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Newmark Group, Inc. (NMRK -0.31%)
Q1 2019 Earnings Call
May. 9, 2019, 10:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning. My name is Julianne, and I will be your conference operator today. At this time, I would like to welcome everyone to the Newmark First Quarter 2019 Earnings Conference Call. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)
I will now turn the call over to Jason McGruder, Head of Investor Relations. Sir, you may begin, when you're ready.
Jason McGruder -- Head of Investor Relations
Good morning. We issued our first quarter 2019 financial results press release and presentation summarizing results this morning. You can find these documents at ir.ngkf.com.
Unless otherwise stated, the results provided on today's call compare only the first quarter of 2019 with the year- earlier period. We'll be referring to results on this call mainly only on an adjusted earnings basis, unless otherwise stated. We may also refer to adjusted EBITDA. Please see today's press release results under Generally Accepted Accounting Principles or GAAP. Please see the section in the back of today's press release for the complete definitions of any such non-GAAP terms, reconciliations of these terms to the corresponding GAAP results, and how, when, and why management uses them.
I also remind you that the information on this call regarding our business that are not historical facts are forward- looking statements within the meaning of Section 27A of Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements involve risks and uncertainties. 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 forward-looking statements, see Newmark's Securities and Exchange Commission filings including, but not limited to the risk factors and special note regarding forward-looking statements set forth in our most recent Form 10-K, Form 10-Q, or Form 8-K filings.
I'm now happy to turn the call over to our host, Barry Gosin, CEO of Newmark Group, Inc.
Barry M. Gosin -- Chief Executive Officer
Thank you, Jason. Good morning and thank you for joining us for Newmark's first quarter 2019 conference call. With me today are Newmark's Chairman, Howard Lutnick; and our Chief Financial Officer, Mike Rispoli. Newmark generated 4% revenue growth and 18% improvement in post-tax adjusted earnings per share, and a 9% improvement in adjusted EBITDA. I'm pleased to report that the Company's Board of Directors raised our dividend by $0.01 per common share to $0.10 per common share. At yesterday's closing price, this translates into a yield of 4.9%.
We continue to grow across leasing, investment sales, mortgage brokerage, and multifamily during the quarter. We are pleased to reaffirm our full-year 2019 revenue and adjusted EBITDA guidance. As we execute on our plan to reduce net share issuance, we are increasing our 2019 adjusted earnings per share guidance by $0.05. We now expect adjusted earnings per share to improve to between $1.60 and $1.70, which is 7% to 13% higher for the full-year. Our results are consistent with normal first quarter seasonality for Newmark, and its full service peers.
Now turning to our business. We continue to attract many leading producers to Newmark. For example, we significantly expanded our Healthcare & Alternative Real Estate Assets group by adding the top-ranked senior housing capital markets team. We added a top ranked senior housing debt origination team. In addition, we added a leading senior housing team in Canada. We expect to be the leading senior housing capital markets business in the Americas. We have added leading debt origination teams in Denver and the Carolinas to enhance our existing multifamily and commercial investment sales platform. We've also added strong industrial teams in Los Angeles, Seattle, Minneapolis, and Vancouver, and over 100 professionals in Latin America during the past year.
Newmark's evolution over the past five years has led us to a position of strength and made us the Company of choice for many of the most talented real estate professionals, as evidenced by our 11% growth in front-office headcount and continued improvement in productivity. We are improving our productivity through the deployment of innovative technology and by leveraging our extensive cross-selling opportunities. We are excited by the progress we are making in our technology investments.
Turning to the market. We estimate that overall U.S. investment sales and industry-wide originations were together up approximately 11% in terms of notional volumes. Newmark's 23% increase in full-year volumes across investment sales, mortgage, brokerage and origination compares very favorably to the overall market.
Newmark's combined volumes from multifamily originations, investment sales and non-originated mortgage brokerage increased by 20% year-on-year to $7 billion. This compares to an estimated volume increase of 7% for the industry across multi-family. We expect to continue to grow and build our multi-family and other businesses over time through cross- selling, innovative use of data and technology, and attracting top producers to our platform.
