01—Abstract
Summary
Summary of the 10-K filed March 1, 2018. Cited figures are marked; the original filing is the authoritative source.
CBRE Group, Inc. (CBRE) reported strong revenue growth in its 2017 fiscal year, with total revenue reaching $14.2 billiona, an increase of 8.7% from the prior year.
This growth was primarily driven by robust performance in occupier outsourcing and property management services, along with increased leasing and sales activity across its global segments. The company's diversified business model, spanning advisory and transaction services, property and facilities management, and investment management, positions it well to benefit from global real estate market trends. While the company experienced increased operating expenses, largely due to higher compensation and integration costs from recent acquisitions, it also saw an improvement in its operating income.
CBRE continues to focus on expanding its global services platform and leveraging its strong market position. The company's financial health appears stable, supported by healthy cash flow from operations and a revolving credit facility, though it faces the typical industry risks associated with economic cycles and credit market conditions.
02—Key points
Key Highlights
- Reported total revenue of $14.2 billion for fiscal year 2017, an increase of 8.7% compared to 2016.
- Occupier outsourcing and property management segments showed strong organic growth.
- Operating income increased to $1.07 billion in 2017 from $815 million in 2016.
- Assets Under Management (AUM) for Global Investment Management grew to $103.2 billion at year-end 2017 from $86.6 billion in 2016.
- The company operated in over 450 offices worldwide with more than 80,000 employees.
- CBRE maintained a strong financial position, with a leverage ratio of 0.79x as of December 31, 2017.
- The company did not declare or pay any cash dividends and intends to reinvest earnings for growth and debt reduction.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, CBRE Group, Inc. kept $0.04.
- Revenue$18.63B100.0%
- Cost of revenue−$14.31B76.8%
- Gross profit$4.32B23.2%
- Operating costs−$3.25B17.4%
- Operating income$1.08B5.8%
- Interest, other & tax−$381.6M2.0%
- Net income$697.1M3.7%
Where FY2017 revenue went
$18.63B- Cost of revenue: $14.31B, 77% of revenue
- Operating costs: $3.25B, 17% of revenue
- Net income: $697.1M, 3.7% of revenue
- Interest, other & tax: $381.6M, 2.0% of revenue
Kept 3.7% as net incomeNet income $697.1M · 3.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed March 1, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $18.63B$17.37B | +7.3% |
| Cost of Revenue | $14.31B$13.42B | +6.6% |
| Gross Profit | $4.32B$3.95B | +9.5% |
| Operating Expenses | $17.57B$16.57B | +6.0% |
| Operating Income | $1.08B$816.83M | +32.1% |
| Interest Expense | $136.81M$144.85M | −5.5% |
| Net Income | $697.11M$573.08M | +21.6% |
| EPS (Basic) | $2.06$1.71 | +20.5% |
| EPS (Diluted) | $2.05$1.69 | +21.3% |
| Shares Outstanding (Basic) | 337.66M335.41M | +0.7% |
| Shares Outstanding (Diluted) | 340.78M338.42M | +0.7% |
05—Questions
Frequently Asked Questions
What were CBRE's primary revenue drivers in 2017?
CBRE's primary revenue drivers in 2017 were strong organic growth in occupier outsourcing (up 12.0%) and property management (up 9.0%), alongside increased leasing activity (up 7.1%) and property sales (up 5.4%).
How did the company's acquisitions impact its results?
The company's growth has been significantly fueled by strategic acquisitions. The filing mentions the 2015 Global Workplace Solutions (GWS) acquisition as a major contributor to revenue growth in 2016 and 2017. While acquisitions bring growth, they also incur integration costs, which were noted as a factor in increased operating expenses.
What is the company's dividend policy?
CBRE has not declared or paid any cash dividends on its common stock and does not anticipate doing so in the foreseeable future. The company intends to retain earnings to finance future growth, reduce debt, or repurchase stock.
How did foreign currency fluctuations affect CBRE's results?
Foreign currency fluctuations had a negative impact on total revenue in 2017, estimated at $34.5 million, primarily due to the weakness in British pound sterling and Venezuelan bolivar, partially offset by the strength in the euro. Conversely, foreign currency movements had a positive impact on cost of services.
06—Continue