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EX-99.2 - EX-99.2 - CBRE GROUP, INC.a14-5079_1ex99d2.htm
8-K - 8-K - CBRE GROUP, INC.a14-5079_18k.htm

Exhibit 99.1

 

PRESS RELEASE

 

Corporate Headquarters

400 South Hope Street

25th Floor

Los Angeles, CA 90071

www.cbre.com

 

FOR IMMEDIATE RELEASE

 

For further information:

 

Gil Borok

Steve Iaco

Chief Financial Officer

Investor Relations & Corporate Communications

213.613.3730

212.984.6535

 

CBRE GROUP, INC. REPORTS ADJUSTED EARNINGS PER SHARE INCREASES OF 22% FOR FOURTH-QUARTER AND 17% FOR FULL-YEAR 2013

 

Adjusted EPS Totals $0.67 for Fourth Quarter and $1.43 for 2013

 

2013 Revenue Reaches New Milestone at $7.2 Billion,

Up 10% (11% in Local Currency) for the Year

 

Normalized EBITDA Surpasses $1.0 Billion for First Time

 

Los Angeles, CA — February 5, 2014 — CBRE Group, Inc. (NYSE:CBG) today reported continued strong revenue and adjusted earnings growth for the fourth quarter and year ended December 31, 2013.

 

Full-Year 2013 Results

 

·                  Revenue for full-year 2013 totaled $7.2 billion, an increase of 10% (11% in local currency) from $6.5 billion in 2012.

 

·                  Excluding selected charges1, net income2 for 2013 rose 19% to $474.3 million from $399.4 million in 2012, while earnings per diluted share improved 17% to $1.43 from $1.22 for the prior year.  Selected charges (net of income taxes) totaled $157.8 million in 2013.  For 2012, selected charges (net of income taxes) totaled $83.8 million.

 

·                  On a U.S. GAAP basis, net income was $316.5 million, or $0.95 per diluted share for 2013, as compared to $315.6 million, or $0.97 per diluted share for 2012.  Current-year results were significantly impacted by a $74.3 million ($0.22 per share) non-cash intangible asset impairment in one element of the Company’s Global Investment Management business in continental Europe, as described more fully below.  In addition, costs associated with the Company’s corporate debt refinancing reduced GAAP earnings per diluted share by $0.10 for 2013.

 

·                  Excluding selected charges, Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)3 increased 11% to $1.0 billion in the current year from $918.4 million in the year prior.  EBITDA3 (including selected charges) rose 14% to $982.9 million for 2013 from $861.6 million for 2012.

 



 

CBRE Press Release

February 5, 2014

Page 2

 

Fourth-Quarter 2013 Results

 

·                  Revenue for the quarter totaled $2.2 billion, an increase of 11% (13% in local currency) from $2.0 billion in the fourth quarter of 2012.

 

·                  Excluding selected charges, net income rose 22% to $221.3 million from $181.9 million in the fourth quarter of 2012, while earnings per diluted share improved 22% to $0.67 from $0.55 in the prior-year period. For the fourth quarter, selected charges (net of income taxes) totaled $106.6 million versus $8.9 million for the same period in 2012.

 

·                  On a U.S. GAAP basis, net income totaled $114.6 million, compared with $173.0 million for the fourth quarter of 2012.  GAAP earnings per diluted share totaled $0.34, compared with $0.53 in last year’s fourth quarter. These lower results also reflect the $74.3 million ($0.22 per share) charge in the Global Investment Management segment, referenced above.

 

·                  Excluding selected charges, EBITDA increased 12% to $392.7 million from $351.7 million in the fourth quarter of 2012. EBITDA (including selected charges) rose 4% to $358.3 million for the fourth quarter of 2013, from $345.7 million for the same period a year earlier.

 

Management Commentary

 

“We ended 2013 on a high note,” said Bob Sulentic, president and chief executive officer of CBRE. “Despite lingering economic challenges and an uneven global recovery, CBRE generated double-digit revenue and adjusted earnings growth for the fourth quarter and full year.  We were especially encouraged to see further market share gains in our leasing and sales businesses, supported by investments in recruiting and in our platform. In addition, revenue continued to rebound strongly in our EMEA region, and our global occupier outsourcing business maintained double-digit growth in local currency.

 

“For 2013 overall, we reached new milestones as revenue exceeded $7 billion and normalized EBITDA surpassed $1 billion for the first time. These are notable accomplishments that reflect the diligent efforts of our people to work together, leveraging our brand and our global service offering to produce outstanding results for our clients.  We also had tremendous success in attracting new talent to CBRE, adding hundreds of top professionals to our brokerage ranks through strategic recruiting and in-fill acquisitions. This was a top priority for 2013, resulting in what we believe was our strongest year of brokerage recruiting in the past decade.

 

“We remain highly focused on sustaining our market leadership position for the long term by making important investments in platform enhancements, including technology, research and talent development that will support our people in serving our clients and open new avenues of growth for our Company.”

 

Among CBRE’s geographic regions, revenue growth during the fourth quarter was led by another strong performance in Europe, the Middle East and Africa (EMEA), where revenue increased 21% (18% in local currency).  The United Kingdom, in particular, generated exceptional results with a 28% (27% in local currency) revenue increase.  The Americas, CBRE’s largest business segment, also posted a healthy revenue gain of 9% (10% in local currency). The Americas leasing business continued to revive strongly with revenue up 15% (16% in local currency) despite a sluggish macro environment.  Meanwhile, currency effects continued to temper otherwise strong growth in Asia Pacific. In local currency, this region’s revenue rose 14%, but only 3% in U.S. dollars.

