PITTSBURGH--(BUSINESS WIRE)--HFF, Inc. (NYSE:HF) (the Company or HFF) reported today its financial and production volume results for the second quarter of 2016. Based on transaction volume, HFF, through its subsidiaries, Holliday Fenoglio Fowler, L.P. and HFF Securities L.P., is one of the leading and largest full-service commercial real estate financial intermediaries in the U.S., providing commercial real estate and capital markets services to both the consumers and providers of capital in the commercial real estate sector.

Second Quarter 2016 Highlights

• Revenue was $117.7 million, compared to $125.0 million in the prior year.
• Net income was $15.8 million, as compared to $21.2 million in the prior year period.
• Net income per diluted share $0.41, as compared to $0.55 during the prior year’s second quarter.
• Adjusted EBITDA was $28.0 million versus $35.3 million in the prior year period.

First Six Months of 2016 Highlights

• Revenue grew to $235.2 million, which is a 7.3% year-over-year increase.
• Net income was $29.7 million, as compared to $30.6 million in the prior year period.
• Net income per diluted share was $0.77, as compared to $0.80 during the prior year’s first six months.
• Adjusted EBITDA was relatively flat at $52.7 million compared to $53.2 million in the prior year period.

“Transaction volumes in the U.S. commercial real estate industry for the second quarter and first six months of 2016 were lower as compared to the same periods in 2015. There are a number of factors creating a challenging capital markets environment, including but not limited to, an unsettled sentiment among investors due to general economic uncertainty regarding domestic and global growth, heightened near term volatility created by the Brexit vote, as well as increased regulatory scrutiny among financial institutions. While some of these headwinds are expected to persist into the second half of 2016, it does not change our long-term view of the fundamental drivers of the U.S. commercial real estate transaction activity as evidenced by the increases in our overall headcount during the last 12 months representing the largest such gain in HFF’s history,” said Mark Gibson, chief executive officer of HFF.

“Despite the headwinds and their impact on the industry’s transaction activity in the first six months of 2016, HFF’s transaction volumes increased across all business lines during the same period driving revenues higher. We continue to benefit from our integrated platform, as well as the outstanding efforts of our associates who provide value-added solutions and services to our clients. We believe our unique partnership culture, our capital markets centric business model, our strong balance sheet, and the ongoing strategic investments we continue to make in our business will continue to increase our market presence in the real estate transaction services business,” added Mark Gibson.

Results for the Second Quarter Ended June 30, 2016

The Company’s revenues were $117.7 million for the second quarter of 2016, which represents a decrease of $7.3 million, or 5.9% compared to revenues of $125.0 million for the second quarter of 2015. The Company generated operating income of $17.6 million during the second quarter of 2016, a decrease of $8.1 million, or 31.6% when compared to operating income of $25.7 million for the second quarter of 2015. This decrease in operating income is primarily due to the 5.9% decrease in revenues, in addition to (a) increases in the Company’s compensation-related costs and expenses associated with the net growth in headcount of 105 associates during the last twelve months, (b) increases in non-cash stock compensation, and (c) increases in other operating expenses due to the increase in headcount.

Interest and other income, net, totaled $8.7 million in the second quarter of 2016, a decrease of $0.7 million, or 7.8%, when compared to $9.5 million in the second quarter of 2015. This decrease is primarily a result of a reduction in securitization and other agency-related income.

The Company reported net income for the quarter ended June 30, 2016 of $15.8 million, a decrease of approximately $5.4 million, or 25.2%, when compared to net income of $21.2 million for the quarter ended June 30, 2015. For the quarter ended June 30, 2016 net income per diluted share was $0.41 compared to $0.55 for the second quarter of 2015, representing a 25.5% decrease.

Adjusted EBITDA (a non-GAAP measure whose reconciliation to net income can be found within this release) for the second quarter of 2016 was $28.0 million, which represents a decrease of $7.3 million, or 20.8%, when compared to $35.3 million in the second quarter of 2015. This decrease in Adjusted EBITDA is attributable to the lower revenue and increase in operating costs. The Adjusted EBITDA margin for the second quarter of 2016 was 23.8%, a 450 basis point decrease as compared to an Adjusted EBITDA margin of 28.3% in the second quarter of 2015.

Results for the Six Months Ended June 30, 2016

The Company reported revenues of $235.2 million for the six months ended June 30, 2016, which represents an increase of $15.9 million, or 7.3% compared to revenues for the first six months of 2015 of $219.3 million. The Company generated operating income of $34.3 million during the first half of 2016, a decrease of $2.6 million, or 7.1% when compared to operating income of $36.9 million for the first half of 2015. This decrease in operating income is primarily due to (a) increases in the Company’s compensation-related costs and expenses associated with the net growth in headcount of 105 associates during the last twelve months, (b) an increase in non-cash stock compensation and (c) increases in other operating expenses due to the growth in transactional activity and the increase in headcount. These costs were partially offset by the increase in revenues.

Interest and other income, net, totaled $15.1 million for the six months ended June 30, 2016 compared to $15.0 million for the six months ended June 30, 2015.

The Company reported net income for the six month period ended June 30, 2016 of $29.7 million, a decrease of approximately $0.9 million, or 2.8%, when compared to net income of $30.6 million for the six month period ended June 30, 2015. For the six month period ended June 30, 2016, net income per diluted share was $0.77, or a 3.8% decrease when compared to $0.80 for the six month period ended June 30, 2015.

Adjusted EBITDA for the six month period ended June 30, 2016 was $52.7 million, which represents a decrease of $0.5 million, or 0.9%, when compared to $53.2 million in the comparable period in 2015. This decrease in Adjusted EBITDA is primarily attributable to the increases in operating costs associated with the additional headcount as well as a reduction in other agency-related income. The Adjusted EBITDA margin for the six month period ended June 30, 2016 was 22.4%, a 180 basis point decrease, compared to an Adjusted EBITDA margin of 24.2% in the comparable period in 2015.

About HFF, Inc.

Through its subsidiaries, Holliday Fenoglio Fowler, L.P. and HFF Securities L.P., the Company operates out of 23 offices nationwide and is one of the leading and largest full-service commercial real estate financial intermediaries in the U.S. providing commercial real estate and capital markets services to both the users and providers of capital in the commercial real estate sector. The Company offers clients a fully-integrated national capital markets platform including debt placement, investment sales, equity placement, investment banking and advisory services, loan sales and commercial loan servicing.