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EX-99.2 - EX-99.2 - CBRE GROUP, INC.a16-9378_1ex99d2.htm
8-K - 8-K - CBRE GROUP, INC.a16-9378_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:

 

Steve Iaco

 

Senior Managing Director

 

Investor Relations & Corporate Communications

 

212.984.6535

 

 

CBRE GROUP, INC. REPORTS STRONG FINANCIAL

RESULTS FOR FIRST-QUARTER 2016

 

Revenue up 39% (42% local currency)

Fee Revenue up 25% (28% local currency)

GAAP EPS of $0.24; Adjusted EPS of $0.36

 

Los Angeles, CA — April 28, 2016 — CBRE Group, Inc. (NYSE:CBG) today reported strong financial results for the first quarter ended March 31, 2016.

 

First-Quarter 2016 Results*

 

·                  Revenue for the first quarter totaled $2.8 billion, an increase of 39% (42% local currency(1)).  Fee revenue(2) increased 25% (28% local currency) to $1.8 billion.  The first quarter of 2016 included approximately $654 million of revenue from the acquired Global Workplace Solutions business.  Excluding the acquired Global Workplace Solutions business, revenue and fee revenue were both up 7% (10% local currency).

 

·                  On a U.S. GAAP basis, net income and earnings per diluted share decreased to $82.2 million and $0.24, respectively.  GAAP net income for the first quarter of 2016 was affected by $17.0 million of acquisition-related non-cash amortization, $11.6 million of integration costs associated with the Global Workplace Solutions acquisition, as well as $8.8 million incurred in the cost elimination program that the company referenced in its fourth quarter 2015 earnings release.

 

·                  Adjusted net income(3) rose 14% to $120.8 million, while adjusted earnings per share improved 13% to $0.36.

 

·                  Foreign currency movement, primarily the impact of marking to market of currency hedges, reduced earnings per diluted share and adjusted earnings per diluted share, by approximately $0.04 as compared to the prior-year first quarter.

 

·                  EBITDA(4) rose 3% to $252.6 million and Normalized EBITDA(4) increased 15% to $282.7 million. EBITDA and Normalized EBITDA were negatively impacted by $21.1 million and

 


*                 All percentage changes versus prior-year periods throughout this press release are in U.S. dollars, except where noted.

 



 

$22.0 million, respectively, of currency movement, primarily the marking to market of currency hedges in the first quarter of 2016 versus the first quarter of 2015.

 

·                  Normalized EBITDA margin on fee revenue was 15.6%.

 

Management Commentary

 

“We started 2016 with very strong performance,” said Bob Sulentic, CBRE’s president and chief executive officer. “Our people around the world worked together to again produce double-digit revenue and adjusted earnings per share growth, despite significant negative effects from currency hedges in the quarter.  Without this impact, adjusted earnings per share would be up 25%.”

 

Mr. Sulentic added: “CBRE continues to achieve market share gains by attracting and developing top talent and enabling them to leverage our powerful platform to provide superb insight and value to our clients.” Earlier this month, Forbes named CBRE the 15th best employer in America, reflecting the strength of the company’s culture.

 

Revenue growth was strong in each of CBRE’s three global regions. The Americas, the company’s largest business segment, saw revenue increase 29% (30% local currency). In EMEA (Europe, the Middle East & Africa), revenue rose by 72% (79% local currency) with all countries posting gains, highlighted by The Netherlands, Spain and the United Kingdom. In Asia Pacific (APAC), India and Japan were the catalysts for a 48% (54% local currency) increase in revenue.

 

Global leasing was exceptionally strong during the first quarter as revenue surged 15% (18% local currency).  The United States set the pace, with revenue up 20%, driven by a number of large transactions.  A broad range of countries also generated strong growth, including Canada, France, India, Italy and Japan. The United Kingdom showed growth of 7% (16% local currency).

