CWK - Earnings call transcript Q2 2019 | Cushman & Wakefield plc

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Operator

Welcome to Cushman & Wakefield's Second Quarter 2019 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce Bill Knightly, EVP of Investor Relations and Treasurer for Cushman & Wakefield. Mr. Knightly, you may begin your conference.

Bill Knightly

Thank you, and welcome again to Cushman & Wakefield's Second Quarter 2019 Earnings Conference Call. a announcing issued for financial we period. the today, press our release results Earlier be our use found along can release This on presentation that along. with Investor pages you follow can to today's website, Relations materials be at ir.cushmanwakefield.com. The can found statements. turn Please labeled the page to forward-looking

contains actual on our forward-looking materially. results of may and current considered be based statements These differ events. should statements estimates presentation forecast estimates Today's future only and

non-GAAP non-GAAP financial Reconciliations During are measures outlined presentation. today's refer call, financial guidelines. to we by earnings appendix the of within to GAAP our release measures will found SEC of of as tables and today's

assist like adjusted investors underlying the the of earnings that company in to our remind and performance EBITDA, business. share to adjusted currency local revenue, current our I'd per of to improve analyzing uses you comparability fee and results

You of will earnings detailed measures financial of and and in financial Form more non-GAAP today's the X-K. tables release find information these definitions

presentation to in In growth local addition and like to would currency. XXXX rates I throughout note comparisons comparable of are and the periods the that

Chairman begin CEO, you call For will presentation, over we turn with page our like five. with And to Executive our of following that White. the along Brett I'd those on to and

Brett White

all you thank and joining Bill, You, us again today. for Thank

in to see double-digit continue growth in business revenue year-to-date fee We and good the momentum solid with quarter. the second

commercial remains for continued our top on favorable focus estate growth performance our an strong of sustained in environment result Our that a is services. priorities real

continue recruiting momentum. By large and the operational leveraging As recurring our our strategic service growing of continued businesses; M&A best-in-class measures, quite strategic Revenue continued to second differentiated our strong to a focus. quarter discipline. the and share margin reminder, good revenue have and to here delivery growth platform; in and strength to our growth through our through are these of areas clients; expand infill and global

performance second PM/FM. we saw by quarter and XX% management double-digit which capital markets and the property in facilities and year-to-date stronger primarily call in of We our revenue led project XX% lines in leasing, service fee

We just to also more second a adjusted growth by EBITDA speak in quarter to bit year-to-date. results I'm strong the in detail saw X% later. going

to addition a other to in the few highlights notable I'd performance, share strong like quarter. In financial our

strong Our Sustained brand XXXX, the again again recognition continued in Star global America's leading Partner Forbes' the to Best including honors earn Large receiving quarter and list third-party named Excellence. of Employers second as Year of to once top for XXXX the of Energy being

naming through for recruiting. stakeholders, many and expand Commercial Real one the creating Place platform our also Cushman Equality & estate We're clients, real continued the we second Index infill management leading shareholders. because that a our We including these project proud full-service and people to further score designations Austin, our quarter, Estate, Corporate the evidence operations of XXX that they Wakefield management brokerage, M&A us Texas our and acquired strategic property we In firms. of Peloton Austin's to Best value for provide are received of XXXX a Work perfect LGBTQ Equality. of our

Cushman Our business for Services occupiers Global corporate large estate real win as to in second chose & Occupier continued quarter. the mandates new outsourcing Wakefield

services Americas, integrated square three portfolio million across services square Intuitive solutions for include of a million assignment than renewed foot years their services, for client. H&R for across Cushman spanning project We Pacific. in This integrated for and management, we management, We with contract Block our and H&R project administration expanded and Honeywell's Surgical a and of For six facilities scope of Block management new Asia the XXX provide consists feet. XX marks facilities extend transaction year Wakefield management transaction which example, contract sites workplace & won management XXXX. development to their to more portfolio being to

foot States. And retailer, of big-box and portfolio locations with two servicing the currently for more than Lincoln way a United U.S. our new management we X,XXX outsourcing largest included Laboratory across for million strategic project world's square the portfolio at examples provide services Similar foot Lexington, Air are for facilities in business Academy million in in square under X.X MIT Rowe services facilities Force Colorado nearly Springs. a the to assignments

