CB Richard Ellis Group Inc. (CBG) reported third-quarter 2010 revenues of $1.3 billion compared with $1.0 billion in the year-earlier quarter, reflecting an increase of 24%. The revenues in the reported quarter beat the Zacks Consensus Estimate of $1.2 billion.
The company reported a net income of $57.0 million or 18 cents per share during the quarter, compared with $12.4 million or 4 cents in the year-ago period. Excluding non-recurring items, CB Richard Ellis reported a net income of $62.4 million or 20 cents per share during the quarter compared with $21.6 million or 8 cents in the year-earlier quarter. The third quarter earnings also surpassed the Zacks Consensus Estimate by 3 cents.
The better-than-expected results were primarily due to improved performance across all geographic regions and all business lines. Third quarter 2010 reported EBITDA (earnings before interest, tax, depreciation, and amortization) of $175.5 million (excluding selected charges) compares favorably with $109.9 million in the year-ago quarter.
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 Europewas fueled by the recovery of the property sales market in the U.K., Germany and France.
During the quarter, global property sales revenue increased 63% year over year, while leasing revenue increased 27%. Total global property and facilities management revenue increased 7% during the quarter. CB Richard Ellis signed 33 long-term real estate outsourcing contracts (including 19 new clients) during the quarter.
Revenues for the Americasincreased 26% year-over-year to $812.3 million, while operating income increased to $94.7 million from $47.7 million in the year-ago quarter. Property sales and leasing revenue in the Americasincreased 69% and 36%, respectively, in the third quarter of 2010. Revenues for the EMEA (Europe, Middle Eastand Africa) region grew by 12% to $215.8 million, while the Asia Pacific region recorded a revenue growth of 27% to $167.4 million. Operating income for the EMEA region was $14.3 million for the quarter vis-à-vis $11.7 million in the year-ago period, while that of the Asia-Pacific region rose 28% to $13.6 million.
The Global Investment Management segment, comprising investment management operations in the U.S., Europeand Asia, reported revenues of $49.5 million during the quarter compared with $32.9 million in the year-earlier quarter − an increase of 51%. Assets under management totaled $35.7 billion at the end of the quarter, up 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 revenues of $21.3 million compared with $20.2 million in the year-ago quarter.
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 by indications of stabilization and recovery of market conditions. At quarter-end, CB Richard Ellis had cash and cash equivalents of $768.7 million.
For full year 2010, the company expects recurring earnings in the range of 65 cents to 70 cents per share. We maintain our Neutral recommendation on the stock, which presently has a Zacks #2 Rank that translates into a short-term “Buy” rating.
CB RICHARD ELLS (CBG): Free Stock Analysis Report
Zacks Investment Research
