Cbre Group Inc · NYSE:CBRE
Cbre — CB Richard Ellis Group — Q4 2006 Earnings Presentation
26 slides from Cbre's earnings presentation, Feb 7, 2007
Slide 1: Fourth Quarter 2006 Earnings Conference Call
CB Richard Ellis Group, Inc. Fourth Quarter 2006 Earnings Conference Call February 7, 2007
Slide 2: Forward Looking Statements
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 2007, future operations, the impact of acquisitions and future financial perform
Slide 3: Conference Call Participants
Conference Call Participants Brett White, President and Chief Executive Officer Kenneth J. Kay, Sr. Executive Vice President & Chief Financial Officer Bob Sulentic, Group President, EMEA, Asia Pacific and Development Sevices Shelley Young, Director, Investor Relations
Slide 4: Q4 2006 Summary
Record financial performance Continued growth in the outsourcing business through major account wins, expansion of existing client relationships and acquisitions Completion of the Trammell Crow Company acquisition Repaid $126.7 million of high yield debt and financed the Trammell Crow acquisition wi
Slide 5: Q4 2006 Performance Highlights
Q4 2006 Performance Highlights Revenue $1,409.3 million $376.6 million, or 37% higher than the prior year quarter Approximately three-fourths of the revenue increase was organic 17th straight quarter of double-digit year-over-year organic revenue growth $29.7 million, or 31% higher than the same qua
Slide 6: Q4 2006 Financial Results
Q4 2006 Financial Results 1. In the fourth quarter of 2006, certain reimbursements (primarily salaries and related costs) related to facilities and property management operations were reclassified from cost of services to revenue. Prior year figures have been restated to conform to this new presenta
Slide 7: YTD 2006 Financial Results
YTD 2006 Financial Results 1. In the fourth quarter of 2006, certain reimbursements (primarily salaries and related costs) related to facilities and property management operations were reclassified from cost of services to revenue. Prior year figures have been restated to conform to this new present
Slide 8: 2006 Revenue Breakdown
2006 Revenue Breakdown 4th Quarter, 2006 ($ in millions) 2006 2005 % Change 2006 2005 % Change Leasing 517.8 372.7 39 1,478.9 1,105.8 34 Sales 427.2 348.2 23 1,245.9 1,077.8 16 Property and Facilities Management 170.9 135.4 26 567.5 492.0 15 Investment Management 130.3 56.5 131 232.7 127.7 82 Apprai
Slide 9: Normalized EBITDA Margins
Normalized EBITDA Margins CBRE has consistently improved its EBITDA margin. Before Reclassification of Reimbursables After Reclassification of Reimbursables Notes: Normalized EBITDA margins exclude merger-related and other non-recurring costs, integration costs related to acquisitions, one-time IPO-
Slide 10: Capitalization
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 $318.7 million. 2. Excludes $104.0 million and $256.0 million of warehouse facility at December 31, 2006 and 2005, respectively. (
Slide 11: Strong cash flow generator
Strong cash flow generator $112 million, or 46% improvement from last year Low capital intensity Utilization of internal cash flow Debt reduction Co-investment activities Development In-fill acquisitions 2006 Normalized Internal Cash Flow ($ millions) 52 348 Net Income, as adjusted D&A Cap Ex (45) 3
Slide 12: 2006 In-Fill Acquisitions
2006 In-Fill Acquisitions Austin Adams Holley Blake Oxford Property Consultants Groupe Axival, Inc. CPMS Artequation McCann Property & Planning Rafter and O’Hagan DTZ Australia Residential Valuation (WA) Advocate Consulting Group, Inc. Project Advantage, Inc. The Polacheck Company CB Richard Ellis H
Slide 13: Q4 2006 Segment Performance
Q4 2006 Segment Performance1 $791.0 ($ In millions) Revenue Normalized EBITDA Americas EMEA Asia Pacific Global Investment Management $670.3 $362.5 $247.6 $117.7 $58.4 $129.3 $56.4 $108.0 $89.4 $96.0 $60.3 $20.9 $11.2 $27.1 $26.2 18% 46% 102% 129% 21% 59% 3% 2006 2005 87% 1. Excludes Development Ser