Newmark Research estimates that rents for all property types in the U.S. increased year-on-year, while overall U.S. leasing activity decreased. In comparison, revenues from our Leasing Commissions business increased by 8.2% year-on-year. I have never been more excited about the prospects for Newmark. We spent the last seven years building and growing our platform. We have established ourselves as the most attractive Company for real estate professionals to execute business. I expect our hiring of top talent will accelerate over the next few years.
With that, I'm happy to turn it over to Mike.
Michael J. Rispoli -- Chief Financial Officer
Thank you, Barry, and good morning, everybody. In the first quarter Newmark generated revenues of $447.7 million, an increase of 4%. Our compensation expenses increased 0.9% to $263.4 million, and improved by approximately 180 basis points to 58.8% of revenue. Non-compensation expenses increased by 9% to $115.9 million, as a result of the impact of recent acquisitions and new hires, and increased usage of our GSE warehouse facilities.
Turning to our quarterly earnings. Our adjusted EBITDA improved by 8.6% to $79.3 million. Our pre-tax adjusted earnings for the quarter were up by 17.4% to $64.8 million. Our tax rate for adjusted earnings was 14.4%, which is consistent with our previous outlook for non-GAAP tax in the range of 14% to 16%. Our post-tax earnings increased 18.2% to $55.6 million. Our post-tax earnings per share increased 10.5% to $0.21.
We have taken and expect to take a number of steps to reduce net share issuance. These include, using more cash and less equity, with respect to acquisitions and new hires, and deferred equity for employee compensation. We now expect our fully diluted share count for 2019 to increase by 0% to 1% from the 268 million shares outstanding as of December 31, 2018. Thereafter, for the foreseeable future, our goal is to maintain annual net share count issuance in the 2% range on average. Our fully diluted share count was virtually unchanged in the first quarter of 2019 versus the fourth quarter of 2018. Year-over-year, the share count increased primarily due to the March 2018 sale to BGC of approximately $16.6 million exchangeable limited partnership units of Newmark for $242 million.
Moving onto the balance sheet. Newmark's total liquidity was $72.5 million, down from $171.4 million at December 31, 2018. This change reflects the payment of $59.3 million for corporate taxes, in addition to the impact of year-end bonuses. Our unsecured long-term debt was $538.6 million. Therefore, our net debt was $466.1 million. The Company's net debt to trailing 12-month adjusted EBITDA is 0.9 times as of March 31, 2019, versus 1.9 times in the prior-year period.
Our balance sheet does not yet reflect the approximately $451 million of additional NASDAQ payments, expected from 2023 through 2027. 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 continue to invest for growth.
With that, I'm happy to turn the call back over to Barry.
Barry M. Gosin -- Chief Executive Officer
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, up from $2,048 million in 2018. We estimate our adjusted EBITDA to be in the range of $550 million to $585 million, up from $524 million in 2018. We anticipate our 2018 tax rate for adjusted earnings to be in the range of 14% to 16%, compared with 14.8% in 2018. We have raised our earnings per share guidance to be in the range of $1.60 and $1.70, up from $1.55 and $1.65 previously. This outlook compares to $1.50 in 2018. Our outlook assumes no material acquisitions or meaningful changes in the stock price.
Operator, we'd like to open the call for questions.
Questions and Answers:
Operator
Certainly. (Operator Instructions) Your first question comes from Jade Rahmani from KBW. Your line is open.
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
Thanks very much. Just in terms of the capital markets outlook. It seems that you were able to outgrow peers and the overall market this quarter. Can you talk to the drivers of that. And then, secondly, can you comment on what drove the average -- the lower average transaction fee rate. Was that due to deal size, some large deals or anything else?
