Cbre Group Inc · NYSE:CBRE
Cbre — CB Richard Ellis Group — Q2 2009 Earnings Presentation
23 slides from Cbre's earnings presentation, Jul 30, 2009
Slide 1: Second Quarter 2009 Earnings Conference Call
Second Quarter 2009 Earnings Conference Call July 30, 2009 CB Richard Ellis Group, Inc.
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 momentum in 2009, future operations and future financial performance. These statements should be co
Slide 3: Conference Call Participants
Conference Call Participants Brett White President & Chief Executive Officer Bob Sulentic Group President & Chief Financial Officer Nick Kormeluk Investor Relations
Slide 4: Business Overview Highlights
Business Overview Highlights: Q2 2009 year over year normalized EBITDA margin improvement – cost cutting continued to exceed expectations Global lines of business and geographies continue market share leadership Outsourcing client and square footage growth continued Outsourcing revenues 42% of total
Slide 5: Q2 CBRE Wins
Q2 CBRE Wins ATLANTA Cox Enterprises CBRE to provide transaction and project management services for Cox’s 18 million SF portfolio. The portfolio consists of 1,200 locations in North America, plus international locations. ASIA PACIFIC Shell Shell selected CBRE as one of two providers to deliver Tran
Slide 6: Q2 2009 Performance Overview
Q2 2009 Performance Overview Q2 2008 Q2 2009 $114.5 million $90.9 million Normalized EBITDA3 8.7% 9.5% Normalized EBITDA Margin3 $99.0 million $68.4 million EBITDA GAAP $0.08 Adjusted $0.16 GAAP ($0.02) Adjusted $0.04 EPS1,2 GAAP $16.6 million Adjusted $33.2 million GAAP ($6.6) million Adjusted $9.7
Slide 7: Revenue Breakdown
Revenue Breakdown 2nd Quarter 2009 42% 31% 10% 7% 4% 2% 2% 2% ($ in millions) 2009 2008 % Change 2009 2008 % Change Property & Facilities Management 399.8 419.7 -5 796.2 832.9 -4 Leasing 299.0 436.2 -31 566.2 830.7 -32 Sales 98.2 250.2 -61 175.9 478.1 -63 Appraisal & Valuation 70.1 92.4 -24 132.5 17
Slide 8: Outsourcing Q2 2009
Outsourcing Q2 2009 Wins 9 renewals 6 expansions 7 new CAGR 11% 1. Represents combined data for CBRE and TCC; does not include joint ventures and affiliates 1 Q2 2009 revenue down modestly Positives: Robust global RFP activity 25% increase in new client contracts versus 2008 Square footage growth po
Slide 9: US Market Statistics
US Market Statistics 8.7% 9.5% 12.5% 4Q07 13.9 167.2 59.3 2007 -23.3 -11.3 -0.4 12.6% 11.7% 10.4% Retail -306.1 -80.5 -86.9 14.3% 13.0% 11.4% Industrial -68.2 -16.2 19.8 17.3% 15.5% 14.0% Office 2009 F 2Q09 2008 4Q09 F 2Q09 4Q08 US Absorption Trends (in millions of square feet) US Vacancy Source: CB
Slide 10: Sales and Leasing Revenue - Americas
Sales and Leasing Revenue - Americas ($ in millions) Sales Leasing (64%) (31%) (59%) (30%) $262.9 $184.6 $289.4 $102.8 YTD Second Quarter $140.5 $57.8 Second Quarter $525.2 $362.8 2008 2009
Slide 11: Sales and Leasing Revenue – EMEA
Sales and Leasing Revenue – EMEA ($ in millions) Sales Leasing (64%) (36%) (71%) (39%) $111.7 $68.0 $194.4 $123.5 $129.6 $47.2 YTD Second Quarter $81.4 $24.0 Second Quarter 2008 2009
Slide 12: Sales and Leasing Revenue – Asia Pacific
Sales and Leasing Revenue – Asia Pacific ($ in millions) Sales Leasing (56%) (42%) (29%) (25%) $28.1 $16.3 Second Quarter $58.6 $25.8 YTD Second Quarter $61.4 $46.1 $110.9 $79.1 2008 2009
Slide 13: Development Services Balance Sheet Participation
