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8-K - 8-K - CBRE GROUP, INC.a15-3625_18k.htm
EX-99.2 - EX-99.2 - CBRE GROUP, INC.a15-3625_1ex99d2.htm

Exhibit 99.1

 

 

 

 

P R E S S   R E L E A S E

 

Corporate Headquarters

 

400 South Hope Street

25th Floor
Los Angeles, CA 90071
www.cbre.com

 

FOR IMMEDIATE RELEASE

 

For further information:

 

Steve Iaco

Senior Managing Director

Investor Relations & Corporate Communications

212.984.6535

 

 

 

CBRE GROUP, INC. REPORTS 2014 REVENUE GROWTH OF 26%

AND 25% FOR FOURTH QUARTER

 

Adjusted Earnings Per Share up 17% for 2014; or 31% Ex. Carried Interest

 

Los Angeles, CA – February 4, 2015 — CBRE Group, Inc. (NYSE:CBG) today reported strong revenue and earnings growth for the year ended December 31, 2014.

 

Full-Year 2014 Results

 

·

Revenue for full-year 2014 totaled $9.0 billion, an increase of 26% (27% in local currency) from $7.2 billion in 2013.

 

 

·

Excluding selected charges1, net income2 for 2014 rose 18% to $561.1 million from $474.3 million in 2013, while earnings per diluted share improved 17% to $1.68 from $1.43 for the prior year. Selected charges (net of income taxes) totaled $76.6 million and $157.8 million in 2014 and 2013, respectively.

 

 

·

Excluding carried interest in the Global Investment Management segment from both years, adjusted earnings per diluted share rose 31% from the prior year. 2013 included significantly more carried interest than 2014.

 

 

·

On a U.S. GAAP basis, net income rose to $484.5 million, or $1.45 per diluted share, for 2014, up more than 50% from $316.5 million, or $0.95 per diluted share, for 2013. Prior-year results included a non-cash intangible asset impairment in the Global Investment Management business in continental Europe.

 

 

·

Excluding selected charges, Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) 3 increased 14% to $1.2 billion in 2014 from $1.0 billion in the prior year. EBITDA3 (including selected charges) rose 16% to $1.1 billion for 2014 from $982.9 million for 2013.

 

 

·

EBITDA for the year was positively impacted by less than $1.0 million as a result of foreign currency translation, after the effect of hedging.

 



 

CBRE Press Release

February 4, 2015

Page 2

 

 

Fourth-Quarter 2014 Results

 

·

Revenue for the quarter totaled $2.8 billion, an increase of 25% (28% in local currency) from $2.2 billion in the fourth quarter of 2013.

 

 

·

Excluding selected charges1, net income2 rose 3% to $227.5 million from $221.3 million in the fourth quarter of 2013, and adjusted earnings per diluted share rose to $0.68 from $0.67 in the prior-year period. For the fourth quarter, selected charges (net of income taxes) totaled $23.2 million versus $106.6 million for the same period in 2013.

 

 

·

Excluding carried interest in the Global Investment Management segment from both quarters, adjusted earnings per diluted share rose 18% from the prior-year quarter. The 2013 fourth quarter included significantly more carried-interest than the 2014 fourth quarter.

 

 

·

On a U.S. GAAP basis, net income rose 78% to $204.3 million, compared with $114.6 million for the fourth quarter of 2013. GAAP earnings per diluted share rose 79% to $0.61, compared with $0.34 in last year’s fourth quarter. Prior-year results included the non-cash charge referenced in the 2014 full-year results summary.

 

 

·

Excluding selected charges, EBITDA3 increased 5% to $412.4 million from $392.7 million in the fourth quarter of 2013. EBITDA3 (including selected charges) rose 9% to $392.0 million for the fourth quarter of 2014, from $358.3 million for the same period a year earlier.

 

 

·

EBITDA for the quarter was negatively impacted by approximately $7.0 million as a result of foreign currency transl ation, after the effect of hedging.

 

Management Commentary

“2014 was a banner year for CBRE,” said Bob Sulentic, the company’s president and chief executive officer. “We generated strong growth and reached new milestones for total revenue and EBITDA.  We achieved these results by investing in our professionals and platform, as our people worked together to create distinct advantages for our clients.  Importantly, for the full year, our regional services businesses, together, achieved significant operating leverage before the contributions from Norland.  In the fourth quarter, our people drove continued strong gains in our global leasing, occupier outsourcing and capital markets business lines as well as in our U.S. real estate development services business.”

