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CBRE GROUP, INC. 8-K Report (Nov 12, 2002)

Reports
Other Events
Filing Date
Filed November 12, 2002
Period End
November 6, 2002
Security
CBRE
In the record · 2016–202610-K1110-Q328-K150

CBRE filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 150 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Mar ’17Mar ’17
  2. Leadership change8-K · Apr ’19Apr ’19
  3. Material agreement8-K · Jul ’21Jul ’21
  4. Material agreement8-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 8-K filed November 12, 2002. Cited figures are marked; the original filing is the authoritative source.

CBRE Holding, Inc., parent of CB Richard Ellis Services, filed this Form 8-K on November 12, 2002 to furnish, under Regulation FD, an unaudited press release reporting results for the third quarter and nine months ended September 30, 2002.

The quarter was the company's clearest improvement in the period. Revenue rose 3.2% to $284.9 milliona, and EBITDA excluding merger-related charges rose 15.2% to $27.6 million, lifting the EBITDA margin to 9.7% from 8.7%. Net income was $1.9 million, compared with a net loss of $27.7 million a year earlier, which had included $19.8 million of merger-related charges.

The quarter's profitability was supported by the absence of those charges and by lower depreciation and amortization. The nine-month picture is weaker on the top line. Revenue fell 4.8% to $793.8 millionb, while EBITDA rose 23.3% to $72.1 million and net income improved to $3.6 million from a net loss of $32.8 million.

Interest expense climbed to $46.3 millionc from $35.5 million, which absorbs much of the operating gain. Balance sheet data show cash falling to $18.5 million from $57.4 million at year-end 2001, total assets declining to $1.27 billion, and goodwill and intangibles rising to $673.5 million. Investors should weigh the margin recovery against the thinner liquidity and the heavy, high-cost debt load.

The company also said it would hold a conference call with bondholders, which signals that bondholders are a key audience for these results. Note on naming: the filing is made by CBRE Holding, Inc., not 'CBRE Group, Inc.' The 8-K itself is a brief Regulation FD disclosure. It contains no new guidance and no forward-looking commitments beyond the standard cautionary language in the press release.

02—Key points

Key Highlights

  1. Q3 2002 revenue of $284.9M rose 3.2% year over year from $276.2M.
  2. Q3 2002 EBITDA excluding merger-related charges was $27.6M, up 15.2% from $23.9M, with EBITDA margin improving to 9.7% from 8.7%.
  3. Q3 2002 net income was $1.9M, compared with a net loss of $27.7M in Q3 2001, which included $19.8M of merger-related charges.
  4. Nine-month revenue declined 4.8% to $793.8M, while nine-month EBITDA rose 23.3% to $72.1M and nine-month net income was $3.6M versus a $32.8M loss.
  5. Nine-month interest expense increased to $46.3M from $35.5M, a material drag on earnings.
  6. Cash and cash equivalents fell to $18.5M at September 30, 2002 from $57.4M at December 31, 2001, while goodwill and intangibles rose to $673.5M.
  7. Results are unaudited, and the company plans a bondholder conference call on November 7, 2002.

03—Questions

Frequently Asked Questions

  1. Did CBRE's underlying profitability improve in the third quarter of 2002?

    Yes. EBITDA excluding merger-related charges rose 15.2% to $27.6M, and the margin widened to 9.7% from 8.7%. Net income turned positive at $1.9M, versus a $27.7M loss in the prior-year quarter, which had included $19.8M of merger-related charges that did not recur.

  2. Why did revenue decline on a nine-month basis even though the quarter grew?

    Nine-month revenue fell 4.8% to $793.8M from $833.5M. The filing does not explain the drivers of the decline. The quarterly increase of 3.2% suggests the trend was improving during the year, but the filing provides no segment or market-level breakdown to explain the year-to-date shortfall.

  3. How is the company's liquidity and debt position?

    Cash fell to $18.5M from $57.4M at year-end 2001. Debt includes a $7.0M revolver draw, $40.6M and $182.7M of senior secured term loans (tranches A and B), $225.9M of 11¼% senior subordinated notes, and $66.3M of other debt, which includes non-recourse Japan building debt. Interest expense rose sharply for the nine months, so the lower cash balance and heavy debt load warrant close monitoring.

  4. Why does the company host a bondholder call, and what should investors expect from it?

    The company scheduled a November 7, 2002 conference call with its bondholders to discuss Q3 results, and a transcript was to be posted on www.cbre.com within seven working days. The call's focus on bondholders reflects the importance of its high-yield debt. Investors should review the transcript for any comments on debt service, covenants, or liquidity.

04—Continue

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