Altus Group Limited (AIF) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by and welcome to the Annual and Special General Meeting 2020. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Raymond Mikulich. Thank you. Please go ahead, sir.

Thank you, and good morning, everyone. As host -- I'm Ray Mikulich. I am the Chairman of the Board of the Altus Group Limited. And I want to welcome you to the official proceedings of our 2020 Annual and Special Meeting of the shareholders of the Altus Group. On behalf of the Board of Directors, management and all the 2,500 employees of Altus, I want to thank you all for joining us at these extraordinary times and under these unusual circumstances. We are living in what you can only call an unprecedented crisis. And the board, management and employees of the Altus Group extend our heartfelt sympathies to those who have suffered hardship and lost loved ones to the insidious virus. We also express our appreciation to the frontline workers, who show up every day to help us get through this terrible crisis. We will get through these challenging times, but there has been and there will be great disruptions to our life. And some of those disruptions will be permanent. Markets and business models will change, and commercial real estate investors will have to adjust their planning and expectations to the new realities. Fortunately, Altus Group came into this crisis financially sound and well positioned within its industry to provide our clients with the thoughtful leadership, insights and analytic tools they will need to navigate these complex times. Our management team has done a remarkable job of quickly transitioning to a remote workforce and adapting our business workflows to maintain focus on serving our clients and guarding the health of their colleagues. We will undoubtedly feel the effects of the impending economic slowdown. However, the impact will be tempered by the continuing needs of our clients and customers. Real estate operators and the markets will be impacted dramatically. The market fluctuations will make our software, data and analytic tools more essential to our clients as they navigate the dynamics of these -- of their volatile business. Our people have been courageous and determined as they work through the challenges and yet look to the future. It is because of their commitment and efforts that we are confident our company will persevere and prosper. And we thank them. The pandemic has obviously altered the format of our Annual and Special Meeting of Shareholders. This meeting is being held virtually via live webcast. And because of that, it is necessary that we set out a few rules for the ordinary -- orderly conduct of the meeting. Questions in respect of a motion could be submitted by any registered shareholder or duly appointed proxy holder using the instant messaging service of the Lumi virtual interface. Please note that there will be a slight delay in a response to any such communications received by our team. When asking a question, please remember to indicate your name, which entity you're representing and confirm that you are a registered shareholder or alternatively a duly appointed proxy. Questions will only be addressed during the question period at the end of the meeting. However, questions regarding procedural matters are directly related to the motion before the shareholders may be addressed during the meeting at the discretion of the Chair. For the purposes of the meeting today, voting on all matters will be conducted by a single electronic vote at the end of the meeting. As a reminder, if you have already voted prior to attending the meeting by completing a proxy or voting information form, there is no need for you to vote again. Only registered shareholders and duly appointed proxy holders may vote and will be asked to vote on each business item after the presentation of all business items. When you are asked to vote at the end of the meeting, you will receive a message from -- on the Lumi virtual interface requesting that you cast your votes. You will only have a limited amount of time to do so. I will be giving further notice and further direction on the voting when it is time to take place later in the meeting. Obviously, if you have signed in as a guest, you will not be able to vote. All of the current members of the Board of Directors are in attendance. Let me introduce them: Angela Brown, Janet Woodruff, Diane MacDiarmid, Tony Gaffney, Colin Dyer, Anthony Long; and finally, of course, our CEO, Bob Courteau. I'm privileged to be Chairman of this outstanding group, and I want to personally thank each member of the Board and the committee chairs, particularly, for their hard work, wisdom, dedication and teamwork over the past year. I would be remiss if I did not acknowledge and express our thanks for the long and distinguished service of Eric Slavens, who retired at the end of fiscal 2019. Eric was a director from the time of our IPO. And he chaired our Audit Committee for many years. He will be missed. Many members of the management team are also joining the meeting today. On behalf of all the directors and shareholders, I want to thank them for their continued commitment and their extraordinary efforts over the past year and especially during the last 2 months. However, in the interest of time, let me introduce only those, who will be available during the meeting and question-and-answer period to the shareholders. Angelo Bartolini, our CFO; Liana Turrin, General Counsel and Secretary; Camilla Bartosiewicz -- Camilla, I always have trouble with that, I'm sorry, who is, you all know, is our VP of Investor Relations. Camilla will be monitoring and moderating your questions today. Sadly, as I said, time restraints require me to stop there, but I'm very proud of all of our Altus employees and thank them for their service over the last year and the last 2 months. So with that, let me now officially call this meeting to order. And I will start by addressing a few procedural matters. With the consent of the shareholders, I will ask -- act as Chairman of the meeting. Liana Turrin will act as the secretary. And AST Trust Company