Cbre Group Inc · NYSE:CBRE
Cbre — CB Richard Ellis Group — Q3 2006 Earnings Presentation
27 slides from Cbre's earnings presentation, Oct 26, 2006
Slide 1: Third Quarter 2006 Earnings Conference Call
CB Richard Ellis Group, Inc. Third Quarter 2006 Earnings Conference Call October 26, 2006
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 2006, future operations, the impact of acquisitions and future financial perform
Slide 3: Conference Call Participants
Conference Call Participants Brett White, President & Chief Executive Officer Kenneth J. Kay, Sr. Executive Vice President & Chief Financial Officer Christopher Ludeman, President, U.S. Brokerage Shelley Young, Director, Investor Relations
Slide 4: Q3 2006 Summary
Strong performance across virtually all business lines and geographies Acceleration of leasing activity in major markets Significant growth in outsourcing businesses directed to institutional and corporate clients Meaningful contributions from acquisitions Q3 2006 Summary
Slide 5: Q3 2006 Performance Highlights
Q3 2006 Performance Highlights Revenue $903.9 million $159.7 million, or 21% higher than the prior year quarter Approximately two thirds of the revenue increase was organic 16 th straight quarter of double-digit year-over-year organic revenue growth $35.4 million, or 62% higher than the same quarter
Slide 6: Q3 2006 Financial Results
Q3 2006 Financial Results ($ in millions) 2006 2005 % Change Revenue 903.9 744.2 21 Cost of Services 457.0 380.9 20 Operating, Administrative & Other 293.1 255.7 15 Equity Income from Unconsolidated Subsidiaries 9.1 4.0 128 Minority Interest (Income) Expense (0.6) 0.4 N/A EBITDA 163.5 111.2 47 One T
Slide 7: YTD 2006 Financial Results
YTD 2006 Financial Results ($ in millions) 2006 2005 % Change Revenue 2,420.2 1,954.6 24 Cost of Services 1,210.0 987.7 23 Operating, Administrative & Other 841.9 720.7 17 Equity Income from Unconsolidated Subsidiaries 26.0 23.4 11 Minority Interest Expense 1.2 1.7 -29 EBITDA 393.1 267.9 47 One Time
Slide 8: 2006 Revenue Breakdown
2006 Revenue Breakdown 3rd Quarter, 2006 ($ in millions) 2006 2005 % Change 2006 2005 % Change Leasing 370.7 272.3 36 961.0 733.1 31 Sales 290.1 286.2 1 818.7 729.7 12 Appraisal and Valuation 72.4 54.4 33 193.7 142.8 36 Property and Facilities Management 69.2 49.5 40 194.0 149.9 29 Investment Manage
Slide 9: Normalized EBITDA Margins
Normalized EBITDA Margins Significant margin improvement Note: EBITDA margins exclude integration expenses related to acquisitions. 21% 17% 0 5 10 15 20 2005 2006 2005 15.1 14.9 2006 18.3 17.4 3rd Quarter TTM 3rd Quarter
Slide 10: Consolidated Balance Sheets
Consolidated Balance Sheets 1. Represents Freddie Mac loan receivables, which are offset by the related non-recourse warehouse line of credit facility. ($ in millions) 09/30/2006 12/31/2005 Variance Assets Cash and cash equivalents 138.3 449.3 (311.0) Restricted cash 8.7 5.2 3.5 Receivables, net 504
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. ($ in millions) 09/30/2006 12/31/2005 Variance Liabilities Current liabilities, excluding debt 750.3 853.7 (103.4) Warehouse line of credit 1 92.9 256.0
Slide 12: Capitalization
Capitalization Excludes $92.9 million and $256.0 million of warehouse facility at September 30, 2006 and December 31, 2005, respectively. ($ in millions) 09/30/2006 12/31/2005 Variance Cash 138.3 449.3 (311.0) Revolving credit facility 139.8 - 139.8 Senior secured term loan tranche B - 265.2 (265.2)
Slide 13: Strong cash flow generator
Strong cash flow generator $114 million, or 55% improvement from same period last year Low capital intensity Utilization of internal cash flow Debt reduction of approximately $279 million during the nine months ended September 30, 20062 Co-investment activities In-fill acquisitions Q3 2006 Trailing
