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8-K - 8-K - CBRE GROUP, INC.a15-16398_18k.htm
EX-99.2 - EX-99.2 - CBRE GROUP, INC.a15-16398_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 STRONG FINANCIAL

RESULTS FOR THE SECOND QUARTER OF 2015

 

Fee Revenue up 12% (19% in local currency)

Normalized EBITDA up 16% (22% in local currency)

Adjusted Earnings Per Share up 17% (31% without currency effects)

 

 

Los Angeles, CA – July 29, 2015 — CBRE Group, Inc. (NYSE:CBG) today reported strong revenue and earnings growth for the second quarter ended June 30, 2015.

 

Second-Quarter 2015 Results*

 

·                 Revenue for the quarter totaled $2.4 billion, an increase of 12% (19% in local currency1).  Fee revenue2 also increased 12% (19% in local currency) to $1.8 billion.

 

·                 On a U.S. GAAP basis, net income rose 19% to $125.0 million.  GAAP earnings per diluted share rose 16% to $0.37.

 

·                 Adjusted net income3 rose 18% to $140.0 million, while adjusted earnings per share3 improved 17% to $0.42.  For the second quarter of 2015, selected charges (net of income taxes) totaled $15.0 million.

 

·                 Normalized EBITDA4 increased 16% to $303.8 million and EBITDA4 rose 14% to $296.9 million. Normalized EBITDA margin on fee revenue was 17.1%, a 60 basis point increase from the prior year second quarter.

 

·                 These strong results were achieved despite negative foreign currency effects in the quarter. Foreign currency movement, including the marking of currency hedges to market, reduced EBITDA by approximately $27.3 million (or $0.05 per share, net of tax) as compared to the prior-year second quarter.

 

 

*All percentage changes versus prior-year periods are in U.S. dollars except where noted.

 



 

CBRE Press Release

July 29, 2015

Page 2

 

Management Commentary

“We exhibited broad strength in our business during the second quarter, as our talented people, coupled with our high quality, integrated service offering, produced excellent outcomes for our clients and our shareholders,” said Bob Sulentic, CBRE’s president and chief executive officer. “We were especially pleased to achieve outstanding top-line growth, operating leverage and margin expansion in all three regions.”

 

In EMEA (Europe, the Middle East & Africa), revenue rose 15% (32% in local currency). Growth was vigorous in most EMEA countries and across all business lines.  Revenue continued to increase strongly in the Americas, rising 16% (18% in local currency).  All Americas business lines posted double-digit revenue growth for the fourth consecutive quarter. In Asia Pacific, revenue improved 9% (21% in local currency). In local currency, Australia and India were strong contributors to the region’s revenue growth.

 

CBRE continued to capitalize on strong capital flows into commercial real estate. Global property sales revenue surged 23% (32% in local currency) with growth in the vast majority of countries worldwide. Commercial mortgage services revenue growth exceeded 40% for the second consecutive quarter.  Loan activity with the U.S. Government-Sponsored Enterprises continued to grow rapidly.

 

Global leasing revenue rose 9% (15% in local currency). The Americas recorded its eighth consecutive quarter of double-digit leasing revenue growth, led by Brazil, Mexico and the U.S. Australia, Germany, and the United Kingdom, among others, also generated significantly higher leasing revenue.

 

Global Corporate Services, CBRE’s occupier outsourcing business line, continued its long-term secular growth, despite negative foreign currency trends. Global Corporate Services revenue (excluding related transaction revenue, which is accounted for in sales and leasing revenue), improved 9% (17% in local currency). Fee revenue (excluding related transaction revenue) from this business line increased 6% (15% in local currency). CBRE had one of its best quarters for total outsourcing contracts – including 32 expansions of existing client relationships, a new high for the company.

 

The ongoing growth of Global Corporate Services is being fueled by large space occupiers’ increasing preference for purchasing integrated real estate and facilities services on an account basis. CBRE is extremely well positioned to benefit from this trend. Its service offering for occupiers will be further enhanced with the planned acquisition of the Global Workplace Solutions business of Johnson Controls, Inc., announced on March 31, 2015. The acquisition of Global Workplace Solutions, a leading provider of integrated facilities management services on a global basis, remains on course to be completed later in the third quarter or early in the fourth quarter of 2015, subject to, among other things, receipt of customary regulatory approvals.

