Altus Group Limited (AIF) Earnings Call Transcript & Summary

Good morning, everyone. I'm Ray Mikulich, the Chairman of the Board of the Altus Group. It's my honor to, once again, welcome you to the Annual and Special Meeting of the Shareholders of the Altus Group, and doing that on behalf of the Board of Directors, management and our team of 2,600 people throughout the world. Thank you for joining us virtually as we, once again, lead the commercial real estate industry with modern technology and business operations into what is absolutely a traditional business model in the real estate industry. We, of course, share the world's hope that the global pandemic is fading into the past, and we remember those who have suffered the effects of that insidious disease. Of course, now we're facing yet another historic tragedy as we witnessed the horrific atrocities in Europe. Not only do we extend our prayers but also our financial support to the refugees of the great people in Ukraine. North America, our largest market, is removed from the European hostilities, and we are largely inoculated against the virus. But the economic and market disruptions are symptomatic for Altus, for our clients, and 2021 was no less challenging than 2020. Fortunately, Altus Group entered 2021 well positioned in our marketplace, financially strong with a substantial base of recurring revenues and a clear vision for the future under the direction of an exceptional management team. Despite the continued pandemic and a cyber incident, our management delivered record results in 2021, a dramatic increase in revenues in bookings, producing a 15% growth in constant currency adjusted EBITDA in 2021. Markets, business models and human behavior have all been permanently modified and will continue to adapt. And the real estate industry will continue to adjust its business models and its expectations to the new realities that are manifesting themselves in the business, consumer and workforce habits and practices. The continued turbulence and uncertainty will undoubtedly accelerate the need for increased data and analytics, crystallizing yet again and expanding the opportunities for Altus and its ever-evolving products and propelling Altus towards its vision of serving the commercial real estate industry as a preeminent provider of intelligence as a service. We furthered that vision recently by advancing the succession plan with the appointments of Jim Hannon as CEO and Jorge Blanco as Chief Commercial Officer, following the smooth transition of Mike Gordon from his CEO responsibilities to become a valued member of the Board. Jim and Jorge were instrumental in setting the vision and path with Mike and are well suited to take the reins. They have quickly settled into their new roles, and I'm pleased to report that our company, its operations and performance have never been better. Our people have always been dedicated to serving our customers. And along with every member of the Executive Committee, they now enthusiastically look to the opportunities for the future under Jim's leadership. As you're aware, we acquired 3 companies in 2021, and we welcome our colleagues from Finance Active, StratoDem Analytics and Reonomy who have brought their highly regarded expertise to Altus and added market-leading offerings to our portfolio. 2022 has already offered us abundant opportunity to serve our clients, and it is because of the commitment and efforts of our employees, faithful and new, that we entered 2022 with great confidence and we will capitalize on all those opportunities. Now I know many of those employees are joining the meeting, and I, of course, would love to introduce them all, but it is not feasible. But I do want them to know that we appreciate their efforts, and we do thank them from the Board and from the Executives. Altus is committed to good governance. And we strive for practices that not only represent compliance with legal and regulatory requirements but exceed them and respond to the corporate best practices. Continuing our commitment to gender diversity, over 40% of our independent directors are women. The Board added diversity, equity and inclusion, as well as public policy, external relations and sustainability, to our Board skills matrix in 2021. And our Board mandate and committee charters now reflect oversight of certain ESG risks and opportunities consistent with the company's long-term strength. Of course, there's more work for the Board to do in 2022. And we will review Board succession and transitioning our compensation plans to parallel and enhance the transition of our strategic business model from a siloed service business to a fully integrated technology company offering intelligence as a service. Now for the business matters today. As we begin this meeting, and it is being done virtually via live video webcast, it's appropriate that we point out a few rules that will facilitate the orderly conduct of this business. Questions in respect to the motion can be submitted by any registered shareholder or a duly appointed proxy holder using the instant messaging service of the Lumi virtual interface. [Operator Instructions] Please note, there may be a slight delay in response to any communication. As a general rule, questions will be addressed at the end of the meeting. However, questions regarding procedural matters or directly related to motions that are before the shareholders at the time may be addressed during the meeting. Voting on all matters will be cast in a single electronic ballot. 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're signed in as a guest, you will not be able to vote. When you are asked to vote on each business item, a voting tab will appear on the Lumi interface requesting that you cast your vote. You will only have a limited amount of time to do so, so please do it quick. All of the current members of our Board of Directors are in attendance, and let me introduce them. Angela Brown joined our Board in 2016. She's the Chair of our Corporate Governance and Nominating Committee and she also serves on the Audit Committee. Colin Dyer joined the Board in 2019 and is a member of the Audit Committee and the Corporate Governance and Nominating Committee. Tony Gaffney has served on the Board for 10 years and is the Chair of our Human Resources and Compensation Committee as well as a member of the Audit Committee. Tony Long also joined the Board in 2019 and is a member of the Audit Committee and Human Resources and Compensation Committee. Diane MacDiarmid joined us in 2012 along with Tony Gaffney and serves on our Corporate Governance and Nominating Committee as well as our Human Resources and Compensation Committee. Janet Woodruff joined our Board in 2015 and is the Chair of our Audit Committee. Janet also serves on the Human Resources and Compensation Committee. And finally, Mike Gordon, who you know well, has served as our Chief Executive Officer from September 2020 until March 2022 and remains a director of the company. And as I said, I am Ray Mikulich, and I am privileged to be the Chair 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. It was a busy year. 2021 was a very busy year for the Altus Group. And I can report to my fellow shareholders that your Board and each of the directors individually were staunch in their support of your company and committed to spending the time and energy to fulfill their duties in an exceptional manner. The cyber incident, 3 acquisitions, other M&A activities and our management transition necessitated approximately 20 Board meetings over the past 12 months, and I'm so proud to report that the directors' attendance was 99%. And I want to thank each of them individually for their service above and beyond. Now as we begin the business of the meeting, I asked Terrie-Lynne Devonish, the company's Chief Legal Officer and Corporate Secretary, to start with some important messages and reminders.

