CBRE Group, Inc. Reports Financial Results for First-Quarter 2023
CBRE Group, Inc. reported Q1 2023 results with GAAP EPS declining 68% to $0.37 and core EPS down 34% to $0.92. Revenue reached $7.411 billion, a slight increase of 1.1% year-over-year. However, net revenue fell 4.5% to $4.181 billion. The company faced a significant drop in property sales, leading to a 70.2% decrease in net income at $117 million. The Global Workplace Solutions segment saw an 11.1% revenue increase, while the Advisory Services segment reported a 17.5% revenue decline. Despite these challenges, CBRE maintains its full-year guidance, expecting core EPS to decline by low-to-mid double digits in 2023 before surpassing previous peaks in 2024. The company highlights resilience in certain business areas and cost management efforts.
- Global Workplace Solutions revenue rose 11.1% year-over-year.
- Cost management efforts mitigated some declines in revenue.
- Core earnings forecast to exceed prior peak in 2024.
- GAAP EPS declined 68% to $0.37.
- Net revenue fell 4.5% to $4.181 billion.
- Advisory Services segment revenue declined 17.5%.
-
GAAP EPS Declined
68% to$0.37 -
Core EPS Declined
34% to$0.92
Consolidated Financial Results Overview
The following table presents highlights of CBRE performance (dollars in millions, except per share data; totals may not add due to rounding):
|
|
|
|
|
% Change |
||||||||
|
Q1 2023 |
|
Q1 2022 |
|
USD |
|
LC (1) |
||||||
Operating Results |
|
|
|
|
|
|
|
||||||
Revenue |
$ |
7,411 |
|
|
$ |
7,333 |
|
|
1.1 |
% |
|
4.4 |
% |
Net revenue (2) |
|
4,181 |
|
|
|
4,376 |
|
|
(4.5 |
) % |
|
(1.2 |
) % |
GAAP net income |
|
117 |
|
|
|
392 |
|
|
(70.2 |
) % |
|
(68.6 |
) % |
GAAP EPS |
|
0.37 |
|
|
|
1.16 |
|
|
(68.1 |
) % |
|
(66.4 |
) % |
Core adjusted net income (3) |
|
290 |
|
|
|
469 |
|
|
(38.3 |
) % |
|
(35.9 |
) % |
Core EBITDA (4) |
|
533 |
|
|
|
732 |
|
|
(27.2 |
) % |
|
(25.1 |
) % |
Core EPS (3) |
|
0.92 |
|
|
|
1.39 |
|
|
(34.0 |
) % |
|
(31.2 |
) % |
|
|
|
|
|
|
|
|
||||||
Cash Flow Results |
|
|
|
|
|
|
|
||||||
Cash flow used in operations |
$ |
(745 |
) |
|
$ |
(394 |
) |
|
89.3 |
% |
|
|
|
Less: Capital expenditures |
|
60 |
|
|
|
42 |
|
|
43.3 |
% |
|
|
|
Free cash flow (5) |
$ |
(805 |
) |
|
$ |
(436 |
) |
|
84.8 |
% |
|
|
“Our first quarter results were slightly better than we expected going into the year, but still down significantly from last year’s strong first quarter. Our performance relative to our expectations was led by the cyclically resilient elements of our business and our cost management efforts, which more than offset a greater-than-expected decline in property sales,” said
“Although we anticipate pressure on our transactional businesses to intensify further this year, we are maintaining our earnings outlook for full-year 2023, with core earnings per share expected to decline by low-to-mid double digits this year, but then exceed the prior peak in 2024. Our full-year outlook is supported by the same dynamics we saw in the first quarter – benefits from the diversification of our business and our intense focus on cost. There is more uncertainty in our outlook than there was 60 days ago, with our expectations underpinned by our view that a recession this year will be moderate and that an eventual easing of the Fed’s monetary policy will spur a rebound in economic activity in 2024.”
The cyclically resilient elements of CBRE’s business include its entire
Advisory Services Segment
The following table presents highlights of the Advisory Services segment performance (dollars in millions; totals may not add due to rounding):
|
|
|
|
|
% Change |
||||||||
|
Q1 2023 |
|
Q1 2022 |
|
USD |
|
LC |
||||||
Revenue |
$ |
1,854 |
|
|
$ |
2,248 |
|
|
(17.5 |
) % |
|
(15.1 |
) % |
Net revenue |
|
1,831 |
|
|
|
2,231 |
|
|
(17.9 |
) % |
|
(15.5 |
) % |
Segment operating profit (6) |
|
270 |
|
|
|
466 |
|
|
(42.1 |
) % |
|
(40.1 |
) % |
Segment operating profit on revenue margin (7) |
|
14.5 |
% |
|
|
20.7 |
% |
|
(6.2 pts |
) |
|
(6.1 pts |
) |
Segment operating profit on net revenue margin (7) |
|
14.7 |
% |
|
|
20.9 |
% |
|
(6.1 pts |
) |
|
(6.1 pts |
) |
Note: all percent changes cited are vs. first-quarter 2022, except where noted.
-
Global leasing revenue declined
8% (6% local currency). The current-quarter decline was against a particularly strong first quarter of 2022, when leasing revenue was up49% versus first-quarter 2021. -
The decline was largely driven by the
Americas , where revenue fell10% (same in local currency). -
Foreign currency headwinds masked growth in overseas markets. Combined EMEA/APAC leasing revenue was up
6% in local currency, but down2% inU.S. dollars. - Global leasing revenue declined across all major property types, except retail, which was driven by strength in EMEA.