 

The company’s Valuation and Asset Services business lines both achieved strong growth during the second quarter.  Valuation revenue rose 23% (35% in local currency) with notable growth in the Americas and EMEA.  Asset Services revenue jumped 21% (28% in local currency) while fee revenue from this business line increased 17% (24% in local currency).

 

Reflecting the company’s strong financial position, Standard & Poor’s raised CBRE’s investment grade credit rating to BBB from BBB- on July 28, 2015.

 



 

CBRE Press Release

July 29, 2015

Page 3

 

Second-Quarter 2015 Segment Results

 

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

 

·                 Revenue rose 16% (18% in local currency) to $1.4 billion. Fee revenue rose 18% (19% in local currency) to $1.06 billion.

·                 Normalized EBITDA increased 23% to $207.6 million and EBITDA increased 20% to $203.4 million.

·                 Operating income rose 20% to $152.9 million.

 

EMEA Region (primarily Europe)

 

·                 Revenue improved 15% (32% in local currency) to $585.7 million. Fee revenue rose 14% (33% in local currency) to $409.1 million. Revenue growth was broad-based across the region, led by Germany, Spain and the United Kingdom. Performance in these countries was strong even after the negative effects of currency movement.

·                 EBITDA and Normalized EBITDA both totaled $47.8 million, an increase of 75%.

·                 Operating income totaled $32.5 million, an increase of 173%.

 

Asia Pacific Region (Asia, Australia and New Zealand)

 

·                 Revenue increased 9% (21% in local currency) to $261.8 million. Fee revenue rose 3% (17% in local currency) to $200.1 million. Performance improved in several countries, particularly Australia and India.

·                 Normalized EBITDA increased 21% to $28.7 million and EBITDA increased 19% to $28.2 million.

·                 Operating income totaled $24.3 million, an increase of 19%.

 

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

 

·                 Revenue totaled $94.1 million, a decrease of 26% (18% in local currency).

·                 Normalized EBITDA decreased to $18.4 million and EBITDA decreased to $16.3 million.

·                 Operating income decreased to $12.7 million.

·                 The decline in revenue and earnings was driven by minimal incentive fees and carried interest achieved in this year’s second quarter, the performance of the Real Estate Investment Trust market in second-quarter 2015 compared with second-quarter 2014, as well as negative foreign currency movement.

·                 Assets Under Management (AUM) totaled $88.4 billion. Compared with the second quarter of 2014, AUM was up $2.1 billion in local currency, but down when converted into U.S. dollars.

 

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

 

·                 Revenue increased to $14.4 million.

·                 EBITDA decreased to $1.2 million.

·                 Operating income improved to $6.3 million.

·                 Development projects in process totaled $6.0 billion, up $500 million over the first quarter of 2015. The pipeline inventory totaled $3.7 billion, up $100 million over the first quarter of 2015.

 



 

CBRE Press Release

July 29, 2015

Page 4

 

Six-Month Results

 

·                 Revenue for the six months ended June 30, 2015 totaled $4.4 billion, an increase of 11% (18% in local currency).  Fee revenue increased 11% (17% in local currency) to $3.2 billion.

 

·                 On a U.S. GAAP basis, net income rose 26% to $218.0 million. GAAP earnings per diluted share rose 25% to $0.65.

 

·                 Adjusted net income rose 22% to $246.0 million, while adjusted earnings per share improved 22% to $0.73.  For the six months ended June 30, 2015 selected charges (net of income taxes) totaled $28.0 million.

 

·                 Normalized EBITDA increased 19% to $550.5 million and EBITDA rose 19% to $543.1 million.

 

·                 Foreign currency movement, including the marking of currency hedges to market, reduced EBITDA by approximately $14.3 million (or $0.03 per share, net of tax) as compared to the prior-year six month period.

 

Business Outlook

 

“At the mid-point of 2015, CBRE is on course for another year of very strong financial performance,” Mr. Sulentic said. “Our business has positive underlying momentum and we are seeing great benefit from the steps we have taken to enhance our service delivery for clients and fortify our market position.”