Slide 14: CBRE Recent Wins
CBRE Recent Wins HSBC Bank HSBC has retained CBRE to sell its corporate headquarters building in London’s Canary Wharf. HSBC intends to leaseback the 45-story, 1.1 million sq. ft. office building following the sale. 55 Water Street, New York Leasing agent for the 3.8 million sq. ft. downtown office
Slide 15: Investment Management Growth
Investment Management Growth Revenue ($ in Millions) CAGR: 41.4% CAGR: 129.3% ANNUAL 4th QUARTER 127.3 Carried Interest Investment Management CAGR: 25.9% CBRE’s Assets Under Management ($ in Billions) 129.3 56.4 228.0 57.1 68.4 99.3 126.3 28.0 101.7 94.0 0 50 100 150 200 250 2002 2003 2004 2005 2006
Slide 16: Global Investment Management Carried Interest
Global Investment Management Carried Interest Carried interest pertains to certain real estate investment funds from which CBRE earns an additional share of the profits from the fund once its performance meets certain financial hurdles Dedicated fund team leaders and executives in our investment man
Slide 17: Development Services Overview
Development Services Overview Development Services is a merchant development business Co-invests alongside equity of institutional partners Develops properties for user/investor clients on a fee basis without co-investing in the projects Does not seek to own development projects long term Revenue an
Slide 18: Development Services
Development Services ($ in billions) Projects In Process/Pipeline 2.2 2.3 3.8 1.4 5.0 2.0 4.9 2.3 3.6 1.4 2.8 1.5 2.6 2.5 3.6 2.7 5.4 3.0 0 1 2 3 4 5 6 7 8 9 4Q98 4Q99 4Q00 4Q01 4Q02 4Q03 4Q04 4Q05 4Q06 In Process Pipeline
Slide 19: 2007 Guidance
2007 Guidance As compared to 2006 results, the Company expects to generate full year 2007 diluted earnings per share growth of approximately 25% to 30%, excluding one-time charges Approximation of earnings per share distribution by quarter: 1st Quarter 7% - 8% 2nd Quarter 19% - 20% 3rd Quarter 23% -
Slide 20: Summary
Summary Leasing markets continue to improve globally with economic expansion resulting in lower vacancies and increased rental rates Institutional allocations of capital to real estate remain at high levels Increasing cross-border flow of investment capital Favorable trends in outsourcing due to sup
Slide 21: Appendix
Appendix
Slide 22: Reconciliation of Net Income to Net Income, As Adjusted
Reconciliation of Net Income to Net Income, As Adjusted Twelve Months Ended Dec. 31, ($ in millions) 2006 2005 2006 2005 Net income 125.1 95.4 318.6 217.3 Amortization expense related to net revenue backlog and incentive fees acquired in acquisitions, net of tax 6.8 - 9.7 - Integration costs related
Slide 23: Reconciliation of Normalized EBITDA to EBITDA to Net Income
Reconciliation of Normalized EBITDA to EBITDA to Net Income ($ in millions) 2006 2005 Normalized EBITDA 254.0 187.1 Adjustments: Income related to investment in Savills (8.6) - Integration costs related to acquisitions 2.2 0.9 EBITDA 260.4 186.2 Add: 2.3 3.4 Less: 25.5 12.7 10.3 13.5 11.6 - 90.2 68.
Slide 24: Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss)
Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss) For the Year Ended December 31, ($ in millions) 2006 2005 2004 2003 2002 Normalized EBITDA 652.5 461.3 300.3 183.2 130.7 Adjustments: Merger-related charges related to the Insignia acquisition - - 25.6 36.8 - Integration costs relate
Slide 25: Reconciliation of Normalized EBITDA by Segment
Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss) Americas EMEA Asia Pacific Global Investment Management Three Months Ended Dec. 31, Three Months Ended Dec. 31, Three Months Ended Dec. 31, Three Months Ended Dec. 31, ($ in millions) 2006 2005 2006 2005 2006 2005 2006 2005 Normalize
Slide 26: CBRE
CBRE CB RICHARD ELLIS
CB Richard Ellis Group — Q4 2006 Earnings Presentation on 6ix