10-QPeriod: Q2 FY2009

CBRE GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 10, 2009For Securities:CBRE

Summary

CB Richard Ellis Group, Inc. (CBRE) reported a net loss of $6.6 million for the second quarter of 2009, a significant downturn from a net income of $16.6 million in the same period of the previous year. This loss was driven by a substantial 27.3% decrease in revenue, totaling $955.7 million, attributed to the ongoing challenging global economic conditions affecting sales and leasing activities. Despite cost-reduction measures that lowered operating expenses as a percentage of revenue, the decline in top-line performance and increased interest expenses related to new debt issuances led to the overall net loss. The company's balance sheet shows a decrease in total assets from $4.73 billion to $4.42 billion, largely due to a reduction in current assets like receivables and inventory. Total liabilities also decreased, primarily driven by lower current liabilities, including short-term borrowings and current maturities of long-term debt. The company raised capital through equity offerings in June 2009, which helped bolster its cash position, increasing cash and cash equivalents to $309.5 million from $158.8 million at the end of 2008.

Financial Highlights

22 data points
Beta

Revenue

$955.67M

Net Income

-$6.64M

-0.7% Net Margin

EPS (Diluted)

$-0.02

Cash & Equivalents

$309.52M

Free Cash Flow

-$88.60M

Financial Statements
Beta
Revenue$955.67M
Operating Expenses$919.67M
Operating Income$38.92M
Interest Expense$47.42M
Net Income-$6.64M
EPS (Basic)$-0.02
EPS (Diluted)$-0.02
Shares Outstanding (Basic)265.68M
Shares Outstanding (Diluted)265.68M

Key Highlights

  • 1Reported a net loss of $6.6 million for Q2 2009, compared to a net income of $16.6 million in Q2 2008.
  • 2Revenue decreased by 27.3% year-over-year to $955.7 million, reflecting the impact of challenging global economic conditions on sales and leasing activities.
  • 3Operating, administrative, and other expenses decreased by 29.9% due to cost-saving initiatives, which improved the operating expense ratio.
  • 4Interest expense increased by 14.1% year-over-year, impacted by new debt issuances, including $450 million in senior subordinated notes.
  • 5Cash and cash equivalents significantly increased to $309.5 million as of June 30, 2009, from $158.8 million as of December 31, 2008, partly due to equity offerings.
  • 6Total assets decreased to $4.42 billion from $4.73 billion, reflecting a decline in current assets.
  • 7The company continues to manage its leverage, with total debt (excluding warehouse lines) at $2.3 billion as of June 30, 2009.

Frequently Asked Questions

The primary driver was the significant decline in revenue, down 27.3% year-over-year to $955.7 million. This was directly attributed to challenging global economic conditions that impacted commercial real estate sales and leasing activities across all segments.

CBRE implemented cost-reduction measures, leading to a 29.9% decrease in operating, administrative, and other expenses. This included reductions in payroll, travel, and marketing costs, as well as lower incentive compensation. While cost of services also decreased, it rose as a percentage of revenue due to the significant drop in overall revenue.

CBRE's liquidity improved significantly, with cash and cash equivalents increasing to $309.5 million from $158.8 million at the end of the previous year. This increase was partly due to the net proceeds from equity offerings completed in June 2009.

Interest expense increased by 14.1% compared to the prior year, influenced by the issuance of $450 million in senior subordinated notes in June 2009. The company's significant leverage remains a key factor in its financial structure.