Earnings call transcript Q4 2022

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Operator

Welcome to the Cushman & Wakefield's Fourth Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions]

It is now my pleasure to introduce Megan McGrath, Head of Investor Relations for Cushman & Wakefield. Ms. the begin may you conference. McGrath,

Megan McGrath

results welcome Thank website presentation quarter press can & This at financial fourth be found Investor Cushman earnings you, release along conference Relations today's our a ir.cushmanwakefield.com. and XXXX issued call. Wakefield's we period. our to Earlier with the for on announcing release, today,

future statements differ cautionary events. actual and statements. Today's forward-looking turn the to on forecasts be should page Please statements results current contains These on based forward-looking considered note estimates and our our of materially. presentation labeled only on presentation estimates may

During our of appendix are today's rates of as GAAP refer within local and and found comparisons and of non-GAAP presentation. Reconciliations outlined release financial of non-GAAP financial the measures measures, that definitions periods of the growth financial currency note call, measures otherwise earnings the we comparable today's will XXXX, to throughout non-GAAP guidelines. the information by and please related Also, stated. SEC presentation, financial unless to in are to tables other

with of presentation, following along Page our those For on we will X. you begin

And to our call with to over I'd John Forrester. that, the CEO, like turn

John Forrester

you and to our Megan, joining thank Thanks, call. everyone

invited our macroeconomic and our market Johnston, and With is provide our into portion to me insight the today Neil of outlook. Chief participate Q&A I Kevin have in CFO; to also Thorpe Economist the call

enhance hard our want two somewhat half been and such to we company halves headwinds. have offset the considerable of And of with XXXX provide that team times I am clients platform. year to results of our course was by groundwork I as other. work like our proud of first contrasting a to have a and the thank half, year testament volatile presented ability laying strategic was our no And the results exceptional in macroeconomic to their that is today. XXXX the strength record in the a resiliency a a professionals to second we value of team's around world. reported

environment, Despite billion for Cushman adjusted million, year. X% company record results highs. the Wakefield $X.X were $XXX EBITDA of growing Fee respectively of & and strong and reported X%, full uncertain the revenue

the results a strategy global mix consistent of multi-year of with reflect recurring of building a XXXX platform fully execution our highly diversified revenues. Our strong

completing During as continued and such the enhancing in year, in we six invest position term and logistics. and acquisitions areas growth long sciences strategic our integrating asset to growing further classes life

outsourcing and of available include exceptional A occupier onboarded the as we few our of notable year won the several an highlights business year largest for growth mandates.

Our costs. reduce mix new to as second strongly first competitive a corporates look grow contracts business and continue third pipelines and generation with generation outsourcing of to

continue service had this excited and to is and full a now the what successful the our States. platform Greystone we remain partnership We build joint our market asset about drive institutional multifamily investors out United class and for year in venture with to gains largest share

our prior grew versus more reflecting in key prior achieved while investments growth we in Sciences Leasing, Additionally, by year, Industrial areas. than Life these growth XX% the leasing both double-digit

investment finished in volume sales in asset Capital fourth sales to for share XX according basis up in second moving We in classes, the second the increased overall our while overall despite and points Markets, Real third lastly, year, in And market and volumes, the to respectively. environment industrial the of investment Analytics. Capital the challenging U.S. half multifamily in XXXX, total

in commercial times real quality challenging growth market share, even gain the impact highest in our the and to demonstrates teams of our strategic ability the estate. of during Our investments sectors

putting further growth excellent of opportunities. advantage while balance future our strengthening us accomplished an sheet, were take in position highlights notable These to

to depth of remains volatility many to in our global returns. fragmented attractive relatively times and markets the at industry capabilities Our add provides opportunity

