CBRE GROUP, INC. REPORTS 2014 REVENUE GROWTH OF 26% AND 25% FOR FOURTH QUARTER
CBRE GROUP, INC. REPORTS 2014 REVENUE GROWTH OF 26% AND 25% FOR FOURTH QUARTER
4 February 2015
Los Angeles, CA – February 4, 2015 — CBRE Group, Inc. (NYSE:CBG) today reported strong revenue
and earnings growth for the year ended December 31, 2014.
Full-Year 2014 Results
Revenue for full-year 2014
totaled $9.0 billion, an increase of 26% (27% in local currency) from $7.2
billion in 2013.
Excluding selected charges1, net
income2 for 2014 rose 18% to $561.1 million from $474.3 million
in 2013, while earnings per diluted share improved 17% to $1.68 from $1.43
for the prior year. Selected charges
(net of income taxes) totaled $76.6 million and $157.8 million in 2014 and
Excluding carried interest in the Global
Investment Management segment from both years, adjusted earnings per diluted
share rose 31% from the prior year. 2013
included significantly more carried interest than 2014.
On a U.S. GAAP basis, net income
rose to $484.5 million, or $1.45 per diluted share, for 2014, up more than
50% from $316.5 million, or
$0.95 per diluted share, for 2013.
Prior-year results included a non-cash intangible asset impairment
in the Global Investment Management business in continental Europe.
selected charges, Earnings Before Interest Taxes Depreciation and
Amortization (EBITDA)3 increased 14% to $1.2 billion
in 2014 from $1.0 billion in the prior year. EBITDA3 (including
selected charges) rose 16% to $1.1 billion for 2014 from $982.9 million for
for the year was positively impacted by less than $1.0 million as a result of
foreign currency translation, after the effect of hedging.
Revenue for the quarter totaled $2.8 billion, an
increase of 25% (28% in local currency) from
$2.2 billion in the fourth quarter of 2013.
Excluding selected charges1, net
income2 rose 3% to $227.5 million from $221.3 million in the fourth
quarter of 2013, and adjusted earnings per diluted share rose to $0.68 from $0.67
in the prior-year period. For the fourth quarter, selected charges (net of
income taxes) totaled $23.2 million versus $106.6 million for the same period
Excluding carried interest in the Global
Investment Management segment from both quarters, adjusted earnings per diluted
share rose 18% from the prior-year quarter.
The 2013 fourth quarter included significantly more carried-interest than
the 2014 fourth quarter.
On a U.S. GAAP basis, net income rose 78% to $204.3
million, compared with $114.6 million for the fourth quarter of 2013. GAAP earnings per diluted share rose 79% to
$0.61, compared with $0.34 in last year’s fourth quarter. Prior-year results included the non-cash charge
referenced in the 2014 full-year results summary.
Excluding selected charges, EBITDA3 increased 5% to $412.4 million from $392.7
million in the fourth quarter of 2013. EBITDA3
(including selected charges) rose 9% to $392.0 million for the fourth
quarter of 2014, from $358.3 million for the same period a year earlier.
for the quarter was negatively impacted by approximately $7.0 million as a
result of foreign currency translation, after the effect of hedging.
“2014 was a banner year for CBRE,” said Bob
Sulentic, the company’s president and chief executive officer. “We generated
strong growth and reached new milestones for total revenue and EBITDA. We achieved these results by investing in our
professionals and platform, as our people worked together to create distinct
advantages for our clients. Importantly,
for the full year, our regional services businesses, together, achieved
significant operating leverage before the contributions from Norland. In the fourth quarter, our people drove
continued strong gains in our global leasing, occupier outsourcing and capital
markets business lines as well as in our U.S. real estate development services business.”
For the quarter, revenue rose significantly in all
three global regions. The Americas, CBRE’s largest business segment, saw a 19%
(20% in local currency) revenue increase, as every major business line produced
double-digit growth. In Europe, the Middle East and Africa (EMEA), organic
revenue improved 16% (23% in local currency), or 71% (78% in local currency)
including the contributions from Norland Managed Services Ltd, which CBRE
acquired in December 2013. Asia Pacific
posted revenue growth of 8% (14% in local currency), fueled by notable strength
in Australia, India and Japan.
