Oct 30, 2012
Executives
Nick Kormeluk - Investor Relations Brett White - Chief Executive Officer Bob Sulentic - President Gil Borok - Chief Financial Officer
Analysts
Will Marks - JMP Securities David Ridley-Lane - Merrill Lynch
Operator
Ladies and gentlemen, thank you for standing by. And welcome to the CBRE Third Quarter Earnings Call.
At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.
Instructions will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded.
I’d now like to turn the conference over to our host Mr. Nick Kormeluk with Investor Relations.
Please go ahead, sir.
Nick Kormeluk
Thank you. And welcome to CBRE’s third quarter 2012 earnings conference call.
About an hour ago, we issued a press release announcing our Q3 financial results. This release is available on the homepage of our website at cbre.com.
This conference call is being webcast and is available on the Investor Relations section of our website. Also available is the presentation slide deck which you can use to follow along with our prepared remarks.
An archive audio of the webcast and a PDF version of the slide presentation will be posted to the website later today and a transcript of our call will be posted tomorrow. Please turn to slide labeled Forward-Looking Statements.
This presentation contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future growth momentum, operations, financial performance and business outlook. These statements should be considered as estimates only and actual results may ultimately differ from these estimates.
Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that you may hear today. Please refer to our third quarter earnings report filed on Form 8-K, and our current annual report on Form 10-K and our current quarterly report on Form 10-Q, in particular any discussion of risk factors or forward-looking statements, which are filed with the SEC and available at the SEC’s website sec.gov for a full discussion of the risks and other factors that may impact any estimates that you may hear today.
We may make certain statements during the course of this presentation, which include references to non-GAAP financial measures, as defined by SEC regulations. As required by these regulations, we have provided reconciliations of these measures to what we believe are the most directly comparable GAAP measures, which are attached hereto within the appendix.
Please turn to slide three. Participating with me today are Brett White, our Chief Executive Officer; Bob Sulentic, our President, who as you know will succeed Brett as CEO at the end of the year; and Gil Borok, our Chief Financial Officer.
I’ll now turn the call over to Brett.
Brett White
Thank you, Nick, and please turn to slide four. As you know, the market environment turned more cautious in the third quarter of this year.
Many investors and occupiers deferred making decisions and commitments, concerns about ongoing European sovereign debt issues and slowing growth in Asia, which have been vain on the markets most of the year were joined by heightened uncertainty starting from lower corporate profit expectations, as well as the upcoming U.S. election and so called fiscal cliff.
The increase caution was manifested in lower business volumes, particularly sale and lease transactions. In most of our geographies, also across EMEA, this was also the case in all other significant service lines.
Despite this very challenging macro conditions we were nevertheless able to improve revenue, while holding operating expenses flat exclusive of cost containment expenses, thereby supporting normalized EBITDA and adjusted earnings per share, and preserving our industry-leading margins. This of course is a credit to our people and our broad diverse global platform.
We’ve worked hard over a number of years to build a well-balanced integrated platform to meet the needs of our clients. The benefits of these efforts will vary evident in the third quarter of this year.
Our acquisition of the ING REIM business has added significant and largely recurring fee based revenue to our Global Investment Management operations. As a result, this segment saw revenue grow sharply and its contribution to total company normalized EBITDA versus the third quarter of 2011 increased significantly.
We’re quite pleased with the 32% normalized EBITDA margin, this business delivered in the third quarter, and we believe it is indicative of where it can perform on a consistent basis. Outsourcing continue to grow solidly with revenue up 7% globally or 11% in local currency and 13% in the Americas.
Steady adoption of outsourcing continues and CBRE remains well-positioned to capitalize on this trend. We signed 67 total contracts in the third quarter, our highest total ever for one quarter, including 25 with new customers and 16 contract expansions, also single quarter company records.
Despite the slowdown in global investment sales, our mortgage brokerage business posted a double-digit revenue increase, driven by our deep and strong position in the U.S. multi-family finance market.
These two business lines outsourcing and mortgage brokerage were the biggest growth drivers in our Americas operations. While the property sales market was soft, we were able to expand the gap between ourselves and the number two firm in the world’s two largest investment markets which are drawing global capital through their status as relative safe-haven namely, the United States and United Kingdom.
