Cbre Group Inc · NYSE:CBRE
Cbre — CB Richard Ellis Group — Q1 2008 Earnings Presentation
33 slides from Cbre's earnings presentation, Apr 30, 2008
Slide 1: First Quarter 2008 Earnings Conference Call
First Quarter 2008 Earnings Conference Call April 30, 2008 CB Richard Ellis Group, Inc.
Slide 2: Forward Looking Statements
CB Richard Ellis | Page 2 Forward Looking Statements This presentation contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our growth momentum in 2008, future operations, future expenses, and future f
Slide 3: Conference Call Participants
CB Richard Ellis | Page 3 Conference Call Participants Brett White President & Chief Executive Officer Kenneth J. Kay Senior Executive Vice President & Chief Financial Officer Bill Concannon Vice Chairman, Global Corporate Services Nick Kormeluk Senior Vice President, Investor Relations
Slide 4: Business Overview
CB Richard Ellis | Page 4 Business Overview Solid first quarter results better than internal expectations Challenges during the quarter • Capital markets businesses impacted by difficult credit markets • Weakened economy in U.S. and parts of EMEA affecting absorption and vacancy trends Strong perfor
Slide 5: Q1 2008 Performance Highlights
CB Richard Ellis | Page 5 Q1 2008 Performance Highlights $57.3 million or 35% lower than prior year quarter $104.6 million Normalized EBITDA2 $4.2 million or 5% higher than prior year quarter $88.5 million EBITDA Increased 100% as compared to $0.05 EPS for prior year quarter Decreased 44% as compare
Slide 6: Notable Accomplishments
CB Richard Ellis | Page 6 Notable Accomplishments #1 investment sales firm Companies that Care Honor Roll #1 consultant & leasing agent in Asia Pacific World’s Top Brokerage Firm One of the world’s leading outsourcing companies #1 brand for seven consecutive years U.S. EPA 2008 Energy Star Partner o
Slide 7: Q1 CBRE Wins
CB Richard Ellis | Page 7 Q1 CBRE Wins HOUSTON Principal Real Estate Investors Partnered with TCC Development Services to develop Discovery Tower, a 30-story, 871,000 SF office tower. Will be the first LEED Gold certified office tower ever constructed in Houston’s CBD. SINGAPORE Singapore Power Chos
Slide 8: In-fill acquisitions 2005 - present
CB Richard Ellis | Page 8 In-fill acquisitions 2005 - present Groupe Axival, Inc. CB Richard Ellis Alberta Advocate Consulting Group CB Richard Ellis Charlotte Columbus Commercial Realty Project Advantage The Polacheck Company CB Richard Ellis Hawaii Marshall & Stevens’ Cost Segregation Businesses K
Slide 9: US Market Statistics
CB Richard Ellis | Page 9 US Market Statistics US Vacancy 12.0 94.0 13.6 2008 PF 8.7% 9.9% 13.7% 2008 PF 8.2% 9.4% 12.6% 2006 10.1 208.0 79.8 2006 18.8 13.3 9.3% 9.2% Retail 47.6 160.7 10.2% 9.4% Industrial -5.2 56.1 14.7% 12.6% Office 2008 CF 2007 2008 CF 2007 US Absorption Trends (in millions of s
Slide 10: Sales and Leasing Revenue - Americas
CB Richard Ellis | Page 10 Sales and Leasing Revenue - Americas $959.0 $1,024.5 Full Year $238.5 $148.8 First Quarter $1,207.6 $1,240.8 $225.3 $262.3 ($ in millions) Sales Leasing Note: Americas Sales revenue was down 14% in Q4 2007 Note: Americas Leasing revenue was flat in Q4 2007. 7% 3% (38%) 16%
Slide 11: Sales and Leasing Revenue - EMEA
CB Richard Ellis | Page 11 Sales and Leasing Revenue - EMEA $317.7 $458.3 Full Year $71.4 $48.2 First Quarter $322.9 $426.4 $70.1 $82.7 ($ in millions) Sales Leasing Note: EMEA Sales revenue was up 11% in Q4 2007. Note: EMEA Leasing revenue was up 7% in Q4 2007 44% (32%) 32% 18% 2006 2007 2008
Slide 12: Sales and Leasing Revenue – Asia Pacific
