- GAAP EPS Declined 57% to $0.64
- Core EPS Declined 55% to $0.82
CBRE Group, Inc. (NYSE:CBRE) today reported financial results
for the second quarter ended June 30, 2023.
Consolidated Financial Results
Overview
The following table presents highlights of CBRE performance
(dollars in millions, except per share data; totals may not add due
to rounding):
% Change
Q2 2023
Q2 2022
USD
LC (1)
Operating Results
Revenue
$
7,720
$
7,771
(0.7
)%
0.8
%
Net revenue (2)
4,478
4,803
(6.8
)%
(5.4
)%
GAAP net income
201
487
(58.7
)%
(57.3
)%
GAAP EPS
0.64
1.48
(56.6
)%
(55.2
)%
Core adjusted net income (3)
258
604
(57.3
)%
(56.1
)%
Core EBITDA (4)
504
919
(45.2
)%
(44.2
)%
Core EPS (3)
0.82
1.83
(55.2
)%
(53.9
)%
Cash Flow Results
Cash flow (used in) provided by
operations
$
(11
)
$
454
(102.4
)%
Less: Capital expenditures
75
55
36.7
%
Free cash flow (5)
$
(86
)
$
400
(121.4
)%
“Like last quarter, CBRE’s results slightly exceeded our
expectations, driven largely by better-than-expected growth in
Global Workplace Solutions and aggregate growth in our resilient
lines of business, offset by weaker-than-expected property sales in
Advisory Services,” said Bob Sulentic, president & chief
executive officer of CBRE.
“It is notable when considering our performance that the
prior-year comparison was especially difficult. We had our best
quarter ever for core earnings-per-share in last year’s second
quarter, driven by exceptionally robust development earnings. To
put this in perspective, development earnings in last year’s second
quarter exceeded the level of development operating profit in any
prior full year except 2021.
“The economy performed better than we had anticipated going into
the quarter in terms of both GDP and employment growth. However,
the opposite was true with interest rates, where increases in the
last 90 days, coupled with expectations that rates will end the
year higher than anticipated last quarter, pressured the elements
of our business that are sensitive to commercial real estate
capital flows, particularly our sales and financing businesses. We
expect this pressure to continue for the remainder of the year.
“At the same time, we are beginning to see signs in our own
business that will eventually lead to improved performance, likely
starting next year.”
CBRE now expects full-year 2023 Core EPS to decline by 20 to 25%
against last year’s record level, with the majority of the decrease
due to the delayed capital markets recovery. The company continues
to expect its resilient lines of business, in aggregate –
consisting of the entire Global Workplace Solutions business, loan
servicing, property management, valuations and the asset management
component of investment management – to grow for the full year at a
rate that is consistent with its expectations three months ago.
Further, CBRE believes there is a reasonable path to achieving a
record level of Core EPS in 2024, although reaching that goal now
has become more difficult with the expected delay in the return of
capital markets activity.
Advisory Services
Segment
The following table presents highlights of the Advisory Services
segment performance (dollars in millions; totals may not add due to
rounding):
% Change
Q2 2023
Q2 2022
USD
LC
Revenue
$
2,042
$
2,588
(21.1
)%
(19.9
)%
Net revenue
2,020
2,571
(21.4
)%
(20.3
)%
Segment operating profit (6)
315
521
(39.4
)%
(38.5
)%
Segment operating profit on revenue margin
(7)
15.5
%
20.1
%
(4.6 pts)
(4.7 pts)
Segment operating profit on net revenue
margin (7)
15.6
%
20.2
%
(4.6 pts)
(4.6 pts)
Note: all percent changes cited are vs. second-quarter 2022,
except where noted.
Property Leasing
- Global leasing revenue declined 16% (15% local currency),
in-line with expectations. The current-quarter decline was against
a particularly strong second quarter of 2022, when leasing revenue
was up 40% year-over-year.
- The decline was largely driven by the Americas, where revenue
fell 22% (21% local currency).
- Foreign currency movement tempered growth in overseas markets.
Combined EMEA/APAC leasing revenue was up 2% (6% local
currency).
- Global leasing revenue was down across all major property
types, most notably in office.
Capital Markets
- Sales revenue fell 44% (43% local currency) due to severely
constrained capital availability and a difficult comparison with
second-quarter 2022. In second-quarter 2022, sales revenue was up
17% year-over-year.
- In the Americas, sales revenue fell 49% (same local currency)
from last year’s strong level, when second-quarter sales revenue
rose 26% year-over-year. EMEA sales revenue declined 44% (43% local
currency) while APAC sales fell 17% (11% local currency).
- Global mortgage origination revenue declined 44% (same local
currency), as most debt capital sources remained largely on the
sidelines. U.S. loan origination volume was down markedly with all
private and public sector capital sources.
Other Advisory Business Lines
- Loan servicing revenue slipped 6% (same local currency).
Excluding prepayment fees, loan servicing revenue increased 6%
year-over-year. The servicing portfolio ended the quarter at
approximately $396 billion, up 3% from first-quarter 2023 and 14%
since second-quarter 2022.
- Property management net revenue rose 3% (5% local currency),
paced by Continental Europe and Southeast Asia.
- Valuations revenue declined 9% (6% local currency), driven
largely by lower activity with financial institutions in the U.S.
market.