 

For the quarter, revenue rose significantly in all three global regions. The Americas, CBRE’s largest business segment, saw a 19% (20% in local currency) revenue increase, as every major business line produced double-digit growth. In Europe, the Middle East and Africa (EMEA), organic revenue improved 16% (23% in local currency), or 71% (78% in local currency) including the contributions from Norland Managed Services Ltd, which CBRE acquired in December 2013.  Asia Pacific posted revenue growth of 8% (14% in local currency), fueled by notable strength in Australia, India and Japan.

 

Among global business lines, revenue growth was paced by property leasing, which logged its sixth consecutive quarter of double-digit revenue increases. Globally, this business line saw revenue rise by 20% (23% in local currency) during the fourth quarter. This result reflects investments in growth initiatives as well as better underlying market conditions.

 

The strong growth of CBRE’s occupier outsourcing business continued in the fourth quarter.  The company signed outsourcing contracts with 37 new customers – the most ever for a single quarter – reflecting its success at delivering integrated, value-added solutions for major occupiers. Globally, revenue from occupier outsourcing, including related transaction revenues, improved 59% (60% in local currency), or 17% (19% in local currency) without the contributions from Norland, during the fourth quarter.

 



 

CBRE Press Release

February 4, 2015

Page 3

 

 

Global property sales revenue improved 14% (17% in local currency) in the fourth quarter, with increases of 20% or more in the United States, France and Spain. Global commercial mortgage services revenue increased robustly, rising 34% (35% in local currency) in the fourth quarter, reflecting continued strong capital flows into commercial real estate as well as the company’s efforts to expand this service offering outside the U.S.

 

The Development Services business continued to perform exceptionally well during the quarter, with revenue improving 32% (same in local currency).

 

As expected, Global Investment Management revenue declined during the quarter.  The 26% (24% in local currency) decrease was primarily due to significantly higher carried-interest revenue in last year’s fourth quarter than in the fourth quarter of 2014. Carried interest is performance-based revenue that is generated when CBRE sells assets within its investment portfolios at values that exceed specified return thresholds. Capital raising activity in the Global Investment Management business remained strong, totaling approximately $8.6 billion for the full year.

 

During the fourth quarter, Standard & Poor’s raised CBRE’s corporate rating to Investment Grade. CBRE has taken advantage of liquidity and low interest rates in the debt markets to optimize the strength and flexibility of its balance sheet. In December 2014, the company issued $125 million of senior notes due 2025, following an earlier offering of $300 million of the same series of notes in September 2014. In January 2015, CBRE closed on an expanded $2.6 billion, five-year revolving credit facility and $500 million Tranche A term loan facility.  The company used the proceeds from the new term loan and the December 2014 notes offering, along with cash on hand, to pay off the balances on its shorter-maturity, higher-interest rate term loans and the outstanding balance of approximately $5 million on its prior revolving credit facility.

 

Fourth-Quarter 2014 Segment Results

 

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

 

·

Revenue rose 19% (20% in local currency) to $1.62 billion, compared with $1.36 billion for the fourth quarter of 2013. The revenue growth was driven by higher property sales, leasing, occupier outsourcing and commercial mortgage services activities.

 

 

·

EBITDA increased 21% to $242.9 million compared with $201.3 million in last year’s fourth quarter.

 

 

·

Operating income totaled $194.6 million, an increase of 18% from $165.3 million for the prior-year fourth quarter.

 

EMEA Region (primarily Europe)

 

·

Revenue rose 71% (78% in local currency) to $740.1 million, compared with $432.7 million for the fourth quarter of 2013. Excluding the contributions from Norland, EMEA revenue increased 16% (23% in local currency) over the prior-year period. The increase was driven by higher property sales, leasing and appraisal activities as well as strong organic growth in occupier outsourcing. The company achieved significant improvement in several countries, including Germany, Ireland, the Netherlands, Spain and the United Kingdom.