Capital Markets
-
Sales revenue fell
41% (38% local currency) due to severely constrained capital availability and especially difficult comparisons with first-quarter 2022. In first-quarter 2022, sales revenue was up58% from first-quarter 2021. -
In the
Americas , sales revenue fell43% (same local currency) from last year’s robust level, when year-over-year first-quarter sales revenue rose59% . EMEA sales revenue declined43% (39% local currency) while APAC sales fell30% (22% local currency). -
Most debt capital sources sharply curtailed their lending activity. As a result, global mortgage origination revenue declined
51% (same local currency). Loan origination volume was down markedly with nearly all private and public sector capital sources.
Other Advisory Business Lines
-
Loan servicing revenue rose
5% (same local currency). Excluding prepayment fees, loan servicing revenue increased11% compared with first-quarter 2022. The servicing portfolio ended the quarter at approximately , up$386 billion 1% from year-end 2022 and14% since first-quarter 2022. -
Property management net revenue edged up
1% (4% local currency), driven by theAmericas and Pacific. -
Valuations revenue declined
9% (5% local currency).
The following table presents highlights of the GWS segment performance (dollars in millions; totals may not add due to rounding):
|
|
|
|
|
% Change |
||||||||
|
Q1 2023 |
|
Q1 2022 |
|
USD |
|
LC |
||||||
Revenue |
$ |
5,338 |
|
|
$ |
4,806 |
|
|
11.1 |
% |
|
14.8 |
% |
Net revenue |
|
2,130 |
|
|
|
1,866 |
|
|
14.1 |
% |
|
18.3 |
% |
Segment operating profit |
|
230 |
|
|
|
203 |
|
|
13.3 |
% |
|
18.4 |
% |
Segment operating profit on revenue margin |
|
4.3 |
% |
|
|
4.2 |
% |
|
0.1 pts |
|
0.1 pts |
||
Segment operating profit on net revenue margin |
|
10.8 |
% |
|
|
10.9 |
% |
|
(0.1 pts |
) |
|
— pts |
Note: all percent changes cited are vs. first-quarter 2022, except where noted.
-
Facilities management net revenue rose
12% (16% local currency), supported by significant growth with technology and healthcare clients. -
Project management net revenue rose
18% (23% local currency), driven by large project mandates. - GWS had its strongest first quarter for new business since 2019. The pipeline also rose to a record level with growth across nearly all key client sectors.
-
GWS segment operating profit improved
13% (18% local currency) aided by project management’s outstanding performance and continued strong growth in Local and Enterprise accounts.
Real Estate Investments (REI) Segment
The following table presents highlights of the REI segment performance (dollars in millions):
|
|
|
|
|
% Change |
||||||
|
Q1 2023 |
|
Q1 2022 |
|
USD |
|
LC |
||||
Revenue |
$ |
224 |
|
$ |
284 |
|
(21.1 |
) % |
|
(17.0 |
) % |
Segment operating profit |
|
131 |
|
|
167 |
|
(21.3 |
) % |
|
(21.4 |
) % |
Note: all percent changes cited are vs. first-quarter 2022, except where noted.
Real Estate Development
-
Development operating profit(8) totaled
, driven by large industrial asset sales in January. The$90 million decline in operating profit primarily reflected a difficult comparison against particularly robust asset sale activity in first-quarter 2022.$17 million -
The in-process portfolio ended first-quarter 2023 at
, up$17.3 billion from year-end 2022, as certain projects, primarily industrial and residential, moved from the pipeline. The pipeline increased$0.4 billion during the quarter to$0.2 billion .$13.1 billion
Investment Management
-
Revenue edged up
3% in local currency but fell2% inU.S. dollars to .$147 million -
Asset management fees were up
5% in local currency but were unchanged inU.S. dollars. -
Operating profit decreased
31% (29% local currency) to , due to modest co-investment losses versus significant gains in first-quarter 2022. Excluding co-investments, operating profit was roughly flat with first-quarter 2022.$43 million -
Assets Under Management (AUM) totaled
, a decrease of$148.9 billion from year-end 2022. The decrease was largely attributable to lower asset values, which offset net capital inflows and positive currency movement.$0.4 billion
Corporate and Other Segment
-
Non-core operating loss totaled
, primarily due to the lower fair-value of the company’s investment in$26 million Altus Power, Inc. (NYSE:AMPS), reflecting a decline in the share price during the quarter. -
Net corporate overhead expenses decreased by
5% , or roughly , driven by lower stock compensation expense, partially offset by higher salary and benefits expenses.$5 million
Capital Allocation Overview
-
Free Cash Flow – During the first quarter of 2023, free cash outflow was
. This reflected cash used in operating activities of$805 million , less total capital expenditures of$745 million (9).$60 million -
Stock Repurchase Program – The company repurchased approximately 1.4 million shares for