Global Workplace Solutions
(GWS) Segment
The following table presents highlights of the GWS segment
performance (dollars in millions; totals may not add due to
rounding):
% Change
Q2 2023
Q2 2022
USD
LC
Revenue
$
5,426
$
4,908
10.6
%
12.1
%
Net revenue
2,205
1,956
12.7
%
14.4
%
Segment operating profit
233
218
6.6
%
8.4
%
Segment operating profit on revenue
margin
4.3
%
4.4
%
(0.1 pts)
(0.1 pts)
Segment operating profit on net revenue
margin
10.6
%
11.2
%
(0.6 pts)
(0.6 pts)
Note: all percent changes cited are vs. second-quarter 2022,
except where noted.
- Facilities management net revenue rose 12% (14% local
currency), driven largely by growth with both new and existing
clients and the continued expansion of the Local business.
- Project management net revenue increased 14% (16% local
currency), driven by growth across the client base, most notably in
the Turner & Townsend business.
- The decline in segment operating profit margin reflected higher
opex investments to support the Local business’s continued
geographic expansion as well as costs associated with integrating
recent acquisitions.
- The pipeline remained elevated with notable growth from large
first-generation outsourcers.
Real Estate Investments (REI)
Segment
The following table presents highlights of the REI segment
performance (dollars in millions):
% Change
Q2 2023
Q2 2022
USD
LC
Revenue
$
256
$
277
(7.8
)%
(6.7
)%
Segment operating profit
33
275
(87.9
)%
(87.7
)%
Note: all percent changes cited are vs. second-quarter 2022,
except where noted.
Real Estate Development
- Development operating loss(8) totaled $8.7 million. Earnings
were down dramatically from second-quarter 2022’s exceptionally
robust level.
- The in-process portfolio ended second-quarter 2023 at $17.1
billion, down $0.2 billion from first-quarter 2023. The pipeline
increased $0.3 billion during the quarter to $13.4 billion.
Investment Management
- Revenue edged down 4% (3% local currency) while asset
management fees were up 1% (2% local currency).
- Operating profit fell 36% (34% local currency) to $37.5
million, due to lower incentive fees and modest co-investment
losses versus gains in second-quarter 2022. Excluding
co-investments and incentive fees, operating profit was roughly
flat with second-quarter 2022.
- Assets Under Management (AUM) totaled $147.6 billion, a
decrease of $1.3 billion from first-quarter 2023. The decrease was
largely driven by lower market asset values.
Corporate and Other
Segment
- Non-core operating loss totaled $6 million, primarily due to
the net unfavorable fair value adjustment of the company’s
investment in Altus Power, Inc. (NYSE:AMPS), reflecting a decline
in the share price during the quarter.
- Net corporate overhead expenses decreased 18%, or roughly $17
million, driven by lower incentive compensation expense, partially
offset by higher salary and benefits expenses.
Capital Allocation
Overview
- Free Cash Flow – During the second quarter of 2023, free
cash outflow was $86 million. This reflected cash used in operating
activities of $11 million, less total capital expenditures of $75
million (9).
- Stock Repurchase Program – The company did not
repurchase any of its common stock during the second quarter of
2023. There was approximately $2.0 billion of capacity remaining
under the company’s authorized stock repurchase program as of June
30, 2023.
- Acquisitions and Investments – CBRE completed four
in-fill acquisitions during the second quarter, including three in
Advisory Services and one in GWS, totaling $143 million in cash and
deferred consideration.
Leverage and Financing
Overview
- Leverage – CBRE’s net leverage ratio (net debt (10) to
trailing twelve-month core EBITDA) was 0.79x as of June 30, 2023,
which is substantially below the company’s primary debt covenant of
4.25x. The net leverage ratio is computed as follows (dollars in
millions):
As of
June 30, 2023
Total debt
$
3,085
Less: Cash (11)
1,261
Net debt (10)
$
1,824
Divided by: Trailing twelve-month Core
EBITDA
$
2,310
Net leverage ratio
0.79x
- Liquidity – As of June 30, 2023, the company had
approximately $4.4 billion of total liquidity, consisting of
approximately $1.3 billion in cash, plus the ability to borrow an
aggregate of approximately $3.1 billion under its revolving credit
facilities, net of any outstanding letters of credit.
Conference Call Details
The company’s second quarter earnings webcast and conference
call will be held today, Thursday, July 27, 2023 at 8:30 a.m.
Eastern Time. Investors are encouraged to access the webcast via
this link or they can click this link beginning at
8:15 a.m. Eastern Time for automated access to the conference
call.
Alternatively, investors may dial into the conference call using
these operator-assisted phone numbers: 877.407.8037 (U.S.) or
201.689.8037 (International). A replay of the call will be
available starting at 1:00 p.m. Eastern Time on July 27, 2023. The
replay is accessible by dialing 877.660.6853 (U.S.) or 201.612.7415
(International) and using the access code: 13739513#. A transcript
of the call will be available on the company's Investor Relations
website at https://ir.cbre.com.
About CBRE Group,
Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500
company headquartered in Dallas, is the world’s largest commercial
real estate services and investment firm (based on 2022 revenue).
The company has more than 115,000 employees (excluding Turner &
Townsend employees) serving clients in more than 100 countries.
CBRE serves a diverse range of clients with an integrated suite of
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. We routinely post important
information on our website, including corporate and investor
presentations and financial information. We intend to use our
website as a means of disclosing material, non-public information
and for complying with our disclosure obligations under Regulation
FD. Such disclosures will be included in the Investor Relations
section of our website at https://ir.cbre.com. Accordingly,
investors should monitor such portion of our website, in addition
to following our press releases, Securities and Exchange Commission
filings and public conference calls and webcasts.