 



 

CBRE Press Release

February 4, 2015

Page 4

 

·

EBITDA increased 66% to $70.2 million compared with $42.3 million in the prior-year fourth quarter. The prior-year quarter was impacted by selected charges totaling $13.7 million for integration and other costs related to acquisitions, primarily Norland, as well as cost containment expenses, which did not recur in the fourth quarter of 2014.

 

 

·

Operating income totaled $54.3 million, an increase of 54% from $35.2 million for the fourth quarter of 2013. Prior-year operating income was impacted by the same selected charges that impacted EBITDA.

 

Asia Pacific Region (Asia, Australia and New Zealand)

 

·

Revenue was $277.2 million, an increase of 8% (14% in local currency) from $255.6 million for the fourth quarter of 2013. Performance improved in several countries, particularly Australia, India and Japan.

 

 

·

EBITDA increased 28% to $33.1 million compared with $25.9 million in the prior-year fourth quarter. The prior-year period was impacted by selected charges totaling $4.3 million related to cost containment and acquisition-related integration expenses, which did not recur in the fourth quarter of 2014.

 

 

·

Operating income totaled $29.1 million, an increase of 32% compared with $22.1 million in the fourth quarter of 2013. Prior-year operating income was impacted by the same selected charges that impacted EBITDA.

 

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

 

·

Revenue totaled $125.2 million compared with $168.0 million for the fourth quarter of 2014. The decrease was largely driven by the decline in carried-interest revenue.

 

 

·

Excluding selected charges, EBITDA totaled $29.2 million compared with $82.2 million in the prior-year fourth quarter. EBITDA (including selected items) totaled $8.7 million compared with $66.9 million in the fourth quarter of 2013. These results include the impact of carried interest described above.

 

 

·

Prior-year period results included $58.4 million of normalized EBITDA associated with carried interest while fourth-quarter 2014 results included $11.7 million of normalized EBITDA associated with carried interest.

 

 

·

Operating income was $4.4 million compared with an operating loss of $45.3 million for the fourth quarter of 2013.

 

 

·

Assets Under Management increased during the quarter by $3.8 billion in local currency - offset by $1.8 billion of exchange rate impact - to $90.6 billion, driven by strong acquisition activity and higher property and securities values.

 

 

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

 

·

Revenue rose 32% to $24.3 million, compared with $18.4 million for the fourth quarter of 2013.

 



 

CBRE Press Release

February 4, 2015

Page 5

 

 

·

EBITDA increased 70% to $37.0 million compared with $21.8 million in the prior-year period. The increase was largely driven by higher income from property sales (reflected primarily in gain on disposition of real estate) in the fourth quarter of 2014.

 

 

·

Operating income totaled $6.3 million compared with an operating loss of $8.0 million for the fourth quarter of 2013. Under U.S. GAAP, equity earnings are not included in the calculation of operating income. If equity earnings were included, operating income would have totaled $34.0 million in the fourth quarter of 2014, compared to $19.0 million for the fourth quarter of 2013.

 

 

·

Development projects in process totaled $5.4 billion, up $300 million from third-quarter 2014, and the inventory of pipeline deals totaled $4.0 billion, up $1.1 billion from third-quarter 2014. Most of the pipeline increase is due to fee-development work in the health care sector.

 

Business Outlook

“By any measure, 2014 was an excellent year for CBRE, and we believe 2015 will be another year of strong growth,” Mr. Sulentic said. “The investments we’ve made in our people and operating platform have materially strengthened our global business lines and positioned them for further market share gains by delivering enhanced value to our clients.”

 

In light of its outlook for its business performance in 2015, CBRE expects to achieve earnings-per-share, as adjusted, in the range of $1.90 to $1.95 for the full year.

 

Conference Call Details

The company’s fourth-quarter earnings conference call will be held today (Wednesday, February 4, 2015) 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 877-407-8037 for U.S. callers and 201-689-8037 for international callers.  A replay of the call will be available starting at 10 p.m. Eastern Time on February 4, 2015, and ending at midnight Eastern Time on February 11, 2015. The dial-in number for the replay is 877-660-6853 for U.S. callers and 201-612-7415 for international callers.  The access code for the replay is 13598701.  A transcript of the call will be available on the company’s Investor Relations website at www.cbre.com/investorrelations.

 

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 2014 revenue).  The Company has more than 52,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 370 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.

