentals are largely intact to support pricing in the commercial real estate market, and don't see a significant falloff in that at all.

Okay, great. I'll pass the line.

David Gold, Sidoti.

A couple of questions, just on the outlook. One, as we speak about expecting, say, modestly lower growth in the year -- really two questions there. First, how much of the impact that you are baking in is based on currency? Or how are you thinking about currency for forecasting, John?

Our belief is that we stated our expectations around local currency growth. That's what we can try and best estimate. And there's going to be some impact, we believe, on FX that will probably negatively impact our expected growth rate in terms of local currency. But at least at this point, we don't believe that it will be nearly as dramatic as it has been over the last couple of years.

And I think most recently, we've seen some pullback in the US dollar, which we don't know what -- whether that will continue or just stay where it is. But we expect a much more moderate impact on FX -- negative impact on our business in our results this year.

Got you. Okay. And then, Jay, what we have been hearing pretty consistently is that there's a bit of a disconnect between, say, the volatile equity markets and what's truly happening on the real estate side of the world. Translation: that it hasn't really just stopped things or as much as people think.

Can you just speak a little bit towards confidence in pipelines? It sounds like you are seeing similar pipelines to a year ago. But your confidence in the year and maybe expectations there as far as -- it sounds like you might be a little concerned about momentum. Or am I reading that wrong?

I'm not concerned about momentum in the sense that I think business will continue to do nicely. I just think that gaining growth market by market is not going to be as easy in 2016 as it was in 2015, for a variety of reasons. And so as we are looking at 2016, we are saying it's going to be a good year and we are going to do nicely.

But our internal growth expectations are dialed down somewhat and we are hoping to be able to accelerate our acquisition engine a little bit to offset some of that and use the slower growth and the uncertainty and what everybody is reading in the newspaper as an advantage to us as we move forward here. I don't know if that answers the question you are looking for, but hopefully it gives you a taste.

All right, sure, sure. But just to that end, are there things that you are doing differently business-wise to position -- so in other words, are you still actively hiring? Have you dialed back on that a little bit? And it does sound like you are still actively looking at acquisitions.

Well, we are actively hiring all the time. I would say that there are some smaller players in the marketplace that are offering dollars to B players that, if you calculate the returns, they are negative. We don't do business that way. That's the way other people operate and we know what happens to those people.

So we have to use discipline in our approach on recruiting. We have been very strategic. When we believe a high-quality professional will augment us in our major markets, will help to throw off additional business into other areas, we are as competitive or more so than others. And all the while, benefiting because we are -- we do have more momentum than the others. We are more entrepreneurial than the others.

The great real estate service professionals want to be in an environment where they can ply their craft in a way that doesn't require them to follow rules and to line up and sing the National Anthem every day at 10 o'clock in the morning and stuff like that. And I think that gives us an advantage for the right kind of people. And at the end of the day, that has worked to our advantage.

Perfect. Thank you both.

(Operator Instructions) Stephen MacLeod, BMO Capital Markets.

I just wanted to talk a little bit about the outlook. And I was just hoping you could maybe identify potential areas where your EBITDA margin outlook could either be a little bit higher than what you're looking for or a little bit lower than what you're looking for.

Look, Steve, it has been in some respects a long road, but shorter than we expected to arrive at the margin we are at now. And we had telegraphed what we needed to get there, which was really bolstering our businesses in a number of areas and gaining scale.

I think it remains to be the case. There's certainly areas where we believe margins are pretty much optimal, but other areas, and significant ones, where we believe that there's further upside. And it is mainly a scale game and it's around productivity. And we have made significant strides in those areas. We are not done yet and I think there is further upside.

If you look at -- I think the US we've talked about in terms of margins. They have come a long way but there's still room for improvement there. And then Asia. Even though for us Asia still is, when you look at the entire picture, a relatively small part of our business, our margins aren't where we want them to be. And we have plans to get there, and we will need market conditions to help us get there.

We believe that that's going to happen. It may not be in 2016, but it's certainly going to be beyond that time frame. So absolute upside, don't really want to quantify what that is.

I would layer something on top of that. And that is that when you look at our two publicly traded peers and the margins that they are generating, you have to dial out the margins that they generate from their investment management business, which is significant and very high margins and pulls up their overall margins as an organization. And that also adds performance fees on their managed funds, which further drive their margins up.

So if you were to compare our global margins to the margins generated by the other two publicly traded peers, I'd think you would find our margins pretty much in line right now across the board with our peers. I may be off some basis points, but I'm not off 100 basis points.

So we are pretty much in line right now and very proud of where we are. I think it's sustainable. It is been a long road for us: four years. And we did it a little faster than we thought. But we do have the platform we need.

John's comments are absolutely right. If we can move margins up in Asia, that will help. If we can move margins up in the US, that will help. But I think we are pretty much at an optimal level, but for those two or three things. And we should really focus our efforts now on driving top-line and bottom-line growth.

Great. Okay, that's helpful. In terms of the M&A pipeline, obviously we've talked a lot about it this morning. But you were very active over the last -- through December and then thus far in 2016. Is that reflective of what the pipeline potentially looks like right now?

Yes. We have a very good pipeline. As you know, Steve, you have been following us for awhile, we consider tuck-under acquisitions to augment our internal growth. We have an acquisition team, which is quite extensive. It works extremely well with operations around the world. And so we are originating, considering, underwriting acquisitions on a global basis and I think doing a pretty nice job of it.

And to my earlier comments, we are in an industry where only 17% of the overall market's consolidated. So we should be able to continue to capitalize on this for many years to come. As long as we keep our discipline and look for 16%, 17% IRRs on every single deal we do, we should be able to continue to grow Colliers internally and through acquisitions and add share value for many years to come.

