Colliers International Group Inc (CIGI) 2025 Q2 法說會逐字稿

Welcome to the Colliers International second quarter 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 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 Thursday, July 31, 2025. And at this time, for opening remarks and introductions, I would like to turn the call over to Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

Thank you, operator. Good morning, and thanks for joining our second quarter conference call. As the operator mentioned, I'm Jay Hennick, Chairman and CEO of Colliers. And with me today is Christian Mayer, our CFO. This call is webcast and available in the Investor Relations section of our website, along with the presentation slide deck.

As you saw, we exceeded expectations with our strong second quarter results, highlighting the exceptional performance of our Engineering division. Our long-term strategy to build a diversified professional services and investment management business with high-quality recurring revenue streams is clearly paying off.

All three divisions, Real Estate Services, Engineering and Investment Management demonstrated strong momentum driven by organic growth, new revenue pipelines and acquisitions. We anticipate this positive trend to continue throughout the year, prompting us to raise our outlook despite macroeconomic uncertainties, as you'll hear from Christian in just a few minutes.

Last week, we rebranded our Investment Management division into Harrison Street Asset Management, reflecting the strength and global recognition of the Harrison Street brand. We also expanded our leadership team, appointing Co-Founder, Chris Merrill as Global CEO; and Zach Michaud and Steve Gordon as Managing Partners and Global CFO and COO, respectively. Chris and the team remain significant shareholders consistent with our long-standing partnership philosophy.

As part of this initiative, we launched a dedicated private wealth channel by rebranding and expanding our Versus Capital subsidiary. The newly branded Harrison Street Private Wealth will continue to deliver highly differentiated alternative investment strategies to wealth managers, financial advisers and high net worth individuals. This rebranding significantly expands our Harrison Street's broad array of global investment products and capabilities.

This week, we also completed the acquisition of RoundShield Partners, a premier European credit platform with $5.4 billion in AUM. This acquisition enhances our credit, student housing and hospitality capabilities. In addition, RoundShield's vertically integrated student housing platform offers an exciting opportunity to scale our combined operations across the region. Overall, AUM increased to $103 billion during the quarter and over $108 billion pro forma for the acquisition of RoundShield.

Fundraising has improved over the past few quarters, and we expect this to continue, although still below historical levels. Operationally, we continue to deliver attractive risk-adjusted returns for investors throughout our various investment strategies, including real assets, infrastructure and credit.

This quarter, new investments increased 64% year-over-year. And currently, we have about $8 billion of capital to put to work, which positions us very well to continue to seize opportunity and deliver value to our investors. Realizations were also up 150% over the prior year, yielding substantial returns for our investors while providing necessary liquidity for reinvestment.

Besides RoundShield, we also completed 4 tuck-under acquisitions in Engineering and two in Real Estate Services since the beginning of the quarter. Our M&A pipeline remains robust, and we are confident in completing several additional tucks throughout the balance of the year.

With our 30-year track record of value creation, visionary leadership and three high-value growth engines, Colliers is well positioned to continue to seize opportunities and deliver enduring value for our shareholders.

Now I'll turn things over to Christian for his financial report, then we'll open the call to your questions. Christian?

Thank you, Jay, and good morning, everyone. As a reminder, all non-GAAP measures referenced today are defined in the materials accompanying this call. Revenue growth figures are presented in local currency terms.

We delivered strong results in the second quarter with revenues of $1.3 billion, up 17% year-over-year. Growth was led by our Engineering segment, supported by recent acquisitions as well as solid internal performance. Overall, internal revenue growth came in at 4%.

Adjusted EBITDA was $180 million for the quarter, a 15% increase from last year. In our Real Estate Services segment, revenue grew 4%. Recurring outsourcing revenues rose 6% with growth across property management, valuation and loan servicing.

Capital markets revenues were up 16%, improving on the 10% growth reported in Q1 and ahead of our expectations. Sales brokerage was strongest in the US and Western Europe. Debt finance activity also surged, led by significantly higher US multifamily originations.

Leasing revenues declined 5% globally, coming in below expectations. While office leasing was strong, it was offset by weaker industrial volumes due to tariff-related and other macroeconomic uncertainty. Segment net margin was down slightly to 11.9%, impacted by revenue mix and continued investments in recruiting.