businesses In quarter. addition, the our leasing large assignments to execute in win second and continue capital markets and

of We New representing represented sales York. in Cushman acquisition the in related approximate example, million one largest-ever largest their Europe billion the building of single WarnerMedia the asset square $XXX We & headquarters, which For in million transactions, XXXX. the AT&T $X.X Citigroup companies. represented the sale-leaseback X.X single-asset is Wakefield in Milk to their in their in closed sale-leaseback and of in transaction EMEA foot Jamestown

Kowloon markets for office building in team billion, Mapletree district. capital represented Kong of Hong A Our $X.X the largest in sale Kong's a in Investments single office ever Grade transaction Hong the

in We square which became tower lease in approximately Pacific. XXX,XXX Salesforce Tokyo represented first their in foot Asia Salesforce the

Our project Greater service IoT in team won in world and Lab, are Microsoft's IoT which two Microsoft project new assignment AI for notable innovation for services the Shanghai, management and China largest center and mandates date. the labs development in to an AI and

estate see to you'll real commercial the Now continues largely turning on to for which dashboard remain real page market our favorable services. estate six, global

and we for metrics assess real monitor and demand forecast. the a business commercial primary our supply estate among provide are to These foundation to

XXXX The we do growth healthy. drives broadly to demand metrics XXXX, economic and that, for of healthy forecasting currently real respectively. real commercial GDP You X.X%, Global GDP because rates estate a for recognize see backdrop at that projected growth we real in XXXX, estate of demand can has indicative and growth global X.X% the remains continue space, commercial balanced. bit supply/demand see economic are solid. rent growth economic IMF Though is remains for and and decelerated growth have

it largely creates first a to real commercial in healthy capital year estate, of real in performance with So we rates generally results the estate, business. remain pertains interest low continued as the drive labor with healthy to the summary, half including environment quite and forward. record coupled our raise The conditions economic markets, to pleased in continue going strong targeting momentum favorable

discuss now for on results year. and the will our Duncan? our share outlook Duncan financial more

Duncan Palmer

Brett. X, And key everyone. which summarizes afternoon, Thanks, let's the to start turn data our quarter good year-to-date. Page for financial To second and

XXXX. of fee Brett compared strong of last year. three continue period reported with results. fee quarter operating As our we to to over same said, $X.X second was of half billion, increase, of deliver $X.X a the an XX% across Today, billion, first in nearly revenue each we segments XX% Year-to-date revenue growth double-digit increase the

XXXX. EBITDA flat X% $XXX EBITDA from adjusted was first increase quarter million, by second a year. our of $XXX performance. prior about Year-to-date increase XXXX. And growth Second was revenue X% the to million, half the year-to-date X.X% a quarter from adjusted EBITDA was strong driven EBITDA was margin of of

modest business shift half generally first service a property PM/FM. This our on lines. and reflect results our mix in facilities service we a management is Our project toward brokerage lower-margin which line, call

the recruitment In we are XXXX an in up of year. addition, the contribute broker investments to the made expected ramping the half in of second in half mainly which Americas second in

a expect continue for whole. to the as We year margin accretion

was Second per quarter year-to-date adjusted adjusted share $X.XX, earnings per earnings $X.XX. was and share

services digits Americas pages both service the grew APAC line. three second with typically we QSI XX%. variety EMEA segments. growth, particularly including revenue. facilities the far the the strongly to first all facilities growth performance PM/FM, significant All XX, of and operations We're by With and PM/FM Within the so modest of our of on XX%. this services in was X in and where revenue PM/FM year. service three quarter, with quarter and pleased and in PM/FM PM/FM acquisition rates show of up segment was growing second double X% major portion our In and a to a in segments fee line's QSI, capital in the with APAC. revenue capital at grew Moving XXXX. self-perform service very growth shift both growing markets through of Americas we the markets line and or half represents this strong, XX% by services, the In there fee subcontract

quarter flow low in basis, high growth cash annualized was solid the on occupier stable outsourcing, a an stream, and our first has which services half. on generates management rate. project growth. facilities for property for in digits revenue and both the rest the business The single Fee operations, comprises typically line, service single-digit grew of management PM/FM strong and This double-digit our a revenue at

growth the in revenue overall service in PM We continued line double-digit XXXX. expect