 



 

CBRE Press Release

February 4, 2015

Page 6

 

 

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 (including earnings per share), business outlook and use of capital.  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: disruptions in general economic and business conditions, particularly in geographies where our business may be concentrated; volatility and disruption of the securities, capital and credit markets; interest rate increases; the cost and availability of capital for investment in real estate; clients’ willingness to make real estate or long-term contractual commitments and other factors affecting the value of real estate assets, inside and outside the United States; our ability to control costs relative to revenue growth; our ability to retain and incentivize producers; our ability to identify, acquire and integrate synergistic and accretive businesses; costs and potential future capital requirements relating to businesses we may acquire; integration challenges arising out of companies we may acquire; increases in, unemployment and general slowdowns in commercial activity; variations in historically customary seasonal patterns that cause our business not to perform as expected; trends in pricing and risk assumption for commercial real estate services; our ability to diversify our revenue model to offset cyclical economic trends in the commercial real estate industry; foreign currency fluctuations; our ability to attract new user and investor clients; our ability to retain major clients and renew related contracts; a reduction by companies in their reliance on outsourcing for their commercial real estate needs, which would affect our revenues and operating performance; client actions to restrain project spending and reduce outsourced staffing levels; changes in tax laws in the United States or in other jurisdictions in which our business may be concentrated that reduce or eliminate deductions or other tax benefits we receive; changes in international law (including anti-corruption, anti-money laundering and trade control law), particularly in Russia, Eastern Europe and the Middle East, due to the rising level of political instability in those regions; our ability to maintain our effective tax rate at or below current levels; our ability to compete globally, or in specific geographic markets or business segments that are material to us; our ability to leverage our global services platform to maximize and sustain long-term cash flow; our ability to maintain EBITDA margins that enable us to continue investing in our platform and client service offerings; our exposure to liabilities in connection with real estate advisory and property management activities and our ability to procure sufficient insurance coverage on acceptable terms; declines in lending activity of Government Sponsored Enterprises, regulatory oversight of such activity and our mortgage servicing revenue from the U.S. commercial real estate mortgage market; our ability to manage fluctuations in net earnings and cash flow, which could result from poor performance in our investment programs, including our participation as a principal in real estate investments; the ability of our Global Investment Management business to maintain and grow assets under management and achieve desired investment returns for our investors, and any potential related litigation, liabilities or reputational harm possible if we fail to do so; our ability to comply with laws and regulations related to our global operations, including real estate licensure, labor and employment laws and regulations, as well as the anti-corruption laws and trade sanctions of the U.S. and other countries; our leverage and our ability to perform under our credit facilities; liabilities under guarantees, or for construction defects, that we incur in our Development Services business; the ability of CBRE Capital Markets to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit; the effect of significant movements in average cap rates across different property types; and the effect of implementation of new accounting rules and standards.

 

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, 2013 (as amended), 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, 2014, 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.

 

Note – CBRE has not reconciled the non-GAAP earnings per share guidance included in this release to the most directly comparable GAAP measure because this cannot be done without unreasonable effort.

 

1 Selected charges included the write-off of financing costs, amortization expense related to certain intangible assets attributable to acquisitions, certain carried-interest incentive compensation expense, the impairment of non-amortizable intangible assets, integration and other costs related to acquisitions and cost containment expenses.  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.”

 



 

CBRE Press Release

February 4, 2015

Page 7

 

 

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, certain carried-interest incentive compensation expense, asset impairments and cost containment initiatives.  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 4, 2015

Page 8

 

CBRE GROUP, INC.

OPERATING RESULTS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2014 AND 2013

 (Dollars in thousands, except share data)

 

 

 

Three Months Ended
 December 31,

 

Twelve Months Ended
December 31,

 

 

 

2014

 

2013

 

2014

 

2013

 

Revenue

 

$

2,787,194

 

$

2,233,851

 

$

9,049,918

 

$

7,184,794

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

1,706,343

 

1,276,998

 

5,611,262

 

4,189,389

 

Operating, administrative and other

 

743,337

 

638,696

 

2,438,960

 

2,104,310

 

Depreciation and amortization

 

69,444

 

52,984

 

265,101

 

190,390

 

Non-amortizable intangible asset impairment

 

-

 

98,129

 

-

 

98,129

 

Total costs and expenses

 

2,519,124

 

2,066,807

 

8,315,323

 

6,582,218

 

