Newmark : Reports First Quarter 2024 Financial Results Presentation

Newmark Group, Inc.

(Nasdaq: NMRK)

First Quarter 2024 Financial Results Presentation

May 3, 2024

Property Type: Retail

N M R K . C O M

Disclaimers

Discussion of Forward-Looking Statements

References in this document to "we," "us," "our," the "Company" and "Newmark" mean Newmark Group, Inc., and its consolidated subsidiaries. Statements in this document regarding Newmark that are not historical facts are "forward-looking statements" that involve risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements. These include statements about the Company's business, results, financial position, liquidity, and outlook, which may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected. Except as required by law, Newmark undertakes no obligation to update any forward-looking statements. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Newmark's Securities and Exchange Commission filings, including, but not limited to, the risk factors and Special Note on Forward-Looking Information set forth in these filings and any updates to such risk factors and Special Note on Forward-Looking Information contained in subsequent reports on Form 10-K, Form 10-Q or Form 8-K.Our expectations are subject to change based on various macroeconomic, social, political, and other factors. None of our long-term targets or goals beyond 2024 should be considered formal guidance.

Non-GAAP Financial Measures

This document contains non-GAAP financial measures that differ from the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"). Non-GAAP financial measures used by the Company may include "Adjusted Earnings before noncontrolling interests and taxes", which is used interchangeably with "pre-tax Adjusted Earnings"; "Post-tax Adjusted Earnings to fully diluted shareholders", which is used interchangeably with "post-tax Adjusted Earnings"; "Adjusted EBITDA"; and "Liquidity". The definitions of these and other non-GAAP terms are in the section of this document titled "Non-GAAP Financial Measures".

Other Items

Investors may find the following information useful: (i) Throughout this document, certain other reclassifications may have been made to previously reported amounts to conform to the current presentation and to show results on a consistent basis across periods. Unless otherwise stated, any such changes would have had no impact on consolidated total revenues or earnings under GAAP or for Adjusted Earnings, all else being equal. Certain numbers in the tables or elsewhere throughout this document may not sum due to rounding. (ii) Rounding may have also impacted the presentation of certain year-on-year percentage changes. (iii) Decreases in losses may be shown as positive percentage changes in the financial tables. (iv) Changes from negative figures to positive figures may be calculated using absolute values, resulting in positive percentage changes in the tables.

NEWMARK 2

Recent Consolidated Results

HIGHLIGHTS OF CONSOLIDATED RESULTS ($ in millions, except per share data)	1Q24	1Q23	Change
Revenues	$546.5	$520.8	4.9%
GAAP loss before income taxes and noncontrolling interests ("GAAP pre-tax income")	(29.8)	(19.4)	(53.7)%
GAAP net loss for fully diluted shares	(16.3)	(10.4)	(57.0)%
GAAP net loss per fully diluted share	(0.09)	(0.06)	(50.0)%
Adjusted Earnings before noncontrolling interests and taxes ("Pre-tax Adjusted Earnings")	42.9	40.8	5.1%
Post-tax Adjusted Earnings to fully diluted shareholders ("Post-tax Adjusted Earnings")	37.4	35.4	5.8%
Post-tax Adjusted Earnings per share ("Adjusted Earnings EPS")	0.15	0.15	-
Adjusted EBITDA ("AEBITDA")	63.5	62.9	0.9%

• GAAP results included a $15.8 million increase in non-cashequity-based compensation due to the timing of such charges between quarters and the increase in Newmark's stock price. These charges were not related to additional share issuance.
• On May 2, 2024, Newmark's Board of Directors (the "Board") declared a qualified quarterly dividend of $0.03 per share payable on June 3, 2024, to Class A and Class B common stockholders of record as of May 17, 2023. The ex-dividend date is May 16, 2023.

