CBRE Group (CBRE) Q4 2004 earnings summary

Executive summary

• FY04 revenue rose 45.1% to $2.365B; net income was $64.7M versus a $34.7M loss in 2003, with growth reflecting Insignia and organic gains.

• Adjusted net income was $117.9M, or $1.65 diluted EPS; adjusted EBITDA was $300.3M, up 64% YoY, excluding $54.9M of one-time Insignia and IPO expenses.

• Organic revenue growth was 21%; management described business momentum as strong and the 2005 outlook as encouraging.

Financial highlights

• Revenue increased $735.0M, or 45.1%, to $2.365B; higher sales, leasing, management, consulting and appraisal activity contributed.

• Operating income was $171.0M versus $25.8M in 2003; net income was $64.7M versus a net loss of $34.7M.

• Diluted EPS was $0.91 reported; adjusted diluted EPS was $1.65, compared with $0.71 adjusted in 2003.

• Operating cash flow was $182.2M, up from $77.3M; cash and equivalents ended 2004 at $256.9M.

Outlook and guidance

• Management expected strong momentum and improving leasing markets to continue in 2005, potentially bringing rental-rate increases for the first time in more than three years.

• Expected Insignia integration expenses: $6.5M in 2005 and $4.0M in 2006; 2005 capital expenditures were projected at $36.0M.

• Management expected operating cash flow and the revolving credit facility to meet anticipated cash needs for at least the next 12 months.

• Deleveraging was expected to generate annual cash interest savings of approximately $16M; further debt reduction opportunities remained under consideration.