 

 

 

 

 

 

 

 

 

 

Gain on disposition of real estate

 

20,557

 

2,167

 

57,659

 

13,552

 

Operating income

 

288,627

 

169,211

 

792,254

 

616,128

 

Equity income from unconsolidated subsidiaries

 

34,150

 

34,782

 

101,714

 

64,422

 

Other income

 

1,131

 

4,171

 

12,183

 

13,523

 

Interest income

 

1,912

 

1,287

 

6,233

 

6,289

 

Interest expense

 

27,709

 

27,372

 

112,035

 

135,082

 

Write-off of financing costs

 

-

 

-

 

23,087

 

56,295

 

Income from continuing operations before provision for income taxes

 

298,111

 

182,079

 

777,262

 

508,985

 

Provision for income taxes

 

92,441

 

66,242

 

263,759

 

187,187

 

Income from continuing operations

 

205,670

 

115,837

 

513,503

 

321,798

 

Income from discontinued operations, net of income taxes

 

-

 

2,703

 

-

 

26,997

 

Net income

 

205,670

 

118,540

 

513,503

 

348,795

 

Less: Net income attributable to non-controlling interests

 

1,393

 

3,894

 

29,000

 

32,257

 

Net income attributable to CBRE Group, Inc.

 

$

204,277

 

$

114,646

 

$

484,503

 

$

316,538

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Income from continuing operations attributable to CBRE Group, Inc.

 

$

0.62

 

$

0.35

 

$

1.47

 

$

0.95

 

Income from discontinued operations attributable to CBRE Group, Inc.

 

-

 

-

 

-

 

0.01

 

Net income attributable to CBRE Group, Inc.

 

$

0.62

 

$

0.35

 

$

1.47

 

$

0.96

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding for basic income per share

 

331,875,303

 

329,912,177

 

330,620,206

 

328,110,004

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Income from continuing operations attributable to CBRE Group, Inc.

 

$

0.61

 

$

0.34

 

$

1.45

 

$

0.94

 

Income from discontinued operations attributable to CBRE Group, Inc.

 

-

 

-

 

-

 

0.01

 

Net income attributable to CBRE Group, Inc.

 

$

0.61

 

$

0.34

 

$

1.45

 

$

0.95

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding for diluted income per share

 

335,106,838

 

332,519,441

 

334,171,509

 

331,762,854

 

 

 

 

 

 

 

 

 

 

 

EBITDA (1)

 

$

391,959

 

$

358,256

 

$

1,142,252

 

$

982,883

 

 


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

 



 

CBRE Press Release

February 4, 2015

Page 9

 

CBRE GROUP, INC.

SEGMENT RESULTS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2014 AND 2013

(Dollars in thousands)

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

 

2014

 

2013

 

2014

 

2013

 

Americas

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,620,490

 

$

1,359,179

 

$

5,203,766

 

$

4,504,520

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

1,065,973

 

877,128

 

3,398,443

 

2,911,168

 

Operating, administrative and other

 

318,514

 

285,067

 

1,111,091

 

1,008,518

 

Depreciation and amortization

 

41,418

 

31,726

 

149,214

 

116,564

 

Operating income

 

$

194,585

 

$

165,258

 

$

545,018

 

$

468,270

 

EBITDA

 

$

242,917

 

$

201,339

 

$

725,559

 

$

603,191

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

 

 

Revenue

 

$

740,093

 

$

432,702

 

$

2,344,252

 

$

1,217,109

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

471,619

 

240,126

 

1,605,859

 

721,461

 

Operating, administrative and other

 

198,364

 

149,966

 

582,182

 

425,189

 

Depreciation and amortization

 

15,766

 

7,395

 

64,628

 

20,496

 

Operating income

 

$

54,344

 

$

35,215

 

$

91,583

 

$

49,963

 

EBITDA

 

$

70,205

 

$

42,337

 

$

158,424

 

$

71,267

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

 

 

Revenue

 

$

277,178

 

$

255,559

 

$

967,777

 

$

872,821

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

168,751

 

159,744

 

606,960

 

556,760

 

Operating, administrative and other

 

75,329

 

69,936

 

272,946

 

245,251

 

Depreciation and amortization

 

4,044

 

3,826

 

14,661

 

12,397

 

Operating income

 

