CBRE GROUP, INC. Second Quarter 2017: Earnings Conference Call JULY 27, 2017
FORWARD-LOOKING STATEMENTS This presentation contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding CBRE’s future growth momentum, operations, market share, business outlook, and financial performance expectations. These statements are estimates only and actual results may ultimately differ from them. 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 second quarter earnings release, furnished on Form 8-K, our most recent annual report filed on Form 10-K, our most recent quarterly report filed on Form 10-Q, and in particular any discussion of risk factors or forward-looking statements therein, which are available on the SEC’s website (www.sec.gov), for a full discussion of the risks and other factors that may impact any forward-looking statements 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. Where 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. CBRE CBRE GROUP, INC. | Q2 2017 EARNINGS CONFERENCE CALL 2
CONFERENCE CALL PARTICIPANTS Bob Sulentic Jim Groch PRESIDENT AND CHIEF FINANCIAL OFFICER AND CHIEF EXECUTIVE OFFICER HEAD OF CORPORATE DEVELOPMENT Gil Borok Brad Burke DEPUTY CHIEF FINANCIAL OFFICER AND INVESTOR RELATIONS CHIEF ACCOUNTING OFFICER CBRE CBRE GROUP, INC. | Q2 2017 EARNINGS CONFERENCE CALL 3
Q2 2017 RESULTS Q2 provides more evidence of the diversity and strength of our business Our results reflect: • Well-balanced portfolio of market-leading businesses • People and globally integrated capabilities, increasingly enabled by technology and data, strengthening competitive advantages • Prudent financial management allows improved profitability while making investments to further strengthen market position Strategy is working and we continue to execute it at a high level CBRE CBRE GROUP, INC. | Q2 2017 EARNINGS CONFERENCE CALL 4
Q2 2017 HIGHLIGHTS Capital Markets revenue up 12% Occupier Outsourcing continued strong organic growth at 10% Margins on fee revenue increased 70 basis points to 16.4% in our combined regional services businesses M&A activity year-to-date • 4 traditional in-fill M&A deals • 2 Software as a Service (SaaS) companies • Equity investment in another SaaS company CBRE CBRE GROUP, INC. | Q2 2017 EARNINGS CONFERENCE CALL 5
Q2 2017 PERFORMANCE OVERVIEW Fee Fee Adjusted Revenue Net Revenue Revenue 1 EBITDA 2 EBITDA 3 Margin 4 Income 5 EPS 5,6 GAAP $ 197 M $ 0.58 Q2 $ 3,342 M $ 2,192 M $ 400 M $ 413 M 18.8% 2017 Adjusted $ 222 M $ 0.65 GAAP $ 122 M $ 0.36 Q2 $ 3,208 M $ 2,120 M $ 310 M $ 360 M 17.0% 2016 Adjusted $ 175 M $ 0.52 Change Q2 2017-over-Q2 2016 ▲ 4% ▲ 3% ▲ 29% ▲ 14% ▲ 180bps ▲ 27% 8 ▲ 25% 8 USD Local ▲ 7% ▲ 6% ▲ 33% 7 ▲ 18% 7 n/a ▲ 32% 7,8 ▲ 31% 7,8 Currency See slide 15 for footnotes. CBRE CBRE GROUP, INC. | Q2 2017 EARNINGS CONFERENCE CALL 6
REGIONAL SERVICES BUSINESSES OVERVIEW Q2 2017 REGION HIGHLIGHTS (% INCREASE IN LOCAL CURRENCY) Americas EMEA Asia Pacific Fee Revenue 1 ▲ 1% Fee Revenue 1 ▲ 13% Fee Revenue 1 ▲ 18% Adjusted EBITDA ▲ 3% 2 Adjusted EBITDA ▲ 30% 2 Adjusted EBITDA ▲ 44% 2 See slide 15 for footnotes. CBRE CBRE GROUP, INC. | Q2 2017 EARNINGS CONFERENCE CALL 7
