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CB Richard Ellis Group Inc. (CBG)

Q4 2010 Earnings Call Transcript

February 4, 2011 10:30 am ET


Nick Kormeluk – SVP, IR

Brett White – CEO

Gil Borok – CFO


Sloan Bohlen – Goldman Sachs

Anthony Paolone – JPMorgan

Bose George – KBW

Will Marks – JMP Securities

David Ridley-Lane – BOA Merrill Lynch



Ladies and gentlemen, thank you for standing by, and welcome to the CB Richard Ellis Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session. Instructions will be given at that time. (Operator instructions) As a reminder, this conference call is being recorded.

I would now like to turn the call over to our host, Mr. Nick Kormeluk. Please go ahead sir.

Nick Kormeluk

Welcome to CB Richard Ellis Fourth-Quarter 2010 Earnings Conference Call. Last night we issued a press release announcing our financial results. This release is available on the home page of our Web site at This conference call is being webcast live, and is available on the Investor Relations section of our Web site.

Also available is a presentation slide deck, which you can use to follow along with our prepared remarks. An archived audio of the webcast, a transcript, and a PDF version of the slide presentation will be posted to the Web site later today.

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 our 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 Fourth-Quarter Earnings report filed on Form 8-K and our current Annual Report on Form 10-K and current quarterly report on Form 10-Q, in particular any discussion of risk factors or forward-looking statements which are filed with the SEC and available at the SEC’s Web site 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; our management team members participating with me today are Brett White, our Chief Executive Officer; and Gil Borok, our Chief Financial Officer.

I’ll now hand the call off to Brett.

Brett White

Thank you, Nick. As dire as things appeared two years ago, they now seem equally positive and exciting. We’re at that point in the cycle when all fundamentals are positive and rapidly improving and when everything seems possible. On today’s call, we will discuss our very strong results for Q4 and full-year 2010.

It was undoubtedly one of the best years in CBRE’s 100-plus year history and at the moment our near-term future looks even brighter. I’m equally sure many of you would like us to comment on our current M&A activities. Like you, we have read the press speculation and heard the market rumors. However, we have had a longstanding policy not to discuss rumors and speculation on this topic. Accordingly, M&A is not a subject we can or will address today. In fairness to you, I want to make this statement upfront.

So, please turn to slide #4, for the fourth-quarter of 2010, we posted very strong revenue and earnings growth in our business. In fact, normalized EBITDA for Q4 2010 and for the full-year 2010 were the second best ever in company’s history. This performance was driven by the continued recovery of the commercial real estate services industry, combined with strong execution and our proven discipline in managing the return of related expenses.

Our fourth-quarter total revenue was $1.7 billion, a 27% increase over the fourth-quarter of 2009. As was the case, for most of 2010, our revenue growth was led by three lines of business.

Investment sales where revenues were up 40% in Q4 2010 with all regions posting double-digit growth, leasing revenue, which increased 35% led by activity in the Americas and Asia Pacific, and outsourcing, which posted a 10% revenue increase led by the Americas.

Total company normalized EBITDA was $253 million, a 27% increase over the fourth-quarter of 2009. This translated into a normalized EBITDA margin of 15.3% in the fourth-quarter of 2010. Diluted earnings per share for the fourth-quarter of 2010 increased 29% to $0.36 versus $0.28 in Q4 2009.

As we entered 2010, given our concerns around the economy and its impact on the performance of our business, we significantly reduced target bonus levels and 401(k) matching for 2010. Throughout the year, we did not restore these expenses even as our performance improved.

However, based on our performance this past quarter and full year performance, which significantly exceeded our original planning, in the fourth-quarter we substantially restored bonus target levels and also reinstated a partial 401(k) match for our employees retroactively for the full-year 2010. These actions resulted in additional expense of approximately $30.0 million or $0.06 per share in the fourth-quarter.

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