Safe Harbor and
Footnotes
This press release contains forward-looking statements within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, including statements
regarding the economic outlook, the company’s future growth
momentum, operations and business outlook. These forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause the company’s actual results and performance
in future periods to be materially different from any future
results or performance suggested in forward-looking statements in
this press release. Any forward-looking statements speak only as of
the date of this press release and, except to the extent required
by applicable securities laws, the company expressly disclaims any
obligation to update or revise any of them to reflect actual
results, any changes in expectations or any change in events. If
the company does update one or more forward-looking statements, no
inference should be drawn that it will make additional updates with
respect to those or other forward-looking statements. Factors that
could cause results to differ materially include, but are not
limited to: disruptions in general economic, political and
regulatory conditions and significant public health events,
particularly in geographies or industry sectors where our business
may be concentrated; volatility or adverse developments in the
securities, capital or credit markets, interest rate increases and
conditions affecting the value of real estate assets, inside and
outside the United States; poor performance of real estate
investments or other conditions that negatively impact clients’
willingness to make real estate or long-term contractual
commitments and the cost and availability of capital for investment
in real estate; foreign currency fluctuations and changes in
currency restrictions, trade sanctions and import/export and
transfer pricing rules; our ability to compete globally, or in
specific geographic markets or business segments that are material
to us; our ability to identify, acquire and integrate accretive
businesses; costs and potential future capital requirements
relating to businesses we may acquire; integration challenges
arising out of companies we may acquire; increases in unemployment
and general slowdowns in commercial activity; trends in pricing and
risk assumption for commercial real estate services; the effect of
significant changes in capitalization rates across different
property types; a reduction by companies in their reliance on
outsourcing for their commercial real estate needs, which would
affect our revenues and operating performance; client actions to
restrain project spending and reduce outsourced staffing levels;
our ability to further diversify our revenue model to offset
cyclical economic trends in the commercial real estate industry;
our ability to attract new occupier and investor clients; our
ability to retain major clients and renew related contracts; our
ability to leverage our global services platform to maximize and
sustain long-term cash flow; our ability to continue investing in
our platform and client service offerings; our ability to maintain
expense discipline; the emergence of disruptive business models and
technologies; negative publicity or harm to our brand and
reputation; the failure by third parties to comply with service
level agreements or regulatory or legal requirements; the ability
of our investment management business to maintain and grow assets
under management and achieve desired investment returns for our
investors, and any potential related litigation, liabilities or
reputational harm possible if we fail to do so; our ability to
manage fluctuations in net earnings and cash flow, which could
result from poor performance in our investment programs, including
our participation as a principal in real estate investments; the
ability of our indirect subsidiary, CBRE Capital Markets, Inc., to
periodically amend, or replace, on satisfactory terms, the
agreements for its warehouse lines of credit; declines in lending
activity of U.S. GSEs, regulatory oversight of such activity and
our mortgage servicing revenue from the commercial real estate
mortgage market; changes in U.S. and international law and
regulatory environments (including relating to anti-corruption,
anti-money laundering, trade sanctions, tariffs, currency controls
and other trade control laws), particularly in Asia, Africa,
Russia, Eastern Europe and the Middle East, due to the level of
political instability in those regions; litigation and its
financial and reputational risks to us; our exposure to liabilities
in connection with real estate advisory and property management
activities and our ability to procure sufficient insurance coverage
on acceptable terms; our ability to retain, attract and incentivize
key personnel; our ability to manage organizational challenges
associated with our size; liabilities under guarantees, or for
construction defects, that we incur in our development services
business; variations in historically customary seasonal patterns
that cause our business not to perform as expected; our leverage
under our debt instruments as well as the limited restrictions
therein on our ability to incur additional debt, and the potential
increased borrowing costs to us from a credit-ratings downgrade;
our and our employees’ ability to execute on, and adapt to,
information technology strategies and trends; cybersecurity threats
or other threats to our information technology networks, including
the potential misappropriation of assets or sensitive information,
corruption of data or operational disruption; our ability to comply
with laws and regulations related to our global operations,
including real estate licensure, tax, labor and employment laws and
regulations, fire and safety building requirements and regulations,
as well as data privacy and protection regulations and ESG matters,
and the anti-corruption laws and trade sanctions of the U.S. and
other countries; changes in applicable tax or accounting
requirements; any inability for us to implement and maintain
effective internal controls over financial reporting; the effect of
implementation of new accounting rules and standards or the
impairment of our goodwill and intangible assets; and the
performance of our equity investments in companies that we do not
control.
Additional information concerning factors that may influence the
company’s financial information is discussed under “Risk Factors,”
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” “Quantitative and Qualitative Disclosures
About Market Risk” and “Cautionary Note on Forward-Looking
Statements” in our Annual Report on Form 10-K for the year ended
December 31, 2022, our latest quarterly report on Form 10-Q, as
well as in the company’s press releases and other periodic filings
with the Securities and Exchange Commission (SEC). Such filings are
available publicly and may be obtained on the company’s website at
www.cbre.com or upon written request from CBRE’s Investor Relations
Department at investorrelations@cbre.com.