Now shift sidelines ended downward on experienced We remain early a transactional the I to fourth likely quarter having in significant momentum year want during how turn in the is experienced progress. sat results. and in the Capital might to and XXXX year XXXX. our there the to fourth quarter

resulted In Leasing, asset lower the overall shifting activity macroeconomic in classes. most across

interest is However, to clarity long in remain commercial participants intact. strongly estate term fundamentals real for order market craved dry deployment discovery. price facilitate greater There available powder significant but trajectory on rate

path under demand shoots interest soon. Whilst locations We pressure policies critical such could quality in rate strong. economic remain anticipate appear Leasing and term, data as short the clearer green the higher in market likely continued for we to that believe moderation and remain to for inflationary a relatively those is assets

level addition, leasing market relatively we active. million elevated of In XXX the par expiring per with annum observed over and keep an in square years next leases, XXXX XXXX office roughly the feet levels few will expect on that

other We also asset of have fast continue in to and feel the confident we classes. the built in opportunity growing capabilities scale

industrial with third-party grow. trends the over expect jobs employment in in global XXXX market trends re-shoring e-commerce, leasing absorption And in We levels. and million labor pre-pandemic positive with industrial than X.X logistics higher continued to continuing

all businesses transactional Our not versus recurring prior our that grew with apply strongly revenue near solid caution to large quarter of the XXXX, business. PM In service does segments growth our term and year up of fourth across lines. market FM X%

our management notably business we as reconfigure project sciences. clients had space, life a in our helped strong redesign year and particular, most In

long-term XXXX, recurring the business to We demonstrating continue in our revenue expect positive of lines the our power momentum diversification strategy. in

our across occur platform, we some global where can tailwinds on XXXX. will I large market Looking additional give color in believe

a China of after leading a muted eased Greater COVID-related with have activity. term substantial presence now restrictions We in

solid this a year. are recovery expecting We

continue expect as India we market fast property addition, matures. to the the expand In economy growing

in towards the such challenges as Europe, In the conflict of year. end resulted operating environment difficult Russia-Ukraine the in XXXX, especially

as the believe year we forward, drivers ESG resilience seeing markets the and we are better flight could and leasing in points data quality Europe some somewhat to Looking provide a progresses. inflation that in

XXXX's are confident Europe have able successfully world team in We navigate and to we ability our in to class execute. a to continue challenges that was

We designed shareholder long-term to areas results in the on long-term targeted value. strategy our growth high have and drive of conviction investments in our

Our to exceptional expertise, and continue us meeting focus value their on every navigate clients on complex us landscape they our to come in our rely this engagement creating we will face. to our to commitment and needs for all that unrivaled

our operations, owner a around talent day-to-day complete to services occupier built and our We're around and leading and everything do and centricity, four analytics suite data insight exciting a focused client clients sectors is of increasingly the pillars world. value. with In we relentless growth excellence, on that people strategic both provide with being operating solutions unique platform leveraging and our

All while building platforms We client to maintaining our business growth secular and focus culture on continue are and commitment in a the transform Inclusion. market our efficiently leading and to Equity these we areas operating first at scale. Diversity, by as

a in the have years we put foundational for XXXX. over us business positioned well-balanced have and past work the model place several We success in

all we of positioning in the Neil more are decisions the our being allocation touch areas. emerge business prudent Given capital out moment the investment in detail and prioritizing on in which order further managing will growth on backdrop, and cylinders. current a operating cost long-term our to environment, in efficiencies, firing economic current to drive base

through management an and team have cycles economic led base invaluable. that has that experienced We previous is knowledge

execution our of employees proven in exceptional business have and the the leaders world around also priorities. We

continue expertise value and and and share platform, to We clients have people the the our market the shareholders. to taking delivering

that, over performance. financial I'd to call discuss with Neil? to like the more And turn in Neil to detail our

Neil Johnston

afternoon, and John, good you, everyone. Thank

of of fee year. COVID-related billion, generated PM/FM the of $X.X prior restrictions and lower full million, prior offset $XXX Greystone our the higher X% over in X% revenue well the adjusted market expense. activity, and year, EBITDA venture we Contributions And over leasing were China, For increase increase of an as FX from largely capital commission as an growth by joint headwinds year.