 



 

CBRE Press Release

February 5, 2014

Page 3

 

Among business lines, Global Investment Management figured prominently in the Company’s strong fourth-quarter performance.  Revenue improved 36% (35% in local currency), largely due to the realization of carried-interest revenue. Carried interest is incremental revenue that CBRE earns when it sells assets within portfolios it manages for institutional investors at values that exceed target return thresholds.

 

Also reflecting the strength of the investment market, global property sales increased 19% (21% in local currency) in the fourth quarter of 2013.  Sales activity was particularly vibrant in a number of countries around the world, including Australia, Brazil, Germany, Japan, the Netherlands and the United Kingdom.  U.S. property sales growth was more temperate following the tax-motivated activity in the fourth quarter of 2012. Nevertheless, Americas sales revenue improved 8% (9% in local currency) during the quarter, and 15% (16% in local currency) for all of 2013.  For the 8th consecutive year, CBRE claimed the #1 investment sales market share in 2013, with an increase of 150 basis points.

 

Global leasing revenue rose 10% (11% in local currency), marking the second consecutive quarter of double-digit increases. Growth in this business line had been hampered by a slow economic recovery. However, recent performance in leasing has improved markedly, particularly in the U.S., as CBRE continues to gain market share.

 

The Company’s occupier outsourcing business, Global Corporate Services (GCS), grew steadily, as more space users globally recognize the advantages of turning over the management of their real estate to third-party service providers.  During the fourth quarter, CBRE signed 32 outsourcing contracts with new customers, the most ever for the Company in a single quarter.  CBRE also set a new Company record by signing 96 outsourcing contracts with new customers for all of 2013.

 

Revenue from the GCS business (which comprises facilities management, project management, transaction management and strategic consulting) rose 9% globally (10% in local currency) during the fourth quarter, paced by an 11% increase (12% in local currency) in the Americas.

 

During the quarter, CBRE completed a significant acquisition to bolster its GCS business in EMEA. London-based Norland Managed Services Ltd, which CBRE acquired on December 23, 2013, is a leading provider of commercial building technical engineering services. The acquisition of Norland enables CBRE to self-perform these services for its occupier clients in EMEA and to add substantial expertise in the rapidly growing critical environments market segment. Norland did not contribute to CBRE’s financial results in 2013.

 

CBRE also completed ten additional in-fill acquisitions during the year, including five in the fourth quarter: Alan Selby & Partners, a leading firm serving the London prime residential real estate market; CAC Group, a leading regional commercial real estate services firm based in San Francisco, California; CB Richard Ellis Carmody, CBRE’s former affiliate in Charleston, South Carolina; KLMK Group, a facility consulting and project advisory firm serving the healthcare industry and based in Richmond, Virginia; and Whitestone Research, a leading provider of facilities-related cost analytics data, tools and services, based in Santa Barbara, California.

 



 

CBRE Press Release

February 5, 2014

Page 4

 

Commercial mortgage brokerage revenue decreased 4%, with the decline wholly attributable to regulatory curbs placed on the U.S. Government-Sponsored Enterprises’ (GSEs) multi-housing lending activity. These mandatory limits put significant pressure on revenue and profits for the commercial mortgage brokerage business, which otherwise remained quite healthy.

 

Fourth-Quarter 2013 Segment Results

 

Americas Region (U.S., Canada and Latin America)

 

·                  Revenue rose 9% (10% in local currency) to $1.4 billion, compared with $1.2 billion for the fourth quarter of 2012.

·                  EBITDA, excluding selected charges, increased 2% to $202.4 million compared with $199.3 million in last year’s fourth quarter.  Including selected charges, current-quarter EBITDA was $201.3 million.  There were no selected charges in the comparable period of 2012.

·                  Operating income totaled $165.3 million, compared with $169.8 million for the prior-year fourth quarter.

·                  Both EBITDA and operating income continued to be affected by increased investments in areas necessary to drive long-term growth and client service, notably brokerage recruiting and technology.

·                  In addition, the current-year results were impacted by the reduction in mortgage servicing work for GSEs and higher insurance and legal costs, all three of which reduced both EBITDA metrics by approximately $20 million.

 

EMEA Region (primarily Europe)

 

·                  Revenue rose 21% (18% in local currency) to $432.7 million, compared with $357.5 million for the fourth quarter of 2012.  This revenue was the highest ever for the EMEA region in local currency.  The increase was broad based, as every major business line showed growth, led by property sales. Notable strength was evident in the U.K. as well as in the Netherlands and Spain.

·                  EBITDA, excluding selected charges, increased 4% to $56.0 million compared with $53.8 million in the prior-year fourth quarter.   Including selected charges, current-quarter EBITDA was $42.3 million, which was impacted by $13.7 million of integration and other costs related to acquisitions, primarily Norland, as well as cost containment expenses.  There were no selected charges in the comparable period of 2012.

·                  Like the Americas, EBITDA was affected by investments in areas necessary to drive long-term growth and client service, notably brokerage recruiting and technology.