 

CBRE believes its full-year 2015 performance is likely to be toward the upper end of its guidance range of $1.90 to $1.95 for adjusted earnings per share.

 

 

Conference Call Details

 

The Company’s second-quarter earnings conference call will be held today (Wednesday, July 29, 2015) at 8:00 a.m. Eastern Time.  A webcast, along with an associated slide presentation, 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 1 p.m. Eastern Time on July 29, 2015, and ending at midnight Eastern Time on August 5, 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 13612139.  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

July 29, 2015

Page 5

 

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 (including the expected closing date of the Global Workplace Solutions acquisition), financial performance (including adjusted earnings per share expectations) and business outlook.  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; increases in unemployment and general slowdowns in commercial activity; trends in pricing and risk assumption for commercial real estate services; the effect of significant movements in average cap rates across different property types; 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; 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 diversify our revenue model to offset cyclical economic trends in the commercial real estate industry; our ability to attract new user and investor clients; our ability to retain major clients and renew related contracts; 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 ability to control costs relative to revenue growth; variations in historically customary seasonal patterns that cause our business not to perform as expected; changes in domestic and international law and regulatory environments (including relating to anti-corruption, anti-money laundering, trade sanctions, currency controls and other trade control laws), particularly in Russia, Eastern Europe and the Middle East, due to the level of political instability in those regions; foreign currency fluctuations; 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 our pending Global Workplace Solutions (“GWS”) acquisition as well as of other companies we may acquire (including our ability to close the GWS acquisition and the timing of that closing), and our ability to achieve expected cost synergies relating to those acquisitions; our and our employees’ ability to execute on, and adapt to, information technology strategies and trends ; 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 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; our leverage and our ability to perform under our credit facilities, indentures and other debt instruments, including additional debt that we may incur in connection with the acquisition of the GWS business; 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; 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; our ability to compete globally, or in specific geographic markets or business segments that are material to us; 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; our ability to maintain our effective tax rate at or below current levels; 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; 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 both our Annual Report on Form 10-K for the year ended December 31, 2014 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, as well as in the Company’s press releases and other periodic filings with the Securities and Exchange Commission (the SEC). 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) adjusted earnings per share guidance included in this release to the most directly comparable GAAP measure because this cannot be done without unreasonable effort.

 



 

CBRE Press Release

July 29, 2015

Page 6

 

The terms “fee revenue,” “adjusted net income,” “adjusted earnings per share” (or adjusted EPS), “EBITDA” and “Normalized EBITDA,” all of which CBRE uses in this press release, are non-GAAP financial measures under SEC guidelines, and you should refer to the footnotes below as well as the “Non-GAAP Financial Measures” section in this press release for a further explanation of these measures.  We have also included in that section reconciliations of these measures in specific periods to their most directly comparable financial measure calculated and presented in accordance with U.S. GAAP for those periods.

 

1 Local currency percentage change is calculated by comparing current period results at prior period exchange rates versus prior period results.

 

2 Fee revenue excludes both client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients.

 

3 Adjusted net income and adjusted earnings per share (or adjusted EPS) exclude the effect of selected charges from U.S. GAAP net income and U.S. GAAP earnings per diluted share.  Selected charges during the periods presented included the write-off of financing costs, amortization expense related to certain intangible assets attributable to acquisitions, integration and other costs related to acquisitions and certain carried-interest incentive compensation expense.

 

4 EBITDA represents earnings before net interest expense, write-off of financing costs, income taxes, depreciation and amortization.  Amounts shown for Normalized EBITDA further remove (from EBITDA) the impact of certain cash and non-cash charges related to acquisitions and certain carried-interest incentive compensation expense.

 



 

CBRE Press Release

July 29, 2015

Page 7

 

CBRE GROUP, INC.