XX versus generally Adjusted was EBITDA expectations share earnings versus XXXX, a basis was of were margins the a with prior for Adjusted which and $X, of year our decrease per points X% decline line year. guidance. in XX.X%,

by Looking at line. service fee our revenue

in primarily the project growth Leasing year, facilities our by of driven grew pleased business performance XXXX the the management strong the recurring year and activity. revenues. office sector. a PM/FM continued For in setting record with throughout and solid the of XX% performance the fee our recovery XXXX. PM/FM were in We most a and industrial XX% sector full by XX%, grew especially revenue steady versus Capital in driven revenues Markets decreased

revenue Turning lower reflects XX% remained year. as to which on fee was activity, $X.X Capital sidelines. the brokerage billion of revenue decline Markets fourth quarter. most in The in profound versus investors the declined Fee prior

in China, decrease earnings driven our Fourth a prior COVID-related of adjusted year continue quarter $XXX lower adversely EBITDA per to brokerage record restrictions share and versus APAC. quarter XX% declined versus of for Adjusted year. EBITDA The results in decline $X.XX, comparison. was activity the in principally XX% million, by the prior adjusted was impact which a

declined Moving to line PM/FM businesses management service performance PM/FM by quarter offering across our our decreased Capital fourth fourth fourth particularly year. revenue the and declining entire for facilities all fee our was the in with the Leasing in up XX% project strong, XXXX. quarter X%. prior total service in revenue versus Markets XX% segments with versus revenue fee record-setting quarter of a

down industrial many the surpassed market declined square in absorption while absorption during logistics increased sequentially, a macroeconomic XXX of which Despite quarter, other in tempered continued and activity in lower quarter valuation strength, awaiting for labor straight fourth the when foot the quarter result fourth million In the occupiers fourth was XX% ninth still the Valuation the business. quarter decision-making as office clarity. marked mark. sector our

Greystone $XXX a for revenue Leasing more and million positive segment by principally PM/FM, X% with by contribution fee of in offset EBITDA results decreased brokerage quarter, the Turning $XX decline and partially XX% X% prior Adjusted year venture. driven our strong from in lower joint activity offset Markets. XX% a Capital decline our to in by growth million year-over-year versus the the Americas than declined

PM/FM of brokerage primarily by year prior In up $XX million Markets EMEA, lower with declined XX% and comparison. prior versus EBITDA declined X%. challenging Adjusted a fee Capital versus activity. $XX revenue Leasing down XX% declined XX% year driven million

of were Pacific, X% XX% Capital million China. were COVID-related as of by was line, revenue Adjusted fee Markets, result and PM/FM the China XX% the this down restrictions. driven which EBITDA in versus and service our Leasing XX% most declined growth prior Asia versus $XX year grew driven in declines performance which was of in declines $XX declines by the year, growth a million prior partially pronounced In for The offsetting quarter, of respectively.

times our XXXX $X.X revolver We billion. of $X.X balance on at had our billion of on We with of quarter. our on our position and financial fourth million end outstanding X.X facility hand of no the remains sheet, liquidity, of net cash availability to $XXX leverage consisting credit ended strong. Moving revolving was and borrowings the

we to $X.X secured Subsequent XX, our a the extending of of date fourth billion to amended the of January quarter, XXXX. $X outstanding portion maturity senior the term billion loan

refinancing were the Our deal. achieve We goals spacing profile to outstanding extend both out with flexibility sheet the these with of the increasing maturities. this balance of execution our of also goals on our maturity our by while debt

maturity priorities. long-term strategic an new Our our profile liquidity to us excellent ample in puts our with position coupled pursue

Now unrealistic macroeconomic full XXXX, seasonality for for current combined uncertainty the this business, is us the it year. time a at moving provide to second in our specific with guidance typical to given half

planning However, for high result. this insight as thinking I some business would about to year are the like how level we're what and as a to we provide

business to generate a PM/FM mid-single-digit and the well expected XXXX. growth revenue revenue to we recurring in to positioned Our stability low environment is current provide in

throughout of more XXXX anticipate sequential improvements and We In improvement the brokerage Capital the of the half course the brokerage brokerage, XXXX. of remain environment similar occupier trends during clarity in of we to many QX the with to strength timing factors declines in do year-over-year path price and decision-making. of the anticipate on challenging year first on depending discovery with including these Markets the

