CBRE Group, Inc. Files 10-Q for Q2 2024

TL;DR

CBRE Q2 2024 10-Q filed. Financials look steady.

AI Summary

CBRE Group, Inc. filed its 10-Q for the period ending June 30, 2024. The filing covers the second quarter of 2024 and provides financial updates. Key financial data and operational details for the period are presented.

Why It Matters

This filing provides investors and analysts with the latest financial performance and operational insights for CBRE Group, Inc. during the second quarter of 2024.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing standard financial disclosures.

Key Numbers

• 2024-06-30 — Report End Date (Quarterly financial reporting period)
• 2024-12-31 — Fiscal Year End (Annual financial reporting cycle)

Key Players & Entities

• CBRE GROUP, INC. (company) — Filer
• 20240630 (date) — Period of Report
• 20240725 (date) — Filed as of Date
• 214-979-6100 (phone_number) — Business Phone

FAQ

Key Financial Figures

• $0.01 — which registered Class A Common Stock, $0.01 par value per share "CBRE" New York Sto

Filing Documents

• cbre-20240630.htm (10-Q) — 2337KB
• cbre-20240630x10qxex221.htm (EX-22.1) — 2KB
• cbre-20240630x10qxex311.htm (EX-31.1) — 10KB
• cbre-20240630x10qxex312.htm (EX-31.2) — 10KB
• cbre-20240630x10qxex32.htm (EX-32) — 7KB
• cbre-20240630_g1.jpg (GRAPHIC) — 25KB
• 0001138118-24-000023.txt ( ) — 11895KB
• cbre-20240630.xsd (EX-101.SCH) — 78KB
• cbre-20240630_cal.xml (EX-101.CAL) — 107KB
• cbre-20240630_def.xml (EX-101.DEF) — 419KB
• cbre-20240630_lab.xml (EX-101.LAB) — 876KB
• cbre-20240630_pre.xml (EX-101.PRE) — 636KB
• cbre-20240630_htm.xml (XML) — 2081KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Page Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) Consolidated Balance Sheets at June 30, 2024 and December 31, 2023 1 Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 2 Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023 3 Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 4 Consolidated Statements of Equity for the three and six months ended June 30, 2024 and 2023 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 51 Item 4.

Controls and Procedures

Controls and Procedures 53

– OTHER INFORMATION

PART II – OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 54 Item 1A.

Risk Factors

Risk Factors 54 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 54 Item 5. Other Information 54 Item 6. Exhibits 55

Signatures

Signatures 56 Table of contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements CBRE GROUP, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in millions, except share data) June 30, 2024 December 31, 2023 ASSETS Current Assets: Cash and cash equivalents $ 928 $ 1,265 Restricted cash 105 106 Receivables, less allowance for doubtful accounts of $ 103.7 and $ 102.0 at June 30, 2024 and December 31, 2023, respectively 6,304 6,370 Warehouse receivables 973 675 Contract assets 454 443 Prepaid expenses 342 333 Income taxes receivable 190 159 Other current assets 357 315 Total Current Assets 9,653 9,666 Property and equipment, net of accumulated depreciation and amortization of $ 1,703.4 and $ 1,576.1 at June 30, 2024 and December 31, 2023, respectively 895 907 Goodwill 5,667 5,129 Other intangible assets, net of accumulated amortization of $ 2,327.8 and $ 2,178.9 at June 30, 2024 and December 31, 2023, respectively 2,385 2,081 Operating lease assets 1,032 1,030 Investments in unconsolidated subsidiaries (with $ 904.6 and $ 997.3 at fair value at June 30, 2024 and December 31, 2023, respectively) 1,309 1,374 Non-current contract assets 92 75 Real estate under development 380 300 Non-current income taxes receivable 77 78 Deferred tax assets, net 338 361 Other assets, net 1,634 1,547 Total Assets $ 23,462 $ 22,548 LIABILITIES AND EQUITY Current Liabilities: Accounts payable and accrued expenses $ 3,568 $ 3,562 Compensation and employee benefits payable 1,230 1,459 Accrued bonus and profit sharing 974 1,556 Operating lease liabilities 244 242 Contract liabilities 311 298 Income taxes payable 128 217 Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase) 961 666 Revolving credit facility 940 — Other short-term borrowings 7 16 Current maturities of long-term debt 28 9 Other current liabilities 238 218 Total Current Liabilities 8,629 8,243 Long-term debt, net of current maturities 3,272 2,804 Non-current operating

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation Readers of this Quarterly Report on Form 10-Q (Quarterly Report) should refer to the audited financial statements and notes to consolidated financial statements of CBRE Group, Inc., a Delaware corporation (which may be referred to in these financial statements as "CBRE," "the company," "we," "us" and "our"), for the year ended December 31, 2023, which are included in our 2023 Annual Report on Form 10-K (2023 Annual Report) , filed with the United States Securities and Exchange Commission (SEC) and also available on our website (www.cbre.com), since we have omitted from this Quarterly Report certain footnote disclosures which would substantially duplicate those contained in such audited financial statements. You should also refer to Note 2, Significant Accounting Policies, in the notes to consolidated financial statements in our 2023 Annual Report for further discussion of our significant accounting policies and estimates. Financial Statement Preparation The accompanying consolidated financial statements have been prepared in accordance with the rules applicable to quarterly reports on Form 10-Q and include all information and footnotes required for interim financial statement presentation, but do not include all disclosures required under accounting principles generally accepted in the United States (U.S.), or General Accepted Accounting Principles (GAAP), for annual financial statements. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S., which require management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts reported in our consolidated financial statements and accompanying notes and are based on our best judgment. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors, includin