CB Richard Ellis | Page 12 Sales and Leasing Revenue – Asia Pacific $80.6 $173.1 Full Year $28.7 $30.5 First Quarter $177.7 $201.1 $33.0 $49.5 ($ in millions) Sales Leasing Note: Asia Pacific sales revenue was up 104% in Q4 2007. Note: Asia Pacific leasing revenue was up 21% in Q4 2007. 115% 13% 6%
Slide 13: Q1 2008 Financial Results
CB Richard Ellis | Page 13 Q1 2008 Financial Results ($ in millions) 2008 2007 % Change Revenue 1,230.9 1,213.9 1 Cost of Services 704.4 649.7 8 Operating, Administrative & Other 432.3 411.9 5 Merger-Related Charges - 31.8 -100 Equity (Loss) Income from Unconsolidated Subsidiaries (10.8) 4.2 n/a Min
Slide 14: Q1 2008 Revenue Breakdown
CB Richard Ellis | Page 14 Q1 2008 Revenue Breakdown 33% 32% 19% 7% 3% 2% 2% 2% Property & Facilities Management Leasing Sales Appraisal & Valuation Investment Management Development Services Commercial Mortgage Brokerage Other Revenue Breakdown ($ in millions) 2008 2007 % Change 413.2 307.8 34 394.
Slide 15: Normalized EBITDA Margin
CB Richard Ellis | Page 15 8.4% 9.6% 10.1% 11.3% 14.4% 16.2% 16.1% 15.1% 16.0% 20.0% 2001 2002 2003 2004 2005 2006 2007 TTM Q1 2008 TTM Q1 2008 Pro Forma Target Normalized EBITDA Margin1 1. Normalized EBITDA margin excludes merger-related and other non-recurring costs, integration costs related to a
Slide 16: Capitalization
CB Richard Ellis | Page 16 Capitalization 1. Represents notes payable on real estate in Development Services that are recourse to the company. Excludes non-recourse notes payable on real estate of $512.2 million and $459.4 million at March 31, 2008 and December 31, 2007, respectively. 2. Excludes $2
Slide 17: Q1 2008 TTM Normalized Internal Cash Flow
CB Richard Ellis | Page 17 Q1 2008 TTM Normalized Internal Cash Flow Strong cash flow generator Low capital intensity Utilization of internal cash flow • Co-investment activities • Development • In-fill acquisitions • Debt reduction • Share repurchases Internal Cash Flow Integration & merger related
Slide 18: Q1 2008 Segment Performance
CB Richard Ellis | Page 18 Q1 2008 Segment1 Performance $791.9 $783.5 Americas $84.2 $82.2 $225.4 $242.8 EMEA $37.3 $11.9 $94.0 $137.4 Asia Pacific $9.5 $13.7 ($ in millions) Revenue Normalized EBITDA2 1. Excludes Development Services and Global Investment Management. 2. Normalized EBITDA excludes m
Slide 19: Development Services
CB Richard Ellis | Page 19 Development Services Balance Sheet Participation $151 million co-invested in development services at quarter end. $7 million in recourse debt to CBRE. ($ in millions) 3/31/2008 3/31/2007 Revenue 27.7 17.1 EBITDA (1.8) (8.0) Add Back: Purchase accounting adjustments for the
Slide 20: Global Investment Management
CB Richard Ellis | Page 20 Global Investment Management Annual Revenue 57.1 68.4 94.0 99.3 126.3 259.2 - - - 28.0 101.7 88.7 57.1 68.4 94.0 127.3 228.0 347.9 2002 2003 2004 2005 2006 2007 Assets Under Management 11.4 14.4 15.1 17.3 28.6 37.8 42.2 2002 2003 2004 2005 2006 2007 Q1 2008 Q1 Revenue 39.2
Slide 21: Global Investment Management Carried Interest
CB Richard Ellis | Page 21 Global Investment Management Carried interest pertains to certain real estate investment funds from which CBRE earns an additional share of the profits, once its performance meets certain financial hurdles. Dedicated fund team leaders and executives in our investment manag
Slide 22: CBRE Outsourcing Services
CB Richard Ellis | Page 22 Facilities Management Project Management Transaction Management Consulting Property Management Leasing Project Management Marketing & Branding Tenant Relations Occupiers Corporate Healthcare Government Investors/owners Office Industrial Retail Global Corporate Services Ass