Among global business lines, revenue growth was
paced by property leasing, which logged its sixth consecutive quarter of
double-digit revenue increases. Globally, this business line saw revenue rise
by 20% (23% in local currency) during the fourth quarter. This result reflects
investments in growth initiatives as well as better underlying market
The strong growth of CBRE’s occupier outsourcing
business continued in the fourth quarter.
The company signed outsourcing contracts with 37 new customers – the
most ever for a single quarter – reflecting its success at delivering
integrated, value-added solutions for major occupiers. Globally, revenue from occupier
outsourcing, including related transaction revenues, improved 59% (60% in local
currency), or 17% (19% in local currency) without the contributions from
Norland, during the fourth quarter.
Global property sales revenue improved 14% (17%
in local currency) in the fourth quarter, with increases of 20% or more in the United
States, France and Spain. Global commercial mortgage services revenue increased
robustly, rising 34% (35% in local currency) in the fourth quarter, reflecting
continued strong capital flows into commercial real estate as well as the
company's efforts to expand this service offering outside the U.S.
The Development Services business continued to
perform exceptionally well during the quarter, with revenue improving 32% (same
in local currency).
As expected, Global
Investment Management revenue declined during the quarter. The 26% (24% in local currency) decrease was
primarily due to significantly higher carried-interest revenue in last year’s
fourth quarter than in the fourth quarter of 2014. Carried interest is
performance-based revenue that is generated when CBRE sells assets within its
investment portfolios at values that exceed specified return thresholds. Capital raising
activity in the Global Investment Management business remained strong, totaling
approximately $8.6 billion for the full year.
During the fourth
quarter, Standard & Poor’s raised CBRE’s corporate rating to Investment Grade.
CBRE has taken advantage of liquidity and low interest rates in the debt
markets to optimize the strength and flexibility of its balance sheet. In
December 2014, the company issued $125 million of senior notes due 2025, following
an earlier offering of $300 million of the same series of notes in September
2014. In January 2015, CBRE closed on an expanded $2.6 billion, five-year
revolving credit facility and $500 million Tranche A term loan facility. The company used the proceeds from the new
term loan and the December 2014 notes offering, along with cash on hand, to pay
off the balances on its shorter-maturity, higher-interest rate term loans and
the outstanding balance of approximately $5 million on its prior revolving credit
2014 Segment Results
Americas Region (U.S., Canada
and Latin America)
> Revenue rose 19% (20% in local currency) to $1.62
billion, compared with $1.36 billion for the fourth quarter of 2013. The
revenue growth was driven by higher property sales, leasing, occupier
outsourcing and commercial mortgage services activities.
> EBITDA increased 21% to $242.9 million compared
with $201.3 million in last year’s fourth quarter.
> Operating income totaled $194.6 million, an
increase of 18% from $165.3 million for the prior-year fourth quarter.
EMEA Region (primarily Europe)
> Revenue rose 71% (78% in local currency) to $740.1
million, compared with $432.7 million for the fourth quarter of 2013. Excluding the contributions from Norland, EMEA
revenue increased 16% (23% in local currency) over the prior-year period. The increase was driven by higher property
sales, leasing and appraisal activities as well as strong organic growth in
occupier outsourcing. The company achieved significant improvement in several
countries, including Germany, Ireland, the Netherlands, Spain and the United
> EBITDA increased 66% to $70.2 million compared
with $42.3 million in the prior-year fourth quarter. The prior-year quarter was impacted by
selected charges totaling $13.7 million for integration and other costs related
to acquisitions, primarily Norland, as well as cost containment expenses, which
did not recur in the fourth quarter of 2014.
> Operating income totaled $54.3 million, an increase
of 54% from $35.2 million for the fourth quarter of 2013. Prior-year operating income was impacted by
the same selected charges that impacted EBITDA.