Barry M. Gosin -- Chief Executive Officer
Exactly right. Larger deals that are renewed the commissions are less and we continue to ramp-up and we've hired incredible talent, the talent continues to ramp. They also continue to congeal as a group, many of these people have come from other companies and as they -- as the enterprise communicates, collaborates, better and better each day, it just gets better.
Michael J. Rispoli -- Chief Financial Officer
And I'll add to that.
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
What percent -- oh, go ahead.
Michael J. Rispoli -- Chief Financial Officer
Jade, I would add to that in the GSE origination business, more than 70% of our notional volumes in the quarter were Freddie Mac and as you know, Freddie just has a little bit of a lower revenue stream. So that's mix as well.
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
What percentage of transactions that you are leading. Would you say there is a team based effort where you have sales folks from capital markets and leasing or management services teaming up?
Barry M. Gosin -- Chief Executive Officer
Well, for starters, the debt origination team is side-by-side linked arm-in-arm on the projects that we sell. There generally is a connection to the leasing team in understanding the market. So they are also linked together in valuing and enhancing the understanding of the property for those people that are buyers and the management the same. I mean, understanding the guts and the bones of a building is important. So we bring management together. So they're generally linked together and the ability to have a fully integrated platform with all of the services, all of the knowledge is a real advantage in the sales market and in the capturing the management and leasing after the sale.
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
On the leasing side, some of your peers put up Americas growth north of 20% year-on-year. Wondering, if you have any comments as to why Newmark's growth in leasing was less than that. If it has to do with specific sub-sectors, such as technology, flex office or something else?
Barry M. Gosin -- Chief Executive Officer
Well, we -- the average was about 12, we were -- in the Americas, I thought, we were 8.2%. The first quarter of last year we had a significant amount of large deals. We continue to grow, some deals slip from one quarter to the next. I expect that we'll have a good year in leasing.
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
Okay. Lastly, do you have any expectations you could offer for operating cash flow generation or free cash flow for the full year?
Michael J. Rispoli -- Chief Financial Officer
Yeah. If you look at our business last year, we generated close to $300 million of cash flow from operations and that included about $100 million that we reinvested back into hiring new talent and new producers. So if you look at it before that investment, it was about $400 million. And we see the business generating a similar amount of cash flow in 2019.
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
Thanks for taking the questions.
Operator
Your next question comes from Alexander Goldfarb from Sandler O'Neill. Your line is open.
Alexander Goldfarb -- Sandler O'Neil + Partners -- Analyst
Hey. Good morning. Just a few questions here. First, Barry, very good to see you guys addressing the share count challenges (technical difficulty) the last call and it seems like (technical difficulty) the adjusted EBITDA, I guess, is the same adjusted for the footnote from last quarter. Although, in the future it would be helpful, if that was clarified when you guys are writing out the guidance footnote, so that we can remember all that stuff. But suffice to say, in terms of businesses going well and it sounds like you have no problem hiring more teams, but you've made a dramatic adjustment to the way that you're compensating. So can you just walk through, are we to assume that there has been no impact as far as your ability to retain people or grow when you've redone the commission -- the compensation structure. Is that a way to understand or has there been some effect on your ability, maybe either to grow more, grow less, based on the revised compensation?
Barry M. Gosin -- Chief Executive Officer
We continue to grow and accelerate with respect to hiring. The platform is so much improved. And as we -- as the evolution of the Company gets better and more mature, there is no shortage of opportunities to hire people, the compensation has not impacted at all the ability to hire people.
Michael J. Rispoli -- Chief Financial Officer
Yeah. And I'll add to that, Alex, that, when we're going out now and recruiting and hiring people, we simplified the comp structure and it's just making it easier to recruit.
