CBRE Group (CBRE) Q4 2014 earnings summary

Executive summary

• Record FY14 revenue of $9.05B, up 26%; adjusted EPS rose 17% to $1.68 and normalized EBITDA increased 14% to a record $1.2B.

• Growth reflected strong organic activity, Norland contributions, 11 infill acquisitions, platform investment, and a shift toward recurring revenue; contractual sources were 51% of revenue.

• Management entered 2015 expecting continued strong growth, supported by gradually improving market fundamentals and investments positioned to support further share gains.

Financial highlights

• FY14 revenue was $9.05B, up 26.0% YoY; growth included higher management fees (excluding Norland, +15.8%), sales (+19.7%) and leasing (+16.2%).

• Net income attributable to shareholders was $484.5M vs. $316.5M; operating income was $792.3M vs. $616.1M.

• Reported diluted EPS was $1.45 vs. $0.95; adjusted diluted EPS was $1.68 vs. $1.43.

• EBITDA was $1.142B vs. $983M; adjusted EBITDA was $1.166B vs. $1.022B, excluding specified acquisition, cost-containment and carried-interest items.

• Operating cash flow was $661.8M, down from $745.1M, primarily reflecting higher receivables, bonus, tax and commission payments.

Outlook and guidance

• Management expected continued strong growth in 2015 as market fundamentals gradually improved and platform investments supported further market-share gains.

• 2015 planned net capital expenditures were up to $180M; internally generated cash flow and revolving credit capacity were expected to cover anticipated needs for at least the next 12 months.

• Development projects in process totaled $5.4B at year-end; the prospective deal pipeline was $4.0B.