Development Services Balance Sheet Participation $88 million co-invested in Development Services at quarter end. $12.8 million in recourse debt to CBRE and repayment guarantees. (3.0) Projects In Process/Pipeline ($ in billions) 2.2 3.8 5.0 4.9 3.6 2.8 2.6 3.6 5.4 6.5 5.6 5.2 2.3 1.4 2.0 2.3 1.4 1.5
Slide 14: Global Investment Management
Global Investment Management ($ in billions) ($ in millions) CBRE’s co-investments totaled $85.2 million at June 30, 2009. CAGR 19% CAGR 19.6% ($ in millions) ($ in millions) YTD Q2 Revenue 68.8 63.0 13.0 6.9 0.4 82.2 69.9 YTD Q2 2008 YTD Q2 2009 Q2 Revenue 36.0 29.4 6.3 3.2 0.4 32.6 42.7 Q2 2008 Q2
Slide 15: Global Investment Management
Global Investment Management For the three months ended June 30, 2009, the Company recorded a reversal of carried interest incentive compensation expense of $0.3 million compared to expense accruals of $2.6 million in the same period in 2008. For the six months ended June 30, 2009, the Company recor
Slide 16: Cost Cutting Initiatives
Cost Cutting Initiatives Previously announced $475 - $500 million cost savings plans implemented – visible in EBITDA margin recovery despite substantial revenue decline Raising expected savings target by $100 million to a range of $575 - $600 million Expect to realize approximately $550 million of t
Slide 17: Balance Sheet Management
Balance Sheet Management Proactively taking a methodical approach to improve our capital structure: deleveraging, less reliance on bank market and extending maturities Amended credit agreement completed March 24, 2009 Relaxation of leverage and coverage ratios Ability to buy back term loans at disco
Slide 18: Capitalization
Capitalization Net of original issue discount of $14 million. Represents notes payable on real estate in Development Services that are recourse to the company. Excludes non-recourse notes payable on real estate of $567.1 million and $618.0 million at June 30, 2009 and March 31, 2009, respectively. E
Slide 19: CBRE Debt Covenants & Maturity Schedule
CBRE Debt Covenants & Maturity Schedule Covenant Hurdle 12/31/08 3/31/09 6/30/09 Leverage Ratio <4.25x1 3.28 2.78 2.47 Interest Coverage Ratio >2.00x1 4.72 5.89 5.36 Year Amount Due 2009 $6 million remaining 2010 $254 million Debt Covenants Required Debt Maturity Schedule Effective March 24, 2009
Slide 20: Business Outlook
Business Outlook Summary: Significant operating leverage in business model following cost cuts Overall market conditions not much different than at end of Q1 Investment sales weak; still expect start of distressed activity this year Leasing expected to remain weak until economies begin to improve Ou
Slide 21: GAAP Reconciliation Tables
GAAP Reconciliation Tables CB RICHARD ELLIS
Slide 22: Reconciliation of Net (Loss) Income to Net Income, As Adjusted
Reconciliation of Net (Loss) Income to Net Income, As Adjusted Three Months Ended June 30, ($ in millions, except for share data) 2009 2008 Net (loss) income attributable to CB Richard Ellis Group, Inc. $(6.6) $16.6 Cost containment expenses, net of tax 10.6 - Write-down of impaired assets, net of t
Slide 23: Reconciliation of Normalized EBITDA to EBITDA to Net (Loss) Income
Reconciliation of Normalized EBITDA to EBITDA to Net (Loss) Income 8.7% 9.5% Normalized EBITDA Margin $ 1,314.9 $ 955.7 Revenue 16.6 (6.6) Ellis Group, Inc. Net (loss) income attributable to CB Richard 20.3 4.7 Provision for income taxes 41.6 47.4 Interest expense 25.0 24.1 Depreciation and amortiza
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