OPERATING RESULTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014

(Dollars in thousands, except share data)

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

  $

2,390,506

 

  $

2,126,806

 

  $

4,443,009

 

  $

3,987,648

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

1,487,974

 

1,314,473

 

2,778,751

 

2,475,933

 

Operating, administrative and other

 

610,158

 

566,202

 

1,141,933

 

1,094,597

 

Depreciation and amortization

 

70,605

 

63,295

 

140,451

 

128,498

 

Total costs and expenses

 

2,168,737

 

1,943,970

 

4,061,135

 

3,699,028

 

 

 

 

 

 

 

 

 

 

 

Gain on disposition of real estate

 

6,986

 

23,170

 

6,986

 

29,867

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

228,755

 

206,006

 

388,860

 

318,487

 

 

 

 

 

 

 

 

 

 

 

Equity income from unconsolidated subsidiaries

 

6,693

 

9,264

 

22,144

 

24,264

 

Other (loss) income

 

(1,069)

 

6,364

 

18

 

11,165

 

Interest income

 

1,402

 

1,146

 

3,699

 

2,723

 

Interest expense

 

26,154

 

28,470

 

52,368

 

56,485

 

Write-off of financing costs

 

 

 

2,685

 

 

Income before provision for income taxes

 

209,627

 

194,310

 

359,668

 

300,154

 

Provision for income taxes

 

76,474

 

64,111

 

133,377

 

102,013

 

Net income

 

133,153

 

130,199

 

226,291

 

198,141

 

Less: Net income attributable to non-controlling interests

 

8,124

 

24,735

 

8,325

 

25,014

 

Net income attributable to CBRE Group, Inc.

 

  $

125,029

 

  $

105,464

 

  $

217,966

 

  $

173,127

 

 

 

 

 

 

 

 

 

 

 

Basic income per share:

 

 

 

 

 

 

 

 

 

Net income per share attributable to CBRE Group, Inc.

 

  $

0.38

 

  $

0.32

 

  $

0.66

 

  $

0.52

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding for basic income per share

 

331,999,935

 

330,133,061

 

331,988,489

 

330,084,525

 

 

 

 

 

 

 

 

 

 

 

Diluted income per share:

 

 

 

 

 

 

 

 

 

Net income per share attributable to CBRE Group, Inc.

 

  $

0.37

 

  $

0.32

 

  $

0.65

 

  $

0.52

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding for diluted income per share

 

336,154,524

 

333,918,620

 

335,926,626

 

333,634,342

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

  $

296,860

 

  $

260,194

 

  $

543,148

 

  $

457,400

 

 



 

CBRE Press Release

July 29, 2015

Page 8

 

CBRE GROUP, INC.

SEGMENT RESULTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

Americas

 

 

 

 

 

 

 

 

 

Revenue

 

   $

1,434,489

 

   $

1,235,720

 

   $

2,662,105

 

   $

2,257,401

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

924,509

 

802,311

 

1,711,626

 

1,462,581

 

Operating, administrative and other

 

312,471

 

270,477

 

570,633

 

511,144

 

Depreciation and amortization

 

44,591

 

35,187

 

87,541

 

69,345

 

Operating income

 

   $

152,918

 

   $

127,745

 

   $

292,305

 

   $

214,331

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

   $

203,411

 

   $

169,404

 

   $

390,732

 

   $

295,166

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

 

 

Revenue

 

   $

585,714

 

   $

510,987

 

   $

1,079,738

 

   $

1,029,666

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

400,947

 

360,190

 

763,450

 

731,737

 

Operating, administrative and other

 

137,628

 

123,571

 

262,523

 

248,104

 

Depreciation and amortization

 

14,607

 

15,319

 

29,399

 

32,782

 

Operating income

 

   $

32,532

 

   $

11,907

 

   $

24,366

 

   $

17,043

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

   $

47,810

 

   $

27,369

 

   $

55,388

 

   $

50,734

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

 

 

Revenue

 

   $

261,828

 

   $

241,214

 

   $

470,194

 

   $

436,857

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

162,518

 

151,972

 

303,675

 

281,615

 

Operating, administrative and other

 

71,190

 

65,487

 

127,849

 

123,236

 

Depreciation and amortization

 

3,783

 

3,371

 

7,629

 

6,439

 

Operating income

 

   $

24,337

 

   $

20,384

 

   $

31,041

 

   $

25,567

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

   $

28,154

 

   $

23,765

 

   $

38,704

 

   $

32,006

 

 

 

 

 

 

 

 

 

 

 

Global Investment Management

 

 

 

 

 

 

 

 

 

Revenue

 

   $

94,053

 

   $

126,314

 

   $

204,277

 