 

The occupier outsourcing business line continued to benefit from strong underlying growth drivers, augmented by contributions from the acquired Global Workplace Solutions business. Excluding contributions from this acquisition, fee revenue improved 11% (17% local currency), with all three regions posting double-digit growth in local currency. (Note: leasing and sales revenue generated by contractual occupier clients is recorded in our leasing and sales revenue categories.)

 

On a global basis, property sales revenue grew 7% (9% local currency) with notable growth outside the United States. APAC registered the strongest growth with revenue up 12% (18% local currency), paced by Japan.  Strong gains in France, The Netherlands and Spain — as well as growth in the United Kingdom — resulted in a 4% (11% local currency) revenue increase in EMEA. The Americas saw revenue rise 6% (7% local currency). Commercial mortgage services revenue increased 3% (same in local currency), driven by higher loan origination volumes with banks.

 

Development Services also posted very strong revenue and earnings growth.  Projects in process in this business totaled $7.1 billion, up $1.6 billion from the first quarter of 2015.  The pipeline inventory totaled $3.1 billion, down $0.5 billion from a year ago, as development projects converted from pipeline to in-process.  In the Global Investment Management business, Assets Under Management totaled $89.7 billion at the end of the first quarter 2016.  This represents an increase of $0.7 billion from year-end 2015 or $0.3 billion in local currency.

 

The first quarter results reflect the ongoing evolution of CBRE’s business base toward more stable revenue.  Contractual fee revenue accounted for 46% of total fee revenue in the current quarter — up from 39% in the first quarter of 2015. Contractual fee revenue, plus leasing, rose to 74% of total fee revenue from 70% during the prior-year period.

 

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First-Quarter 2016 Segment Results

 

The following tables present highlights of CBRE segment performance during the first quarter of 2016 (dollars in thousands):

 

 

 

Americas

 

EMEA

 

Asia Pacific

 

 

 

 

 

% Change from Q1 2015

 

 

 

% Change from Q1 2015

 

 

 

% Change from Q1 2015

 

 

 

Q1 2016

 

USD

 

LC

 

Q1 2016

 

USD

 

LC

 

Q1 2016

 

USD

 

LC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,583,559

 

29

%

30

%

$

847,498

 

72

%

79

%

$

308,524

 

48

%

54

%

Fee revenue

 

1,068,861

 

25

%

26

%

447,389

 

38

%

45

%

192,689

 

28

%

34

%

Fee revenue, excluding GWS

 

950,809

 

11

%

12

%

343,197

 

6

%

13

%

158,353

 

5

%

11

%

EBITDA

 

173,338

 

2

%

2

%

15,214

 

-16

%

-10

%

10,654

 

-26

%

-29

%

Normalized EBITDA

 

187,387

 

8

%

8

%

27,716

 

52

%

63

%

12,790

 

-12

%

-15

%

 

 

 

Global Investment Management

 

Development Services

 

 

 

 

 

% Change from Q1 2015

 

 

 

% Change from Q1 2015

 

 

 

Q1 2016

 

USD

 

LC

 

Q1 2016

 

USD

 

LC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

90,380

 

-18

%

-15

%

$

16,773

 

37

%

37

%

EBITDA

 

21,536

 

-43

%

-42

%

31,875

 

476

%

476

%

Normalized EBITDA

 

22,915

 

-35

%

-33

%

31,875

 

476

%

476

%

 

First-quarter 2016 results were impacted by select items including acquisition-related integration expenses and charges associated with cost elimination actions. The company does not normalize for currency movements, including gains or losses from currency hedging. Accordingly, EBITDA and Normalized EBITDA were negatively impacted by foreign currency movements, primarily the marking to market of currency hedging. This reduced the current quarter Normalized EBITDA relative to the first quarter of 2015 as follows: Americas $4.9 million; EMEA $5.4 million; Asia Pacific $7.0 million; and Global Investment Management $4.7 million.

 

Business Outlook

 

“We are very encouraged by our strong start to 2016,” Mr. Sulentic said.  “As we look ahead, it is important to remember that the first quarter is typically our seasonally lightest quarter for revenue and earnings. As always, we caution against using the first quarter as a barometer of full year performance.  However, our business has positive momentum and the macro environment — while more cautious than a year ago — remains generally supportive, with consensus forecasts calling for continued modest economic growth in the U.S. and globally.”

