10-QPeriod: Q3 FY2022

CBRE GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 27, 2022For Securities:CBRE

Summary

CBRE Group, Inc. reported solid revenue growth in the third quarter of 2022, with total revenue increasing by 10.8% year-over-year to $7.53 billion. This growth was primarily driven by strong performance in the Global Workplace Solutions (GWS) segment, boosted by the full quarter contribution from the Turner & Townsend acquisition, and continued strength in the Real Estate Investments (REI) segment, benefiting from appreciating asset values and development/construction revenue. While net income attributable to CBRE Group, Inc. saw a modest increase to $446.6 million, this was influenced by significant foreign currency translation headwinds and increased operating expenses, including provisions for Telford Homes' fire safety remediation efforts and costs related to efficiency initiatives. Despite macroeconomic challenges such as rising interest rates and inflation, CBRE demonstrated resilience. The company's diversification strategy across asset types, lines of business, clients, and geographies continues to support its performance. Management is actively managing expenses and initiating cost-reduction measures to navigate the current economic environment. The company's balance sheet remains strong, with substantial liquidity available through its revolving credit facility and cash on hand, which is being actively used for strategic share repurchases.

Financial Highlights

45 data points
Beta

Revenue

$7.53B

21.2% Gross Margin

Net Income

$446.64M

5.9% Net Margin

EPS (Diluted)

$1.38

Total Assets

$20.22B

Cash & Equivalents

$1.13B

Free Cash Flow

$689.62M

Financial Statements
Beta
Revenue$7.53B
Cost of Revenue$5.93B
Gross Profit$1.60B
Operating Income$374.35M
Net Income$446.64M
EPS (Basic)$1.40
EPS (Diluted)$1.38
Shares Outstanding (Basic)319.83M
Shares Outstanding (Diluted)324.74M

Key Highlights

  • 1Total revenue increased by 10.8% year-over-year to $7.53 billion in Q3 2022.
  • 2Global Workplace Solutions (GWS) revenue grew by 16.2%, driven by the Turner & Townsend acquisition and strong performance in facilities and project management.
  • 3Real Estate Investments (REI) revenue increased by 15.1%, benefiting from asset appreciation and development/construction activities.
  • 4Net income attributable to CBRE Group, Inc. increased slightly to $446.6 million, though impacted by foreign currency headwinds and increased operating expenses.
  • 5The company recorded a provision of $9.5 million for Telford Homes' fire safety remediation efforts.
  • 6CBRE continues to execute its significant share repurchase program, with $2.6 billion of capacity remaining under its 2021 program as of September 30, 2022.
  • 7Despite a challenging macroeconomic environment, the company maintains a strong liquidity position with $1.1 billion in cash and cash equivalents and $3.3 billion available under its revolving credit facilities.

Frequently Asked Questions

CBRE reported a 10.8% increase in total revenue to $7.53 billion in Q3 2022 compared to the same period in 2021. Net income attributable to CBRE Group, Inc. saw a modest increase to $446.6 million. This growth was primarily driven by the Global Workplace Solutions and Real Estate Investments segments, despite facing headwinds from foreign currency translation and increased operating expenses.

The acquisition of Turner & Townsend, completed in November 2021, is contributing significantly to the Global Workplace Solutions segment's performance. For Q3 2022, Turner & Townsend contributed approximately $325.2 million in revenue, and its full quarter contribution has boosted project management revenue growth.

CBRE faces macroeconomic challenges including rising interest rates, inflation impacting construction costs, and foreign currency fluctuations negatively affecting reported revenues. Additionally, there's a specific provision related to potential fire safety remediation costs for its Telford Homes business in the UK, which could be material. The company also continues to address material weaknesses in internal control over financial reporting for its GWS EMEA business.

CBRE maintains a strong liquidity position with $1.1 billion in cash and cash equivalents and $3.3 billion available under its revolving credit facilities as of September 30, 2022. The company is actively repurchasing shares, having spent $408.3 million in Q3 2022 under its $4.0 billion authorization, and continues to review its capital structure and debt refinancing opportunities.