Los Angeles, CA – April 29, 2009 — CB Richard Ellis Group, Inc. (NYSE:CBG) today
reported revenue of $890.4 million and a net loss on a U.S. GAAP basis of $36.7 million,
or $0.14 loss per diluted share, for the first quarter of 2009. Excluding one-time charges(1),
the Company’s net loss(2) for the quarter was $7.5 million, or $0.03 loss per diluted share.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)(3) totaled $38.4
million for the quarter, which was negatively impacted by the inclusion of $15.7 million(4) of
These results compare with first quarter 2008 revenue of $1.2 billion; net income on a U.S.
GAAP basis of $20.5 million, or $0.10 per diluted share; net income excluding one-time
charges of $31.7 million, or $0.15 per diluted share; and EBITDA of $88.5 million. First
quarter 2008 EBITDA included $16.1 million(5) of one-time charges. In the first quarter of
2008, the Company was still experiencing relatively strong results with particularly good
growth in outsourcing and leasing revenues.
First quarter 2009 results were in line with the Company’s expectations in light of the
broad weakness in sales and leasing markets worldwide. The Company’s aggressive
actions to reduce structural operating expenses and diversify its revenue sources helped to
mitigate the impact of these adverse marketplace trends.
“Despite the formidable challenges posed by today’s economic environment, we were able
to produce positive EBITDA for the quarter due to our efforts to diversify our revenue
base, focus on our clients, and aggressively reduce fixed costs,” said Brett White, president
and chief executive officer of CB Richard Ellis. “The all-in 29% reduction in operating
expenses exceeded the 28% decline in revenue, which is indicative of our ability to act
decisively to streamline our operations, serve clients more efficiently and support our
margins. Our global reach, broad service offering, strong brand and depth of professional
talent position us well to capitalize on the opportunities available today – particularly
corporate and institutional outsourcing services and property restructuring and
repositioning services. Further, our very effective cost cutting efforts position us to
experience strong operating leverage when the market recovers, which it inevitably will.”
While the Company’s outsourcing business continues to add new clients and expand
existing relationships, its revenue declined slightly for the quarter as a result of client
actions to restrain project spending and reduce outsourced staffing levels (which lowers
reimbursement revenue) as well as a loss of clients due to consolidations and bankruptcies.
Ten new corporate customers signed outsourcing contracts in the quarter, including France
Telecom, StatoilHydro, Pepsico, and Locartis, while service offerings were expanded for
five existing corporate customers, including Nokia, AON and NCR.
The Company also continued to improve market share in investment sales. In a highly
capital-constrained market it was responsible for 17.1% of all U.S. investment sales
transactions during the first quarter – up from 14.2% for the same period in 2008.
Expense Reduction Target Raised
During the first quarter, management increased its cost containment targets by an
additional $100 million of annual savings, as the Company continued to move assertively
to align its expense base with lower revenue opportunities in the current market. Much of
the incremental cost savings target has already been identified. The Company has now
eliminated or targeted for elimination between $475 million and $500 million of structural
operating expenses, versus 2007, including the $385 million of previously announced cost
savings plans, which have been implemented. These operating cost reductions are in
addition to reduced variable commission and compensation expense that results from lower
In conjunction with the implementation of cost savings actions, the Company incurred onetime
expenses consisting of severance and office closure costs totaling $7.9 million in the
first quarter of 2009.
Credit Amendment Enhances Flexibility
During the quarter, the Company successfully renegotiated its credit agreement, providing
greater financial flexibility. The credit agreement amendment, announced on March 24,
2009, allows for a higher maximum leverage ratio, lower minimum interest coverage ratio,
modifications to the EBITDA calculation for financial covenant purposes, and other
provisions that give the Company greater capacity to proactively manage its balance sheet.
The Company remains in compliance with all financial covenants under its credit
agreement, and has substantial cushion should market activity weaken further. In
connection with this amendment, the Company prepaid $105.5 million of its term loan
balance that would have been due at the end of the first and second quarters of 2009, and
wrote off $29.3 million of financing costs in the first quarter of 2009.
Americas Segment Results
Revenue for the Americas region, including the U.S., Canada and Latin America, was
$577.0 million for the first quarter of 2009, compared with $783.5 million for the first
quarter of 2008. Operating income for the Americas region was $22.9 million for the first
quarter of 2009 compared with $62.4 million for the same period of 2008. EBITDA
totaled $38.6 million for the first quarter of 2009, compared with $66.3 million in last
year’s first quarter. While market conditions remained weak, operating expenses for this
segment declined by 30%.