 

CBRE continues to expect adjusted earnings-per-share in the range of $2.27 to $2.37 for full-year 2016.  This represents 13% year-on-year growth at the mid-point of the range.

 

Conference Call Details

 

The Company’s first-quarter earnings conference call will be held today (Thursday, April 28, 2016) 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 April 28, 2016, and ending at midnight Eastern Time on May 5, 2016.  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

 

3



 

replay is 13633047.  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 2015 revenue).  The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 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.

 

The information contained in, or accessible through, the Company’s website is not incorporated into this press release.

 

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 adjusted earnings per share expectations), market share, 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; foreign currency fluctuations; 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 rising level of political instability in those regions; 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; our ability to retain and incentivize producers; 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 under our debt instruments as well as the limited restrictions therein on our ability to incur additional debt, and the potential increased borrowing costs to us from a credit-ratings downgrade; litigation and its financial and reputational risks to us;  the ability of CBRE Capital Markets to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit; 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; our ability to compete globally, or in specific geographic markets or business segments that are material to us; our and our employees’ ability to execute on, and adapt to, information technology strategies and trends; our ability to comply with laws and regulations related to our global operations, including real estate licensure, tax, labor and employment laws and regulations, as well as the anti-corruption laws and trade sanctions of the U.S. and other countries; our ability to maintain our effective tax rate at or below current levels; and the effect of implementation of new accounting rules and standards.

 

4



 

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, 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 CBRE’s 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.

 

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 is gross revenue less 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) include the impact of adjusting the provision for income taxes to a normalized rate as well as exclude the effect of select charges from U.S. GAAP net income and U.S. GAAP earnings per diluted share.  Adjustments during the periods presented included the write-off of financing costs on extinguished debt, amortization expense related to certain intangible assets attributable to acquisitions, integration and other costs related to acquisitions, cost containment expenses and certain carried interest incentive compensation expense (reversal) to align with the timing of associated revenue.

 

(4) EBITDA represents earnings before net interest expense, write-off of financing costs on extinguished debt, 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, cost containment expenses and certain carried interest incentive compensation expense (reversal) to align with the timing of associated revenue.

 

5



 

CBRE GROUP, INC.

OPERATING RESULTS

FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2015

(Dollars in thousands, except share data)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2016

 

2015

 

 

 

 

 

 

 

Revenue

 

$

2,846,734

 

$

2,052,503

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

Cost of services

 

2,013,613

 

1,290,777

 

Operating, administrative and other

 

635,838

 

550,184

 

Losses (gains) on currency hedges

 

7,528

 

(18,409

)

Depreciation and amortization

 

86,994

 

69,846

 

Total costs and expenses

 

2,743,973

 

1,892,398

 

 

 

 

 

 

 

Gain on disposition of real estate

 

4,819

 

 

 

 

 

 

 

 

Operating income

 

107,580

 

160,105

 

 

 

 

 

 

 

Equity income from unconsolidated subsidiaries(1)

 

57,301

 

15,451

 

Other income

 

3,215

 

1,087

 

Interest income

 

1,459

 

2,297

 

Interest expense

 

34,790

 

26,214

 

Write-off of financing costs on extinguished debt

 

 

2,685

 

Income before provision for income taxes

 

134,765

 

150,041

 

Provision for income taxes

 

50,125

 

56,903

 

Net income

 

84,640

 

93,138

 

Less: Net income attributable to non-controlling interests

 

2,473

 

201

 

Net income attributable to CBRE Group, Inc.

 

$

82,167

 

$

92,937

 

 

 

 

 

 

 

Basic income per share:

 

 

 

 

 

Net income per share attributable to CBRE Group, Inc.

