CBRE Group (CBRE) Q4 2005 earnings summary

Executive summary

• 2005 revenue reached $2.91B, up 23.1% YoY, with double-digit growth across all six primary business lines.

• Adjusted diluted EPS was $3.00, up almost 82% YoY; adjusted net income was $229.9M, up 95%.

• Record results reflected improved market share, favorable real estate conditions and operating leverage; cash was $449M at year-end and net debt/EBITDA was below 1.0x.

Financial highlights

• Revenue was $2.911B vs. $2.365B in 2004; reported operating income rose to $372.4M from $171.0M.

• Reported net income was $217.3M vs. $64.7M; diluted EPS was $2.84 vs. $0.91.

• Normalized EBITDA increased 54% to $461.3M; EBITDA margin excluding one-time charges rose to 15.8% from 12.7%.

• Q4 revenue was $956.0M, operating income $159.0M, net income $95.4M and diluted EPS $1.24.

• Operating cash flow was $359.7M, up $172.4M YoY; cash and cash equivalents were $449.3M at Dec. 31, 2005.

Outlook and guidance

• 2006 EPS growth guidance was 15–20%, excluding one-time items; management expected market-share gains and growth consistent with long-term objectives.

• 2006 net capital expenditures were expected to be $44.6M, including $4.0M related to recent in-fill acquisitions.

• Favorable U.S. office and industrial rent appreciation was expected in 2006; European leasing recovery was at an early stage.

• Expected 2006 integration expenses were $8.5M, including residual Insignia integration and costs for recent acquisitions.