   $

238,777

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Operating, administrative and other

 

74,334

 

93,960

 

148,252

 

178,958

 

Depreciation and amortization

 

7,061

 

8,452

 

14,672

 

17,818

 

Gain on disposition of real estate

 

 

23,028

 

 

23,028

 

Operating income

 

   $

12,658

 

   $

46,930

 

   $

41,353

 

   $

65,029

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

   $

16,304

 

   $

38,129

 

   $

51,184

 

   $

66,392

 

 

 

 

 

 

 

 

 

 

 

Development Services

 

 

 

 

 

 

 

 

 

Revenue

 

   $

14,422

 

   $

12,571

 

   $

26,695

 

   $

24,947

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Operating, administrative and other

 

14,535

 

12,707

 

32,676

 

33,155

 

Depreciation and amortization

 

563

 

966

 

1,210

 

2,114

 

Gain on disposition of real estate

 

6,986

 

142

 

6,986

 

6,839

 

Operating income (loss)

 

   $

6,310

 

   $

(960)

 

   $

(205)

 

   $

(3,483)

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

   $

1,181

 

   $

1,527

 

   $

7,140

 

   $

13,102

 

 



 

CBRE Press Release

July 29, 2015

Page 9

 

Non-GAAP Financial Measures

 

As noted above, the following measures are considered “non-GAAP financial measures” under SEC guidelines:

 

(i)

Fee revenue

(ii)

Net income attributable to CBRE Group, Inc., as adjusted (which we also refer to as “adjusted net income”)

(iii)

Diluted income per share attributable to CBRE Group, Inc. shareholders, as adjusted (which we also refer to as “adjusted earnings per share” or “adjusted EPS”)

(iv)

EBITDA and EBITDA, as adjusted (the latter of which we also refer to as “Normalized EBITDA”)

 

None of these measures is a recognized measurement under U.S. generally accepted accounting principles, or U.S. GAAP, and when analyzing our operating performance, readers should use them in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.  Because not all companies use identical calculations, our presentation of these measures may not be comparable to similarly titled measures of other companies.

 

Our management generally uses these non-GAAP financial measures to evaluate operating performance and for other discretionary purposes, and the Company believes that these measures provide a more complete understanding of ongoing operations, enhance comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected charges that may obscure trends in the underlying performance of our business.  The Company further uses certain of these measures, and believes that they are useful to investors, for purposes described below.

 

With respect to fee revenue:  The Company believes that investors may find this measure useful to analyze the financial performance of our Global Corporate Services (GCS) and Asset Services business lines and our business generally because it excludes costs reimbursable by clients, and as such provides greater visibility into the underlying performance of our business.

 

With respect to adjusted net income, adjusted EPS, EBITDA and Normalized EBITDA:  The Company believes that investors may find these measures useful in evaluating our operating performance compared to that of other companies in our industry because their calculations generally eliminate the accounting effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions, and—in the case of EBITDA and Normalized EBITDA—the effects of financings and income tax and the accounting effects of capital spending.  All of these measures may vary for different companies for reasons unrelated to overall operating performance.  In the case of EBITDA and Normalized EBITDA, these measures are not intended to be measures of free cash flow for our management’s discretionary use because they do not consider cash requirements such as tax and debt service payments.  The EBITDA and Normalized EBITDA measures calculated herein may also differ from the amounts calculated under similarly titled definitions in our credit facilities and debt instruments, which amounts are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.  The Company also uses Normalized EBITDA and adjusted EPS as significant components when measuring our operating performance under our employee incentive compensation programs.

 



 

CBRE Press Release

July 29, 2015

Page 10

 

Fee revenue is calculated as follows (dollars in thousands):

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

Revenue

 

$

2,390,506

 

$

2,126,806

 

$

4,443,009

 

$

3,987,648

 

Less: Client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients

 

610,283

 

535,082

 

1,207,646

 

1,067,576

 

Fee revenue

 

$

1,780,223

 

$

1,591,724

 

$

3,235,363

 

$

2,920,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Corporate Services

 

 

 

 

 

 

 

 

 

Revenue (excluding related transaction revenue)

 

$

745,773

 

$

682,501

 

 

 

 

 