EMEA Segment Results
Revenue for the EMEA region, which mainly consists of operations in Europe, was $162.2
million for the first quarter of 2009, compared with $242.8 million for the first quarter of
2008. The EMEA region reported an operating loss of $6.1 million for the first quarter of
2009 compared with operating income of $8.0 million for the same period in 2008. EMEA
reported negative EBITDA of $3.1 million for the first quarter of 2009, compared with
positive EBITDA of $11.7 million for last year’s first quarter. Partially mitigating the
revenue decrease was a 38% reduction in operating expenses, reflecting aggressive actions
to streamline operations and cut costs.
Asia Pacific Segment Results
In the Asia Pacific region, which includes operations in Asia, Australia and New Zealand,
revenue totaled $93.1 million for the first quarter of 2009, compared to $137.4 million for
the first quarter of 2008. Operating income for the Asia Pacific region was $0.7 million for
the first quarter of 2009 compared with $12.3 million for the same period of 2008.
EBITDA totaled $1.9 million for the first quarter of 2009, compared to $13.7 million for
last year’s first quarter. Our Asia Pacific segment reduced operating expenses by 34% for
Global Investment Management Segment Results
In the Global Investment Management segment, which consists of investment management
operations in the U.S., Europe and Asia, revenue totaled $37.3 million for the first quarter
of 2009, compared with $39.5 million in the first quarter of 2008. The decline in the first
quarter of 2009 was attributable to lower acquisition, disposition and incentive fees as
compared to the first quarter of 2008. Global Investment Management had operating
income of $6.7 million for the first quarter of 2009 compared with an operating loss of $2.1
million for the first quarter of 2008. This segment reported negative EBITDA of $0.4
million for the first quarter of 2009 versus negative EBITDA of $1.4 million in the first
quarter of 2008. Operating income for the first quarter of 2009 excludes a net, non-cash
write down associated with decreases in co-investment asset valuations of $5.2 million,
which is included in negative EBITDA.
Assets under management totaled $36.0 billion at the end of the first quarter, down 6%
from year-end 2008 mainly due to lower property valuations and currency declines.
Development Services Segment Results
In the Development Services segment, which consists of real estate development and
investment activities primarily in the U.S., revenue totaled $20.9 million for the first
quarter of 2009, compared with $27.7 million recorded in the first quarter of 2008. This
revenue decrease was primarily driven by reduced construction revenue, which led to a
corresponding decrease in construction expense, thereby not significantly impacting
operating income or EBITDA.
This segment reported an operating loss of $18.8 million for the first quarter of 2009,
compared with an operating loss of $10.3 million for the same period last year. Driven by
cost containment efforts, first quarter 2009 EBITDA for the segment was $1.4 million,
compared to an EBITDA loss of $1.8 million in last year’s first quarter. The operating loss
for the first quarter of 2009 includes the gross, non-cash write down of real estate assets of
$9.4 million but not the offsetting portion attributable to non-controlling interests of $8.4
million, while EBITDA includes both items.
Development projects in process as of March 31, 2009 totaled $5.4 billion, down slightly
from year-end 2008. The inventory of pipeline deals as of March 31, 2009 stood at $1.5
billion, down 40% from year-end 2008.
The Company believes that the commercial real estate market will turn, and when it does,
the actions that it has taken to preserve its geographic presence and services offered,
together with the reduction of operating expenses, will enable it to disproportionately grow
market share and earnings versus the rest of the industry. Until the overall market
improves, management believes that the largest opportunities will exist for the Company’s
businesses that focus on outsourcing, distressed property management, asset restructuring
and disposition, and within certain areas of global investment management.
Conference Call Details
The Company’s first-quarter earnings conference call will be held on Thursday, April 30,
2009 at 10:30 a.m. Eastern Daylight Time (EDT). A live webcast will be accessible
through the Investor Relations section of the Company’s Web site at www.cbre.com.
The direct dial-in number for the conference call is 800-700-7784 for U.S. callers and 612-
288-0318 for international callers. A replay of the call will be available starting at 2:00
p.m. EDT on April 30, 2009 and ending at midnight EDT on May 13, 2009. The dial-in
number for the replay is 800-475-6701 for U.S. callers and 320-365-3844 for international
callers. The access code for the replay is 995471. A transcript of the call will be available
on the Company’s Investor Relations Web site.
About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in
Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2008 revenue).
