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): February 3, 2016
CBRE GROUP, INC.
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(Exact name of registrant as specified in its charter)
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Delaware |
001-32205 |
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94-3391143 | ||
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(State or other |
(Commission File Number) |
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(IRS Employer | ||
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jurisdiction of |
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Identification No.) | ||
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incorporation) |
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400 South Hope Street, 25th Floor, Los Angeles, California |
90071 |
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(Address of Principal Executive Offices) |
(Zip Code) |
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(213) 613-3333
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Registrants Telephone Number, Including Area Code
Not Applicable
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(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:
[_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12(b))
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[_] 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 February 3, 2016, the Company issued a press release reporting its financial results for the three and twelve months ended December 31, 2015. A copy of this release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Also on February 3, 2016, the Company will conduct a conference call to discuss its results of operations for the three and twelve months ended December 31, 2015 and to answer any questions raised by the calls audience. A copy of the presentation that the Company will use for this conference call is furnished as Exhibit 99.2 to this Current Report on Form 8-K. The Company has provided webcast and dial-in details for the call in the press release furnished as Exhibit 99.1 and also previously disseminated these details on January 13, 2016.
The information contained herein, including the Exhibits 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 expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
The exhibits listed below are being furnished with this Current Report on Form 8-K:
Exhibit No.
99.1 Press Release of Financial Results for the Fourth Quarter and Full Year 2015
99.2 Conference Call Presentation for the Fourth Quarter of 2015
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: February 3, 2016 |
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CBRE GROUP, INC. |
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By: |
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/s/ GIL BOROK |
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Gil Borok |
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Deputy Chief Financial Officer and |
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Chief Accounting Officer |
Exhibit 99.1
PRESS RELEASE |
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Corporate Headquarters | |
400 South Hope Street | |
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25th Floor |
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Los Angeles, CA 90071 |
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www.cbre.com |
FOR IMMEDIATE RELEASE
For further information:
Steve Iaco
Senior Managing Director
Investor Relations & Corporate Communications
212.984.6535
CBRE GROUP, INC. REPORTS ROBUST REVENUE AND ADJUSTED EARNINGS
GROWTH FOR FULL-YEAR AND FOURTH-QUARTER 2015
Adjusted Earnings Per Share up 22% to $2.05 for 2015 (26% local currency)
Fee Revenue up 14% for 2015 (20% local currency)
GAAP Net Income up 13% for 2015 (18% local currency)
18.3% Normalized EBITDA Margin on Fee Revenue for 2015
Los Angeles, CA February 3, 2016 CBRE Group, Inc. (NYSE:CBG) today reported robust revenue and adjusted earnings growth for the year and fourth quarter ended December 31, 2015, with full-year revenue and normalized EBITDA reaching new highs for the company*.
Full-Year 2015 Results
· Revenue for full-year 2015 totaled $10.9 billion, an increase of 20% (26% local currency1). Fee revenue2 increased 14% (20% local currency) to $7.7 billion. Excluding the acquired Global Workplace Solutions business, which CBRE purchased on September 1, 2015, revenue and fee revenue both increased 15% in local currency.
· Adjusted net income3 for 2015 rose 23% to $689.2 million, while adjusted earnings per diluted share3 improved 22% to $2.05. Adjustments (net of tax) for the year included $15.8 million to align the timing of carried interest expense and associated revenue recognition, $34.6 million for integration costs associated with the Global Workplace Solutions acquisition, $61.4 million of acquisition-related non-cash amortization as well as $28.6 million that was incurred to eliminate costs to enhance margins going forward.
· On a U.S. GAAP basis, net income for 2015 rose 13% to $547.1 million, and earnings per diluted share increased 12% to $1.63.
· Normalized EBITDA4 increased 21% to $1.4 billion in 2015 and EBITDA4 rose 14% to $1.3 billion for 2015.
*All percentage changes versus prior-year periods throughout this press release are in U.S. dollars except where noted.
CBRE Press Release
February 3, 2016
· Normalized EBITDA margin on fee revenue was 18.3% for 2015, a 110 basis point increase from the prior year.
· Foreign currency movement, including the marking of currency hedges to market, reduced EBITDA by approximately $34.8 million (or $0.07 per share) as compared to the prior year. Without currency effects, adjusted earnings per share would have increased 26%.
2015 was another year of exceptional performance for CBRE, said Bob Sulentic, the companys president and chief executive officer. The hard work of our people enabled us to set new company records for total revenue and earnings and drive double-digit top- and bottom-line growth. As important, we made many strategic gains, which have positioned CBRE to continue to create value for our clients and shareholders.
Fourth-Quarter 2015 Results
Adjusted Earnings Per Share up 19% to $0.81 for Q4 2015 (21% local currency)
Fee Revenue up 18% for Q4 2015 (23% local currency)
· Revenue for the fourth quarter totaled $3.7 billion, an increase of 33% (38% local currency). Fee revenue increased 18% (23% local currency) to $2.6 billion. The fourth quarter of 2015 included approximately $745 million of revenue from the acquired Global Workplace Solutions business. Excluding the acquired Global Workplace Solutions business, revenue and fee revenue were up 11% and 10%, respectively, in local currency. This growth was achieved on top of an exceptionally strong fourth quarter of 2014, when revenue increased 25% (28% local currency) compared with the year-earlier fourth quarter.
· Adjusted net income rose 19% to $271.5 million, while adjusted earnings per share improved 19% to $0.81. For the fourth quarter of 2015, adjustments (net of tax) included $15.5 million to align the timing of carried interest expense and associated revenue recognition, $16.6 million for integration costs associated with the acquired Global Workplace Solutions business, $27.2 million of acquisition-related non-cash amortization as well as $28.6 million that was incurred to eliminate costs to enhance margins going forward.
· On a U.S. GAAP basis, net income and earnings per diluted share decreased to $180.0 million and $0.53, respectively.
· Normalized EBITDA increased 26% to $517.6 million and EBITDA rose 9% to $427.6 million.
· Normalized EBITDA margin on fee revenue was 20.3%, a 130 basis point increase from the prior-year fourth quarter.
· Foreign currency movement, including the marking of currency hedges to market, reduced EBITDA by approximately $3.8 million (or $0.01 per share) as compared to the prior-year fourth quarter.
During the fourth quarter, revenue grew by double digits in all three global regions. The Americas, CBREs largest business segment, posted its 13th consecutive quarter of double-digit year-over-year increases as revenue climbed 22% (23% local currency). EMEA (Europe, the Middle East & Africa) and Asia Pacific saw revenue increase by 60% (69% local currency) and 37% (49% local currency), respectively.
CBRE Press Release
February 3, 2016
The companys principal businesses global investment management and development services also posted exceptionally strong results for the quarter.
Occupier outsourcing revenue and fee revenue more than doubled with the acquisition of Global Workplace Solutions. Excluding contributions from this acquisition, revenue and fee revenue rose 16% and 19%, respectively, in local currency. (Occupier outsourcing revenue excludes associated leasing and sales revenue, most of which is contractual.)
Global leasing revenue rose 4% (8% local currency). In the United States, growth was muted at 4%, which reflects a solid performance on top of an exceptionally strong 28% year-over-year increase in the fourth quarter of 2014. The global increase in leasing was paced by Europe notably France and the United Kingdom as well as strong contributions from Canada and Mexico.
Capital markets businesses remained highly active globally, although growth rates slowed from earlier in the year. Global property sales rose 1% (7% local currency), after accounting for a decline in market volumes in the United Kingdom. Excluding the United Kingdom, the global growth rate was 6% (13% local currency) driven by improved performance in the United States and across much of Asia Pacific and continental Europe. While investor interest in United Kingdom property remains strong, with cap rates stable and rental rates increasing in the fourth quarter, capital has been migrating to continental Europe as the economies there strengthen and property yields are higher. Commercial mortgage services revenue increased 5% (6% local currency). CBREs loan servicing portfolio totaled $135 billion at the end of 2015.
Asset Services had a strong quarter. Revenue rose 10% (15% local currency) while fee revenue increased 12% (18% local currency) with notable growth in EMEA and the Americas. Valuation revenue rose 1% (9% local currency).
