CBRE - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to CBRE Third Quarter Conference Call. [Operator Instructions]. I would now like to turn the conference over to your host, Brad Burke.

Bradley Burke

Thank you, and welcome to CBRE's Third Quarter 2017 Earnings Conference Call. Earlier today, we issued a press release announcing our financial results, and it is posted on the homepage of our website, cbre.com. will to presentation prepared follow you you deck remarks. page, use can along this find slide a that On with our This statements. forward-looking presentation contains These operations, growth and CBRE's performance include business financial share, outlook momentum, expectations. statements regarding market future and be from ultimately only, estimates. results may These statements estimates actual should considered differ these

Annual report risks our full please third our refer the factors on furnished Form may and and Report earnings X-K on a recent For of impact XX-K. that most to quarter other discussion these statements, Form XXXX forward-looking

During we the of as comparable have directly believe remarks, measures, these of these Where may our we non-GAAP refer found most explanations presentation. this we financial defined required GAAP can be to measures. measures, provided regulations, appendix regulations. what the certain reconciliations These to by within reconciliations, SEC are with by together

FX all are rate the to before remarks FX Additionally, impacts stated. in local of activity. cited our exclude References percentages unless otherwise results hedging growth also in currency impact

Our Head participants and and Bob third Groch, Officer morning Financial X Sulentic, on to Please our Chief Slide and quarter Bob this Executive turn our Officer; Chief as the Corporate Jim Development. call of discusses our President performance. are

Robert Sulentic

Brad, and you, everyone. good morning, Thank

with CBRE quarter seen, produced up As you've XX%. growth of double-digit excellent another and results, revenue EPS adjusted

the quarter of all-time commanding high adjusted occupier The the in business in produced as strategy. result is market of our the transaction our an in property performance to continued based. each of trailing Leasing our despite Our solid the activity, performance exceptionally of in Each regions a exceptional our X XX,XXX this growth, tepid our Revenue our third growth strength and and States. X sales focused share. we position and to returned our our EBITDA our the global strong the XX-month to take ability broad executing capitalize outsourcing growth regions. accelerated quarter at in global is in was double-digit was Global commitment clients growth healthy our to United outcomes of more brand generally on of for market growing direct sector. and reflecting saw strategy to for the produce professionals third strength than

performance Finally, real of we company. estate the Investment world's also real investment that had our Global is Services. services both supported and investment strength and CBRE's businesses, industry play by Longer significant our excellent commercial Development X in outlook estate Management to term, trends largest as

real solutions. The first is commercial estate outsourced the growing for demand

by real The investors is the commercial allocation institutional estate. to increased second

consolidation. our global Clients third work to The drives trend is fewer, are industry. consolidation which providers, within capable awarding their service more

With particularly to continue the people, We our Jim you trends. technology investments capabilities, through operating by capture that, and these digital created industry our service in take offering will quarter third make results in platform, opportunities to detail.

James Groch

Thank you, Bob.

noted, produce to continued great QX. results As in Bob CBRE

Let highlights Slide me start with few on X. a

adjusted total growth was and in year. X First, in segments all XX% up broad up versus based, business EBITDA last

as XX%, led in increased share. which up take the the leasing revenue XX%, continued we U.S., Second, is Americas to by market

our from gains on decline year-over-year to GSE mortgage adjusted servicing in despite related XX.X% fee lending. margin EBITDA regional to a up Third, points was basis in revenue rights XX businesses

points points. capital entire we deploy to Fourth, XXX the revenue XX impact, business revenue Margin basis increased regional on this by businesses attractive overall M&A by our our basis opportunities. XX.X%. Excluding to margin increased on fee fee in into for continued

