CBRE Group, Inc reports solid financial results for third-quarter 2016
CBRE GROUP, INC. REPORTS SOLID FINANCIAL RESULTS FOR THIRD-QUARTER 2016
Revenue of $3.2 billion, up 18% (20% local currency)
Fee Revenue of $2.1 billion, up 9% (11% local currency)
GAAP EPS of $0.31; Adjusted EPS of $0.50
Los Angeles, CA – October 27, 2016 — CBRE Group, Inc. (NYSE:CBG) today reported solid financial
results for the third quarter ended September 30, 2016.
Third-Quarter 2016 Results*
Revenue for the third quarter totaled $3.2 billion, an increase of 18% (20% local currency1). Fee revenue increased 9% (11% local currency) to $2.1 billion. The third quarter of 2016 included increased 9% (11% local currency) to $2.1 billion. The third quarter of 2016 included approximately $429 million of additional revenue from the Global Workplace Solutions business, which CBRE acquired on September 1, 2015, with a full quarter of activity reflected in the current quarter versus only one month of activity in the third quarter of 2015. Excluding the acquired Global Workplace Solutions business, revenue was up 2% (5% local currency) and fee revenue was essentially unchanged in U.S. dollars, but up 2% in local currency.
On a GAAP basis, net income and earnings per diluted share decreased to $104.2 million and $0.31 per share, respectively. GAAP net income for the third quarter of 2016 was reduced by $38.9 million (pre-tax) incurred in the previously announced cost-elimination program, which is now complete; $30.3 million (pre-tax) of acquisition-related non-cash amortization; and $28.6 million (pre-tax) of integration costs associated with the Global Workplace Solutions acquisition. These costs were partially offset by an associated tax benefit of $31.3 million.
Adjusted net income and adjusted earnings per share both decreased 2% to $168.0 million and $0.50 per share, respectively. The decrease reflects lower property sales revenue and the yearover-year impact of foreign currency movement.
Foreign currency movement, primarily the impact of currency translation and the marking-tomarket of currency hedges, reduced current-quarter earnings per share by approximately $0.01, and increased earnings per share by approximately $0.01 for the third quarter of 2015. Due to rounding the year-over-year negative impact was $0.03 per share when comparing the third quarter of 2016 to the third quarter of 2015. In the absence of this impact, adjusted earnings per share would have been up approximately 4%.
EBITDA decreased 13% to $284.6 million and adjusted EBITDA4 increased 1% to $349.4 million. In the third quarter of 2016, EBITDA and adjusted EBITDA were negatively impacted by $7.2 million of currency movement, primarily related to the sharp decline in the value of the British pound sterling, and in the third quarter of 2015, were positively impacted by $5.7 million of currency movement, primarily the marking-to-market of currency hedges, for a total yearover-year negative impact of $12.9 million. Adjusted EBITDA margin on fee revenue was 16.5%.
Q3 was another strong quarter for CBRE in EMEA and we achieved positive gains in revenue and double digit adjusted EBITDA growth in local currency. Our strong results reflect the broad diversification of our business with increased contributions during the quarter from our outsourcing businesses, as well as notable successes for our transactions teams. Our Continental European business performed particularly strongly, boosted by an exceptional quarter for our Capital Markets teams. Country revenue gains were achieved across the region with France, Spain, the Netherlands, Switzerland and the Nordic region all making significant contributions. While our UK business has inevitably been impacted by the slow-down experienced since the EU referendum, overall our UK revenues grew in the third quarter. UK market fundamentals remain strong and our team continues to advise clients on some of the most significant transactions, including the recent circa 500,000 sq ft office leasing at the iconic London Battersea Power Station redevelopment to a major technology giant.
Whilst we are mindful of broader macro-economic uncertainty in some markets, we enter the final quarter of 2016 with a business in great shape across the region, and with a healthy pipeline of opportunities.
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