 

$

0.25

 

$

0.28

 

 

 

 

 

 

 

Weighted average shares outstanding for basic income per share

 

333,992,935

 

331,976,907

 

 

 

 

 

 

 

Diluted income per share:

 

 

 

 

 

Net income per share attributable to CBRE Group, Inc.

 

$

0.24

 

$

0.28

 

 

 

 

 

 

 

Weighted average shares outstanding for diluted income per share

 

337,506,232

 

335,698,590

 

 

 

 

 

 

 

EBITDA

 

$

252,617

 

$

246,288

 

 


(1)         Equity income from unconsolidated subsidiaries includes $47.4 million and $11.8 million for the three months ended March 31, 2016 and 2015, respectively, attributable to Development Services but does not include related compensation.  Both equity income and related compensation expense are included in EBITDA for that segment.

 

6



 

CBRE GROUP, INC.

SEGMENT RESULTS

FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2015

(Dollars in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2016

 

2015(1)

 

 

 

 

 

 

 

Americas

 

 

 

 

 

Revenue

 

$

1,583,559

 

$

1,227,616

 

Costs and expenses:

 

 

 

 

 

Cost of services

 

1,099,391

 

787,117

 

Operating, administrative and other(2)

 

317,183

 

275,421

 

Depreciation and amortization

 

60,600

 

42,950

 

Operating income

 

$

106,385

 

$

122,128

 

EBITDA

 

$

173,338

 

$

170,062

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

Revenue

 

$

847,498

 

$

494,024

 

Costs and expenses:

 

 

 

 

 

Cost of services

 

683,678

 

362,503

 

Operating, administrative and other(2)

 

149,315

 

114,290

 

Depreciation and amortization

 

15,005

 

14,792

 

Operating (loss) income

 

$

(500

)

$

2,439

 

EBITDA

 

$

15,214

 

$

18,183

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

Revenue

 

$

308,524

 

$

208,366

 

Costs and expenses:

 

 

 

 

 

Cost of services

 

230,544

 

141,157

 

Operating, administrative and other(2)

 

67,281

 

52,747

 

Depreciation and amortization

 

4,181

 

3,846

 

Operating income

 

$

6,518

 

$

10,616

 

EBITDA

 

$

10,654

 

$

14,462

 

 

 

 

 

 

 

Global Investment Management

 

 

 

 

 

Revenue

 

$

90,380

 

$

110,224

 

Costs and expenses:

 

 

 

 

 

Operating, administrative and other(2)

 

72,390

 

70,753

 

Depreciation and amortization

 

6,620

 

7,611

 

Operating income

 

$

11,370

 

$

31,860

 

EBITDA

 

$

21,536

 

$

38,045

 

 

 

 

 

 

 

Development Services

 

 

 

 

 

Revenue

 

$

16,773

 

$

12,273

 

Costs and expenses:

 

 

 

 

 

Operating, administrative and other

 

37,197

 

18,564

 

Depreciation and amortization

 

588

 

647

 

Gain on disposition of real estate

 

4,819

 

 

Operating loss

 

$

(16,193

)

$

(6,938

)

EBITDA

 

$

31,875

 

$

5,536

 

 


(1)         During 2016, we changed our methodology for allocating certain costs to our reporting segments, including stock compensation, currency hedging and certain intercompany transactions.  Prior year amounts have been reclassified to conform with the current year presentation.  Such changes had no impact on our consolidated results.

 

(2)         Operating, administrative and other expenses includes gains and losses on currency hedges.

 

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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 Occupier Outsourcing 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.

 

8



 

Fee revenue, which excludes from revenue client reimbursed pass through costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients, is calculated as follows (dollars in thousands):

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2016

 

2015

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

Revenue

 

$

2,846,734

 

$

2,052,503

 

Less: Pass through costs also recognized as revenue

 

1,030,642

 

597,363

 

Fee revenue

 

$

1,816,092

 

$

1,455,140

 

 

 

 

 

 

 

Occupier Outsourcing

 

 

 

 

 

Revenue(1)

 

$

1,413,294

 

$

694,863

 

Less: Pass through costs also recognized as revenue

 

897,300

 

461,535

 

Fee revenue(1)

 

$

515,994

 

$

233,328

 

 

 

 

 

 

 

Property Mangement

 

 

 

 

 

Revenue(1)

 

$

250,674

 

$

252,459

 

Less: Pass through costs also recognized as revenue

 

133,342

 

135,828

 

Fee revenue(1)

 

$

117,332

 

$

116,631

 

 


(1)  Excludes associated leasing and sales revenue.

