EX-99.1 2 cbg-ex991_6.htm EX-99.1 cbg-ex991_6.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:

 

Brad Burke                                          Steve Iaco

Investor Relations                               Media Relations

215.921.7436                                      212.984.6535

 

 

CBRE GROUP, INC. REPORTS STRONG FINANCIAL

RESULTS FOR THIRD-QUARTER 2017

 

GAAP EPS of $0.58, up 87%

Adjusted EPS of $0.64, up 28%

Revenue and Fee Revenue up 11% and 10%, respectively

 

 

Los Angeles, CA – November 3, 2017 — CBRE Group, Inc. (NYSE:CBG) today reported strong financial results for the third quarter ended September 30, 2017.

“We are pleased to produce another quarter of excellent results, with double-digit revenue growth and adjusted earnings per share up 28%,” said Bob Sulentic, CBRE’s president and chief executive officer. “Our performance is the direct result of our focused strategy to produce exceptional outcomes for our clients and the commitment of our more than 75,000 people to executing our strategy.”

“The strength of our performance in the third quarter was broad-based. Each of our three global regions produced solid organic growth. Leasing returned to double-digit growth, and was especially strong in the U.S. Revenue growth accelerated in our occupier outsourcing business, as we continue to capitalize on our commanding position in this growing sector. Global property sales saw healthy growth, despite a generally tepid market for transaction activity, reflecting the strength of our brand and ability to take market share. Finally, we also had excellent performance in both of our real estate investment businesses.”

Mr. Sulentic added: “We continue to see healthy momentum across most of our businesses and regions and are increasing our full-year 2017 guidance for adjusted earnings per share to a range of $2.58 to $2.68.”

Third-Quarter 2017 Results

 

•

Revenue for the third quarter totaled $3.5 billion, an increase of 11% (10% local currency1).  Fee revenue2 increased 10% (9% local currency) to $2.3 billion.

 

•

On a GAAP basis, net income increased 88% and earnings per diluted share increased 87% to $196.3 million and $0.58 per share, respectively.  Adjusted net income3 for the third quarter of 2017 rose 31% to $219.5 million, while adjusted earnings per share3 improved 28% to $0.64 per share.

 

•

The adjustments to GAAP net income for the third quarter of 2017 included $28.2 million (pre-tax) of non-cash acquisition-related amortization and $5.1 million (pre-tax) of net carried interest incentive compensation expense.  These costs were partially offset by a net tax benefit of $10.2 million associated with the aforementioned adjustments.

 

•

EBITDA4 increased 43% (42% local currency) to $406.4 million and adjusted EBITDA4 increased 18% (17% local currency) to $411.6 million. Adjusted EBITDA margin on fee revenue increased 120 basis points to 17.7%.  The company’s regional services businesses – the Americas, Europe, the Middle East and Africa (EMEA) and Asia Pacific (APAC) – produced combined adjusted EBITDA growth for the quarter of 12% (11% excluding the impact of all currency movement including hedging activity).

 

CBRE Press Release

November 3, 2017

Page 2

Third-Quarter 2017 Segment Review

The following tables present highlights of CBRE segment performance during the third quarter of 2017 (dollars in thousands):

 

 

Americas

 

 

EMEA

 

 

APAC

 

 

 

 

 

 

% Change from Q3 2016

 

 

 

 

 

 

% Change from Q3 2016

 

 

 

 

 

 

% Change from Q3 2016

 

 

Q3 2017

 

 

USD

 

 

LC

 

 

Q3 2017

 

 

USD

 

 

LC

 

 

Q3 2017

 

 

USD

 

 

LC

 

Revenue

$

1,969,430

 

 

 

11%

 

 

 

11%

 

 

$

1,033,042

 

 

 

9%

 

 

 

7%

 

 

$

440,933

 

 

 

22%

 

 

 

21%

 

Fee revenue

 

1,355,215

 

 

 

9%

 

 

 

9%

 

 

 

574,312

 

 

 

10%

 

 

 

8%

 

 

 

285,235

 

 

 

19%

 

 

 

18%

 

EBITDA

 

238,259

 

 

 

28%

 

 

 

27%

 

 

 

71,169

 

 

 

45%

 

 

 

41%

 

 

 

43,081

 

 

 

59%

 

 

 

60%

 

Adjusted EBITDA

 

238,259

 

 

 

7%

 

 

 

7%

 

 

 

71,169

 

 

 

16%

 

 

 

14%

 

 

 

43,081

 

 

 

37%

 

 

 

37%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Investment Management

 

 

Development Services (5)

 

 

 

 

 

 

 

 

 