Less: Client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients

 

477,042

 

428,582

 

 

 

 

 

Fee revenue (excluding related transaction revenue)

 

$

268,731

 

$

253,919

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Services

 

 

 

 

 

 

 

 

 

Revenue (excluding related transaction revenue)

 

$

254,650

 

$

210,444

 

 

 

 

 

Less: Client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients

 

133,241

 

106,500

 

 

 

 

 

Fee revenue (excluding related transaction revenue)

 

$

121,409

 

$

103,944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,434,489

 

$

1,235,720

 

 

 

 

 

Less: Client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients

 

371,976

 

334,629

 

 

 

 

 

Fee revenue

 

$

1,062,513

 

$

901,091

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

 

 

Revenue

 

$

585,714

 

$

510,987

 

 

 

 

 

Less: Client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients

 

176,578

 

153,154

 

 

 

 

 

Fee revenue

 

$

409,136

 

$

357,833

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

 

 

Revenue

 

$

261,828

 

$

241,214

 

 

 

 

 

Less: Client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients

 

61,729

 

47,299

 

 

 

 

 

Fee revenue

 

$

200,099

 

$

193,915

 

 

 

 

 

 



 

CBRE Press Release

July 29, 2015

Page 11

 

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

 

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

125,029

 

$

105,464

 

$

217,966

 

$

173,127

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

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

 

10,766

 

11,681

 

21,875

 

25,440

 

Integration and other costs related to acquisitions, net of tax

 

2,926

 

 

4,886

 

 

Carried interest incentive compensation, net of tax

 

1,291

 

1,564

 

(400)

 

2,516

 

Write-off of financing costs, net of tax

 

 

 

1,638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

140,012

 

$

118,709

 

$

245,965

 

$

201,083

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.42

 

$

0.36

 

$

0.73

 

$

0.60

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding for diluted income per share

 

336,154,524

 

333,918,620

 

335,926,626

 

333,634,342

 

 

 

EBITDA and EBITDA, as adjusted (or Normalized EBITDA) are calculated as follows (dollars in thousands):

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

125,029

 

$

105,464

 

$

217,966

 

$

173,127

 

 

 

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

70,605

 

63,295

 

140,451

 

128,498

 

Interest expense

 

26,154

 

28,470

 

52,368

 

56,485

 

Write-off of financing costs

 

 

 

2,685

 

 

Provision for income taxes

 

76,474

 

64,111

 

133,377

 

102,013

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

Interest income

 

1,402

 

1,146

 

3,699

 

2,723

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

296,860

 

260,194

 

543,148

 

457,400

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

Integration and other acquisition related costs

 

4,805

 

 

8,018

 

 

Carried interest incentive compensation to match current period revenue

 

2,115

 

2,567

 

(657)

 

4,130

 

 

 

 

 

 

 

 

 

 

 

EBITDA, as adjusted

 

$

303,780

 

$

262,761

 

$

550,509

 

$

461,530

 

 



 

CBRE Press Release

July 29, 2015

Page 12

 

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

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

Americas

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

96,857

 

$

92,304

 

$

192,059

 

$

162,770

Adjustments:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

44,591

 

35,187

 

87,541

 

69,345

Interest expense (income), net

 

4,247

 

(226)

 

7,793

 

8,960

Write-off of financing costs

 

 

 

2,685

 

Royalty and management service expense (income)

 

2,370

 

(2,843)

 

2,478

 

(3,707)

Provision for income taxes

 

55,346

 

44,982

 

98,176

 

57,798

EBITDA

 

203,411

 

169,404

 

390,732

 

295,166

Integration and other costs related to acquisitions

 

4,195

 

 

7,408

 

EBITDA, as adjusted

 

$

207,606

 

$

169,404

 

$

398,140

 

$

295,166

 

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

 

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

 

$

19,929

 

$

(6,967)

 

$

1,443

 

$

(13,957)

Adjustments:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

14,607

 

15,319

 

29,399

 

32,782

Interest expense, net

 

11,375

 

17,184

 

22,822

 

24,343

Royalty and management service income

 

(4,975)

 

(3,070)

 

(6,192)

 

(6,955)

Provision for income taxes

 

6,874

 

4,903

 

