UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 24, 2012
CBRE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware |
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001-32205 |
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94-3391143 |
(State or other |
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(Commission File Number) |
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(IRS Employer |
jurisdiction of |
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Identification No.) |
incorporation) |
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11150 Santa Monica Boulevard, Suite 1600, Los Angeles, California |
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90025 |
(Address of Principal Executive Offices) |
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(Zip Code) |
(310) 405-8900
Registrants Telephone Number, Including Area Code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12(b))
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
This Current Report on Form 8-K is filed by CBRE Group, Inc., a Delaware corporation (the Company), in connection with the matters described herein.
Item 2.02 Results of Operations and Financial Condition
On April 24, 2012, the Company issued a press release reporting its financial results for the three months ended March 31, 2012. A copy of this release is furnished as Exhibit 99.1 to this report. The information contained in this report, including the Exhibit attached hereto, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
On April 24, 2012, the Company will conduct a properly noticed conference call to discuss its results of operations for the first quarter of 2012 and to answer any questions raised by the calls audience. A copy of the presentation to be used in connection with this conference call is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits
(d) |
Exhibits |
The exhibits listed below are being furnished with this Form 8-K:
Exhibit No.
99.1 |
Press Release of Financial Results for the First Quarter of 2012 |
99.2 |
Conference Call Presentation for the First Quarter of 2012 |
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 24, 2012 |
CBRE GROUP, INC. | |
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By: |
/s/ GIL BOROK |
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Gil Borok |
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Chief Financial Officer |
Exhibit 99.1
FOR IMMEDIATE RELEASE
For further information: |
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Gil Borok |
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Nick Kormeluk |
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Steve Iaco |
CBRE GROUP, INC. REPORTS 14% REVENUE INCREASE FOR
THE FIRST QUARTER OF 2012 AND EARNINGS PER SHARE OF $0.14
Los Angeles, CA April 24, 2012 CBRE Group, Inc. (NYSE:CBG) today reported financial results for the first quarter ended March 31, 2012.
First-Quarter 2012 Results
· Revenue for the quarter totaled $1.35 billion, an increase of 14% from $1.2 billion in the first quarter of 2011.
· Excluding selected charges(1), net income(2) totaled $45.9 million, or $0.14 per diluted share, for the current-year quarter, up 13% and 8%, respectively, from $40.6 million, or $0.13 per diluted share, in the first quarter of 2011. Selected charges, primarily related to the ING REIM businesses acquired in 2011, totaled $18.9 million, net of income taxes, for the quarter.
· On a U.S. GAAP basis, net income totaled $27.0 million, or $0.08 per diluted share, for the first quarter of 2012 compared with $34.4 million, or $0.11 per diluted share, for the first quarter of 2011.
· Excluding selected charges, Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) (3) increased 25% to $150.5 million in the current period from $120.6 million in the first quarter of 2011. EBITDA(3) (including selected charges) rose 24% to $140.5 million for the first quarter of 2012, from $113.0 million for the same period a year earlier. Selected charges, primarily related to the integration of the ING REIM businesses acquired in 2011, reduced EBITDA by $10.0 million for the current-year period.
Management Commentary
We are very pleased with our performance in the seasonally slower first quarter, said Brett White, chief executive officer of CBRE. We delivered solid, double-digit top-line growth - and even stronger normalized EBITDA growth - despite the challenges presented by the on-going economic difficulties in Europe and slower investment activity in Asia Pacific. Our performance against this backdrop underscores the strength and diversity of our platform, and our ability to effectively calibrate operating costs to an uncertain market environment.
CBREs growth for the quarter was driven by the Americas Region (primarily the U.S.), which accounted for approximately 60% of total Company revenue and nearly 70% of total Company normalized EBITDA. In the U.S., we have built - and continually enhance - a robust, highly integrated services platform that we believe has made us the first choice for property occupiers and investors, Mr. White said. Our leading market position in the U.S. is a crucial advantage in what continues to be an uneven global economic recovery.
The benefits of CBREs platform diversity were also evident in the strong performance of its Global Investment Management business. The first quarter of 2012 was the first full period in which all three ING REIM businesses (acquired in July and October 2011) were operating together with CBREs existing investment management business. The combined entity accounted for approximately 10% of the Companys total revenue and 30% of the Companys total normalized EBITDA in the quarter.
The two investment management platforms have meshed very well, Mr. White said. Our deep experience as a strategic acquirer is facilitating a smooth integration, and the team from ING REIM has added considerably to our existing leadership talent and spectrum of investment programs. Over time, we see significant growth opportunities for this business.
The Companys capital markets business continued to exhibit solid growth during the first quarter of 2012, driven by strength in the Americas. Revenue from global property sales rose by double-digits for the 10th consecutive quarter, as a 33% improvement in the Americas more than offset declines in other parts of the world. Revenue grew 46% in commercial mortgage brokerage, as Americas loan origination activity increased nearly 50% compared with the first quarter of 2011, reflecting broader availability of debt capital in the U.S. investment market.
Outsourcing notched its 6th consecutive quarter of double-digit revenue growth, with positive contributions across all regions. CBRE expanded its client base at an aggressive pace, signing 58 total long-term contracts, including 21 with new clients - both new quarterly records for the Company. The Companys focus on the health care, government and education vertical markets resulted in 11 total contracts in those sectors, including those with Adventist Health System, the Pennsylvania Higher Education Assistance Agency, Public Works of Canada, Sutter Health, Tenet Healthcare, and the University of Cincinnati. In addition, CBRE was awarded expanded facilities management contracts with Microsoft (U.S. and Canada) and NYSE Euronext (U.S.).
Despite sluggish market conditions around the world, global leasing revenue also improved modestly, fueled by growth in Asia Pacific and the Americas.