·                  Operating income totaled $35.2 million compared with $45.0 million for the same period in 2012.  Current-year operating income was impacted by the same selected charges and investments in recruiting and other growth initiatives that affected EBITDA.

 

Asia Pacific Region (Asia, Australia and New Zealand)

 

·                  Revenue was $255.6 million, an increase of 3% (14% in local currency) from $248.8 million for the fourth quarter of 2012.  Performance improved in several countries, particularly Australia, India and Japan, but was largely offset by the negative effect of foreign currency movement.

·                  EBITDA, excluding selected charges, totaled $30.2 million compared with $38.6 million for the prior-year fourth quarter.  Including selected charges, current-quarter EBITDA was $25.9 million, which was impacted by $4.3 million of cost containment and acquisition-related integration expenses.  There were no selected charges in the comparable period of 2012.

 



 

CBRE Press Release

February 5, 2014

Page 5

 

·                  Both EBITDA metrics were impacted by a concentration of property sales commissions among higher-producing professionals and foreign currency movement.

·                  Operating income totaled $22.1 million compared with $36.0 million for the fourth quarter of 2012. Current-year operating income was also impacted by the same factors that affected EBITDA.

 

Global Investment Management (investment management operations in the U.S., Europe and Asia)

 

·                  Revenue rose 36% (35% in local currency) to $168.0 million from $123.4 million in the fourth quarter of 2012. The increase was driven by the aforementioned carried-interest revenue, which totaled $56.3 million in the current quarter.

·                  Excluding selected charges, EBITDA increased more than 230% to $82.2 million from $24.4 million in the prior-year fourth quarter.  EBITDA (including selected charges) rose more than 260% to $66.9 million compared with $18.4 million in the fourth quarter of 2012.

·                  Operating loss totaled $45.3 million as compared to operating income of $7.3 million for the fourth quarter of 2012.  Operating loss for the fourth quarter of 2013 included a $98.1 million non-cash write-off of intangible assets associated with the European open-end fund business and $9.6 million of integration and other acquisition-related costs.  The non-amortizable intangible asset impairment is included in the calculation of operating loss but not in EBITDA.

·                  The Global Investment Management business continues to perform well overall. The non-cash impairment charge is related to a decrease in value within one part of the European business – open-end funds. These funds have experienced a decline in assets under management, as the business mix shifts toward separate accounts, consistent with market movements following the extended financial crisis in Europe, which has resulted in project sales and planned liquidations of certain funds.

·                  Assets under management (AUM) totaled $89.1 billion at year-end 2013, up 2% from the third quarter of 2013, but down 3% from year-end 2012. The increase during the quarter was driven by $2.1 billion of acquisitions, favorable currency effects of $0.9 billion and a $0.9 billion increase in property values. These were partly offset by property dispositions, reflecting the strategy to harvest portfolio gains, of $2.4 billion.

 

Development Services (real estate development and investment activities primarily in the U.S.)

 

·                  Revenue totaled $18.4 million compared with $28.4 million for the fourth quarter of 2012.  The revenue decline was attributable to decreased rental revenue resulting from property dispositions and lower incentive development fees.

·                  EBITDA totaled $21.8 million, compared with $35.6 million reported in the prior-year period. The decline was primarily due to lower gains on the sale of properties (reflected in equity income from unconsolidated subsidiaries).

·                  Operating loss narrowed to $8.0 million compared with $25.3 million for the same period in 2012. Equity income from unconsolidated subsidiaries is included in the calculation of EBITDA, but not in operating loss.

·                  Development projects in process totaled $4.9 billion, up 17% from year-end 2012, and the inventory of pipeline deals totaled $1.5 billion, down 29% from year-end 2012. The shift from pipeline to in-process reflects recovering demand for development services as the economy improves.

 



 

CBRE Press Release

February 5, 2014

Page 6

 

Business Outlook

 

“As we look ahead to 2014, we have good momentum in most of our businesses and market sentiment is positive. Our outlook is further buoyed by signs of firmer economic growth in the U.S. and Europe’s emergence from a long slump,” said Mr. Sulentic. “Should a stronger market recovery develop, we expect to benefit significantly due to the continued strengthening of our leading brand and platform, which is enhancing our value proposition for our clients, and in turn, our shareholders.”

 

In looking forward to 2014, CBRE expects its global real estate services business to produce double-digit normalized EBITDA growth even before contributions from Norland.  This growth is expected to be driven by double-digit revenue increases in both global property sales and occupier outsourcing as well as continued growth in leasing revenue.  The Company faces continued uncertainty over the regulatory environment of GSE mortgage origination activity, but currently assumes 2014 volumes will be similar to 2013.  Together, CBRE’s principal businesses, Global Investment Management and Development Services, are expected to perform in line with 2013, excluding carried interest.

 

Even with relatively little carried interest and continued investments in growth, particularly in brokerage recruiting, CBRE expects to achieve earnings-per-share, as adjusted, in the range of $1.55 to $1.60 in 2014, implying a growth rate of 10% at the mid-point of the range.  With the investments being made in recruiting and other initiatives, CBRE believes it is well positioned for long-term growth.