In Capital declines. will addition, Market be we expect that declines less than pronounced Leasing

expectations We the an as market clarity will on improves. in our update provide

in are costs vary at by specifically reminder, but about to incremental and Cost PM/FM. expect our profiles margins margins generally a average of and service XX% XX% roughly on semi-variable Looking in XX% XX% of decremental fixed. XX% roughly of variable, line, XX% we of would to as XX% brokerage costs, of

during reverse declines recovers. As will which will result a overall result, brokerage anticipated margin in the pressure, as brokerage in XXXX

teams our our to As in quarter stated on identified XXXX, back efficiencies. call operating earnings the third of drive actions specific half further

of We have in $XX on begun and these anticipate already executing initiatives achieving cost million savings XXXX.

fixed and our these any to expect than We savings semi-variable cost offset cost inflation more base. in

contraction margin to it's completely strong the they position maintain grow the not as offset to in temporary share However, decline, believe will from we anticipated recovery. the a brokerage revenue important

brokerage expect as more that similar year, to XXXX. our relates back-end Given what half in these of the revenue, to expectations weighted the the be phasing year, contribution it we second particularly experienced of for will to EBITDA we the

In summary, with the I'd you like following. to leave

short experiencing over and scenario currently real estate fundamentals in We've rigorous management are focus discipline we approach continues the macroeconomic term developed long-term Although that and XXXX. headwinds, remained a cost planning and years to strong. commercial

active through in finally, management, actions are both brokerage continued our And growth in we recovery balance cost position for businesses. the of strategic and investments, recurring targeted a in and sheet revenue the strength, anticipated

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

Operator

comes Our first Paolone Anthony question Instructions] with [Operator Please ahead. JPMorgan. from go

Anthony Paolone

in slide just to guess, half. around first I deck understand first comments the the in the you. hi. Yes, question, Thank declines brokerage want

if down, I markets like XX%. so think fourth I the was about capital think And quarter

So will half what in of of be that your down take magnitude? same the 'XX we order guess terms of should of view as for And Leasing. also I first

Neil Johnston

at that's and year, done for for through sort well. second the this quarter, sort difficult but range half. very planning, and and that first we the a Tony as happen planning planned going what's range sure. Markets point for of that the this scenario to to as looked point, have Leasing of even Capital We're project at at we believe Yes,

year. to we expecting the improve are improvements half the and each back We of sequential that in so especially quarter expect

Anthony Paolone

for X% growth. then did PM/FM, you And Okay.

I the you business. said mid-single know fourth that you and in digits, have --I a low large think quarter janitorial is

how was of is wondering that break down that it And number working? so wondering out bit that the a just that kind of I in trends if ballpark could that you core or sort in just embedded growth janitorial bringing same within the are is

John Forrester

short John. bucket of the each specific difference What sector between real service this very XXXX. I of make the as in seen that strong look term Tony, is that Yes, a is up whole, at the Hi. no is -- PM/FM there that lines revenue. a dynamics we've

in prepared of that in said contracts year brought had the I've really very we the remarks, some large outstanding a As we on.

growth last you think period a opposed as years So of being business to that a therefore, more guide, I about driving three two of say of to over year that type average one, that by again. contracts blowout a followed integrated not because we and they then that's get see year a through come muted more sales how go business we on, the cycle

growing a us But particularly which ultimately, pipeline, very very, makes continued in a good is our component to growth. very year-over-year business, strong the feel substantially outsourcing about

Anthony Paolone

I have one Okay. on. I ask think we last Thanks. one, can If Kevin since

space footprints? the once office of out Just for rates vacancy and any market into on world new leases where cycled are ultimately view settle sort of should uses through people's kind dialed

Kevin Thorpe

I'll lay Yes, sure. Appreciate of a forecast. the points. question. And couple out I guess the

it's was outlook, positive of U.S. office that We I absorption float of stabilize. to territory last -- was important year. the office So it year thinking first half the beginning really last the sort net and just to think the demand I just think focus -- on about sector, in in start U.S. recognize with to

space. it And Return in starting absorb the was that stronger to seeing was remote green not are but again shoots duration of track pre-pandemic to all or demand trending fact, back third trending we normalize higher, -- to we a even higher levels. work, markets for space these we're with track starting lease office what to pre-pandemic

that. for baseline, mild now, are reestablish year, eventually this of started green confirming recession. high, mild shoots my were space thesis job, a look to we itself So relationship a and that has But sort anticipating would job into high, to when of right, perspective, demand we're our risks the the these do kind -- growth from potentially recession

