CB Richard Ellis Group, Inc. (
CBG)
Q3 2009 Earnings Call
October 29, 2009 10:30 a.m. ET
Executives
Nick Kormeluk - Senior Vice President, Investor Relations
W. Brett White - President and Chief Executive Officer
Bob Sulentic - Group President and Chief Financial Officer
Analysts
Kevin Dougherty - Banc of America
Anthony Paolone - J.P. Morgan
Sloan Bohlen - Goldman Sachs
Will Marks - JMP Securities
Brandon Dobell - William Blair
Presentation
Operator
Ladies and gentlemen, thank you for standing by. Welcome to the CB Richard Ellis Third Quarter Earnings Conference Call. At this time all participants are in a listen-only mode, later we will conduct a question-and-answer session instruction will be given at that time. So if you do require assistants during the call, please press star then zero. As a reminder this conference is being recorded. I would now like to turn the conference over to our host, Mr. Nick Kormeluk. Please go ahead, sir.
Nick Kormeluk
CB Richard Ellis third quarter 2009 earnings conference call. Last night, we issued a press release announcing our financial results. This release is available on the home page of our website at www.cbre.com. This conference call is being webcast live and is available on the Investor Relations section of our website as well. 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 website later today. Please turn to 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 momentum in 2009, future operations and future financial performance. 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 current annual report on Form 10K and our current quarterly Form 10Q in particular any discussion of risk factors or forward-looking statements which are filed with the SEC and available at the SEC''s website at www.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 such 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 three. Our management team members participating today are Brett White, our President and Chief Executive Officer and Bob Sulentic, our Group President and Chief Financial Officer. Also with us today for the question and answer session are Gil Borok, our Chief Accounting Officer and CFO, the Americas and Jim Groch, our Chief Investment Officer.
I will now hand the call over to Brett.
W. Brett White
Thank you, Nick. And good morning everyone, I want to start today''s call by mentioning a few key operational and financial highlights which have been summarized on slide four.
First, as the year has progressed, declines in 2009 financial performance compared to the same quarters in 2008 have narrowed across our geographic regions. We believe that there has been modest improvement in market sediment. This should encourage occupiers and investors to make more decisions regarding commercial real estate, which in turn will create revenue opportunities for the company.
In addition, as the year has progressed and taking seasonality into account, quarterly comparisons to 2008 have become easier because the global economic downturn had a more profound impact on the commercial real estate industry as 2008 unfolded.
Our facilities management business continued to benefit from strong fundamentals in the third quarter. The firms operating in a wide variety of industries continue their efforts to improve earnings and reduce real estate operating expense by outsourcing their commercial real estate needs. And we continue to grab a significant share of this growing market.
Our property management business also continues to prosper as ownership turnover in our managed portfolio has decreased. We also continue to secure new client engagements as asset owners seek to find the most efficient operators for their properties.
Largely driven by outsourcing, third quarter recurring revenue for CBRE was 60% of total revenue, as compared to 54% in the third quarter of 2008. Outsourcing alone now comprises 40% of total company revenues as measured by third quarter 2009 performance. Our appraisal business showed improvements in the third quarter as workouts, distressed properties and bankruptcies have begun to modestly revive activity levels, particularly when compared with the depressed levels of late 2008.