 

Conference Call Details

 

The Company’s fourth-quarter earnings conference call will be held today (Wednesday, February 5, 2014) at 5:00 p.m. Eastern Time.  A webcast will be accessible through the Investor Relations section of the Company’s website at www.cbre.com/investorrelations.

 

The direct dial-in number for the conference call is 800-230-1059 for U.S. callers and 612-234-9959 for international callers.  A replay of the call will be available starting at 10 p.m. Eastern Time on February 5, 2014, and ending at midnight Eastern Time on February 12, 2014. The dial-in number for the replay is 800-475-6701 for U.S. callers and 320-365-3844 for international callers.  The access code for the replay is 311487.  A transcript of the call will be available on the Company’s Investor Relations website at www.cbre.com/investorrelations.

 



 

CBRE Press Release

February 5, 2014

Page 7

 

About CBRE Group, Inc.

 

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue).  The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

 

Note: This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our future growth momentum, operations, financial performance, business outlook and ability to successfully integrate businesses we have acquired with our existing operations.  These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results and performance in future periods to be materially different from any future results or performance suggested in forward-looking statements in this release.  Any forward-looking statements speak only as of the date of this release and, except to the extent required by applicable securities laws, the Company expressly disclaims any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events.  If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.  Factors that could cause results to differ materially include, but are not limited to: general conditions of financial liquidity for real estate transactions, including the impact of European sovereign debt issues and relatively flat economic growth in many European countries as well as U.S. and European fiscal uncertainty; our leverage and our ability to perform under our credit facilities; commercial real estate vacancy levels; employment conditions and their effect on vacancy rates; property values; rental rates; interest rates; our ability to leverage our platform to grow revenues and capture market share; fluctuations in currency; continued growth in trends toward use of outsourced commercial real estate services; our ability to control costs relative to revenue growth and expand EBITDA margins; our ability to retain and incentivize producers; our ability to identify, acquire and integrate synergistic and accretive businesses; expected levels of interest, depreciation and amortization expense; changes in our effective tax rate; realization of values in investment funds to offset related incentive compensation expense; our ability to maintain and grow assets under management in our Global Investment Management business; a decline in asset values in, or a reduction in earnings or cash flow from, our investment programs, as well as related litigation, liabilities and reputational harm; and our ability to comply with laws and regulations related to our domestic and international operations, including employment laws, regulatory requirements and the anti-corruption laws of the U.S. and other countries.

 

Additional information concerning factors that may influence the Company’s financial information is discussed under “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Quantitative and Qualitative Disclosures About Market Risk” and “Cautionary Note on Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, 2012, and under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Quantitative and Qualitative Disclosures About Market Risk” and “Forward-Looking Statements” in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, as well as in the Company’s press releases and other periodic filings with the Securities and Exchange Commission.  Such filings are available publicly and may be obtained on the Company’s website at www.cbre.com or upon written request from the CBRE Investor Relations Department at investorrelations@cbre.com.

 


1 Selected charges included the write-off of financing costs, amortization expense related to net revenue backlog, incentive fees and certain customer relationships resulting from acquisitions, certain carried interest incentive compensation expense, integration and other costs related to acquisitions, cost containment expenses and the impairment of non-amortizable intangible assets.  For the impact of selected charges on specific periods, see the “Non-GAAP Financial Measures” section of this press release.

 

2 A reconciliation of net income attributable to CBRE Group, Inc. to net income attributable to CBRE Group, Inc., as adjusted for selected charges, is provided in the section of this press release entitled “Non-GAAP Financial Measures.”

 

3 EBITDA represents earnings before net interest expense, write-off of financing costs, income taxes, depreciation and amortization, while amounts shown for EBITDA, as adjusted (or normalized EBITDA), remove the impact of certain cash and non-cash charges related to acquisitions, cost containment initiatives and asset impairments, as well as certain carried interest incentive compensation expense.  Our management believes that both of these measures are useful in evaluating our operating performance compared to that of other companies in our industry because the calculations of EBITDA and EBITDA, as adjusted, generally eliminate the effects of financing and income taxes and the accounting effects of capital spending and acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions. Such items may vary for different companies for reasons unrelated to overall operating performance.  As a result, our management uses these measures to evaluate operating performance and for other discretionary purposes, including as a significant component when measuring our operating performance under our employee incentive programs. Additionally, we believe EBITDA and EBITDA, as adjusted, are useful to investors to assist them in getting a more complete picture of our results from operations.

 

However, EBITDA and EBITDA, as adjusted, are not recognized measurements under U.S. generally accepted accounting principles, or GAAP, and when analyzing our operating performance, readers should use EBITDA and EBITDA, as adjusted, in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA and EBITDA, as adjusted, may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA and EBITDA, as adjusted, are not intended to be measures of free cash flow for our management’s discretionary use, as they do not consider certain cash requirements such as tax and debt service payments. The amounts shown for EBITDA and EBITDA, as adjusted, also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

 

For a reconciliation of EBITDA and EBITDA, as adjusted to net income attributable to CBRE Group, Inc., the most comparable financial measure calculated and presented in accordance with GAAP, see the section of this press release titled “Non-GAAP Financial Measures.”

 



 

CBRE Press Release

February 5, 2014

Page 8

 

CBRE GROUP, INC.