And a playbook across of spots It's and the the just do with businesses cut sort periods that headcount cost ways recession actually this typically will in for cycle. more sector trend look example, certainly it tech to during that's be happened board. like the but get that seeing this for space, in in will efficient

I think to that's really say. hard

I the started really that already and that a space more since may noting think with lot into if not job significant mild is recession translated efficient it businesses pandemic have losses. mild truly gotten our worth the

in that And I remarks think demand somewhat we also prepared for right. inelastic, the mentioned space and

businesses So expiring next leases significant number need there and leasing regular their we're as years. tracking the and over churn of couple space business always to what a operate is a of in

trending that and baseline So the point the then U.S., from through for recession to that have XX.X% XX% at outlook stabilizing forward. lower office vacancy in we and trending

Anthony Paolone

Great. Thanks that. for

Operator

comes with ahead. go Please Sachs. question next Goldman Luthra Our from Chandni

Chandni Luthra

this areas for in Thank targeting? What actions the that's Chandni million like are about taking my that you that there? to about be is the you to briefly. are what Luthra you're Hi, impacted these from the most talk with are segments talked savings the I'd Goldman. going cost actions? question. $XX What And temporary

Neil Johnston

of efficiency. majority they Sure, permanent around costs are costs Chandni. those focused The and

So rather a taking journey. we strong stay very, three doing Remember, to been to just or than and has that just this official drive cost, year randomly by we've temporary journey continue been our going business cuts efficiency. up very and make in the sure focused

all continuation it this that is really spans costs of so just geographies. a and And and all

John Forrester

going Well, cut business of one of in on business. focused growth course, falls out a And on course, are transactions, through cost side, that's to business, it volume the decrement light you Interestingly, very like very, into if add, low is going for you'd thing to all your organizations services savings actually try cost revenue I'd us of be diversified part is is brokerage cost will the the intuitively, all taking with Chandni, case that substantial drive the a infrastructure period. be that model. very to have the of cover hard actually you'd to the which driving of

the we key service do and us on we own stripping and out coming that from class allow for work in focus workforce. suppliers maintain So is inflation say ensure through ourselves world to our that's that to a the

So come that out. will

prepared recovery because all believe for said fundamentals I've strong we absolutely place in in do a firing are As cylinders, on point. at some the the remarks,

Chandni Luthra

And think I'd in going do leverage target there And Is track? we follow expense in within that about to think a like little bit. some XXXX? think leverage cadence that Where your Could about going leverage loan. a follow-up, as you it. about interest should your think about? you do of to portion a your to as discuss then we recently Got you up, be should a is obviously how talk How term amended you XXXX?

Neil Johnston

Sure.

let leverage, just our me If a little look remains bit. long-term unpack Chandni, target that we at intact. So

range. times leverage over to to be in the year two Our long run three ended X.X at We the times. that is

So, well within that range.

temporarily much liquidity. decline an important EBITDA, But 'XX into is more Going with I up. see in think will you expected move what's that leverage

over and feel we We very have are standpoint. liquidity $X.X strong position billion leverage We from a both in of like liquidity.

$X.X B In terms we've of came the year, had extending unique into X.X just 'XX. the as a opportunity -- the in we we expiring term got billion loan term B, a loan market that's saw we in the

lot do we the move paper. time. our of saw for we So coming in saw year, a and But we have into demand spreads

just was there very to give successful just we a a out to sheet, had $X our we sheet really very strengthen overall. where goal space out balance balance really to maturities XXXX. so and The transaction pushed us our flexible And billion

XX very of that points. increase rate was terms from interest cost, In the small basis

less So million. than $X

effective in itself. very So terms cost the transaction it of was

go up a the reduce XX% However, I fixed, in increasing. slightly we of is rate that SOFR But would that on debt of because will interest of net basis remind XXXX our you just floating so about see impact debt moving. does

Chandni Luthra

Thank Excellent. you.

Operator

Sheldon go Stephen from Blair. Please comes question next Our ahead. William with

Patrick McIlwee

McIlwee This Hi. Stephen. