This summary is based on the second quarter fiscal 2007 earnings call conducted by CB Richard Ellis, Inc. (CBG: chart) on July 31, 2007.
Management:
President and Chief Executive Officer: Brett White
Senior Executive Vice President and Chief Financial Officer: Kenneth. J. Kay
Senior Vice President, Investor Relations Nick Kormeluck
President, Institutional and Corporate Services: Michael Lafitte
Key Investors Issues
- Revenue rose by $586.8 million from a year ago to $1.5 billion in the quarter.
- Net income (adjusted) almost doubled from a year ago to $157.3 million.
- Adjusted earnings per share rose 94% to 66 cents from 34 cents a year ago.
- EBITDA was 80% higher than the prior year at $267.6 million.
Second Quarter Highlights
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Revenue increased by 65% to $1.5 billion supported by strong performance in all service lines and geographies
- Organic revenue growth was 30%, marking the 19th straight quarter of double-digit organic growth.
- Strong performance in Americas, EMEA and Asia-Pacific continued with revenue up 56%, 72% and 40% respectively.
Leasing, sales and facilities management contributed the bulk of revenue at $466 million, $432 million and $324 million respectively.
- Investment sales activity surged 72% to $35.1 billion, once again exceeding the strong growth rate for the market overall
- Business combination with the Trammell Crow Company (TCC) continues to yield strong results as evidenced by new business won and client retention.
Cost of services increased 65% from a year ago to $791.6 million.
- Operating expenses rose 66% from a year ago to $469.8 million due to TCC integration costs and carried interest incentive compensation accruals.
- Excluding one-time charges, operating expense would have increased 23%.
Equity income increased by $15.6 million or 151%, due to higher dispositions within selected funds in our Global Investment Management segment.
EBITDA totaled $252.2 million, an increase of $105.2 million, or 71.6% from 2006 despite the inclusion of $15.4 million of acquisition-related expenses.
Cash and cash equivalents rose 193% to $438.2 million due to strong business performance, partially offset by the payment of bonuses and debt pay down.
- Restricted cash decreased from $313 million to $77.6 million due to the payout on outstanding shares of TCC common stock tendered.
- Trading securities were down 353% from $356 million to $2.8 million following the sale of the investment in Savills.
Second Quarter Segment Performance
Americas Region revenue increased 56.4% to $934 million, compared with $597.2 million in 2006 driven by acquisitions.
- Operating income totaled $92.2 million against $84 million year ago.
- EBITDA rose by $21.3 million to $116.5 million despite the inclusion of $14.9 million of acquisition-related expenses.
- Reflecting the strength of the office market, rental growth rose 7.1% from a year ago.
EMEA Region revenue grew by 72.2% from a year ago to $330.8 million mostly because of organic growth driven by strong performance in Europe.
- Operating income rose 98% from a year ago to $64.5 million.
- EBITDA was $67.2 million, an increase of $31.4 million, or 87.8%, from 2006.
- Investment in commercial real estate totaled $156 billion representing an increase of 12% from 2006.
- Demand remained strong across all property types particularly in France, Germany and the Netherlands.
Asia Pacific Region (Asia, Australia and New Zealand) revenue rose 39.6% from a year ago to $121.8 million on improved performance in Australia, China, Singapore and Japan.
- Operating income doubled to $24.6 million from $12.3 million a year ago.
- EBITDA was up 90% from $10.9 million in 2006 to $23.1 million.