Our engineering net revenue jumped 70%, fueled by acquisitions and internal growth of 8%. The net margin rose to 13.7%, a substantial increase from last year with improvements coming from both acquisitions and enhanced productivity in our core operations. We continue to monitor any potential impacts from tariffs or government policy, but we've seen no significant effect on our backlogs to date.

In Investment Management, net revenues declined 7% as expected due to catch-up fees recognized in the prior year. However, the net margin improved to 42% from 40%, driven by disciplined cost control and lower incentive compensation.

We have been very active on fundraising. During Q2, we raised $1 billion in new capital commitments. We also raised an additional $0.5 billion since quarter end, bringing total year-to-date fundraising to $2.7 billion. The launch of Harrison Street Fund X in May was the primary driver for fundraising during the quarter. With this fund and others currently in market or launching later this year, we remain well on track to achieve our $5 billion to $8 billion full year fundraising target.

Assets under management stood at $103.3 billion at June 30, up 3% from March 31 and up 7% from a year ago, supported by new capital raised, deployment activity and favorable mark-to-market adjustments.

Free cash flow remains strong. On a trailing 12-month basis, we converted 98% of adjusted net earnings into free cash flow, in line with our long-term target. As we've noted before, our working capital-light business model and modest CapEx result in strong free cash flows available for reinvestment and growth.

Turning to our balance sheet. Our leverage ratio was 2.3 times as of June 30. Second quarter leverage was slightly higher than anticipated, firstly, due to our increased pace of acquisitions and secondly, due to the recent appreciation of the US dollar, which increased the reported value of our foreign-denominated debt. With the completion of the Astris and RoundShield acquisitions in July, we now expect our leverage to decline to just under 2 times by year-end. This assumes no additional major acquisitions.

We have raised our full year consolidated outlook to reflect our strong year-to-date performance and the impact of recent acquisitions, including RoundShield. RoundShield contributes approximately $35 million in annual management fee revenue at margins consistent with our existing Investment Management division.

While we continue to monitor the effects of global trade tensions and interest rate volatility, particularly on our Real Estate Services segment, we remain optimistic. Our outlook is supported by healthy pipelines across all three of our segments and the expectation of a modest improvement in market conditions through the second half of the year.

That concludes my remarks. Operator, please open the line for questions.

(Operator Instructions)

Anthony Paolone, JPMorgan.

Thank you. Good morning. My first question relates to leasing. I understand the industrial weakness that occurred in the quarter. Just wondering, did you find that to be a surprise? Like did the market change more dramatically than maybe you thought? And then also, just what does it look like today? Has there been much of a rebound as you start to look at the second half of the year?

Tony, we'd expected leasing softness for the second quarter. I think we telegraphed that in our first quarter commentary. We compete in many markets. We have a very diversified business in 35 countries and strong positions in places like Canada, Australia and Western Europe that are heavily tariff impacted, and that was something we thought would weigh on our results, and it did, although I am -- I can report that July has been more positive in terms of trajectory on that, and that includes industrial leasing activity being trending more positively today.

What's industrial as a percentage of your leasing revenue at this point?

40%, 40, 45%.

Okay. All right. And then just my second question, in investment management, can you talk a bit more about the branding that you announced? How much centralization perhaps might occur or just any other economic implications of just the reorganization of investment management?

Yeah, So we're very excited about it for a number of reasons. When we -- and for those that have been long-term shareholders, we curated this this division one step at a time since 2016. And every one of the moves that we made were all complementary.

So for example, the rebranding and integration of Versus, which is a very well-managed business, its focus was entirely on the private wealth channel. And so how do we -- internally, we were focused on how do we accelerate the growth and utilize the expertise of the Versus team across the entire platform. And so, in addition to rebranding Harrison Street, it was a natural step as part of that initiative to add Versus.

And I would say, going forward, we're looking for similar opportunities to leverage some of the expertise that we have throughout the platform -- and I think you'll see more of it over the next couple of quarters.

Okay, thank you.

Stephen Sheldon, William Blair.

Hey, thanks and nice results here. First one, just on the guidance raise for the year. Can you help frame how much of that is driven by M&A completed since the last earnings call versus higher organic revenue and profit expectations? And specifically, are -- I guess, are your underlying organic assumptions for the year also moving higher?

Stephen, that's a good question. We expect that out of our outlook increase that half will come from the partial year effect of completed acquisitions, and half will come from increasing expectations for organic growth in our core operations.