During the fourth quarter, CBRE completed four in-fill acquisitions, including a data analytics firm, a retail brokerage specialist, a leader in capital markets services for affordable housing, and its former affiliate in Memphis, TN.
Fourth-Quarter 2015 Segment Results
Americas Region (U.S., Canada and Latin America)
Revenue rose 22% (23% local currency) to $2.0 billion. Fee revenue rose 15% (17% local currency) to $1.4 billion. Excluding the acquired Global Workplace Solutions business, revenue and fee revenue both rose 9% in local currency. Normalized EBITDA increased 7% (9% local currency) to $260.9 million.
EMEA Region (primarily Europe)
Revenue improved 60% (69% local currency) to $1.2 billion. Fee revenue rose 26% (36% local currency) to $687.7 million. Excluding the acquired Global Workplace Solutions business, revenue and fee revenue were up 13% and 12%, respectively, in local currency. Normalized EBITDA increased 33% (45% local currency) to $93.1 million.
Asia Pacific Region (Asia, Australia and New Zealand)
Revenue increased 37% (49% local currency) to $379.5 million. Fee revenue rose 14% (27% local currency) to $260.3 million. Excluding the acquired Global Workplace Solutions business, revenue and fee revenue were up 16% and 11%, respectively, in local currency. Normalized EBITDA increased 11% (24% local currency) to $36.8 million.
CBRE Press Release
February 3, 2016
Global Investment Management (investment management operations in the U.S., Europe and Asia Pacific)
Revenue rose 14% (22% local currency) to $142.3 million, primarily driven by higher carried interest tied to significant returns for clients on property dispositions. Normalized EBITDA increased 79% (94% local currency) to $52.2 million.
Assets Under Management (AUM) totaled $89.0 billion at the end of 2015. Compared with year-end 2014, AUM was up $1.9 billion in local currency, but down when converted into U.S. dollars. During the fourth quarter, AUM increased by $3.0 billion, after a $1.1 billion drag from currency movement.
Development Services (real estate development and investment activities primarily in the U.S.)
Revenue decreased to $20.3 million, while EBITDA more than doubled to $74.7 million. Development projects in process totaled $6.7 billion, up $1.3 billion from year-end 2014. The pipeline inventory totaled $3.6 billion, down $0.4 billion from year-end 2014, as projects have been converted from pipeline to in-process.
Business Outlook
CBRE has a sustained competitive advantage. Our leading global brand and strong culture help us to attract and keep tremendous talent and highly desirable clients. Investments in our platform, particularly in technology and data analytics, are helping our people create value for these clients. Our revenue base is more stable and stickier than ever before, Mr. Sulentic said.
While we are mindful of concerns about Chinas slowing growth and the effect of lower oil prices, fundamentals in our sector remain on solid footing. We are positioned for another strong year in 2016, but are maintaining flexibility in case the economy weakens. Our outlook is based on economists consensus view that the global economy will maintain its modest rate of growth in 2016.
CBRE anticipates double-digit growth again in 2016, supported by continued gains in market share, and expects to achieve adjusted earnings-per-share in the range of $2.27 to $2.37 for 2016. This equates to a growth rate of 13% at the mid-point of the guidance.
Conference Call Details
The Companys fourth-quarter earnings conference call will be held today (Wednesday, February 3, 2016) at 8:00 a.m. Eastern Time. A webcast, along with an associated slide presentation, will be accessible through the Investor Relations section of the Companys website at www.cbre.com/investorrelations.
The direct dial-in number for the conference call is 877-407-8037 for U.S. callers and 201-689-8037 for international callers. A replay of the call will be available starting at 1 p.m. Eastern Time on February 3, 2016, and ending at midnight Eastern Time on February 10, 2016. The dial-in number for the replay is 877-660-6853 for U.S. callers and 201-612-7415 for international callers. The access code for the replay is 13626794. A transcript of the call will be available on the Companys Investor Relations website at www.cbre.com/investorrelations.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the worlds largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices
CBRE Press Release
February 3, 2016
(excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
The information contained in, or accessible through, the Companys website is not incorporated into this press release.
Note: This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our future growth momentum, operations, financial performance (including adjusted earnings per share expectations), market share, and business outlook. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the 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: disruptions in general economic and business conditions, particularly in geographies where our business may be concentrated; volatility and disruption of the securities, capital and credit markets; interest rate increases; the cost and availability of capital for investment in real estate; clients willingness to make real estate or long-term contractual commitments and other factors affecting the value of real estate assets, inside and outside the United States; increases in unemployment and general slowdowns in commercial activity; trends in pricing and risk assumption for commercial real estate services; the effect of significant movements in average cap rates across different property types; a reduction by companies in their reliance on outsourcing for their commercial real estate needs, which would affect our revenues and operating performance; client actions to restrain project spending and reduce outsourced staffing levels; declines in lending activity of Government Sponsored Enterprises, regulatory oversight of such activity and our mortgage servicing revenue from the U.S. commercial real estate mortgage market; our ability to diversify our revenue model to offset cyclical economic trends in the commercial real estate industry; our ability to attract new user and investor clients; our ability to retain major clients and renew related contracts; our ability to leverage our global services platform to maximize and sustain long-term cash flow; our ability to maintain EBITDA margins that enable us to continue investing in our platform and client service offerings; our ability to control costs relative to revenue growth; variations in historically customary seasonal patterns that cause our business not to perform as expected; changes in domestic and international law and regulatory environments (including relating to anti-corruption, anti-money laundering, trade sanctions, currency controls and other trade control laws), particularly in Russia, Eastern Europe and the Middle East, due to the level of political instability in those regions; foreign currency fluctuations; our ability to identify, acquire and integrate synergistic and accretive businesses; costs and potential future capital requirements relating to businesses we may acquire; integration challenges arising out of our Global Workplace Solutions acquisition as well as of other companies we may acquire, and our ability to achieve expected cost synergies relating to those acquisitions; our and our employees ability to execute on, and adapt to, information technology strategies and trends; the ability of our Global Investment Management business to maintain and grow assets under management and achieve desired investment returns for our investors, and any potential related litigation, liabilities or reputational harm possible if we fail to do so; our ability to manage fluctuations in net earnings and cash flow, which could result from poor performance in our investment programs, including our participation as a principal in real estate investments; our leverage and our ability to perform under our credit facilities, indentures and other debt instruments; our exposure to liabilities in connection with real estate advisory and property management activities and our ability to procure sufficient insurance coverage on acceptable terms; liabilities under guarantees, or for construction defects, that we incur in our Development Services business; the ability of CBRE Capital Markets to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit; our ability to compete globally, or in specific geographic markets or business segments that are material to us; changes in tax laws in the United States or in other jurisdictions in which our business may be concentrated that reduce or eliminate deductions or other tax benefits we receive; our ability to maintain our effective tax rate at or below current levels; our ability to comply with laws and regulations related to our global operations, including real estate licensure, labor and employment laws and regulations, as well as the anti-corruption laws and trade sanctions of the U.S. and other countries; and the effect of implementation of new accounting rules and standards.
Additional information concerning factors that may influence the 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 Cautionary Note on Forward-Looking Statements in both our Annual Report on Form 10-K for the year ended December 31, 2014 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, as well as in the Companys press releases and other periodic filings with the Securities and Exchange Commission (the SEC). Such filings are available publicly and may be obtained on the Companys website at www.cbre.com or upon written request from CBREs Investor Relations Department at investorrelations@cbre.com.
CBRE Press Release
February 3, 2016
Note CBRE has not reconciled the (non-GAAP) adjusted earnings per share guidance included in this release to the most directly comparable GAAP measure because this cannot be done without unreasonable effort.
The terms fee revenue, adjusted net income, adjusted earnings per share (or adjusted EPS), EBITDA and Normalized EBITDA, all of which CBRE uses in this press release, are non-GAAP financial measures under SEC guidelines, and you should refer to the footnotes below as well as the Non-GAAP Financial Measures section in this press release for a further explanation of these measures. We have also included in that section reconciliations of these measures in specific periods to their most directly comparable financial measure calculated and presented in accordance with U.S. GAAP for those periods.