Pacific Region (Asia, Australia and New Zealand)
> Revenue was $277.2 million, an increase of 8% (14%
in local currency) from $255.6 million for the fourth quarter of 2013. Performance
improved in several countries, particularly Australia, India and Japan.
> EBITDA increased 28% to $33.1 million compared
with $25.9 million in the prior-year fourth quarter. The prior-year period was impacted by
selected charges totaling $4.3 million related to cost containment and
acquisition-related integration expenses, which did not recur in the fourth
quarter of 2014.
> Operating income totaled $29.1 million, an
increase of 32% compared with $22.1 million in the fourth quarter of 2013. Prior-year
operating income was impacted by the same selected charges that impacted
Investment Management (investment management operations in the U.S., Europe
and Asia Pacific)
> Revenue totaled $125.2 million compared with $168.0
million for the fourth quarter of 2014. The decrease was largely driven by the
decline in carried-interest revenue.
> Excluding selected charges, EBITDA totaled $29.2
million compared with $82.2 million in the prior-year fourth quarter. EBITDA (including selected items) totaled $8.7
million compared with $66.9 million in the fourth quarter of 2013. These results include the impact of carried
interest described above.
> Prior-year period results included $58.4 million
of normalized EBITDA associated with carried interest while fourth-quarter 2014
results included $11.7 million of normalized EBITDA associated with carried interest.
> Operating income was $4.4 million compared with an
operating loss of $45.3 million for the fourth quarter of 2013.
> Assets Under Management increased during the
quarter by $3.8 billion in local currency - offset by $1.8 billion of exchange rate
to $90.6 billion, driven by strong acquisition activity and higher property and
Services (real estate development and investment activities primarily in
> Revenue rose 32% to $24.3 million, compared with
$18.4 million for the fourth quarter of 2013.
> EBITDA increased 70% to $37.0 million compared
with $21.8 million in the prior-year period. The increase was largely driven by
higher income from property sales (reflected primarily in gain on disposition
of real estate) in the fourth quarter of 2014.
> Operating income totaled $6.3 million compared
with an operating loss of $8.0 million for the fourth quarter of 2013. Under U.S. GAAP, equity earnings are not included
in the calculation of operating income. If equity earnings were included, operating
income would have totaled $34.0 million in the fourth quarter of 2014, compared
to $19.0 million for the fourth quarter of 2013.
> Development projects in process totaled $5.4
billion, up $300 million from third-quarter 2014, and the inventory of pipeline
deals totaled $4.0 billion, up $1.1 billion from third-quarter 2014. Most of
the pipeline increase is due to fee-development work in the health care sector.
“By any measure,
2014 was an excellent year for CBRE, and we believe 2015 will be another year
of strong growth,” Mr. Sulentic said. “The investments we’ve made in our people
and operating platform have materially strengthened our global business lines
and positioned them for further market share gains by delivering enhanced value
to our clients.”
In light of its
outlook for its business performance in 2015, CBRE expects to achieve
earnings-per-share, as adjusted, in the range of $1.90 to $1.95 for the full year.
Conference Call Details
The company’s fourth-quarter earnings conference
call will be held today (Wednesday, February 4, 2015) at 5:00 p.m. Eastern
Time. A webcast will be accessible
through the Investor Relations section of the company’s website at www.cbre.com/investorrelations.
The direct dial-in number for the conference
call is 877-407-8037 for U.S. callers and 201-689-8037 for international
callers. A replay of the call will be
available starting at 10 p.m. Eastern Time on February 4, 2015, and ending at
midnight Eastern Time on February 11, 2015. The dial-in number for the replay
is 877-660-6853 for U.S. callers and 201-612-7415 for international
callers. The access code for the replay
is 13598701. A transcript of the call
will be available on the company’s Investor Relations website at www.cbre.com/investorrelations.
About CBRE Group, Inc.
CBRE Group, Inc.
(NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles,
is the world’s
largest commercial real estate services and investment firm (in terms of 2014
revenue). The Company has more than 52,000
employees (excluding affiliates), and serves real estate owners, investors and
occupiers through more than 370 offices (excluding affiliates) worldwide. CBRE
offers strategic advice and execution for property sales and leasing; corporate
services; property, facilities and project management; mortgage banking; appraisal and valuation; development
services; investment management; and research and consulting. Please visit our
website at www.cbre.com.
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
earnings per share), business outlook and use of capital. These forward-looking statements involve
known and unknown risks, uncertainties and other factors that may cause the
Company’s actual results and performance in future periods to be materially
different from any future results or performance suggested in forward-looking
statements in this release. Any
forward-looking statements speak only as
of the date of this release and, except to the extent required by applicable
securities laws, the Company expressly disclaims any obligation to update or
revise any of them to reflect actual results, any changes in expectations or
any change in events. If the Company
does update one or more forward-looking statements, no inference should be
drawn that it will make additional updates with respect to those or other
forward-looking statements. Factors that could
cause results to differ materially include, but are not limited to: disruptions
in general economic and business conditions, particularly in geographies where
our business may be concentrated; volatility and disruption of the securities,
capital and credit markets; interest rate increases; the cost and availability
of capital for investment in real estate; clients’ willingness to make real
estate or long-term contractual commitments and other factors affecting the
value of real estate assets, inside and outside the United States; our ability
to control costs relative to revenue growth; our ability to retain and
incentivize producers; our ability to identify, acquire and integrate
synergistic and accretive businesses; costs and potential future capital
requirements relating to businesses we may acquire; integration challenges
arising out of companies we may acquire; increases in, unemployment and general
slowdowns in commercial activity; variations in historically customary seasonal
patterns that cause our business not to perform as expected; trends in pricing
and risk assumption for commercial real estate services; our ability to
diversify our revenue model to offset cyclical economic trends in the
commercial real estate industry; foreign
currency fluctuations; our ability to attract new user and investor clients;
our ability to retain major clients and renew related contracts; 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;
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; changes in international law (including anti-corruption,
anti-money laundering and trade control law), particularly in Russia, Eastern
Europe and the Middle East, due to the rising level of political instability in
those regions; our ability to maintain our effective tax rate at or below
current levels; our ability to compete globally, or in specific geographic
markets or business segments that are material to us; 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 exposure to liabilities in
connection with real estate advisory and property management activities and our
ability to procure sufficient insurance coverage on acceptable terms; 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 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; 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 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; our
leverage and our ability to perform under our credit facilities; 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; the effect of significant movements in average cap rates across
different property types; and the effect of implementation of new accounting
rules and standards.
concerning factors that may influence the Company's financial information is
discussed under “Risk Factors”, “Management’s Discussion and Analysis of
Financial Condition and Results of Operations”, “Quantitative and Qualitative
Disclosures About Market Risk” and “Cautionary Note on Forward-Looking
Statements” in our Annual Report on Form 10-K for the year ended December 31,
2013 (as amended), and under “Management’s Discussion and Analysis of Financial
Condition and Results of Operations”, “Quantitative and Qualitative Disclosures
About Market Risk” and “Forward-Looking Statements” in our Quarterly Report on
Form 10-Q for the quarter ended September 30, 2014, as well as in the Company’s
press releases and other periodic filings with the Securities and Exchange
Commission. Such filings are available
publicly and may be obtained on the Company’s website at www.cbre.com or upon written
request from the CBRE Investor Relations Department at [email protected].
Note – CBRE has not reconciled the non-GAAP earnings per share
guidance included in this release to the most directly comparable GAAP measure
because this cannot be done without unreasonable effort.
1 Selected charges included the write-off of financing costs, amortization
expense related to certain intangible assets attributable to acquisitions,
certain carried-interest incentive compensation expense, the impairment of
non-amortizable intangible assets, integration and other costs related to
acquisitions and cost containment expenses.
For the impact of selected charges on specific periods, see the “Non-GAAP
Financial Measures” section of this press release.
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
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, certain carried-interest
incentive compensation expense, asset impairments and cost containment
initiatives. 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 management’s 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
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