% Change from Q3 2016

 

 

 

 

 

 

% Change from Q3 2016

 

 

`

 

 

 

 

 

Q3 2017

 

 

USD

 

 

LC

 

 

Q3 2017

 

 

USD

 

 

LC

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

92,122

 

 

‒

 

 

 

-1%

 

 

$

14,450

 

 

 

-12%

 

 

 

-12%

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

18,068

 

 

 

198%

 

 

 

194%

 

 

 

35,863

 

 

 

128%

 

 

 

128%

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

23,202

 

 

 

22%

 

 

 

21%

 

 

 

35,863

 

 

 

128%

 

 

 

128%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding the impact of all currency movement including hedging activity, adjusted EBITDA growth rates for the third quarter of 2017 were: 8% in the Americas, 12% in EMEA, 31% in APAC and 17% in Global Investment Management.

CBRE’s revenue growth was strong in all three of its regional services businesses in the third quarter.

 

•

APAC posted a 22% (21% local currency) revenue increase, supported by outsized growth in Greater China, India, Japan and Singapore.

 

•

In the Americas, revenue increased 11% (same local currency), with double-digit growth in occupier outsourcing and leasing.  Brazil, Canada and the United States all exhibited strong overall growth.

 

•

EMEA revenue rose 9% (7% local currency), paced by strong gains in the United Kingdom.

Revenue growth across CBRE’s global business lines was almost entirely organic.

 

•

Global occupier outsourcing achieved growth of 14% (13% local currency) in both revenue and fee revenue.  Almost all of this growth was organic.

 

o

Growth was broad-based across the three global regions, led by India, Singapore, the United Kingdom and the United States.

 

•

Leasing revenue rose 13% (12% local currency), with double-digit growth in APAC and the Americas.

 

o

APAC leasing revenue surged 17% (same local currency), with especially strong growth in Australia, Greater China, India and Japan.

 

o

Americas leasing revenue rose 14% (13% in local currency), and 16% in the United States, paced by strong performance in New York City.

 

o

In EMEA, Germany, Italy and Spain led the way to 7% (4% local currency) growth for the region.

 

•

The capital markets businesses – property sales and commercial mortgage origination – produced global revenue growth of 5% (4% local currency) on a combined basis.

 

•

Global property sales revenue rose 9% (same local currency), reflecting market share gains in an environment where global market volumes were relatively flat year over year.

 

o

This performance was paced by robust growth in APAC, which increased 33% (same local currency), led by Australia, Greater China and Japan.

CBRE Press Release

November 3, 2017

Page 3

 

o

Americas sales revenue improved 7% (same local currency), as robust gains in Brazil and Canada offset relatively flat revenue in the United States. CBRE extended its market-leading position in U.S. investment sales with market share increasing approximately 190 basis points versus last year’s third quarter, according to Real Capital Analytics.

 

o

EMEA’s revenue was flat (2% decline local currency) – reflecting fewer large transactions in continental Europe – although growth remained strong in the United Kingdom.

 

•

Commercial mortgage origination revenue declined 12% (same local currency), driven almost entirely by lower gains from mortgage-servicing rights associated with U.S. Government Sponsored Enterprises financing activity, which more than doubled in the prior-year third quarter.

 

•

Recurring revenue from the loan servicing portfolio increased 24% (same local currency).  At the end of the third quarter, CBRE’s loan servicing portfolio totaled approximately $165 billion, up 27% from the year-earlier third quarter.

 

•

Property management services produced solid growth of 9% (8% local currency) for revenue and 11% (10% local currency) for fee revenue.

 

•

Valuation revenue increased 6% (4% local currency).

 

•

CBRE’s real estate investment businesses – Global Investment Management and Development Services – produced combined adjusted EBITDA growth of 70% (69% local currency) in the third quarter.

 

o

In the Global Investment Management segment, assets under management (AUM) totaled $98.3 billion, up $10.4 billion, or $2.6 billion excluding the Caledon Capital acquisition, which was completed in August 2017. Positive foreign currency movement added $2.2 billion to AUM versus the prior-year quarter.

 

o

In the Development Services segment, projects in process totaled $5.9 billion, down $1.2 billion from the third quarter of 2016, while the pipeline totaled $5.4 billion, up $1.7 billion in the same period. Fee-only and build-to-suit projects constitute more than 50% of the pipeline.

Nine-Month 2017 Results

 

•

Revenue for the nine months ended September 30, 2017 totaled $9.9 billion, an increase of 7% (8% local currency).  Fee revenue increased 6% (7% local currency) to $6.4 billion.  This growth was almost entirely organic.

