01—Abstract
Summary
Summary of the 10-K filed March 1, 2017. Cited figures are marked; the original filing is the authoritative source.
CBRE Group, Inc. (CBRE) reported robust revenue growth of 20.4% to $13.1 billiona in 2016, driven significantly by the full-year impact of the Global Workplace Solutions (GWS) acquisition and strong organic growth across its core services.
The company demonstrated resilience with a 4.5% increase in net income attributable to CBRE Group, Inc. to $572 millionb, despite increased costs and foreign currency headwinds. Key segments like the Americas and EMEA showed substantial revenue increases, supported by the GWS acquisition and growth in occupier outsourcing.
While the Global Investment Management segment experienced a revenue dip, the company's diversified business model and strategic focus on integrated, account-based services position it well for continued market leadership. Investors should note the company's ongoing commitment to operational efficiency and capital allocation, including a recently authorized share repurchase program, as it navigates global economic conditions.
02—Key points
Key Highlights
- Total revenue increased by 20.4% to $13.1 billion in 2016, primarily driven by the full year impact of the Global Workplace Solutions (GWS) acquisition and strong organic growth.
- Net income attributable to CBRE Group, Inc. increased by 4.5% to $572 million, with diluted EPS reported at $1.69.
- The Americas segment remains the largest, with revenue up 16.7%, boosted by the GWS acquisition and organic growth in outsourcing, leasing, and mortgage brokerage.
- EMEA revenue saw a significant increase of 30.4%, also heavily influenced by the GWS acquisition and strong organic growth in outsourcing.
- Despite a revenue decrease of 19.7%, the Global Investment Management segment managed its expenses effectively, with operating expenses decreasing by 14.6%.
- CBRE has a solid liquidity position, with $762.6 million in cash and cash equivalents and $2.8 billion available under its revolving credit facility as of December 31, 2016.
- The company's debt covenants remain comfortably met, with an EBITDA to total interest expense coverage ratio of 12.73x and a leverage ratio of 1.18x at year-end 2016.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, CBRE Group, Inc. kept $0.03.
- Revenue$17.37B100.0%
- Cost of revenue−$13.42B77.3%
- Gross profit$3.95B22.7%
- Operating costs−$3.13B18.0%
- Operating income$816.8M4.7%
- Interest, other & tax−$243.8M1.4%
- Net income$573.1M3.3%
Where FY2016 revenue went
$17.37B- Cost of revenue: $13.42B, 77% of revenue
- Operating costs: $3.13B, 18% of revenue
- Net income: $573.1M, 3.3% of revenue
- Interest, other & tax: $243.8M, 1.4% of revenue
Kept 3.3% as net incomeNet income $573.1M · 3.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed March 1, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $17.37B$10.86B | +60.0% |
| Cost of Revenue | $13.42B$40.44M | +33088.0% |
| Gross Profit | $3.95B$10.82B | −63.5% |
| Operating Expenses | $16.57B$10.03B | +65.2% |
| Operating Income | $816.83M$835.94M | −2.3% |
| Interest Expense | $144.85M$118.88M | +21.8% |
| Net Income | $573.08M$547.13M | +4.7% |
| EPS (Basic) | $1.71$1.64 | +4.3% |
| EPS (Diluted) | $1.69$1.63 | +3.7% |
| Shares Outstanding (Basic) | 335.41M332.62M | +0.8% |
| Shares Outstanding (Diluted) | 338.42M336.41M | +0.6% |
05—Questions
Frequently Asked Questions
What were the main drivers of CBRE's revenue growth in 2016?
CBRE's revenue growth was primarily driven by the full-year impact of the Global Workplace Solutions (GWS) acquisition completed in September 2015. Organic growth in key service lines, including occupier outsourcing (up 14.0% excluding GWS), leasing (up 6.7%), and commercial mortgage brokerage (up 19.1%), also significantly contributed to the 20.4% increase in total revenue.
How did the company manage its expenses in light of increased revenues?
While revenue increased, cost of services also rose, largely due to the GWS acquisition and higher commission expenses reflecting transaction volume. Operating, administrative, and other expenses increased by 5.6%, partly due to acquisition costs and higher payroll. The company did implement a cost-elimination project, contributing to efficiency efforts.
What is the company's financial position regarding debt and liquidity?
As of December 31, 2016, CBRE maintained a strong liquidity position with $762.6 million in cash and cash equivalents and had $2.8 billion available under its revolving credit facility. The company's debt levels are managed within its covenants, with a leverage ratio of 1.18x and an EBITDA to interest expense coverage of 12.73x, indicating a healthy financial footing.
What is CBRE's outlook or strategy for future growth?
CBRE's strategy focuses on delivering globally integrated services to major occupiers and leveraging its scale. The company has historically used strategic acquisitions to grow and complement its service offerings. They also maintain a focus on operational efficiency and capital allocation, as evidenced by the recent share repurchase authorization.
06—Continue