The terms “net revenue,” “core adjusted net income,” “core EPS,”
“business line operating profit,” “segment operating profit on
revenue margin,” “segment operating profit on net revenue margin,”
“core EBITDA,” “net debt” and “free cash flow,” all of which CBRE
uses in this press release, are non-GAAP financial measures under
SEC guidelines, and you should refer to the footnotes below as well
as the “Non-GAAP Financial Measures” section in this press release
for a further explanation of these measures. We have also included
in that section reconciliations of these measures in specific
periods to their most directly comparable financial measure
calculated and presented in accordance with GAAP for those
periods.
Totals may not sum in tables in millions included in this
release due to rounding.
Note: We have not reconciled the (non-GAAP) core earnings per
share forward-looking guidance included in this release to the most
directly comparable GAAP measure because this cannot be done
without unreasonable effort due to the variability and low
visibility with respect to costs related to acquisitions, carried
interest incentive compensation and financing costs, which are
potential adjustments to future earnings. We expect the variability
of these items to have a potentially unpredictable, and a
potentially significant, impact on our future GAAP financial
results.
(1)
Local currency percentage change is
calculated by comparing current-period results at prior-period
exchange rates versus prior-period results.
(2)
Net revenue is gross revenue less costs
largely associated with subcontracted vendor work performed for
clients. These costs are reimbursable by clients and generally have
no margin.
(3)
Core adjusted net income and core earnings
per diluted share (or core EPS) exclude the effect of select items
from GAAP net income and GAAP earnings per diluted share as well as
adjust the provision for income taxes and impact on non-controlling
interest for such charges. Adjustments during the periods presented
included non-cash depreciation and amortization expense related to
certain assets attributable to acquisitions and restructuring
activities, certain carried interest incentive compensation
(reversal) expense to align with the timing of associated revenue,
the impact of fair value adjustments to real estate assets acquired
in the acquisition of Telford Homes plc in 2019 (the Telford
acquisition) (purchase accounting) that were sold in the period,
costs incurred related to legal entity restructuring, write-off of
financing costs on extinguished debt, integration and other costs
related to acquisitions, asset impairments, provision associated
with Telford’s fire safety remediation efforts, and costs
associated with efficiency and cost-reduction initiatives. It also
removes the fair value changes and related tax impact of certain
strategic non-core non-controlling equity investments that are not
directly related to our business segments (including venture
capital “VC” related investments). Note: Core adjusted EPS has been
renamed core EPS for simplicity.
(4)
Core EBITDA represents earnings, inclusive
of non-controlling interest, before net interest expense, write-off
of financing costs on extinguished debt, income taxes, depreciation
and amortization, asset impairments, adjustments related to certain
carried interest incentive compensation expense (reversal) to align
with the timing of associated revenue, fair value adjustments to
real estate assets acquired in the Telford acquisition (purchase
accounting) that were sold in the period, costs incurred related to
legal entity restructuring, integration and other costs related to
acquisitions, provision associated with Telford’s fire safety
remediation efforts, and costs associated with efficiency and
cost-reduction initiatives. It also removes the fair value changes,
on a pre-tax basis, of certain strategic non-core non-controlling
equity investments that are not directly related to our business
segments (including venture capital “VC” related investments).
(5)
Free cash flow is calculated as cash flow
provided by operations, less capital expenditures (reflected in the
investing section of the consolidated statement of cash flows).
(6)
Segment operating profit is the measure
reported to the chief operating decision maker (CODM) for purposes
of making decisions about allocating resources to each segment and
assessing performance of each segment. Segment operating profit
represents earnings, inclusive of non-controlling interest, before
net interest expense, write-off of financing costs on extinguished
debt, income taxes, depreciation and amortization and asset
impairments, as well as adjustments related to the following:
certain carried interest incentive compensation expense (reversal)
to align with the timing of associated revenue, fair value
adjustments to real estate assets acquired in the Telford
acquisition (purchase accounting) that were sold in the period,
costs incurred related to legal entity restructuring, and
integration and other costs related to acquisitions, provision
associated with Telford’s fire safety remediation efforts, and
costs associated with efficiency and cost-reduction
initiatives.
(7)
Segment operating profit on revenue and
net revenue margins represent segment operating profit divided by
revenue and net revenue, respectively.
(8)
Represents line of business
profitability/losses, as adjusted.
(9)
For the three months ended June 30, 2023,
the company incurred capital expenditures of $74.7 million
(reflected in the investing section of the condensed consolidated
statement of cash flows) and received tenant concessions from
landlords of $6.0 million (reflected in the operating section of
the condensed consolidated statement of cash flows).
(10)
Net debt is calculated as cash and cash
equivalents less total debt (excluding non-recourse debt).
(11)
Cash represents cash and cash equivalents
(excluding restricted cash).
CBRE GROUP, INC.