OPERATING RESULTS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2013 AND 2012

(Dollars in thousands, except share data)

 

 

 

Three Months Ended
 December 31,

 

Twelve Months Ended
December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

Revenue

 

$

2,233,851

 

$

2,005,846

 

$

7,184,794

 

$

6,514,099

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

1,276,998

 

1,131,570

 

4,189,389

 

3,742,514

 

Operating, administrative and other

 

638,696

 

597,453

 

2,104,310

 

2,002,914

 

Depreciation and amortization

 

52,984

 

44,750

 

190,390

 

169,645

 

Non-amortizable intangible asset impairment

 

98,129

 

 

98,129

 

19,826

 

Total costs and expenses

 

2,066,807

 

1,773,773

 

6,582,218

 

5,934,899

 

 

 

 

 

 

 

 

 

 

 

Gain on disposition of real estate

 

2,167

 

650

 

13,552

 

5,881

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

169,211

 

232,723

 

616,128

 

585,081

 

 

 

 

 

 

 

 

 

 

 

Equity income from unconsolidated subsidiaries

 

34,782

 

40,859

 

64,422

 

60,729

 

Other income

 

4,171

 

6,458

 

13,523

 

11,093

 

Interest income

 

1,287

 

1,860

 

6,289

 

7,643

 

Interest expense

 

27,372

 

43,025

 

135,082

 

175,068

 

Write-off of financing costs

 

 

 

56,295

 

 

Income from continuing operations before provision for income taxes

 

182,079

 

238,875

 

508,985

 

489,478

 

Provision for income taxes

 

66,242

 

82,969

 

187,187

 

185,322

 

Income from continuing operations

 

115,837

 

155,906

 

321,798

 

304,156

 

Income from discontinued operations, net of income taxes

 

2,703

 

631

 

26,997

 

631

 

Net income

 

118,540

 

156,537

 

348,795

 

304,787

 

Less: Net income (loss) attributable to non-controlling interests

 

3,894

 

(16,461

)

32,257

 

(10,768

)

Net income attributable to CBRE Group, Inc.

 

$

114,646

 

$

172,998

 

$

316,538

 

$

315,555

 

 

 

 

 

 

 

 

 

 

 

Basic income per share attributable to CBRE Group, Inc. shareholders

 

 

 

 

 

 

 

 

 

Income from continuing operations attributable to CBRE Group, Inc.

 

$

0.35

 

$

0.52

 

$

0.95

 

$

0.97

 

Income from discontinued operations attributable to CBRE Group, Inc.

 

 

0.01

 

0.01

 

0.01

 

Net income attributable CBRE Group, Inc.

 

$

0.35

 

$

0.53

 

$

0.96

 

$

0.98

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding for basic income per share

 

329,912,177

 

325,372,928

 

328,110,004

 

322,315,576

 

 

 

 

 

 

 

 

 

 

 

Diluted income per share attributable to CBRE Group, Inc. shareholders

 

 

 

 

 

 

 

 

 

Income from continuing operations attributable to CBRE Group, Inc.

 

$

0.34

 

$

0.52

 

$

0.94

 

$

0.96

 

Income from discontinued operations attributable to CBRE Group, Inc.

 

 

0.01

 

0.01

 

0.01

 

Net income attributable to CBRE Group, Inc.

 

$

0.34

 

$

0.53

 

$

0.95

 

$

0.97

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding for diluted income per share

 

332,519,441

 

329,012,910

 

331,762,854

 

327,044,145

 

 

 

 

 

 

 

 

 

 

 

EBITDA (1)

 

$

358,256

 

$

345,730

 

$

982,883

 

$

861,621

 

 


(1)         Includes EBITDA related to discontinued operations of $0.4 million and $5.6 million for the three months ended December 31, 2013 and 2012, respectively, and $7.9 million and $5.6 million for the twelve months ended December 31, 2013 and 2012, respectively.

 



 

CBRE Press Release

February 5, 2014

Page 9

 

CBRE GROUP, INC.

SEGMENT RESULTS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2013 AND 2012

(Dollars in thousands)

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

Americas

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,359,179

 

$

1,247,703

 

$

4,504,520

 

$

4,103,602

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

877,128

 

788,867

 

2,911,168

 

2,607,029

 

Operating, administrative and other

 

285,067

 

264,793

 

1,008,518

 

929,950

 

Depreciation and amortization

 

31,726

 

24,286

 

116,564

 

82,841

 

Operating income

 

$

165,258

 

$

169,757

 

$

468,270

 

$

483,782

 

EBITDA

 

$

201,339

 

$

199,345

 

$

603,191

 

$

578,649

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

 

 

Revenue

 

$

432,702

 

$

357,451

 

$

1,217,109

 

$

1,031,818

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

240,126

 

198,012

 

721,461

 

624,498

 

Operating, administrative and other

 

149,966

 

109,945

 

425,189

 

358,696

 

Depreciation and amortization

 

7,395

 

4,524

 

20,496

 

14,198

 

Non-amortizable intangible asset impairment

 

 

 

 

19,826

 

Operating income

 

$

35,215

 

$

44,970

 

$

49,963

 

$

14,600

 

EBITDA

 

$

42,337

 

$

53,792

 

$

71,267

 

$

54,299

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

 

 

Revenue

 

$

255,559

 

$

248,845

 

$

872,821

 

$

817,241

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

159,744

 

144,691

 

556,760

 

510,987

 