$

29,054

 

$

22,053

 

$

73,210

 

$

58,413

 

EBITDA

 

$

33,098

 

$

25,879

 

$

87,871

 

$

70,795

 

 

 

 

 

 

 

 

 

 

 

Global Investment Management

 

 

 

 

 

 

 

 

 

Revenue

 

$

125,152

 

$

168,014

 

$

468,941

 

$

537,102

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Operating, administrative and other

 

113,280

 

106,278

 

373,977

 

352,395

 

Depreciation and amortization

 

7,499

 

8,911

 

32,802

 

36,194

 

Non-amortizable asset impairment

 

-

 

98,129

 

-

 

98,129

 

Gain on disposition of real estate

 

-

 

-

 

23,028

 

-

 

Operating income (loss)

 

$

4,373

 

$

(45,304)

 

$

85,190

 

$

50,384

 

EBITDA(1)

 

$

8,724

 

$

66,886

 

$

96,262

 

$

194,609

 

 

 

 

 

 

 

 

 

 

 

Development Services

 

 

 

 

 

 

 

 

 

Revenue

 

$

24,281

 

$

18,397

 

$

65,182

 

$

53,242

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Operating, administrative and other

 

37,850

 

27,449

 

98,764

 

72,957

 

Depreciation and amortization

 

717

 

1,126

 

3,796

 

4,739

 

Gain on disposition of real estate

 

20,557

 

2,167

 

34,631

 

13,552

 

Operating income (loss)

 

$

6,271

 

$

(8,011)

 

$

(2,747)

 

$

(10,902)

 

EBITDA(2)

 

$

37,015

 

$

21,815

 

$

74,136

 

$

43,021

 

 


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

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

 



 

CBRE Press Release

February 4, 2015

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 (which we also refer to above as earnings per share)  attributable to CBRE Group, Inc., as adjusted for selected charges, and diluted income per share attributable to CBRE Group, Inc., as adjusted, excluding carried interest in the Global Investment Management segment

 

(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 4, 2015

Page 11

 

 

Net income attributable to CBRE Group, Inc., as adjusted for selected charges and diluted 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,

 

 

 

 

2014

 

 

 

2013

 

 

 

2014

 

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

 

$

204,277

 

 

 

$

114,646

 

 

 

$

484,503

 

 

 

$

316,538

 

Carried-interest incentive compensation expense pertaining to future periods, net of tax

 

 

12,341

 

 

 

3,441

 

 

 

14,430

 

 

 

5,530

 

Amortization expense related to certain intangible assets attributable to acquisitions, net of tax

 

 

10,997

 

 

 

5,851

 

 

 

48,261

 

 

 

19,708

 

Write-off of financing costs, net of tax

 

 

(120)

 

 

 

(94)

 

 

 

13,955

 

 

 

33,989

 

Non-amortizable intangible asset impairment, net of tax

 

 

-

 

 

 

74,259

 

 

 

-

 

 

 

74,259

 

Cost containment expenses, net of tax

 

 

-

 

 

 

12,922

 

 

 

-

 

 

 

12,922

 

Integration and other costs related to acquisitions, net of tax

 

 

-

 

 

 

10,256

 

 

 

-

 

 

 

11,342

 

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

 

 

$

227,495

 

 

 

$

221,281

 

 

 

$

561,149

 

 

 

$

474,288

 

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

 

 

$

0.68

 

 

 

$

0.67

 

 

 

$

1.68

 

 

 

$

1.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carried-interest pertaining to current periods, net of tax

 

 

7,041

 

 

 

35,015

 

 

 

10,007

 

 

 

55,297

 

Net income attributable to CBRE Group, Inc., as adjusted, excluding carried interest

 

 

$

220,454

 

 

 

$

186,266

 

 

 

$

551,142

 

 

 

$

418,991

 

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

 

 

$

0.66

 

 

 

$

0.56

 

 

 

$

1.65

 

 

 

$

1.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding for diluted income per share

 

 

335,106,838

 

 

 

332,519,441

 

 

 

334,171,509

 

 

 

331,762,854

 

 



 

CBRE Press Release

February 4, 2015

Page 12

 

 

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,

 

 

 

 

2014

 

 

 

2013

 

 

 

2014

 

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

 

$

204,277

 

 

 

$

114,646

 