We continue to be cautiously optimistic about our business, and we maintain our full-year 2012 earnings outlook, which we announced in early February, Mr. White said. Clearly, lagging economic growth and weak job creation have inhibited the market rebound compared with previous cycles. Nevertheless, our diverse platform, premier brand and global footprint position us to capture increased opportunities as the recovery cycle advances.
First-Quarter 2012 Segment Results
Americas Region (U.S., Canada and Latin America)
· Revenue rose 13% to $845.3 million, compared with $750.1 million for the first quarter of 2011.
· EBITDA totaled $101.2 million, up 30% from $78.1 million in last years first quarter.
· Operating income rose 29% to $80.8 million from $62.5 million for the prior-year first quarter.
EMEA Region (primarily Europe)
· Revenue totaled $197.4 million, compared with $205.0 million for the first quarter of 2011. The slight revenue decline reflected the impact of Europes continuing weak economic growth, which resulted in lower sales and leasing activity market-wide. Revenue grew modestly in the Netherlands and the United Kingdom, but this was offset by reduced revenue in other countries in the region, most notably in France, which had a particularly strong first quarter in 2011.
· In line with the revenue trend, the region reported an EBITDA loss of $7.1 million compared with positive EBITDA of $3.0 million in the prior year first quarter.
· Operating loss totaled $11.3 million, compared with operating income of $0.7 million for the same period in 2011.
Asia Pacific Region (Asia, Australia and New Zealand)
· Revenue rose 4% to $167.2 million from $160.5 million for the first quarter of 2011. The increase reflects improved overall performance in several countries, particularly Australia, China and India. However, the investment markets in the region saw decidedly less activity than in the prior-year period.
· EBITDA totaled $2.3 million, compared with $12.4 million for last years first quarter, driven by the reduced revenue from higher-margin investment sales, investment in the China operations and a notable bonus accrual reversal in last years first quarter, which did not recur this year.
· Operating loss totaled $0.4 million, compared with operating income of $11.3 million for the first quarter of 2011.
Global Investment Management Business (investment management operations in the U.S., Europe and Asia)
· Revenue increased 149% to $125.2 million from $50.3 million in the first quarter of 2011.
· EBITDA, before selected charges, totaled $44.6 million compared with $13.4 million in the prior-year first quarter. Including these charges, EBITDA totaled $34.6 million in the first quarter of 2012 compared with $6.0 million in the first quarter of 2011.
· Operating income totaled $11.4 million, compared with operating income of $1.3 million for the first quarter of 2011.
· The improved revenue, EBITDA and operating performance were driven by contributions from the ING REIM businesses acquired in the second half of 2011.
· Assets under management totaled $95.9 billion at the end of the first quarter, representing a 2% increase from year-end 2011.
Development Services (real estate development and investment activities primarily in the U.S.)
· Revenue totaled $14.9 million, compared with $19.2 million for the first quarter of 2011. The lower revenue in the current-year period was attributable to a decrease in incentive
fees and lower rental revenue driven by property dispositions in the later quarters of 2011.
· Operating loss totaled $4.4 million as compared with an operating loss of $2.6 million for the same period in 2011.
· EBITDA totaled $9.5 million, compared with $13.5 million in the prior-year period. The decrease was largely driven by lower equity earnings associated with gains on property sales in the current-year period, and the aforementioned decline in incentive fees. Equity earnings from unconsolidated subsidiaries are included in the calculation of EBITDA, but not in revenue or operating loss.
· Development projects in process totaled $4.8 billion and the inventory of pipeline deals totaled $1.3 billion. These totals are relatively flat as compared to year-end 2011.
Conference Call Details
The Companys first-quarter earnings conference call will be held on Tuesday, April 24, 2012 at 5:00 p.m. Eastern Time. A webcast will be accessible through the Investor Relations section of the Companys Web site at www.cbre.com/investorrelations.
The direct dial-in number for the conference call is 800-230-1059 for U.S. callers and 612-234-9959 for international callers. A replay of the call will be available starting at 10 p.m. Eastern Time on April 24, 2012, and ending at midnight Eastern Time on April 30, 2012. The dial-in number for the replay is 800-475-6701 for U.S. callers and 320-365-3844 for international callers. The access code for the replay is 244860. A transcript of the call will be available on the Companys Investor Relations Web site 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 worlds largest commercial real estate services firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 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 Web site at www.cbre.com.
Note: This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our future growth momentum, operations, financial performance, business outlook, and ability to successfully integrate the ING REIM businesses and capture resultant new growth opportunities. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Companys actual results and performance in future periods to be materially different from any future results or performance suggested in forward-looking statements in this release. Any forward-looking statements speak only as of the date of this release and, except to the extent required by applicable securities laws, the Company expressly disclaims any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. Factors that could cause results to differ materially include, but are not limited to: general conditions of financial liquidity for real estate transactions, including the impact of the European sovereign debt crisis; our leverage and our ability to perform under our credit facilities; commercial real estate vacancy levels; employment conditions and their effect on vacancy rates; property values; rental rates; interest rates; our ability to leverage our platform to grow revenues and capture market share; continued growth in trends toward use of outsourced real estate services; our ability to control costs relative to revenue growth and expand EBITDA margins; our ability to retain and incentivize producers; our ability to identify, acquire and integrate synergistic and accretive businesses; expected levels of interest, depreciation and amortization expense resulting from completed acquisitions; realization of values in investment funds to offset related incentive compensation expense; a decline in asset values in, or a reduction in earnings or cash flow from, our investment programs, as well as related litigation,
liabilities and reputational harm; and our ability to comply with laws and regulations related to our international operations, including the anti-corruption laws of the U.S. and other countries.
Additional information concerning factors that may influence the Companys financial information is discussed under Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations, Quantitative and Qualitative Disclosures About Market Risk and Forward-Looking Statements in our Annual Report on Form 10-K for the year ended December 31, 2011 as well as in the Companys press releases and other periodic filings with the Securities and Exchange Commission. Such filings are available publicly and may be obtained on the Companys Web site at www.cbre.com or upon written request from the CBRE Investor Relations Department at investorrelations@cbre.com.
