CBRE reports strong revenue and earnings growth for first quarter
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Steve Iaco, Senior Managing Director
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CBRE GROUP, INC. REPORTS RECORD FIRST QUARTER
NORMALIZED EBITDA OF $247 MILLION, UP 24%
Adjusted Earnings Per Share Rises 28% to $0.32
Los Angeles, CA – April 29, 2015 — CBRE Group, Inc. (NYSE:CBG) today reported strong revenue and earnings growth for the first quarter ended March 31, 2015.
First-Quarter 2015 Results
- Revenue for the quarter totaled $2.1 billion, an increase of 10% (15% in local currency) from $1.9 billion in the first quarter of 2014. Fee revenue1 increased 10% (15% in local currency) to $1.5 billion.
- Adjusted net income2 rose 29% to $106.0 million from $82.4 million in the first quarter of 2014, while adjusted earnings per diluted share2 improved 28% to $0.32 from $0.25 in the prior-year period. Adjusted net income and adjusted earnings per share excludes from U.S. GAAP net income and earnings per share the effect of selected charges3. For the first quarter of 2015, selected charges (net of income taxes) totaled $13.1 million versus $14.7 million for the same period in 2014.
- On a GAAP basis, net income rose 37% to $92.9 million, compared with $67.7 million for the first quarter of 2014. GAAP earnings per diluted share rose 40% to $0.28, compared with $0.20 in last year’s first quarter.
Normalized EBITDA4, which excludes selected charges, increased 24% to $246.7 million from $198.8 million in the first quarter of 2014. EBITDA4 (including selected charges) rose 25% to $246.3 million for the first quarter of 2015, from $197.2 million for the same period a year earlier.
These results include a net gain of approximately $13 million (approximately $8 million or $0.02 per share, net of tax) over the prior-year first quarter, from foreign currency movement, after the impact of currency hedging activities for the year.
“Our strong results in the first quarter reflect the success of our people in executing our strategy and creating real advantages for our clients,” said Bob Sulentic, CBRE’s president and chief executive officer. “We are especially pleased with the double-digit top and bottom line growth we achieved while continuing to make strategic investments in our people and platform that will enhance our client offering and boost future growth.”
CBRE’s performance in the quarter was driven by the Americas, the company’s largest business segment. Americas revenue improved 20% (21% in local currency), as all of the region’s major business lines achieved double-digit revenue growth. The strong dollar tempered revenue growth in overseas markets. In Asia Pacific, revenue rose 7% (15% in local currency), driven by robust growth in Australia and China. In Europe, the Middle East and Africa (EMEA), revenue increased 6% in local currency but declined 5% when converted to U.S. dollars. The growth in EMEA followed an exceptionally strong first quarter in 2014.
CBRE’s Capital Markets businesses were particularly strong performers during the quarter, as investor appetite for commercial real estate remained robust. Global property sales revenue improved 16% (21% in local currency), while commercial mortgage services revenue surged 40% (41% in local currency), reflecting significantly increased origination and servicing activity with the U.S. Government-Sponsored Enterprises.
Global leasing revenue rose 9% (13% in local currency). The Americas was the primary catalyst with revenue up 18% (19% in local currency) as CBRE’s investments in producer recruiting and in-fill M&A -- along with increased productivity from existing producers -- continued to enhance performance.
CBRE’s occupier outsourcing business maintained strong growth in the first quarter, despite negative foreign currency effects. More corporations and other major space occupiers are purchasing integrated real estate and facilities services on an account basis. Globally, revenue from occupier outsourcing, excluding related transaction revenue, improved 8% (13% in local currency). Fee revenue (excluding related transaction revenue) from this business line rose 5% (12% in local currency).
Compared with the first quarter of 2014, CBRE’s net debt declined by approximately $275 million to 1.2 times trailing 12-month normalized EBITDA from 1.7 times. Reflecting the company’s increasingly strong financial position, Moody’s Investors Services raised its rating on CBRE’s senior secured and senior unsecured debt to Investment Grade. This upgrade followed Standard & Poor’s decision to increase CBRE’s corporate issuer rating to Investment Grade in late 2014.
On March 31, 2015, CBRE entered into a definitive agreement to acquire the Global WorkPlace Solutions (GWS) business of Johnson Controls, Inc. The GWS acquisition, which we expect to close in late third quarter or early fourth quarter of this year, will significantly enhance CBRE’s ability to self-perform facilities management services in more than 50 countries and deepen its relationships with large multi-national corporations. In addition, CBRE has completed two in-fill acquisitions thus far in 2015: United Commercial Realty, a leading retail real estate services specialist based in Dallas (which closed in the first quarter); and Environmental Systems, Inc., an energy management specialist based in Brookfield, Wisconsin (which closed in the second quarter).
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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 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 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.