Cbre Group Inc · NYSE:CBRE
Cbre — CB Richard Ellis Group — Q2 2007 Earnings Presentation
29 slides from Cbre's earnings presentation, Jul 31, 2007
Slide 1: Second Quarter 2007 Earnings Conference Call
CB Richard Ellis Group, Inc. Second Quarter 2007 Earnings Conference Call July 31, 2007
Slide 2: Conference Call Participants
Conference Call Participants Brett White, President and Chief Executive Officer Kenneth J. Kay, Senior Executive Vice President & Chief Financial Officer Michael Lafitte, President, Institutional & Corporate Services Nick Kormeluk, Senior Vice President, Investor Relations
Slide 3: 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 4: Q2 2007 Summary
Q2 2007 Summary Strong revenue and earnings growth as a result of exceptional performance from virtually all business lines and geographic regions Organic revenue growth of approximately 30%, resulting in our 19th consecutive quarter of double digit organic growth Continued to de-lever by repayment
Slide 5: Q2 2007 Performance Highlights
Q2 2007 Performance Highlights Revenue $1.5 billion $586.8 million, or 65% higher than the prior year quarter About half of the revenue increase was organic $76.9 million, or 120% higher than the same quarter last year $78.1 million, or 99% higher than the same quarter last year GAAP: $141.1 million
Slide 6: Q2 2007 Financial Results
Q2 2007 Financial Results Excludes Trammell Crow Company’s operations, which were not purchased until 12/20/2006. Includes Trammell Crow Company’s operations prior to the acquisition on 12/20/2006. The financial information including Trammell Crow Company is presented for informational purposes only
Slide 7: YTD 2007 Financial Results
YTD 2007 Financial Results 1. Excludes Trammell Crow Company’s operations, which were not purchased until 12/20/2006. 2. Includes Trammell Crow Company’s operations prior to the acquisition on 12/20/2006. The financial information including Trammell Crow Company is presented for informational purpos
Slide 8: Normalized EBITDA Margins
Normalized EBITDA Margins Significant margin improvement Note: EBITDA margins exclude merger-related costs and integration expenses related to acquisitions and loss on sale of trading securities acquired in the Trammell Crow Company acquisition. 9% 10% 0 5 10 15 20 25 2006 2007 2006 16.5 15.2 2007 1
Slide 9: Earnings Per Share Dynamics
Earnings Per Share Dynamics1 1. All EPS information is based upon diluted shares. GAAP EPS Integration costs related to acquisitions Adjusted EPS $0.59 $0.03 $0.66 Merger-related charges $0.01 Amortization of net revenue backlog, incentive fees and customer relationships acquired $0.03 Amortization
Slide 10: Consolidated Balance Sheets
Consolidated Balance Sheets Represents Freddie Mac loan receivables, which are offset by the related non-recourse warehouse line of credit facility. Includes real estate and other assets held for sale, real estate under development and real estate held for investment. ($ in millions) 6/30/2007 12/31
Slide 11: Consolidated Balance Sheets (cont.)
Consolidated Balance Sheets (cont.) Represents the non-recourse warehouse line of credit facility, which supports the Freddie Mac loan receivables. Includes a non-recourse revolving credit facility balance of $47.8 million in Development Services as of June 30, 2007. Includes recourse notes payable
Slide 12: Capitalization
Capitalization Represents notes payable on real estate in Development Services that are recourse to the Company. Excludes non-recourse notes payable on real estate of $427.7 million and $329.6 million at June 30, 2007 and December 31, 2006, respectively. Excludes $164.3 million and $104.0 million of
Slide 13: Strong cash flow generator
Strong cash flow generator Low capital intensity Utilization of internal cash flow Debt reduction Co-investment activities Development In-fill acquisitions Q2 2007 Trailing Twelve Months Normalized Internal Cash Flow ($ millions) 451 Net Income, as adjusted D&A Cap Ex (45) 672 1. Represents capital
Slide 14: Trammell Crow Company Integration Update
Trammell Crow Company Integration Update Revenue synergy opportunities are starting to be realized Trammell Crow Company integration is proceeding well and is ahead of schedule Accordingly, we have increased the net expense synergy savings target by $25 million to $90 million, 60% of which should be