(1) Selected charges include integration and other costs related to acquisitions and amortization expense related to incentive fees and customer relationships acquired in the ING REIM and Trammell Crow Company (TCC) acquisitions.
(2) A reconciliation of net income attributable to CBRE Group, Inc. to net income attributable to CBRE Group, Inc., as adjusted for selected charges, is provided in the section of this press release entitled Non-GAAP Financial Measures.
(3) EBITDA represents earnings before net interest expense, write-off of financing costs, income taxes, depreciation and amortization, while amounts shown for EBITDA, as adjusted (or normalized EBITDA), remove the impact of certain cash and non-cash charges related to acquisitions. Our management believes that both of these measures are useful in evaluating our operating performance compared to that of other companies in our industry because the calculations of EBITDA and EBITDA, as adjusted, generally eliminate the effects of financing and income taxes and the accounting effects of capital spending and acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions. Such items may vary for different companies for reasons unrelated to overall operating performance. As a result, our management uses these measures to evaluate operating performance and for other discretionary purposes, including as a significant component when measuring our operating performance under our employee incentive programs. Additionally, we believe EBITDA and EBITDA, as adjusted, are useful to investors to assist them in getting a more complete picture of our results from operations.
However, EBITDA and EBITDA, as adjusted, are not recognized measurements under U.S. generally accepted accounting principles, or GAAP, and when analyzing our operating performance, readers should use EBITDA and EBITDA, as adjusted, in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA and EBITDA, as adjusted, may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA and EBITDA, as adjusted, are not intended to be measures of free cash flow for our managements discretionary use, as they do not consider certain cash requirements such as tax and debt service payments. The amounts shown for EBITDA and EBITDA, as adjusted, also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.
For a reconciliation of EBITDA and EBITDA, as adjusted to net income attributable to CBRE Group, Inc., the most comparable financial measure calculated and presented in accordance with GAAP, see the section of this press release titled Non-GAAP Financial Measures.
CBRE GROUP, INC.
OPERATING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
(Dollars in thousands, except share data)
(Unaudited)
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Three Months Ended |
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2012 |
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2011 |
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Revenue |
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$ |
1,349,989 |
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$ |
1,185,105 |
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Costs and expenses: |
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Cost of services |
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787,556 |
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713,755 |
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Operating, administrative and other |
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440,722 |
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377,025 |
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Depreciation and amortization |
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46,457 |
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23,178 |
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Total costs and expenses |
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1,274,735 |
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1,113,958 |
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Gain on disposition of real estate |
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809 |
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1,972 |
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Operating income |
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76,063 |
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73,119 |
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Equity income from unconsolidated subsidiaries |
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14,386 |
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15,179 |
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Other income |
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6,588 |
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Interest income |
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2,303 |
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2,668 |
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Interest expense |
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43,981 |
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33,718 |
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Income from continuing operations before provision for income taxes |
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55,359 |
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57,248 |
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Provision for income taxes |
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25,413 |
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23,406 |
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Income from continuing operations |
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29,946 |
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33,842 |
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Income from discontinued operations, net of income taxes |
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10,644 |
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Net income |
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29,946 |
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44,486 |
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Less: Net income attributable to non-controlling interests |
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2,971 |
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10,117 |
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Net income attributable to CBRE Group, Inc. |
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$ |
26,975 |
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$ |
34,369 |
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Basic income per share attributable to CBRE Group, Inc. shareholders |
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Income from continuing operations attributable to CBRE Group, Inc. |
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$ |
0.08 |
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$ |
0.11 |
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Income from discontinued operations attributable to CBRE Group, Inc. |
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Net income attributable CBRE Group, Inc. |
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$ |
0.08 |
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$ |
0.11 |
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Weighted average shares outstanding for basic income per share |
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320,671,395 |
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316,563,392 |
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Diluted income per share attributable to CBRE Group, Inc. shareholders |
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Income from continuing operations attributable to CBRE Group, Inc. |
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$ |
0.08 |
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$ |
0.11 |
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Income from discontinued operations attributable to CBRE Group, Inc. |
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Net income attributable to CBRE Group, Inc. |
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$ |
0.08 |
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$ |
0.11 |
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Weighted average shares outstanding for diluted income per share |
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325,738,859 |
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322,920,829 |
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EBITDA (1) |
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$ |
140,523 |
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$ |
113,044 |
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(1) Includes EBITDA related to discontinued operations of $1.0 million for the three months ended March 31, 2011.
CBRE GROUP, INC.