1 Local currency percentage change is calculated by comparing current-period results at prior-period exchange rates versus prior-period results.
2 Fee revenue is gross revenue less both client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients.
3 Adjusted net income and adjusted earnings per share (or adjusted EPS) include the impact of adjusting the provision for income taxes to a normalized rate as well as exclude the effect of selected charges from U.S. GAAP net income and U.S. GAAP earnings per diluted share. Adjustments during the periods presented included the write-off of financing costs on extinguished debt, amortization expense related to certain intangible assets attributable to acquisitions, integration and other costs related to acquisitions, cost containment expenses and certain carried interest incentive compensation expense.
4 EBITDA represents earnings before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization. Amounts shown for Normalized EBITDA further remove (from EBITDA) the impact of certain cash and non-cash charges related to acquisitions, cost containment expenses and certain carried interest incentive compensation expense.
CBRE Press Release
February 3, 2016
CBRE GROUP, INC.
OPERATING RESULTS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2015 AND 2014
(Dollars in thousands, except share data)
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Three Months Ended |
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Twelve Months Ended |
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December 31, |
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December 31, |
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2015 |
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2014 |
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2015 |
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2014 |
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Revenue |
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$ |
3,700,242 |
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$ |
2,787,194 |
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$ |
10,855,810 |
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$ |
9,049,918 |
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Costs and expenses: |
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Cost of services |
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2,530,521 |
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1,706,343 |
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7,082,932 |
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5,611,262 |
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Operating, administrative and other |
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864,771 |
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743,337 |
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2,633,609 |
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2,438,960 |
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Depreciation and amortization |
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98,598 |
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69,444 |
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314,096 |
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265,101 |
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Total costs and expenses |
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3,493,890 |
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2,519,124 |
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10,030,637 |
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8,315,323 |
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Gain on disposition of real estate |
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631 |
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20,557 |
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10,771 |
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57,659 |
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Operating income |
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206,983 |
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288,627 |
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835,944 |
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792,254 |
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Equity income from unconsolidated subsidiaries |
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123,463 |
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34,150 |
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162,849 |
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101,714 |
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Other income (loss) |
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1,118 |
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1,131 |
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(3,809) |
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12,183 |
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Interest income |
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1,454 |
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1,912 |
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6,311 |
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6,233 |
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Interest expense |
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35,813 |
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27,709 |
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118,880 |
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112,035 |
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Write-off of financing costs on extinguished debt |
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- |
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- |
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2,685 |
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23,087 |
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Income before provision for income taxes |
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297,205 |
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298,111 |
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879,730 |
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777,262 |
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Provision for income taxes |
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114,610 |
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92,441 |
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320,853 |
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263,759 |
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Net income |
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182,595 |
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205,670 |
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558,877 |
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513,503 |
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Less: Net income attributable to non-controlling interests |
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2,552 |
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1,393 |
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11,745 |
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29,000 |
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Net income attributable to CBRE Group, Inc. |
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$ |
180,043 |
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$ |
204,277 |
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$ |
547,132 |
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$ |
484,503 |
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Basic income per share: |
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Net income per share attributable to CBRE Group, Inc. |
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$ |
0.54 |
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$ |
0.62 |
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$ |
1.64 |
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$ |
1.47 |
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Weighted average shares outstanding for basic income per share |
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333,783,269 |
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331,875,303 |
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332,616,301 |
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330,620,206 |
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Diluted income per share: |
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Net income per share attributable to CBRE Group, Inc. |
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$ |
0.53 |
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$ |
0.61 |
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$ |
1.63 |
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$ |
1.45 |
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Weighted average shares outstanding for diluted income per share |
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337,223,824 |
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335,106,838 |
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336,414,856 |
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334,171,509 |
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EBITDA |
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$ |
427,610 |
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$ |
391,959 |
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$ |
1,297,335 |
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$ |
1,142,252 |
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CBRE Press Release
February 3, 2016
CBRE GROUP, INC.
SEGMENT RESULTS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER, 2015 AND 2014
(Dollars in thousands)
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Three Months Ended |
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Twelve Months Ended |
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December 31, |
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December 31, |
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2015 |
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2014 |
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2015 |
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2014 |
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Americas |
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Revenue |
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$ |
1,971,160 |
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$ |
1,620,490 |
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$ |
6,189,913 |
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$ |
5,203,766 |
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Costs and expenses: |
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Cost of services |
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1,358,386 |
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1,065,973 |
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4,116,257 |
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3,398,443 |
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Operating, administrative and other |
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373,805 |
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318,514 |
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1,257,310 |
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1,111,091 |
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Depreciation and amortization |
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64,158 |
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41,418 |
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198,908 |
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149,214 |
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Operating income |
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$ |
174,811 |
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$ |
194,585 |
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$ |
617,438 |
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$ |
545,018 |
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EBITDA |
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$ |
242,040 |
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$ |
242,917 |
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$ |
836,370 |
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$ |
725,559 |
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EMEA |
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Revenue |
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$ |
1,186,883 |
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$ |
740,093 |
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$ |
3,004,484 |
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$ |
2,344,252 |
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Costs and expenses: |
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|
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Cost of services |
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900,063 |
|
471,619 |
|
2,205,550 |
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1,605,859 |
| ||||
Operating, administrative and other |
|
221,344 |
|
198,364 |
|
624,924 |
|
582,182 |
| ||||
Depreciation and amortization |
|
23,796 |
|
15,766 |
|
68,370 |
|
64,628 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
$ |
41,680 |
|
$ |
54,344 |
|
$ |
105,640 |
|
$ |
91,583 |
|
|
|
|
|
|
|
|
|
|
| ||||
EBITDA |
|
$ |
65,175 |
|
$ |
70,205 |
|
$ |
176,321 |
|
$ |
158,424 |
|
|
|
|
|
|
|
|
|
|
| ||||
Asia Pacific |
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
$ |
379,539 |
|
$ |
277,178 |
|
$ |
1,135,070 |
|
$ |
967,777 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
| ||||
Cost of services |
|
272,072 |
|
168,751 |
|
761,125 |
|
606,960 |
| ||||
Operating, administrative and other |
|
86,580 |
|
75,329 |
|
286,706 |
|
272,946 |
| ||||
Depreciation and amortization |
|
4,223 |
|
4,044 |
|
15,580 |
|
14,661 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
$ |
16,664 |
|
$ |
29,054 |
|
$ |
71,659 |
|
$ |
73,210 |
|
|
|
|
|
|
|
|
|
|
| ||||
EBITDA |
|
$ |
20,656 |
|
$ |
33,098 |
|
$ |
87,059 |
|
$ |
87,871 |
|
|
|
|
|
|
|
|
|
|
| ||||
Global Investment Management |
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
$ |
142,329 |
|
$ |
125,152 |
|
$ |
460,700 |
|
$ |
468,941 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
| ||||
Operating, administrative and other |
|
119,631 |
|
113,280 |
|
349,324 |
|
373,977 |
| ||||
Depreciation and amortization |
|
5,925 |
|
7,499 |
|
29,020 |
|
32,802 |
| ||||
Gain on disposition of real estate |
|
- |
|
- |
|
- |
|
23,028 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
$ |
16,773 |
|
$ |
4,373 |
|
$ |
82,356 |
|
$ |
85,190 |
|
|
|
|
|
|
|
|
|
|
| ||||
EBITDA |
|
$ |
25,086 |
|
$ |
8,724 |
|
$ |
105,284 |
|
$ |
96,262 |
|
|
|
|
|
|
|
|
|
|
| ||||
Development Services |
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
$ |
20,331 |
|
$ |
24,281 |
|
$ |
65,643 |
|
$ |
65,182 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
| ||||
Operating, administrative and other |
|
63,411 |
|
37,850 |
|
115,345 |
|
98,764 |
| ||||
Depreciation and amortization |
|
496 |
|
717 |
|
2,218 |
|
3,796 |
| ||||
Gain on disposition of real estate |
|
631 |
|
20,557 |
|
10,771 |
|
34,631 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating (loss) income |
|
$ |
(42,945) |
|
$ |
6,271 |
|
$ |
(41,149) |
|
$ |
(2,747) |
|
|
|
|
|
|
|
|
|
|
| ||||
EBITDA |
|
$ |
74,653 |
|
$ |
37,015 |
|
$ |
92,301 |
|
$ |
74,136 |
|
CBRE Press Release
February 3, 2016
Non-GAAP Financial Measures
As noted above, the following measures are considered non-GAAP financial measures under SEC guidelines:
(i) Fee revenue
(ii) Net income attributable to CBRE Group, Inc., as adjusted (which we also refer to as adjusted net income)
(iii) Diluted income per share attributable to CBRE Group, Inc. shareholders, as adjusted (which we also refer to as adjusted earnings per share or adjusted EPS)
(iv) EBITDA and EBITDA, as adjusted (the latter of which we also refer to as Normalized EBITDA)
None of these measures is a recognized measurement under U.S. generally accepted accounting principles, or U.S. GAAP, and when analyzing our operating performance, readers should use them in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. Because not all companies use identical calculations, our presentation of these measures may not be comparable to similarly titled measures of other companies.