 

 

$

484,503

 

 

 

$

316,538

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization(1)

 

 

69,444

 

 

 

52,994

 

 

 

265,101

 

 

 

191,270

 

Non-amortizable intangible asset impairment

 

 

-

 

 

 

98,129

 

 

 

-

 

 

 

98,129

 

Interest expense(2)

 

 

27,709

 

 

 

27,522

 

 

 

112,035

 

 

 

138,379

 

Write-off of financing costs

 

 

-

 

 

 

-

 

 

 

23,087

 

 

 

56,295

 

Provision for income taxes(3)

 

 

92,441

 

 

 

66,252

 

 

 

263,759

 

 

 

188,561

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,912

 

 

 

1,287

 

 

 

6,233

 

 

 

6,289

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA(4)

 

 

$

391,959

 

 

 

$

358,256

 

 

 

$

1,142,252

 

 

 

$

982,883

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carried-interest incentive compensation expense

 

 

20,447

 

 

 

5,709

 

 

 

23,873

 

 

 

9,160

 

Integration and other costs related to acquisitions

 

 

-

 

 

 

11,066

 

 

 

-

 

 

 

12,591

 

Cost containment expenses

 

 

-

 

 

 

17,621

 

 

 

-

 

 

 

17,621

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA, as adjusted (4)

 

 

$

412,406

 

 

 

$

392,652

 

 

 

$

1,166,125

 

 

 

$

1,022,255

 

________________________

 

 

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

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

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

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

 

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

 


 


 

CBRE Press Release

February 4, 2015

Page 13

 

 

 

 

Three Months Ended
December 31,

 

 

Twelve Months Ended
December 31,

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Americas

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

138,434

 

 

$

400,487

 

 

$

387,302

 

 

$

539,373

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

41,418

 

 

31,726

 

 

149,214

 

 

116,564

 

Interest expense, net

 

3,638

 

 

15,259

 

 

15,959

 

 

85,230

 

Write-off of financing costs

 

-

 

 

-

 

 

23,087

 

 

56,295

 

Royalty and management service expense (income)

 

5,245

 

 

(274,928)

 

 

(13,411)

 

 

(295,154)

 

Provision for income taxes

 

 

54,182

 

 

 

28,795

 

 

 

163,408

 

 

 

100,883

 

EBITDA

 

 

$

242,917

 

 

 

$

201,339

 

 

 

$

725,559

 

 

 

$

603,191

 

Integration and other costs related to acquisitions

 

-

 

 

1,101

 

 

-

 

 

1,101

 

EBITDA, as adjusted

 

$

242,917

 

 

$

202,440

 

 

$

725,559

 

 

$

604,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

28,088

 

 

$

(252,570)

 

 

$

13,383

 

 

$

(248,888)

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

15,766

 

 

7,395

 

 

64,628

 

 

20,496

 

Interest expense, net

 

12,856

 

 

2,257

 

 

50,344

 

 

2,060

 

Royalty and management service (income) expense

 

(6,504)

 

 

263,822

 

 

(5,210)

 

 

267,199

 

Provision for income taxes

 

 

19,999

 

 

 

21,433

 

 

 

35,279

 

 

 

30,400

 

EBITDA

 

 

$

70,205

 

 

 

$

42,337

 

 

 

$

158,424

 

 

 

$

71,267

 

Integration and other costs related to acquisitions

 

-

 

 

9,556

 

 

-

 

 

9,556

 

Cost containment expenses

 

 

-

 

 

 

4,118

 

 

 

-

 

 

 

4,118

 

EBITDA, as adjusted

 

$

70,205

 

 

$

56,011

 

 

$

158,424

 

 

$

84,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

26,397

 

 

$

4,823

 

 

$

35,797

 

 

$

14,876

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

4,044

 

 

3,826

 

 

14,661

 

 

12,397

 

Interest expense (income), net

 

673

 

 

(1,269)

 

 

2,250

 

 

875

 

Royalty and management service (income) expense

 

(22)

 

 

9,952

 

 

13,876

 

 

23,184

 

Provision for income taxes

 

 

2,006

 

 

 

8,547

 

 

 

21,287

 

 

 

19,463

 

EBITDA

 

 

$

33,098

 

 

 

$

25,879

 

 

 

$

87,871

 