OPERATING RESULTS
FOR THE THREE AND SIX MONTHS
ENDED JUNE 30, 2023 AND 2022
(in thousands, except share
and per share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue:
Net revenue
$
4,477,507
$
4,802,558
$
8,658,296
$
9,178,589
Pass through costs also recognized as
revenue
3,242,356
2,968,720
6,472,681
5,925,622
Total revenue
7,719,863
7,771,278
15,130,977
15,104,211
Costs and expenses:
Cost of revenue
6,179,496
6,053,984
12,185,910
11,806,178
Operating, administrative and other
1,088,812
1,188,819
2,297,716
2,254,815
Depreciation and amortization
154,387
162,359
315,878
311,391
Asset impairments
—
26,405
—
36,756
Total costs and expenses
7,422,695
7,431,567
14,799,504
14,409,140
Gain on disposition of real estate
9,261
177,226
12,321
198,818
Operating income
306,429
516,937
343,794
893,889
Equity (loss) income from unconsolidated
subsidiaries
(7,502
)
119,168
134,181
162,039
Other income (loss)
5,612
(6,909
)
8,086
(21,373
)
Interest expense, net of interest
income
42,982
18,518
71,396
31,344
Income before provision for income
taxes
261,557
610,678
414,665
1,003,211
Provision for income taxes
55,404
120,762
83,439
117,024
Net income
206,153
489,916
331,226
886,187
Less: Net income attributable to
non-controlling interests
4,750
2,594
12,931
6,568
Net income attributable to CBRE Group,
Inc.
$
201,403
$
487,322
$
318,295
$
879,619
Basic income per share:
Net income per share attributable to CBRE
Group, Inc.
$
0.65
$
1.50
$
1.02
$
2.68
Weighted average shares outstanding for
basic income per share
310,857,203
325,415,305
310,662,324
328,692,585
Diluted income per share:
Net income per share attributable to CBRE
Group, Inc.
$
0.64
$
1.48
$
1.01
$
2.64
Weighted average shares outstanding for
diluted income per share
314,282,247
329,843,710
314,821,615
333,514,398
Core EBITDA
$
503,522
$
918,592
$
1,036,111
$
1,650,655
CBRE GROUP, INC.
SEGMENT RESULTS
FOR THE THREE MONTHS ENDED
JUNE 30, 2023
(in thousands, totals may not
add due to rounding)
(Unaudited)
Three Months Ended June 30,
2023
Advisory
Services
Global Workplace
Solutions
Real Estate
Investments
Corporate (1)
Total Core
Other
Total
Consolidated
Revenue:
Net revenue
$
2,020,273
$
2,205,106
$
255,657
$
(3,529
)
$
4,477,507
$
—
$
4,477,507
Pass through costs also recognized as
revenue
21,400
3,220,956
—
—
3,242,356
—
3,242,356
Total revenue
2,041,673
5,426,062
255,657
(3,529
)
7,719,863
—
7,719,863
Costs and expenses:
Cost of revenue
1,233,594
4,897,144
51,420
(2,662
)
6,179,496
—
6,179,496
Operating, administrative and other
498,060
306,470
176,346
107,816
1,088,692
120
1,088,812
Depreciation and amortization
71,699
65,565
2,920
14,203
154,387
—
154,387
Total costs and expenses
1,803,353
5,269,179
230,686
119,357
7,422,575
120
7,422,695
Gain on disposition of real estate
3
—
9,258
—
9,261
—
9,261
Operating income (loss)
238,323
156,883
34,229
(122,886
)
306,549
(120
)
306,429
Equity income (loss) from unconsolidated
subsidiaries
1,451
379
(3,441
)
—
(1,611
)
(5,891
)
(7,502
)
Other income (loss)
2,117
1,420
(118
)
2,483
5,902
(290
)
5,612
Add-back: Depreciation and
amortization
71,699
65,565
2,920
14,203
154,387
—
154,387
Adjustments:
Integration and other costs related to
acquisitions
—
8,023
—
28,421
36,444
—
36,444
Carried interest incentive compensation
reversal to align with the timing of associated revenue
—
—
(459
)
—
(459
)
—
(459
)
Costs associated with efficiency and
cost-reduction initiatives
1,853
410
—
47
2,310
—
2,310
Total segment operating profit (loss)
$
315,443
$
232,680
$
33,131
$
(77,732
)
$
(6,301
)
$
497,221
Core EBITDA
$
503,522
_______________
(1)
Includes elimination of inter-segment
revenue.
CBRE GROUP, INC.
SEGMENT
RESULTS—(CONTINUED)
FOR THE THREE MONTHS ENDED
JUNE 30, 2022
(in thousands, totals may not
add due to rounding)
(Unaudited)
Three Months Ended June 30,
2022
Advisory
Services
Global Workplace
Solutions
Real Estate
Investments
Corporate (1)
Total Core
Other
Total
Consolidated
Revenue:
Net revenue
$
2,571,441
$
1,955,967
$
277,281
$
(2,131
)
$
4,802,558
$
—
$
4,802,558
Pass through costs also recognized as
revenue
16,542
2,952,178
—
—
2,968,720
—
2,968,720
Total revenue
2,587,983
4,908,145
277,281
(2,131
)
7,771,278
—
7,771,278
Costs and expenses:
Cost of revenue
1,554,472
4,443,566
74,276
(18,330
)
6,053,984
—
6,053,984
Operating, administrative and other
514,412
254,962
306,455
114,294
1,190,123
(1,304
)
1,188,819
Depreciation and amortization
79,416
70,859
3,618
8,466
162,359
—
162,359
Asset impairments
—
—
26,405
—
26,405
—
26,405
Total costs and expenses
2,148,300
4,769,387
410,754
104,430
7,432,871
(1,304
)
7,431,567
Gain on disposition of real estate
—
—
177,226
—
177,226
—
177,226
Operating income (loss)
439,683
138,758
43,753
(106,561
)
515,633
1,304
516,937
Equity income (loss) from unconsolidated
subsidiaries
1,505
(400
)
172,986
—
174,091
(54,923
)
119,168
Other income (loss)
53
870
(803
)
(7,029
)
(6,909
)
—
(6,909
)
Add-back: Depreciation and
amortization
79,416
70,859
3,618
8,466
162,359
—
162,359
Add-back: Asset impairments
—
—
26,405
—
26,405
—
26,405
Adjustments:
Integration and other costs related to
acquisitions
—
8,209
—
—
8,209
—
8,209
Carried interest incentive compensation
reversal to align with the timing of associated revenue
—
—
(7,495
)
—
(7,495
)
—
(7,495
)
Impact of fair value adjustments to real
estate assets acquired in the Telford acquisition (purchase
accounting) that were sold in period
—
—
(1,451
)
—
(1,451
)
—
(1,451
)
Costs incurred related to legal entity
restructuring
—
—
—
10,245
10,245
—
10,245
Provision associated with Telford’s fire
safety remediation efforts
—
—
37,505
—
37,505
—
37,505
Total segment operating profit (loss)
$
520,657
$
218,296
$
274,518
$
(94,879
)
$
(53,619
)
$
864,973
Core EBITDA
$
918,592
_______________
(1)
Includes elimination of inter-segment
revenue.