SEGMENT RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
(Dollars in thousands)
(Unaudited)
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Three Months Ended |
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2012 |
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2011 |
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Americas |
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Revenue |
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$ |
845,326 |
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$ |
750,115 |
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Costs and expenses: |
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Cost of services |
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542,400 |
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477,329 |
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Operating, administrative and other |
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203,837 |
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197,417 |
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Depreciation and amortization |
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18,326 |
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12,831 |
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Operating income |
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$ |
80,763 |
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$ |
62,538 |
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EBITDA |
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$ |
101,237 |
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$ |
78,128 |
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EMEA |
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Revenue |
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$ |
197,386 |
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$ |
204,968 |
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Costs and expenses: |
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Cost of services |
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130,132 |
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131,273 |
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Operating, administrative and other |
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75,266 |
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70,782 |
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Depreciation and amortization |
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3,291 |
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2,262 |
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Operating (loss) income |
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$ |
(11,303 |
) |
$ |
651 |
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EBITDA |
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$ |
(7,097 |
) |
$ |
3,006 |
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Asia Pacific |
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Revenue |
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$ |
167,201 |
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$ |
160,500 |
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Costs and expenses: |
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Cost of services |
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115,024 |
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105,153 |
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Operating, administrative and other |
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49,824 |
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42,104 |
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Depreciation and amortization |
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2,739 |
|
1,983 |
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Operating (loss) income |
|
$ |
(386 |
) |
$ |
11,260 |
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EBITDA |
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$ |
2,283 |
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$ |
12,442 |
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Global Investment Management |
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Revenue |
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$ |
125,200 |
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$ |
50,322 |
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Costs and expenses: |
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Operating, administrative and other |
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94,575 |
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45,556 |
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Depreciation and amortization |
|
19,225 |
|
3,495 |
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Operating income |
|
$ |
11,400 |
|
$ |
1,271 |
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EBITDA(1) |
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$ |
34,593 |
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$ |
5,990 |
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|
|
|
|
|
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Development Services |
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|
|
|
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Revenue |
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$ |
14,876 |
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$ |
19,200 |
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Costs and expenses: |
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|
|
|
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Operating, administrative and other |
|
17,220 |
|
21,166 |
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Depreciation and amortization |
|
2,876 |
|
2,607 |
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Gain on disposition of real estate |
|
809 |
|
1,972 |
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Operating loss |
|
$ |
(4,411 |
) |
$ |
(2,601 |
) |
EBITDA |
|
$ |
9,507 |
|
$ |
13,478 |
|
(1) Includes EBITDA related to discontinued operations of $1.0 million for the three months ended March 31, 2011.
Non-GAAP Financial Measures
The following measures are considered non-GAAP financial measures under SEC guidelines:
(i) Net income attributable to CBRE Group, Inc., as adjusted for selected charges
(ii) Diluted income per share attributable to CBRE Group, Inc, as adjusted for selected charges
(iii) EBITDA and EBITDA, as adjusted for selected charges
The Company believes that these non-GAAP financial measures provide a more complete understanding of ongoing operations and enhance comparability of current results to prior periods as well as presenting the effects of selected charges in all periods presented. The Company believes that investors may find it useful to see these non-GAAP financial measures to analyze financial performance without the impact of selected charges that may obscure trends in the underlying performance of its business.
Net income attributable to CBRE Group, Inc., as adjusted for selected charges and diluted net income per share attributable to CBRE Group, Inc. shareholders, as adjusted for selected charges are calculated as follows (dollars in thousands, except per share data):
|
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Three Months Ended |
| ||||
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
| ||
Net income attributable to CBRE Group, Inc. |
|
$ |
26,975 |
|
$ |
34,369 |
|
Amortization expense related to ING REIM and TCC incentive fees and customer relationships acquired, net of tax |
|
11,455 |
|
1,764 |
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Integration and other costs related to acquisitions, net of tax |
|
7,483 |
|
4,469 |
| ||
Net income attributable to CBRE Group, Inc., as adjusted |
|
$ |
45,913 |
|
$ |
40,602 |
|
|
|
|
|
|
| ||
Diluted income per share attributable to CBRE Group, Inc. shareholders, as adjusted |
|
$ |
0.14 |
|
$ |
0.13 |
|
|
|
|
|
|
| ||
Weighted average shares outstanding for diluted income per share |
|
325,738,859 |
|
322,920,829 |
|
EBITDA and EBITDA, as adjusted for selected charges are calculated as follow (dollars in thousands):
|
|
Three Months Ended |
| ||||
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
| ||
Net income attributable to CBRE Group, Inc. |
|
$ |
26,975 |
|
$ |
34,369 |
|
Add: |
|
|
|
|
| ||
Depreciation and amortization(1) |
|
46,457 |
|
23,469 |
| ||
Interest expense(2) |
|
43,981 |
|
34,468 |
| ||
Provision for income taxes |
|
25,413 |
|
23,406 |
| ||
Less: |
|
|
|
|
| ||
Interest income |
|
2,303 |
|
2,668 |
| ||
|
|
|
|
|
| ||
EBITDA(3) |
|
$ |
140,523 |
|
$ |
113,044 |
|
|
|
|
|
|
| ||
Adjustments: |
|
|
|
|
| ||
Integration and other costs related to acquisitions |
|
9,965 |
|
7,511 |
| ||
|
|
|
|
|
| ||
EBITDA, as adjusted (3) |
|
$ |
150,488 |
|
$ |
120,555 |
|
(1) Includes depreciation and amortization expense related to discontinued operations of $0.3 million for the three months ended March 31, 2011.
(2) Includes interest expense related to discontinued operations of $0.7 million for the three months ended March 31, 2011.
(3) Includes EBITDA related to discontinued operations of $1.0 million for the three months ended March 31, 2011.