 

•

On a GAAP basis, net income increased 70% to $523.1 million and earnings per diluted share increased 69% to $1.54 per share.  Adjusted net income for the first nine months of 2017 rose 26% to $586.6 million, while adjusted earnings per share improved 26% to $1.72 per share.

 

•

EBITDA increased 31% (32% local currency) to $1.1 billion and adjusted EBITDA increased 14% (same in local currency) to $1.1 billion.  Adjusted EBITDA margin on fee revenue increased approximately 120 basis points to 17.5%.

Conference Call Details

The company’s third quarter earnings conference call will be held today (Friday, November 3, 2017) at 8:30 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 1:00 p.m. Eastern Time on November 3, 2017, and ending at midnight Eastern Time on November 10, 2017.  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 13671701.  A transcript of the call will be available on the company’s Investor Relations website at www.cbre.com/investorrelations.

CBRE Press Release

November 3, 2017

Page 4

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 (based on 2016 revenue).  The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide.  CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.  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.

 

This press 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), currency movement, 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 press release.  Any forward-looking statements speak only as of the date of this press 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 U.S. Government Sponsored Enterprises, regulatory oversight of such activity and our mortgage servicing revenue from the 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 and adjusted EBITDA margins that enable us to continue investing in our platform and client service offerings; our ability to control costs relative to revenue growth; economic volatility and market uncertainty globally related to uncertainty surrounding the implementation and effect of the United Kingdom’s referendum to leave the European Union, including uncertainty in relation to the legal and regulatory framework that would apply to the United Kingdom and its relationship with the remaining members of the European Union; foreign currency fluctuations; our ability to retain and incentivize key personnel; our ability to compete globally, or in specific geographic markets or business segments that are material to us; 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; 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; the ability of our wholly-owned subsidiary, CBRE Capital Markets, Inc., to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit; variations in historically customary seasonal patterns that cause our business not to perform as expected; litigation and its financial and reputational risks to us; 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 and our employees’ ability to execute on, and adapt to, information technology strategies and trends; 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 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; changes in applicable tax or accounting requirements, including potential tax reform under the current U.S. administration; and the effect of implementation of new accounting rules and standards.

 

CBRE Press Release

November 3, 2017

Page 5

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, 2016 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017, as well as in the company’s press releases and other periodic filings with the Securities and Exchange Commission (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 forward-looking guidance included in this press release to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the variability and low visibility with respect to costs related to acquisitions, carried interest incentive compensation and financing costs, which are potential adjustments to future earnings.  We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.

 

The terms “fee revenue,” “adjusted net income,” “adjusted earnings per share” (or adjusted EPS), “EBITDA” and “adjusted 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 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.  Certain adjustments have been made to 2016 fee revenue to conform with current-year presentation.

 

3  Adjusted net income and adjusted earnings per share (or adjusted EPS) exclude the effect of select charges from GAAP net income and GAAP earnings per diluted share as well as adjust the provision for income taxes for such charges.  Adjustments during the periods presented included non-cash amortization expense related to certain intangible assets attributable to acquisitions, integration and other costs related to acquisitions, cost-elimination 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 adjusted EBITDA further remove (from EBITDA) the impact of certain cash and non-cash charges related to acquisitions, cost-elimination expenses and certain carried interest incentive compensation expense (reversal) to align with the timing of associated revenue.

 

5  Revenue in the Development Services segment does not include equity income from unconsolidated subsidiaries and gain on disposition of real estate, net of non-controlling interest.  EBITDA includes equity income from unconsolidated subsidiaries and gain on disposition of real estate, net of non-controlling interests, and the associated compensation expense.

CBRE Press Release

November 3, 2017

Page 6

CBRE GROUP, INC.

OPERATING RESULTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Dollars in thousands, except share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenue (1)

 

$

2,321,334

 

 

$

2,113,906

 

 

$

6,434,763

 

 

$

6,070,530

 

Pass through costs also recognized as revenue

 

 

1,228,643

 

 

 

1,079,581

 

 

 

3,438,633

 

 

 

3,177,228

 

Total revenue

 

 

3,549,977

 

 

 

3,193,487

 

 

 

9,873,396

 

 

 

9,247,758

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

2,513,377

 

 

 

2,252,783

 

 

 

6,919,018

 

 

 

6,520,629

 

Operating, administrative and other

 

 

704,898

 

 

 

686,530

 

 

 

2,023,503

 

 

 

2,010,338

 

Depreciation and amortization

 

 

102,591

 

 

 

92,725

 

 

 

297,014

 

 

 

269,987

 

Total costs and expenses

 

 

3,320,866

 

