CBRE Group Inc

Greetings and welcome to the CBRE's first quarter conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kristen Fairman, Vice President in Corporate Finance. Thank you. You may begin.

Good morning, everyone, and welcome to CBRE's first quarter 2020 earnings conference call. Earlier today, we issued a press release announcing our financial results, and it is posted on the investor relations page of our website, cbre.com, along with a presentation slide deck that you can use to follow along with our prepared remarks, as well as an Excel file that contains additional supplemental materials. Our agenda for this morning's call will be as follows. First, I'll provide an overview of our financial results for the quarter. Next, Bob Cilentic, our president and CEO, and Leah Stearns, our CFO, will discuss our first quarter results in more detail. After these comments, we'll open up the call for your questions. Before I begin, I'll remind you that this presentation contains forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include our expectations regarding CBRE's future growth prospects, operations, market share, capital deployment, acquisition integration, financial performance, and 2020 outlook, including the impact of COVID-19 and any other statements regarding matters that are not historical fact. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained on this call to reflect subsequent events or circumstances. You should be aware that these statements should be considered estimates only, and certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements. For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this morning's earnings release and our most recent annual and quarterly reports filed on Form 10-K and Form 10-Q, respectively. We have provided reconciliations of adjusted EPS, adjusted EBITDA, fee revenue, and certain other non-GAAP financial measures included in our remarks to the most directly comparable GAAP measures together with explanations of these measures in the appendix of this presentation slide deck. Now, please turn to slide four of our presentation, which highlights our financial results for the first quarter of 2020. Combined services revenue grew 13% while adjusted EBITDA rose 8%. primarily driven by advisory services. Adjusted EBITDA in our real estate investment segments fell 56% year-over-year, largely due to a $27 million decline in co-investments in our public securities business, driven by the equity market sell-off at the end of the quarter and fewer large development deals than in Q1 2019. Overall, adjusted EPS and adjusted EBITDA decreased modestly versus the prior year, with strengths in advisory services offsetting most of the REI decline. As a reminder, this will be the last quarter that we will provide geographic-level disclosures based on the old segment reporting in our Excel supplemental, given the change to reporting three global business segments that we adopted at the beginning of 2019. Now, for an update on our business fundamentals, please turn to slide six, and I will turn the call over to Bob.

Thanks, Kristen, and good morning, everyone. We hope all of you are coping with COVID-19's many disruptions, and we wish you and your families good health during this very difficult time. We are encouraged by the emerging signs that COVID-19 is being brought under control and early moves by some governments to reopen parts of their economies. We hope this progress can continue, and we extend our thanks to everyone on the front lines of the battle with this disease. With the global economy in a recession today, the steps we have taken over the past decade to strengthen CBRE have prepared us well for the current environment. Compared with the global financial crisis, we have a stronger market position across our business lines, a more diversified and contractual revenue base, a significantly stronger balance sheet with markedly more liquidity and a leadership team that is far better equipped to manage our cost structure. As the impact of COVID-19 began to emerge, we moved aggressively and early to take out non-essential costs. In early April, I decided to forego my salary, and our top executive leaders also agreed to meaningfully reduce their compensation. While these moves do not materially impact our financials, They create a precedent that allows us to take on other difficult actions to adjust our workforce to reflect lower levels of client demand. These moves include some job eliminations, but mostly consists of furloughs and reduced work schedules, giving us flexibility to bring back staff as needed when business activity resumes. The coming quarters will no doubt be challenging for our industry. In light of how suddenly and severely economic growth has collapsed, we are taking actions to mitigate the impact across every part of our business, which Leo will cover in her remarks. Notably, we moved 100% of our people who work from CBRE offices in the US to working from home on the night of March 13th. This seamless transition confirmed the scalability of our digital and technology infrastructure and the adaptability of our workforce. Every substantial downturn creates fundamental changes in the way that commercial real estate is designed, developed, financed, and used. I will cite five examples that occurred in the aftermath of the great financial crisis. First, e-commerce catalyzed a sharp increase in warehouse and logistics space utilization. demand exploded for institutionally managed multifamily housing. Third, the growth of real estate outsourcing accelerated as companies pursued greater cost efficiencies. Fourth, an increased emphasis on the office occupancy experience drove demand for leasing and related project services. And finally, property ownership became much more institutional. with well-capitalized investors depending on third-party firms to manage, lease, value, finance, and monetize these assets. CBRE benefited in a big way from each of these trends, which, taken together, had a major impact on our decade-long record of robust growth. COVID-19 is likely to bring about equally powerful changes to our sector, and we believe CBRE is again well-positioned for our industry's next evolution. Given our strong balance sheet and industry-leading market position, we are poised to withstand the negative impacts of COVID-19 while also remaining very focused on identifying and capitalizing on potential long-term growth catalysts that will emerge from this crisis. With that, I'll turn the call over to Leah.