Operating, administrative and other

 

69,936

 

65,125

 

245,251

 

224,558

 

Depreciation and amortization

 

3,826

 

3,017

 

12,397

 

11,475

 

Operating income

 

$

22,053

 

$

36,012

 

$

58,413

 

$

70,221

 

EBITDA

 

$

25,879

 

$

38,583

 

$

70,795

 

$

80,630

 

 

 

 

 

 

 

 

 

 

 

Global Investment Management

 

 

 

 

 

 

 

 

 

Revenue

 

$

168,014

 

$

123,409

 

$

537,102

 

$

482,589

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Operating, administrative and other

 

106,278

 

104,640

 

352,395

 

387,592

 

Depreciation and amortization

 

8,911

 

11,487

 

36,194

 

51,290

 

Non-amortizable intangible asset impairment

 

98,129

 

 

98,129

 

 

Operating (loss) income

 

$

(45,304

)

$

7,282

 

$

50,384

 

$

43,707

 

EBITDA(1)

 

$

66,886

 

$

18,434

 

$

194,609

 

$

96,359

 

 

 

 

 

 

 

 

 

 

 

Development Services

 

 

 

 

 

 

 

 

 

Revenue

 

$

18,397

 

$

28,438

 

$

53,242

 

$

78,849

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Operating, administrative and other

 

27,449

 

52,950

 

72,957

 

102,118

 

Depreciation and amortization

 

1,126

 

1,436

 

4,739

 

9,841

 

Gain on disposition of real estate

 

2,167

 

650

 

13,552

 

5,881

 

Operating loss

 

$

(8,011

)

$

(25,298

)

$

(10,902

)

$

(27,229

)

EBITDA(2)

 

$

21,815

 

$

35,576

 

$

43,021

 

$

51,684

 

 


(1)         Includes EBITDA related to discontinued operations of $0.5 million for the three months ended December 31, 2012 and $1.4 million and $0.5 million for the twelve months ended December 31, 2013 and 2012, respectively.

(2)         Includes EBITDA related to discontinued operations of $0.4 million and $5.1 million for the three months ended December 31, 2013 and 2012, respectively and $6.5 million and $5.1 million for the twelve months ended December 31, 2013 and 2012, respectively.

 



 

CBRE Press Release

February 5, 2014

Page 10

 

Non-GAAP Financial Measures

 

The following measures are considered “non-GAAP financial measures” under SEC guidelines:

 

(i)                                     Net income attributable to CBRE Group, Inc., as adjusted for selected charges

 

(ii)                                  Diluted income per share attributable to CBRE Group, Inc., as adjusted for selected charges

 

(iii)                               EBITDA and EBITDA, as adjusted for selected charges

 

The Company believes that these non-GAAP financial measures provide a more complete understanding of ongoing operations and enhance comparability of current results to prior periods as well as presenting the effects of selected charges in all periods presented.  The Company believes that investors may find it useful to see these non-GAAP financial measures to analyze financial performance without the impact of selected charges that may obscure trends in the underlying performance of its business.

 



 

CBRE Press Release

February 5, 2014

Page 11

 

Net income attributable to CBRE Group, Inc., as adjusted for selected charges and diluted net income per share attributable to CBRE Group, Inc. shareholders, as adjusted for selected charges are calculated as follows (dollars in thousands, except per share data):

 

 

 

Three Months Ended
 December 31,

 

Twelve Months Ended
December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

114,646

 

$

172,998

 

$

316,538

 

$

315,555

 

Non-amortizable intangible asset impairment, net of tax

 

74,259

 

 

74,259

 

15,018

 

Cost containment expenses, net of tax

 

12,922

 

 

12,922

 

13,521

 

Integration and other costs related to acquisitions, net of tax

 

10,256

 

4,473

 

11,342

 

29,891

 

Amortization expense related to net revenue backlog, incentive fees and certain customer relationships acquired, net of tax

 

5,851

 

4,437

 

19,708

 

25,421

 

Carried interest incentive compensation, net of tax

 

3,441

 

 

5,530

 

 

Write-off of financing costs, net of tax

 

(94

)

 

33,989

 

 

Net income attributable to CBRE Group, Inc., as adjusted

 

$

221,281

 

$

181,908

 

$

474,288

 

$

399,406

 

 

 

 

 

 

 

 

 

 

 

Diluted income per share attributable to CBRE Group, Inc. shareholders, as adjusted

 

$

0.67

 

$

0.55

 

$

1.43

 

$

1.22

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding for diluted income per share

 

332,519,441

 

329,012,910

 

331,762,854

 

327,044,145

 

 

EBITDA and EBITDA, as adjusted for selected charges are calculated as follow (dollars in thousands):

 

 

 

Three Months Ended
 December 31,

 

Twelve Months Ended
December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

114,646

 

$

172,998

 

$

316,538

 

$

315,555

 

Add:

 

 

 

 

 

 

 

 

 

Depreciation and amortization(1)

 

52,994

 

46,010

 

191,270

 

170,905

 

Non-amortizable intangible asset impairment

 

98,129

 

 

98,129

 

19,826

 

Interest expense(2)

 

27,522

 

44,606

 

138,379

 

176,649

 

Write-off of financing costs

 

 

 

56,295

 

 

Provision for income taxes(3)

 