Q2 2017 BUSINESS LINE REVENUE CONTRACTUAL REVENUE & LEASING, WHICH IS LARGELY RECURRING OVER TIME 1 , IS 72% OF FEE REVENUE Revenue ($ in millions) Contractual Revenue Sources Leasing Capital Markets Other Commercial Occupier Property Investment Mortgage Development Outsourcing 2 Management 2 Management Valuation Leasing Sales Services Services Other Total Gross Revenue $ 1,612 $ 276 $ 93 $ 130 $ 623 $ 431 $ 144 $ 13 $ 20 $ 3,342 Q2 2017 Fee Revenue 3 $ 606 $ 132 $ 93 $ 130 $ 623 $ 431 $ 144 $ 13 $ 20 $ 2,192 Q2 2017 72% of total fee revenue % of Q2 2017 28% 6% 4% 6% 28% 20% 6% 1% 1% 100% Total Fee Revenue Fee Revenue Growth Rate (Change Q2 2017-over-Q2 2016) ▲ 5% ▲ 2% ▼ -3% ▲ 4% ▼ -2% ▲ 11% ▲ 10% ▼ -7% ▼ -9% ▲ 4% USD Local ▲ 10% ▲ 4% ▲ 1% ▲ 7% ▼ -1% ▲ 13% ▲ 10% ▼ -7% ▼ -6% ▲ 7% Currency See slide 15 for footnotes. CBRE CBRE GROUP, INC. | Q2 2017 EARNINGS CONFERENCE CALL 8
OCCUPIER OUTSOURCING 2017 TOTAL CONTRACTS HIGHLIGHTS 103 total contracts signed in Q2 2017 Q2 YTD Q2 33 total contracts in EMEA and APAC, New 25 56 including 16 client expansions Growth driven by strength of diversified Expansions 44 95 and integrated offering Renewals 34 61 Winning global, multi-service contracts Q2 2017 Representative Clients Facilities Management Transaction Services Project Management CBRE CBRE GROUP, INC. | Q2 2017 EARNINGS CONFERENCE CALL 9
GLOBAL INVESTMENT MANAGEMENT CAPITAL RAISED 1 FINANCIAL RESULTS ($ in millions) ($ in billions) Revenue 9.0 8.3 Q2 YTD Q2 186.1 182.3 3.3 10.6 21.8 22.7 95.7 92.8 1.4 7.3 12.1 161.0 11.5 149.0 82.2 74.0 2016 2017 2016 2017 2016 Q2 TTM 2017 Asset Management Carried Interest Capital to deploy: approx. $5.5 billion 2 Acquisition, Disposition, Incentive & Other Co-Investment: $155.3 million 2 ASSETS UNDER MANAGEMENT (AUM) Adjusted EBITDA 3 ($ in billions) Q2 YTD Q2 91.7 88.6 49.8 49.3 26.4 23.9 2016 2017 2016 2017 Q2 2016 Q2 2017 AUM is up $3.1 billion in USD from Q2 2016 (up $2.6 billion in local currency). See slide 15 for footnotes. CBRE CBRE GROUP, INC. | Q2 2017 EARNINGS CONFERENCE CALL 10
DEVELOPMENT SERVICES PROJECTS IN PROCESS/PIPELINE FINANCIAL RESULTS ($ in millions) ($ in billions) Revenue Q2 YTD Q2 117.9 115.4 94.0 5.9 3.0 46.4 34.7 30.9 17.9 17.2 7.1 5.9 2016 2017 2016 2017 Revenue Pro-forma Revenue 3 2Q16 2Q17 1 2 In Process Pipeline Adjusted EBITDA Q2 YTD Q2 $130.0 million of co-investments at the end of Q2 2017 $14.6 million in repayment guarantees on outstanding debt balances at the end of Q2 2017 50.4 49.3 46.5 18.5 2016 2017 2016 2017 See slide 15 for footnotes. CBRE CBRE GROUP, INC. | Q2 2017 EARNINGS CONFERENCE CALL 11
Q2 2017 OBSERVATIONS Results demonstrate the benefit of globally diversified business mix • Organic growth in EMEA/Asia Pacific as well as global Occupier Outsourcing and Capital Markets more than offset decline in Americas transaction revenues Strength of company’s balance sheet and free cash flow • Leverage essentially flat at 1.3x net debt to adjusted EBITDA since acquiring Global Workplace Solutions for approximately $1.5 billion CBRE CBRE GROUP, INC. | Q2 2017 EARNINGS CONFERENCE CALL 12
2017 OUTLOOK Raising adjusted EPS guidance for 2017 to a range of $2.53 to $2.63 • Implies 12% growth at the midpoint of the range Updated outlook for 2017: • Leasing slightly below initial expectations of mid single-digit growth • Capital markets slightly above initial expectations of low to mid-single digit growth • Occupier Outsourcing fee revenue growth of 10% or slightly higher • Expect combined Development Services and Investment Management adjusted EBITDA to be flat to slightly up versus prior expectation of flat to slightly down • Margin likely to be at the high-end of previously guided 17.5% to 18.0% range, despite a continued shift in business mix • Expect full year adjusted tax rate of approximately 29% CBRE CBRE GROUP, INC. | Q2 2017 EARNINGS CONFERENCE CALL 13
SUPPLEMENTAL SLIDES AND GAAP RECONCILIATION TABLES
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