In particular, we're seeing revenue acceleration in Real Estate Services in the back half of the year. We've increased that slightly relative to our prior expectations. And engineering, as you can see, has been outperforming expectations in the first and second quarter with very strong organic growth, both top line as well as margin enhancement.

So those are the key drivers for the organic piece and between the combination of the acquisitions and the organic growth improvement, that is the basis of the increase in outlook.

Great. That's helpful. And then as a follow-up, I also wanted to ask about the IM branding consolidation under Harrison Street. Jay, you've been pretty vocal, I think, about investors undervaluing the IM segment and the team considering a potential spin-off.

Does the rebranding set the stage even more for that? And generally, how serious are you about pursuing that if Colliers doesn't get the sum of the parts valuation, you think it deserves?

We always look at our overall valuation, and we believe that the overall valuation, especially given the component parts of Colliers is materially below where it should be. The steps we're taking in the IM segment are probably steps we would have taken anyway.

And for those that follow us for -- have followed us, you'll know that the -- our reluctance so far to accelerate doing anything, and we haven't made any final decisions about this, has been really around fundraising. The fundraising for the past couple of years has been softer than we've expected and -- but it's picking up now.

So now is an appropriate time to make the changes necessary to augment our leadership team. All of our platforms have been working beautifully together. There's lots of collaboration going on, mostly around new investment products, new markets that we can take our existing expertise to things like infrastructure, data centers and now credit in a much bigger way are all exciting opportunities for this platform.

And it's brought a collaboration beyond, I think, what we would have anticipated. So we're very excited about it. The teams are incredible. They own direct equity in the business, which has always been consistent with our philosophy of partnership. So we've got high hopes for that division and what will be, will be.

Understood. Thank you.

Stephen MacLeod, BMO Capital Markets.

Oh, thank you. Good morning, guys. Just wanted to circle around on the Engineering business, which obviously had a strong Q2 and as you pointed out, a strong -- as we saw as well, strong Q1. You did reference the backlog. So I was just wondering if you could sort of characterize either quantitatively or qualitatively sort of what the backlog looks like for the balance of the year and then into 2026, and I guess even longer term, if you can give some color on that, too.

Steve, we always strive to maintain a backlog in excess of 12 months of revenue. And that continues to be the case today despite -- and not despite, but regardless of the fact we've increased revenue significantly. So that backlog needs to grow significantly as the revenue on the trailing 12 basis grows in the business, and we are able to do that.

We are having success with gaining wins on contracts for new infrastructure projects, larger scale type projects as well in the private sector. So, we feel very confident about our pipeline of revenue in that business, and we're tracking right where we expect it to be in terms of our planning.

We also strive to maintain a mix of private sector and public sector clientele in the segment. So, we look at that carefully. And that balance gives our revenues additional resilience through all cycles of the economy, and that's something we strive to do as well.

Okay. That's helpful color, Christian. And then maybe just on the Harrison Street Asset Management. With the balance of fundraising kind of year-to-date being in the high $2.7 billion range in the long term, the yearly target of $5 billion to $8 billion, can you talk a little bit about where that back half growth is expected to come from? Is it in addition to Harrison Street X? And are there -- maybe just some color around that as well.

Yes, Steve, as I noted, Harrison Street Fund X launched very successfully in May of this year, so just a few months ago. We have another significant closed-end fund launching in the fourth quarter, the Balt latest fund, that will be their Fund V. We expect that will have a significant impact on our AUM growth for the full year in terms of fundraising. And we also have a number of other products in the market, open-ended products and others that are fundraising and that will be additive for the rest of the year.

We have a total of about 20 products in the market at various sizes right now. And that includes the RoundShield products that also offer -- there's some overlap, obviously, with student housing and some hospitality, but 20 products in total. So, we're optimistic that fundraising will finish the year nicely on fundraising, which sets us up beautifully for '26 and beyond. So, we're looking forward to that.

Great to hear. Thanks for that color, Jay.

Appreciate It. Thanks, guys. Thanks.

Mitch Germain from Citizens Capital Markets.

Thank you and Congrats on the quarter. Is the goal to centralize the functions of the Investment Management platform like fundraising and other capabilities?

It's to make them better. So, I don't think that centralizing them necessarily is the ultimate goal, but it's to better enhance the distribution capabilities of all the segments of the platform.

Okay. That's helpful. And then, do you think -- is the $5 million to $8 million of fundraising, is that what you would consider to be a target in the current environment or kind of a longer-term target based on the composition of that platform today?