66,252

 

83,980

 

188,561

 

186,333

 

Less:

 

 

 

 

 

 

 

 

 

Interest income

 

1,287

 

1,864

 

6,289

 

7,647

 

 

 

 

 

 

 

 

 

 

 

EBITDA(4)

 

$

358,256

 

$

345,730

 

$

982,883

 

$

861,621

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

Cost containment expenses

 

17,621

 

 

17,621

 

17,578

 

Integration and other costs related to acquisitions

 

11,066

 

5,927

 

12,591

 

39,240

 

Carried interest incentive compensation

 

5,709

 

 

9,160

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA, as adjusted (4)

 

$

392,652

 

$

351,657

 

$

1,022,255

 

$

918,439

 

 


(1)         Includes depreciation and amortization expense related to discontinued operations of $1.3 million for the three months ended December 31, 2012 and $0.9 million and $1.3 million for the twelve months ended December 31, 2013 and 2012, respectively.

(2)         Includes interest expense related to discontinued operations of $0.1 million and $1.6 million for the three months ended December 31, 2013 and 2012, respectively and $3.3 million and $1.6 million for the twelve months ended December 31, 2013 and 2012, respectively.

(3)         Includes provision for income taxes related to discontinued operations of $1.0 million for the three months ended December 31, 2012 and $1.3 million and $1.0 million for the twelve months ended December 31, 2013 and 2012, respectively.

(4)         Includes EBITDA related to discontinued operations of $0.4 million and $5.6 million for the three months ended December 31, 2013 and 2012, respectively and $7.9 million and $5.6 million for the twelve months ended December 31, 2013 and 2012, respectively.

 



 

CBRE Press Release

February 5, 2014

Page 12

 

EBITDA and EBITDA, as adjusted for selected charges for segments are calculated as follows (dollars in thousands):

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

Americas

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

400,487

 

$

124,679

 

$

539,373

 

$

267,313

 

Add:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

31,726

 

24,286

 

116,564

 

82,841

 

Interest expense

 

16,287

 

18,266

 

89,241

 

124,633

 

Write-off of financing costs

 

 

 

56,295

 

 

Royalty and management service income

 

(274,928

)

(11,435

)

(295,154

)

(32,214

)

Provision for income taxes

 

28,795

 

44,634

 

100,883

 

140,634

 

Less:

 

 

 

 

 

 

 

 

 

Interest income

 

1,028

 

1,085

 

4,011

 

4,558

 

EBITDA

 

$

201,339

 

$

199,345

 

$

603,191

 

$

578,649

 

Integration and other costs related to acquisitions

 

1,101

 

 

1,101

 

 

EBITDA, as adjusted

 

$

202,440

 

$

199,345

 

$

604,292

 

$

578,649

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to CBRE Group, Inc.

 

$

(252,570

)

$

28,802

 

$

(248,888

)

$

9,846

 

Add:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

7,395

 

4,524

 

20,496

 

14,198

 

Non-amortizable intangible asset impairment

 

 

 

 

19,826

 

Interest expense

 

2,257

 

2,414

 

2,552

 

9,152

 

Royalty and management service expense

 

263,822

 

3,688

 

267,199

 

12,654

 

Provision for income taxes

 

21,433

 

18,509

 

30,400

 

7,170

 

Less:

 

 

 

 

 

 

 

 

 

Interest income

 

 

4,145

 

492

 

18,547

 

EBITDA

 

$

42,337

 

$

53,792

 

$

71,267

 

$

54,299

 

Integration and other costs related to acquisitions

 

9,556

 

 

9,556

 

 

Cost containment expenses

 

4,118

 

 

4,118

 

15,331

 

EBITDA, as adjusted

 

$

56,011

 

$

53,792

 

$

84,941

 

$

69,630

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

4,823

 

$

17,370

 

$

14,876

 

$

35,040

 

Add:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

3,826

 

3,017

 

12,397

 

11,475

 

Interest expense

 

208

 

1,453

 

2,990

 

4,641

 

Royalty and management service expense

 

9,952

 

3,688

 

23,184

 

15,388

 

Provision for income taxes

 

8,547

 

13,187

 

19,463

 

14,840

 

Less:

 

 

 

 

 

 

 

 

 

Interest income

 

1,477

 

132

 

2,115

 

754

 

EBITDA

 

$

25,879

 

$

38,583

 

$

70,795

 

$

80,630

 

Integration and other costs related to acquisitions

 

409

 

 

409

 

 

Cost containment expenses

 

3,942

 

 

3,942

 

2,247

 

EBITDA, as adjusted

 

$

30,230

 

$

38,583

 

$

75,146

 

$

82,877

 

 



 

CBRE Press Release

February 5, 2014

Page 13

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Global Investment Management

 

 

 

 

 

 

 

 

 

Net loss attributable to CBRE Group, Inc.