Alexander Goldfarb -- Sandler O'Neil + Partners -- Analyst
Okay. And then just -- one thing I think that could be helpful, because you guys provide a lot of information, and obviously, you guys are doing a lot of good things as far as addressing the dilutions to growth, but the releases can be a little bit confusing. So I would just say, on a release basis, if you guys can simplify and make clear things are actual changes versus just updates that were previously disclosed that now you're simplifying. Because this morning, when we look and see lower revenue, but then we see higher earnings per share. As far as guidance, that's a good thing, unfortunately gets lost with the stock being down. So just -- it's a suggestion maybe going forward that I think would be helpful to the stock. And certainly, you guys are putting a good performance, you're definitely doing all the right things, it's just a shame to see the stock be down the way it is this morning. So I don't know if that's something that you think is reasonable to do or if this format is something -- the way you disclosed is something that you in fact will be sticking with, maybe if you could just provide some comment on that?
Barry M. Gosin -- Chief Executive Officer
So, Alex, as you know, we did have some adjustments and some changes to how we show the numbers and how we provide the information to the public, that we talked about on the last earnings call. And so, these numbers are consistent with those changes. And as you know, the business is seasonal and we feel pretty good about the rest of the year and the pipeline that we see for the business, which is why we were able to reiterate our revenue and top-line growth for the year.
Alexander Goldfarb -- Sandler O'Neil + Partners -- Analyst
Okay. Thank you.
Operator
Your next question comes from Andrew Rosivach from Goldman Sachs. Your line is open.
Andrew Rosivach -- Goldman Sachs -- Analyst
Hey. Thanks for taking my call. The biggest question I'm getting on your stock is stock comp and my line died for a little bit, I am sorry, if you said this earlier, but what do you anticipate will be the equity compensation adjustment between your adjusted earnings and GAAP earnings for 2019?
Barry M. Gosin -- Chief Executive Officer
We haven't provided specific guidance on that. But if you remember, the Company's non-GAAP tax rate gets the benefit from the stock compensation deductions. And we still have the units and FPUs that issued in past that as they get the right to convert those units into stock will generate stock charges for the Company. And so, to maintain our GAAP, non-GAAP tax rate between 14% and 16%, we would have a similar amount of GAAP compensation charges for stock comp. But all that said, we are changing the comp structure in a way that will limit the share count issuance between 0% and 1% when measured against the 268 million shares for diluted that were outstanding at the end of last year.
Andrew Rosivach -- Goldman Sachs -- Analyst
So if that's the case, does it mean -- because we know what your -- we are seeing from the standard of cash flows, what your stock comp add-back was last year. Does that imply that it would be lower this year?
Michael J. Rispoli -- Chief Financial Officer
I would think it would be a similar amount or maybe a little bit higher.
Andrew Rosivach -- Goldman Sachs -- Analyst
Okay. And then, one follow-up on this, if you look at other companies and this is for multiple companies, they aren't necessarily adding back for other brokers. They're not necessarily adding back stock comp to their adjusted earnings. What they do do though is add back merger-related compensation. By the way, whether it was a stock or just cash. And so my question for you, given Newmarks been doing a kind of M&A, when we look at that equity compensation number. How much of that is just going to go out through the end of time and how much of it is potentially associated with lockups that you needed to do to bring teams or companies in?
Barry M. Gosin -- Chief Executive Officer
So as we bring on teams and as you know in the past, we've used equity as part of the upfront compensation, when we hire, when we buy companies, the equity we give them is really just goodwill that goes on to the balance sheet. And then, though, time they get compensated over time, similar to the rest of the population. But the compensation that we paid in the past for hiring will just continue to come through our earnings as they normally have in the past.
Andrew Rosivach -- Goldman Sachs -- Analyst
Just to throw it out. It might be worth segregating is, if you look at other companies, Cushman now, JLL, I believe with HF, they're taking lockups, if you will, and they are adding that back. And if some of this equity comp that people are worried about is essentially lockups, it might mitigate, I think, some concern of the market.
Barry M. Gosin -- Chief Executive Officer
Yeah. Right now, all of the compensation that we pay to our producers to join the Company is coming through the Company's income statement. So it's part of our earnings.
Andrew Rosivach -- Goldman Sachs -- Analyst
No. Right. But it's -- because this is stock comp just recurring or is some of the stock comp one-time?
