CBRE Group, Inc. Files Q3 2024 10-Q

TL;DR

CBRE Q3 2024 10-Q is in. Financials look steady.

AI Summary

CBRE Group, Inc. filed its 10-Q for the period ending September 30, 2024. The filing details financial performance and operational updates for the third quarter of 2024. Key financial data and business segments are presented, reflecting the company's ongoing activities in the real estate sector.

Why It Matters

This filing provides investors and analysts with the latest financial performance data for CBRE Group, Inc., crucial for understanding the company's health and future prospects in the commercial real estate market.

Risk Assessment

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

Key Numbers

• 2024-09-30 — Reporting Period End (The end date for the financial reporting period covered by this 10-Q.)
• 2024-07-01 — Quarter Start Date (The start date for the third quarter of 2024.)
• 2023-09-30 — Prior Year Quarter End (The end date for the comparable quarter in the previous year.)

Key Players & Entities

• CBRE GROUP, INC. (company) — Filer
• 20240930 (date) — Reporting Period End Date
• 214-979-6100 (phone_number) — Business Phone Number
• CB RICHARD ELLIS GROUP INC (company) — Former Company Name
• CBRE HOLDING INC (company) — Former Company Name

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-20240930.htm (10-Q) — 2325KB
• cbre-20240930x10qxex221.htm (EX-22.1) — 2KB
• cbre-20240930x10qxex311.htm (EX-31.1) — 10KB
• cbre-20240930x10qxex312.htm (EX-31.2) — 10KB
• cbre-20240930x10qxex32.htm (EX-32) — 7KB
• cbre-20240930_g1.jpg (GRAPHIC) — 25KB
• 0001138118-24-000029.txt ( ) — 11847KB
• cbre-20240930.xsd (EX-101.SCH) — 78KB
• cbre-20240930_cal.xml (EX-101.CAL) — 109KB
• cbre-20240930_def.xml (EX-101.DEF) — 424KB
• cbre-20240930_lab.xml (EX-101.LAB) — 882KB
• cbre-20240930_pre.xml (EX-101.PRE) — 639KB
• cbre-20240930_htm.xml (XML) — 2039KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Page Item 1.

Financial Statements (Unaudited)

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

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 54 Item 4.

Controls and Procedures

Controls and Procedures 56

– OTHER INFORMATION

PART II – OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 57 Item 1A.

Risk Factors

Risk Factors 57 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 57 Item 5. Other Information 57 Item 6. Exhibits 58

Signatures

Signatures 59 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) September 30, 2024 December 31, 2023 ASSETS Current Assets: Cash and cash equivalents $ 1,025 $ 1,265 Restricted cash 132 106 Receivables, less allowance for doubtful accounts of $ 113 and $ 102 at September 30, 2024 and December 31, 2023, respectively 6,705 6,370 Warehouse receivables 1,438 675 Contract assets 496 443 Prepaid expenses 361 333 Income taxes receivable 157 159 Other current assets 302 315 Total Current Assets 10,616 9,666 Property and equipment, net of accumulated depreciation and amortization of $ 1,803 and $ 1,576 at September 30, 2024 and December 31, 2023, respectively 936 907 Goodwill 5,778 5,129 Other intangible assets, net of accumulated amortization of $ 2,483 and $ 2,179 at September 30, 2024 and December 31, 2023, respectively 2,372 2,081 Operating lease assets 1,122 1,030 Investments in unconsolidated subsidiaries (with $ 930 and $ 997 at fair value at September 30, 2024 and December 31, 2023, respectively) 1,334 1,374 Non-current contract assets 96 75 Real estate under development 457 300 Non-current income taxes receivable 68 78 Deferred tax assets, net 392 361 Other assets, net 1,674 1,547 Total Assets $ 24,845 $ 22,548 LIABILITIES AND EQUITY Current Liabilities: Accounts payable and accrued expenses $ 3,851 $ 3,562 Compensation and employee benefits payable 1,241 1,459 Accrued bonus and profit sharing 1,223 1,556 Operating lease liabilities 229 242 Contract liabilities 329 298 Income taxes payable 75 217 Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase) 1,422 666 Revolving credit facility 683 — Other short-term borrowings 4 16 Current maturities of long-term debt 38 9 Other current liabilities 335 218 Total Current Liabilities 9,430 8,243 Long-term debt, net of current maturities 3,277 2,804 Non-

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, " Business Combinations, " and was accounted for using the acquisition method of accounting. We financed the acquisition with a new issuance in February 2024 of $ 500 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 $ 808 Deferred and contingent consideration 11 Total consideration $ 819 The purchase price included $ 7 million of contingent consideration, representing the acquisition date fair value recognized for up to $ 250 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 $ 819 Less: Estimated fair value of net assets

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 19 Prepaid expenses 2 Other current assets 2 Property and equipment, net 11 Other intangible assets, net 297 Operating lease assets 6 Investments in unconsolidated subsidiaries 20 Other assets, net 9 Total assets acquired 483 Liabilities Assumed: Accounts payable and accrued expenses 54 Compensation and employee benefits payable 8 Contract liabilities 1 Income taxes payable 1 Other current liabilities 3 Non-current operating lease liabilities 3 Deferred tax liabilities, net 57 Other liabilities 3 Total liabilities assumed 130 Non-controlling Interest Acquired 6 Estimated Fair Value of Net Assets Acquired $ 347 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 September 30, 2024 Asset Class Amortization Period Amount Assigned at Acquisition Date Accumulated Amortization Net Carrying Value Customer relationships 9 - 12 years $ 174 $ 9 $ 165 Backlog 4 - 6 years 111 15 96 Trademark 3 years 10 2 8 Technology 5 years 2 — 2 The accompanying consolidated statements of operations for the three months ended September 30, 2024 includes revenue, operating loss and net loss of $ 115 million, $ 3 million and $ 5 million, respectively, and for the nine months ended September 30, 2024 includes revenue, operating loss and net loss of $ 262 million, $ 8 million and $ 8 million, respectively, attributable to the J&J acquisition. This does not include the total direct transaction and integration costs of $ 17 million, $ 1 million, and $ 4 million incurred during the first, second and third quarters of

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 nine months ended September 30, 2024 and 2023 are presented below. They include certain adjustments for increased amortization expense related to the intangible assets acquired (approximately $ 5 million for the three months ended September 30, 2023, and approximately $ 3 million and $ 14 million for the nine months ended September 30, 2024 and 2023, respectively) as well as increased interest expense related to the long-term financing ($ 7 million for the three months ended September 30, 2023, and approximately $ 4 million and $ 21 million for the nine months ended September 30, 2024 and 2023, respectively). Direct transaction and integration costs of $ 4 million incurred during the third quarter of 2024, $ 1 million incurred during the second quarter of 2024, $ 17 million incurred during the first quarter of 2024, and $ 2 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

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