CBRE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
(Unaudited)
June 30, 2023
December 31, 2022
Assets:
Cash and cash equivalents
$
1,261,174
$
1,318,290
Restricted cash
96,152
86,559
Receivables, net
5,552,692
5,326,807
Warehouse receivables (1)
1,009,770
455,354
Contract assets
509,988
529,106
Income taxes receivable
258,408
133,438
Property and equipment, net
848,852
836,041
Operating lease assets
983,782
1,033,011
Goodwill and other intangibles, net
7,173,623
7,061,088
Investments in unconsolidated
subsidiaries
1,306,769
1,317,705
Other assets, net
2,730,857
2,415,990
Total assets
$
21,732,067
$
20,513,389
Liabilities:
Current liabilities, excluding debt and
operating lease liabilities
$
5,887,577
$
6,915,857
Warehouse lines of credit (which fund
loans that U.S. Government Sponsored Enterprises have committed to
purchase) (1)
997,235
447,840
Revolving credit facility
583,000
178,000
5.950% senior notes, net
972,990
—
4.875% senior notes, net
596,962
596,450
2.500% senior notes, net
489,845
489,262
Current maturities of long term debt
436,205
427,792
Other debt
6,199
42,914
Operating lease liabilities
1,294,165
1,309,976
Other long-term liabilities
1,574,252
1,499,566
Total liabilities
12,838,430
11,907,657
Equity:
CBRE Group, Inc. stockholders' equity
8,098,058
7,853,273
Non-controlling interests
795,579
752,459
Total equity
8,893,637
8,605,732
Total liabilities and equity
$
21,732,067
$
20,513,389
_______________
(1)
Represents loan receivables, the majority
of which are offset by borrowings under related warehouse line of
credit facilities.
CBRE GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Six Months Ended June
30,
2023
2022
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
331,226
$
886,187
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization
315,878
311,391
Amortization of financing costs
2,305
3,407
Gains related to mortgage servicing
rights, premiums on loan sales and sales of other assets
(45,340
)
(87,150
)
Asset impairments
—
36,756
Net realized and unrealized (gains)
losses, primarily from investments
(2,935
)
27,251
Provision for doubtful accounts
6,412
7,781
Net compensation expense for equity
awards
38,796
82,322
Equity income from unconsolidated
subsidiaries
(134,181
)
(162,039
)
Distribution of earnings from
unconsolidated subsidiaries
183,068
315,255
Proceeds from sale of mortgage loans
4,356,448
7,270,423
Origination of mortgage loans
(4,893,898
)
(6,984,779
)
Increase (decrease) in warehouse lines of
credit
549,395
(259,502
)
Tenant concessions received
6,515
4,250
Purchase of equity securities
(8,309
)
(13,931
)
Proceeds from sale of equity
securities
7,503
25,296
(Increase) decrease in real estate under
development
(36,542
)
74,127
Increase in receivables, prepaid expenses
and other assets (including contract and lease assets)
(101,074
)
(509,350
)
Decrease in accounts payable and accrued
expenses and other liabilities (including contract and lease
liabilities)
(313,243
)
(194,236
)
Decrease in compensation and employee
benefits payable and accrued bonus and profit sharing
(810,852
)
(573,809
)
Increase in net income taxes
receivable/payable
(157,326
)
(60,160
)
Other operating activities, net
(49,471
)
(138,574
)
Net cash (used in) provided by operating
activities
(755,625
)
60,916
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures
(135,012
)
(96,722
)
Acquisition of businesses, including net
assets acquired and goodwill, net of cash acquired
(165,539
)
(45,377
)
Contributions to unconsolidated
subsidiaries
(59,800
)
(220,492
)
Distributions from unconsolidated
subsidiaries
20,787
42,006
Other investing activities, net
(29,754
)
(8,357
)
Net cash used in investing activities
(369,318
)
(328,942
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from revolving credit
facility
3,206,000
310,000
Repayment of revolving credit facility
(2,801,000
)
—
Proceeds from notes payable on real
estate
219
15,706
Repayment of notes payable on real
estate
—
(16,544
)
Proceeds from issuance of 5.950% senior
notes
975,253
—
Repurchase of common stock
(129,808
)
(993,769
)
Acquisition of businesses (cash paid for
acquisitions more than three months after purchase date)
(68,239
)
(28,431
)
Units repurchased for payment of taxes on
equity awards
(50,217
)
(34,841
)
Non-controlling interest contributions
1,744
713
Non-controlling interest distributions
(1,398
)
(370
)
Other financing activities, net
(57,777
)
(12,960
)
Net cash provided by (used in) financing
activities
1,074,777
(760,496
)
Effect of currency exchange rate changes
on cash and cash equivalents and restricted cash
2,643
(180,543
)
NET DECREASE IN CASH AND CASH
EQUIVALENTS AND RESTRICTED CASH
(47,523
)
(1,209,065
)
CASH AND CASH EQUIVALENTS AND
RESTRICTED CASH, AT BEGINNING OF PERIOD
1,404,849
2,539,781
CASH AND CASH EQUIVALENTS AND
RESTRICTED CASH, AT END OF PERIOD
$
1,357,326
$
1,330,716
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest
$
91,301
$
27,745
Income tax payments, net
$
303,394
$
336,266
Non-GAAP Financial
Measures
The following measures are considered “non-GAAP financial
measures” under SEC guidelines:
(i)
Net revenue
(ii)
Core EBITDA
(iii)
Business line operating profit/loss
(iv)
Segment operating profit on revenue and
net revenue margins
(v)
Free cash flow
(vi)
Net debt
(vii)
Core net income attributable to CBRE
Group, Inc. stockholders, as adjusted (which we also refer to as
“core adjusted net income”)
(viii)
Core EPS
These measures are not recognized measurements under United
States generally accepted accounting principles (GAAP). When
analyzing our operating performance, investors should use these