Our management generally uses these non-GAAP financial measures to evaluate operating performance and for other discretionary purposes, and the Company believes that these measures provide a more complete understanding of ongoing operations, enhance comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected charges that may obscure trends in the underlying performance of our business. The Company further uses certain of these measures, and believes that they are useful to investors, for purposes described below.
With respect to fee revenue: The Company believes that investors may find this measure useful to analyze the financial performance of our Occupier Outsourcing and Asset Services business lines and our business generally because it excludes costs reimbursable by clients, and as such provides greater visibility into the underlying performance of our business.
With respect to adjusted net income, adjusted EPS, EBITDA and Normalized EBITDA: The Company believes that investors may find these measures useful in evaluating our operating performance compared to that of other companies in our industry because their calculations generally eliminate the accounting effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitionsand in the case of EBITDA and Normalized EBITDAthe effects of financings and income tax and the accounting effects of capital spending. All of these measures may vary for different companies for reasons unrelated to overall operating performance. In the case of EBITDA and Normalized EBITDA, these measures are not intended to be measures of free cash flow for our managements discretionary use because they do not consider cash requirements such as tax and debt service payments. The EBITDA and Normalized EBITDA measures calculated herein may also differ from the amounts calculated under similarly titled definitions in our credit facilities and debt instruments, which amounts are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments. The Company also uses Normalized EBITDA and adjusted EPS as significant components when measuring our operating performance under our employee incentive compensation programs.
CBRE Press Release
February 3, 2016
Fee revenue, which excludes from revenue client reimbursed pass through costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients, is calculated as follows (dollars in thousands):
|
|
Three Months Ended |
|
Twelve Months Ended |
| ||||||||
|
|
December 31, |
|
December 31, |
| ||||||||
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Consolidated |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
$ |
3,700,242 |
|
$ |
2,787,194 |
|
$ |
10,855,810 |
|
$ |
9,049,918 |
|
Less: Pass through costs also recognized as revenue |
|
1,144,971 |
|
613,742 |
|
3,125,473 |
|
2,258,626 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fee revenue |
|
$ |
2,555,271 |
|
$ |
2,173,452 |
|
$ |
7,730,337 |
|
$ |
6,791,292 |
|
|
|
|
|
|
|
|
|
|
| ||||
Occupier Outsourcing |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenue1 |
|
$ |
1,598,159 |
|
$ |
766,140 |
|
$ |
4,034,922 |
|
$ |
2,794,422 |
|
Less: Pass through costs also recognized as revenue |
|
1,010,861 |
|
488,811 |
|
2,591,340 |
|
1,796,411 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fee revenue1 |
|
$ |
587,298 |
|
$ |
277,329 |
|
$ |
1,443,582 |
|
$ |
998,011 |
|
|
|
|
|
|
|
|
|
|
| ||||
Asset Services |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenue1 |
|
$ |
264,884 |
|
$ |
241,457 |
|
$ |
1,025,447 |
|
$ |
919,431 |
|
Less: Pass through costs also recognized as revenue |
|
134,110 |
|
124,931 |
|
534,133 |
|
462,215 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fee revenue1 |
|
$ |
130,774 |
|
$ |
116,526 |
|
$ |
491,314 |
|
$ |
457,216 |
|
|
|
|
|
|
|
|
|
|
| ||||
1 Excludes related transaction revenue. |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Americas |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
$ |
1,971,160 |
|
$ |
1,620,490 |
|
$ |
6,189,913 |
|
$ |
5,203,766 |
|
Less: Pass through costs also recognized as revenue |
|
526,538 |
|
369,032 |
|
1,690,786 |
|
1,373,291 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fee revenue |
|
$ |
1,444,622 |
|
$ |
1,251,458 |
|
$ |
4,499,127 |
|
$ |
3,830,475 |
|
|
|
|
|
|
|
|
|
|
| ||||
EMEA |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
$ |
1,186,883 |
|
$ |
740,093 |
|
$ |
3,004,484 |
|
$ |
2,344,252 |
|
Less: Pass through costs also recognized as revenue |
|
499,195 |
|
195,209 |
|
1,125,758 |
|
698,484 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fee revenue |
|
$ |
687,688 |
|
$ |
544,884 |
|
$ |
1,878,726 |
|
$ |
1,645,768 |
|
|
|
|
|
|
|
|
|
|
| ||||
Asia Pacific |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
$ |
379,539 |
|
$ |
277,178 |
|
$ |
1,135,070 |
|
$ |
967,777 |
|
Less: Pass through costs also recognized as revenue |
|
119,238 |
|
49,501 |
|
308,929 |
|
186,851 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fee revenue |
|
$ |
260,301 |
|
$ |
227,677 |
|
$ |
826,141 |
|
$ |
780,926 |
|
CBRE Press Release
February 3, 2016
Net income attributable to CBRE Group, Inc., as adjusted (or adjusted net income), and diluted income per share attributable to CBRE Group, Inc. shareholders, as adjusted (or adjusted EPS), are calculated as follows (dollars in thousands, except per share data):
|
|
Three Months Ended |
|
Twelve Months Ended | |||||||||
|
|
December 31, |
|
December 31, | |||||||||
|
|
2015 |
|
2014 |
|
2015 |
|
2014 | |||||
|
|
|
|
|
|
|
|
|
| ||||
Net income attributable to CBRE Group, Inc. |
|
$ |
180,043 |
|
$ |
204,277 |
|
$ |
547,132 |
|
$ |
484,503 |
|
|
|
|
|
|
|
|
|
|
| ||||
Plus / minus: |
|
|
|
|
|
|
|
|
| ||||
Cost containment expenses, net of tax |
|
28,581 |
|
- |
|
28,581 |
|
- |
| ||||
Amortization expense related to certain intangible assets |
|
|
|
|
|
|
|
|
| ||||
attributable to acquisitions, net of tax |
|
27,177 |
|
10,997 |
|
61,446 |
|
48,261 |
| ||||
Integration and other acquisition related costs, net of tax |
|
16,603 |
|
- |
|
34,614 |
|
- |
| ||||
Carried interest incentive compensation expense to align with |
|
|
|
|
|
|
|
|
| ||||
the timing of associated revenue, net of tax |
|
15,459 |
|
12,341 |
|
15,759 |
|
14,430 |
| ||||
Adjustment of taxes during the year to normalized rate |
|
3,633 |
|
- |
|
- |
|
- |
| ||||