EBITDA and EBITDA, as adjusted for selected charges for segments are calculated as follows (dollars in thousands):
|
|
Three Months Ended |
| ||||
|
|
2012 |
|
2011 |
| ||
Americas |
|
|
|
|
| ||
Net income attributable to CBRE Group, Inc. |
|
$ |
33,567 |
|
$ |
29,509 |
|
Add: |
|
|
|
|
| ||
Depreciation and amortization |
|
18,326 |
|
12,831 |
| ||
Interest expense |
|
35,601 |
|
25,832 |
| ||
Royalty and management service income |
|
(6,617 |
) |
(6,620 |
) | ||
Provision for income taxes |
|
21,753 |
|
18,376 |
| ||
Less: |
|
|
|
|
| ||
Interest income |
|
1,393 |
|
1,800 |
| ||
EBITDA |
|
$ |
101,237 |
|
$ |
78,128 |
|
Integration and other costs related to acquisitions |
|
|
|
53 |
| ||
EBITDA, as adjusted |
|
$ |
101,237 |
|
$ |
78,181 |
|
|
|
|
|
|
| ||
EMEA |
|
|
|
|
| ||
Net loss attributable to CBRE Group, Inc. |
|
$ |
(9,376 |
) |
$ |
(149 |
) |
Add: |
|
|
|
|
| ||
Depreciation and amortization |
|
3,291 |
|
2,262 |
| ||
Interest expense |
|
2,468 |
|
139 |
| ||
Royalty and management service expense |
|
2,608 |
|
2,731 |
| ||
Benefit of income taxes |
|
(1,410 |
) |
(1,460 |
) | ||
Less: |
|
|
|
|
| ||
Interest income |
|
4,678 |
|
517 |
| ||
EBITDA |
|
$ |
(7,097 |
) |
$ |
3,006 |
|
|
|
|
|
|
| ||
Asia Pacific |
|
|
|
|
| ||
Net (loss) income attributable to CBRE Group, Inc. |
|
$ |
(3,135 |
) |
$ |
2,901 |
|
Add: |
|
|
|
|
| ||
Depreciation and amortization |
|
2,739 |
|
1,983 |
| ||
Interest expense |
|
861 |
|
420 |
| ||
Royalty and management service expense |
|
3,962 |
|
3,607 |
| ||
(Benefit of) provision for income taxes |
|
(1,999 |
) |
3,790 |
| ||
Less: |
|
|
|
|
| ||
Interest income |
|
145 |
|
259 |
| ||
EBITDA |
|
$ |
2,283 |
|
$ |
12,442 |
|
|
|
|
|
|
| ||
Global Investment Management |
|
|
|
|
| ||
Net income (loss) attributable to CBRE Group, Inc. |
|
$ |
3,591 |
|
$ |
(2,455 |
) |
Add: |
|
|
|
|
| ||
Depreciation and amortization(1) |
|
19,225 |
|
3,786 |
| ||
Interest expense(2) |
|
6,359 |
|
4,590 |
| ||
Royalty and management service expense |
|
47 |
|
282 |
| ||
Provision for (benefit of) income taxes |
|
5,652 |
|
(160 |
) | ||
Less: |
|
|
|
|
| ||
Interest income |
|
281 |
|
53 |
| ||
EBITDA(3) |
|
$ |
34,593 |
|
$ |
5,990 |
|
Integration and other costs related to acquisitions |
|
9,965 |
|
7,458 |
| ||
EBITDA, as adjusted(3) |
|
$ |
44,558 |
|
$ |
13,448 |
|
|
|
|
|
|
| ||
Development Services |
|
|
|
|
| ||
Net income attributable to CBRE Group, Inc. |
|
$ |
2,328 |
|
$ |
4,563 |
|
Add: |
|
|
|
|
| ||
Depreciation and amortization |
|
2,876 |
|
2,607 |
| ||
Interest expense |
|
2,972 |
|
3,487 |
| ||
Provision for income taxes |
|
1,417 |
|
2,860 |
| ||
Less: |
|
|
|
|
| ||
Interest income |
|
86 |
|
39 |
| ||
EBITDA |
|
$ |
9,507 |
|
$ |
13,478 |
|
(1) Includes depreciation and amortization expense related to discontinued operations of $0.3 million for the three months ended March 31, 2011.
(2) Includes interest expense related to discontinued operations of $0.7 million for the three months ended March 31, 2011.
(3) Includes EBITDA related to discontinued operations of $1.0 million for the three months ended March 31, 2011.
CBRE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
|
|
March 31, |
|
December 31, |
| ||
|
|
2012 |
|
2011 |
| ||
Assets: |
|
|
|
|
| ||
Cash and cash equivalents (1) |
|
$ |
703,937 |
|
$ |
1,093,182 |
|
Restricted cash |
|
60,873 |
|
67,138 |
| ||
Receivables, net |
|
1,075,495 |
|
1,135,371 |
| ||
Warehouse receivables (2) |
|
418,111 |
|
720,061 |
| ||
Real estate assets (3) |
|
487,448 |
|
464,468 |
| ||
Goodwill and other intangibles, net |
|
2,634,216 |
|
2,622,732 |
| ||
Investments in and advances to unconsolidated subsidiaries |
|
186,875 |
|
166,832 |
| ||
Other assets, net |
|
972,602 |
|
949,359 |
| ||
Total assets |
|
$ |
6,539,557 |
|
$ |
7,219,143 |
|
|
|
|
|
|
| ||
Liabilities: |
|
|
|
|
| ||
Current liabilities, excluding debt |
|
$ |
1,307,940 |
|
$ |
1,688,034 |
|
Warehouse lines of credit (2) |
|
410,259 |
|
713,362 |
| ||
Revolving credit facility |
|
34,906 |
|
44,825 |
| ||
Senior secured term loans |
|
1,675,256 |
|
1,683,561 |
| ||
Senior subordinated notes, net |
|
439,376 |
|
439,016 |
| ||
Senior notes |
|
350,000 |
|
350,000 |
| ||
Other debt |
|
105 |
|
125 |
| ||
Notes payable on real estate (4) |
|
391,588 |
|
372,912 |
| ||
Other long-term liabilities |
|
527,784 |
|
510,145 |
| ||
Total liabilities |
|
5,137,214 |
|
5,801,980 |
| ||
|
|
|
|
|
| ||
CBRE Group, Inc. stockholders equity |
|
1,212,227 |
|
1,151,481 |
| ||
Non-controlling interests |
|
190,116 |
|
265,682 |
| ||
Total equity |
|
1,402,343 |
|
1,417,163 |
| ||
|
|
|
|
|
| ||
Total liabilities and equity |
|
$ |
6,539,557 |
|
$ |
7,219,143 |
|
(1) Includes $96.6 million and $208.1 million of cash in consolidated funds and other entities not available for Company use
at March 31, 2012 and December 31, 2011, respectively.
(2) Represents loan receivables, the majority of which are offset by the related non-recourse warehouse line of credit facility.