of Canada, our transfer agent, by its representatives, will act as the scrutineer of the voting. We will be dealing with a number of formal and administrative matters at today's meeting. And due to the unusual circumstances of our AGM this year and to be expedient, I will move and second all motions. I'd like to ask Liana Turrin to please table the following documents: the notice of meeting, the form of proxy, the management information circular dated March 20, 2020, and the declaration of mailing providing service of notice of all the above material on each shareholder of record of the company. The notice of meeting, form of proxy and management information circular were mailed to the shareholders on around April 3, 2020. As announced in the company's press release dated April 13, 2020, to proactively deal with the unprecedented and public health impact of COVID-19, the company changed location of today's meeting to the virtual format in which we are now currently convened. Accordingly, unless there is any objection, I will dispense with the reading of the notice of the meeting. Hearing no objection, let's move on. Copies of the management information circular and other meeting materials are available on our website and on the SEDAR website under our company's profile. I confirm that all of these documents have been delivered to each director and the auditors of the company. According to bylaw #1, two or more persons holding or representing 25% of the votes attached to the common shares entitled to be voted at the meeting will represent a quorum. I've been advised that there are proxies representing more than 25% of all outstanding common shares of the company. And therefore, a quorum of the shareholders of the company is present, and the meeting is properly called and duly constituted for the transaction of business. I'd ask Liana Turrin to please include the declaration of mailing of the notice of the meeting and the scrutineer's final report on attendance in the meeting -- in the minutes of the meeting. As mentioned at the beginning of this meeting, registered voters and duly appointed proxy holders will be asked about on each business item after the presentation of all the business items. When you are asked to vote, you will receive a message on the Lumi virtual interface requesting you to cast your votes. You will only have a certain limited amount of time to do so. After you have cast your votes for all business items of today's meeting, the scrutineer will compile the votes in respect of each business item. Voting will take place after our final item of business, which is the approach to executive compensation. As I indicated previously, if you have already and previously voted prior to attending the meeting by completing a proxy or voting information form, there is no need to vote again. As the first item of business on the agenda for today's meeting, I'd like to now table the 2019 financial statements and the auditor's report of the financial statements. Copies of those statements are available on our website, on the SEDAR website under the company's profile and were mailed to the shareholders who have requested them. The next item of business is the election of the directors. As the company did not receive notice of any director nominations in connection with the meeting in accordance with general bylaw #2 and advance notice bylaw, the only persons eligible to be nominated for election to the Board of Directors of the company are the nominees described in the management information circular. Those nominees for election as directors of the Altus Group Limited are: Angela Brown, Robert Courteau, Colin Dyer, Tony Gaffney; Anthony Long, Diane MacDiarmid, Raymond Mikulich and Janet Woodruff. If elected, the nominees will hold office until the next Annual Meeting of Shareholders or until their successors are elected and appointed -- or appointed. Since there are no other nominations, I move and second the motion to elect the directors. The motion is now on the floor. Our corporate governance guidelines provide for the election of the directors according to the company's majority voting policy and is therefore necessary to vote by ballot for the election of each director. A full description of this policy is provided in the management information circular. As mentioned at the beginning of this meeting, voting today will be conducted by a single electronic ballot. We will, therefore, continue with the next item of business, and you will be prompted to vote on the election of each director after the presentation of all business items for this meeting. Unless there are any questions or discussions, I will move to the next item of business. The next item of business is the appointment of our auditor for the current year and authorizing the Board of Directors to fix the remuneration of the auditors. The other tough word, Camilla. On the recommendation of the Audit Committee, the Board of Directors recommends the present auditor, Ernst & Young LLP, be retained for the current year as auditor of the company. I move and second that Ernst & Young LLP be appointed auditors of the company until the next Annual Meeting of Shareholders and that the Board of Directors be authorized to fix their compensation. The motion is now on the floor, and you will be prompted to vote on the appointment of the auditors after the presentation of all business items for this meeting. Unless there are any questions or discussions, I will move to the next item of business. And the next item is the approval of the resolution to increase the number of shares reserved for issuance under the company's long-term equity incentive plan by 1,850,000 to 4,075,000 shares and to ratify the grant of 405,121 stock options and 69,694 performance share units to executives and key employees for a total of 474,815 stock options and performance share units. A full description of these -- of this item of business is set out at Page 10 of the management information circular. On February 20, 2020, the Board of Directors, on the recommendation of the Human Resource and Compensation Committee of the Board approved the increase of $1,850,000 (sic) [ 1,850,000 ] in the number of shares reserved for issuance under the company's long-term equity incentive plan and made the grant of up to 474,815 performance share units and stock options under the plan, subject, of course, to shareholder approval and the approval of the Toronto Stock Exchange. The increase in the number of shares and the grant of performance share units and stock options has been conditionally approved by the Toronto Stock Exchange, all, of course, subject to the approval of the shareholders today. I move and second that the resolution to increase the number of shares of 1,850,000 reserve for issuance under the company's long-term equity incentive plan and the grant of 474,815 stock options and performance share units to executives and key employees, which shall be taken as read, be approved. The motion is now on the floor. And once again, you'll be prompted to vote on the resolution to increase the number of shares reserved for issuance under the company's long-term equity incentive plan and the grant of stock options and performance share units to executives and key employees after the presentation of all the items of business for this meeting. Unless there are any questions or discussions, I will move to the next and final item of business, which is the approval of the nonbinding resolution, the full text of which is set out, starting on Page 12 of the management information circular that on an advisory basis and not to diminish the role and responsibilities of the Board of Directors, the shareholders of the company accept the approach to executive compensation described in the management information circular. This is the second year that the advisory vote is on the agenda, and it is an opportunity for the shareholders to have their say regarding our executive compensation. Last year, our compensation plans had the support of 94% of our shareholders. I move and second that the nonbinding advisory resolution that the shareholders of the company accept the approach to executive compensation described in the management information circular, which shall be taken as read, be approved. And that motion is now on the floor. Unless there are any questions or discussions, I will move to the voting procedures. As we have mentioned many times, voting today will be conducted by a single electronic ballot. At this point, I ask the scrutineer to open the polls for voting. You will now be prompted to cast your vote in respect of each of today's business items for this meeting. Once again, I remind you that if you've already voted prior to attending the meeting by completing a proxy or voting information form, there is no need to vote again. Only registered shareholders and duly appointed proxy holders may vote. And if you have signed in as a guest, you will not be able to vote. Please cast your votes by accessing the voting page when prompted and pressing on the 4 or the Withhold Buttons next to the names of each proposed Director and next to the resolution with respect to the appointment of Ernst & Young LLP as the company's auditors. Please cast your votes by pressing on the 4 or against buttons next to each of the following resolutions. The resolution to increase the number of shares reserved for the issuance under the company's long-term equity incentive plan and the grant of stock options and performance share units to executives and key employees in the nonbinding resolution that, on an advisory basis, the shareholders of the company accept the approach to executive compensation described in the management information circular. The voting will be opened for approximately a minute or as long as we see voting is still taking place. So if you will be casting a vote, please complete the electronic ballots quickly. Once the electronic balloting closes, the voting page will disappear, and your votes will be automatically submitted. [Voting]

We'll wait a few more moments for the completion of the balloting and the voting, and then we will move on to the remainder of the meeting. Once voting is completed, I would ask that the scrutineer compile report regarding the results of the voting on all business matters. We will reconvene in a few moments with the scrutineer's report and the voting results. Hopefully, we are making progress here. And scrutineer is in a position to tell us where we're at.

Mr. Chairman, the polls are now closed, and we confirm that all votes have been received.

Thank you, [ Cindy ]. We have now received the scrutineer's preliminary report and confirm that the following have been elected as directors of the Altus Group Limited. They are: Angela Brown, Robert Courteau, Colin Dyer, Tony Gaffney, Anthony Long, Diane MacDiarmid, Raymond Mikulich and Janet Woodruff. The 8 nominees have been elected as directors of the company to serve until the next Annual Meeting of the Shareholders until their successors are elected or appointed. The appointment of Ernst & Young as the auditors of the company has also been approved, and the Board of Directors of the company has been authorized to fix their remuneration. The resolution to increase the number of shares reserved for issuance under the company's long-term equity incentive plan and the grant of stock options and the performance share units to executives and key employees has been approved. The nonbinding advisory resolution that the shareholders of the company accept the approach to executive compensation described in the management information circular has also been approved. I direct that the results of the poll for the election of the directors be included with the minutes of this meeting announced in a press release in accordance with the policies of the Toronto Stock Exchange and filed on SEDAR. The formal items of business is set out in the notice of meeting have now been completed and dealt with. I move and second that the meeting now be terminated. As there's no further business to come before the meeting, I declare the formal part of the meeting to be concluded. I thank you all for your attending. Please stay safe and healthy. I will now turn the proceedings over to our CEO, Bob Courteau, for any questions.