 

 

3,032,038

 

 

 

9,239,535

 

 

 

8,800,954

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on disposition of real estate (2)

 

 

6,180

 

 

 

11,043

 

 

 

18,863

 

 

 

15,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

235,291

 

 

 

172,492

 

 

 

652,724

 

 

 

462,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity income from unconsolidated subsidiaries (2)

 

 

67,834

 

 

 

24,672

 

 

 

158,236

 

 

 

116,902

 

Other income

 

 

1,768

 

 

 

1,356

 

 

 

9,069

 

 

 

8,453

 

Interest income

 

 

3,129

 

 

 

1,020

 

 

 

6,967

 

 

 

5,545

 

Interest expense

 

 

34,483

 

 

 

37,273

 

 

 

103,923

 

 

 

109,050

 

Income before provision for income taxes

 

 

273,539

 

 

 

162,267

 

 

 

723,073

 

 

 

484,516

 

Provision for income taxes

 

 

76,178

 

 

 

51,414

 

 

 

195,813

 

 

 

165,578

 

Net income

 

 

197,361

 

 

 

110,853

 

 

 

527,260

 

 

 

318,938

 

Less:  Net income attributable to non-controlling interests (2)

 

 

1,044

 

 

 

6,690

 

 

 

4,181

 

 

 

10,940

 

Net income attributable to CBRE Group, Inc.

 

$

196,317

 

 

$

104,163

 

 

$

523,079

 

 

$

307,998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to CBRE Group, Inc.

 

$

0.58

 

 

$

0.31

 

 

$

1.55

 

 

$

0.92

 

Weighted average shares outstanding for basic income

   per share

 

 

337,948,324

 

 

 

335,770,122

 

 

 

337,280,914

 

 

 

334,949,606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to CBRE Group, Inc.

 

$

0.58

 

 

$

0.31

 

 

$

1.54

 

 

$

0.91

 

Weighted average shares outstanding for diluted income

   per share

 

 

341,186,431

 

 

 

338,488,975

 

 

 

340,502,432

 

 

 

338,053,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$

406,440

 

 

$

284,555

 

 

$

1,112,862

 

 

$

847,068

 

Adjusted EBITDA

 

$

411,574

 

 

$

349,384

 

 

$

1,127,331

 

 

$

992,518

 

 

 

(1)

Certain adjustments have been made to 2016 fee revenue to conform with current-year presentation.

(2)

Equity income from unconsolidated subsidiaries and gain on disposition of real estate, less net income attributable to non-controlling interests, includes income of $68.3 million and $26.2 million for the three months ended September 30, 2017 and 2016, respectively, and $155.3 million and $107.0 million for the nine months ended September 30, 2017 and 2016, respectively, attributable to Development Services but does not include significant related compensation expense (which is included in operating, administrative and other expenses).  In the Development Services segment, related equity income from unconsolidated subsidiaries and gain on disposition of real estate, net of non-controlling interests, and the associated compensation expense, are all included in EBITDA.

CBRE Press Release

November 3, 2017

Page 7

CBRE GROUP, INC.

SEGMENT RESULTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2017

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment

 

 

Development

 

 

 

 

 

 

 

Americas

 

 

EMEA

 

 

Asia Pacific

 

 

Management

 

 

Services

 

 

Consolidated

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenue

 

$

1,355,215

 

 

$

574,312

 

 

$

285,235

 

 

$

92,122

 

 

$

14,450

 

 

$

2,321,334

 

Pass through costs also

   recognized as revenue

 

 

614,215

 

 

 

458,730

 

 

 

155,698

 

 

 

—

 

 

 

—

 

 

 

1,228,643

 

Total revenue

 

 

1,969,430

 

 

 

1,033,042

 

 

 

440,933

 

 

 

92,122

 

 

 

14,450

 

 

 

3,549,977

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

1,394,731

 

 

 

803,293

 

 

 

315,353

 

 

 

—

 

 

 

—

 

 

 

2,513,377

 

Operating, administrative

   and other

 

 

340,190

 

 

 

158,829

 

 

 

82,610

 

 

 

76,347

 

 

 

46,922

 

 

 

704,898

 

Depreciation and amortization

 

 

73,768

 

 

 

17,539

 

 

 

4,657

 

 

 

6,082

 

 

 

545

 

 

 

102,591

 

Total costs and expenses

 

 

1,808,689

 

 

 

979,661

 

 

 

402,620

 

 

 

82,429

 

 

 

47,467

 

 

 

3,320,866

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on disposition of real estate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6,180

 

 

 

6,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

160,741

 

 

 

53,381

 