Slide 15: 2007 Revenue Breakdown
2007 Revenue Breakdown 2nd Quarter, 2007 Excludes Trammell Crow Company’s operations, which were not purchased until 12/20/2006. Includes Trammell Crow Company’s operations prior to the acquisition on 12/20/2006. The financial information including Trammell Crow Company is presented for informationa
Slide 16: CBRE Recent Wins
CBRE Recent Wins Duke Realty Corporation Retained as an advisor for Duke Realty’s core acquisition joint venture The joint venture, with a target investment objective of $600 to $800 million, will be initially capitalized with a 3.5 million sq ft industrial portfolio valued at $200 million Citigroup
Slide 17: Q2 2007 Segment Performance – Americas, EMEA and Asia Pacific
Q2 2007 Segment Performance – Americas, EMEA and Asia Pacific $934.0 ($ in millions) Revenue1 Normalized EBITDA2 Americas EMEA Asia Pacific $597.2 $330.8 $192.2 $121.8 $87.2 $131.4 $96.6 $67.7 $36.3 $23.0 $12.1 56% 72% 40% 36% 87% 2007 2006 90% Certain reimbursements (primarily salaries and related
Slide 18: Investment Management Growth
24.5 26.7 59.3 0.3 0 15 30 45 60 75 90 Q2 2006 Q2 2007 Investment Management Growth Revenue ($ in Millions) CAGR: 41.4% Growth: 210.3% ANNUAL 2nd QUARTER Carried Interest Investment Management CAGR: 26.8% CBRE’s Assets Under Management ($ in Billions) 83.8 27.0 228.0 Growth: 195.1% YEAR TO DATE 169.
Slide 19: 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 20: Q2 2007 Segment Performance - Development Services
Q2 2007 Segment Performance - Development Services ($ in billions) Projects In Process/Pipeline 2nd Quarter Activities 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 5.5 2.9 6.2 3.4 0 1 2 3 4 5 6 7 8 9 10 4Q98 4Q99 4Q00 4Q01 4Q02 4Q03 4Q04 4Q05 4Q06 1Q07 2Q07 In Process Pipe
Slide 21: 2007 Guidance
2007 Guidance Raising full year 2007 diluted earnings per share growth to approximately 50% as compared to 2006 performance, excluding one time items Increase due to strong first half 2007 growth across all businesses, outperformance of the Trammell Crow Company net expense synergy savings target an
Slide 22: Summary
Summary As evidenced by this quarter’s financial performance business conditions remain positive Capital allocations to commercial real estate remain at high levels, further supported by the backlog of funds that have yet to be invested and increasing cross border capital deployment Ongoing economic
Slide 23: Appendix
Appendix
Slide 24: Reconciliation of Net Income to Net Income, As Adjusted
Reconciliation of Net Income to Net Income, As Adjusted ($ in millions) 2007 2006 Net income 141.1 64.3 Amortization expense related to net revenue backlog, incentive fees and customer relationships acquired, net of tax 6.0 (0.2) Integration costs related to acquisitions, net of tax 7.8 1.1 Loss on
Slide 25: Reconciliation of Normalized EBITDA to EBITDA to Net Income
Reconciliation of Normalized EBITDA to EBITDA to Net Income Six Months Ended June 30, ($ in millions) 2007 2006 2007 2006 Normalized EBITDA 267.6 148.9 429.6 233.0 Adjustments: Integration costs related to acquisitions 12.5 1.9 24.7 3.3 Loss on sale of trading securities acquired in the Trammell Cro
Slide 26: Reconciliation of Normalized EBITDA to EBITDA to Net Income
Reconciliation of Normalized EBITDA to EBITDA to Net Income ($ in millions) Q2 2007 Q2 2006 Normalized EBITDA 849.1 532.7 Adjustments: Integration costs related to acquisitions 29.0 5.6 Loss related to trading securities acquired in the Trammell Crow Company acquisition 25.1 - Merger-related charges
Slide 27: Reconciliation of Net Income to Net Income, As Adjusted
(a) Amortization expense related to net revenue backlog, incentive fees and customer relationships acquired1 (b) Integration costs related to acquisitions1 (c) Loss related to trading securities acquired in the Trammell Crow Company acquisition1 (d) Merger-related charges1 (e) Costs of extinguishmen
Slide 28: Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss)
Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss) Three Months Ended June 30, 2006 ($ in millions) Americas EMEA Asia Pacific Global Investment Management Development Services Normalized EBITDA 96.6 36.3 12.1 3.9 - Less: Integration costs related to acquisitions 1.4 0.5 - - - EBITDA
Slide 29: CBRE CB Richard Ellis
CBRE CB Richard Ellis
CB Richard Ellis Group — Q2 2007 Earnings Presentation on 6ix