Newmark Group, Inc. (NASDAQ:NMRK) Q4 2018 Earnings Conference Call - Final Transcript

Feb 12, 2019 • 10:00 am ET

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Newmark Group, Inc. (NASDAQ:NMRK) Q4 2018 Earnings Conference Call - Final Transcript

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Executive
Michael Rispoli

$0.45. Newmark's fully diluted weighted average share count for the quarter was $267.6 million. The year-earlier weighted average share count was $233.4 million. Newmark's fully diluted weighted average share count increased mainly due to the first quarter 2018 sale to BGC of approximately $16.6 million exchangeable limited partnership units of Newmark for $242 million. Additionally, our share count rose due to equity-based compensation, front office hires, and acquisitions. Going forward, we expect to take a number of steps to reduce share issuance. These include a greater percentage of cash for acquisitions, employee compensation, and new hires. We expect our weighted average fully diluted share count to grow by between 5% and 7% year-over-year in 2019. In comparison, Newmark's weighted average fully diluted share count increased by 7% in 2018, excluding the units sold to BGC last year. Our share issuance outlook for 2019 assumes no material acquisitions, buybacks, or meaningful changes to the Company's stock price.

Moving onto the balance sheet. Including cash and cash equivalents and marketable securities, Newmarks total liquidity was $171.4 million. Our unsecured long-term debt was $537.9 million. Therefore, our net debt was $366.5 million. Total equity was $1.083 million. During the quarter we issued $550 million of senior unsecured notes due in 2023. To meet tax-free spin-off requirements, the proceeds from this issuance were used to pay down pre-existing debt owed to or guaranteed by BGC. We also entered into a $250 million revolving credit facility improving our financial flexibility.

As a result of our greatly strengthened balance sheet, the Company's net debt to adjusted EBITDA has improved 0.7 times as of year-end 2018 versus 2.6 times in the prior year. Our balance sheet does not yet reflect the approximately $430 million of additional Nasdaq payments expected from 2023 through 2027 because the shares are contingent upon Nasdaq generating at least $25 million in gross revenues on an annual basis. Nasdaq generated gross revenues of approximately $4.3 billion in 2018.

Given the strength of our on and off balance sheet assets, our $250 million credit facility, strong cash flow generation from the business, and low leverage, we believe that we are well positioned to invest for growth. And as a reminder, we will simplify our definitions of adjusted earnings and adjusted EBITDA beginning with the first quarter of 2019. Please see the section of today's press release titled Simplifying Non-GAAP Reporting Beginning in 2019 for additional details.

And with that, I'm happy to turn the call back over to Barry.

Executive
Barry M. Gosin

Thank you, Mike. Our full-year outlook for 2019 is as follows: we expect to generate revenues in the range of $2.2 billion to $2.3 billion; we anticipate our 2018 tax rate for adjusted earnings to be in the range of 14% to 16%; we expect our weighted average fully diluted share count to grow 5% to 7%; we expect our earnings per share to be in the range of $1.55 and $1.65; we estimate our adjusted EBITDA to be in the range of $575 million