 

 

38,313

 

 

 

9,693

 

 

 

(26,837

)

 

 

235,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity income from

   unconsolidated subsidiaries

 

 

3,295

 

 

 

399

 

 

 

111

 

 

 

1,895

 

 

 

62,134

 

 

 

67,834

 

Other income (expense)

 

 

455

 

 

 

(95

)

 

 

—

 

 

 

1,408

 

 

 

—

 

 

 

1,768

 

Less: Net income (loss)

   attributable to non-controlling

   interests

 

 

—

 

 

 

55

 

 

 

—

 

 

 

1,010

 

 

 

(21

)

 

 

1,044

 

Add-back: Depreciation and

   amortization

 

 

73,768

 

 

 

17,539

 

 

 

4,657

 

 

 

6,082

 

 

 

545

 

 

 

102,591

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

238,259

 

 

 

71,169

 

 

 

43,081

 

 

 

18,068

 

 

 

35,863

 

 

 

406,440

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carried interest incentive

   compensation expense to

   align with the timing of

   associated revenue

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,134

 

 

 

—

 

 

 

5,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

238,259

 

 

$

71,169

 

 

$

43,081

 

 

$

23,202

 

 

$

35,863

 

 

$

411,574

 

 

CBRE Press Release

November 3, 2017

Page 8

CBRE GROUP, INC.

SEGMENT RESULTS—(CONTINUED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment

 

 

Development

 

 

 

 

 

 

 

Americas

 

 

EMEA

 

 

Asia Pacific

 

 

Management

 

 

Services

 

 

Consolidated

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenue (1)

 

$

1,240,753

 

 

$

524,467

 

 

$

240,380

 

 

$

91,807

 

 

$

16,499

 

 

$

2,113,906

 

Pass through costs also

   recognized as revenue

 

 

534,573

 

 

 

423,586

 

 

 

121,422

 

 

 

—

 

 

 

—

 

 

 

1,079,581

 

Total revenue

 

 

1,775,326

 

 

 

948,053

 

 

 

361,802

 

 

 

91,807

 

 

 

16,499

 

 

 

3,193,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

1,256,268

 

 

 

734,343

 

 

 

262,172

 

 

 

—

 

 

 

—

 

 

 

2,252,783

 

Operating, administrative

   and other

 

 

335,839

 

 

 

164,552

 

 

 

72,656

 

 

 

86,493

 

 

 

26,990

 

 

 

686,530

 

Depreciation and amortization

 

 

62,549

 

 

 

19,379

 

 

 

4,481

 

 

 

5,673

 

 

 

643

 

 

 

92,725

 

Total costs and expenses

 

 

1,654,656

 

 

 

918,274

 

 

 

339,309

 

 

 

92,166

 

 

 

27,633

 

 

 

3,032,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on disposition of real estate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

11,043

 

 

 

11,043

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

120,670

 

 

 

29,779

 

 

 

22,493

 

 

 

(359

)

 

 

(91

)

 

 

172,492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity income from

   unconsolidated subsidiaries

 

 

3,056

 

 

 

483

 

 

 

102

 

 

 

1,519

 

 

 

19,512

 

 

 

24,672

 

Other income

 

 

277

 

 

 

—

 

 

 

—

 

 

 

1,079

 

 

 

—

 

 

 

1,356

 

Less: Net income attributable

   to non-controlling interests

 

 

1

 

 

 

431

 

 

 

45

 

 

 

1,858

 

 

 

4,355

 

 

 

6,690

 

Add-back: Depreciation and

   amortization

 

 

62,549

 

 

 

19,379

 

 

 

4,481

 

 

 

5,673

 

 

 

643

 

 

 

92,725

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

186,551

 

 

 

49,210

 

 

 

27,031

 

 

 

6,054

 

 

 

15,709

 

 

 

284,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost-elimination expenses

 

 

17,974

 

 

 

2,038

 

 

 

3,287

 

 

 

15,578

 

 

 

—

 

 

 

38,877

 

Integration and other costs

   related to acquisitions

 

 

17,518

 

 

 

9,929

 

 

 

1,149

 

 

 

—

 

 

 

—

 

 

 

28,596

 

Carried interest incentive

   compensation reversal to

   align with the timing of

   associated revenue

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,644

)

 

 

—

 

 

 

(2,644

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

222,043

 

 

$

61,177

 

 

$

31,467

 

 

$

18,988

 

 

$

15,709

 

 

$

349,384

 

 

 

(1)

In 2017, we have changed the presentation of the operating results of one of our emerging businesses among our regional services reporting segments.  Prior year amounts have been reclassified to conform with the current-year presentation.  This change had no impact on our consolidated results.  Additionally, certain adjustments have been made to 2016 fee revenue to conform with current-year presentation.


