01—Abstract
Summary
Summary of the 10-K filed March 2, 2020. Cited figures are marked; the original filing is the authoritative source.
CBRE Group, Inc. (CBRE) is the world's largest commercial real estate services and investment firm, as indicated by its 2019 revenue.
The company offers a broad spectrum of services to both real estate occupiers and investors globally, encompassing leasing, property sales, outsourcing, valuation, investment management, and development. CBRE has a strong global presence with over 100,000 employees across more than 530 offices in over 100 countries. The company's business model is increasingly shifting towards contractual, fee-for-service revenue streams, which are generally more stable and predictable than transaction-based commissions.
This strategic shift is supported by a diversified client base, including a significant portion of Fortune 100 companies. For the fiscal year ending December 31, 2019, CBRE reported significant revenue growth, driven by strong performance across its Advisory Services and Global Workplace Solutions segments, and bolstered by the acquisition of Telford Homes.
The company also highlighted progress in its Real Estate Investments segment, particularly in investment management services. However, investors should note the company's disclosure of material weaknesses in internal controls within its Global Workplace Solutions segment in the EMEA region, which management is actively working to remediate.
02—Key points
Key Highlights
- CBRE is the world's largest commercial real estate services and investment firm, based on 2019 revenue.
- The company operates in over 530 offices across more than 100 countries, with over 100,000 employees.
- CBRE's business is increasingly focused on contractual, fee-for-service revenue, aiming for greater revenue stability.
- In 2019, revenue grew to $23.9 billion, driven by organic growth and the acquisition of Telford Homes.
- The company reported net income attributable to CBRE Group, Inc. of $1.3 billion for 2019.
- A material weakness in internal control over financial reporting was identified in the Global Workplace Solutions segment (EMEA region), which management is addressing.
- CBRE does not currently pay dividends, intending to reinvest earnings for growth and debt reduction.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, CBRE Group, Inc. kept $0.05.
- Revenue$23.89B100.0%
- Cost of revenue−$18.69B78.2%
- Gross profit$5.21B21.8%
- Operating costs−$3.95B16.5%
- Operating income$1.26B5.3%
- Interest, other & tax$22.5M0.1%
- Net income$1.28B5.4%
Where FY2019 revenue went
$23.89B- Cost of revenue: $18.69B, 78% of revenue
- Operating costs: $3.95B, 17% of revenue
- Operating income: $1.26B, 5.3% of revenue
Kept 5.3% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed March 2, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $23.89B$21.34B | +12.0% |
| Cost of Revenue | $18.69B$16.45B | +13.6% |
| Gross Profit | $5.21B$4.89B | +6.4% |
| Operating Income | $1.26B$1.09B | +15.8% |
| Net Income | $1.28B$1.06B | +20.6% |
| EPS (Basic) | $3.82$3.13 | +22.0% |
| EPS (Diluted) | $3.77$3.10 | +21.6% |
| Shares Outstanding (Basic) | 335.80M339.32M | −1.0% |
| Shares Outstanding (Diluted) | 340.52M343.12M | −0.8% |
05—Questions
Frequently Asked Questions
What are CBRE's main business segments and services?
CBRE operates through three main segments: Advisory Services (including leasing, capital markets, property management, project management, and valuation), Global Workplace Solutions (providing integrated outsourcing services like facilities management and project management for occupiers), and Real Estate Investments (including investment management, development services, and flexible-space solutions).
How did CBRE perform financially in 2019?
In the fiscal year ended December 31, 2019, CBRE reported total revenue of $23.9 billion, an increase of 12.0% from the prior year. Net income attributable to CBRE Group, Inc. was $1.3 billion, or $3.77 per diluted share.
What is the significance of the identified material weakness in internal controls?
CBRE identified material weaknesses in its Global Workplace Solutions segment in the EMEA region, primarily related to insufficient resources, ineffective risk assessment, control deficiencies, and inadequate information/communication processes. While management stated no material misstatement was identified in the financial statements due to these weaknesses, it indicates a potential risk that such misstatements might not be prevented or detected promptly. The company is implementing remediation plans to address these issues.
Does CBRE pay dividends?
No, 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 shares.
06—Continue