($114 million average price per share) during the first quarter of 2023. There was approximately$83.48 of capacity remaining under the company’s authorized stock repurchase program as of$2.0 billion March 31, 2023 . -
Acquisitions and Investments – CBRE completed five in-fill acquisitions during the first quarter, including four in the GWS business, totaling
in cash and deferred consideration.$65 million
Leverage and Financing Overview
-
Leverage – CBRE’s net leverage ratio (net debt (10) to trailing twelve-month core EBITDA) was 0.56x as of
March 31, 2023 , which is substantially below the company’s primary debt covenant of 4.25x. The net leverage ratio is computed as follows (dollars in millions):
|
As of |
|
|
|
|
Total debt |
$ |
2,746 |
Less: Cash (11) |
|
1,231 |
Net debt (10) |
$ |
1,515 |
|
|
|
Divided by: Trailing twelve-month Core EBITDA |
$ |
2,725 |
|
|
|
Net leverage ratio |
0.56x |
-
Liquidity – As of
March 31, 2023 , the company had approximately of total liquidity, consisting of approximately$3.7 billion in cash, plus the ability to borrow an aggregate of approximately$1.2 billion under its revolving credit facilities, net of any outstanding letters of credit.$2.5 billion
Conference Call Details
The company’s first quarter earnings webcast and conference call will be held today,
Alternatively, investors may dial into the conference call using these operator-assisted phone numbers: 877.407.8037 (
About
Safe Harbor and Footnotes
This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the company’s future growth momentum, operations and business outlook. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the company’s actual results and performance in future periods to be materially different from any future results or performance suggested in forward-looking statements in this press release. Any forward-looking statements speak only as of the date of this press release and, except to the extent required by applicable securities laws, the company expressly disclaims any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. If the company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. Factors that could cause results to differ materially include, but are not limited to: disruptions in general economic, political and regulatory conditions and significant public health events, particularly in geographies or industry sectors where our business may be concentrated; volatility or adverse developments in the securities, capital or credit markets, interest rate increases and conditions affecting the value of real estate assets, inside and outside
Additional information concerning factors that may influence the company’s financial information is discussed under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and “Cautionary Note on Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended
The terms “net revenue,” “core adjusted net income,” “core EPS,” “business line operating profit,” “segment operating profit on revenue margin,” “segment operating profit on net revenue margin,” “core EBITDA,” “net debt” and “free cash flow,” all of which CBRE uses in this press release, are non-GAAP financial measures under
Totals may not sum in tables in millions included in this release due to rounding.
Note: We have not reconciled the (non-GAAP) core earnings per share forward-looking guidance included in this release to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the variability and low visibility with respect to costs related to acquisitions, carried interest incentive compensation and financing costs, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results
(1) |
|
Local currency percentage change is calculated by comparing current-period results at prior-period exchange rates versus prior-period results. |
(2) |
|
Net revenue is gross revenue less costs largely associated with subcontracted vendor work performed for clients. These costs are reimbursable by clients and generally have no margin. |
(3) |
|
Core adjusted net income and core earnings per diluted share (or core EPS) exclude the effect of select items from GAAP net income and GAAP earnings per diluted share as well as adjust the provision for income taxes and impact on non-controlling interest for such charges. Adjustments during the periods presented included non-cash depreciation and amortization expense related to certain assets attributable to acquisitions and restructuring activities, certain carried interest incentive compensation (reversal) expense to align with the timing of associated revenue, the impact of fair value adjustments to real estate assets acquired in the acquisition of |
(4) |
|
