CBRE Group (CBRE) Q4 2008 earnings summary

Executive summary

• FY08 revenue was $5.13B, down 15% YoY; normalized EBITDA was $601M, while reported net loss reached $1.01B, driven mainly by non-cash impairment charges.

• Outsourcing revenue grew 23% and represented one-third of global revenue, partly offsetting declines in brokerage and transaction-based services.

• U.S. investment-sales share rose to ~18%; market leadership and a global service platform supported new client assignments and share gains in a severe downturn.

Financial highlights

• Revenue fell $905.4M, or 15.0%, to $5.13B from $6.03B; lower sales and leasing activity were partly offset by outsourcing growth.

• Reported operating loss was $788.5M versus operating income of $699.0M in 2007; the 2008 result included $1.159B of goodwill and intangible impairment.

• Net loss was $1.012B, or diluted EPS of -$4.81, versus net income of $390.5M, or diluted EPS of $1.66, in 2007.

• Adjusted net income was $208.7M and adjusted diluted EPS was $0.97; adjustments excluded impairment and other specified items.

• Operating cash flow was negative $130.4M versus positive $648.2M in 2007; lower results, bonus payments and the prior-year Savills proceeds affected the comparison.

Outlook and guidance

• For the remainder of 2009, capital markets were expected to remain weak and leasing conditions soft for most of the year.

• 2009 projections indicated compliance with minimum interest coverage and maximum leverage covenants; further cost actions were planned if revenue fell below projections.

• Cost actions were expected to reduce annual operating expenses by $385M on a run-rate basis versus 2007; anticipated 2009 net capital expenditures were ~$30M.

• A ~$100M cash tax benefit was expected in 2009 from deferred-compensation plan distributions.