In the current environment, we think we can do much better. Historically, we've done much better than that, and we're much bigger today than we were before. You're seeing the data from all the other firms in the space that are reporting. They're all having challenges around fundraising unless, of course, they have an insurance arm, which helps them quite a bit. We don't have that.

But everybody is having fundraising challenges. They were more challenging last year than they are this year. We think that we're doing a much better job both internally and externally. And it all comes down to the success of our products and the returns that we've

been delivering to our investors. So our investor base keeps getting stronger. And as I said to one of the earlier questions, we're quite excited about '26 and beyond and what it could mean.

Thank you for that.

(Operator Instructions)

Daryl Young, Stifel.

Hey, good morning, everyone. question on the Investment Management platform and specifically your gearing towards Europe. Harrison Street, the Basalt and now RoundShield all have good representation there. Is that a geography you're specifically targeting? Or is it potentially the timing of what acquisitions are available when? Just any color you can give on sort of the European exposure.

Well, let's also not forget Colliers Global Investors, which has been in Europe for probably 10 years now and have a significant portfolio in hospitality, multifamily, et cetera.

We see Europe as some white space for us. The beauty of RoundShield is there with our in Europe. And it was all credit-based. So we can help with our student housing business. We can help with some seniors business by providing credit.

And RoundShield also has, and I want to emphasize this, a vertically integrated business, which is new to us and especially new in Europe where there isn't as much experience in managing student housing facilities. So we see a lot of opportunity to collaborate with our existing products there.

So all of this to say, it's just further increasing the size, scope, depth of management, and probably most importantly, investment strategies in Europe. We have a significant business there, and it's growing. And so that really supports our business in North America as well.

Okay. Great. And then just as a second question on IM. Do you have the capabilities you're looking for now? I think historically, you've said you'd avoid traditional private equity as a vertical. But just curious if there's any other capabilities you'd like to add to continue scaling up the platform.

There are some additional capabilities. We'd like to continue to expand in a couple of areas, credit, in particular, infrastructure, mid- market infrastructure, where we have a very, very strong presence, both in Europe and North America. Private equity is not something that we've targeted, not to say that we wouldn't, but it's not sort of a near-term opportunity that we're pursuing.

So, we're always looking for white space. We're always looking for products and investment strategies where we can generate better returns for our investors so that we can introduce them to those new opportunities. And so that was one of the great things about RoundShield. Its results over a long period of time were stellar. And that helps to introduce RoundShield's products to our existing investor base.

Got it. Okay, that's great, and congrats on the good quarter. I'll get back in the queue.

Thanks.

Scott Fletcher, CIBC Capital Markets.

Hi, good morning. I wanted to ask a question about engineering, strong quarter margin expansion looking quite good. Is there anything specific to call out on what drove that margins, whether it was more tilted to the M&A or just -- or the operations side? And just how we should expect that to play out going forward?

Yeah, Scott, in terms of the engineering margins, the margin expansion came equally from acquisitions and from organic improvement in the productivity and efficiency and utilization of our staff. So, we've made strides there, and that's showing in the reported margins.

So, as you look ahead to Q3 and Q4 of this year, you'll see the gains from the acquisition piece become a little bit less. We do expect because we've lapped the Englobe acquisition and a few others, we do expect continuing enhancement in efficiency and productivity in the core operations. So you'll see -- we expect margins to continue to tick up on a year-over-year basis for that reason.

Okay. And then sticking on the margin front, on the Investment Management side, has there been any change to the sort of to the future view that margins should expand nicely in 2026, just given this year has had some additional investments and lapping some tougher costs?

Yeah, Scott, our objective in investment management is that margins as we scale the business should improve over time. Today, we're in the low 40s range. We would expect over time, and this is a period of a couple of years to get that margin to the 45% and even approaching 50% range as the business scales and we've had more success on fundraising, which is going to drive it.

I might add to that. We are doing a lot of investment spending also in a bunch of areas around Harrison Street. And so that's going to keep pressure on, I think, Christian, the margins a bit for the next year or two as we continue to build out some of these capabilities, especially in the areas of our private wealth channel, as an example, some distribution, et cetera.

So, we're hiring. And so that always has -- puts a little bit of a damper on margins. But we're very focused on margins. So, we're trying to balance that, as Christian was talking about, but I just wanted to emphasize the fact that with the margins being in a good spot right now relative to our peers, that is with some significant investment that we're making.

Okay, great, good to hear.