Core EBITDA represents earnings, inclusive of non-controlling interest, before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization, asset impairments, adjustments related to certain carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, integration and other costs related to acquisitions, provision associated with Telford’s fire safety remediation efforts, and costs associated with efficiency and cost-reduction initiatives. It also removes the fair value changes, on a pre-tax basis, of certain strategic non-core non-controlling equity investments that are not directly related to our business segments (including venture capital “VC” related investments). |
(5) |
|
Free cash flow is calculated as cash flow provided by operations, less capital expenditures (reflected in the investing section of the consolidated statement of cash flows). |
(6) |
|
Segment operating profit is the measure reported to the chief operating decision maker (CODM) for purposes of making decisions about allocating resources to each segment and assessing performance of each segment. Segment operating profit represents earnings, inclusive of non-controlling interest, before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization and asset impairments, as well as adjustments related to the following: certain carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, costs associated with workforce optimization, transformation initiatives and integration and other costs related to acquisitions, provision associated with Telford’s fire safety remediation efforts, and costs associated with efficiency and cost-reduction initiatives. |
(7) |
|
Segment operating profit on revenue and net revenue margins represent segment operating profit divided by revenue and net revenue, respectively. |
(8) |
|
Represents line of business profitability/losses, as adjusted. |
(9) |
|
For the three months ended |
(10) |
|
Net debt is calculated as cash and cash equivalents less total debt (excluding non-recourse debt). |
(11) |
|
Cash represents cash and cash equivalents (excluding restricted cash). |
|
||||||
|
Three Months Ended |
|||||
|
2023 |
|
2022 |
|||
Revenue: |
|
|
|
|||
Net revenue |
$ |
4,180,790 |
|
$ |
4,376,029 |
|
Pass through costs also recognized as revenue |
|
3,230,324 |
|
|
2,956,904 |
|
Total revenue |
|
7,411,114 |
|
|
7,332,933 |
|
|
|
|
|
|||
Costs and expenses: |
|
|
|
|||
Cost of revenue |
|
6,006,413 |
|
|
5,752,194 |
|
Operating, administrative and other |
|
1,208,904 |
|
|
1,065,996 |
|
Depreciation and amortization |
|
161,491 |
|
|
149,032 |
|
Asset impairments |
|
— |
|
|
10,351 |
|
Total costs and expenses |
|
7,376,808 |
|
|
6,977,573 |
|
|
|
|
|
|||
Gain on disposition of real estate |
|
3,059 |
|
|
21,592 |
|
|
|
|
|
|||
Operating income |
|
37,365 |
|
|
376,952 |
|
|
|
|
|
|||
Equity income from unconsolidated subsidiaries |
|
141,682 |
|
|
42,871 |
|
Other income (loss) |
|
2,475 |
|
|
(14,464 |
) |
Interest expense, net of interest income |
|
28,414 |
|
|
12,826 |
|
Income before provision for income taxes |
|
153,108 |
|
|
392,533 |
|
Provision for (benefit from) income taxes |
|
28,036 |
|
|
(3,738 |
) |
Net income |
|
125,072 |
|
|
396,271 |
|
Less: Net income attributable to non-controlling interests |
|
8,180 |
|
|
3,974 |
|
Net income attributable to |
$ |
116,892 |
|
$ |
392,297 |
|
|
|
|
|
|||
Basic income per share: |
|
|
|
|||
Net income per share attributable to |
$ |
0.38 |
|
$ |
1.18 |
|
Weighted average shares outstanding for basic income per share |
|
310,464,609 |
|
|
331,925,104 |
|
|
|
|
|
|||
Diluted income per share: |
|
|
|
|||
Net income per share attributable to |
$ |
0.37 |
|
$ |
1.16 |
|
Weighted average shares outstanding for diluted income per share |
|
315,358,147 |
|
|
337,140,325 |
|
|
|
|
|
|||
Core EBITDA |
$ |
532,589 |
|
$ |
732,063 |
|
|
|||||||||||||||||||||||
|
Three Months Ended |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Advisory
|
Global
|
|
Real Estate
|
|
Corporate (1) |
|
Total Core |
|
Other |
|
Total
|
|||||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net revenue |
$ |
1,831,289 |
$ |
2,129,977 |
|
$ |
223,846 |
|
|
$ |
(4,322 |
) |
|
$ |
4,180,790 |
|
$ |
— |
|
|
$ |
4,180,790 |
|
Pass through costs also recognized as revenue |
|
22,579 |
|
3,207,745 |
|
|
— |
|
|
|
— |
|
|
|
3,230,324 |
|
|
— |
|
|
|
3,230,324 |
|
Total revenue |
|
1,853,868 |
|
5,337,722 |
|
|
223,846 |
|
|
|
(4,322 |
) |
|
|
7,411,114 |
|
|
— |
|
|
|
7,411,114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cost of revenue |
|
1,126,761 |
|
4,842,639 |
|
|
38,538 |
|
|
|
(1,525 |
) |
|
|
6,006,413 |
|
|
— |
|
|
|
6,006,413 |
|
Operating, administrative and other |
|
522,866 |
|
323,060 |
|
|
252,095 |
|
|
|
111,014 |
|
|
|
1,209,035 |
|
|
(131 |
) |
|
|
1,208,904 |
|
Depreciation and amortization |
|
78,443 |
|
63,556 |
|
|
6,460 |
|
|
|
13,032 |
|
|
|
161,491 |
|
|
— |
|
|
|
161,491 |
|
Total costs and expenses |
|
1,728,070 |
|
5,229,255 |
|
|
297,093 |
|
|
|
122,521 |
|
|
|
7,376,939 |
|
|
(131 |
) |
|
|
7,376,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gain on disposition of real estate |
|
— |
|
— |
|
|
3,059 |
|
|
|
— |
|
|
|
3,059 |
|
|
— |
|
|
|
3,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (loss) |
