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Segments | 9 Months Ended
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Sep. 30, 2020
Segment Reporting [Abstract] |
Segments |
1 4. | Segments
We organize our operations around, and publicly report our financial results on, three global business segments: (1) Advisory Services; (2) Global Workplace Solutions and (3) Real Estate Investments. Advisory Services provides a comprehensive range of services globally, including property leasing, property sales, mortgage services, property management, project management and valuation. Global Workplace Solutions provides a broad suite of integrated, contractually-based outsourcing services to occupiers of real estate, including facilities management, project management and transaction services. Real Estate Investments includes: (i) investment management services provided globally; (ii) development services in the U.S. and U.K. and (iii) flexible office space solutions. Summarized financial information by segment is as follows (dollars in thousands):
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  |  | 2020 |  |  |  | 2019 |  |  |  | 2020 |  |  |  | 2019 |
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Advisory Services |  | $ | 1,754,165 |  |  | $ | 2,240,712 |  |  | $ | 5,238,618 |  |  | $ | 6,254,072 |
Global Workplace Solutions |  |  | 3,721,365 |  |  |  | 3,555,176 |  |  |  | 11,134,383 |  |  |  | 10,106,543 |
Real Estate Investments |  |  | 169,612 |  |  |  | 129,213 |  |  |  | 542,693 |  |  |  | 414,069 |
Total revenue |  | $ | 5,645,142 |  |  | $ | 5,925,101 |  |  | $ | 16,915,694 |  |  | $ | 16,774,684 |
Adjusted EBITDA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Advisory Services |  | $ | 236,369 |  |  | $ | 345,482 |  |  | $ | 662,129 |  |  | $ | 942,860 |
Global Workplace Solutions |  |  | 140,523 |  |  |  | 95,209 |  |  |  | 355,768 |  |  |  | 298,948 |
Real Estate Investments |  |  | 64,872 |  |  |  | 13,939 |  |  |  | 121,522 |  |  |  | 131,346 |
Total Adjusted EBITDA |  | $ | 441,764 |  |  | $ | 454,630 |  |  | $ | 1,139,419 |  |  | $ | 1,373,154 |
Adjusted EBITDA is the measure reported to the chief operating decision maker (CODM) for purposes of making decisions about allocating resources to each segment and assessing performance of each segment. EBITDA represents earnings before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization and asset impairments. Amounts shown for adjusted EBITDA further remove (from EBITDA) the impact of costs associated with transformation initiatives, certain carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, fair value adjustments to real estate acquired in the Telford Acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, integration and other costs related to acquisitions, costs primarily associated with workforce optimization efforts in response to the COVID-19 pandemic and costs associated with our reorganization, including cost-savings initiatives. Adjusted EBITDA is calculated as follows (dollars in thousands):
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  |  | 2020 |  |  |  | 2019 |  |  |  | 2020 |  |  |  | 2019 |
Net income attributable to CBRE Group, Inc. |  | $ | 184,132 |  |  | $ | 256,599 |  |  | $ | 438,224 |  |  | $ | 644,739 |
Add: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 127,725 |  |  |  | 111,560 |  |  |  | 357,903 |  |  |  | 323,862 |
Asset impairments |  |  | — |  |  |  | — |  |  |  | 75,171 |  |  |  | 89,037 |
Interest expense, net of interest income |  |  | 17,829 |  |  |  | 21,846 |  |  |  | 51,795 |  |  |  | 67,638 |
Write-off of financing costs on extinguished debt |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,608 |
Provision for income taxes |  |  | 49,062 |  |  |  | 63,468 |  |  |  | 119,047 |  |  |  | 169,867 |
EBITDA |  |  | 378,748 |  |  |  | 453,473 |  |  |  | 1,042,140 |  |  |  | 1,297,751 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Costs associated with transformation initiatives (1) |  |  | 55,374 |  |  |  | — |  |  |  | 55,374 |  |  |  | — |
Carried interest incentive compensation expense (reversal) to align with the timing of associated revenue |  |  | 3,767 |  |  |  | (3,360 | ) |  |  | (11,517 | ) |  |  | 12,284 |
Impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in period |  |  | 2,289 |  |  |  | — |  |  |  | 9,289 |  |  |  | — |
Costs incurred related to legal entity restructuring |  |  | 1,061 |  |  |  | — |  |  |  | 4,995 |  |  |  | — |
Integration and other costs related to acquisitions |  |  | 525 |  |  |  | 4,517 |  |  |  | 1,544 |  |  |  | 13,554 |
Costs associated with workforce optimization efforts (2) |  |  | — |  |  |  | — |  |  |  | 37,594 |  |  |  | — |
Costs associated with our reorganization, including cost-savings initiatives (3) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 49,565 |
Adjusted EBITDA |  | $ | 441,764 |  |  | $ | 454,630 |  |  | $ | 1,139,419 |  |  | $ | 1,373,154 |
(1) | Commencing during the quarter ended September 30, 2020, management began the implementation of certain transformation initiatives to enable the company to reduce costs, streamline operations and support future growth. The majority of expenses incurred were cash in nature and primarily related to employee separation benefits, lease termination costs and professional fees. See Note 15 for further discussion.
(2) | Primarily represents costs incurred related to workforce optimization initiated and executed in the second quarter of 2020 as part of management’s cost containment efforts in response to the COVID-19 pandemic. The charges are cash expenditures primarily for severance costs incurred related to this effort. Of the total costs, $7.4 million was included within the “Cost of revenue” line item and $30.2 million was included in the “Operating, administrative, and other” line item in the accompanying consolidated statements of operations for the nine months ended September 30, 2020.
(3) | Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.
Our CODM is not provided with total asset information by segment and accordingly, does not measure or allocate total assets on a segment basis. As a result, we have not disclosed any asset information by segment. Geographic Information Revenue in the table below is allocated based upon the country in which services are performed (dollars in thousands):
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  |  | 2020 |  |  |  | 2019 |  |  |  | 2020 |  |  |  | 2019 |
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 3,162,235 |  |  | $ | 3,442,570 |  |  | $ | 9,632,592 |  |  | $ | 9,851,477 |
United Kingdom |  |  | 736,927 |  |  |  | 758,084 |  |  |  | 2,188,822 |  |  |  | 2,003,671 |
All other countries |  |  | 1,745,980 |  |  |  | 1,724,447 |  |  |  | 5,094,280 |  |  |  | 4,919,536 |
Total revenue |  | $ | 5,645,142 |  |  | $ | 5,925,101 |  |  | $ | 16,915,694 |  |  | $ | 16,774,684 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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