CBRE Press Release

November 3, 2017

Page 9

CBRE GROUP, INC.

SEGMENT RESULTS—(CONTINUED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Dollars in thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment

 

 

Development

 

 

 

 

 

 

 

Americas

 

 

EMEA

 

 

Asia Pacific

 

 

Management

 

 

Services

 

 

Consolidated

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenue

 

$

3,750,001

 

 

$

1,597,877

 

 

$

767,122

 

 

$

274,451

 

 

$

45,312

 

 

$

6,434,763

 

Pass through costs also

   recognized as revenue

 

 

1,768,962

 

 

 

1,234,087

 

 

 

435,584

 

 

 

—

 

 

 

—

 

 

 

3,438,633

 

Total revenue

 

 

5,518,963

 

 

 

2,831,964

 

 

 

1,202,706

 

 

 

274,451

 

 

 

45,312

 

 

 

9,873,396

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

3,848,207

 

 

 

2,202,793

 

 

 

868,018

 

 

 

—

 

 

 

—

 

 

 

6,919,018

 

Operating, administrative

   and other

 

 

1,013,478

 

 

 

466,606

 

 

 

228,705

 

 

 

199,178

 

 

 

115,536

 

 

 

2,023,503

 

Depreciation and amortization

 

 

214,061

 

 

 

51,954

 

 

 

13,360

 

 

 

16,006

 

 

 

1,633

 

 

 

297,014

 

Total costs and expenses

 

 

5,075,746

 

 

 

2,721,353

 

 

 

1,110,083

 

 

 

215,184

 

 

 

117,169

 

 

 

9,239,535

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on disposition of real estate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

18,863

 

 

 

18,863

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

443,217

 

 

 

110,611

 

 

 

92,623

 

 

 

59,267

 

 

 

(52,994

)

 

 

652,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity income from

   unconsolidated subsidiaries

 

 

13,157

 

 

 

1,218

 

 

 

161

 

 

 

7,187

 

 

 

136,513

 

 

 

158,236

 

Other income (expense)

 

 

1,494

 

 

 

(72

)

 

 

—

 

 

 

7,647

 

 

 

—

 

 

 

9,069

 

Less: Net (loss) income

   attributable to non-controlling

   interests

 

 

—

 

 

 

(105

)

 

 

—

 

 

 

4,254

 

 

 

32

 

 

 

4,181

 

Add-back: Depreciation and

   amortization

 

 

214,061

 

 

 

51,954

 

 

 

13,360

 

 

 

16,006

 

 

 

1,633

 

 

 

297,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

671,929

 

 

 

163,816

 

 

 

106,144

 

 

 

85,853

 

 

 

85,120

 

 

 

1,112,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Integration and other costs

   related to acquisitions

 

 

17,139

 

 

 

9,794

 

 

 

418

 

 

 

—

 

 

 

—

 

 

 

27,351

 

Carried interest incentive

   compensation reversal to

   align with the timing of

   associated revenue

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(12,882

)

 

 

—

 

 

 

(12,882

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

689,068

 

 

$

173,610

 

 

$

106,562

 

 

$

72,971

 

 

$

85,120

 

 

$

1,127,331

 

CBRE Press Release

November 3, 2017

Page 10

CBRE GROUP, INC.

SEGMENT RESULTS—(CONTINUED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016

(Dollars in thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment

 

 

Development

 

 

 

 

 

 

 

Americas

 

 

EMEA

 

 

Asia Pacific

 

 

Management

 

 

Services

 

 

Consolidated

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenue (1)

 

$

3,562,453

 

 

$

1,515,746

 

 

$

663,244

 

 

$

277,924

 

 

$

51,163

 

 

$

6,070,530

 

Pass through costs also

   recognized as revenue

 

 

1,581,137

 

 

 

1,226,572

 

 

 

369,519

 

 

 

—

 

 

 

—

 

 

 

3,177,228

 

Total revenue

 

 

5,143,590

 

 

 

2,742,318

 

 

 

1,032,763

 

 

 

277,924

 

 

 

51,163

 

 

 

9,247,758

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

3,594,638

 

 

 

2,169,669

 

 

 

756,322

 

 

 

—

 

 

 

—

 

 

 

6,520,629

 

Operating, administrative

   and other

 

 

994,439

 

 

 

473,442

 

 

 

217,982

 

 

 

232,460

 

 

 

92,015

 

 

 

2,010,338

 

Depreciation and amortization

 