|
125,798 |
|
108,467 |
|
|
(70,188 |
) |
|
|
(126,843 |
) |
|
|
37,234 |
|
|
131 |
|
|
|
37,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Equity income (loss) from unconsolidated subsidiaries |
|
1,002 |
|
341 |
|
|
166,674 |
|
|
|
— |
|
|
|
168,017 |
|
|
(26,335 |
) |
|
|
141,682 |
|
Other income (loss) |
|
1,938 |
|
490 |
|
|
115 |
|
|
|
(55 |
) |
|
|
2,488 |
|
|
(13 |
) |
|
|
2,475 |
|
Add-back: Depreciation and amortization |
|
78,443 |
|
63,556 |
|
|
6,460 |
|
|
|
13,032 |
|
|
|
161,491 |
|
|
— |
|
|
|
161,491 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Integration and other costs related to acquisitions |
|
— |
|
7,424 |
|
|
— |
|
|
|
10,710 |
|
|
|
18,134 |
|
|
— |
|
|
|
18,134 |
|
Carried interest incentive compensation reversal to align with the timing of associated revenue |
|
— |
|
— |
|
|
6,978 |
|
|
|
— |
|
|
|
6,978 |
|
|
— |
|
|
|
6,978 |
|
Costs associated with efficiency and cost-reduction initiatives |
|
62,541 |
|
49,388 |
|
|
21,459 |
|
|
|
4,859 |
|
|
|
138,247 |
|
|
— |
|
|
|
138,247 |
|
Total segment operating profit (loss) |
$ |
269,722 |
$ |
229,666 |
|
$ |
131,498 |
|
|
$ |
(98,297 |
) |
|
|
|
$ |
(26,217 |
) |
|
$ |
506,372 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Core EBITDA |
|
|
|
|
|
|
|
$ |
532,589 |
|
|
|
|
_______________
(1) |
|
Includes elimination of inter-segment revenue. |
|
||||||||||||||||||||||||||
|
Three Months Ended |
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Advisory
|
|
Global
|
|
Real Estate
|
|
Corporate (1) |
|
Total Core |
|
Other |
|
Total
|
|||||||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net revenue |
$ |
2,230,670 |
|
|
$ |
1,866,490 |
|
$ |
283,757 |
|
|
$ |
(4,888 |
) |
|
$ |
4,376,029 |
|
|
$ |
— |
|
|
$ |
4,376,029 |
|
Pass through costs also recognized as revenue |
|
17,778 |
|
|
|
2,939,126 |
|
|
— |
|
|
|
— |
|
|
|
2,956,904 |
|
|
|
— |
|
|
|
2,956,904 |
|
Total revenue |
|
2,248,448 |
|
|
|
4,805,616 |
|
|
283,757 |
|
|
|
(4,888 |
) |
|
|
7,332,933 |
|
|
|
— |
|
|
|
7,332,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cost of revenue |
|
1,312,291 |
|
|
|
4,373,967 |
|
|
70,053 |
|
|
|
(4,114 |
) |
|
|
5,752,197 |
|
|
|
(3 |
) |
|
|
5,752,194 |
|
Operating, administrative and other |
|
480,255 |
|
|
|
239,386 |
|
|
246,752 |
|
|
|
97,363 |
|
|
|
1,063,756 |
|
|
|
2,240 |
|
|
|
1,065,996 |
|
Depreciation and amortization |
|
74,887 |
|
|
|
61,969 |
|
|
3,856 |
|
|
|
8,320 |
|
|
|
149,032 |
|
|
|
— |
|
|
|
149,032 |
|
Asset impairments |
|
10,351 |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10,351 |
|
|
|
— |
|
|
|
10,351 |
|
Total costs and expenses |
|
1,877,784 |
|
|
|
4,675,322 |
|
|
320,661 |
|
|
|
101,569 |
|
|
|
6,975,336 |
|
|
|
2,237 |
|
|
|
6,977,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gain on disposition of real estate |
|
— |
|
|
|
— |
|
|
21,592 |
|
|
|
— |
|
|
|
21,592 |
|
|
|
— |
|
|
|
21,592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating income (loss) |
|
370,664 |
|
|
|
130,294 |
|
|
(15,312 |
) |
|
|
(106,457 |
) |
|
|
379,189 |
|
|
|
(2,237 |
) |
|
|
376,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Equity income (loss) from unconsolidated subsidiaries |
|
9,756 |
|
|
|
863 |
|
|
157,440 |
|
|
|
— |
|
|
|
168,059 |
|
|
|
(125,188 |
) |
|
|
42,871 |
|
Other (loss) income |
|
(4 |
) |
|
|
1,489 |
|
|
(92 |
) |
|
|
(6,918 |
) |
|
|
(5,525 |
) |
|
|
(8,939 |
) |
|
|
(14,464 |
) |
Add-back: Depreciation and amortization |
|
74,887 |
|
|
|
61,969 |
|
|
3,856 |
|
|
|
8,320 |
|
|
|
149,032 |
|
|
|
— |
|
|
|
149,032 |
|
Add-back: Asset impairments |
|
10,351 |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10,351 |
|
|
|
— |
|
|
|
10,351 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Integration and other costs related to acquisitions |
|
— |
|
|
|
8,121 |
|
|
— |
|
|
|
— |
|
|
|
8,121 |
|
|
|
— |
|
|
|
8,121 |
|
Carried interest incentive compensation expense to align with the timing of associated revenue |
|
— |
|
|
|
— |
|
|
22,856 |
|
|
|
— |
|
|
|
22,856 |
|
|
|
— |
|
|
|
22,856 |
|
Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period |
|
— |
|
|
|
— |
|
|
(1,696 |
) |
|
|
— |
|
|
|
(1,696 |
) |
|
|
— |
|
|
|
(1,696 |
) |
Costs incurred related to legal entity restructuring |
|
— |
|
|
|
— |
|
|
— |
|
|
|
1,676 |
|
|
|
1,676 |
|
|
|
— |
|
|
|
1,676 |
|
Total segment operating profit (loss) |
$ |
465,654 |
|
|
$ |
202,736 |
|
$ |
167,052 |
|
|
$ |
(103,379 |
) |
|
|
|
$ |
(136,364 |
) |
|
$ |
595,699 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Core EBITDA |
|
|
|
|
|
|
|
|
$ |
732,063 |
|
|
|
|
|
_______________
(1) |
|
Includes elimination of inter-segment revenue. |
|
|||||
|
|
|
|
||
Assets: |
|
|
|
||
Cash and cash equivalents |
$ |
1,231,325 |
|
$ |
1,318,290 |
Restricted cash |
|
88,464 |
|
|
86,559 |
Receivables, net |
|
5,468,926 |
|
|
5,326,807 |
Warehouse receivables (1) |
|
792,294 |
|
|
455,354 |
Contract assets |