Thank you, Ray. I always appreciate your support, advice and encouragement and particularly over the last couple of months. Let me also echo the sentiments on Eric Slavens, an outstanding board member. And clearly, we always appreciated his advice. Thank you all for joining us remotely today. Given the unprecedented circumstances, the world finds itself in today with the COVID-19 pandemic. I want to thank you for attending today's meeting virtually, safely from your new place of work. During these challenging times, we're pleased at the company's Annual General Meeting can continue as scheduled, and we thank you for your cooperation and patience in these unusual arrangements. We've guided all of our actions with the health and safety of our employees, our clients and the communities in which we operate in around the world. I'm wishing the same care for each of you, our shareholders and business partners. As much as I look forward to interacting with you face-to-face, I'm glad we're still able to connect in this virtual format. Now given the new format and our current environment, I wanted to spend my time today less on reflecting on the year that has passed, as I normally would, and more on what might be at the top of mind for everyone, and that is the uncertainty brought in by COVID-19 and the pandemic. For a recap of the past year, I invite you to review our annual report and my annual letter to shareholder that's available on our website. As many of you are aware, we'll be hosting our first quarter results conference call tomorrow at 5:00 p.m. Eastern Time. In addition to reporting on the first quarter, we'll walk through how we see the rest of the year unfolding given the COVID-19 pandemic. Tomorrow's call will also provide you with a deeper analysis, so today, I wanted to use this time to share with you how we have responded to the pandemic. First and foremost, let me say our thoughts are with those individuals whose health and well-being has been directly impacted by this pandemic. While we have -- the work we do at Altus Group is clearly very important in our industry, we are all humbled by the exceptional courage and perseverance of all the frontline workers in the world who have played a monumental role in the battle we're all facing. Their work is of utmost importance in our societies and deeply appreciated by every one of us at Altus Group. I'd also like to extend my thanks to all my colleagues at Altus Group, our clients and particularly the Board of Directors for the trust they've placed in our management team over the last 2 months. We've had ongoing dialogue with the board during this time, and they are fully aligned and supportive of our efforts. When our management team first met to discuss business continuity measures in light of COVID-19, one thing was very clear. People, our employees, came first at Altus Group. We acted decisively and quickly with the well-being of our colleagues, employees and communities being the priority. We've been operating within our business continuity plan framework since early March when we proactively asked our employees around the world to work from home. I'm incredibly proud of how well our team has transitioned and applaud their efforts to adjust during this personally difficult time. I would like to especially thank and recognize our HR and communications teams, who went above and beyond to help people feel safe and informed on a very personal level. In a way, we're physically separated more than ever, and yet, we've never felt more connected than we do today given the huge amount of interactive communications. And a special thanks, particularly to our IT team for delivering on the promise of business continuity and to our legal and finance team who have been working long hours, playing an important role in helping us limit COVID-19's impact on our operations while also ensuring the business could continue with little interruption. I have to say, our transition to remote work arrangements was effectively seamless with no client impact while successfully maintaining excellent productivity. This was underpinned by our operations being supported by modern cloud-based technology for our corporate systems and also for our client software platforms. Tech enabling Altus Group is a long-standing theme of our past AGMs and an area we have previously invested in to build a global modern growing business. It's been a cornerstone of our pivot into information technology services. And today, it's enabled us to conduct our business remotely with very little disruption. We've been able to maintain full service levels across our Altus Analytics and Commercial Real Estate Consulting businesses. We continue to maintain the highest quality of service. And truthfully, the crisis has triggered some incredible high-touch points with many of our clients. As a global market leader, the industry looks to Altus Group during this uncertain time, leaning on our solutions and talented colleagues to help them navigate the challenges brought on by this pandemic. One other observation. Our actions throughout this pandemic have exemplified Altus Group's unique corporate culture where people and relationships are cornerstones. And our ability to rise up to challenges and adapt to change is just part of our DNA. This gives us a tremendous edge in our industry, and how we're able to attract and retain top talent. The evolution of Altus Group from a Canadian commercial real estate service provider to a global provider of commercial real estate software platforms, data analytics and expert advice exemplifies this completely. In our daily operations, we continuously adapt to new threats and opportunities, and I must say that the innovation that is taking place at Altus Group today ensures that we will emerge from this crisis stronger on the other end, as we have done through a wide range of economic cycles in the past, driven by solid financial and operational performance in 2019, we entered this period of uncertainty from a position of strength with a highly diversified and stable business model and with a healthy balance sheet. Whereas 2019 was kind of a building year of sorts. 