U.S. line the in $XXX our active $X.XX fee QX. and produced EBITDA Adjusted year underwriting acquisitions top maintain investments financial and Slide We with by our discipline. to strategy growth have this XX% for thus CBRE growth X%, grew closed strong an increased far core enhance dollars and Adjusted for continued These U.S. share increased virtually all summarizes organic. XX% positive and being Gross operating reflect million, in pipeline. quarter. X to in our XX% the results. revenue dollars per earnings reflecting leverage. respectively, revenue quarter X

rate in quarter, the increased and was XX% our to in XX.X% benefit prior offset tax tax compared to year when in quarter tax continue lower QX enhance improved we depreciation take 'XX adjusted year. and efficiency. to our amortization Our of versus third the steps mostly The to prior by rate

disclosures. notice our and You'll statement enhanced that income we segment-level reconciliation

in Bob record currency effects. quarter The the EBITDA for and Asia transparency in XX of a levels trailing three the and the in XX% the at regional as including in for all all EBITDA improve which, Pacific, our Adjusted mentioned, together up our EBITDA EMEA financial adjusted growth Slide services businesses, our also was segment These overall as Americas, revenue are of for fee excluding should disclosure by XX% detailed revenue X on XX%. We of X% posted produced months. further a supplemental are business investors. disclosures history website. our enhanced summarizes regions

United in In from major in rose the would organic. Pacific Greater business and fee revenue growth. of Revenue in in fee was outsized our revenue Growth Brazil, global performer increased the with business almost X%, occupier excluding have of revenue Kingdom. by of QX. China, the the rights. all performance paced supported United XX%, reviews in across growth the X overall notable these gains Asia growth Americas, X%, strong lines servicing entirely Slide EMEA a strong Americas EBITDA lines by mortgage leasing. Japan adjusted been in increase, in gains was quarter, of India, X% double-digit fee XX% and posting an States outsourcing growth Canada the and exhibited the Singapore.

by X% in Americas relatively in market year-over-year. U.S., performance Australia, where growth India X%, in Leasing the and XX% the where Greater Pacific, increased As flat were gains in mentioned, strong rose environment Property Japan. revenue volumes rose share New Asia leasing was City. reflecting and China, paced an sales especially in strong in XX% York and revenue XX% EMEA by market in global

sales revenue on sales as X% in property XX%, by and robust by robust Brazil growth gains which increased in in led offset improved performance totals Japan. was Australia, XX%, revenue business in X%, Pacific, which transactions paced recurring sales lower growth which of and the doubled a billion. XX% China QX Continental prior Canada servicing strong loan Greater in Asia Notably, our in than fewer, Our CBRE revenue Americas market revenue $XXX declined in quarter, almost in versus GSE flat the businesses, increasing our approximately by reflecting mortgage to more remained third with related Capital share basis origination our U.K. Analytics. its relatively last States. by year's Real portfolio, large servicing now extended to entirely U.S. saw revenue points driven according leading increase Europe, sales, gains Commercial investment in rights although mortgage the XXX position EMEA United year. from declined

doubled to our X nearly more which mortgage revenue, revenue services. from the our than over separately disclose and We servicing years now represents commercial has loan begun have last XX% of year-to-date

a expansion value to summarizes produced quarter. a quarter. with X continued of Our history Slide the increased we of Revenue this providing let's quarterly see revenue servicing from occupier contract valuation supplemental services includes our revenue signed we strong of up XX% stream business, Property business fee proposition, illustrate revenue, loan our fee for recurring management for growth for look an results quarter. investors. outsourcing for solid growth, at the X-year disclosure revenue where our this enhanced our X%. XX% our To view

over and portfolio period merging premerger provided was of managing Packard day-to-day projects, subsequently and facilities most CSC, basic providing key and advantages longer advising employees no strategic that the leadership of we ground summary, CBRE relationship market-leading to include Global consulting. thousands leasing facilities client's of year-to-date. facilities XXX of countries. for our This for Slide Enterprise facilities project In identifying client, the division In DXC we clients increased supported be Technology. over and Our is transactions, large support the XX the and the like by with related where expertise of their capital the team EBITDA the to could that analytics client, XX,XXX that management and services during global adjusted on meet expertise. operations data a mean we an of XX-million-square-foot our service on new what CBRE management, a global segment, Hewlett to entire dedicate we QX sense, talk disposing competitive up XX% include about Management summarizes technology, in scale, sector Investment and the platform XX% create expanded and DXC, improvement includes is needs. scope in when experienced

dollars or in business $XX.X Capital realizing to a to reached Total total AUM Positive capital. up billion equity prior billion, outstanding Slide versus income XX can $XX.X versus over to acquisition, to the business in $XX.X rose from excluding $X.X of in million QX to Please quarter-to-quarter. segment. results. billion Management XXXX. was incentive continues added contributions Investment up year. produce Adjusted FX AUM the Our completed vary in million the Year-to-date, XX% turn This attract that $X.X XXXX. XX August ago EBITDA summarizing year EBITDA $XX.X U.S. significant our which year. prior from billion past the third quarter continues timing Development the months. you billion, to Caledon increased adjusted is Services I'll the $X.X commitments movements remind

though to less healthy, realize meaningful and last year's than in-process fourth expect quarter, income Our in and pipeline fourth remain quarter. the portfolios we

stands development pipeline. Our more projects half to with fee-only build-to-suit of XX. than billion, Please our $X.X turn at pipeline and representing Slide

acquisition property our This like Over have has performance quarter highlight anniversary growth in and reflect the on to period, steady metrics. I'd X closing sales a and since Global is slow our great, of GDP represents and employment time Workplace good volumes Solutions Against then. backdrop, declined. not but to been on the this this X-year and

over X period. XX-month by the has for in X% First, to years adjusted EPS our XX% the S&P compared XXX last trailing EPS this over growth increased

a Second, our has making declined acquisition. period over even after $X.X this leverage billion

performance As to over strategy. the years. of and to the our housekeeping call We acquisition believe One of I strong we QX, this growth the turn flow our back only our reflects the Bob. highlights is Workplace leverage strength prior level net earnings immediately Xx item EBITDA versus This our company cash our debt-to-adjusted past had and of Solutions. X Global before X.Xx ratio

give over that, will Investor speaking outlook our full you to the for This XXXX. year of With to We I us Annual in to XXXX March when forward the Slide with our Bob. as early call moving are XXXX. providing look turn turn results having We XXXX. again please of benefit early to Day XX

Robert Sulentic

quarter full you, trending generally are Thank above be Last updated year is fourth exceptionally outstanding the our CBRE. year midpoint you our We want remind we the our earnings EBITDA from adjusted prior XX% another regional quarter, that with those results services in Jim. and to last up for to XXXX year proving the in guidance, of were expectations. results businesses year. strong, of

adjusted see continue in to of momentum and still businesses Additionally, clear, we year-over-year fourth Services healthy for our we most adjusted XXXX year. for to Management to be quarter and a increase an full $X.XX. Development our expect we range combined increasing in of Investment continue To year and while full to EPS the businesses the across EBITDA are guidance decline our to regions, $X.XX realizing

strong of people are to our the of our performance improve. of our very have The perception we the continue for strength our the quality with We shareholders. delivered brand pleased and business,

trends are market for Slide sector. turn leader long-term continued a in benefiting to services As investment, we XX. real disproportionately should growth from our global estate and Please that commercial support

the Before These to quarter disasters. natural on this Caribbean with comment to want U.S., Mexico multiple City. test capabilities in our were in CBRE's we moment respond clients conclude, the certainly a helping to take put to the and I events role

disaster to mobilized clients' relief our operational. Our safe keep and teams response quickly facilities

open needs, of personal not Our will people their questions. balanced extraordinary the CBRE I with family With that you community tell gone line customers. operator, disasters. I this can and everyone unnoticed responsibilities of to need effort our at their work in ahead great put who often obligations client time commitments their their has want during the a by that, and for own natural we thank

Operator

[Operator Instructions].

Our Josh from first Lamers question William with Blair. is

Joshua Lamers

last technology period pretty great. form and whether about handful Oh, of the whatever How of question? through of new be. the has or gone of estate more, the a kind it real a years it's innovation, may wild Over in products industry broader-picture

of your new in keeping get not internally, of thoughts guess So unveiling gains necessarily the I because technology to I'm curious get are level just adoption technologies. that pace with CBRE, the the sense or that I the that on market productivity the of either

Robert Sulentic

on the Josh, few couple closely, in across We getting people particular track as enablement would adoption tell results. that's considerably over I down we've and years technologies in doubled productivity part introduced our that I a think gone good years. focus number last up showing for from we've what's gains and that of you regard. our has technology, up business we adoption of our are the in our last in

leverage better I we As from you see, to so think continued have in we operating and business, are better have that. and our benefiting

think However, support an to in and to our serve there's our our sector to I long as using and it go, people our awful company, clients. way both enablement relates technology

Joshua Lamers

of the WeWork your one the Last purchase get me Helpful. to in York. really light space thoughts on curious New for especially would in be shared business,

Robert Sulentic

client with us. good that part WeWork. a a environment where ours. a of WeWork places, our they that's say. in where really here environment. a think regard the specifically some And in around compete clients. dynamic And of is think of of Well, They're an and a we Okay. send to we're we're -- company. The well We positioned concept number first good ways is here in to lot of compete to WeWork to all, place stay. with I they're very is we

We well help investing and significantly circumstance, future. us in of a to that number that address we're in serve that'll us more ways it address the have capabilities

Operator

question Our with Yulico Nick is next from UBS.

