CBRE Group, Inc. reported strong revenue and earnings growth for the second quarter ended June 30, 2014.
Revenue for the quarter totaled $2.1 billion, an increase of 22 percent from $1.7 billion in the second quarter of 2013.
Excluding selected charges, net income rose 17 percent to $118.7 million from $101.8 million in the second quarter of 2013, while adjusted earnings per diluted share improved 16% to $0.36 from $0.31 in the prior-year period.
For the second quarter, selected charges (net of income taxes) totaled $13.2 million versus $31.9 million for the same period in 2013.
On a U.S. GAAP basis, net income rose 51 percent to $105.5 million, compared with $69.9 million for the second quarter of 2013. GAAP earnings per diluted share rose 52 percent to $0.32, compared with $0.21 in last year’s second quarter.
Excluding selected charges, EBITDA increased eight percent to $262.8 million from $243.1 million in the second quarter of 2013. EBITDA3 (including selected charges) also rose eight percent to $260.2 million for the second quarter of 2014, from $240.5 million for the same period a year earlier.
As expected, EBITDA was impacted by lower mortgage origination activity with Government Sponsored Enterprises (GSEs) and the timing of development sales.
“Our strong performance in 2014 continued in the second quarter,” said Bob Sulentic, president and chief executive officer of CBRE.
“Our significant leasing growth was particularly notable, especially in the U.S., where the markets are improving and we are continuing to drive gains in market share. We are equally pleased with the exceptionally strong growth in our occupier outsourcing business, even before the benefit of the Norland acquisition.
“Our overall performance was in line with the anticipated trajectory of our business and reflects our success in driving meaningful growth while continuing to make investments that will enhance client service, support our professionals and sustain our long term performance.”
Europe, Middle East & Africa (EMEA) continued to show improved results in step with better macro conditions and sentiment. Revenue rose 89 percent with significant increases in property sales and occupier outsourcing, coupled with strong contributions from U.K.-based Norland Managed Services Ltd, which CBRE acquired in late December 2013.
In the Americas, CBRE’s largest business segment, revenue rose 11 percent for the quarter. Asia Pacific revenue increased nine percent i, with notable growth in Australia. Among global business lines, property leasing revenue improved 14 percent paced by market share gains in the U.S. Global property sales revenue rose five per cent. Within the Americas, the U.S. experienced an uneven first half with 38% growth in the first quarter and 2% growth in the second quarter.
The shift in the company’s business mix toward greater contractual revenue was evident in the quarter.
With the addition of Norland, contractual revenue rose to 53 percent of total revenue – up from 47% in the second quarter of 2013. The increased contractual revenue – coupled with conservative financial management – led Standard & Poor’s to raise its rating on CBRE’s secured debt to Investment Grade during the quarter.