Thank you, Mr. Chair. The statements made during this meeting, which are not historical facts, are statements containing forward-looking information in respect of which various factors and assumptions were applied or taken into consideration. Our actual results could differ materially as a result of numerous risks and uncertainties, and reference should be made to our annual information form and our most recent management discussion and analysis for a discussion of these and related risks. With that, I'll turn the meeting back to the Chair.

Thank you, Terrie. I'll now call the meeting to order and start with addressing a few procedural matters. With the consent of the shareholders, I will act as the Chair of this meeting. Terrie-Lynne Devonish will act as the secretary. And TSX Trust Company, our transfer agent, by its representatives, will act as scrutineer of the voting. We'll be dealing with a number of formal and administrative matter at this meeting today. And due to the meeting being held virtually and to avoid technical difficulties, I will move and second all motions. To get started, I ask that Terrie-Lynne Devonish please table the documents entitled Notice of Meeting, Form of Proxy, Management Information Circular dated March 21, 2022, and the Declaration of Mailing, which provided services notice for all these materials on each shareholder of record of the company.

I confirm the tabling of the following documents: Notice of Meeting, Form of Proxy, Management Information Circular dated March 21, 2022, and Declaration of Mailing.

Those documents, the Notice of Meeting, the Form of Proxy and the Management Information Circular, were all mailed to shareholders on or about April 1 of this year. And accordingly, unless there is any objection, I will dispense with the reading of the Notice of the Meeting. Copies of the Management Information Circular and other meeting materials are also available on our website and on the SEDAR website under the company's profile. I now confirm that all of these documents have been delivered to each director and the auditors of the company. So according to bylaw #1, 2 or more persons holding or representing 25% of the votes attached to the common shares entitled to be voted at the meeting represents a quorum. And I have been advised that there are proxies representing more than 25% of all outstanding common shares of the company. And therefore, a quorum of shareholders of the company is present. The meeting is properly called and duly constituted for the transaction of business. Terrie-Lynne, please include the declaration of mailing of the Notice of the Meeting and the scrutineer's final report on attendance in the minutes of the meeting. As mentioned at the beginning of the meeting, registered shareholders and duly appointed proxy holders will be asked to vote on each business item. Voting on each item of business requiring a vote will take place during the meeting. A tab will be visible on the Lumi interface requesting that you vote. After you have cast your votes for all the business items of today's meeting, the scrutineer will compile the votes in respect of each of the business items. The results will be reported at the end of the meeting after all the votes on all the matters have been counted. Again, if you've already voted prior to attending this meeting by completing a proxy or the voting information form, there is no need to vote again. As the first item of business on the agenda for today's meeting, I now table the 2021 financial statements and the auditor's report of the financial statements. Copies of the statements are available on our website, on SEDAR under our company's profile and were, of course, mailed to the shareholders who 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 the general bylaw #2, an 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 circuit. The nominees for election as directors of the Altus Group Limited are: Angela Brown; Colin Dyer; Anthony Gaffney; Michael Gordon; Anthony Long; Diane MacDiarmid; myself, 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 or appointed. Since there are no other nominations, I move and second a motion to elect the directors. Our corporate governance guidelines provide for the election of directors according to the company's majority voting policy. A full description of this policy is provided in the management information circular for the meeting. As mentioned at the beginning of the meeting, voting today will be conducted by a single electronic vote or ballot, and you should be prompted to vote on the election of each director. And voting is now open on all the resolutions. Unless there are any questions or discussions, we will move to the next item of business. [Voting]