2020 is all about execution, and we are mobilized, and we are moving. Recall, the transformational investments to move the Altus Analytics business to cloud subscriptions are largely behind us now, and the groundwork that was laid in 2018 and 2019 established a solid recurring revenue base across the business. And our Commercial Real Estate Consulting businesses have been tech-enabled with enviable competitive moats that provide us with good stability across various economic cycles. As always, we continue to manage the business prudently, balancing growth with efficiency. In light of the current environment, we've already taken some important steps to ensure we remain in the best position possible financially and operationally. This is included -- this has included 3 phases. The first was ensuring employee safety and business continuity. As mentioned earlier, we were proactive in our approach and acted swiftly, moving our team to work remotely as this pandemic escalated globally. This was aided by our global internal IT platforms, which are primarily mobile ready, and this continued to allow us to ensure that our employees had the information they needed to do their jobs and to also meet the heightened client demand in a very safe environment. Now we're carefully planning our transition back to a new working model, always with health and safety top of mind. The second prudently was cash preservation and productivity. In the new normal, we have already started by pursuing reductions in operational costs, consolidating our major IT applications and reducing nonessential spend. And we announced by press release that we refinanced our credit facility at a very good time to ensure we have liquidity going forward. And we're carefully tracking our plans to ensure our alignment sets up nicely with the new opportunities in front of us. And third, in play today, client focus and the leverage of our data and software. Our teams are supporting our clients so they can get visibility on risk and opportunity. We've offered significant thought leadership for our industry. We've already started innovating with new relevant offerings, and we're pursuing opportunities to grow market share in virtually every category. Fortunately, we've migrated all of our businesses to be tech-enabled and data rich. This information that we collect as part of our modern business models is critical to the deep planning that's going on in our industry, and we're working closely with our clients to support them on evaluating portfolio balancing, identifying risk and return opportunities, assessing development scenarios and providing the data so they can run their models. Given the depth of our expertise in solutions, we will be an even more influential partner for our clients as we go forward. And the commercial real estate industry will undoubtedly face some hardships, but there will also be many opportunities ahead. Our approach is a proactive one with a forward-looking view that will allow us to take advantage of the new opportunities that they become available and strengthen our competitive position. You can count on us to always take a long-term view for our company and increasing our differentiation as the leader in software, data and consulting services. We are determined to come out of this pandemic better than when we went into it. As mentioned, tomorrow, we'll do a deep dive on the operations, but I'll reinforce that the long-term opportunity ahead for our business is unchanged, more attractive than ever, and we remain well positioned to execute on our thesis in 2020 and beyond. It is our objective to be an even stronger company as we move back to this new normal. And with the talent on our team, we are confident in our ability to navigate the current environment of uncertainty and to continue adding even more value to our clients. I wish to each of you all the best of health and a very good day. Thank you. Now we'd be pleased to take some of your questions, if there is any. I ask that all attendees who would like to ask a question, please use the instant messaging feature of the Lumi virtual interface to do so. We'll try and answer as many questions as time permits. And please be mindful that we are still technically in our quiet period until we report our Q1 results tomorrow. So may not be able to provide additional color until that time. When asking your questions, please state your name, the entity you represent, if any, and confirm if you are a registered shareholder or a duly appointed proxy holder. Please limit your questions to topics relating to today's subject matter, and I would ask that questions be kept short and to the point. We'll now give attendees a brief moment to type in their questions. Camilla, who is moderating today, will introduce you and summarize the question. We would like to remind you that the questions which were already answered will not be published nor answered. Camilla, when you're ready.

Bob, it doesn't appear we have any questions today. So please go ahead, and you can close the meeting.

Okay. Well, thanks again. And on behalf of the board and the company, I would like to thank you for your attendance today. And more importantly, your amazing and continued support of our company. Look forward to connecting again tomorrow at our Q1 results conference call and webcast at 5:00 p.m. Eastern Time. We hope you can join us for that webcast. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.