(3) Includes real estate and other assets held for sale, real estate under development and real estate held for investment.
(4) Represents notes payable on real estate of which $13.6 million are recourse to the Company as of March 31, 2012 and December 31, 2011, respectively.
Exhibit 99.2
CBRE Group, Inc. First Quarter 2012 Earnings Conference Call April 24, 2012 |
Forward Looking Statements This presentation contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future growth momentum, operations, financial performance, business outlook and our ability to integrate the ING REIM businesses. These statements should be considered as estimates only and actual results may ultimately differ from these estimates. Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that you may hear today. Please refer to our first quarter earnings report, filed on Form 8-K and our current annual report on Form 10-K, in particular any discussion of risk factors or forward-looking statements, which are filed with the SEC and available at the SECs website (www.sec.gov), for a full discussion of the risks and other factors that may impact any estimates that you may hear today. We may make certain statements during the course of this presentation, which include references to non-GAAP financial measures, as defined by SEC regulations. As required by these regulations, we have provided reconciliations of these measures to what we believe are the most directly comparable GAAP measures, which are attached hereto within the appendix. |
Conference Call Participants Brett White Chief Executive Officer Mike Lafitte President, The Americas Gil Borok Chief Financial Officer Nick Kormeluk Investor Relations |
Business Overview Highlights: Total Company revenue increased 14% to $1.35 billion in Q1 2012 versus Q1 2011 The Americas paced the three regions with 13% revenue growth in Q1 2012 versus Q1 2011 Outsourcing revenue growth continued to be strong with a 10% overall increase in Q1 2012 In Q1 2012, Outsourcing set new records with 58 total and 21 new contract wins, which pushed total square feet under management to over 3 billion Leasing revenue grew 3% in Q1 2012 versus Q1 2011, driven by Asia Pacific and the Americas Investment sales revenue remained solid with 10% growth in Q1 2012, led by the Americas Investment management achieved a significant increase in revenue and normalized EBITDA from higher asset management and incentive fees attributable to the ING REIM acquisitions. The resulting normalized EBITDA margin for investment management was 36% in Q1 2012. Commercial mortgage brokerage revenue grew a robust 46% in Q1 2012 Total Company normalized EBITDA increased 25% to $150.5 million in Q1 2012, compared to Q1 2011 Total Company normalized EBITDA margin improved 90 basis points to 11.1% in Q1 2012, compared to Q1 2011 |
Q1 CBRE Wins EMEA ASR Dutch Prime Retail Fund CBRE completed an oversubscribed first close of the fund. CBRE helped raise $486M (exceeding target of $384M), representing CBRE's largest equity placement and fund structuring to date in EMEA. CHINA Jiangsu Suning Real Estate Jiangsu Suning Real Estate engaged CBRE for property management consulting and management services for Wuxi Suning Plaza, the tallest building in this city. This is located in Wuxis primary downtown area and includes 3.3M SF. UNITED KINGDOM Blackstone CBRE assisted Blackstone in acquiring a 25% interest in, and won a management mandate for, a $2.2B portfolio of real estate loans from Royal Bank of Scotland (RBS). CBRE will provide ongoing loan agency services to the portfolio. AUSTRALIA CIMB Trust Capital Advisors CIMB Trust Capital Advisors, the real estate advisor arm of CIMB Group, Malaysias second largest financial services group, appointed CBRE to manage its 831,000 SF Australian office portfolio of three Class A buildings. FRANCE FM Logistic CBRE arranged the sale and leaseback of a portfolio of three prime assets in France totalling 1.2M SF on behalf of FM Logistic, one of the top five pan-European logistics companies. HOUSTON J.P. Morgan Investment Management CBRE was selected to manage 4.2M SF of office and retail properties at Houston Centera property that includes five Class A buildings. SPAIN Eurofund Investments Zaragoza SL (joint venture between British Land and Orion Capital Managers) CBRE selected to manage the development of the 2.2M SF Puerto Venecia shopping center. FAIRFAX, VA Shorenstein CBRE won an assignment to lease a 1.7M SF office campus in Fairfax, VA. Assignment includes nine Class A office buildings totalling 1.2M SF of existing office space and approximately 480,000 SF of development rights. |
2011 Americas Corporate Statistics 1. Includes loan sale advisory 2. Reflects loans serviced by GEMSA, a joint venture between CBRE Capital Markets and GE Capital Real Estate 3. Includes affiliate offices 4. Includes $6.1 billion of projects that were in process as of December 31, 2011 Unique Breadth and Depth Property Sales (# of Transactions) 5,550 Property Sales (Transaction Value) $45.6 billion Property Leasing (# of Transactions) 32,725 Property Leasing (Transaction Value) $46.8 billion Valuation and Advisory Assignments 34,500 Loan Originations $19.9 billion1 Loan Servicing $103.6 billion2 Property & Corporate Facilities Under Management 1.6 billion SF3 Project Management Contract Value $13.4 billion4 |
2011 Global Sales & Lease Activity Source: National Real Estate Investor, April 2012 $92.4 Billions CBRE Global CBRE Americas Top 10 Firms Excluding Networks |