 

$

(49,673

)

$

(16,829

)

$

(7,056

)

$

(14,872

)

Add:

 

 

 

 

 

 

 

 

 

Depreciation and amortization (1)

 

8,911

 

11,754

 

36,670

 

51,557

 

Interest expense (2)

 

9,099

 

23,837

 

38,053

 

44,818

 

Non-amortizable intangible asset impairment

 

98,129

 

 

98,129

 

 

Royalty and management service expense

 

1,154

 

4,059

 

4,771

 

4,172

 

(Benefit of) provision for income taxes

 

(557

)

(4,106

)

24,809

 

11,805

 

Less:

 

 

 

 

 

 

 

 

 

Interest income

 

177

 

281

 

767

 

1,121

 

EBITDA(3)

 

$

66,886

 

$

18,434

 

$

194,609

 

$

96,359

 

Cost containment expenses

 

9,561

 

 

9,561

 

 

Carried interest incentive compensation

 

5,709

 

 

9,160

 

 

Integration and other costs related to acquisitions

 

 

 

5,927

 

1,525

 

39,240

 

EBITDA, as adjusted (3)

 

$

82,156

 

$

24,361

 

$

214,855

 

$

135,599

 

 

 

 

 

 

 

 

 

 

 

Development Services

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

11,579

 

$

18,976

 

$

18,233

 

$

18,228

 

Add:

 

 

 

 

 

 

 

 

 

Depreciation and amortization (4)

 

1,136

 

2,429

 

5,143

 

10,834

 

Interest expense (5)

 

1,132

 

2,686

 

7,004

 

11,288

 

Provision for income taxes (6)

 

8,034

 

11,756

 

13,006

 

11,884

 

Less:

 

 

 

 

 

 

 

 

 

Interest income

 

66

 

271

 

365

 

550

 

EBITDA(7)

 

$

21,815

 

$

35,576

 

$

43,021

 

$

51,684

 

 


(1)         Includes depreciation and amortization expense related to discontinued operations of $0.3 million for the three months ended December 31, 2012 and $0.5 million and $0.3 million for the twelve months ended December 31, 2013 and 2012, respectively.

(2)         Includes interest expense related to discontinued operations of $0.2 million for the three months ended December 31, 2012 and $1.0 million and $0.2 million for the twelve months ended December 31, 2013 and 2012, respectively.

(3)         Includes EBITDA related to discontinued operations of $0.5 million for the three months ended December 31, 2012 and $1.4 million and $0.5 million for the twelve months ended December 31, 2013 and 2012, respectively.

(4)         Includes depreciation and amortization expense related to discontinued operations of $1.0 million for the three months ended December 31, 2012 and $0.4 million and $1.0 million for the twelve months ended December 31, 2013 and 2012, respectively.

(5)         Includes interest expense related to discontinued operations of $0.1 million and $1.4 million for the three months ended December 31, 2013 and 2012, respectively, and $2.3 million and $1.4 million for the twelve months ended December 31, 2013 and 2012, respectively.

(6)         Includes provision for income taxes related to discontinued operations of $1.0 million for the three months ended December 31, 2012, and $1.3 million and $1.0 million for the twelve months ended December 31, 2013 and 2012, respectively.

(7)         Includes EBITDA related to discontinued operations of $0.4 million and $5.1 million for the three months ended December 31, 2013 and 2012, respectively, and $6.5 million and $5.1 million for the twelve months ended December 31, 2013 and 2012, respectively.

 



 

CBRE Press Release

February 5, 2014

Page 14

 

CBRE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

 

 

December 31,

 

December 31,

 

 

 

2013

 

2012

 

Assets:

 

 

 

 

 

Cash and cash equivalents (1)

 

$

491,912

 

$

1,089,297

 

Restricted cash

 

61,155

 

73,676

 

Receivables, net

 

1,486,489

 

1,262,823

 

Warehouse receivables (2)

 

381,545

 

1,048,340

 

Real estate assets (3)

 

126,954

 

392,860

 

Goodwill and other intangibles, net

 

3,131,702

 

2,676,395

 

Investments in and advances to unconsolidated subsidiaries

 

198,696

 

206,798

 

Other assets, net

 

1,119,961

 

1,059,353

 

Total assets

 

$

6,998,414

 

$

7,809,542

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Current liabilities, excluding debt

 

$

1,984,381

 

$

1,663,022

 

Warehouse lines of credit (2)

 

374,597

 

1,026,381

 

Revolving credit facility

 

142,484

 

72,964

 

5.00% senior notes

 

800,000

 

 

Senior secured term loans

 

685,263

 

1,627,746

 

6.625% senior notes

 

350,000

 

350,000

 

Senior subordinated notes, net

 

 

440,523

 

Other debt

 

5,433

 

9,352

 

Notes payable on real estate (4)

 

130,472

 

326,012

 

Other long-term liabilities

 

589,778

 

611,730

 

Total liabilities

 

5,062,408

 

6,127,730

 

 

 

 

 

 

 

CBRE Group, Inc. stockholders’ equity

 

1,895,785

 

1,539,211

 

Non-controlling interests

 

40,221

 

142,601

 

Total equity

 

1,936,006

 

1,681,812

 

Total liabilities and equity

 

$

6,998,414

 

$

7,809,542

 

 


(1) Includes $32.4 million and $94.6 million of cash in consolidated funds and other entities not available for Company use as of December 31, 2013 and 2012, respectively.

(2) Represents loan receivables, the majority of which are offset by related warehouse lines of credit facilities.

(3) Includes real estate and other assets held for sale, real estate under development and real estate held for investment.

(4) Represents notes payable on real estate of which $4.0 million and $13.9 million are recourse to the Company as of December 31, 2013 and 2012, respectively.