The next item of business is the appointment of our auditor for the current year and authorizing the Board of Directors to fix their remuneration. Tough one for me, I don't know why every year, remuneration. On the recommendation of the Audit Committee, the Board of Directors recommends the present auditor, Ernst & Young, be retained for the current year as auditors of the company. I move and second that Ernst & Young LLP be appointed auditors of the company until the next Annual Meeting of the Shareholders and that the Board of Directors be authorized to fix their remuneration. The motion is now on the floor, and you may vote on the appointment of the auditors. Unless there are any objections or discussions, I will move to the next item of business. [Voting]

The next item of business 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 2,689,000 shares, bringing the total to 6,764,000 shares. A full description of this item of business is set out at Page 10 of the management information circular. On March 16, 2022, the Board of Directors, on the recommendation of the Human Resource and Compensation Committee, approved the increase of 2,689,000 shares in the number of shares reserved for issuance under the company's long-term equity incentive plan, subject to shareholder approval and the approval of the Toronto Stock Exchange. The increase in the number of shares has been conditionally approved by the Toronto Stock Exchange, subject to the shareholder approval. I move and second that the resolution to increase the number of shares of 2,689,000 reserved for issuance under the company's long-term incentive plan, which shall be taken as read, be approved. That motion is now on the floor, and you may vote on the resolution to increase the number of shares reserved for issuance under the long-term incentive compensation plan. Unless there are any questions or discussions, I will move to the final item of business. [Voting]

Having heard none, the final item of business is the approval of the nonbinding resolution, the full text of which is set out starting on Page 11 of the MIC, that, on an advisory basis and not to diminish the role and responsibilities of the Board of Directors, shareholders of the company accept the approach to executive compensation described in the management information circular. The advisory vote is on the agenda and is an opportunity for shareholders to have their say regarding our executive compensation. Our plans are designed to align executive compensation with the long-term interest of shareholders and adopt a policy of pay for performance. Last year, our compensation plans had the support of 95% of the votes cast in favor of our shareholders. I move and second that the shareholders of the company accept the approach to executive compensation described in the nonbinding advisory resolution in the management information circular, which shall be taken as read, and that it be approved. That motion is now on the floor, and you may cast your vote. Unless there are any questions or discussions, we will move on. [Voting]

Having heard none, I will once again remind you that if you have 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 had signed in as a guest, you will not be able to vote. Once the electronic balloting closes, the voting page will disappear, and your votes will be submitted. We'll wait a few more minutes for the completion of electronic ballots, and then we will move on with the remainder of the meeting.

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

Thank you, Ms. Harrett. I have received the scrutineer's preliminary report and confirm the following. Angela Brown, Colin Dyer, Anthony Gaffney, Michael Gordon, Anthony Long, Diane MacDiarmid, Raymond Mikulich and Janet Woodruff have been elected as directors of the company to serve until the next Annual Meeting of the Shareholders or until their successors are elected or appointed. The appointment of Ernst & Young LLP as the auditors of the company has been approved, and the Board of Directors are 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 has been approved. And I want to say that the Board appreciates candid engagement it had with many of our shareholders on this matter. And we do not take lightly your support and the confidence that you have given us. I personally thank you for your support and assure the shareholders the LTIP will continue to be administered in a thoughtful and disciplined manner, that your input has been heard and that the Board will reflect on your comments as we review the company's compensation plans. The nonbinding advisory resolution that the shareholders of the company accepted, the shareholders have accepted, the approach to the executive compensation as described in the management information circular. And that, too, has been approved. That brings us to the conclusion of the meeting. The formal items of the business as set out in the Notice of Meeting have been addressed. And I move and second that this meeting now terminate. As there is no further business to come before the meeting, I declare that the formal part of the meeting being concluded. As announced on April 12, the company will be releasing earnings and conducting an earnings call after the market close tomorrow, at which time Jim Hannon and Angelo Bartolini, our CEO and CFO, will report on the financial performance and operations of the company for the first quarter. On behalf of the Board and the company, I would like to thank you all for your attendance today and for your continued support of our company.

We'll now open the floor to questions from you or our shareholders. I ask that all attendees who would like to ask a question use the instant messaging feature of the Lumi virtual interface to do so. We will answer as many questions as time permits. [Operator Instructions] So we'll now give the attendees a few minutes to type in their questions. We'll go back to music while they type them.

There's no questions.

There seems to be no questions. So with that, I will thank you all for joining us today. We appreciate your support, and that will end our meeting today. Thank you.