Cbre Group Inc · NYSE:CBRE
Cbre — Q3 2014 Earnings Presentation
20 slides from Cbre's earnings presentation, Oct 29, 2014
Slide 1: Third Quarter 2014: Earnings Conference Call
CBRE GROUP, INC. Third Quarter 2014: Earnings Conference Call October 29, 2014
Slide 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 future growth momentum, operations, financial performance and business outlook. These statements should be considered as estim
Slide 3: Conference Call Participants
CONFERENCE CALL PARTICIPANTS Bob Sulentic PRESIDENT AND CHIEF EXECUTIVE OFFICER Gil Borok DEPUTY CHIEF FINANCIAL OFFICER AND CHIEF ACCOUNTING OFFICER Jim Groch CHIEF FINANCIAL OFFICER AND GLOBAL DIRECTOR OF CORPORATE DEVELOPMENT Steve Iaco INVESTOR RELATIONS AND CORPORATE COMMUNICATIONS
Slide 4: Q3 2014 Region Highlights
Q3 2014 Region Highlights BUSINESS OVERVIEW Americas EMEA Asia Pacific Revenue 20% (20% local currency) Revenue 101% (95% local currency) Ex. Norland Revenue 25% (19% local currency) Revenue 25% (23% local currency)
Slide 5: Q3 2014 Business Line Revenue
Revenue ($ in millions) Contractual Revenue Sources Capital Markets Global Corporate Services and Asset Services1 Investment Management Appraisal & Valuation Leasing Sales Commercial Mortgage Services Development Services Other Total Q3 2014 $ 944.0 $ 105.0 $ 119.3 $ 579.7 $ 404.6 $ 94.4 $ 11.6 $ 16
Slide 6: Q3 2014 Performance Overview
Q3 2014 PERFORMANCE OVERVIEW Normalized EBITDA excludes certain carried interest incentive compensation (reversal) expense. Adjusted net income and adjusted EPS exclude amortization expense related to certain intangible assets attributable to acquisitions, certain carried interest incentive compensa
Slide 7: Americas Revenue
($ in millions) Global Corporate Services and Asset Services1 Leasing Sales Q3 2014 $ 513.5 $ 413.0 $ 252.1 USD2 16% 18% 27% Local Currency2 17% 18% 27% YTD Q3 2014 $ 1,467.9 $ 1,097.1 $ 625.5 USD3 13% 16% 15% Local Currency3 14% 16% 16% Global Corporate Services (GCS) and Asset Services revenue exc
Slide 8: EMEA Revenue
($ in millions) Global Corporate Services and Asset Services1 Leasing Sales Q3 2014 $ 343.2 ($ 127.0 ex. Norland) $ 97.6 $ 83.2 USD2 249% (29% ex. Norland) 9% 37% Local Currency2 244% (24% ex. Norland) 3% 30% YTD Q3 2014 $ 996.5 ($ 367.1 ex. Norland) $ 261.2 $ 209.6 USD3 249% (29% ex. Norland) 8% 38
Slide 9: Asia Pacific Revenue
($ in millions) Global Corporate Services and Asset Services1 Leasing Sales Q3 2014 $ 83.4 $ 68.9 $ 69.1 USD2 22% 9% 57% Local Currency2 20% 8% 56% YTD Q3 2014 $ 234.6 $ 191.1 $ 171.6 USD3 9% 6% 25% Local Currency3 14% 10% 30% ASIA PACIFIC REVENUE Total Q3 2014 revenue up 25% in USD or 23% in local
Slide 10: Global Corporate Services Highlights
Q3 YTD Q3 New 26 70 Expansions 11 50 Renewals 20 47 GLOBAL CORPORATE SERVICES 26 new clients in Q3 2014 – one of the highest ever 6 new public sector clients 3 new U.S. healthcare clients 5 new clients in EMEA and Asia Pacific 2014 TOTAL CONTRACTS Facilities Management Transaction Services Project M
Slide 11: Global Investment Management
YTD Q3 Q3 GLOBAL INVESTMENT MANAGEMENT Excludes securities business. Normalized EBITDA excludes certain carried interest compensation (reversal) expense. Includes discontinued operations. See slide 20 for details. In 2011, CBRE acquired the real estate investment management operations of ING Group i
Slide 12: Development Services
Q3 YTD Q3 Revenue Pro-forma Revenue3 2 2 DEVELOPMENT SERVICES 1 $110.1 million of co-investments at the end of Q3 2014 $13.8 million in recourse debt to CBRE and repayment guarantees at the end of Q3 2014 In Process figures include Long-Term Operating Assets (LTOA) of $0.3 billion for 3Q 14, $0.9 bi
Slide 13: Business Outlook
Positive trends Strong momentum across our business lines Underlying fundamentals continue to improve Market sentiment remains positive Considerations Return of financial market volatility Concerns about slowing economic growth outside the U.S. More challenging earnings comparison ($58 million of ca
Slide 14: Supplemental Slides and GAAP Reconciliation Tables
SUPPLEMENTAL SLIDES AND GAAP RECONCILIATION TABLES
Slide 15: U.S. Market Statistics
U.S. MARKET STATISTICS U.S. VACANCY U.S. ABSORPTION TRENDS (in MSF) 3Q13 3Q14 4Q14 F 4Q15F 3Q13 3Q14 2013 2014F 2015F Office 15.1% 14.1% 14.0% 13.5% 8.3 16.1 36.7 48.1 41.4 Industrial 11.6% 10.6% 10.5% 10.1% 53.7 60.3 238.5 198.7 160.5 Retail 12.2% 11.5% 11.2% 9.8% 1.3 8.0 28.1 32.3 49.6 Source: CBR
Slide 16: Mandatory Amortization and Maturity Schedule
Pro-forma as of September 30, 20141 MANDATORY AMORTIZATION AND MATURITY SCHEDULE ($ in millions) Pro-forma gives effect to payoff of 6.625% senior unsecured notes aggregate principal amount of $350 million on October 27, 2014. $1,200.0 million revolver facility matures in March 2018. As of September
Slide 17: Capitalization
CAPITALIZATION Excludes $47.0 million of cash in consolidated funds and other entities not available for Company use at September 30, 2014. Senior unsecured notes – 6.625% paid off in full on October 27, 2014. Represents notes payable on real estate in Development Services that are recourse to the C
Slide 18: Reconciliation of Normalized EBITDA to EBITDA to Net Income
Three Months Ended September 30, ($ in millions) 2014 2013 Normalized EBITDA $ 292.2 $ 225.2 Adjustments: Carried interest incentive compensation (reversal) expense 1 (0.7) 0.8 EBITDA 292.9 224.4 Add: Interest Income 1.6 1.5 Less: Depreciation and amortization 67.2 47.5 Interest expense 27.8 27.8 Wr
Slide 19: Reconciliation of Net Income to Net Income, As Adjusted
Three Months Ended September 30, ($ in millions) 2014 2013 Net income attributable to CBRE Group, Inc. $ 107.1 $ 94.4 Write-off of financing costs, net of tax 14.1 - Amortization expense related to certain intangible assets attributable to acquisitions, net of tax 11.8 4.7 Carried interest incentive
Slide 20: Reconciliation of Discontinued Operations
Discontinued Operations for the Nine Months Ended September 30, 2013 ($ in millions) Global Investment Management Development Services Total Revenue $ 1.5 $ 7.4 $ 8.9 EBITDA1 $ 1.4 $ 6.0 $ 7.4 Less: Depreciation & amortization 0.5 0.4 0.9 Interest expense 1.0 2.2 3.2 Provision for income taxes - 1.3