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CBRE GROUP, INC. 8-K Report (Aug 5, 2004)

Reports
Other Events
Filing Date
Filed August 5, 2004
Period End
August 4, 2004
Security
CBRE
In the record · 2016–202610-K1110-Q328-K149

CBRE filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 149 current reports (8-K) between 2016 and 2026.

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

01—Abstract

Summary

Summary of the 8-K filed August 5, 2004. Cited figures are marked; the original filing is the authoritative source.

CB Richard Ellis Group, Inc. (NYSE: CBG) reported second quarter 2004 revenue of $550.9 milliona, up 71.2% year over year, with GAAP net income of $3.0 million, or $0.04 per diluted share.

Excluding $30.9 millionb pre-tax (about $19.4 million after-tax) of one-time items tied to the Insignia acquisition and the June 2004 IPO, adjusted net income was $22.4 million, or $0.32 per diluted share, versus $0.19 a year earlier on the company's adjusted basis. Roughly 17% organic revenue growth in the quarter, driven by improving U.S. sales and leasing activity, was a key positive; the Insignia acquisition contributed much of the rest of the increase, particularly in New York and London. For the six months, revenue rose 69.4% to $991.9 million, but the company posted a net loss of $13.6 million, or $(0.22) per diluted share, compared with net income of $3.8 million a year earlier.

Investors should weigh the heavy one-time charges, the $4.0 millionc interest expense hit from the repurchase of $21.6 million of 11¼% notes, and the fact that reported EBITDA for the first half was essentially flat at $49.0 million despite the revenue surge. Management guided to full-year 2004 revenue of about $2.1 billion and GAAP EPS above $0.63, or above $1.35 excluding roughly $83 million of pre-tax one-time costs.

The filing is a Form 8-K furnishing the earnings press release (Exhibit 99.1) under Item 12. Its financial statements are unaudited, and the non-GAAP adjusted measures and EBITDA are company-defined, so investors should reconcile them to GAAP figures and review the risk factors in the Form 10-K/A filed June 28, 2004.

02—Key points

Key Highlights

  1. Q2 2004 revenue rose 71.2% to $550.9 million from $321.7 million, aided by the Insignia acquisition and about 17% organic growth.
  2. GAAP net income was $3.0 million ($0.04 per diluted share); adjusted net income excluding one-time items was $22.4 million ($0.32 per diluted share).
  3. One-time items totaled $30.9 million pre-tax in Q2, including $15.0 million of IPO-related bonuses, $15.0 million of merger and integration costs, and $0.9 million of Insignia backlog amortization.
  4. Six-month GAAP net loss of $13.6 million ($0.22 per share) compared with net income of $3.8 million a year earlier; first-half revenue rose 69.4% to $991.9 million.
  5. Americas operating income fell to $14.1 million from $17.2 million on a reported basis, but adjusted operating income rose 128.3% to $43.2 million.
  6. EMEA revenue more than doubled (up 120.8%) to $115.2 million, reflecting Insignia contributions in London and Paris.
  7. Full-year 2004 guidance: revenue of about $2.1 billion, GAAP EPS above $0.63, and adjusted EPS above $1.35 excluding roughly $83 million of pre-tax one-time costs.

03—Questions

Frequently Asked Questions

  1. Why did CBRE report a GAAP net income of only $0.04 per share when adjusted EPS was $0.32?

    The gap reflects $30.9 million of pre-tax one-time charges in Q2: $15.0 million of IPO-related employee bonuses, $15.0 million of merger and integration costs tied to the Insignia acquisition, and $0.9 million of amortization on acquired Insignia revenue backlog. Management argues these items distort underlying performance, but investors should evaluate both GAAP and adjusted figures.

  2. How much of the revenue growth came from the Insignia acquisition versus the underlying business?

    The filing attributes much of the 71.2% increase to Insignia, but it cites organic growth of roughly 17% company-wide (about 14% in the Americas). The exact split between acquired and organic revenue is not quantified in the release.

  3. Why did interest expense rise, and what is the company doing about its debt?

    Interest expense rose to $23.2 million in Q2 from $16.9 million, partly because of a $4.0 million charge from premiums and write-offs when the company repurchased $21.6 million of its 11¼% senior subordinated notes in May and June 2004. The repurchases are part of a deleveraging effort funded in part by IPO proceeds.

  4. What are the main risks to CBRE's outlook?

    The release cites commercial real estate vacancy levels, employment conditions, property values, rental rates, a potential domestic or international recession, and the availability of liquidity for real estate transactions. Investors are directed to the risk factors in the Form 10-K/A for the year ended December 31, 2003, filed June 28, 2004.

  5. Is EBITDA a reliable measure of CBRE's performance?

    EBITDA was $39.0 million in Q2 and $49.0 million for the first half, but the company notes it is a non-GAAP measure, is not a substitute for operating income or net income, and does not account for tax payments or debt service. The company's debt-covenant EBITDA is calculated differently and is not comparable.

04—Continue

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