CBRE Group (CBG)
Q1 2013 Earnings Call
April 25, 2013 5:00 pm ET
Nick Kormeluk - Senior Vice President of Investor Relations
Robert E. Sulentic - Chief Executive Officer, President, Director, Chairman of Acquisition Committee and Member of Executive Committee
Jack Durburg - Global President of Transaction Services
Gil Borok - Chief Financial Officer and Executive Vice President
Anthony Paolone - JP Morgan Chase & Co, Research Division
Brandon Burke Dobell - William Blair & Company L.L.C., Research Division
David Ridley-Lane - BofA Merrill Lynch, Research Division
William C. Marks - JMP Securities LLC, Research Division
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Thank you, and welcome to CBRE's First Quarter 2013 Earnings Conference Call. About an hour ago, we issued a press release announcing our Q1 financial results. This release is available on the homepage of our website at www.cbre.com.
The conference call is being webcast and is available on the Investor Relations section of our website. Also available is a presentation slide deck, which you can use to follow along with our prepared remarks. An archived audio of the webcast and a PDF version of the slide presentation will be posted to the website later today, and a transcript of our call will be posted tomorrow.
Please turn to the slide labeled Forward-Looking Statements. This presentation contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future growth momentum, operations, financial performance and business outlook. These statements should be considered as estimates only, and actual results may ultimately differ from these estimates.
Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that you may hear today. Please refer to our first quarter earnings report filed on Form 8-K and our current quarterly report on Form 10-K, in particular, any discussion of risk factors or forward-looking statements, which are filed with the SEC and available at the SEC's website, sec.gov, for a full discussion of the risks and other factors that may impact any estimates that you may hear today.
We may make certain statements during the course of this presentation, which include references to non-GAAP financial measures, as defined by SEC regulations. As required by these regulations, we have provided reconciliations of these measures to what we believe are the most directly comparable GAAP measures, which are attached hereto within the appendix.
Please turn to Slide 3. Participating with me today are Bob Sulentic, our President and Chief Executive Officer; Gil Borok, our Chief Financial Officer; and Jack Durburg, our Global President of Transaction Services business. I'll now turn the call over to Bob.
Robert E. Sulentic
Thanks, Nick. And please turn to Slide 4. CBRE had a good start to 2013 in what is traditionally our seasonally slowest period of the year. As you have seen from our news release, revenue, earnings and normalized EBITDA grew solidly despite continued sluggish pace to the global economic recovery and a high degree of investor and occupier caution that persists in many parts of the world. In this environment, CBRE continues to be well served by our broad geographic and product line footprint and the effectiveness of our people at working across these markets and business lines to create value for clients.
Going forward, we will also benefit significantly from the series of debt refinancing actions undertaken in March, which Gil will describe in detail. These actions will lower our interest expense and increase our capacity to fund strategic initiatives and platform investments, while giving us greater flexibility to navigate market uncertainty.
In the first quarter, revenue rose in every one of our global regions and major business lines. It was particularly gratifying to see strong double-digit revenue growth in the EMEA, a notable turnaround from last year's first quarter. This improvement partly reflects our preeminent position in the U.K., which continues to attract a disproportionate share of capital due to its safe haven status, and our ability to take advantage of modestly better market sentiment and activity on the European continent.
Asia-Pacific also meaningfully improved on last year's first quarter, with notable gains in Greater China and Japan, while the Americas sustained good growth in all business lines.
Looking at our global business lines, capital markets-based businesses again set the pace. Property sales revenue increased 21%, led by rebounds in EMEA and Asia-Pacific. Commercial Mortgage Brokerage revenue improved 16%, fueled by continued strong U.S. investment activity, particularly in the multifamily sector.
Increased investment activity in the U.S. and Europe contributed to a 12% rise in Appraisal & Valuation revenue. We also continue to see steady gains in our outsourcing line of business. Revenue grew in all regions, climbing 11% on a global basis. EMEA's performance was notably strong. In our Global Corporate Services business, which is our outsourcing services offering for occupiers, we signed 46 contracts in the quarter, including 22 with new clients.
Ongoing sluggish job creation and occupier caution continue to temper leasing revenue performance. Growth in the EMEA and the Americas was partially offset by decline in activity in Asia-Pacific, resulting in a modest improvement on a global basis.
A significant portion of the falloff in Asia-Pacific reflected continued occupier caution throughout the region, as well as the Japanese yen's depreciation against the dollar.