With that, let's with the with detailed Americas segments on our starting review a XX. more Page of start

across the quarter growth revenue driven and strong, performance Americas fee segment of the for X% year-to-date. was by XX% Our

line, XX% Facilities first a the half, business the second at up XX% revenue XX% double-digit half, for of revenue. first by half was double grew for half. quarter and flat growth PM/FM PM/FM up services for service clients fee by for driven half. the our up existing the was PM/FM and rate. quarter operations fee at wins. The the services markets the growth good Capital which up and which the leasing first X% had about XX%, also In for the quarter and first for was and quarter, Our our a a Americas our represent rest new little of facilities driven line digits over was service and strong by was

PM/FM in growth double-digit expect XXXX. We in

second quarter flat was and adjusted quarter for of was $XXX for line Americas service flat other and EBITDA valuation quarter. half. the the first Americas million

of First million half $XXX versus up first X% adjusted half EBITDA was XXXX. of

basis half margin X.X% of half First EBITDA declined first the of from XXXX. points XX

half QSI year-to-date. and shift we first strong mentioned, a in facilities in PM/FM I modest in by saw by driven mix As the the toward services growth

of to in be up Our during and to made ramping full our investments, and the track recruitment XXXX, business fee to we margin earner are as XXXX, reach they expect and potential. half on accretive second them including

Moving on on page to EMEA XX.

and year-to-date up revenue was across revenue X%, driven service fee Second our lines. quarter growth all fee solid increased of by XX%

the segment again, PM/FM PM/FM driving EMEA regions represents towards in overall less XX% the but line two and overall. in of our a grew XX% year-to-date than mix the Our shift service in again in quarter other

leasing In the quarter, other leasing while X%, both and grew valuations X%, and respectively. markets X%, X%, other and valuation grew X% capital year-to-date markets capital and grew and and

Second quarter second XXXX. declined $X quarter of adjusted versus of million EBITDA million $XX

increased from $XX EBITDA EBITDA of $X was the the X.X% million driven growth. to first by for adjusted million half up of first half X.X% XXXX. versus revenue margin half First

seasonal, As half the in EBITDA. a reminder, business full EMEA than XX% less is generally of first the and year our represents

Growth Asia Pacific XX. our continues segment for to Page Now strong. be on

in grew has Second growth XX% quarter and fee XXX% in revenue revenue XX%. Capital grown quarter XX% markets the grew second in the the bringing XX%. fee quarter XX%, grew PM/FM year-to-date. Leasing and quarter grew XX% the to and year-to-date year-to-date year-to-date. XX%

thirds service two for roughly the X% valuation and grew and digits The and services APAC Facilities up in the XX% in first segment. year-to-date. represents the operations of other line half fee were the strong quarter quarter PM/FM of double the revenue Finally, digits. rest in of the grew the PM/FM low-single year. in the

of in that increase transaction also in performance growth part EBITDA first region Investments XX% XX% Mapletree the markets adjusted strong, of EBITDA Brett second revenue referenced a across revenue adjusted year-to-date. and Capital was quarter in The the the improving to XX.X%. half drove for resulted performance from a the Kong Hong impact X.X% Strong in quarter margin very the strong result earlier.

to we to across continues first be half Turning growth global are of Page the XXXX. businesses. The overall XX, throughout our the our performance to conducive delighted of business economy with strong now

expect is overall grow margin. to to momentum XXXX we our continue and increase and in profitably Our good, to

million. our guidance. range to with first the track, half, in are on $XXX full quarter on XXXX Based consistent EBITDA call, we million of provided we the guidance XXXX On expect adjusted we $XXX year be fourth to our that

the Q&A that, for portion the today's With call. I'll back turn operator to call of the

