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Segments
 9 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Segments

14.

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