7,916

 

14,521

EBITDA

 

$

47,810

 

$

27,369

 

$

55,388

 

$

50,734

Integration and other costs related to acquisitions

 

30

 

 

30

 

EBITDA, as adjusted

 

$

47,840

 

$

27,369

 

$

55,418

 

$

50,734

 

 

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

10,949

 

$

8,246

 

$

13,608

 

$

4,002

Adjustments:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

3,783

 

3,371

 

7,629

 

6,439

Interest expense, net

 

991

 

768

 

1,889

 

1,103

Royalty and management service expense

 

1,586

 

4,623

 

1,649

 

8,262

Provision for income taxes

 

10,845

 

6,757

 

13,929

 

12,200

EBITDA

 

$

28,154

 

$

23,765

 

$

38,704

 

$

32,006

Integration and other costs related to acquisitions

 

580

 

 

580

 

EBITDA, as adjusted

 

$

28,734

 

$

23,765

 

$

39,284

 

$

32,006

 

 

 

 

 

 

 

 

 

Global Investment Management

 

 

 

 

 

 

 

 

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

 

$

(2,688)

 

$

12,234

 

$

8,020

 

$

15,062

Adjustments:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

7,061

 

8,452

 

14,672

 

17,818

Interest expense, net

 

7,818

 

8,745

 

15,502

 

17,586

Royalty and management service expense

 

1,019

 

1,290

 

2,065

 

2,400

Provision for income taxes

 

3,094

 

7,408

 

10,925

 

13,526

EBITDA

 

16,304

 

38,129

 

51,184

 

66,392

Carried interest incentive compensation

 

2,115

 

2,567

 

(657)

 

4,130

EBITDA, as adjusted

 

$

18,419

 

$

40,696

 

$

50,527

 

$

70,522

 

 

 

 

 

 

 

 

 

Development Services

 

 

 

 

 

 

 

 

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

 

$

(18)

 

$

(353)

 

$

2,836

 

$

5,250

Adjustments:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

563

 

966

 

1,210

 

2,114

Interest expense, net

 

321

 

853

 

663

 

1,770

Provision for income taxes

 

315

 

61

 

2,431

 

3,968

EBITDA

 

$

1,181

 

$

1,527

 

$

7,140

 

$

13,102

 



 

CBRE Press Release

July 29, 2015

Page 13

 

CBRE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

 

 

 

June 30,

 

December 31,

 

 

2015

 

2014

Assets:

 

 

 

 

Cash and cash equivalents1

 

$

336,422

 

$

740,884

Restricted cash

 

66,011

 

28,090

Receivables, net

 

1,604,620

 

1,736,229

Warehouse receivables2

 

750,816

 

506,294

Property and equipment, net

 

484,032

 

497,926

Real estate assets3

 

36,984

 

45,604

Goodwill and other intangibles, net

 

3,119,921

 

3,136,181

Investments in and advances to unconsolidated subsidiaries

 

222,539

 

218,280

Other assets, net

 

838,914

 

737,617

Total assets

 

$

7,460,259

 

$

7,647,105

 

 

 

 

 

Liabilities:

 

 

 

 

Current liabilities, excluding debt

 

$

1,834,768

 

$

2,303,948

Warehouse lines of credit2

 

743,592

 

501,185

Revolving credit facility

 

 

4,840

5.00% senior notes

 

800,000

 

800,000

Senior secured term loans

 

496,875

 

645,613

5.25% senior notes

 

426,774

 

426,813

Other debt

 

2,296

 

2,808

Notes payable on real estate4

 

24,819

 

42,843

Other long-term liabilities

 

627,607

 

617,657

Total liabilities

 

4,956,731

 

5,345,707

 

 

 

 

 

Equity:

 

 

 

 

CBRE Group, Inc. stockholders’ equity

 

2,459,592

 

2,259,830

Non-controlling interests

 

43,936

 

41,568

Total equity

 

2,503,528

 

2,301,398

Total liabilities and equity

 

$

7,460,259

 

$

7,647,105

 


1

Includes $58.4 million and $58.0 million of cash in consolidated funds and other entities not available for Company use as of June 30, 2015 and December 31, 2014, 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 (none of which is recourse to the Company).