The current recovery unlike previous ones remains frustratingly slow and inconsistent. Nevertheless, we continue to believe that the recoveries are ongoing and as we’ve been saying for some time remain subject to quick swings in market sentiment as we saw in the third quarter.
We do expect the solid finish to the year in light of current business pipeline and as always, we cautioned against judging the underlying trends in our business based on a 90-day timeframe. Some of the most notable transactions we completed during or immediately following the quarter are shown here on slide five.
As usual, I’ll not go through them individually, but we’ve included them for your review. And with that, I’ll now turn the call over to Gil to discuss our overall performance.
Gil Borok
Thank you, Brett. Please advance to slide six.
Total revenue was approximately $1.6 billion for the third quarter of 2012, up 1% from last year or 5% in local currency. This increase was driven by growth in outsourcing, Investment Management and Commercial Mortgage Brokerage.
We recorded normalized EBITDA of $195.3 million in the third quarter of 2012 versus $194.8 million in the third quarter of 2011 for a normalized EBITDA margin of 12.5% close to our 12.7% EBITDA margin achieved last year. Cost of services increase 50 basis points to 58.8% of total revenue in the third quarter of 2012 versus 58.3% in the third quarter of 2011.
This increase was driven by cost containment expenses incurred in the third quarter of 2012 and the decline in transaction revenues in certain geographies that has significant fix cost compensation structure. Despite the inclusion of all of the ING REIM costs in the operating expense line item and cost containment expenses incurred in the third quarter of 2012.
Operating expense as a percentage of revenue in the third quarter increased by just 40 basis points from 30.6% of revenue in the third quarter of 2011 to 31% of revenue in the third quarter of 2012. In light of lower business volumes in EMEA in the first six months of the year and our expectations for the second half of the year.
We took further cost contain actions in this region, primarily headcount reductions that resulted in a charge of approximately $16 million. This charge, as well as a charge of approximately $2 million for cost containment actions in Japan has been normalize and should result in savings of approximately $10 million on a run rate basis for 2013 and beyond.
Furthermore, revert of the value of the trade name in the United Kingdom that is no longer being broadly utilized. The non-cash write-off of this intangible asset was approximately $20 million and was also normalized.
Interest expense increased by $4.6 million in the quarter versus the third quarter of 2011, primarily due to the full impact from the financing of ING REIM acquisitions and the sterling denominated term loan A1 facility that was entered into in the fourth quarter of 2011. Our third quarter 2012 tax rate was approximately 31%.
This was primarily driven by the benefits derive from a legal reorganization of certain entities in Asia-Pacific that was largely discreet to the quarter. We are continuing to focus on the tax efficiency of legal entity and operating structure.
For these reasons we now anticipate a tax rate of approximately 35% for the full year 2012. Depreciation and amortization expense increased $8.8 million in the quarter versus the third quarter of 2011, primarily due to depreciation on recent increase IT-related capital expenditures and higher amortization of intangible assets associated with the ING REIM acquisitions.
Third quarter 2012 GAAP diluted earnings per share was $0.12 versus $0.20 last year. While our normalized EBITDA in the third quarter of 2012 was comparable to the prior year quarter, the combination of increased interest, depreciation and amortization expense was more than offset by a lower tax provision that reduced adjusted diluted earnings per share of $0.26 in the third quarter of 2012, which was up 8% as compared to $0.24 in the third quarter of 2011.
Please turn to slide seven. Property and facilities management was our largest service line in the third quarter of 2012, representing 36% of total revenue in the quarter with a 7% increase or 11% in local currency over the third quarter of 2011.
Leasing remained our second largest service line, representing 29% of total revenue in the third quarter of 2012, but experienced softness globally as compared to the third quarter of 2011, mostly due to increased uncertainty. Investment sales slowed by 7% or 4% in local currency in the third quarter of 2012, with weakness also felt globally as investors grew more hesitant to deploy capital.
Global investment management revenue increased 54% quarter-over-quarter, driven by increases in asset management fees attributable to the ING REIM businesses. Appraisal and valuation revenue remained flat in the third quarter of 2012, as compared to the third quarter of 2011.
Commercial mortgage brokerage revenue grew 11% year-over-year, driven by continued capital availability, generally low interest rates, competitive spreads and investors continued search for yield. It should be noted that this is primarily U.S.-based business where investment activity and sentiment, particularly in the multi-family sector remain stronger than in other parts of the world.