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) 3. J&J Worldwide Services Acquisition On February 27, 2024, we acquired a 100 % ownership interest in J&J Worldwide Services (J&J), a leading provider of engineering services, base support operations and facilities maintenance for the U.S. federal government. J&J primarily serves the U.S. Department of Defense through long-term, fixed-price contracts and is reported as part of our Global Workplace Solutions (GWS) segment. The acquisition is consistent with key elements of our M&A strategy that focus on enhancing our technical services capabilities, increasing revenue resilience and secular growth, and expanding our government client base within our GWS segment. The J&J acquisition was treated as a business combination under FASB Accounting Standards Codification (ASC) Topic 805 and was accounted for using the acquisition method of accounting. We financed the acquisition with a new issuance in February 2024 of $ 500.0 million in aggregate principal amount of 5.500 % senior notes due April 1, 2029; (ii) borrowings under our existing revolving credit facility under our 2023 Credit Agreement; and (iii) cash on hand. See Note 8 for more information on the above mentioned debt instruments. The following summarizes the consideration transferred at closing for the J&J acquisition (dollars in millions): Cash consideration $ 809 Deferred and contingent consideration 11 Total consideration $ 820 The purchase price included $ 7.4 million of contingent consideration, representing the acquisition date fair value recognized for up to $ 250.0 million gross of potential future earnout payments based on the achievement of certain performance thresholds during calendar years 2025 and 2026. The following represents the summary of the excess purchase price over the fair value of net assets acquired (dollars in millions): Purchase price $ 820 Less: Estimated fair value of net assets acquired (see table b

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) The following table summarizes the preliminary fair values assigned to the identified assets acquired and liabilities assumed at the acquisition date on February 27, 2024 (dollars in millions): Assets Acquired: Cash and cash equivalents $ 26 Receivables, net 91 Contract assets 22 Prepaid expenses 2 Other current assets 2 Property and equipment, net 11 Other intangible assets, net 297 Operating lease assets 2 Investments in unconsolidated subsidiaries 24 Other assets, net 15 Total assets acquired 492 Liabilities Assumed: Accounts payable and accrued expenses 54 Compensation and employee benefits payable 8 Contract liabilities 1 Income taxes payable 1 Other current liabilities 2 Non-current operating lease liabilities 3 Deferred tax liabilities, net 57 Other liabilities 3 Total liabilities assumed 129 Non-controlling Interest Acquired 6 Estimated Fair Value of Net Assets Acquired $ 357 In connection with the J&J acquisition, below is a summary of the preliminary value allocated to the intangible assets acquired (dollars in millions): As of June 30, 2024 Asset Class Amortization Period Amount Assigned at Acquisition Date Accumulated Amortization Net Carrying Value Customer relationships 9 - 12 years $ 174 $ 5 $ 169 Backlog 4 - 6 years 111 9 102 Trademark 3 years 10 1 9 Technology 5 years 2 — 2 The accompanying consolidated statements of operations for the three months ended June 30, 2024 includes revenue, operating loss and net loss of $ 105.7 million, $ 4.8 million and $ 4.4 million, respectively, and for the six months ended June 30, 2024 includes revenue, operating loss and net loss of $ 147.1 million, $ 5.1 million and $ 3.9 million, respectively, attributable to the J&J acquisition. This does not include the total direct transaction and integration costs of $ 17.5 million and $ 1.0 million incurred during the first and second quarter of 2024, respectively,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) The fair value of the trademark and the existing technology was determined by using the Relief-from-Royalty Method, a form of the Income Approach, and relied on key unobservable inputs such as timing of the projected cash flows, growth rates, and royalty rates. The basic tenet of the Relief-from-Royalty Method is that without ownership of the subject intangible asset, the user of that intangible asset would have to make a stream of payments to the owner of the asset in return for the rights to use that asset. By acquiring the intangible asset, the user avoids these payments. Unaudited pro forma results, assuming the J&J acquisition had occurred as of January 1, 2023 for purposes of the pro forma disclosures for the three and six months ended June 30, 2024 and 2023 are presented below. They include certain adjustments for increased amortization expense related to the intangible assets acquired (approximately $ 4.7 million for the three months ended June 30, 2023, and approximately $ 3.2 million and $ 9.4 million for the six months ended June 30, 2024 and 2023, respectively) as well as increased interest expense related to the long-term financing ($ 7.0 million for the three months ended June 30, 2023, and approximately $ 4.2 million and $ 14.1 million for the six months ended June 30, 2024 and 2023, respectively). Direct transaction and integration costs of $ 1.0 million incurred during the second quarter of 2024, $ 17.5 million, incurred during the the first quarter of 2024, and $ 2.1 million incurred during the fourth quarter of 2023 as well as the tax impact of all pro forma adjustments are also included in the unaudited pro forma results. These unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what operating results would have been had the J&J acquisition occurred on January 1, 2023 and may not be indicative of future operating

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