10-QPeriod: Q3 FY2015

CBRE GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 9, 2015For Securities:CBRE

Summary

CBRE Group, Inc. reported strong revenue growth of 19.2% for the third quarter of 2015 compared to the prior year, reaching $2.71 billion. This growth was driven by a significant contribution from the acquisition of Global Workplace Solutions (GWS) and robust organic growth across its global operations. Net income attributable to CBRE Group, Inc. increased to $149.1 million ($0.44 per diluted share) from $107.1 million ($0.32 per diluted share) in the prior year's third quarter. The company's financial performance reflects a successful integration of GWS and continued strength in its core real estate services, with notable improvements in leasing and sales activities across its Americas, EMEA, and Asia Pacific segments. For the nine-month period ended September 30, 2015, revenue grew by 14.3% to $7.16 billion, with net income attributable to CBRE Group, Inc. rising to $367.1 million ($1.09 per diluted share) from $280.2 million ($0.84 per diluted share) in the corresponding prior period. The company's financial position remains solid, supported by a well-managed debt structure and effective liquidity management. CBRE continues to execute its strategy of delivering integrated services to clients globally, positioning it for sustained growth.

Financial Highlights

48 data points
Beta

Revenue

$2.71B

Net Income

$149.12M

5.5% Net Margin

EPS (Diluted)

$0.44

Total Assets

$9.56B

Cash & Equivalents

$440.36M

Free Cash Flow

$149.66M

Financial Statements
Beta
Revenue$2.71B
Operating Expenses$2.48B
Operating Income$240.10M
Interest Expense$30.70M
Net Income$149.12M
EPS (Basic)$0.45
EPS (Diluted)$0.44
Shares Outstanding (Basic)332.68M
Shares Outstanding (Diluted)336.56M

Key Highlights

  • 1Consolidated revenue increased by 19.2% to $2.71 billion for Q3 2015 compared to Q3 2014.
  • 2Net income attributable to CBRE Group, Inc. rose to $149.1 million in Q3 2015 from $107.1 million in Q3 2014.
  • 3Diluted EPS increased to $0.44 in Q3 2015 from $0.32 in Q3 2014.
  • 4The acquisition of Global Workplace Solutions (GWS) contributed significantly to revenue growth.
  • 5Strong organic growth was observed across property, facilities, and project management services, as well as in sales and leasing activities.
  • 6The company successfully refinanced and managed its debt, with total debt increasing due to the GWS acquisition financing.
  • 7EBITDA increased to $326.6 million for Q3 2015 from $292.9 million for Q3 2014.

Frequently Asked Questions

The primary driver of revenue growth in the third quarter of 2015 was the acquisition of Global Workplace Solutions (GWS), which contributed $236.6 million in revenue. Additionally, strong organic growth across various service lines, including property, facilities, and project management, as well as increased sales and leasing activities, also significantly contributed to the overall revenue increase.

The GWS acquisition had a positive impact on profitability, contributing to the increase in net income and diluted EPS. For the three months ended September 30, 2015, the GWS acquisition contributed $8.6 million to net income attributable to CBRE Group, Inc. However, the acquisition also brought associated costs, such as integration expenses and increased interest expense due to new debt financing.

CBRE's debt level increased significantly during the nine months ended September 30, 2015, primarily due to financing the GWS acquisition. This involved issuing $600 million in 4.875% senior notes and borrowing $400 million in new term loan facilities. The company's debt structure includes revolving credit facilities, senior term loans, and various senior notes. CBRE's leverage ratio was 1.88x as of September 30, 2015, which is well within its covenant limits.

Foreign currency fluctuations had a negative impact on CBRE's reported revenue, with a $153.9 million negative impact on total revenue during the third quarter of 2015 compared to the prior year period. This was primarily due to the weakness of currencies like the Australian dollar, Brazilian real, British pound sterling, Canadian dollar, euro, and Japanese yen against the U.S. dollar. The company utilizes hedging strategies to mitigate some of this foreign currency risk.