Colliers International Group Inc. (CIGI) Cash Flow Statement

The dividend appears well covered by AFFO on a trailing basis, with the 2026Q2 AFFO of $68M far exceeding the $32.7K dividend paid. However, the 2026Q1 AFFO of $25M was only about 3.3 times the dividend, indicating that coverage can compress sharply in seasonally weak quarters. Investors should monitor whether the company can sustain this coverage as acquisition-related amortization and integration costs continue to pressure AFFO.

The wide swings in FFO-to-OCF conversion suggest that working capital changes, particularly in receivables and payables, heavily influence reported operating cash flow. For instance, in 2026Q1, OCF was -$192M while FFO was $43M, implying a large cash outflow from working capital, likely due to seasonal bonus payments or receivable build-up. This volatility underscores the need to focus on AFFO rather than OCF when assessing cash generation.

The rising capex, likely driven by investments in technology and build-outs for new engineering acquisitions, is outpacing AFFO growth. This trend may indicate that the company is prioritizing growth initiatives over near-term distributable cash, which could pressure future dividend increases. Investors should assess whether these investments are generating sufficient returns to justify the reduced free cash flow.

The recurring Q1 cash outflows, despite positive net income in some quarters, suggest that the company pays out annual bonuses and incurs other seasonal expenses early in the year. The magnitude of the 2026Q1 outflow (-$192M) is notably larger than the prior year, which may reflect higher acquisition-related payments or a build-up in receivables. This pattern highlights the importance of annualizing cash flow metrics rather than relying on quarterly figures.

The company's dividend is modest relative to its AFFO, with a payout ratio of roughly 11% on average. This suggests that Colliers retains significant cash to fund its acquisition strategy and internal growth initiatives. However, the negative operating cash flow in Q1 quarters may require short-term borrowing or use of cash reserves, but the overall cash position appears sufficient to cover these seasonal needs without issuing equity or debt.

The large gap between net income and FFO is primarily due to depreciation and amortization of tangible and intangible assets acquired through M&A. For example, in 2025Q1, FFO/NI was 19.89, indicating that GAAP earnings were nearly negligible relative to cash-based earnings. This distortion is typical for asset-heavy service firms, but the magnitude here suggests that investors should rely on FFO and AFFO rather than net income when evaluating the company's cash-generating ability.