CBRE Group, Inc. reports strong financial results for Q1 2016
CBRE GROUP, INC. REPORTS STRONG FINANCIAL RESULTS FOR FIRST-QUARTER 2016
Revenue up 39% (42% local currency)
Fee Revenue up 25% (28% local currency)
GAAP EPS of $0.24; Adjusted EPS of $0.36
Los Angeles, CA – April 28, 2016 — CBRE Group, Inc. (NYSE:CBG) today reported strong financial results for the first quarter ended March 31, 2016.
First-Quarter 2016 Results*
• Revenue for the first quarter totaled $2.8 billion, an increase of 39% (42% local currency1). Fee revenue2 increased 25% (28% local currency) to $1.8 billion. The first quarter of 2016 included approximately $654 million of revenue from the acquired Global Workplace Solutions business. Excluding the acquired Global Workplace Solutions business, revenue and fee revenue were both up 7% (10% local currency).
• On a U.S. GAAP basis, net income and earnings per diluted share decreased to $82.2 million and $0.24, respectively. GAAP net income for the first quarter of 2016 was affected by $17.0 million of acquisition-related non-cash amortization, $11.6 million of integration costs associated with the Global Workplace Solutions acquisition, as well as $8.8 million incurred in the cost elimination program that the company referenced in its fourth quarter 2015 earnings release.
• Adjusted net income3 rose 14% to $120.8 million, while adjusted earnings per share improved 13% to $0.36.
• Foreign currency movement, primarily the impact of marking to market of currency hedges, reduced earnings per diluted share and adjusted earnings per diluted share, by approximately $0.04 as compared to the prior-year first quarter.
• EBITDA4 rose 3% to $252.6 million and Normalized EBITDA4 increased 15% to $282.7 million. EBITDA and Normalized EBITDA were negatively impacted by $21.1 million and $22.0 million, respectively, of currency movement, primarily the marking to market of currency hedges in the first quarter of 2016 versus the first quarter of 2015.
• Normalized EBITDA margin on fee revenue was 15.6%.
“We started 2016 with very strong performance,” said Bob Sulentic, CBRE’s president and chief executive officer. “Our people around the world worked together to again produce double-digit revenue and adjusted earnings per share growth, despite significant negative effects from currency hedges in the quarter. Without this impact, adjusted earnings per share would be up 25%.”
Mr. Sulentic added: “CBRE continues to achieve market share gains by attracting and developing top talent and enabling them to leverage our powerful platform to provide superb insight and value to our clients.” Earlier this month, Forbes named CBRE the 15th best employer in America, reflecting the strength of the company’s culture.
Revenue growth was strong in each of CBRE’s three global regions. The Americas, the company’s largest business segment, saw revenue increase 29% (30% local currency). In EMEA (Europe, the Middle East & Africa), revenue rose by 72% (79% local currency) with all countries posting gains, highlighted by The Netherlands, Spain and the United Kingdom. In Asia Pacific (APAC), India and Japan were the catalysts for a 48% (54% local currency) increase in revenue.
Global leasing was exceptionally strong during the first quarter as revenue surged 15% (18% local currency). The United States set the pace, with revenue up 20%, driven by a number of large transactions. A broad range of countries also generated strong growth, including Canada, France, India, Italy and Japan. The United Kingdom showed growth of 7% (16% local currency).
The occupier outsourcing business line continued to benefit from strong underlying growth drivers, augmented by contributions from the acquired Global Workplace Solutions business. Excluding contributions from this acquisition, fee revenue improved 11% (17% local currency), with all three regions posting double-digit growth in local currency. (Note: leasing and sales revenue generated by contractual occupier clients is recorded in our leasing and sales revenue categories.)
On a global basis, property sales revenue grew 7% (9% local currency) with notable growth outside the United States. APAC registered the strongest growth with revenue up 12% (18% local currency), paced by Japan. Strong gains in France, The Netherlands and Spain – as well as growth in the United Kingdom – resulted in a 4% (11% local currency) revenue increase in EMEA. The Americas saw revenue rise 6% (7% local currency). Commercial mortgage services revenue increased 3% (same in local currency), driven by higher loan origination volumes with banks.
Development Services also posted very strong revenue and earnings growth. Projects in process in this business totaled $7.1 billion, up $1.6 billion from the first quarter of 2015. The pipeline inventory totaled $3.1 billion, down $0.5 billion from a year ago, as development projects converted from pipeline to in-process. In the Global Investment Management business, Assets Under Management totaled $89.7 billion at the end of the first quarter 2016. This represents an increase of $0.7 billion from year-end 2015 or $0.3 billion in local currency.
The first quarter results reflect the ongoing evolution of CBRE’s business base toward more stable revenue. Contractual fee revenue accounted for 46% of total fee revenue in the current quarter – up from 39% in the first quarter of 2015. Contractual fee revenue, plus leasing, rose to 74% of total fee revenue from 70% during the prior-year period.
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CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.