CBRE Group, Inc. reports robust revenue and adjusted earnings growth for full-year and fourth-quarter 2015
Adjusted Earnings Per Share up 22% to $2.05 for 2015 (26% local currency)
Fee Revenue up 14% for 2015 (20% local currency)
GAAP Net Income up 13% for 2015 (18% local currency)
18.3% Normalized EBITDA Margin on Fee Revenue for 2015
Los Angeles, CA – February 3, 2016 — CBRE Group, Inc. (NYSE:CBG) today reported robust revenue and adjusted earnings growth for the year and fourth quarter ended December 31, 2015, with full-year revenue and normalized EBITDA reaching new highs for the company*.
Full-Year 2015 Results
- Revenue for full-year 2015 totaled $10.9 billion, an increase of 20% (26% local currency1). Fee revenue2 increased 14% (20% local currency) to $7.7 billion. Excluding the acquired Global Workplace Solutions business, which CBRE purchased on September 1, 2015, revenue and fee revenue both increased 15% in local currency.
- Adjusted net income3 for 2015 rose 23% to $689.2 million, while adjusted earnings per diluted share3 improved 22% to $2.05. Adjustments (net of tax) for the year included $15.8 million to align the timing of carried interest expense and associated revenue recognition, $34.6 million for integration costs associated with the Global Workplace Solutions acquisition, $61.4 million of acquisition-related non-cash amortization as well as $28.6 million that was incurred to eliminate costs to enhance margins going forward.
- On a U.S. GAAP basis, net income for 2015 rose 13% to $547.1 million, and earnings per diluted share increased 12% to $1.63.
- Normalized EBITDA4 increased 21% to $1.4 billion in 2015 and EBITDA4 rose 14% to $1.3 billion for 2015.
*All percentage changes versus prior-year periods throughout this press release are in U.S. dollars except where noted.
- Normalized EBITDA margin on fee revenue was 18.3% for 2015, a 110 basis point increase from the prior year.
- Foreign currency movement, including the marking of currency hedges to market, reduced EBITDA by approximately $34.8 million (or $0.07 per share) as compared to the prior year. Without currency effects, adjusted earnings per share would have increased 26%.
“2015 was another year of exceptional performance for CBRE,” said Bob Sulentic, the company’s president and chief executive officer. “The hard work of our people enabled us to set new company records for total revenue and earnings and drive double-digit top- and bottom-line growth. As important, we made many strategic gains, which have positioned CBRE to continue to create value for our clients and shareholders.”
Fourth-Quarter 2015 Results
Adjusted Earnings Per Share up 19% to $0.81 for Q4 2015 (21% local currency)
Fee Revenue up 18% for Q4 2015 (23% local currency)
- Revenue for the fourth quarter totaled $3.7 billion, an increase of 33% (38% local currency). Fee revenue increased 18% (23% local currency) to $2.6 billion. The fourth quarter of 2015 included approximately $745 million of revenue from the acquired Global Workplace Solutions business. Excluding the acquired Global Workplace Solutions business, revenue and fee revenue were up 11% and 10%, respectively, in local currency. This growth was achieved on top of an exceptionally strong fourth quarter of 2014, when revenue increased 25% (28% local currency) compared with the year-earlier fourth quarter.
- Adjusted net income rose 19% to $271.5 million, while adjusted earnings per share improved 19% to $0.81. For the fourth quarter of 2015, adjustments (net of tax) included $15.5 million to align the timing of carried interest expense and associated revenue recognition, $16.6 million for integration costs associated with the acquired Global Workplace Solutions business, $27.2 million of acquisition-related non-cash amortization as well as $28.6 million that was incurred to eliminate costs to enhance margins going forward.
- On a U.S. GAAP basis, net income and earnings per diluted share decreased to $180.0 million and $0.53, respectively.
- Normalized EBITDA increased 26% to $517.6 million and EBITDA rose 9% to $427.6 million.
- Normalized EBITDA margin on fee revenue was 20.3%, a 130 basis point increase from the prior-year fourth quarter.
- Foreign currency movement, including the marking of currency hedges to market, reduced EBITDA by approximately $3.8 million (or $0.01 per share) as compared to the prior-year fourth quarter.
During the fourth quarter, revenue grew by double digits in all three global regions. The Americas, CBRE’s largest business segment, posted its 13th consecutive quarter of double-digit year-over-year increases as revenue climbed 22% (23% local currency). EMEA (Europe, the Middle East & Africa) and Asia Pacific saw revenue increase by 60% (69% local currency) and 37% (49% local currency), respectively.
The company’s principal businesses – global investment management and development services – also posted exceptionally strong results for the quarter.
Occupier outsourcing revenue and fee revenue more than doubled with the acquisition of Global Workplace Solutions. Excluding contributions from this acquisition, revenue and fee revenue rose 16% and 19%, respectively, in local currency. (Occupier outsourcing revenue excludes associated leasing and sales revenue, most of which is contractual.)
Global leasing revenue rose 4% (8% local currency). In the United States, growth was muted at 4%, which reflects a solid performance on top of an exceptionally strong 28% year-over-year increase in the fourth quarter of 2014. The global increase in leasing was paced by Europe – notably France and the United Kingdom – as well as strong contributions from Canada and Mexico.
Capital markets businesses remained highly active globally, although growth rates slowed from earlier in the year. Global property sales rose 1% (7% local currency), after accounting for a decline in market volumes in the United Kingdom. Excluding the United Kingdom, the global growth rate was 6% (13% local currency) – driven by improved performance in the United States and across much of Asia Pacific and continental Europe. While investor interest in United Kingdom property remains strong, with cap rates stable and rental rates increasing in the fourth quarter, capital has been migrating to continental Europe as the economies there strengthen and property yields are higher. Commercial mortgage services revenue increased 5% (6% local currency). CBRE’s loan servicing portfolio totaled $135 billion at the end of 2015.
Asset Services had a strong quarter. Revenue rose 10% (15% local currency) while fee revenue increased 12% (18% local currency) with notable growth in EMEA and the Americas. Valuation revenue rose 1% (9% local currency).
During the fourth quarter, CBRE completed four in-fill acquisitions, including a data analytics firm, a retail brokerage specialist, a leader in capital markets services for affordable housing, and its former affiliate in Memphis, TN.
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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers from more than 450 offices (excluding affiliates) worldwide. CBRE offers strategic advice and guidance in property sales and leasing; corporate services; property, facilities and project management; appraisal and valuation; development services; investment management; and research and consulting. Please visit our websites at www.cbre.nl and www.cbre.com.