Operator

of question JPMorgan. line first Paolone ahead, Tony open. with comes Instructions] go is Please Your your [Operator from line the

Tony Paolone

happened Or into of how to and should Thank especially to you. of just we kind that bit expect come Like the going high of was think of backdrop? Or marrying what drag second of there My has a to you hiring? hiring hiring kind a that just should slow, broader a mentioned and first you up? year, How of about amount the been fruition. the the is particularly with kind of the number near-term question thus, half margins expect little a catch it when there? we to times a

Duncan Palmer

is our about of the application free and year, cash Duncan, At that, Yes. year, it's end talked hiring year of an of last as of kinds infill-type in last we you'll the we end did We do some flow, appreciate, pretty these with hiring. Americas, at nature so ramp But them these good things, expect to and our business performing they multiples. And these you just of as seasonalities. the know, things tend the up, as perform. they we also up are then obviously to ramp seasonal,

So margin of brokers year. in the the as and talked a it's these and what we not exactly about times multiples type last them they're of also because the two those within year, at to bit of expect associated by typically costs of which did And a ramp to the back we've of there's seasonality of half past, multiples half we'd second time the drag be over end the covered also, kicks as kind four that's expect deals year, first them in for ranges those up recruits. the pay that is and But kinds back we'd to revenue. of them accretive with in in the on

Tony Paolone

second How we and in then recruiting does second think of again leasing And good. about strong, are think was you've year, pretty sounds last How it trends do good. done because some pretty pretty the the about I half do question but environment know year the like that? the we Okay. seem on comps which

Duncan Palmer

of as year-over-year. digits leasing up leasing, see, you kind Well, year-to-date we're the in double for

in Obviously, strong leasing. we So And strong courses the of all last quite estate market think see as we year to in had in around I growth not services markets that. other last very leasing about in growth in we'll did maybe some year, real see growth feel good we such do expecting the and supportive of those the generally to on is leasing the continue world. quarters but hand, the

Tony Paolone

Okay, thank you.

Operator

line Vikram go Stanley. Vikram the Morgan line Your Morgan next Again is of question line from your your comes next line ahead, is Stanley. from Please with with comes Please of your Malhotra Malhotra question open. go the open. ahead,

Duncan Palmer

stepped Vikram glass a out water. of for

Let's go to our next.

Next question please.

Operator

Certainly.

line Blair. ahead, from next the of Josh is William your Your Lambers with open. comes question line Please go

Josh Lambers

and at more how gentlemen. firms, by partnership, Wall of thanks some I'm that? also the what a bit it's in if afternoon, strategy good reflects a Fifth looking Great, technology a are tech to earlier-stage it or your bit on Curious little change get on feedback structured. your And thoughts wondering essentially CRE

Brett White

years we our Wall for of things Brett. strategic sourcing this company a We've a worked but number is now. a of Yes, one with also apply We've Wall had actually in the very partners into on relationship evolved good lot technologies client and of in environment. Fifth technologies both has Fifth can the that together. vetting internally for

We are of both funds. investors in a their couple

the and day Fifth really ability our no, of analysts myriad coming vet not And but and change question, group every very relationship is of forth to a it's space. this technologies this of property it primary to strategy. Wall at look consultants large impetus their on in tech good is use the a But the and

are active in are they interestingly, Wall, seasoned in as technology technology. Fifth fact, emerging In as they

technologies we think to new not for have in use that not bring of period them just about help we seen the ideas we've existent Fifth wall us time. a use technologies also of before, So marketplace us to been

is Fifth And Wall is you best-in-class as both our develop business in our we important investment client and technologies are for know, our equation technology use. we involves what for and piece with but own that that to and that And strategy technologies also work think MetaProp subscription the own, we partnership environment. very of in the on that set as others a

Josh Lambers

wondering quarters if and Sure, on of And some both me, given service could larger larger the leasing of the in last that the some sales to in just lines you've some And those year. and the the side. any talk the of you in the out region looks if secondly for kind extent just globally wins for half of I'm called volatility of of wins the helps. then back how pipeline in potential couple