 

186,352

 

 

 

50,631

 

 

 

12,963

 

 

 

18,110

 

 

 

1,931

 

 

 

269,987

 

Total costs and expenses

 

 

4,775,429

 

 

 

2,693,742

 

 

 

987,267

 

 

 

250,570

 

 

 

93,946

 

 

 

8,800,954

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on disposition of real estate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

15,862

 

 

 

15,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

368,161

 

 

 

48,576

 

 

 

45,496

 

 

 

27,354

 

 

 

(26,921

)

 

 

462,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity income from

   unconsolidated subsidiaries

 

 

13,879

 

 

 

1,226

 

 

 

142

 

 

 

6,273

 

 

 

95,382

 

 

 

116,902

 

Other (loss) income

 

 

(204

)

 

 

10

 

 

 

—

 

 

 

8,647

 

 

 

—

 

 

 

8,453

 

Less: Net (loss) income

   attributable to non-controlling

   interests

 

 

—

 

 

 

(358

)

 

 

208

 

 

 

6,807

 

 

 

4,283

 

 

 

10,940

 

Add-back: Depreciation and

   amortization

 

 

186,352

 

 

 

50,631

 

 

 

12,963

 

 

 

18,110

 

 

 

1,931

 

 

 

269,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

568,188

 

 

 

100,801

 

 

 

58,393

 

 

 

53,577

 

 

 

66,109

 

 

 

847,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost-elimination expenses

 

 

22,273

 

 

 

25,640

 

 

 

9,265

 

 

 

21,278

 

 

 

—

 

 

 

78,456

 

Integration and other costs

   related to acquisitions

 

 

46,207

 

 

 

22,401

 

 

 

4,912

 

 

 

—

 

 

 

—

 

 

 

73,520

 

Carried interest incentive

   compensation reversal to

   align with the timing of

   associated revenue

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(6,526

)

 

 

—

 

 

 

(6,526

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

636,668

 

 

$

148,842

 

 

$

72,570

 

 

$

68,329

 

 

$

66,109

 

 

$

992,518

 

 

 

(1)

In 2017, we have changed the presentation of the operating results of one of our emerging businesses among our regional services reporting segments.  Prior year amounts have been reclassified to conform with the current-year presentation.  This change had no impact on our consolidated results.  Additionally, certain adjustments have been made to 2016 fee revenue to conform with current-year presentation.


CBRE Press Release

November 3, 2017

Page 11

Non-GAAP Financial Measures

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 adjusted EBITDA

 

These measures are not recognized measurements under United States generally accepted accounting principles, or “GAAP.”  When analyzing our operating performance, investors should use them in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with 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.  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 Property Management business lines and our business generally.   Fee revenue 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 adjusted 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 adjusted 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 adjusted 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 adjusted 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 adjusted EBITDA and adjusted EPS as significant components when measuring our operating performance under our employee incentive compensation programs.

CBRE Press Release

November 3, 2017

Page 12

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 share data):

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income attributable to CBRE Group, Inc.

 

$

196,317

 

 

$

104,163

 

 

$

523,079

 

 

$

307,998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus / minus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash amortization expense related to certain intangible

   assets attributable to acquisitions

 

 

28,211

 

 

 

30,306

 

 

 

82,526

 

 

 

81,758

 

Cost-elimination expenses (1)

 

 

—

 

 

 

38,877

 

 

 

—

 

 

 

78,456

 

Integration and other costs related to acquisitions

 

 

—

 

 

 

28,596

 

 

 

27,351

 

 

 

73,520

 

Carried interest incentive compensation expense (reversal)

   to align with the timing of associated revenue

 

 

5,134

 

 

 

(2,644

)

 

 

(12,882

)

 

 

(6,526

)

Tax impact of adjusted items

 

 

(10,203

)

 

 

(31,271

)

 

 

(33,448

)

 

 

(71,415

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to CBRE Group, Inc. shareholders,

   as adjusted

 

$

219,459

 

 

$

168,027

 

 

$

586,626

 

 

$

463,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income per share attributable to CBRE Group, Inc.

   shareholders, as adjusted

 

$

0.64

 

 

$

0.50

 

 

$

1.72

 

 

$

1.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding for diluted income

   per share

 

 

341,186,431

 

 

 

338,488,975

 

 

 

340,502,432

 

 

 

338,053,297

 

 

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

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income attributable to CBRE Group, Inc.