measures in addition to, and not as an alternative for, their most
directly comparable financial measure calculated and presented in
accordance with GAAP. Because not all companies use identical
calculations, our presentation of these measures may not be
comparable to similarly titled measures of other companies.
Our management generally uses these non-GAAP financial measures
to evaluate operating performance and for other discretionary
purposes. The company believes these measures provide a more
complete understanding of ongoing operations, enhance comparability
of current results to prior periods and may be useful for investors
to analyze our financial performance because they eliminate the
impact of selected charges that may obscure trends in the
underlying performance of our business. The company further uses
certain of these measures, and believes that they are useful to
investors, for purposes described below.
With respect to net revenue, net revenue is gross revenue less
costs largely associated with subcontracted vendor work performed
for clients. We believe that investors may find this measure useful
to analyze the company’s overall financial performance because it
excludes costs reimbursable by clients that generally have no
margin, and as such provides greater visibility into the underlying
performance of our business.
With respect to Core EBITDA, business line operating
profit/loss, and segment operating profit on revenue and net
revenue margins, the company believes that investors may find these
measures useful in evaluating our operating performance compared to
that of other companies in our industry because their calculations
generally eliminate the accounting effects of acquisitions, which
would include impairment charges of goodwill and intangibles
created from acquisitions, the effects of financings and income tax
and the accounting effects of capital spending. All of these
measures may vary for different companies for reasons unrelated to
overall operating performance. In the case of Core EBITDA, this
measure is not intended to be a measure of free cash flow for our
management’s discretionary use because it does not consider cash
requirements such as tax and debt service payments. The Core EBITDA
measure calculated herein may also differ from the amounts
calculated under similarly titled definitions in our credit
facilities and debt instruments, which amounts are further adjusted
to reflect certain other cash and non-cash charges and are used by
us to determine compliance with financial covenants therein and our
ability to engage in certain activities, such as incurring
additional debt. The company also uses segment operating profit and
core EPS as significant components when measuring our operating
performance under our employee incentive compensation programs.
With respect to free cash flow, the company believes that
investors may find this measure useful to analyze the cash flow
generated from operations after accounting for cash outflows to
support operations and capital expenditures. With respect to net
debt, the company believes that investors use this measure when
calculating the company’s net leverage ratio.
With respect to core EBITDA, core EPS and core adjusted net
income, the company believes that investors may find these measures
useful to analyze the underlying performance of operations without
the impact of strategic non-core equity investments (Altus Power,
Inc. and certain other investments) that are not directly related
to our business segments. These can be volatile and are often
non-cash in nature.
Core net income attributable to CBRE Group, Inc. stockholders,
as adjusted (or core adjusted net income), and core EPS, are
calculated as follows (in thousands, except share and per share
data):
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net income attributable to CBRE Group,
Inc.
$
201,403
$
487,322
$
318,295
$
879,619
Plus / minus:
Non-cash depreciation and amortization
expense related to certain assets attributable to acquisitions and
restructuring activities
40,267
40,169
89,435
81,217
Integration and other costs related to
acquisitions
36,444
8,209
54,578
16,330
Carried interest incentive compensation
(reversal) expense to align with the timing of associated
revenue
(459
)
(7,495
)
6,519
15,361
Impact of fair value adjustments to real
estate assets acquired in the Telford acquisition (purchase
accounting) that were sold in period
—
(1,451
)
—
(3,147
)
Costs incurred related to legal entity
restructuring
—
10,245
—
11,921
Asset impairments
—
26,405
—
36,756
Net fair value adjustments on strategic
non-core investments
6,301
53,619
32,518
189,983
Impact of adjustments on non-controlling
interest
(8,268
)
(8,226
)
(18,438
)
(17,289
)
Costs associated with efficiency and
cost-reduction initiatives
2,310
—
140,557
—
Provision associated with Telford’s fire
safety remediation efforts
—
37,505
—
37,505
Tax impact of adjusted items, tax benefit
attributable to legal entity restructuring, and strategic non-core
investments
(20,009
)
(42,180
)
(75,780
)
(174,897
)
Core net income attributable to CBRE
Group, Inc., as adjusted
$
257,989
$
604,122
$
547,684
$
1,073,359
Core diluted income per share attributable
to CBRE Group, Inc., as adjusted
$
0.82
$
1.83
$
1.74
$
3.22
Weighted average shares outstanding for
diluted income per share
314,282,247
329,843,710
314,821,615
333,514,398
Core EBITDA is calculated as follows (in thousands, totals may
not add due to rounding):
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net income attributable to CBRE Group,
Inc.
