CBRE Group (CBRE) Q4 2009 earnings summary

Executive summary

• 2009 revenue was $4.17B, down 18.8% YoY amid weak sales and leasing; net income attributable to shareholders was $33.3M, versus a $1.01B loss in 2008.

• Cost actions reduced operating expenses 20.8%, faster than the 18.8% revenue decline; normalized EBITDA was $453.9M, with an 10.9% margin.

• Outsourcing rose to nearly 40% of revenue, adding recurring contractual fees as transaction-driven markets remained under pressure.

Financial highlights

• Revenue was $4.166B in 2009 versus $5.129B in 2008; foreign currency translation reduced 2009 revenue by $129.2M.

• Operating income was $241.8M, versus an operating loss of $788.5M in 2008, which included $1.159B of goodwill and intangible impairment charges.

• Net income attributable to shareholders was $33.3M; adjusted diluted EPS was $0.39 versus adjusted diluted EPS of $0.97 in 2008.

• Reported EBITDA was $372.1M; normalized EBITDA was $453.9M, compared with $601.2M in 2008.

• Operating expenses fell 20.8% YoY to $1.384B; cost of services fell 16.4% to $2.448B.

Outlook and guidance

• Management saw signs the market cycle might be bottoming, but expected investment-sales recovery in 2010 to be gradual and transaction volume to remain well below 2006–07 levels.

• 2010 planned net capital expenditures were approximately $60M; cash flow and the revolving credit facility were expected to cover anticipated cash needs for at least 12 months.

• Expected 2010 funding included $34.9M of Global Investment Management co-investments and $25.6M committed to Development Services unconsolidated subsidiaries.

• The investment-sales pipeline was slowly replenishing; $5B of U.S. distressed properties were being marketed, including a growing FDIC portfolio.