Slide 14: 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 Advocate Consulting Group, Inc. Project Advantage, Inc. The Polacheck Company Rietmeijer Immobiliere Developpement & Gestion Modus Sogesm
Slide 15: Q3 2006 Segment Performance
Q3 2006 Segment Performance $584.7 ($ In millions) Revenue Normalized EBITDA Americas EMEA Asia Pacific Global Investment Management $516.7 $193.3 $149.6 $84.5 $44.0 $41.4 $33.9 $102.6 $76.3 $39.1 $29.1 $8.7 $6.4 $15.2 $0.8 13% 29% 92% 22% 34% 34% 1800% 2006 2005 36%
Slide 16: CBRE Recent Wins
CBRE Recent Wins WPP Group Exclusive provider of real estate services in the Americas Transaction management and lease administration services for an 11 million sq ft portfolio Cintas Expanded relationship on a global basis Transaction management services for a 14 million sq ft portfolio Silverstein
Slide 17: Investment Management Growth
Investment Management Growth Revenue ($ in Millions) CAGR: 30.6% CAGR: 22.1% CAGR: 39.4% ANNUAL YEAR TO DATE 3rd QUARTER 127.3 98.8 Carried Interest Investment Management CAGR: 20.7% CBRE’s Assets Under Management ($ in Billions) 41.4 57.1 68.4 94.0 99.3 28.0 0 20 40 60 80 100 120 140 2002 2003 2004
Slide 18: 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 19: Updated 2006 Full Year Guidance
Updated 2006 Full Year Guidance Excluding one-time items, the Company expects full year diluted earnings per share growth of approximately 45% as compared to 2005 performance
Slide 20: Summary
Summary Rental rates are rising as vacancy rates decline Buoyancy of the leasing market more than offset the expected pullback in investment sales activity Significant growth in assets under Investment Management Continued favorable corporate and institutional outsourcing trend
Slide 21: Appendix
Appendix 100: . CBRE
Slide 22: Reconciliation of Net Income to Net Income, As Adjusted
Reconciliation of Net Income to Net Income, As Adjusted ($ in millions) 2006 2005 Net income 92.3 56.9 Amortization expense related to net revenue backlog acquired in acquisitions, net of tax 0.8 - Integration costs related to acquisitions, net of tax 1.4 0.6 Loss on extinguishment of debt, net of t
Slide 23: Reconciliation of Normalized EBITDA to EBITDA to Net Income
Reconciliation of Normalized EBITDA to EBITDA to Net Income Nine Months Ended September 30, ($ in millions) 2006 2005 2006 2005 Normalized EBITDA 165.6 112.6 398.6 274.1 Less: Integration costs related to acquisitions 2.1 1.4 5.5 6.2 EBITDA 163.5 111.2 393.1 267.9 Add: Interest income 1.0 2.3 7.6 7.
Slide 24: Reconciliation of Normalized EBITDA to EBITDA to Net Income (TTM)
Reconciliation of Normalized EBITDA to EBITDA to Net Income Trailing Twelve Months ($ in millions) Q3 2006 Q3 2005 Normalized EBITDA 585.8 411.1 Less: Integration costs related to acquisitions 6.4 8.8 EBITDA 579.4 402.3 Add: Interest income 9.0 10.7 Less: Depreciation and amortization 54.8 47.7 Inte
Slide 25: Reconciliation of Net Income to Net Income, As Adjusted (TTM)
Amortization expense related to net revenue backlog acquired in acquisitions1 Integration costs related to acquisitions1 Costs of extinguishment of debt1 Tax expense related to the repatriation of foreign earnings under the American Jobs Creation Act of 2004 Reconciliation of Net Income to Net Incom
Slide 26: Reconciliation of Normalized EBITDA to EBITDA to Net Income by Segment
Reconciliation of Normalized EBITDA to EBITDA to Net Income (Loss) Americas EMEA Asia Pacific Global Investment Management Three Months Ended Sept. 30, Three Months Ended Sept. 30, Three Months Ended Sept. 30, Three Months Ended Sept. 30, ($ in millions) 2006 2005 2006 2005 2006 2005 2006 2005 Norma
Slide 27: CBRE
CBRE CB RICHARD ELLIS 100: *
CB Richard Ellis Group — Q3 2006 Earnings Presentation on 6ix