|
522,700 |
|
|
529,106 |
Income taxes receivable |
|
200,393 |
|
|
133,438 |
Property and equipment, net |
|
833,269 |
|
|
836,041 |
Operating lease assets |
|
980,741 |
|
|
1,033,011 |
|
|
7,086,757 |
|
|
7,061,088 |
Investments in unconsolidated subsidiaries |
|
1,295,088 |
|
|
1,317,705 |
Other assets, net |
|
2,530,140 |
|
|
2,415,990 |
|
|
|
|
||
Total assets |
$ |
21,030,097 |
|
$ |
20,513,389 |
|
|
|
|
||
Liabilities: |
|
|
|
||
Current liabilities, excluding debt and operating lease liabilities |
$ |
6,042,870 |
|
$ |
6,915,857 |
Warehouse lines of credit (which fund loans that |
|
782,637 |
|
|
447,840 |
Revolving credit facility |
|
1,209,000 |
|
|
178,000 |
|
|
596,704 |
|
|
596,450 |
|
|
489,564 |
|
|
489,262 |
Current maturities of long term debt |
|
433,433 |
|
|
427,792 |
Other debt |
|
17,153 |
|
|
42,914 |
Operating lease liabilities |
|
1,285,192 |
|
|
1,309,976 |
Other long-term liabilities |
|
1,531,134 |
|
|
1,499,566 |
|
|
|
|
||
Total liabilities |
|
12,387,687 |
|
|
11,907,657 |
|
|
|
|
||
Equity: |
|
|
|
||
|
|
7,859,834 |
|
|
7,853,273 |
Non-controlling interests |
|
782,576 |
|
|
752,459 |
|
|
|
|
||
Total equity |
|
8,642,410 |
|
|
8,605,732 |
|
|
|
|
||
Total liabilities and equity |
$ |
21,030,097 |
|
$ |
20,513,389 |
_______________
(1) |
|
Represents loan receivables, the majority of which are offset by borrowings under related warehouse line of credit facilities. |
|
|||||||
|
Three Months Ended |
||||||
|
2023 |
|
2022 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
||||
Net income |
$ |
125,072 |
|
|
$ |
396,271 |
|
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
||||
Depreciation and amortization |
|
161,491 |
|
|
|
149,032 |
|
Amortization of financing costs |
|
1,161 |
|
|
|
1,663 |
|
Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets |
|
(23,481 |
) |
|
|
(28,422 |
) |
Asset impairments |
|
— |
|
|
|
10,351 |
|
Net realized and unrealized losses, primarily from investments |
|
319 |
|
|
|
16,690 |
|
Provision for doubtful accounts |
|
3,969 |
|
|
|
3,303 |
|
Net compensation expense for equity awards |
|
18,113 |
|
|
|
36,863 |
|
Equity income from unconsolidated subsidiaries |
|
(141,682 |
) |
|
|
(42,871 |
) |
Distribution of earnings from unconsolidated subsidiaries |
|
177,710 |
|
|
|
146,743 |
|
Proceeds from sale of mortgage loans |
|
2,166,609 |
|
|
|
3,336,084 |
|
Origination of mortgage loans |
|
(2,494,589 |
) |
|
|
(3,221,312 |
) |
Increase (decrease) in warehouse lines of credit |
|
334,797 |
|
|
|
(105,326 |
) |
Tenant concessions received |
|
528 |
|
|
|
2,114 |
|
Purchase of equity securities |
|
(2,137 |
) |
|
|
(8,902 |
) |
Proceeds from sale of equity securities |
|
2,120 |
|
|
|
20,750 |
|
Increase in real estate under development |
|
(5,943 |
) |
|
|
(41,358 |
) |
Increase in receivables, prepaid expenses and other assets (including contract and lease assets) (1) |
|
(73,437 |
) |
|
|
(156,061 |
) |
Decrease in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities) |
|
(73,960 |
) |
|
|
(108,355 |
) |
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing |
|
(843,509 |
) |
|
|
(725,216 |
) |
(Increase) decrease in net income taxes receivable/payable |
|
(56,713 |
) |
|
|
17,722 |
|
Other operating activities, net |
|
(21,195 |
) |
|
|
(93,270 |
) |
Net cash used in operating activities |
|
(744,757 |
) |
|
|
(393,507 |
) |
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
||||
Capital expenditures |
|
(60,284 |
) |
|
|
(42,056 |
) |
Acquisition of businesses, including net assets acquired and goodwill, net of cash acquired |
|
(44,653 |
) |
|
|
(16,792 |
) |
Contributions to unconsolidated subsidiaries |
|
(28,998 |
) |
|
|
(44,387 |
) |
Distributions from unconsolidated subsidiaries |
|
14,794 |
|
|
|
12,101 |
|
Other investing activities, net |
|
4,074 |
|
|
|
(4,487 |
) |
Net cash used in investing activities |
|
(115,067 |
) |
|
|
(95,621 |
) |
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
||||
Proceeds from revolving credit facility |
|
1,660,000 |
|
|
|
210,000 |
|
Repayment of revolving credit facility |
|
(629,000 |
) |
|
|
— |
|
Proceeds from notes payable on real estate |
|
48 |
|
|
|
19,368 |
|
Repayment of notes payable on real estate |
|
— |
|
|
|
(13,954 |
) |
Repurchase of common stock |
|
(129,808 |
) |
|
|
(367,863 |
) |
Acquisition of businesses (cash paid for acquisitions more than three months after purchase date) |
|
(60,034 |
) |
|
|
(13,556 |
) |
Units repurchased for payment of taxes on equity awards |
|
(46,161 |
) |
|
|
(31,395 |
) |
Non-controlling interest contributions |
|
567 |
|
|
|
210 |
|
Non-controlling interest distributions |
|
(101 |
) |
|
|
(213 |
) |
Other financing activities, net |
|
(34,474 |
) |
|
|
(11,606 |
) |
Net cash provided by (used in) financing activities |
|
761,037 |
|
|
|
(209,009 |
) |
Effect of currency exchange rate changes on cash and cash equivalents and restricted cash |
|