Americas Advisory Services Leasing Capital Markets Property Sales Commercial Mortgage Brokerage Major Q1 2012 Transactions 1,000,000 sq. ft. Atlanta, GA 139,000 sq. ft. New York 460,000 sq. ft. Ontario, Canada 101,000 sq. ft. Arlington, VA Major Q1 2012 Transactions Hess Tower $250 Million Acquisition Financing Houston, TX San Tropez Apartments $38 Million (Sale) $30 Million (Financing) Pembroke Pines, FL Mount Airy Casino* $165 Million Recapitalization Poconos, PA SCL Apoquindo 4501 $100 Million Property Sale Santiago, Chile *closed April 2012 Percent of Q1 2012 Americas Revenue Percent of Q1 2012 Americas Revenue |
Americas Outsourcing Services Top U.S. Clients 1. Revenue includes property management, facilities management and project management fees for Global Corporate Services and Asset Services. Does not include transaction revenue associated with outsourcing activities. Asset Services Q1 2012 Global Corporate Services Q1 2012 Consulting Facilities Management Project Management Transaction Management Percent of Q1 2012 Americas Revenue1 |
Q1 2012 Performance Overview Q1 2012 Q1 2011 Revenue1 $1,350.0 million $1,186.1 million Net Income2 GAAP $27.0 million Adjusted $45.9 million GAAP $34.4 million Adjusted $40.6 million EPS2,3 GAAP $0.08 Adjusted $0.14 GAAP $0.11 Adjusted $0.13 EBITDA4 $140.5 million $113.0 million Normalized EBITDA4,5 $150.5 million $120.6 million Normalized EBITDA Margin5,6 11.1% 10.2% 1. Includes revenue from discontinued operations of $1.0 million for the three months ended March 31, 2011. 2. Adjusted net income and adjusted EPS exclude amortization expense related to incentive fees and customer relationships resulting from the ING REIM and Trammell Crow Company (TCC) acquisitions and integration and other costs related to acquisitions. 3. All EPS information is based upon diluted shares. 4. Includes EBITDA from discontinued operations of $1.0 million for the three months ended March 31, 2011. 5. Normalized EBITDA excludes integration and other costs related to acquisitions. 6. Calculation includes revenue and EBITDA from discontinued operations for the three months ended March 31, 2011. |
Revenue Breakdown 1st Quarter 2012 Includes revenue from discontinued operations of $1.0 million for the three months ended March 31, 2011. 39% 27% 13% 9% 6% 4% 1% 1% Three months ended March 31, ($ in millions) 2012 20111 % Change Property & Facilities Management 526.0 478.3 10 Leasing 362.5 353.5 3 Sales 173.8 157.9 10 Investment Management 118.8 39.4 202 Appraisal & Valuation 79.7 75.3 6 Commercial Mortgage Brokerage 56.9 39.0 46 Development Services 13.0 16.3 -20 Other 19.3 26.4 -27 Total 1,350.0 1,186.1 14 |
US Market Statistics Source: CBRE Econometric Advisors (EA) Outlooks 1Q 2012 preliminary. Starting in 2Q 2011 retail was expanded to include strip centers, neighborhood centers and community centers. US Vacancy US Absorption Trends (in millions of square feet) 1Q11 4Q11 1Q12 4Q12 F 4Q13F 2010 2011 2012F 2013F 1Q11 1Q12 Office 16.5% 16.0% 16.0% 15.7% 14.7% 20.3 26.3 17.0 44.8 5.1 -0.7 Industrial 14.1% 13.6% 13.4% 12.6% 11.5% 19.5 117.1 141.5 205.2 29.5 25.2 Retail 13.1% 13.2% 13.2% 12.4% 11.6% -3.9 2.1 23.4 37.4 -1.4 2.0 |
Sales, Leasing and Outsourcing Revenue - Americas ($ in millions) Sales Leasing 33% 4% Outsourcing 11% 36% 6% 12% $1,441.6 $1,288.6 $1,243.4 $1,174.6 $93.8 $124.3 First Quarter 2010 2011 2012 $435.4 $592.3 Full Year $232.1 $241.5 $344.4 $382.4 |
Sales, Leasing and Outsourcing Revenue EMEA ($ in millions) Sales Leasing (9%) (6%) Outsourcing 6% 3% 17% 23% $71.8 $76.3 $30.3 $27.7 First Quarter $268.9 $332.0 $197.3 $202.4 Full Year 2010 2011 2012 $70.2 $65.7 $332.6 $388.0 |
Sales, Leasing and Outsourcing Revenue Asia Pacific ($ in millions) (34%) 8% Sales Leasing Outsourcing 10% 18% 17% 22% $33.1 $21.7 First Quarter $60.3 $66.2 $134.6 $158.7 Full Year $211.7 $257.8 2010 2011 2012 $50.6 $54.6 $233.5 $273.5 |
Development Services Highlights: $93.6 million of co-investments at the end of Q1 2012 $15.0 million in recourse debt to CBRE and repayment guarantees at the end of Q1 2012 1. In Process figures include Long-Term Operating Assets (LTOA) of $1.5 billion for both 1Q 12 and 4Q 11, $1.6 billion for 4Q 10, $1.4 billion for 4Q 09 and $0.4 billion for both 4Q 08 and 4Q 07. LTOA are projects that have achieved a stabilized level of occupancy or have been held 18-24 months following shell completion or acquisition. 1 2.2 3.8 5.0 4.9 3.6 2.8 2.6 3.6 5.4 6.5 5.6 4.7 4.9 4.9 4.8 2.3 1.4 2.0 2.3 1.4 1.5 2.5 2.7 3.0 2.7 2.5 0.9 1.2 1.2 1.3 4Q98 4Q99 4Q00 4Q01 4Q02 4Q03 4Q04 4Q05 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 1Q12 Projects In Process/Pipeline ($ in billions) In Process Pipeline ($ in millions) 3/31/2012 3/31/2011 Revenue 14.9 19.2 EBITDA 9.5 13.5 EBITDA Margin 64% 70% Quarter Ended |
Global Investment Management ($ in billions) ($ in millions) CAGR 20% CAGR 26% Includes revenue from discontinued operations of $5.5 million for the twelve months ended December 31, 2011. Includes revenue from discontinued operations of $1.0 million for the three months ended March 31, 2011. Performance of combined business in line with expectations CBREs co-investments totaled $176.9 million at the end of Q1 2012 ($ in millions) 2 Investment Management Carried Interest Asset Management Acquisition, Disposition & Incentive Rental 1 34.4 103.1 5.6 17.4 11.4 4.7 51.4 125.2 Q1 2011 Q1 2012 Q1 Revenue 57.1 68.4 94.0 99.3 126.3 259.2 160.8 141.4 195.7 294.0 28.0 101.7 88.7 0.4 19.9 1.5 57.1 68.4 94.0 127.3 228.0 347.9 161.2 141.4 215.6 295.5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Annual Revenue 11.4 14.4 15.1 17.3 28.6 37.8 38.5 34.7 37.6 94.1 95.9 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1 2012 Assets Under Management |
