CB Richard Ellis Group, Inc. Announces Earnings Per Share up 48% for Second Quarter of 2006

Business Wire, July 26, 2006

LOS ANGELES -- CB Richard Ellis Group, Inc. (NYSE:CBG) today reported revenue for the second quarter ended June 30, 2006 of $836.2 million, up 24% over the second quarter of 2005, and diluted earnings per share of $0.27 for the second quarter ended June 30, 2006, compared with $0.22 for the same quarter last year. Excluding one-time charges(1) (predominantly due to costs related to extinguishment of debt), second quarter 2006 diluted earnings per share was $0.34, an increase of 48% from the $0.23 earned in the second quarter of 2005.

Second Quarter Highlights

For the second quarter of 2006, the Company generated revenue of $836.2 million, up 24.4% over the $672.2 million posted in the second quarter of 2005. The Company reported net income of $64.3 million, or $0.27 per diluted share, in the second quarter of 2006 compared with net income of $50.4 million, or $0.22 per diluted share, in the second quarter of 2005.

Excluding one-time items, the Company would have earned net income(2) of $79.2 million, or $0.34 per diluted share, in the second quarter of 2006, an increase of 48.0% and 47.8%, respectively, compared with net income of $53.5 million, or $0.23 per diluted share, in the second quarter of 2005.

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)(3) totaled $147.0 million for the second quarter of 2006, an increase of $40.5 million, or 38.0%, from the same quarter last year.

The Company's second quarter results continue to reflect strong performance across virtually all business lines and geographies, as well as contributions from acquisitions. Of the 24.4% revenue growth, approximately two-thirds was due to organic growth and one-third was attributable to acquisitions completed in 2005 and earlier in 2006. The double-digit organic growth was fueled by notably improved leasing activity in most major markets, continued strength in investment sales as well as increased revenue in the appraisal/valuation, mortgage brokerage, property and facilities management and investment management operations.

During the second quarter of 2006, the Company repurchased the remaining $164.7 million in aggregate principal amount of its outstanding 11 1/4% senior subordinated notes at a premium of $9.3 million. This repurchase combined with the new $600.0 million revolving credit facility, which fully replaced the former facility on more favorable terms, will reduce annual interest expense by approximately $25.0 million.

Six-Month Results

Revenue was $1.5 billion for the six months ended June 30, 2006, up $305.9 million, or 25.3%, compared to the same period last year. Approximately two-thirds of the improvement was due to organic growth, while acquisitions completed in 2005 and earlier in 2006 drove the remainder of the revenue increase. The Company reported net income of $101.2 million, or $0.43 per diluted share, for the six months ended June 30, 2006 compared to net income of $65.0 million, or $0.28 per diluted share, in the same period last year.

Excluding one-time items, the Company would have earned net income of $119.3 million, or $0.51 per diluted share, for the six months ended June 30, 2006, up 64.5% and 59.4%, respectively, over net income of $72.5 million, or $0.32 per diluted share, for the six months ended June 30, 2005.

EBITDA was $229.7 million for the six months ended June 30, 2006, up $72.9 million or 46.5% compared to the same period last year.

Management's Commentary

"Our overall business continues to perform very well. Commercial real estate markets worldwide have good momentum, and the combination of people, brand and platform has enabled us to continue to gain market share," said Brett White, CB Richard Ellis' President and Chief Executive Officer. "As expected, the growth rate seen in the U.S. investment sales market has eased back to a more orderly and sustainable rate of growth compared with the heated growth trends of 2004 and 2005, but still reflects a solid year-over-year increase. Supported by expanding employment rolls, the U.S. leasing market continued to improve, seeing higher occupancy and increased rental rates in many business districts across the country. At the same time, our Asset Services and Corporate Services businesses are growing strongly, fueled by the global outsourcing trend. Overseas operations, led by Europe, continue to turn in robust results, as strong organic growth is being augmented by strategic in-fill acquisitions that expand the scope and reach of our service offerings."

Second-Quarter Segment Highlights

Americas Region

Second quarter revenue for the Americas region, including the U.S., Canada, Mexico and Latin America, increased 13.1% to $554.3 million, compared with $489.9 million for the second quarter of 2005. This largely organic revenue increase was mainly attributable to a continued improving leasing trend and strong investment sales as well as higher mortgage brokerage, appraisal/valuation and property and facilities management fees.

Operating income for the Americas region totaled $84.0 million for the second quarter of 2006, compared with $69.0 million for the second quarter of 2005. Excluding the impact of one-time items, operating income for the Americas region would have been $85.4 million for the second quarter of 2006, an increase of $14.7 million, or 20.8%, as compared to $70.7 million for the second quarter of last year. The Americas region's EBITDA totaled $95.2 million for the second quarter of 2006, an increase of $15.3 million, or 19.2%, from last year's second quarter.