Development services revenue was down slightly to $15.9 million. Revenue from property and facilities management, fees for assets under management, loan servicing fees and leasing commissions from existing clients are all largely recurring.
This revenue comprised approximately 62% of total revenue for the third quarter of 2012. Please turn to slide eight.
Our outsourcing business continued its pattern of consistent growth, driven by record total contracts signed and new account additions, particularly in the Americas. In the third quarter of 2012, we signed 67 contracts, once again, a new record total in company history.
We closed 25 new accounts, the most ever for actually in a single quarter, 26 renewals and 16 expansions also a quarterly company record. In sectors that we see as particularly promising for growth, the company was awarded six new contracts and two expansions in the healthcare and government verticals.
Reflecting the increase globalization of outsourcing, the company was awarded two new contracts in the EMEA and won two new contracts in secured three client expansions in Asia-Pacific. As we have previously noted, we believe the total available market for this business is $50 billion to $60 billion.
We continue to make good progress on capturing new business and feel confident about our continued global prospects for this business. Please turn to slide nine.
This slide demonstrates steadily decreasing vacancy rates and positive absorption in all three market sectors depicted, along with forecasted improvement over the next year. Average national cap rates were stable in the third quarter of 2012 versus the second quarter of 2012 and slightly down as compared to the third quarter of 2011, primarily due to continued strength in core property sales.
Please turn to slide 10. The Americas region showed moderate revenue growth in the aggregate driven by outsourcing.
Investment sales revenue in the Americas declined by 5% in the third quarter of 2012 versus the third quarter of 2011, as investors grew more cautious about deploying capital. CBRE once again held the number one position in the U.S.
investment market for the third quarter and the first nine months of the year. Despite the weakness in leasing activity this quarter, the incremental office market recovery continued as the vacancy rate fell by 20 basis points to 15.5%.
Over the past year, the office vacancy rate declined by 70 basis points, indicating that the recovery is continuing in spite of the domestic and global economic headwinds. Americas outsourcing revenue grew by a strong 13% in the third quarter of 2012.
Please turn to slide 11. Our total revenue in EMEA declined 17%.
However, when excluding the impact of foreign currency, it was down 9%. The lack of global economic growth for the region also resulted in a 17% drop in investment sales revenue in the third quarter of 2012 as compared to the third quarter of 2011.
Excluding the impact of foreign currency, investment sales revenue declined 10%. The drop was driven by weakness in France and Germany.
However, the United Kingdom showed strong growth as a result of the ongoing desirability of London-based prime assets. We were pleased to see that our share of United Kingdom investment sales activity nearly doubled compared to a year ago, based on information from property data.
Leasing revenue declined 24% quarter-over-quarter, illustrating the impact of economic uncertainty on occupied sentiment and the resulting caution with which they took new space and made long-term commitments. Excluding the impact of foreign currency, leasing revenue declined 18%.
As with sales activity, France and Germany were particularly weak in the third quarter of 2012. The EMEA outsourcing revenue decreased 12% in the third quarter of 2012 versus the third quarter of 2011.
Excluding the impact of foreign currency, outsourcing revenue was down only 2%, primarily due to reduced project management work versus a year ago. Please turn to slide 12.
Our total revenue in Asia-Pacific was down 4% as compared to the third quarter of 2011. But when excluding the impact of foreign currency, it was up 2%.
While the U.S. owned debt prices and sluggish U.S.
growth have hampered economic activity in Asia-Pacific all year. The decline in the rate of economic growth in China, as well as other countries in the region caused investors and occupiers to be more cautious in the third quarter of 2012.
Property sales revenue declined 6% in the third quarter of 2012 as compared to the third quarter of 2011. Excluding the impact of foreign currency, investment sales revenue declined by 2%.
Leasing revenue in Asia-Pacific declined 12% and excluding the impact of foreign currency the decline was 9%. Outsourcing revenue improved by 4% in the third quarter of 2012 versus the third quarter of 2011, excluding the impact of foreign currency, outsourcing revenue actually grew by 14%.
Please turn to slide 13. Revenue for the development services segment totaled $17.8 million in the third quarter of 2012 versus $18.8 million in the third quarter of 2011, while third quarter normalized EBITDA declined by $1.4 million from the third quarter of 2011 to $3.8 million.