 

Americas

 

 

 

 

 

Revenue

 

$

1,583,559

 

$

1,227,616

 

Less: Pass through costs also recognized as revenue

 

514,698

 

369,361

 

Fee revenue

 

$

1,068,861

 

$

858,255

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

Revenue

 

$

847,498

 

$

494,024

 

Less: Pass through costs also recognized as revenue

 

400,109

 

170,119

 

Fee revenue

 

$

447,389

 

$

323,905

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

Revenue

 

$

308,524

 

$

208,366

 

Less: Pass through costs also recognized as revenue

 

115,835

 

57,883

 

Fee revenue

 

$

192,689

 

$

150,483

 

 

9



 

Net income attributable to CBRE Group, Inc., as adjusted (or adjusted net income), and diluted 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

 

 

 

March 31,

 

 

 

2016

 

2015

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

82,167

 

$

92,937

 

 

 

 

 

 

 

Plus / minus:

 

 

 

 

 

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

 

17,016

 

11,109

 

Integration and other costs related to acquisitions, net of tax

 

11,643

 

1,960

 

Cost containment expenses, net of tax

 

8,788

 

 

Adjustment of taxes during the year to normalized rate

 

930

 

 

Carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, net of tax

 

301

 

(1,691

)

Write-off of financing costs on extinguished debt, net of tax

 

 

1,638

 

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

 

$

120,845

 

$

105,953

 

 

 

 

 

 

 

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

 

$

0.36

 

$

0.32

 

 

 

 

 

 

 

Weighted average shares outstanding for diluted income per share

 

337,506,232

 

335,698,590

 

 

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

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2016

 

2015

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

82,167

 

$

92,937

 

 

 

 

 

 

 

Add:

 

 

 

 

 

Depreciation and amortization

 

86,994

 

69,846

 

Interest expense

 

34,790

 

26,214

 

Write-off of financing costs on extinguished debt

 

 

2,685

 

Provision for income taxes

 

50,125

 

56,903

 

Less:

 

 

 

 

 

Interest income

 

1,459

 

2,297

 

EBITDA

 

252,617

 

246,288

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

Integration and other acquisition related costs

 

17,173

 

3,213

 

Cost containment expenses

 

12,403

 

 

Carried interest incentive compensation expense (reversal) to align with the timing of associated revenue

 

490

 

(2,772

)

EBITDA, as adjusted

 

$

282,683

 

$

246,729

 

 

10



 

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

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2016

 

2015(1)

 

 

 

 

 

 

 

Americas

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

71,518

 

$

83,135

 

Adjustments:

 

 

 

 

 

Depreciation and amortization

 

60,600

 

42,950

 

Interest expense, net

 

20,926

 

3,546

 

Write-off of financing costs on extinguished debt

 

 

2,685

 

Royalty and management service income

 

(6,768

)

(5,084

)

Provision for income taxes

 

27,062

 

42,830

 

EBITDA

 

173,338

 

170,062

 

Integration and other costs related to acquisitions

 

10,691

 

3,213

 

Cost containment expenses

 

3,358

 

 

EBITDA, as adjusted

 

$

187,387

 

$

173,275

 

EMEA

 

 

 

 

 

Net loss attributable to CBRE Group, Inc.