Write-off of financing costs on extinguished debt, net of tax |
|
- |
|
(120) |
|
1,638 |
|
13,955 |
| ||||
Net income attributable to CBRE Group, Inc. shareholders, |
|
|
|
|
|
|
|
|
| ||||
as adjusted |
|
$ |
271,496 |
|
$ |
227,495 |
|
$ |
689,170 |
|
$ |
561,149 |
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted income per share attributable to CBRE Group, Inc. |
|
|
|
|
|
|
|
|
| ||||
shareholders, as adjusted |
|
$ |
0.81 |
|
$ |
0.68 |
|
$ |
2.05 |
|
$ |
1.68 |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average shares outstanding for diluted income |
|
|
|
|
|
|
|
|
| ||||
per share |
|
337,223,824 |
|
335,106,838 |
|
336,414,856 |
|
334,171,509 |
|
EBITDA and EBITDA, as adjusted (or Normalized EBITDA), are calculated as follows (dollars in thousands):
|
|
Three Months Ended |
|
Twelve Months Ended | |||||||||
|
|
December 31, |
|
December 31, | |||||||||
|
|
2015 |
|
2014 |
|
2015 |
|
2014 | |||||
|
|
|
|
|
|
|
|
|
| ||||
Net income attributable to CBRE Group, Inc. |
|
$ |
180,043 |
|
$ |
204,277 |
|
$ |
547,132 |
|
$ |
484,503 |
|
|
|
|
|
|
|
|
|
|
| ||||
Add: |
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
|
98,598 |
|
69,444 |
|
314,096 |
|
265,101 |
| ||||
Interest expense |
|
35,813 |
|
27,709 |
|
118,880 |
|
112,035 |
| ||||
Write-off of financing costs on extinguished debt |
|
- |
|
- |
|
2,685 |
|
23,087 |
| ||||
Provision for income taxes |
|
114,610 |
|
92,441 |
|
320,853 |
|
263,759 |
| ||||
Less: |
|
|
|
|
|
|
|
|
| ||||
Interest income |
|
1,454 |
|
1,912 |
|
6,311 |
|
6,233 |
| ||||
EBITDA |
|
427,610 |
|
391,959 |
|
1,297,335 |
|
1,142,252 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
Cost containment expenses |
|
40,439 |
|
- |
|
40,439 |
|
- |
| ||||
Carried interest incentive compensation expense to |
|
|
|
|
|
|
|
|
| ||||
align with the timing of associated revenue |
|
25,592 |
|
20,447 |
|
26,085 |
|
23,873 |
| ||||
Integration and other acquisition related costs |
|
23,943 |
|
- |
|
48,865 |
|
- |
| ||||
EBITDA, as adjusted |
|
$ |
517,584 |
|
$ |
412,406 |
|
$ |
1,412,724 |
|
$ |
1,166,125 |
|
CBRE Press Release
February 3, 2016
EBITDA and EBITDA, as adjusted (or Normalized EBITDA), for segments are calculated as follows (dollars in thousands):
|
|
Three Months Ended |
|
Twelve Months Ended | |||||||||
|
|
December 31, |
|
December 31, | |||||||||
|
|
2015 |
|
2014 |
|
2015 |
|
2014 | |||||
|
|
|
|
|
|
|
|
|
| ||||
Americas |
|
|
|
|
|
|
|
|
| ||||
Net income attributable to CBRE Group, Inc. |
|
$ |
124,955 |
|
$ |
138,434 |
|
$ |
410,894 |
|
$ |
387,302 |
|
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
|
64,158 |
|
41,418 |
|
198,908 |
|
149,214 |
| ||||
Interest expense, net |
|
17,303 |
|
3,638 |
|
34,788 |
|
15,959 |
| ||||
Write-off of financing costs on extinguished debt |
|
- |
|
- |
|
2,685 |
|
23,087 |
| ||||
Royalty and management service (income) expense |
|
(19,258) |
|
5,245 |
|
(15,136) |
|
(13,411) |
| ||||
Provision for income taxes |
|
54,882 |
|
54,182 |
|
204,231 |
|
163,408 |
| ||||
EBITDA |
|
242,040 |
|
242,917 |
|
836,370 |
|
725,559 |
| ||||
Cost containment expenses |
|
7,491 |
|
- |
|
7,491 |
|
- |
| ||||
Integration and other costs related to acquisitions |
|
11,385 |
|
- |
|
33,255 |
|
- |
| ||||
EBITDA, as adjusted |
|
$ |
260,916 |
|
$ |
242,917 |
|
$ |
877,116 |
|
$ |
725,559 |
|
EMEA |
|
|
|
|
|
|
|
|
| ||||
Net income attributable to CBRE Group, Inc. |
|
$ |
3,958 |
|
$ |
28,088 |
|
$ |
29,028 |
|
$ |
13,383 |
|
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
|
23,796 |
|
15,766 |
|
68,370 |
|
64,628 |
| ||||
Interest expense, net |
|
7,685 |
|
12,856 |
|
41,341 |
|
50,344 |
| ||||
Royalty and management service expense (income) |
|
9,723 |
|
(6,504) |
|
2,079 |
|
(5,210) |
| ||||
Provision for income taxes |
|
20,013 |
|
19,999 |
|
35,503 |
|
35,279 |
| ||||
EBITDA |
|
65,175 |
|
70,205 |
|
176,321 |
|
158,424 |
| ||||
Cost containment expenses |
|
20,014 |
|
- |
|
20,014 |
|
- |
| ||||
Integration and other costs related to acquisitions |
|
7,869 |
|
- |
|
8,868 |
|
- |
| ||||
EBITDA, as adjusted |
|
$ |
93,058 |
|
$ |
70,205 |
|
$ |
205,203 |
|
$ |
158,424 |
|
Asia Pacific |
|
|
|
|
|
|
|
|
| ||||
Net income attributable to CBRE Group, Inc. |
|
$ |
3,219 |
|
$ |
26,397 |
|
$ |
32,286 |
|
$ |
35,797 |
|
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
|
4,223 |
|
4,044 |
|
15,580 |
|
14,661 |
| ||||
Interest expense, net |
|
1,309 |
|
673 |
|
3,998 |
|
2,250 |
| ||||
Royalty and management service expense (income) |
|
7,371 |
|
(22) |
|
8,254 |
|
13,876 |
| ||||
Provision for income taxes |
|
4,534 |
|
2,006 |
|
26,941 |
|
21,287 |
| ||||
EBITDA |
|
20,656 |
|
33,098 |
|
87,059 |
|
87,871 |
| ||||
Cost containment expenses |
|
11,413 |
|
- |
|
11,413 |
|
- |
| ||||
Integration and other costs related to acquisitions |
|
4,689 |
|
- |
|
6,742 |
|
- |
| ||||
EBITDA, as adjusted |
|
$ |
36,758 |
|
$ |
33,098 |
|
$ |
105,214 |
|
$ |
87,871 |
|
Global Investment Management |
|
|
|
|
|
|
|
|
| ||||
Net income (loss) attributable to CBRE Group, Inc. |
|
$ |
2,711 |
|
$ |
(10,607) |
|
$ |
21,065 |
|
$ |
7,530 |
|
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
|
5,925 |
|
7,499 |
|
29,020 |
|
32,802 |
| ||||
Interest expense, net |
|
7,948 |
|
7,979 |
|
31,510 |
|
33,896 |
| ||||
Royalty and management service expense |
|
2,164 |
|
1,281 |
|
4,803 |
|
4,745 |
| ||||
Provision for income taxes |
|
6,338 |
|
2,572 |
|
18,886 |
|
17,289 |
| ||||
EBITDA |
|
25,086 |
|
8,724 |
|
105,284 |
|
96,262 |
| ||||
Carried interest incentive compensation expense |
|
25,592 |
|
20,447 |
|
26,085 |
|
23,873 |
| ||||
to align with the timing of associated revenue |
|
|
|
|
|
|
|
|
| ||||
Cost containment expenses |
|
1,521 |
|
- |
|
1,521 |
|
- |
| ||||
EBITDA, as adjusted |
|
$ |
52,199 |
|
$ |
29,171 |
|
$ |
132,890 |
|
$ |
120,135 |
|
Development Services |
|
|
|
|
|
|
|
|
| ||||
Net income attributable to CBRE Group, Inc. |
|
$ |
45,200 |
|
$ |
21,965 |
|
$ |
53,859 |
|
$ |
40,491 |
|
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
|
496 |
|
717 |
|
2,218 |
|
3,796 |
| ||||
Interest expense, net |
|
114 |
|
651 |
|
932 |
|
3,353 |
| ||||
Provision for income taxes |
|
28,843 |
|
13,682 |
|
35,292 |
|
26,496 |
| ||||
EBITDA |
|
$ |
74,653 |
|
$ |
37,015 |
|
$ |
92,301 |
|
$ |
74,136 |
|
CBRE GROUP, INC.