At the end of the third quarter of 2012, in process development totaled $4.6 billion and the pipeline totaled $1.9 billion. Our equity co-investments at the end of the third quarter of 2012 in the development services business totaled $82.1 million and our recourse debt stood at $15.7 million.
Please turn to slide 14. Third quarter 2012 Global Investment Management revenue increased to $114.3 million from $77.4 million in the third quarter of 2011.
The increase resulted from higher asset management fees, stemming from the inclusion of ING REIM Europe and Asia, which contributed approximately $46 million in revenue in the third quarter of 2012. It should be noted that the global real estate securities component of the business was acquired from ING on July 1, 2011, and is therefore fully included in both the current and prior quarters.
Assets under management or AUM, totaled $90.4 billion at the end of the third quarter of 2012, down $800 million from the second quarter of 2012. This was comprised increases of $1 billion from acquisitions, $500 million from asset value changes and $1 billion due to positive currency fluctuations, more than offset by dispositions and transfers of $3.3 billion.
Included in the $90.4 billion in AUM at the end of the third quarter of 2012 was $22.2 billion of listed securities. This represents an increase of $800 million from the second quarter of 2012, which resulted primarily from value appreciation in this portfolio.
During the third quarter of 2012, we raised new equity capital of approximately $1.5 billion in the direct real estate business and had approximately $3.5 billion of equity capital to deploy at the end of the quarter. Our core investments in this business at the end of the quarter totaled $216.8 million.
Our Global Investment Management EBITDA reconciliation detail is shown on slide 15. In the third quarter of 2012, we incurred $14.2 million of expenses related to ING REIM acquisitions, primarily for retention, severance, facilities and information technology.
As of September 30, 2012, the company maintained a cumulative accrual of carried interest compensation expense of approximately $42 million, which pertains to anticipated future carried interest revenue. This business operated at a pro forma normalized EBITDA margin of 34% for the third quarter of 2012.
Slide 16 shows our liquidity position at September 30, 2012 as well as our amortization and debt maturity schedule for all outstanding debt. The latter is virtually unchanged from the second quarter of 2012.
With considerable liquidity and cash flow, we remain very comfortable with our debt maturity schedule and the flexibility it provides. Please turn to slide 17.
Excluding cash within consolidated funds and other entities not available for company use, and excluding our non-recourse real estate loans and our mortgage brokerage warehouse facilities, our total net debt at the end of the third quarter of 2012 was approximately $1.8 billion, while up by $117 million from year end 2011, net debt is down by almost $110 million from the second quarter of 2012 in line with seasonal patterns. Consistent with historical trends, our net debt is expected to decrease further in the fourth quarter of 2012.
At the end of the third quarter of 2012, our weighted average interest rate was approximately 5.6%, similar to the end of the second quarter of 2012, when including interest rate swaps. Our leverage ratio on a covenant basis now stands at 1.74 times at the end of the third quarter of 2012 on a trailing 12-month basis.
Our total company net debt to trailing 12-month normalized EBITDA stood at 2.1 times. I will now turn the call back over to Brett.
Brett White
Thanks, Gil. And please turn to slide 18.
We believe that the commercial real estate recovery is continuing despite the soft patch particularly in the U.S. in the third quarter of 2012.
If nothing else, the third quarter is a reminder that variable market conditions will be the norm until global economic growth and job creation shift in the higher gear. In the interim, we expect outsourcing to continue with solid consistent growth, leasing to remain relatively subdued reflecting slower global economic and employment growth trends.
Investments sales activity vary widely depending on local and regional market dynamics and investor sentiments which as we have seen can change quickly. Investment Management comparisons will benefit less from the ING REIM businesses in Q4, relatively to the first nine months of 2012, and full-year 2012 normalized EBITDA margins to improve.
We expect conditions in Europe to remain soft until the sovereign debt challenges in Southern Europe are dealt with decisively and in Asia until more steady economic growth returns. In the U.S., the two big uncertainties namely the presidential election and the fiscal cliff will be resolved one way or another shortly.
This resolution will be in greater certainty to the market. Meanwhile, underlined markets fundamentals continue to improve incrementally.
Our business pipelines are healthy and our people around the world are energized to help our clients navigate the choppy environment. CBRE remains well positioned for this market climate because of the strength, the geographic scope and the diversity of our platform.
Our strong financial position and the quality of our brand and people which assure clients they are also receiving the best advice. In light of the operating performance in the third quarter and our outlook for the fourth quarter, we now expect full-year 2012 adjusted earning per share to be in the range of $1.15 to $1.20.