Brett White

occupiers first in markets another to a new up capital lease space. There XXXX Sure. lot to obviously be would both strength among Well good say year. those is corporate We and I the trends. and shaping is of like foremost,

give We first strong and are that half. – Pacific had an on side, We Asia very, year strong we lapped a in seeing example. I'll you last the capital very half first markets

in headwinds dynamics the the moment. strength think behind see all up Pacific, U.S. in been think, strongly UK, capital and you as when see indicative the And marketplace, in is so about up business of tensions have the that the at markets between forth, and I the to the China, markets fundamental to Brexit, trade Asia of and capital

closed deals we're second and year. the specific half getting year, So I our that you can't the reference about good, while we the that quite of see back of can the look half tell I may in excited pipelines

Josh Lambers

thanks. Okay,

Operator

Your Securities. next Mitch ahead. Germain JMP from question of the comes line with Please go

is open. line Your

Corey DeVito

It's how QSI Corey the going DeVito how wondering here underwriting. for it's relative to Mitch. I your performing integration just is and

Brett White

going It's well. very

Management, important in you know Facilities Services an was transaction for us our QSI businesses. Facilities As

well acquisitions, and awful our the integration do and are well of we than we integration we off with is being close on close. planned, the And date, integration. well transactions lot As with small pre it's we few different years, spend was that time have when closed we all and against our hit an of no other the last its it's planning large, QSI in performing running underwriting. quite the executed,

Corey DeVito

Alright. That's Thank it you. from me.

Brett White

bet. You

Operator

comes Suisse. line from with Please go of the is question Credit ahead, line next your Harter Your Douglas open.

Sam Cho

guess what for wondering the filling growth acquisitions. was versus how seeing percentage I had organic just you're from on view will updated and come I actually Sam in this Doug. is if an you Hi, expected whether Cho

Brett White

take that. Duncan let I'll Well

Sam Cho

Yes.

so is market think growing the as the first our and So half, you've business as seen. well real very of is we estate in supportive services, you've heard,

We of see expect in continue those second to the trends some half.

an a in of this dissimilar You've But what our the time stuff. clumpy revenue have generally time of we've maybe so obviously, much is and kind infill be year-over-year talk would pipelines, organic/inorganic it'll that. about perspective, heard to said that's be I bit make and good. From that all about that third not over year growth, speaking, would Brett one strength thought over up pretty typically acquisitions

Brett White

Got it. That's me. Thank you. it for

Operator

comes line next from question Compass Point. your ahead, Weaver your go line And Jason open. of with is the Please

Jason Weaver

for taking seen Thanks afternoon. growth about good tailwind visibility capital the post was U.S., we Hi, half question. peers behind curious pretty quarter, us. your strong markets some in and given we've your have the you my second In into second interest that the rate lower the I

Brett White

in question, now, you've and moment you've nothing here that I space, plentiful it's done would we capital liquidity getting right see the great the extent at of or of lot Europe. any answered in of imply a yourself. begun pace transactions markets answer Asia and of very are closing it Pacific, marketplace, and Look, favorable a think, to it, diminution much Spreads transaction to either or in is the the in

Jason Weaver

follow-up, just much may of of Mapletree XXX% Pacific, transaction? growth? And Asia mentioned But growth what prepared that your How did remarks, might that was it. quick represent in it you have that have the proportion a Okay. missed the I and in

Brett White

deals down. deals, transaction. and and were that Mainland down tell particularly tend large you that Hong very the we of China. don't I to capital break do in will but in we Asia Australia by ilk, that And Mapletree the Pacific certainly region Kong, revenue don't break in markets, We

So say on that's think as that. much I'll I as

Jason Weaver

congrats the Well, Okay. quarter. on

Brett White

the for to Welcome Thanks. remark. Yes.

Operator

to back at the questions further time. call I'll turn presenters. no now this are There the over

Bill Knightly

Great. Well thanks, everybody.

the quarter. here end good to you forward the We'll a talk XXXX. year Looking in of third at to

Operator

This concludes conference call. today’s

disconnect. now may You

Cushman & Wakefield (CWK) 2 Aug 192019 Q2 Earnings call transcript