 

$

196,317

 

 

$

104,163

 

 

$

523,079

 

 

$

307,998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

102,591

 

 

 

92,725

 

 

 

297,014

 

 

 

269,987

 

Interest expense

 

 

34,483

 

 

 

37,273

 

 

 

103,923

 

 

 

109,050

 

Provision for income taxes

 

 

76,178

 

 

 

51,414

 

 

 

195,813

 

 

 

165,578

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

3,129

 

 

 

1,020

 

 

 

6,967

 

 

 

5,545

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

406,440

 

 

 

284,555

 

 

 

1,112,862

 

 

 

847,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost-elimination expenses (1)

 

 

—

 

 

 

38,877

 

 

 

—

 

 

 

78,456

 

Integration and other costs related to acquisitions

 

 

—

 

 

 

28,596

 

 

 

27,351

 

 

 

73,520

 

Carried interest incentive compensation expense (reversal)

   to align with the timing of associated revenue

 

 

5,134

 

 

 

(2,644

)

 

 

(12,882

)

 

 

(6,526

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

411,574

 

 

$

349,384

 

 

$

1,127,331

 

 

$

992,518

 

 

 

(1)

Represents cost-elimination expenses relating to a program initiated in the fourth quarter of 2015 and completed in the third quarter of 2016 to reduce the company’s global cost structure after several years of significant revenue and related cost growth.  Cost-elimination expenses incurred during the three months and nine months ended September 30, 2016 consisted of $36.7 million and $73.6 million, respectively, of severance costs related to headcount reductions in connection with the program and $2.2 million and $4.9 million, respectively, of third-party contract termination costs.

CBRE Press Release

November 3, 2017

Page 13

Revenue includes client reimbursed pass through costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients, both of which are excluded from fee revenue. Reconciliations are shown below (dollars in thousands):

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Occupier Outsourcing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenue (1) (2)

 

$

628,348

 

 

$

553,197

 

 

$

1,794,046

 

 

$

1,664,687

 

Plus: Pass through costs also recognized as revenue

 

 

1,081,447

 

 

 

941,269

 

 

 

3,002,248

 

 

 

2,773,277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue (2)

 

$

1,709,795

 

 

$

1,494,466

 

 

$

4,796,294

 

 

$

4,437,964

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property Management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenue (2)

 

$

137,618

 

 

$

123,501

 

 

$

393,714

 

 

$

370,158

 

Plus: Pass through costs also recognized as revenue

 

 

147,196

 

 

 

138,312

 

 

 

436,385

 

 

 

403,951

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue (2)

 

$

284,814

 

 

$

261,813

 

 

$

830,099

 

 

$

774,109

 

 

 

(1)

Certain adjustments have been made to 2016 fee revenue to conform with current-year presentation.

(2)

Excludes associated leasing and sales revenue.

 


CBRE Press Release

November 3, 2017

Page 14

CBRE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents (1)

 

$

955,605

 

 

$

762,576

 

Restricted cash

 

 

84,794

 

 

 

68,836

 

Receivables, net

 

 

2,843,126

 

 

 

2,605,602

 

Warehouse receivables (2)

 

 

1,434,910

 

 

 

1,276,047

 

Property and equipment, net

 

 

574,266

 

 

 

560,756

 

Goodwill and other intangibles, net

 

 

4,535,907

 

 

 

4,392,431

 

Investments in and advances to unconsolidated subsidiaries

 

 

233,634

 

 

 

232,238

 

Other assets, net

 

 

989,772

 

 

 

881,101

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

11,652,014

 

 

$

10,779,587

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Current liabilities, excluding debt

 

$

3,135,098

 

 

$

3,270,749

 

Warehouse lines of credit (which fund loans that U.S. Government Sponsored Entities

   have committed to purchase) (2)

 

 

1,416,253

 

 

 

1,254,653

 

Senior term loans, net

 

 

746,037

 

 

 

744,332

 

5.00% senior notes, net

 

 

791,394

 

 

 

790,405

 

4.875% senior notes, net

 

 

591,776

 

 

 

591,203

 

5.25% senior notes, net

 

 

422,361

 

 

 

422,183

 

Other debt

 

 

26

 

 

 

30

 

Other long-term liabilities

 

 

697,233

 

 

 

648,787

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

7,800,178

 

 

 

7,722,342

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

CBRE Group, Inc. stockholders' equity

 

 

3,795,470

 

 

 

3,014,487

 

Non-controlling interests

 

 

56,366

 

 

 

42,758

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

3,851,836

 

 

 

3,057,245

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

$

11,652,014

 

 

$

10,779,587

 

 

 

(1)

Includes $93.6 million and $73.3 million of cash in consolidated funds and other entities not available for company use as of September 30, 2017 and December 31, 2016, respectively.

(2)

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