Notes: (i) See the sections of this document including, but not limited to, "Non-GAAP Financial Measures", "Adjusted Earnings Defined", and "Reconciliation of GAAP Net Income (loss) to Common Stockholders to Adjusted Earnings Before Noncontrolling Interests and Taxes and GAAP Fully Diluted EPS to Post-Tax Adjusted EPS", including any footnotes to these sections, for the complete and/or updated definitions of these and other non-GAAP terms and how, when and why management uses them, and the differences between results under GAAP and

non-GAAP for the periods discussed herein. (ii) The tax rate for Adjusted Earnings was 15.0% in the first quarter of 2024 compared with 15.1% a year earlier. (iii) Newmark's compensation charges with respect to grants of exchangeability generally move in the same direction as the NEWMARK 3 Company's stock price. (iv) On July 1, 2023, Newmark redeemed its interest in Real Estate LP for $105.5 million.

Leading Commercial Real Estate Advisor and Service Provider

TTM Revenues

~$2.5B

2022 + 2023 Transaction Volume

~$1.7T

Professionals

~7,600

Global Client Service Locations

~170

Top Global Public

CRE Services Companies

	Acclaimed
	Industry Leader
Top 3 U.S. Broker by Investment	#4 Freddie Mac Lender (2023)
Volume (2023)	& MBA's Top 5 Fannie Mae multifamily
#2 Multifamily Broker (2023)	loan servicer (2023)
#2 Office Broker (2023)
#4 Cross-Border Broker (2023)
	GlobeSt.com
	CRE's Best Places to
	Work (2024)
Ranked #2 Top Mortgage	Global Outsourcing 100®
Banking & Brokerage Firms
(2024)	for 15th consecutive year
	in 2024

Strong Earnings, Cash Generation

& Low Leverage

$399MM of Adjusted EBITDA

&

1.3x net leverage as of March 31, 2024

Notes: (i) Headcount and client service locations include independently-owned business partners. Excluding these business partners, we had nearly 7,200 employees in more than 140 offices as of March 31, 2024. Our revenues and volumes are for Newmark company-owned offices only. (ii) Volume figure is the notional value of leasing, investments sales, mortgage brokerage, and GSE/FHA origination transacted by the Company as well as the estimated value of all properties appraised by our V&A businesses for the past two calendar years. (iii) GSE

lending rankings are based on disclosures by Fannie Mae regarding Multifamily Delegated Underwriting & Servicing Lenders and/or by Freddie Mac about conventional Multifamily Optigo® Lenders. Servicing ranking is per the MBA. (iv) Adjusted EBITDA and net leverage are non- NEWMARK 4 GAAP financial measures. See "Non-GAAP Financial Measures" and "Financial Tables and Reconciliations."

Low Risk Real Estate Services Business with Diversified Revenue Base

Leading CRE Services Platform

Revenues from "Management services, servicing fees,

• other" increased 63% in 1Q 2024 TTM compared with FY2019

Commercial mortgage	Management services,
origination, net	servicing fees, & other

12%41%

1Q 2024 TTM Total

15% Revenue by Business1

Covering a Broad Geography

Increasingly diversified by region. The addition of Gerald Eve put us at 13% international in 2023

		International
West		13%			Central
	22%

8%

2023 Total Revenue

by Geographic

New 15% Region1

York

28%

Diversified Revenue Streams

Focused investments driving continued revenue

growth across property types

Other

Hotel/Lodging

	Land		1% 12%
Multifamily	2%		2019
			42%
					39%
				2023 Total		Office
23%	Revenue by
Property Type1

	32%
Investment sales		Leasing &
other commissions

13%

California

East

8% 15%

2019

11%

RetailIndustrial

1. Percentage shown reflect 1Q 2024 TTM total revenue of $2.5B and 2023 total revenue of $2.5B as generated by all the Company's businesses. The Company historically updates revenue by property type and geography only once a year.	NEWMARK 5

First Quarter 2024 Highlights1

	$546.5MM				$63.5MM
	REVENUES				ADJUSTED EBITDA

$0.15

POST-TAX ADJUSTED EPS

11.6%

ADJUSTED

EBITDA

MARGIN

• Newmark's 13.5% increase in capital markets2 revenues outpaced the industry for the third consecutive quarter, led by 50.5% growth in Fees from commercial mortgage origination, net.
• The Company's businesses across Management services, servicing fees, and other increased by 21.0% and produced strong double-digit growth for the third quarter in a row.

