CBRE Group (CBRE) Q4 2007 earnings summary

Executive summary

• FY07 revenue reached $6.03B, up 49.7%; adjusted net income rose 43% to $496.8M and adjusted diluted EPS rose 43% to $2.11.

• Record full-year results spanned geographies and segments, while Q4 investment sales softened amid credit-market disruption.

• More than 30% of revenue and normalized EBITDA came from outside the U.S.; fee-based outsourcing revenue reached 23% of total revenue, up from 14% in 2006.

Financial highlights

• FY07 revenue was $6.034B vs. $4.032B in 2006; reported net income was $390.5M vs. $318.6M.

• Operating income was $699.0M vs. $550.1M; EBITDA was $834.3M vs. $653.5M, while normalized EBITDA rose to $970.1M from $652.5M.

• Adjusted net income excluded merger-related charges, acquisition integration costs, trading-security losses and other specified items; FY07 adjusted diluted EPS was $2.11.

• Q4 revenue was $1.837B, operating income $192.0M, net income $122.4M and diluted EPS $0.54; Q4 2006 figures were $1.409B, $223.8M, $125.1M and $0.53.

• Operating cash flow was $648.2M; cash and equivalents were $342.9M at year-end.

Outlook and guidance

• 2008 outlook anticipated modestly weaker office leasing in Europe and easing rental growth; credit-market normalization was expected later in 2008, but timing remained uncertain.

• Planned 2008 integration expenses were $16.0M; estimated annual interest expense was $156.0M and anticipated net capital expenditures were $80.0M.

• Management viewed 2008 as an opportunity to gain share, citing variable costs, brand strength and a global platform; acquisitions and industry consolidation remained strategic opportunities.