$
201,403
$
487,322
$
318,295
$
879,619
Net income attributable to non-controlling
interests
4,750
2,594
12,931
6,568
Net income
206,153
489,916
331,226
886,187
Adjustments:
Depreciation and amortization
154,387
162,359
315,878
311,391
Asset impairments
—
26,405
—
36,756
Interest expense, net of interest
income
42,982
18,518
71,396
31,344
Provision for income taxes
55,404
120,762
83,439
117,024
Integration and other costs related to
acquisitions
36,444
8,209
54,578
16,330
Carried interest incentive compensation
(reversal) expense to align with the timing of associated
revenue
(459
)
(7,495
)
6,519
15,361
Impact of fair value adjustments to real
estate assets acquired in the Telford acquisition (purchase
accounting) that were sold in period
—
(1,451
)
—
(3,147
)
Costs incurred related to legal entity
restructuring
—
10,245
—
11,921
Costs associated with efficiency and
cost-reduction initiatives
2,310
—
140,557
—
Provision associated with Telford’s fire
safety remediation efforts
—
37,505
—
37,505
Net fair value adjustments on strategic
non-core investments
6,301
53,619
32,518
189,983
Core EBITDA
$
503,522
$
918,592
$
1,036,111
$
1,650,655
Core EBITDA for the trailing twelve months ended June 30, 2023
is calculated as follows (in thousands):
Trailing
Twelve Months Ended June 30,
2023
Net income attributable to CBRE Group,
Inc.
$
846,046
Net income attributable to non-controlling
interests
22,952
Net income
868,998
Adjustments:
Depreciation and amortization
617,575
Asset impairments
21,957
Interest expense, net of interest
income
109,051
Write-off of financing costs on
extinguished debt
1,862
Provision for income taxes
200,646
Impact of fair value adjustments to real
estate assets acquired in the Telford acquisition (purchase
accounting) that were sold in period
(1,968
)
Costs incurred related to legal entity
restructuring
1,526
Integration and other costs related to
acquisitions
78,950
Carried interest incentive compensation
reversal to align with the timing of associated revenue
(13,070
)
Costs associated with efficiency and
cost-reduction initiatives
258,093
Provision associated with Telford’s fire
safety remediation efforts
148,416
Net fair value adjustments on strategic
non-core investments
17,687
Core EBITDA
$
2,309,723
Revenue includes client reimbursed pass-through costs largely
associated with employees that are dedicated to client facilities
and subcontracted vendor work performed for clients. Reimbursement
related to subcontracted vendor work generally has no margin and
has been excluded from net revenue. Reconciliations are shown below
(dollars in thousands):
Three Months Ended June
30,
2023
2022
Consolidated
Revenue
$
7,719,863
$
7,771,278
Less: Pass through costs also recognized
as revenue
3,242,356
2,968,720
Net revenue
$
4,477,507
$
4,802,558
Three Months Ended June
30,
2023
2022
Property
Management Revenue
Revenue
$
480,623
$
460,992
Less: Pass through costs also recognized
as revenue
21,400
16,542
Net revenue
$
459,223
$
444,450
Three Months Ended June
30,
2023
2022
GWS
Revenue
Revenue
$
5,426,062
$
4,908,145
Less: Pass through costs also recognized
as revenue
3,220,956
2,952,178
Net revenue
$
2,205,106
$
1,955,967
Three Months Ended June
30,
2023
2022
Facilities
Management Revenue
Revenue
$
3,686,548
$
3,820,120
Less: Pass through costs also recognized
as revenue
2,247,299
2,536,371
Net revenue
$
1,439,249
$
1,283,749
Three Months Ended June
30,
2023
2022
Project
Management Revenue
Revenue
$
1,739,514
$
1,088,025
Less: Pass through costs also recognized
as revenue
973,657
415,807
Net revenue
$
765,857
$
672,218
Below represents a reconciliation of REI business line operating
profitability/loss to REI segment operating profit (in
thousands):
Three Months Ended June
30,
Real Estate
Investments
2023
2022
Investment management operating profit
$
37,497
$
58,439
Global real estate development operating
(loss) profit
(8,693
)
215,243
Segment overhead (and related
adjustments)
4,327
836
Real estate investments segment operating
profit
$
33,131
$
274,518
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230727150350/en/
Brad Burke - Investors 214.863.3100
Brad.Burke@cbre.com
Steve Iaco - Media 212.984.6535
Steven.Iaco@cbre.com
CBRE (NYSE:CBRE)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
CBRE (NYSE:CBRE)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024