Barry M. Gosin -- Chief Executive Officer
With all of the Companies that we acquire, we -- the principals sign non-competes, non-solicit, non-reconstitute, they can't do business for a significant period of time after their contracts. They generally sign long-term contracts to begin with. So there is a significant amount of control in respect of there being able to compete and actually be in the business. It's unlikely that they can.
Andrew Rosivach -- Goldman Sachs -- Analyst
It's cool. I can follow-up later. Thanks for taking my call.
Operator
Your next question comes from Jade Rahmani from KBW. Your line is open.
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
Thanks very much. I wanted to ask a follow-up related to your guidance. So the flat to up 1% for the share count. On the 268 million shares outstanding, I think, your prior guidance implied around $16 million shares of issuance. Now, you're flat to up 1%. So that would have equated to about $130 million of value. And my question is that amount being expensed anywhere? Is it going to show up as employee loans that are amortized, where does that value go in terms of how it's -- either a cash item or an expense item?
Michael J. Rispoli -- Chief Financial Officer
Well, to the extent it's a cash item, of course, it will come through our income statement over time, over the course of, the length of the contracts. Yeah, we signed with our producers and if we're giving them stock compensation, it will come through our income statement over time as well.
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
But essentially that $130 million value, previously you anticipated it to be issued in the form of shares and now it's going to be issued likely in the form of cash...
Howard W. Lutnick -- Chairman
No, no, no.
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
Yeah.
Howard W. Lutnick -- Chairman
No. It will be -- what happened is we were issuing units in the firm -- in the form of current fully diluted equity and now we're issuing deferred equity. So we will come over long, instead of going into our share count today, it just comes in slowly over a long time. But it is just mathematically less shares, so we expect virtually no net issuance now 0% to 1%. So it's not just been converted to cash, it's actually less issuance of shares, and that's why, Mike, was able to say that we expect our...
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
Okay.
Howard W. Lutnick -- Chairman
...fully diluted share count target to be 2% growth of shares for the foreseeable future after this year, which is 0% to 1%. So it's not more cash. It's not going to hurt our earnings. It's just we are giving less shares and just throwing.
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
Does that imply that your net hiring growth expectations have been curtailed?
Howard W. Lutnick -- Chairman
Absolutely not.
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
So you've just restructured the hiring agreements to have deferred equity over a longer term than previously?
Howard W. Lutnick -- Chairman
Yes. Effectively.
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
Okay. That makes sense. We were wondering why there was no impact to the adjusted EBITDA guidance as a result of the lower share count. Thanks very much.
Operator
Your next question comes from Patrick O'Shaughnessy from Raymond James. Your line is open.
Patrick O'Shaughnessy -- Raymond James -- Analyst
Hey. Good morning. Curious what your take is on some of the conversations that have been taking place around GSE reform, whether it's things that Crapo has said or the Senate Banking Committee hearing that took place. Any change in your long-term optimism about that multi-family business?
Barry M. Gosin -- Chief Executive Officer
No. We're pretty comfortable with it.
Patrick O'Shaughnessy -- Raymond James -- Analyst
Okay. With the JLL acquisition of HFF, seems like they did a pretty good job of locking up their key talent. Is that kind of your sense as well or do you think there might be some talent that might be available as a result of that deal?
Barry M. Gosin -- Chief Executive Officer
Anytime there's a player that's taken out of the market. It's good for everybody. We are happy about the merger and there is one less Company in a beauty contest to get business.
Patrick O'Shaughnessy -- Raymond James -- Analyst
Okay. And then for that 2% share count growth outlook going forward, is that also, sorry, I think, in response to previous question, you said that, I think, does take into account any hiring you might do, does that also reflect any acquisitions that you might do or if you do a particularly large deal, might we see that share dilution be greater than 2% level?
Michael J. Rispoli -- Chief Financial Officer
Yeah. I think we said our target excludes material acquisitions. So it could change if we do a big transaction over time.
Patrick O'Shaughnessy -- Raymond James -- Analyst
Okay. Great. That's all I've got. Thank you.