Slide 23: #1 Provider Of Every Outsourced Real Estate Service
CB Richard Ellis | Page 23 #1 Provider Of Every Outsourced Real Estate Service • 5,300 brokers worldwide • $264 billion in transactions • Global execution of transactions with a portfolio-wide focus • Optimize portfolio • Lease administration services • Multiple-transaction focus • Full service outs
Slide 24: GCS Strength in Q1
CB Richard Ellis | Page 24 GCS Strength in Q1 11 account renewals 10 account expansions 11 new accounts Transaction management client added facilities management. AT&T: Americas transaction management client expanded globally. Eastman Kodak: U.S. facilities management client expanded to North Americ
Slide 25: Asset Services Strength in Q1
CB Richard Ellis | Page 25 Asset Services Strength in Q1 BIG WINS Los Angeles, New York 0.6 MSF Reno, Washington, DC 1.0 MSF Washington, DC 1.0 MSF Philadelphia 1.4 MSF National 1.8 MSF North Carolina 2.6 MSF
Slide 26: Outsourcing Services: CBRE Differentiators
CB Richard Ellis | Page 26 Outsourcing Services: CBRE Differentiators Global coverage and local market intelligence Industry’s largest base of global consultants and subject matter experts in each service line Account management approach – integration of services Leading platform infrastructure: acc
Slide 27: Business Outlook Summary
CB Richard Ellis | Page 27 Summary Fluctuating market conditions make it unrealistic to provide guidance Our view remains relatively unchanged from expectations discussed last quarter, although the assumptions utilized have been slightly modified Business conditions will likely be more challenging f
Slide 28: GAAP Reconciliation Tables
CB Richard Ellis | Page 28 GAAP Reconciliation Tables
Slide 29: Reconciliation of Net Income to Net Income, As Adjusted
CB Richard Ellis | Page 29 Reconciliation of Net Income to Net Income, As Adjusted ($ in millions) 2008 2007 Net income 20.5 $ 12.0 $ Amortization expense related to net revenue backlog, incentive fees, and customer relationships acquired, net of tax 1.7 6.4 Integration costs related to acquisitions
Slide 30: Reconciliation of Normalized EBITDA to EBITDA to Net Income
CB Richard Ellis | Page 30 Reconciliation of Normalized EBITDA to EBITDA to Net Income ($ in millions) 2008 2007 Normalized EBITDA 104.6 $ 161.9 $ Adjustments: Integration costs related to acquisitions 5.5 12.1 Write down of impaired investment 10.6 - Loss on trading securities acquired in the - 33.
Slide 31: Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss)
CB Richard Ellis | Page 31 Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss) ($ in millions) TTM Q1 2008 2007 2006 2005 2004 2003 Normalized EBITDA 912.8 $ 970.1 $ 652.5 $ 461.3 $ 300.3 $ 183.2 $ Less: Merger-related charges 25.1 56.9 - - 25.6 36.8 Integration costs related to acqui
Slide 32: Reconciliation of Net Income to Net Income, As Adjusted
CB Richard Ellis | Page 32 Reconciliation of Net Income to Net Income, As Adjusted Net Income, As Adjusted (d) (c) (b) (a) Reported Net Income TTM Q1 2008 Results 399 20 23 15 6 463 (a) Amortization expense related to net revenue backlog, incentive fees and customer relationships acquired1 (b) Integ
Slide 33: Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss)
CB Richard Ellis | Page 33 Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss) ($ in millions) Americas EMEA Asia Pacific Global Investment Management Development Services Normalized EBITDA 82.2 $ 11.9 $ 13.7 $ (1.4) $ (1.8) $ Less: Integration costs related to acquisitions 5.3 0.2 -
CB Richard Ellis Group — Q1 2008 Earnings Presentation on 6ix