Greg McGinniss

Greg on is Nick. McGinniss This for

And year continue the as into back double-digit to outsourcing expected, the we services. with proceeding know the the occupier can growing revenue You the is XXXX? in demand this business growth of going acceleration outsourcing half assume the for CRE into

Robert Sulentic

that we continue continue believe years, that said the growth for expect We rate indefinitely, to growth double-digit to be and the We've that'll rate. case.

Greg McGinniss

you mean, of mostly, And how entirely know based it's much on growth. that But, double-digit organic growth is I said acquisitions? that I

Robert Sulentic

double-digit almost entirely That growth acquisitions quarter. the organic, through was It's organic. in not

Greg McGinniss

or most just -- a Okay. have too And volumes? [indiscernible] in declining just to for just is be markets jolt but suggest cap transaction, bit been one how transaction market. might more relatively on much a Do U.S. on trying sense come transaction to for get me. to prices for these On stable, sidelines volumes think transaction need I'm to transactions spread a you money bit the investors. rates down wide waiting the

Robert Sulentic

and on money areas the for transactions There's in U.S., multifamily. the in a lot of sidelines the particularly of industrial

having had peak have down out We growth with investment nice with sales delivering. and out business, around and the the their trouble by amount market is of product that's we've business X% from down is to tenants, industrial the has It's a that big in fact, XXXX. Transactions see world. we that our have, closed matter we and big slowed good plenty healthy little. there, coming with get leased multifamily and the well, well keeping at -- we're so. have transactions of work fact market business, buyers or slowed The market time there, the a slowed the satisfied capital a still down certainly there's But to we're in of product transaction in

Greg McGinniss

issue any not with point there at folks these to Is then? sell just assets wanting this

Robert Sulentic

to have Sure, there unless believe is. real estate and capital growing, building an real institutional like it, to aren't portfolios. asset that investing certain in going mean, people in because exit estate get into cases is are they're -- in feel I they and the commercial commercial that in and another they assets opportunity

cases. definitely situation see So that's some we that a in

Operator

[Operator Instructions].

Rahmani Our with Jade is next KBW. question from

Jade Rahmani

market XXXX for in level as expect of overall, force of your institutional terms XXXX on a you property sales? would in Based your brokerage conversations activity with in the similar and investors with

James Groch

at we're back this I come Jade, going at think to to But give year-end. that any Jim. is don't forecast point. this we'll

Jade Rahmani

lines close, you sort As could property provide a listings, of insights market. on of in with of sale to follow-up commented bidders? to the that to the a anything could sense of time number give respect prior deal You question, color just into property number but any pipelines

Robert Sulentic

investment this of said, There's year the single-digit about buyers in volumes, expect we've marketplace. has of Jade that that projection low and a decent a product. in we what we've growth a lot amount sales Well, changed. is [ph], There's nothing

As some still interested was what XXXX, it's couple not capital it's occupancies market estate. said lot ago, little that's it really a in and in real good I growing a with commercial world overbuilding, a around healthy minutes but of the very institutional circumstances, growing rates, rental of

Jade Rahmani

mortgage GSE services and you how can sources? how say debt the much placement from commercial much Within business is that from revenue of multifamily segment, other the

James Groch

down broken detail. that haven't We

Jade Rahmani

Is GSE multifamily? the majority

James Groch

weighted heavily is all business to multifamily. weighted but GSE origination multifamily. heavily to our Yes, definitely Not

Jade Rahmani

in I guess just year-over-year, confusing the GSE Can think I a you were doubled that? because the multifamily you explain MSR gains, And gains headwind. volumes that somewhat MSR said but