CBRE Press Release
February 3, 2016
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
|
|
December 31, |
|
December 31, |
| ||
|
|
2015 |
|
2014 |
| ||
|
|
|
|
|
| ||
Assets: |
|
|
|
|
| ||
Cash and cash equivalents1 |
|
$ |
540,403 |
|
$ |
740,884 |
|
Restricted cash |
|
72,764 |
|
28,090 |
| ||
Receivables, net |
|
2,471,740 |
|
1,736,229 |
| ||
Warehouse receivables2 |
|
1,767,107 |
|
506,294 |
| ||
Property and equipment, net |
|
529,823 |
|
497,926 |
| ||
Goodwill and other intangibles, net |
|
4,536,466 |
|
3,136,181 |
| ||
Investments in and advances to unconsolidated subsidiaries |
|
217,943 |
|
218,280 |
| ||
Other assets, net3 |
|
881,697 |
|
704,126 |
| ||
Total assets |
|
$ |
11,017,943 |
|
$ |
7,568,010 |
|
|
|
|
|
|
| ||
Liabilities: |
|
|
|
|
| ||
Current liabilities, excluding those related to long-term debt3 |
|
$ |
3,208,932 |
|
$ |
2,380,308 |
|
Warehouse lines of credit2 |
|
1,750,781 |
|
501,185 |
| ||
Revolving credit facility |
|
- |
|
4,840 |
| ||
Senior term loans, net |
|
877,899 |
|
638,076 |
| ||
5.00% senior notes, net |
|
789,144 |
|
787,947 |
| ||
4.875 senior notes, net |
|
590,469 |
|
- |
| ||
5.25% senior notes, net |
|
421,964 |
|
422,206 |
| ||
Other debt |
|
79 |
|
2,808 |
| ||
Other long-term liabilities3 |
|
619,605 |
|
529,242 |
| ||
Total liabilities |
|
8,258,873 |
|
5,266,612 |
| ||
|
|
|
|
|
| ||
Equity: |
|
|
|
|
| ||
CBRE Group, Inc. stockholders equity |
|
2,712,652 |
|
2,259,830 |
| ||
Non-controlling interests |
|
46,418 |
|
41,568 |
| ||
Total equity |
|
2,759,070 |
|
2,301,398 |
| ||
Total liabilities and equity |
|
$ |
11,017,943 |
|
$ |
7,568,010 |
|
1 Includes $70.2 million and $58.0 million of cash in consolidated funds and other entities not available for Company use as of December 31, 2015 and 2014, respectively.
2 Represents loan receivables, the majority of which are offset by related warehouse line of credit facilities.
3 In the fourth quarter of 2015, the Company elected to early adopt the provisions of ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This ASU requires the offset of all deferred tax assets and liabilities, including valuation allowances, for each tax-paying jurisdiction within each tax-paying component. The net deferred tax must be presented as a single noncurrent amount. In connection with the early adoption of ASU 2015-17 as well as due to other reclassifications made to tax accounts, changes were made to the prior year to conform to the current year presentation.
Exhibit 99.2
Cbre group, inc. Fourth Quarter 2015: Earnings Conference Call February 3, 2016
This presentation contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding CBREs future growth momentum, operations, business outlook, financial performance, market share, earnings and adjusted EPS expectations for 2016. These statements are estimates only and actual results may ultimately differ from them. 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 fourth quarter earnings report, filed on Form 8-K, our quarterly report on Form 10-Q for the quarter ended September 30, 2015 and our most recent 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 forward-looking statements 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. Where 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. Forward-Looking Statements
Conference Call Participants Bob Sulentic President and Chief Executive Officer Gil Borok Deputy Chief Financial Officer and Chief Accounting officer Jim Groch Chief Financial Officer Steve Iaco Investor Relations and corporate communications
Full year 2015 global results First firm in our sector to exceed $10 billion in revenue and $1.4 billion in normalized EBITDA Strategic gains across CBRE: Materially stronger Occupier Outsourcing business Brought together transaction and advisory for integrated Leasing solutions Market share gains in Capital Markets around the globe Acquired nine leading companies ($1.6 billion in total purchase price) to enhance capabilities Third straight year of outsized broker recruiting gains Opened 30th new collaborative and innovative workplace Balance sheet strength highlighted by investment-grade credit ratings
Full year 2015 Performance Overview Revenue Fee Revenue1 EBITDA Normalized EBITDA2 Fee Revenue Margin3 Net Income4 EPS4,5 2015 $ 10,856 M $ 7,730 M $ 1,297 M $ 1,413 M 18.3% GAAP $ 547 M $ 1.63 Adjusted $ 689 M $ 2.05 2014 $ 9,050 M $ 6,791 M $ 1,142 M $ 1,166 M 17.2% GAAP $ 485 M $ 1.45 Adjusted $ 561 M $ 1.68 Change 2015-over-2014 USD 20% 14% 14% 21% 110 bps 23%6 22%6 Local Currency 26% 20% 18% 26% n/a 29%6 26%7 Note: Revenue includes approximately $982 million attributable to Global Workplace Solutions business acquired on September 1, 2015. See slide 16 for footnotes.
Revenue ($ in millions) Contractual Revenue Sources Leasing Capital Markets Other Occupier Outsourcing1 Asset Services1 Investment Management Valuation Leasing Sales Commercial Mortgage Services Development Services Other Total Gross Revenue 2015 $ 4,035 $ 1,025 $ 461 $ 504 $ 2,524 $ 1,696 $ 480 $ 53 $ 78 $ 10,856 Fee Revenue2 2015 $ 1,443 $ 491 $ 461 $ 504 $ 2,524 $ 1,696 $ 480 $ 53 $ 78 $ 7,730 % of 2015 Total Fee Revenue 19% 6% 6% 6% 33% 22% 6% 1% 1% 100% Fee Revenue Growth Rate (Change 2015-over- 2014) USD 45% 7% 2% 9% 7% 11% 28% 8% 8% 14% Local Currency 52% 14% 6% 19% 11% 18% 28% 8% 3% 20% FULL Year 2015 BUSINESS LINE REVENUE Occupier Outsourcing and Asset Services revenue excludes associated leasing and sales revenue, most of which is contractual. 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. 70% of total fee revenue Contractual revenue & leasing, which is largely recurring, is 70% of fee revenue
Q4 2015 Performance Overview Revenue Fee Revenue1 EBITDA Normalized EBITDA2 Fee Revenue Margin3 Net Income4 EPS4,5 Q4 2015 $ 3,700 M $ 2,555 M $ 428 M $ 518 M 20.3% GAAP $ 180 M $ 0.53 Adjusted $ 271 M $ 0.81 Q4 2014 $ 2,787 M $ 2,173 M $ 392 M $ 412 M 19.0% GAAP $ 204 M $ 0.61 Adjusted $ 227 M $ 0.68 Change Q4 2015-over-Q4 2014 USD 33% 18% 9% 26% 130bps 19%6 19%6 Local Currency 38% 23% 13% 31% n/a 23%6 21%7 Note: Revenue includes approximately $745 million attributable to Global Workplace Solutions business acquired on September 1, 2015. See slide 16 for footnotes.