Operator
(Operator Instructions) Your next question comes from Henry Coffey from Wedbush. Your line is open.
Henry Coffey -- Wedbush -- Analyst
Good morning. Tough, tough day. So, if I can summarize, you've made some changes sort of below the line that are good for EPS, you don't see anything that any real impediment to your recruiting or your hiring, which is obviously a key way that people like you and Walker & Dunlop are growing and the business seems fine. When I look at Treasuries down today, if you a residential mortgage REIT or a residential mortgage Company, I'd say, well, this is all good. Can I make the same observation in the -- on the commercial side of the business, that lower rates are good for you?
Barry M. Gosin -- Chief Executive Officer
Absolutely. Lower rates are good for us, and we're pretty encouraged in the multi, in the commercial, and all of our businesses, we're pretty optimistic.
Henry Coffey -- Wedbush -- Analyst
So, business is good, a major competitors going to leave the building six months from now, they're -- either the JLL guys in Philadelphia or HF guy in Philadelphia are going to lose their jobs. And they're probably going to come work for you or one of the other companies, that is going to be great. And then, let's talk about the important fundamentals and I -- what is the key variable that drives your ability to increase your dividend and pay down debt?
Barry M. Gosin -- Chief Executive Officer
Look, as I said at the end of my conversation, I have never and I couldn't say this more emphatically, never been more optimistic about our ability to hire. The level of people that are interested in our Company is accelerating, the level of productivity per broker, the profile of the broker, the profile of the team, the people that may not have talked us three years ago, everyone is talking to us, everyone is talking about us. The platform couldn't be in better shape. We continue to have really good cash flow, very good momentum. We just -- you look at in our statement, we hired the number one team in senior housing, literally we will own the market, every private equity firm, every investor in the country is interested in senior housing because of the demographics. We continue to expand our -- in various disciplines and expand every aspect of our business.
Henry Coffey -- Wedbush -- Analyst
So let me go back to my question. Okay. We got that. So if you took out your number two pencil head and so I -- we're going to circle a couple of numbers here. And which -- one of those, now, again, it's a very complex Company from some respective and then from others a very simple Company. So what -- which of those line items are going to really affect, positively affect the ability for you to either: A) raise your dividend or buyback or B) pay down debt or both. And I'm not interested in this stock buyback obviously at these levels. I think you're better off growing -- reducing your interest expense and increasing your dividends. But what are the key items that really drive that, that we should focus on?
Michael J. Rispoli -- Chief Financial Officer
So as you saw, we did increase our dividend from $0.09...
Henry Coffey -- Wedbush -- Analyst
Right.
Michael J. Rispoli -- Chief Financial Officer
$0.09 in the first quarter. That's as a result of our comfort level with our guidance for the year. We will continue to grow the top-line, as Barry talked about, with our ability to recruit and hire talented professionals and give them the ability to cross-sell with the technology that we have and the tools that we put together on our platform. And we just feel good about the business and our ability to perform within the range of guidance that we provided this year.
Henry Coffey -- Wedbush -- Analyst
Super. Thank you very much.
Operator
Your next question comes from Patrick O'Shaughnessy from Raymond James. Your line is open.
Patrick O'Shaughnessy -- Raymond James -- Analyst
Hey. Just a quick follow-up from me. So, as you think about the liquidity that you had, the cash in your balance sheet, you're pretty minimal leverage at this point, the NASDAQ shares that you still have coming. How do you think about potentially doing a special dividend or some other big capital turn versus trying to apply that capital to growing the Company?
Barry M. Gosin -- Chief Executive Officer
We have so many opportunities to grow the Company. I mean, we continue -- we will continue to use the cash in the hiring and acquiring, hiring of great brokers and professionals and acquiring companies. So, we see an enormous amount of opportunity in the market. So we'll use that money wisely.
Patrick O'Shaughnessy -- Raymond James -- Analyst
Yeah. Thank you.