Thank you.

Julien Blouin, Goldman Sachs.

Hello, this is Ryan Triaison for Julian. Congrats On the Engineering segment specifically, I was wondering what types of additional businesses you guys are looking to add in order to round out your offering there and what respective multiples you're able to acquire them at?

We're very active across the board in engineering, as you can see. Being global allows us to continue to augment our platforms in North America, Canada, US, in particular, Australia and New Zealand. And we are actively looking in Europe.

You asked about valuations. Valuations are interesting right now because we believe that we can continue to do -- tuck-under acquisitions at very favorable rates. Platform acquisitions, however, are higher value, and they're worth higher value, frankly. So I would say that if we were to enter the European marketplace, which we'd like to do over the next year or two, we would expect to pay a more healthy valuation, for example, than we would in tucks.

The rest of our business is -- we've got significant platforms, so we can continue to tuck Australia, New Zealand, Canada, US and we're continuing to be very successful there.

I should also add that -- there's one or two other specialties in engineering that command higher valuations as well. So if it's a significant platform within the United States that would add to our overall business mix. For example, power, I'm using that as an example, just to give you a sense, that might be at a valuation that would be higher than normal.

But it's -- beauty is always in the eye of the beholder. And we've been in the acquisition business now for 30 years. So we hope that we know when to pay up for something that's incredible and will add value to us and not.

Thanks.

That color is super helpful. And for my follow-up, is it possible for you guys to expand on the state of the fundraising environment on your real estate funds versus your alternative infrastructure funds? Thank you.

I don't think we want to do that, to be candid. There's some competitive information in there that we want to hold on to. But we -- and Christian, you may have a view on this, but we have consistently talked about our fundraising totals across all strategies and not been specific around where the fundraising is coming from other than your comments on the two big flagship funds that are in the marketplace now.

I would just add to that, Jay, that we do -- and we have been seeing fundraising in all strategies. Our traditional real estate strategies, our infrastructure strategies, our alternative strategies, every single area has been active in fundraising year-to-date, and we expect that to continue.

I appreciate it thanks.

Himanshu Gupta, Scotia Capital.

Thank you and good morning. So on capital markets, it looks like Q2 was ahead of expectations. So any asset class or geography which drove that good performance? And then how should we think about Q3 or back half of the year on capital markets? Thank you.

So Himanshu, as I mentioned, our capital markets performance was led by the US and Western Europe. And we're coming off a low base. So we had strong growth in Q2 of 16%. I would expect that we can repeat or enhance that level of year-over-year growth in Q3.

In Q4, the comps are going to get a bit tougher. If you recall, in Q4 of 2024, there was a surge in capital markets activity. So the comps are getting a little bit tougher. But certainly, I think the momentum in capital markets is strong and should continue.

Got it, thank you. Okay. And then on the leasing, I know some commentary has already been provided. Just wondering, in your guidance for the back half, what kind of growth are you expecting or incorporating in your guidance for leasing revenues?

Himanshu, we are still expecting on a full year basis to have mid-single-digit growth in leasing. As you've seen, leasing has been challenged in the first half of the year. So that implies we're going to have some healthy uptick in leasing activity, and we expect that anyways for Q3 and Q4 to deliver on the full year sort of mid-single-digit area in terms of growth.

Got it. And then if I look at Q3, like capital markets seems to be sequentially improving. Leasing, obviously, outsourcing also looks like good there. So should we expect like some nice margin expansion in Q3 on a year-over-year basis on real estate side?

Himanshu, we do expect some margin enhancement on a year-over-year basis in Q3 and in Q4 and hopefully, on a full year basis as well.

That's very helpful. And maybe the last question, switching gears on engineering. Englobe acquisition, I think it's almost one year now since you made that acquisition. So as you look back one year, how has the acquisition performed relative to underwriting or your expectations?

Yeah, Himanshu, you're right. This -- I think this week is the one-year anniversary of our Englobe acquisition. I can say, from my perspective, it's been a pleasure working with the team at Englobe.

We've done a lot of things together and integrated the business. They've been very active as well on acquisitions, which is part of the thesis around doing that transaction in the first place was building out their Canadian presence. And we've done that now, I think, with four acquisitions, if memory serves, -- so that's been very positive.

The business is performing well. The backlogs are strong, as I mentioned in my general comments about engineering. That is also true of Englobe. So no, we think it's been a great first year, and we're excited about the future.