Global Investment Management Pro-forma Normalized EBITDA For the three months ended March 31, 2012 and 2011, the Company recorded net carried interest compensation expense pertaining to future periods of $0.1 million and $1.0 million, respectively. As of March 31, 2012, the Company maintained a cumulative remaining accrual of such compensation expense of approximately $44 million, which pertains to anticipated future carried interest revenue. Includes EBITDA from discontinued operations of $1.0 million for the three months ended March 31, 2011. Calculation includes EBITDA and revenue from discontinued operations for the three months ended March 31, 2011. ($ in millions) 2012 2011 EBITDA 1 34.6 6.0 Add Back: Integration and other costs related to acquisitions 10.0 7.5 Normalized EBITDA 1 44.6 13.5 Net accrual of compensation expense related to carried interest revenue not yet recognized 0.1 1.0 Pro-forma Normalized EBITDA 1 44.7 14.5 Pro-forma Normalized EBITDA Margin 2 36% 28% Three Months Ended March 31, |
Mandatory Amortization and Maturity Schedule $ millions $700.0 million revolver facility matures in May 2015. As of March 31, 2012, the outstanding revolver balance was $34.9 million. As of March 31, 2012 1 0.0 250.0 500.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Term Loan A Term Loan A - 1 Term Loan B Term Loan C Term Loan D Sr. Subordinated Notes Sr. Unsecured Notes Revolver 1 |
Capitalization Excludes $96.6 million and $208.1 million of cash in consolidated funds and other entities not available for Company use at March 31, 2012 and December 31, 2011, respectively. Increase was due to currency translation. Net of original issue discount of $10.6 million and $11.0 million at March 31, 2012 and December 31, 2011, respectively. Represents notes payable on real estate in Development Services that are recourse to the Company. Excludes non-recourse notes payable on real estate of $378.0 million and $359.3 million at March 31, 2012 and December 31, 2011, respectively. Excludes $410.3 million and $713.4 million of aggregate non-recourse warehouse facilities at March 31, 2012 and December 31, 2011, respectively. ($ in millions) 3/31/2012 12/31/2011 Variance Cash 1 607.3 885.1 (277.8) Revolving credit facility 34.9 44.8 (9.9) Senior secured term loan A 297.5 306.2 (8.7) Senior secured term loan A-1 2 288.3 285.1 3.2 Senior secured term loan B 295.5 296.3 (0.8) Senior secured term loan C 397.0 398.0 (1.0) Senior secured term loan D 397.0 398.0 (1.0) Senior subordinated notes 3 439.4 439.0 0.4 Senior unsecured notes 350.0 350.0 - Notes payable on real estate 4 13.6 13.6 - Other debt 5 0.1 0.1 - Total debt 2,513.3 2,531.1 (17.8) Stockholders equity 1,212.2 1,151.5 60.7 Total capitalization 3,725.5 3,682.6 42.9 Total net debt 1,906.0 1,646.0 260.0 As of |
Business Outlook The cyclical recovery in commercial real estate continues to be incremental and uneven Outsourcing is likely to continue to pace our overall growth rate Leasing growth rates across the globe should continue to be modest Global investment sales will be highly dependent on regional market conditions, acknowledging that challenges remain in EMEA and Asia Pacific activity has cooled Investment management will continue to benefit from ING REIM acquisition contributions We expect continued solid improvement in normalized EBITDA margins in 2012 We are maintaining our full-year 2012 normalized EPS guidance range of $1.20 to $1.25 per diluted share |
GAAP Reconciliation Tables |
Reconciliation of Normalized EBITDA to EBITDA to Net Income Includes EBITDA related to discontinued operations of $1.0 million for the three months ended March 31, 2011. Includes depreciation and amortization related to discontinued operations of $0.3 million for the three months ended March 31, 2011. Includes interest expense related to discontinued operations of $0.7 million for the three months ended March 31, 2011. Includes revenue related to discontinued operations of $1.0 million for the three months ended March 31, 2011. Calculation includes EBITDA and revenue from discontinued operations for the three months ended March 31, 2011. ($ in millions) 2012 2011 Normalized EBITDA 1 150.5 $ 120.6 $ Adjustments: Integration and other costs related to acquisitions 10.0 7.6 EBITDA 1 140.5 113.0 Add: Interest income 2.3 2.7 Less: Depreciation and amortization 2 46.4 23.5 Interest expense 3 44.0 34.4 Provision for income taxes 25.4 23.4 Net income attributable to CBRE Group, Inc. 27.0 34.4 Revenue 4 1,350.0 $ 1,186.1 $ Normalized EBITDA Margin 5 11.1% 10.2% Three Months Ended March 31, |
Reconciliation of Net Income to Net Income, As Adjusted ($ in millions, except for per share data) 2012 2011 Net income attributable to CBRE Group, Inc. 27.0 $ 34.4 $ Amortization expense related to ING and TCC incentive fees and customer relationships acquired, net of tax 11.4 1.7 Integration and other costs related to acquisitions, net of tax 7.5 4.5 Net income attributable to CBRE Group, Inc., as adjusted 45.9 $ 40.6 $ Diluted income per share attributable to CBRE Group, Inc., as adjusted 0.14 $ 0.13 $ Weighted average shares outstanding for diluted income per share 325,738,859 322,920,829 Three Months Ended March 31, |
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