13,727 |
|
|
|
(49,015 |
) |
|
|
|
|
||||
|
|
(85,060 |
) |
|
|
(747,152 |
) |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT BEGINNING OF PERIOD |
|
1,404,849 |
|
|
|
2,539,781 |
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT END OF PERIOD |
$ |
1,319,789 |
|
|
$ |
1,792,629 |
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
||||
Cash paid during the period for: |
|
|
|
||||
Interest |
$ |
39,379 |
|
|
$ |
12,826 |
|
Income tax payments, net |
$ |
82,059 |
|
|
$ |
88,649 |
|
_______________
(1) |
|
First-quarter 2022 operating cash flows include the negative impact of approximately |
Non-GAAP Financial Measures
The following measures are considered “non-GAAP financial measures” under
(i) |
Net revenue |
|
(ii) |
Core EBITDA |
|
(iii) |
Business line operating profit/loss |
|
(iv) |
Segment operating profit on revenue and net revenue margins |
|
(v) |
Free cash flow |
|
(vi) |
Net debt |
|
(vii) |
Core net income attributable to |
|
(viii) |
Core EPS |
These measures are not recognized measurements under
Our management generally uses these non-GAAP financial measures to evaluate operating performance and for other discretionary purposes. The company believes these measures provide a more complete understanding of ongoing operations, enhance comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected charges that may obscure trends in the underlying performance of our business. The company further uses certain of these measures, and believes that they are useful to investors, for purposes described below.
With respect to net revenue, net revenue is gross revenue less costs largely associated with subcontracted vendor work performed for clients. We believe that investors may find this measure useful to analyze the company’s overall financial performance because it excludes costs reimbursable by clients that generally have no margin, and as such provides greater visibility into the underlying performance of our business.
With respect to Core EBITDA, business line operating profit/loss, and segment operating profit on revenue and net revenue margins, the company believes that investors may find these measures useful in evaluating our operating performance compared to that of other companies in our industry because their calculations generally eliminate the accounting effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions, the effects of financings and income tax and the accounting effects of capital spending. All of these measures may vary for different companies for reasons unrelated to overall operating performance. In the case of Core EBITDA, this measure is not intended to be a measure of free cash flow for our management’s discretionary use because it does not consider cash requirements such as tax and debt service payments. The Core EBITDA measure calculated herein may also differ from the amounts calculated under similarly titled definitions in our credit facilities and debt instruments, which amounts are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt. The company also uses segment operating profit and core EPS as significant components when measuring our operating performance under our employee incentive compensation programs.
With respect to free cash flow, the company believes that investors may find this measure useful to analyze the cash flow generated from operations after accounting for cash outflows to support operations and capital expenditures. With respect to net debt, the company believes that investors use this measure when calculating the company’s net leverage ratio.
With respect to core EBITDA, core EPS and core adjusted net income, the company believes that investors may find these measures useful to analyze the underlying performance of operations without the impact of strategic non-core equity investments (
Core net income attributable to
|
Three Months Ended |
||||||
|
2023 |
|
2022 |
||||
|
|
|
|
||||
Net income attributable to |
$ |
116,892 |
|
|
$ |
392,297 |
|
|
|
|
|
||||
Plus / minus: |
|
|
|
||||
Non-cash depreciation and amortization expense related to certain assets attributable to acquisitions and restructuring activities |
|
49,168 |
|
|
|
41,048 |
|
Integration and other costs related to acquisitions |
|
18,134 |
|
|
|
8,121 |
|
Carried interest incentive compensation expense to align with the timing of associated revenue |
|
6,978 |
|
|
|
22,856 |
|
Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period |
|
— |
|
|
|
(1,696 |
) |
Costs incurred related to legal entity restructuring |
|
— |
|
|
|
1,676 |
|
Asset impairments |
|
— |
|
|
|
10,351 |
|
Net fair value adjustments on strategic non-core investments |
|
26,217 |
|
|
|
136,364 |
|
Impact of adjustments on non-controlling interest |
|
(10,170 |
) |
|
|
(9,063 |
) |
Costs associated with efficiency and cost-reduction initiatives |
|
138,247 |
|
|
|
— |
|