 

 

$

70,795

 

Integration and other costs related to acquisitions

 

-

 

 

409

 

 

-

 

 

409

 

Cost containment expenses

 

-

 

 

3,942

 

 

-

 

 

3,942

 

EBITDA, as adjusted

 

$

33,098

 

 

$

30,230

 

 

$

87,871

 

 

$

75,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Investment Management

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

(10,607)

 

 

$

(49,673)

 

 

$

7,530

 

 

$

(7,056)

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization (1)

 

7,499

 

 

8,911

 

 

32,802

 

 

36,670

 

Non-amortizable intangible assetimpairment

 

-

 

 

98,129

 

 

-

 

 

98,129

 

Interest expense, net (2)

 

7,979

 

 

8,922

 

 

33,896

 

 

37,286

 

Royalty and management service expense

 

1,281

 

 

1,154

 

 

4,745

 

 

4,771

 

Provision for (benefit of) income taxes

 

2,572

 

 

(557)

 

 

17,289

 

 

24,809

 

EBITDA (3)

 

$

8,724

 

 

$

66,886

 

 

$

96,262

 

 

$

194,609

 

Carried-interest incentive compensation expense

 

20,447

 

 

5,709

 

 

23,873

 

 

9,160

 

Integration and other costs related to acquisitions

 

-

 

 

-

 

 

-

 

 

1,525

 

Cost containment expenses

 

-

 

 

9,561

 

 

-

 

 

9,561

 

EBITDA, as adjusted (3)

 

$

29,171

 

 

$

82,156

 

 

$

120,135

 

 

$

214,855

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Development Services

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

21,965

 

 

$

11,579

 

 

$

40,491

 

 

$

18,233

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization (4)

 

717

 

 

1,136

 

 

3,796

 

 

5,143

 

Interest expense, net (5)

 

651

 

 

1,066

 

 

3,353

 

 

6,639

 

Provision for income taxes (6)

 

13,682

 

 

8,034

 

 

26,496

 

 

13,006

 

EBITDA(7)

 

$

37,015

 

 

$

21,815

 

 

$

74,136

 

 

$

43,021

 

_______________________

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

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

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

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

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

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

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

 



 

CBRE Press Release

February 4, 2015

Page 14

 

 

CBRE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

 

 

 

 

December 31,

 

December 31,

 

 

 

2014

 

2013

 

Assets:

 

 

 

 

 

Cash and cash equivalents (1)

 

$

740,884

 

$

491,912

 

Restricted cash

 

28,090

 

61,155

 

Receivables, net

 

1,736,229

 

1,486,489

 

Warehouse receivables (2)

 

506,294

 

381,545

 

Property and equipment, net

 

497,926

 

458,596

 

Real estate assets (3)

 

45,604

 

126,954

 

Goodwill and other intangibles, net

 

3,136,181

 

3,131,702

 

Investments in and advances to unconsolidated subsidiaries

 

218,280

 

198,696

 

Other assets, net

 

775,396

 

661,365

 

Total assets

 

$

7,684,884

 

$

6,998,414

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Current liabilities, excluding debt

 

$

2,301,493

 

$

1,984,381

 

Warehouse lines of credit (2)

 

501,185

 

374,597

 

Revolving credit facility

 

4,840

 

142,484

 

5.00% senior notes

 

800,000

 

800,000

 

Senior secured term loans

 

645,613

 

685,263

 

6.625% senior notes

 

-

 

350,000

 

5.25% senior notes

 

426,813

 

-

 

Other debt

 

2,808

 

5,433

 

Notes payable on real estate (4)

 

42,843

 

130,472

 

Other long-term liabilities

 

657,891

 

589,778

 

Total liabilities

 

5,383,486

 

5,062,408

 

 

 

 

 

 

 

CBRE Group, Inc. stockholders’ equity

 

2,259,830

 

1,895,785

 

Non-controlling interests

 

41,568

 

40,221

 

Total equity

 

2,301,398

 

1,936,006

 

Total liabilities and equity

 

$

7,684,884

 

$

6,998,414

 

 

 

________________________

 

 

(1)         Includes $58.0 million and $32.4 million of cash in consolidated funds and other entities not available for Company use as of December 31, 2014 and 2013, 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 are recourse to the Company as of December 31, 2013.