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CB Richard Ellis Group Inc. Reports Operating Results (10-Q)

May 10, 2012 | About:
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10qk

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CB Richard Ellis Group Inc. (CBG) filed Quarterly Report for the period ended 2012-03-31.

Cbre Group Inc has a market cap of $6.25 billion; its shares were traded at around $17.4 with a P/E ratio of 18.2 and P/S ratio of 1.1.

Highlight of Business Operations:

Our revenue on a consolidated basis for the three months ended March 31, 2012 increased by $164.9 million, or 13.9%, as compared to the three months ended March 31, 2011. This increase was primarily driven by contributions from the REIM Acquisitions acquired in the second half of 2011. Increased commercial mortgage brokerage activity (up 45.1%) in our Americas segment as well as higher worldwide sales (up 10.1%) and outsourcing (up 10.0%) activity also contributed to the variance. Foreign currency translation had an $8.2 million negative impact on total revenue during the three months ended March 31, 2012.

Our operating, administrative and other expenses on a consolidated basis increased by $63.7 million, or 16.9%, during the three months ended March 31, 2012 as compared to the three months ended March 31, 2011. The increase was primarily driven by an increase in costs attributable to the REIM Acquisitions, including transaction and integration costs. Foreign currency translation had a $2.7 million positive impact on total operating expenses during the three months ended March 31, 2012. Operating expenses as a percentage of revenue increased to 32.6% for the three months ended March 31, 2012 from 31.8% for the three months ended March 31, 2011, primarily driven by the aforementioned costs associated with the REIM Acquisitions.

Our provision for income taxes on a consolidated basis was $25.4 million for the three months ended March 31, 2012 as compared to $23.4 million for the three months ended March 31, 2011. Our effective tax rate from continuing operations, after adjusting pre-tax income to remove the portion attributable to non-controlling interests, increased to 48.5% for the three months ended March 31, 2012 as compared to 40.5% for the three months ended March 31, 2011. The changes in our provision for income taxes and our effective tax rate were primarily the result of a change in our mix of domestic and foreign earnings (losses), the impact of discrete items and a greater impact in the current year of losses sustained in jurisdictions where no tax benefit could be provided. The impact of such losses and discrete items should lessen as 2012 progresses such that we currently expect our full year 2012 effective tax rate to be slightly below 40%.

Cost of services increased by $65.1 million, or 13.6%, for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011, primarily due to higher salaries and related costs associated with our property and facilities management contracts. Increased commission expense resulting from higher sales and lease transaction revenue also contributed to an increase in cost of services in the current year. Foreign currency translation had a $1.6 million positive impact on cost of services during the three months ended March 31, 2012. Cost of services as a percentage of revenue increased to 64.2% for the three months ended March 31, 2012 from 63.6% for the three months ended March 31, 2011, primarily due to the aforementioned increase in costs relative to our property and facilities management contracts.

Cost of services increased by $9.9 million, or 9.4%, for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011, driven by higher salaries and related costs associated with our property and facilities management contracts throughout the region and increases in headcount, particularly in Australia (partially due to an in-fill acquisition completed in May 2011) and investments in China. Foreign currency translation had a $0.5 million negative impact on cost of services during the three months ended March 31, 2012. Cost of services as a percentage of revenue increased to 68.8% for the three months ended March 31, 2012 as compared to 65.5% for the three months ended March 31, 2011, primarily driven by the aforementioned additions to headcount.

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