Q4 2015 Region Highlights (% Increase in Local Currency) Regional Business Overview Americas EMEA Asia Pacific Fee Revenue 17% Ex. acquired GWS 9% Fee Revenue 36% Ex. acquired GWS 12% Fee Revenue 27% Ex. acquired GWS 11%
Revenue ($ in millions) Contractual Revenue Sources Leasing Capital Markets Other Occupier Outsourcing1 Asset Services1 Investment Management Valuation Leasing Sales Commercial Mortgage Services Development Services Other Total Gross Revenue Q4 2015 $ 1,598 $ 265 $ 142 $ 144 $ 851 $ 525 $ 136 $ 17 $ 22 $ 3,700 Fee Revenue2 Q4 2015 $ 587 $ 131 $ 142 $ 144 $ 851 $ 525 $ 136 $ 17 $ 22 $ 2,555 % of Q4 2015 Total Fee Revenue 23% 5% 6% 6% 33% 20% 5% 1% 1% 100% Fee Revenue Growth Rate (Change Q4 2015-over-Q4 2014) USD 112% 12% 14% 1% 4% 1% 5% 2% 17% 18% Local Currency 118% 18% 22% 9% 8% 7% 6% 2% 15% 23% Q4 2015 BUSINESS LINE REVENUE Occupier Outsourcing and Asset Services revenue excludes associated leasing and sales revenue, most of which is contractual. 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. 73% of total fee revenue Contractual revenue & leasing, which is largely recurring, is 73% of fee revenue
Q4 Full Year New 18 115 Expansions 15 102 Renewals 18 76 Occupier outsourcing Global Workplace Solutions integration activities proceeding as planned 2015 total contracts reach new high Continued strong growth in: International markets Health care Data centers 2015 TOTAL CONTRACTS1 Facilities Management Transaction Services Project Management highlights Q4 2015 Representative Clients Company Record Does not include contracts from the newly acquired Global Workplace Solutions business.
Global Investment management CAPITAL RAISED1 ASSETS UNDER MANAGEMENT (AUM) ($ in billions) ($ in billions) Financial results Revenue Carried Interest Asset Management Acquisition, Disposition, Incentive & Other Capital to deploy: approx. $4.8 billion3 Co-Investment: $145.1 million3 ($ in millions) Q4 2015 AUM versus Q4 2014 AUM is up by $1.9 billion in local currency (USD decline of $1.6 billion driven by exchange rate impact) Normalized EBITDA2 See slide 16 for footnotes. Full Year Q4 Full Year Q4 29.2 52.2 2014 2015 85.8 83.7 18.6 28.8 20.8 29.8 125.2 142.3 2014 2015 3.7 5.0 8.6 7.0 2012 2013 2014 2015 92.0 89.1 90.6 89.0 2012 2013 2014 2015 356.9 330.6 82.3 73.0 29.7 57.1 468.9 460.7 2014 2015 120.1 132.9 2014 2015
Full Year Revenue Pro-forma Revenue3 Development Services 1 $131.1 million of co-investments at the end of Q4 2015 $12.4 million in repayment guarantees on outstanding debt balances at the end of Q4 2015 Financial results PROJECTS IN PROCESS/PIPELINE ($ in billions) ($ in millions) 2 Revenue Q4 Q4 Full Year EBITDA See slide 16 for footnotes. 74.1 92.3 2014 2015 37.0 74.7 2014 2015 24.3 20.3 74.9 138.1 2014 2015 65.2 65.6 172.9 207.6 2014 2015 4.2 4.9 5.4 6.7 2.1 1.5 4.0 3.6 4Q12 4Q13 4Q14 4Q15 In Process Pipeline
Normalized EBITDA up 21% for the year and 26% for the quarter Achieved a margin of 18.3% on fee revenue in 2015 $3 billion of available liquidity Key 2015 financial takeaways .
Occupier Outsourcing revenue anticipated to continue low double-digit growth before the contributions from the acquired Global Workplace Solutions business Leasing revenue expected to increase at a high single-digit rate Capital Markets (Property Sales and Commercial Mortgage Services) revenue estimated to grow at a mid to high single-digit rate Normalized EBITDA from the combined principal businesses (Investment Management and Development Services) anticipated to be flat to slightly down, reflecting a very strong 2015 Expect to achieve 2016 adjusted EPS in the range of $2.27 - $2.37, 13% growth at the mid-point of the range 2016 Business Outlook
Supplemental slides and GAAP Reconciliation tables
Footnotes Slides 5 & 7 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. Normalized EBITDA excludes (from EBITDA) certain carried interest incentive compensation expense, cost containment expenses and integration and other costs related to acquisitions. Fee revenue margin is based on Normalized EBITDA. Adjusted net income and adjusted EPS include the impact of an adjusting provision for income taxes to a normalized rate (Q4 2015) as well as exclude amortization expense related to certain intangible assets attributable to acquisitions, the write-off of financing costs, cost containment expenses, integration and other costs related to acquisitions, and adjusts the timing of certain carried interest incentive compensation expense to align with the timing of associated revenue. All EPS information is based on diluted shares. Based on adjusted results. Based on adjusted results and excludes net impact of mark-to-market hedges and exchange rate transaction impact. Slide 11 Excludes securities business. Normalized EBITDA excludes (from EBITDA) certain carried interest incentive compensation expense to align with the timing of associated revenue, and cost containment expenses. As of December 31, 2015. Slide 12 In Process figures include Long-Term Operating Assets (LTOA) of $0.1 billion for Q4 15, $0.3 billion for 4Q 14, $0.9 billion for 4Q 13, and $1.2 billion for 4Q 12. LTOA are projects that have achieved a stabilized level of occupancy or have been held 18-24 months following shell completion or acquisition. Pipeline deals are projects we are pursuing which we believe have a greater than 50% chance of closing or where land has been acquired and the projected construction start is more than 12 months out. Pro-forma revenue is revenue plus equity in unconsolidated subsidiaries and gains on sales of assets net of non-controlling interest. Note Local currency percent changes versus prior year is a non-GAAP measure noted on slides 5, 6, 7, 8 and 9. These percent changes are calculated by comparing current year results at prior year exchange rates versus prior year results. In addition, in compliance with Regulation G, we have not reconciled the (non-GAAP) guidance for our adjusted earnings per share or Normalized EBITDA for our principal businesses to the most directly comparable GAAP measure because this cannot be done without unreasonable effort.
Mandatory Amortization and Maturity Schedule ($ in millions) $2,600 million revolving credit facility matures in January 2020. As of December 31, 2015, the revolving credit facility balance was zero. As of December 31, 20151 Global Cash Global Cash Available Revolving Credit Facility 425 3,068 34 45 57 139 525 29 59 800 600 0 500 1000 1500 2000 2500 3000 3500 Liquidity 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Cash Revolving Credit Facility Term Loan A Term Loan B-1 Term Loan B-2 Senior Notes - 5.00% Senior Notes - 4.875% Senior Notes - 5.25%
Capitalization Excludes $70.2 million of cash in consolidated funds and other entities not available for Company use at December 31, 2015. Outstanding amount is reflected net of unamortized debt issuance costs. Excludes $1,750.8 million of warehouse facilities for loans originated on behalf of FHA and other government sponsored enterprises outstanding at December 31, 2015, which are non-recourse to CBRE Group, Inc. Excludes non-recourse notes payable on real estate, net of unamortized debt issuance costs, of $38.3 million at December 31, 2015. ($ in millions) As of December 31, 2015 Cash1 $ 470 Revolving credit facility - Senior term loan A2 484 Senior term loan B-12 266 Senior term loan B-22 128 Senior notes 5.00%2 789 Senior notes 4.875%2 591 Senior notes 5.25%2 422 Other debt3,4 - Total debt $ 2,680 Stockholders equity 2,713 Total capitalization $ 5,393 Total net debt $ 2,210 Net debt to Normalized EBITDA 1.6x
($ in millions) Occupier Outsourcing & Asset Services1 Leasing Sales Gross Fee2 Q4 2015 $ 831 $ 305 $ 600 $ 334 USD3 52% 72% 3% 8% Local Currency3 54% 75% 5% 10% Local Currency ex. GWS3 11% 13% 5% 10% Occupier Outsourcing and Asset Services revenue excludes associated leasing and sales revenue, most of which is contractual. 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. Growth rate for Q4 2015 versus Q4 2014. Americas revenue Q4 2015 fee revenue up 15% in USD and 17% in local currency
($ in millions) Occupier Outsourcing & Asset Services1 Leasing Sales Gross Fee2 Q4 2015 $ 840 $ 341 $ 163 $ 118 USD3 126% 93% 11% 17% Local Currency3 135% 103% 22% 8% Local Currency ex. GWS3 23% 29% 22% 8% EMEA revenue Q4 2015 fee revenue up 26% in USD or 36% in local currency Occupier Outsourcing and Asset Services revenue excludes associated leasing and sales revenue, most of which is contractual. 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. Growth rate for Q4 2015 versus Q4 2014.