Tax impact of adjusted items, tax benefit attributable to legal entity restructuring, and strategic non-core investments |
|
(55,773 |
) |
|
|
(132,718 |
) |
|
|
|
|
||||
Core net income attributable to |
$ |
289,693 |
|
|
$ |
469,236 |
|
|
|
|
|
||||
Core diluted income per share attributable to |
$ |
0.92 |
|
|
$ |
1.39 |
|
|
|
|
|
||||
Weighted average shares outstanding for diluted income per share |
|
315,358,147 |
|
|
|
337,140,325 |
|
Core EBITDA is calculated as follows (in thousands, totals may not add due to rounding):
|
Three Months Ended |
|||||
|
2023 |
|
2022 |
|||
|
|
|
|
|||
Net income attributable to |
$ |
116,892 |
|
$ |
392,297 |
|
Net income attributable to non-controlling interests |
|
8,180 |
|
|
3,974 |
|
Net income |
|
125,072 |
|
|
396,271 |
|
|
|
|
|
|||
Adjustments: |
|
|
|
|||
Depreciation and amortization |
|
161,491 |
|
|
149,032 |
|
Asset impairments |
|
— |
|
|
10,351 |
|
Interest expense, net of interest income |
|
28,414 |
|
|
12,826 |
|
Provision for (benefit from) income taxes |
|
28,036 |
|
|
(3,738 |
) |
Integration and other costs related to acquisitions |
|
18,134 |
|
|
8,121 |
|
Carried interest incentive compensation expense to align with the timing of associated revenue |
|
6,978 |
|
|
22,856 |
|
Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period |
|
— |
|
|
(1,696 |
) |
Costs incurred related to legal entity restructuring |
|
— |
|
|
1,676 |
|
Costs associated with efficiency and cost-reduction initiatives |
|
138,247 |
|
|
— |
|
Net fair value adjustments on strategic non-core investments |
|
26,217 |
|
|
136,364 |
|
Core EBITDA |
$ |
532,589 |
|
$ |
732,063 |
|
|
|
|
|
Core EBITDA for the trailing twelve months ended
|
Trailing
|
||
|
|
||
Net income attributable to |
$ |
1,131,965 |
|
Net income attributable to non-controlling interests |
|
20,796 |
|
Net income |
|
1,152,761 |
|
|
|
||
Adjustments: |
|
||
Depreciation and amortization |
|
625,547 |
|
Asset impairments |
|
48,362 |
|
Interest expense, net of interest income |
|
84,587 |
|
Write-off of financing costs on extinguished debt |
|
1,862 |
|
Provision for income taxes |
|
266,004 |
|
Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period |
|
(3,419 |
) |
Costs incurred related to legal entity restructuring |
|
11,771 |
|
Integration and other costs related to acquisitions |
|
50,715 |
|
Carried interest incentive compensation expense to align with the timing of associated revenue |
|
(20,106 |
) |
Costs associated with efficiency and cost-reduction initiatives |
|
255,783 |
|
Provision associated with Telford’s fire safety remediation efforts |
|
185,921 |
|
Net fair value adjustments on strategic non-core investments |
|
65,005 |
|
|
|
||
Core EBITDA |
$ |
2,724,793 |
|
Revenue includes client reimbursed pass-through costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients. Reimbursement related to subcontracted vendor work generally has no margin and has been excluded from net revenue. Reconciliations are shown below (dollars in thousands):
|
Three Months Ended |
||||
|
2023 |
|
2022 |
||
Consolidated |
|
|
|
||
Revenue |
$ |
7,411,114 |
|
$ |
7,332,933 |
Less: Pass through costs also recognized as revenue |
|
3,230,323 |
|
|
2,956,904 |
Net revenue |
$ |
4,180,791 |
|
$ |
4,376,029 |
|
Three Months Ended |
||||
|
2023 |
|
2022 |
||
Property Management Revenue |
|
|
|
||
Revenue |
$ |
463,774 |
|
$ |
455,872 |
Less: Pass through costs also recognized as revenue |
|
22,579 |
|
|
17,778 |
Net revenue |
$ |
441,195 |
|
$ |
438,094 |
|
Three Months Ended |
||||
|
2023 |
|
2022 |
||
GWS Revenue |
|
|
|
||
Revenue |
$ |
5,337,722 |
|
$ |
4,805,616 |
Less: Pass through costs also recognized as revenue |
|
3,207,745 |
|
|
2,939,126 |
Net revenue |
$ |
2,129,977 |
|
$ |
1,866,490 |
|
Three Months Ended |
||||
|
2023 |
|
2022 |
||
Facilities Management Revenue |
|
|
|
||
Revenue |
$ |
3,680,162 |
|
$ |
3,800,688 |
Less: Pass through costs also recognized as revenue |
|
2,284,959 |
|
|
2,558,159 |
Net revenue |
$ |
1,395,203 |
|
$ |
1,242,529 |
|
Three Months Ended |
||||
|
2023 |
|
2022 |
||
Project Management Revenue |
|
|
|
||
Revenue |
$ |
1,657,560 |
|
$ |
1,004,929 |
Less: Pass through costs also recognized as revenue |
|
922,786 |
|
|
380,968 |
Net revenue |
$ |
734,774 |
|
$ |
623,961 |
Below represents a reconciliation of REI business line operating profitability/loss to REI segment operating profit (in thousands):
|
Three Months Ended |
||||||
Real Estate Investments |
2023 |
|
2022 |
||||
Investment management operating profit |
$ |
42,522 |
|
|
$ |
61,293 |
|
Global real estate development operating profit |
|
89,672 |
|
|
|
106,705 |
|
Segment overhead |
|
(696 |
) |
|
|
(946 |
) |
Real estate investments segment operating profit |
$ |
131,498 |
|
|
$ |
167,052 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230427005145/en/
214.863.3100
Brad.Burke@cbre.com
212.984.6535
Steven.Iaco@cbre.com
Source:
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