The Company has more than 30,000 employees (excluding affiliates), and serves real estate
owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB
Richard Ellis offers strategic advice and execution for property sales and leasing; corporate
services; property, facilities and project management; mortgage banking; appraisal and valuation;
development services; investment management; and research and consulting. CB Richard Ellis has
been named a BusinessWeek 50 “best in class” company and Fortune 100 fastest growing
company two years in a row. Please visit our Web site at www.cbre.com.
Note: This 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 our growth momentum
in 2009, future operations and future financial performance. 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 release. Any forward-looking statements speak only as of the date of this
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: general conditions of financial
liquidity for real estate transactions; a protraction or worsening of the economic slow-down or recession we
are currently experiencing in our principal operating regions; our leverage and our ability to perform under
our credit facilities; commercial real estate vacancy levels; employment conditions and their effect on
vacancy rates; property values; rental rates; interest rates; our ability to reduce expenditures to help offset
lower revenues; realization of values in investment funds to offset related incentive compensation expense;
our ability to leverage our platform to sustain revenue growth and capture market share; our ability to retain
and incentivize producers; the integration of our acquisitions and the level of synergy savings achieved as a
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 “Forward-Looking
Statements” in our Annual Report on Form 10-K for the year ended December 31, 2008, as well as in the
Company’s press releases and other periodic filings with the Securities and Exchange Commission. Such
filings are available publicly and may be obtained on the Company’s Web site at www.cbre.com or upon
request from the CB Richard Ellis Investor Relations Department at firstname.lastname@example.org.
(1)One-time charges include the write-off of financing costs incurred in connection with the credit agreement
amendment entered into on March 24, 2009, amortization expense related to customer relationships resulting
from acquisitions, integration costs related to acquisitions, cost containment expenses and the write-down of
(2A) reconciliation of net (loss) income attributable to CB Richard Ellis Group, Inc. to net (loss) income
attributable to CB Richard Ellis Group, Inc., as adjusted for one-time items, is provided in the exhibits to this
(3) The Company’s management believes that EBITDA is useful in evaluating its operating performance
compared to that of other companies in its industry because the calculation of EBITDA generally eliminates
the effects of financing and income taxes and the accounting effects of capital spending and acquisitions,
which items may vary for different companies for reasons unrelated to overall operating performance. As a
result, the Company’s management uses EBITDA as a measure to evaluate the operating performance of
various business lines and for other discretionary purposes, including as a significant component when
measuring its operating performance under its employee incentive programs.
However, EBITDA is not a recognized measurement under U.S. generally accepted accounting principles
(GAAP), and when analyzing the Company’s operating performance, readers should use EBITDA in addition
to, and not as an alternative for, net income determined in accordance with GAAP. Because not all
companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to
similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free
cash flow for management’s discretionary use, as it does not consider certain cash requirements such as tax
and debt service payments. The amounts shown for EBITDA also differ from the amounts calculated under
similarly titled definitions in the Company’s debt instruments, which are further adjusted to reflect certain
other cash and non-cash charges and are used to determine compliance with financial covenants and the
Company’s ability to engage in certain activities, such as incurring additional debt and making certain
For a reconciliation of EBITDA with the most comparable financial measures calculated and presented in
accordance with GAAP, see the section of this press release titled “Non-GAAP Financial Measures.”
(4)Includes cost containment expenses of $7.9 million, impairment of assets of $6.1 million, net of noncontrolling
interests (minority interest), and integration costs related to acquisitions of $1.7 million, the
majority of which related to the Trammell Crow Company acquisition.
(5)Includes an impairment of an investment of $10.6 million and integration costs related to acquisitions of $5.5
million, the majority of which related to the Trammell Crow Company acquisition.
The following measures are considered “non-GAAP financial measures” under
(i) Net (loss) income attributable to CB Richard Ellis Group, Inc., as adjusted
for one-time items
(ii) Diluted (loss) earnings per share attributable to CB Richard Ellis Group,
Inc, as adjusted for one-time items
The Company believes that these non-GAAP financial measures provide a more
complete understanding of ongoing operations and enhance comparability of current results
to prior periods as well as presenting the effects of one-time items in all periods presented.
The Company believes that investors may find it useful to see these non-GAAP financial
measures to analyze financial performance without the impact of one-time items that may
obscure trends in the underlying performance of its business.
Net (loss) income attributable to CB Richard Ellis Group, Inc., as adjusted for onetime
items and diluted net (loss) income per share attributable to CB Richard Ellis Group,
Inc. shareholders, as adjusted for one-time items are calculated as follows (dollars in
thousands, except per share data):