That's great. And then just finally on the M&A, under the previous pre-split structure, you used to have a target for what M&A could potentially contribute on a top-line basis. Do you have -- is that something that you would be sharing? Do you have a target like internally that you are looking at and something that you would be able to disclose?

Steve, we don't budget acquisitions, as you can imagine. We were very active. But the kind of businesses we buy are generally from private owners. And in virtually all cases, they don't need to sell.

So it's an interesting back-and-forth. So it's really hard to pin down the timing other than to say that, again, echoing Jay's comments, we have a robust pipeline and we are very motivated to continue selectively building our business through acquisitions.

I think if you were to go back and look at a profile of what we would really like to accomplish over the next five years, it would be quite in line with what you may have seen before we split Colliers off from the rest of the business. And that would be an equal weighting around contribution to top line, revenue, acquiring businesses that would have margin profiles at or better than where we are today. I think that would give you an indication of where we see it. It may not exactly roll up that way, but certainly that would be our plan.

Okay, that's very helpful. Great, thank you.

Brandon Dobell, William Blair.

A couple quick ones. On the margin question, maybe John, as you think about the mix of business 2016 versus 2015, and part of that is just taking into account the kinds of acquisitions you made, how does mix of business look to change those margin dynamics, all else equal?

I don't see a significant alteration, obviously, in the margins, assuming that we are going to continue to be active in growing our business in the area service lines we are generating today. We had 34% of our revenues in outsourcing and advisory. We like the recurring nature of much of that revenue that's generated in that segment. So we are very interested in adding onto that.

But we see excellent opportunities to continue building sales and leased brokerage as well. So I would say, on balance, our best estimate would be that would more or less stay intact and in and of itself not altering our margin profile. Again, as we build each of these areas in certain markets, we are (technical difficulty) scale, and that will absolutely help us increase margins over time.

Got it. Okay. And then focusing on outsourcing and advisory for a bit, maybe some color on the kinds of deals that you guys were winning during 2015. And especially if you can give any color on what the mix of revenues within that, let's call it, service line looks like in terms of contractual multiyear deals versus maybe now the three- to six-month kind of advisory project that are better than a transaction, but not quite like a multiyear contract. Just trying to get a sense of the true multiyear visibility in that revenue stream.

Unlike some of the peers, Brandon, we really don't spend lots of time talking about we won 16 things, 14 existing [ties], renewed 72 others. We think that's a mug's game. And so from our perspective, recurring revenue, repeat revenue, or long-term revenue streams, it includes corporate solutions, it includes our workplace solutions business, which has an average retainer arrangement of 18 months per retainer.

And this is on a case-by-case basis, so often you are working for a client in multiple locations. Each location would have an average job size or term of roughly 18 months. And property management versus highly recurring, and changes essentially only when a property is monetized and the subsequent buyer has its own internal management capability.

So it's an amalgam of a number of things. And frankly, we don't even include in recurring revenue, as some others do, our leasing revenue, which would drive our recurring revenue up materially. But we don't believe that leasing revenue with an average lease term of, say, five years is a recurring item. So things that we include in that category are more along the lines of what I just described.

Okay. And then final one from me. As you guys think about the headcount additions in 2015, how do we think about 2016 on a comparative basis, i.e., either geographies or service lines? Do you expect to continue the trends that you've been on now, or is there areas of emphasis that we should expect you guys to be a little more focused on, whether it's a geography or a service line?

I think it's across the board. We are at a point -- and it does vary by region, branded. There are certain markets -- Canada and Australia -- where we are just more selective in terms of adding on people we are always looking to increase our bench strength. But in those two particular markets, we are market leaders. So probably less of a focus there in terms of actual numbers.

The US, Asia in particular, are both areas where we are operating in vast markets and we are continuing to recruit in addition to acquisitions to build our capabilities. And then EMEA, which you've seen us active due to the acquisition [prop]. We continue to view acquisitions well in terms of recruiting, not only in the UK, where we talked about before, but also in France, in particular, building out the capabilities there beyond the workplace solutions business.

So again, it's going to be much of the same going forward for us in 2016 as we saw in 2015.

Okay. Great, thanks, guys.

(Operator Instructions) Frederic Bastien, Raymond James.

Your corporate costs were down materially year over year in the quarter. What was behind that and how should we think about those costs trending going forward?

Yes, corporate costs were down on a year-over-year basis. We had some significant compensation costs and actually base salary costs that were in last year that are no longer incurred by us as we work to streamline our global operations team. We have been through that, and that's certainly part of it.

And also we had a little bit of a favorable FX pickup impacting our corporate costs, such that if you really look at our corporate cost on a run rate basis next year, we would be looking for something in the $16 million to $18 million range. So certainly lower this year, for the reasons I talked about. But an amount that's reflective of our streamlining initiatives that we did this year.

Okay, thanks. Now, your mid- to high single-digit growth target isn't flowing straight to your bottom-line target, despite the flattish margins. What's causing this?

We've got a few more -- we got shares. We got a little bit of dilution from the shares that were issued in conjunction with the spin-out. We took out a minority interest at the Colliers level and issued shares in conjunction with that. So we are going to pick up the full account on that.

We've got a little bit of tax as well. As we grow our US business, the unfortunate consequence is they are at a higher tax rate. And we will see that next year. So those two things would be impacting EPS.

And just to confirm your -- that target is inclusive of the recent acquisitions you made, but obviously nothing on go-forward basis?

Correct.

Okay, thank you very much.

We currently have no more questions in the queue. (Operator Instructions) There are currently no questions in the queue at the moment.

Okay. Thank you, everybody, for participating. We look forward to speaking again at the first-quarter conference call. Thanks again.

Ladies and gentlemen, this concludes the fourth-quarter investors conference call. Thank you for your participation and have a nice day.