1. For more on items including recent acquisitions and hires as well as any economic or industry data referenced herein, including Newmark's MSCI ranking, see "Other Useful Information".
2. Beginning in the second quarter of 2024, the Company will present the total for Investment Sales, Fees from commercial mortgage origination, net, and OMSR revenues as "Capital markets". See "Certain Revenue Terms Defined" later in this presentation for more information.
3. Historically, new producers have generated higher revenues 6 to 18 months after joining the Company, although Newmark incurs related expenses prior to this ramp up period. See slides titled "Expect to Generate Record Revenue and Earnings When Industry Volumes

Normalize" later in this presentation for more detail.

NEWMARK 6

1Q 2024 Revenue Detail

Commercial mortgage

origination, net

11.0%

Investment

sales

13.0%

1Q 2024 Revenue 47.0% by Business

Management services, servicing fees, & other

29.1%

Leasing &

other commissions

Management services, servicing fees, and other

	21.0%
	$257
$212
1Q 2023	1Q 2024

Investment sales

	-1.6%
$72	$71
1Q 2023	1Q 2024

Leasing & other

commissions

$193	-17.9%
	$159
1Q 2023	1Q 2024

Commercial mortgage

origination, net

	38.7%
	$60
$43
1Q 2023	1Q 2024

• Fees from management services, servicing, and other rose 22.7%. This improvement reflected the addition of Gerald Eve, as well as approximately 21% organic growth from Newmark's high margin servicing and asset management platform.
• Revenues from Leasing and other commissions were impacted by industry-wide activity declines of over 10% in the U.S. and more than 20% in the U.K.
• The Company gained meaningful market share in Investment sales compared with industry-wide volume declines of 16% in the U.S. and 26% in Europe.
• Newmark's debt origination business dramatically outpaced the industry, as Fees from commercial mortgage origination, net, increased by 50.5%1. In comparison, U.S. commercial/multifamily origination volumes increased by approximately 5%. 2

1.	Including OMSR revenues, which increased by 14.5% to $16.1 MM, revenues related to Commercial mortgage origination, net, increased by 38.7%.	NEWMARK 7
2.	See the page titled "Newmark Volumes".

NEWMARK 8

Servicing & Asset Management Provides Long-term and Recurring, High-Margin Revenues

Portfolio Composition as of 03/31/2024

Newmark Fannie Mae/Freddie Mac Portfolio Maturities by Year

FHA/Other

5%

Fannie Mae

17%

$174.1 Billion

Freddie Mac

15%

Special

Servicing

1%

Limited Servicing &

Asset Management

62%

45%

38%

11%

6%

2024-25

2026-27

2028-30

2031+

• Newmark's servicing portfolio generated $63.5 MM1 (+21% Y/Y) and $256.9 MM (+16% Y/Y), respectively, of high-margin, recurring, and predictable revenue during the three and twelve months ended 3/31/2024.
• As of 3/31/2024, Newmark's higher margin primary servicing portfolio2 was up 13% Y/Y to $63.8 billion, while its weighted-average maturity was 6.0 years.
• Of the Fannie Mae3 and Freddie Mac loans in Newmark's servicing portfolio, only 1.6% will mature before 2025 and ~ 90% will mature in 2027 or later.

1. Newmark produced $163.9 mm in servicing fees during the twelve months ended 3/31/2024. In addition to servicing fees, the Company generated $93.0 mm of other revenues, for a total of $256.9 mm of servicing & other revenues. These include escrow interest, servicing and asset management fees, interest on loans held for sale, and yield maintenance fees. Multifamily mortgage servicing revenue is stable and recurring in part because of greater call protection versus single family mortgages, and because interest income moves in tandem with interest rates. Nearly 99% of the Company's GSE loans include prepayment penalties. Beginning in the first quarter of 2024, servicing fees also reflect Spring 11's limited servicing and asset management business. Please see "Recurring Revenues" under "Certain Revenue Terms Defined" in the appendix for more information regarding Spring11's servicing and asset management revenues.
2. We believe that for the industry, commercial and multifamily servicing and asset management companies earn 40 to 50 basis points on their Fannie Mae servicing book, eight to 10 basis points on Freddie Mac loans, approximately 15 basis points for FHA loans, and 1 to 3 basis

points for limited servicing. The fees for special servicing and asset management can vary depending on a variety of factors. Spring11's portfolio currently earns closer to the low end of the latter range but is targeting higher fees over time as it expands its offerings across special servicing and asset management. Limited servicing, special servicing, and asset management together generally produce higher profit margins than Newmark as a whole, but lower profit margins versus GSE/FHA primary servicing. We expect our overall portfolio to continue providing a steady stream of income and cash flow over the life of the serviced loans