 

$

(12,135

)

$

(10,288

)

Adjustments:

 

 

 

 

 

Depreciation and amortization

 

15,005

 

14,792

 

Interest expense, net

 

3,512

 

11,447

 

Royalty and management service (income) expense

 

(626

)

1,190

 

Provision for income taxes

 

9,458

 

1,042

 

EBITDA

 

15,214

 

18,183

 

Cost containment expenses

 

7,022

 

 

Integration and other costs related to acquisitions

 

5,480

 

 

EBITDA, as adjusted

 

$

27,716

 

$

18,183

 

Asia Pacific

 

 

 

 

 

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

 

$

(2,570

)

$

3,786

 

Adjustments:

 

 

 

 

 

Depreciation and amortization

 

4,181

 

3,846

 

Interest expense, net

 

915

 

898

 

Royalty and management service expense

 

6,258

 

2,848

 

Provision for income taxes

 

1,870

 

3,084

 

EBITDA

 

10,654

 

14,462

 

Cost containment expenses

 

1,134

 

 

Integration and other costs related to acquisitions

 

1,002

 

 

EBITDA, as adjusted

 

$

12,790

 

$

14,462

 

Global Investment Management

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

7,284

 

$

13,873

 

Adjustments:

 

 

 

 

 

Depreciation and amortization

 

6,620

 

7,611

 

Interest expense, net

 

7,697

 

7,684

 

Royalty and management service expense

 

1,136

 

1,046

 

(Benefit of) provision for income taxes

 

(1,201

)

7,831

 

EBITDA

 

21,536

 

38,045

 

Carried interest incentive compensation expense (reversal) to align with the timing of associated revenue

 

490

 

(2,772

)

Cost containment expenses

 

889

 

 

EBITDA, as adjusted

 

$

22,915

 

$

35,273

 

Development Services

 

 

 

 

 

Net income attributable to CBRE Group, Inc.

 

$

18,070

 

$

2,431

 

Adjustments:

 

 

 

 

 

Depreciation and amortization

 

588

 

647

 

Interest expense, net

 

281

 

342

 

Provision for income taxes

 

12,936

 

2,116

 

EBITDA

 

$

31,875

 

$

5,536

 

 


(1)         During 2016, we changed our methodology for allocating certain costs to our reporting segments, including stock compensation, currency hedging and certain intercompany transactions.  Prior year amounts have been reclassified to conform with the current year presentation.  Such changes had no impact on our consolidated results.

 

11



 

CBRE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

 

 

 

March 31,

 

December 31,

 

 

 

2016

 

2015

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

Cash and cash equivalents(1)

 

$

489,229

 

$

540,403

 

Restricted cash

 

63,372

 

72,764

 

Receivables, net

 

2,344,825

 

2,471,740

 

Warehouse receivables(2)

 

724,508

 

1,767,107

 

Property and equipment, net

 

528,350

 

529,823

 

Goodwill and other intangibles, net

 

4,550,202

 

4,536,466

 

Investments in and advances to unconsolidated subsidiaries

 

220,533

 

217,943

 

Other assets, net

 

914,116

 

881,697

 

Total assets

 

$

9,835,135

 

$

11,017,943

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Current liabilities, excluding those related to long-term debt

 

$

2,661,965

 

$

3,208,932

 

Warehouse lines of credit(2)

 

714,377

 

1,750,781

 

Revolving credit facility

 

280,000

 

 

Senior term loans, net

 

872,916

 

877,899

 

5.00% senior notes, net

 

789,453

 

789,144

 

4.875% senior notes, net

 

590,650

 

590,469

 

5.25% senior notes, net

 

422,017

 

421,964

 

Other debt

 

87

 

79

 

Other long-term liabilities

 

636,972

 

619,605

 

Total liabilities

 

6,968,437

 

8,258,873

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

CBRE Group, Inc. stockholders’ equity

 

2,817,595

 

2,712,652

 

Non-controlling interests

 

49,103

 

46,418

 

Total equity

 

2,866,698

 

2,759,070

 

Total liabilities and equity

 

$

9,835,135

 

$

11,017,943

 

 


(1)         Includes $64.0 million and $70.2 million of cash in consolidated funds and other entities not available for Company use as of March 31, 2016 and December 31, 2015, respectively.

 

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

 

12