James Groch

said we the get to origination -- the do one volumes that fees so of quite can But factors coming volumes relating from origination, think doubled. you don't of that, depending from, where I mix another. are up, it's be type the on -- to different but

don't revenues origination. follow always level So of

Jade Rahmani

year-over-year volumes? What in the the GSE growth was

James Groch

the on the $XX we pretax million. million. of comparing, GSE, amortization. had try the is you $XX details impact amortization it The by But up impact impact, hit a of $X the a net numbers is you QX, we -- impact down had of overall are can gains -- million, negative that the $XX you're to gains if earnings. million and the way by if are, we million at $XX have So in was million $XX negative you if from And the our assess overall -- look

Jade Rahmani

GSE And what about year-over-year? overall volumes production

James Groch

up. they're said, I Like up. are Volumes

of volumes just size just deals. of the you by -- the nature of types different have but fee revenue time structures are and where different deals, the in the can deals, -- you So for

Jade Rahmani

M&A there M&A -- Are the looking the service to opportunity? has transactions. you lines? at aviation company which I my segment, caught business noticed that offering? service And acquisition in recent meaningful that the attention. Turning a complementary is the Heery Are an broadening

Robert Sulentic

we management. markets in address Well, in project Heery before does weren't some terms of that

with some professionals stuff local business other very in things. the or to broadened and additive They scope of do seriously they some public That area. some only So education talented do public comes are sector-type that deal aviation that our in but stuff number markets. a not

deal that quite our and we're excited to adds what it about So business.

Jade Rahmani

just And Reform what, on if you there Bill, it Tax and are commercial tax offer you implications House's real to wanted positive whether estate lastly, view CBRE's I could comments the any see as if for to rate. any,

James Groch

Yes, we have taken came a yesterday. bill that out at look the

Obviously, now going cautious Our legislation lot positive and as between finalized. initial twists industry. we positive. is see net-net, to could it we're take and There and But be turns waiting. a for is be of the when

Operator

Our with of Ridley-Lane next is question Lynch. America David from Merrill Bank

David Ridley-Lane

the on progress guess, I transactions. the those X-year check anniversary clients, making acquisition. about around want the of particularly I leasing outsourcing-led to congratulations, in So you're GWS cross-selling did in

Robert Sulentic

them. with work to with cross-selling that through of more brought Client lot in making we're that we all Certainly, doing worth well when just over. but way noting do the the of which to the we clients. new question really area clients what sell the over you're over results the positions those some of satisfaction vein good big for have us our asking, acquisition. progress cross-sell opportunities a and think GWS, individual GWS But we're with gone it's the I in services do David, we them came up, already of business has broad-based clients better

is trend evolving the with those in way of are has that happy ours positive and the specific way gone that now. the and very acquisition we're as regard, clients so And clients

David Ridley-Lane

any on sounds terms or, recruiting having Asian want side looking retention. flip incrementally in it to me, And M&A for did -- Is environment you. though, market you I difficulty activity the of like is talent? it the ask, your to other excuse are that, getting talent? add better is in -- then And on retaining and then attractive of

Robert Sulentic

to fourth the hundred recruited, producers success a advantage net to of acquisitions, continue This of fifth Much We be several an do we where we've infill like attracting world. talent. year in have departure, around terms will or we revenues they that our here to retain in the we good when cost dynamic. because in and we row come do have well-proven themselves the for that or than recruit the on pay platform pay to a our company platform brokers more stay elsewhere. their that can or cost That's produce

retention are and going so And well. recruiting

this that's year. out infill I been actually are said, as pressures the they acquisitions And industry. than the for settled less little think Jim in case the Things last were have a as well. year

seeing well we're executing against those So good opportunities. we're and opportunities,

David Ridley-Lane

of growth there saying in would additions. to any hundreds rough so were -- you of a And far go heard And rate? as you give sort

Robert Sulentic

don't We that give number.

Operator

Sulentic have Ladies call the of remarks. turn and I question-and-answer over the gentlemen, would closing like session. back we to the for reached Bob end to

Robert Sulentic

you, thank year-end Well, care. to everyone, Take you in about and results. we'll our with months X talk

Operator

conference. today's concludes This

may You your disconnect you participation. for this and lines at your thank time,

CBRE (CBRE) 3 Nov 172017 Q3 Earnings call transcript