Notwithstanding current economy conditions, CBRE remains strongly position to thrive in a month and years ahead. To hear more about our long-term strategy, I hope you’ll be able to attend our Business Review Day this year.
Bob Sulentic will be hosting event which will take place in the morning of Thursday, December 6th at our New York City office at 200 Park. With that, operator we’ll now take questions.
Operator
(Operator Instructions) And we’ll go to the line of Will Marks with JMP Securities.
Will Marks - JMP Securities
Yeah. Good afternoon.
First of all, Brett, maybe this is the last we’re going to hear from you, so best of luck to you.
Brett White
Thanks, Will.
Will Marks - JMP Securities
Second, I want to ask you about maybe for Gil, balance sheet strategy, any plans to do anything other than that, has there any acquisitions of late even if they are small, if you can talk about them?
Brett White
Before Gil answer that question, Will, let me just say a few words about what has transpired on the East Coast these past two days. We want to convey our thoughts and prayers for everyone affected by Hurricane Sandy.
I also want to thank our thousands of employees who have already rallied to assist our many clients impacted by the disaster. I witness our response to the main disaster is both man-made and natural over the years.
And I can tell you that no one responds with more enthusiasm and energy on behalf of their clients than our folks across the field. So I really told them thank you for all your doing.
And Gil you can now hit Will’s question.
Gil Borok
Okay. Hi, Will, thank you.
Thanks, Brett. Will, what I would say is generally speaking, debt pay down is always a priority of ours and frankly, we said at the moment our net debt balance is very good.
We’ve got that cash of $700 million, $450 million available -- would be available in the U.S., around $250 million plus overseas. And we’re always anticipating what our options are with that cash.
The one thing that I can say definitively and that I think I’ve said before is we do have a high-yield bonds coming due in June of next year, the 11.625. At least, there is a call on them.
And whether we refinance those or partially finance those and partially use cash is yet to be determined, but you can certainly think about that in terms of an interest expense reduction, certainly for the back half of next year and the full year of 2013, if current interest rates and the current interest rate environment remains low. So there is no specific M&A.
There is no specific opportunities for cash that you wouldn’t normally think of, we’ve obviously got our core investment program in the principle businesses. We’ve got capital expenditures, the routine stuff that you would -- that you are very, very familiar with, nothing specific except that debt item that I just mentioned.
Will Marks - JMP Securities
Great. And then on acquisitions, have you been looking at deals any thing transpired?
Gil Borok
We don’t have anything specific, Will.
Will Marks - JMP Securities
Thanks. On some specific segments, leasing in America is down 2%.
We heard from the competitors, the industry and volumes was down about 14%. Did you see similar figures in your own research, meaning some decent market share gains, despite the tough environment?
Brett White
Well. Let me take a stand on that.
Let me ask Bob to speak as well. First thing I want to caution you, Will, I think you already know this is -- it is dangerous to extrapolate too much from a single quarter.
You may recall last year, we had a soft quarter in leasing in the end of the day at the end of the year, it end up meaning nothing. We do think that we picked up some share gain.
We clearly picked up some share. I’ll let Bob talk a bit more specifically about our share gains.
Bob.
Bob Sulentic
Yeah. Well, I think you hit it, Brett, two things, we don’t want to take any one quarter too seriously.
And secondly, we were happy that we picked up some share in the market place both domestically in the U.S. and around the world we think.
So that’s encouraging to us. And the other thing I had mentioned as it relates to our brokerage business broadly, but our leasing business specifically, we’ve been very focused in the last couple of years on upgrading our team.
We have a program called move-up, move-out. We’ve been doing a decent amount of hiring to upgrade our team.
We’re shifting our focus, Will, now a little bit to actually growth in headcount. And I can tell you that year-to-date, this year, we’ve made more hires in the U.S.
in brokerage for instance than we did in all of last year. So, yeah, we’ve made some market share gains in a period where the market wasn’t particularly good.
And our focus was more on upgrading rather than growing the headcount. But we’re actually going to go -- we’re moving in both directions continuing to upgrade the staff and growing headcount going forward.
Will Marks - JMP Securities
Okay. Thank you.
That’s very helpful. I just had one final question on outsourcing.