($ in millions) Occupier Outsourcing & Asset Services1 Leasing Sales Gross Fee2 Q4 2015 $ 189 $ 70 $ 87 $ 73 USD3 125% 102% 5% 7% Local Currency3 134% 111% 4% 23% Local Currency ex. GWS3 25% 11% 4% 23% Asia Pacific revenue Q4 2015 fee revenue up 14% in USD or 27% in local currency Occupier Outstanding and Asset Services revenue excludes associated leasing and sales revenue, most of which is contractual. 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. Growth rate for Q4 2015 versus Q4 2014.
U.S. VACANCY U.S. ABSORPTION TRENDS (in MSF) 4Q14 4Q15 1Q16F 4Q16F 4Q14 4Q15 2015 2016F Office 14.0% 13.4% 13.1% 12.5% 16.4 12.3 53.9 55.0 Industrial 10.2% 9.6% 9.7% 9.7% 79.4 39.7 215.1 139.6 Retail 11.4% 11.4% 10.7% 9.5% 6.4 12.0 25.7 56.6 U.S. Market Statistics Source: CBRE Econometric Advisors (EA) Outlooks 4Q 2015 preliminary U.S. INVESTMENT VOLUME AND CAP RATES 4Q14 3Q15 4Q15 Office Volume ($B) 39.6 34.3 39.1 Cap Rate 6.7% 6.8% 6.7% Industrial Volume ($B) 15.4 13.4 25.7 Cap Rate 7.0% 6.8% 6.7% Retail Volume ($B) 24.9 20.0 27.8 Cap Rate 6.6% 6.6% 6.4% Source: CBRE EA estimates from RCA data January 2016
Other Financial metrics Twelve Months Ended December 31, ($ in millions) 2016 Forecast 2015 2014 Depreciation $ approx. 150 $ 138.7 $ 126.5 Normalized amortization 1 approx. 110 88.8 72.5 Net interest expense approx. 140 112.6 105.8 Normalized income taxes 383.5 300.2 Normalized income tax rate 35.5% 35.7% 34.9% Q4 2015 Currency Effects vs. Prior Year Q4 2015 currency translation as well as other exchange rate transaction gains/(losses) during Q4 2015 against same quarter prior year (pre-tax EBITDA impact) ($10.6) million Q4 2015 mark-to-market of currency hedges against same quarter prior year (pre-tax EBITDA impact) $6.8 million Excludes amortization expense related to certain intangible assets attributable to acquisitions and write-off of financing costs of $89.2 million in 2015 and $89.2 million in 2014.
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 EBITDA, as adjusted (the latter of which we also refer to as Normalized EBITDA) None of these measures is a recognized measurement under U.S. generally accepted accounting principles, or U.S. GAAP, and when analyzing our operating performance, readers should use them in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. Because not all companies use identical calculations, our presentation of these measures may not be comparable to similarly titled measures of other companies. Our management generally uses these non-GAAP financial measures to evaluate operating performance and for other discretionary purposes, and the Company believes that these measures provide a more complete understanding of ongoing operations, enhance comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected charges that may obscure trends in the underlying performance of our business. The Company further uses certain of these measures, and believes that they are useful to investors, for purposes described below. With respect to fee revenue: The Company believes that investors may find this measure useful to analyze the financial performance of our Occupier Outsourcing and Asset Services business lines and our business generally because it excludes costs reimbursable by clients and, as such, provides greater visibility into the underlying performance of our business. With respect to adjusted net income, adjusted EPS, EBITDA and Normalized EBITDA: The Company believes that investors may find these measures useful in evaluating our operating performance compared to that of other companies in our industry because their calculations generally eliminate the accounting effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions, andin the case of EBITDA and Normalized EBITDAthe effects of financings and income tax and the accounting effects of capital spending. All of these measures may vary for different companies for reasons unrelated to overall operating performance. In the case of EBITDA and Normalized EBITDA, these measures are not intended to be measures of free cash flow for our managements discretionary use because they do not consider cash requirements such as tax and debt service payments. The EBITDA and Normalized EBITDA measures calculated herein may also differ from the amounts calculated under similarly titled definitions in our credit facilities and debt instruments, which amounts are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments. The Company also uses Normalized EBITDA and adjusted EPS as significant components when measuring our operating performance under our employee incentive compensation programs.
Three Months Ended December 31, Twelve Months Ended December 31, ($ in millions) 2015 2014 2015 2014 Occupier Outsourcing revenue 1 $ 1,598.1 $ 766.1 $ 4,034.9 $ 2,794.4 Less: Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients 1,010.8 488.8 2,591.3 1,796.4 Occupier Outsourcing fee revenue 1 $ 587.3 $ 277.3 $ 1,443.6 $ 998.0 AS revenue 1 $ 264.9 $ 241.4 $ 1,025.4 $ 919.4 Less: Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients 134.1 124.9 534.1 462.2 AS fee revenue 1 $ 130.8 $ 116.5 $ 491.3 $ 457.2 Consolidated revenue $ 3,700.2 $ 2,787.2 $ 10,855.8 $ 9,049.9 Less: Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients 1,144.9 613.7 3,125.5 2,258.6 Consolidated fee revenue $ 2,555.3 $ 2,173.5 $ 7,730.3 $ 6,791.3 Reconciliation of revenue to fee revenue Occupier Outsourcing and Asset Services (AS) revenue excludes associated leasing and sales revenue, most of which is contractual.
Three Months Ended December 31, ($ in millions) 2015 2014 Americas revenue $ 1,971.1 $ 1,620.5 Less: Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients 526.5 369.0 Americas fee revenue $ 1,444.6 $ 1,251.5 EMEA revenue $ 1,186.9 $ 740.1 Less: Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients 499.2 195.2 EMEA fee revenue $ 687.7 $ 544.9 Asia Pacific revenue $ 379.5 $ 277.2 Less: Client reimbursed costs largely associated with employees dedicated to client facilities and subcontracted vendor work performed for clients 119.2 49.5 Asia Pacific fee revenue $ 260.3 $ 227.7 Reconciliation of revenue to fee revenue by segment
Three Months Ended December 31, Twelve Months Ended December 31, ($ in millions) 2015 2014 2015 2014 Normalized EBITDA $ 517.6 $ 412.4 $ 1,412.7 $ 1,166.1 Adjustments: Cost containment expenses 40.4 - 40.4 - Carried interest incentive compensation expense 25.6 20.4 26.1 23.8 Integration and other costs related to acquisitions 24.0 - 48.9 - EBITDA 427.6 392.0 1,297.3 1,142.3 Add: Interest income 1.4 1.9 6.3 6.2 Less: Depreciation and amortization 98.6 69.4 314.1 265.1 Interest expense 35.8 27.7 118.9 112.0 Write-off of financing costs - - 2.7 23.1 Provision for income taxes 114.6 92.5 320.8 263.8 Net income attributable to CBRE Group, Inc. $ 180.0 $ 204.3 $ 547.1 $ 484.5 Reconciliation of Normalized EBITDA to EBITDA to Net Income
Three Months Ended December 31, Twelve Months Ended December 31, ($ in millions, except per share amounts) 2015 2014 2015 2014 Net income attributable to CBRE Group, Inc. $ 180.0 $ 204.3 $ 547.1 $ 484.5 Cost containment expenses, net of tax 28.6 - 28.6 - Amortization expense related to certain intangible assets attributable to acquisitions, net of tax 27.2 11.0 61.5 48.3 Integration and other costs related to acquisitions, net of tax 16.6 - 34.6 - Carried-interest incentive compensation expense, net of tax 15.5 12.3 15.8 14.4 Adjustment of taxes to normalized rate 3.6 - - - Write-off of financing costs, net of tax - (0.1) 1.6 13.9 Adjusted net income $ 271.5 $ 227.5 $ 689.2 $ 561.1 Adjusted earnings per share $ 0.81 $ 0.68 $ 2.05 $ 1.68 Weighted average shares outstanding for diluted income per share 337,223,824 335,106,838 336,414,856 334,171,509 Reconciliation of Net Income to adjusted Net Income and adjusted earnings per share
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