CB Richard Ellis Tops Estimates
By Zacks Investment Research on July 28, 2010 | More Posts By Zacks Investment Research | Author's Website
CB Richard Ellis Group Inc. (NYSE:CBG) reported second-quarter 2010 revenues of $1.2 billion compared with $955.7 million in the year-earlier quarter, reflecting an increase of 23%. The revenues in the reported quarter beat the Zacks Consensus Estimate of $1.1 billion.
The company reported a net income of $54.8 million or 17 cents per share during the quarter, compared with a net loss of $6.6 million or 2 cents in the year-ago period. Excluding non-recurring items, CB Richard Ellis reported a net income of $58.8 million or 18 cents per share during the quarter compared with a net income of $9.7 million or 4 cents per share in the year-earlier quarter. The second quarter earnings also surpassed the Zacks Consensus Estimate by 9 cents.
The better-than-expected results were primarily due to improved performance across all geographic regions and almost all business lines. The second quarter 2010 reported the strongest quarterly year-over-year growth in revenue and EBITDA (earnings before interest, tax, depreciation, and amortization) excluding selected charges, since the fourth and first quarters of 2007, respectively.
CB Richard Ellis witnessed robust property sales and leasing in the U.S. and Asia Pacific, reflecting a recovery in market conditions. Strong growth in Europe was fueled by the recovery of the property sales market in the U.K., Germany and France.
During the quarter, global property sales revenue increased 61% year over year, while leasing revenue increased 29%, driven by strong performance in Europe (up 93%), the Asia Pacific (up 67%), and Americas (up 47%). In the Americas, leasing revenue also increased 37% during the quarter on a year over year basis.
Total global outsourcing revenue, including property and facilities management, increased 10% during the quarter — the strongest growth witnessed since the third quarter of 2008. The revenue growth was primarily driven by the Asia Pacific region (up 44%) and Europe (up 27%). CB Richard Ellis also signed 34 multi-year contracts (including 17 new clients) during the quarter, which represents the highest quarterly total ever recorded by the company.
Revenue for the Americas increased 20% year-over-year to $722.3 million, while operating income increased to $72.2 million from $26.5 million in the year-ago quarter. Revenue for the EMEA (Europe, Middle East and Africa) region grew by 28% to $225.4 million, while the Asia Pacific region recorded a revenue growth of 29% to $158.7 million. Operating income for the EMEA region was $18.0 million for the quarter vis-à-vis an operating income of $3.4 million in the year-ago period, while that of the Asia Pacific region remained relatively flat at $10.8 million.
The company reported a net income of $54.8 million or 17 cents per share during the quarter, compared with a net loss of $6.6 million or 2 cents in the year-ago period. Excluding non-recurring items, CB Richard Ellis reported a net income of $58.8 million or 18 cents per share during the quarter compared with a net income of $9.7 million or 4 cents per share in the year-earlier quarter. The second quarter earnings also surpassed the Zacks Consensus Estimate by 9 cents.
The better-than-expected results were primarily due to improved performance across all geographic regions and almost all business lines. The second quarter 2010 reported the strongest quarterly year-over-year growth in revenue and EBITDA (earnings before interest, tax, depreciation, and amortization) excluding selected charges, since the fourth and first quarters of 2007, respectively.
CB Richard Ellis witnessed robust property sales and leasing in the U.S. and Asia Pacific, reflecting a recovery in market conditions. Strong growth in Europe was fueled by the recovery of the property sales market in the U.K., Germany and France.
During the quarter, global property sales revenue increased 61% year over year, while leasing revenue increased 29%, driven by strong performance in Europe (up 93%), the Asia Pacific (up 67%), and Americas (up 47%). In the Americas, leasing revenue also increased 37% during the quarter on a year over year basis.
Total global outsourcing revenue, including property and facilities management, increased 10% during the quarter — the strongest growth witnessed since the third quarter of 2008. The revenue growth was primarily driven by the Asia Pacific region (up 44%) and Europe (up 27%). CB Richard Ellis also signed 34 multi-year contracts (including 17 new clients) during the quarter, which represents the highest quarterly total ever recorded by the company.
Revenue for the Americas increased 20% year-over-year to $722.3 million, while operating income increased to $72.2 million from $26.5 million in the year-ago quarter. Revenue for the EMEA (Europe, Middle East and Africa) region grew by 28% to $225.4 million, while the Asia Pacific region recorded a revenue growth of 29% to $158.7 million. Operating income for the EMEA region was $18.0 million for the quarter vis-à-vis an operating income of $3.4 million in the year-ago period, while that of the Asia Pacific region remained relatively flat at $10.8 million.
The Global Investment Management segment, comprising investment management operations in the U.S., Europe and Asia, reported revenues of $46.9 million during the quarter compared with $32.6 million in the year-earlier quarter — an increase of 44%. Assets under management totaled $33.7 billion at the end of the quarter, down 3% from year-end 2009. During the quarter, Development Services segment, that includes real estate development and investment activities primarily in the U.S., reported a 15.8% reduction in revenues to $18.7 million.
The current market dislocations have resulted in newer opportunities for CB Richard Ellis such as, distressed assets marketing and servicing of failed commercial mortgage backed securities loan funds. The gradual revival of the overall economy has also enabled the company to drive its growth engine. We remain encouraged with indications of stabilization and recovery of market conditions. At quarter end, CB Richard Ellis had cash and cash equivalents of $743.6 million. We maintain our Neutral recommendation on the stock with a Zacks #3 Rank, which translates into a short-term “Hold” rating.
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