I don’t believe that you restated your comment about the size of the industry, but I assume nothing has changed on the industry size, not that it would, but your ability to kind of chase that?
Brett White
No. Nothing has change.
We believe and we continue to believe that we’re advantaged over any other firm in the industry in this particular space. And I think, Will, you would agree that our numbers in that space the last three or four years certainly are evidence of that.
Will Marks - JMP Securities
Okay. Perfect.
Thanks a lot.
Operator
(Operator Instructions) Next we’ll go to the line of David Ridley-Lane with Merrill Lynch.
David Ridley-Lane - Merrill Lynch
Yeah. Just a couple of numbers questions.
Could you breakout the cost containment between cost of services and SG&A, kind of, give a rough split?
Gil Borok
Yeah. It’s about 50-50, David.
David Ridley-Lane - Merrill Lynch
About 50-50.
Gil Borok
Half and half, yeah.
David Ridley-Lane - Merrill Lynch
And you said $10 million in annualize payback from these actions beginning in the first quarter of ‘13?
Gil Borok
There will be $10 million of savings, yeah. I just would caution that whether there is a bigger discussion around, whether or not that would go forward to the bottom line or would offset other items including depending on how revenues looks next year in investment and so forth.
So yeah, in it of itself it will produce $10 million of savings.
David Ridley-Lane - Merrill Lynch
Okay. And the tax rate that you’re now guiding to implies that the fourth quarter will be under 30%.
Is that what you’re thinking?
Gil Borok
No. And it wouldn’t be.
But it will be lower than it’s been, it wouldn’t be under 30%. No, we can go over it in more detail by quarter offline if you’re like, but 35 is a full year rate and that you should be able to sell for the quarter.
David Ridley-Lane - Merrill Lynch
Okay. Okay.
And would you expect a -- the tax rate to be sustainable under 2013?
Gil Borok
I’m not ready to comment on 2013. I think we’ll differ commenting on that to the year-end call, the February call where we’ll give our guidance and we’ll incorporate call for it, the tax rate and other variables into guidance at that time.
What I can’t say is and what I did say is we all -- we continue to focus on this aspect of our business we started to talk about in the few quarters ago. You’re starting to see the beginnings of all the benefits of our work in this area.
And there will be benefit next year, but in terms of how much I’m not ready to talk about that quite yet, David.
David Ridley-Lane - Merrill Lynch
Sure. And then may -- one big picture question.
In terms of the trends of EMEA, did they steadily decelerate through the quarter and October was worse than the third quarter or was -- what was going in intra-quarter and early fourth quarter trends there? Thank you.
Brett White
Yeah. And this is Brett.
I’ll take a stab and again, I’ll have Bob give us some more color on this. First thing I would say is that EMEA has been a soft story for a lot longer than the third quarter.
Third quarter was just another chapter and what seems to be a fairly long book now on difficult market conditions. I will say and we referenced in our comments that, that being said, EMEA as well as our other global businesses feels pretty good about their fourth quarter and the pipelines that they have.
But nonetheless, as we said on the call, until we see -- really I think this way, until there is confidence in the Europe across continental Europe, I think EMEA is going to be feelings from pain. Bob, do you want to add some color to that?
Bob Sulentic
Yeah. Well, first of all, I agree with all that.
As we look at the third quarter in EMEA, we didn’t differentiate one-time period within the quarter versus another, as being a driver in the outcome. It was all a pretty rough time.
What was more important from us is to makeup of our business, the geographic makeup of our business. We have a particularly large business in France, which had a very good year last year and has suffered a big time this year as a marketplace.
In addition to that, it just so happens, France has also had very tough compare on FX, as you know and foreign exchange. So, the combination of the size of our business, the decline of that business in that marketplace in France, the FX circumstance with the euro has made for a very tough quarter in the third quarter in Europe.
And it was more about that from our perspective than it was about any one particular part of the quarter all of which was pretty rough. I will say the business in the U.K., which is our biggest business over there.
I had a much more solid quarter than we did on the continent or in France.
Operator
Was that it from Mr. Lane?
David Ridley-Lane - Merrill Lynch
Yeah.
Operator
And at this time, there is no more in queue with the questions.
Brett White
Great. Well, thanks everyone for you time on the call.
We’ll look forward to speaking to you again at the end of the fourth quarter. Thank you.
Operator
Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T executive teleconference.
You may now disconnect.