3. Newmark's agency risk sharing portfolio was $29.8 B at 3/31/2024. As of that same date, the OLTV of the portfolio was 62%.

Strong Balance Sheet & Credit Metrics

No near term debt maturities due to the refinancing of our corporate debt

	AS OF 03/31/2024, UNLESS OTHERWISE STATED ($ IN MILLIONS)
Cash and Cash Equivalents	$140.9

	Interest Rate	Maturity
Senior Notes	7.50%	01/12/2029	$595.2
Credit Facility	SOFR + 1.50%	04/26/2027	$75.0
Total Debt			$670.2
Net Debt			$529.3
Total Equity			$1,566.6

• On January 12, 2024, the Company closed its offering of $600.0 million aggregate principal amount of 7.500% senior notes1 due January 2029 and used the proceeds to repay the Delayed Draw Term Loan and Cantor Credit Facility.
• The balance sheet changes from year-end 2023 reflected $59.8MM of cash generated by the business, $125MM of incremental corporate debt, which was offset by the issuance of $161.1MM of employee loans used primarily to hire revenue-generating professionals, $37.2MM of share repurchases, and various normal movements in working capital.
• After the close of the quarter, Newmark renewed its $600.0 million revolving Credit Facility under substantially the same covenants, extending the maturity date from March 2025 to April 2027.
• The Company's target is to maintain net leverage at or below 1.5X.

Credit Metrics

as of 03/31/2024

$399.0 million

TTM Adjusted EBITDA

1.3x

Net Leverage Ratio as of 03/31/20242

8.0x

Interest Coverage Ratio3

1. For more information on recent bond offering, please see the related form 8-K.	NEWMARK	9
2. Net Debt / TTM Adjusted EBITDA. Adjusted EBITDA and net leverage are non-GAAP financial measures. See "Non-GAAP Financial Measures" and "Financial Tables and Reconciliations."

3. TTM Adjusted EBITDA / TTM Interest Expense.

Strong Financial Position & Cash Generation

Low Risk

Intermediary

• Capital-lightmodel; we do not own real estate
• Virtually no balance sheet risk1
• ~$174 billion loan servicing and asset management portfolio

Strong Financial Profile &

Credit Metrics

• Operates with investment grade credit metrics
• 1.3x net leverage2 ratio as of 03/31/2024; long-term target remains <1.5x
• ~70% expenses are variable2

Strong Cash Flow

• Newmark has a history of strong Cash Flow Generation and Conversion 3

Cash & Cash Equivalents	Undrawn Portion of Credit Facility4	Strong Expected		Significant Expected Available Capital
$141 MM	$525 MM	Cash Generation5
	~ $1 Billion
$300MM+

1. Newmark shares credit losses on a pari passu basis with Fannie Mae. On average, Newmark and the industry have experienced very low net charge offs.
2. Note the following (i) Adjusted EBITDA and net leverage are non-GAAP financial measures. See "Financial Tables and Reconciliations". (ii) Approximately 70% of GAAP and AE expenses over the last 3 fiscal years were variable, on average.
3. Defined as "Net cash provided by (used in) operating activities" under GAAP ("CFFO") divided by Adjusted EBITDA or Post-tax Adjusted Earnings. See "Other useful information" and "Newmark Has A Proven Record of Strong Cash Flow Conversion".

4. This adjusts for the repayment of all the company's revolving credit facilities following the January 2024 issuance of the Senior Notes.	NEWMARK	10
5. This refers to "Cash Generated by the Business", which was $341.2 million and $393.1 million in fiscal years 2023, and 2022, respectively. Please see the "Other useful information" section in the appendix for the definition of this term.