Got it. And maybe just a follow-up, and that's my last question, by the way. On Engineering, like should we expect like continued high single-digit organic growth in the second half? I know first half has been pretty strong. So overall engineering like second half of the year.

Yeah, I mean in terms of organic growth for the second half of the year in engineering, I would expect something in the mid- to high single-digit range. We have had some strong performance year-to-date. But I think that growth will continue, perhaps not at the same -- not quite at the same rate, but certainly at very strong rates.

Got it, thank you, and I'll turn back. Thank you so much.

(Operator Instructions)

Jimmy Shan, RBC Capital Markets.

Yeah, Just a quick follow-up for me. One on RoundShield. I was wondering if you could share with us the rough multiple paid for the business or at least a rough range -- and then in terms of capital allocation with respect to acquisitions going forward, you mentioned you could do tuck-ins in the Engineering business and a very attractive multiple. And I suspect this RoundShield is going to be not as attractive.

We can't hear you. Can you speak up please?

Okay, can you hear me better now?

Better, yeah.

Okay. My second question was more about whether we should expect more IM acquisitions going forward versus the sort of the better multiples you're getting on these engineering tuck-ins that you've been doing in the last little while.

So let me answer the second question, and Christian can deal with the first. We're always open for acquisitions. We're always talking to several potential targets. So nothing is off the table from that perspective. And yes, the valuations may be slightly higher in that business, but there's a lot of opportunity for us to accelerate growth. So we're looking at everything.

And to your question specifically about RoundShield, I mean, that transaction, and you know credit managers in the market have traded at very high prices over the past number of years. It is a high-growth area. So in our case, the RoundShield acquisition was done in the low teens area, and that's consistent with where the market is at for these.

And I would add also that we've been active this year to date in all three of our segments, balancing allocation of capital across Real Estate services and of course, Engineering, where we've been very active and now also Investment Management, and that's a good place to be for us is having that balanced approach to capital allocation where it makes sense and where we see the most opportunity.

Okay. And then, sorry, one more follow-up on the leasing side. Just trying to understand the sort of the weakness a little bit better. Is it fair to say that your industrial leasing outside of the US is fairly decent sized business and that probably could explain some of that relative to some of your peers?

We can't -- we still can't hear you. You got to speak up. It's very hard to hear you.

Okay. Apologize. Give me my phone. Probably about headset. Yes. No, my second question was about leasing and understanding the weakness there and whether or not you have a larger size of industrial leasing outside of the US that might explain some of the relative weakness that we're seeing weakness relative to your peers?

So Jimmy, we have a significant industrial leasing practice globally, including in the US But as I mentioned earlier, we do have perhaps larger exposure to markets like Canada and Australia and Western Europe than some of the others. So that is potentially a contributing factor here.

Okay. Okay. Thanks.

Frederic Bastien, Raymond James.

Guys, can you hear me?

We can hear you. I can hear you. It was very difficult on the other one.

Okay. A couple of questions. First of all, has the global trade uncertainty adversely impacted any of the Engineering business because you did deliver exceptional organic growth on that front. Just curious what the -- if there was any impact, if at all.

Yeah, Frederic, as I mentioned in my prepared remarks, we have been in close contact with our teams and with our clients on this front. We have not seen any significant impacts on sort of government policy-related matters or on tariff-related matters in our engineering practice, thankfully. So that is not something that is causing us any concerns as it relates to our backlog at the moment.

Okay. That's good. The other thing I noticed is on the Investment Management side. I appreciate that your revenues will swing around depending on the pass-through performance fees that sometimes you have to report. But I was surprised to see EBITDA come down sequentially. And I look back a couple of years of results, and I noticed Q2 is actually always your weakest during the year. Is there anything particular about Q2 that makes this trend? Just curious.

There might be a little bit of timing of expenses in there in the second quarter with investor conferences and that sort of thing. But the real -- that's maybe part of it. But the bigger factors here, we did have higher co-investment income in the first quarter than the second quarter. So that explains part of the difference.

And the final point I'll make is around catch-up fees, which are highly accretive to the bottom line. We had some of those in Q1 of this year, and we did not have any in Q2. So that is also a contributing factor.

That's helpful. Thanks so much.

There are no further questions at this time. I'd like to turn the call over to Zy Henne for closing comments. So, please go ahead.

Thank you, everyone, for participating in today's call. We look forward to equally strong third quarter results. And again, thanks for participating.

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