Michael J. Rispoli -- Chief Financial Officer
And of course, we targeted -- we targeted 15% plus returns on the money that we invest and with our ability to grow the revenues of the companies we acquired and the professionals that we put on our platform. That only makes that return on cash investment better.
Patrick O'Shaughnessy -- Raymond James -- Analyst
Great. Thanks.
Operator
Your next question comes through -- from Andrew Rosivach from Goldman Sachs. Your line is open.
Andrew Rosivach -- Goldman Sachs -- Analyst
Hey. Sorry, I thought I would ask the buyback question, because it's -- if you really do think adjusted earnings is the right way to value. guys, you're at 4.5 times now and as other callers have highlighted, you did a nice job shoring up the balance sheet last year. You haven't announced buyback program in place. Is the issue here just the -- and by the way the 4.5 times would be better than a 15% return, right? Is the issue here just because it's a tax-free spin and it makes it -- makes it too difficult to do share repurchases or is there another factor here we should be thinking about?
Michael J. Rispoli -- Chief Financial Officer
Yes. That's the primary factor. And we are still early in a...
Andrew Rosivach -- Goldman Sachs -- Analyst
Yeah.
Michael J. Rispoli -- Chief Financial Officer
... a two-year process post-spin. So we'll continue to look at and then evaluate that.
Howard W. Lutnick -- Chairman
So we...
Andrew Rosivach -- Goldman Sachs -- Analyst
Is there -- go ahead, sorry.
Howard W. Lutnick -- Chairman
...we figured out a variety of tools that have allowed us to reduce our share -- net share issuance to 0% to 1% for this year and to constrain it to our goal of 2% for the foreseeable future. And so, we're using those tools that are available to us during this period of time after the spin until two years has lapsed. But for the two years, I think, share buybacks would be very high on our priority list at these levels. The Company has operated very well. We had always expected about 20% of our revenues in the first quarter. I have no idea why anyone else would have thought other than 20% of our revenues were in the first quarter. All of our peers do about 20% of their revenue in the first quarter. We are exactly doing what we expected to do for our guidance. And so, I just don't understand, how these things got misaligned, but they won't be misaligned in the future. We do expect to do between $2.2 billion and $2.3 billion in revenues, increased our earnings, constrained our share count, listened to a whole variety of things, a variety of you had suggested, we take out employee loans from the EBITDA, yeah, we took that out. And so I think we've tried to hit all of the right tones and our business is performing well.
Andrew Rosivach -- Goldman Sachs -- Analyst
So to summarize just on the -- thank you for that. But the prior piece is, if you are in the same position today in terms of liquidity at $7.40 price targets a year from now, you would be repurchasing shares, a year and a half now, excuse me, you would be repurchasing shares, people can hang in there?
Barry M. Gosin -- Chief Executive Officer
Given our view of the stock right now, if you could change the calendar. It would certainly change our outlook to buying shares, I -- and I for one and everyone around me, the management would be for buying back our shares at these levels for sure.
Andrew Rosivach -- Goldman Sachs -- Analyst
Great. Thanks a lot guys.
Operator
We have no further questions. I'd like to turn the call over to Barry Gosin, CEO of Newmark Group, for closing remarks.
Barry M. Gosin -- Chief Executive Officer
Thank you all for joining us today and we look forward to speaking to you again next quarter.
Operator
This concludes today's conference call. You may now disconnect.
Duration: 37 minutes
Call participants:
Jason McGruder -- Head of Investor Relations
Barry M. Gosin -- Chief Executive Officer
Michael J. Rispoli -- Chief Financial Officer
Jade Rahmani -- Keefe , Bruyette & Woods , Inc. -- Analyst
Alexander Goldfarb -- Sandler O'Neil + Partners -- Analyst
Andrew Rosivach -- Goldman Sachs -- Analyst
Howard W. Lutnick -- Chairman
Patrick O'Shaughnessy -- Raymond James -- Analyst
Henry Coffey -- Wedbush -- Analyst
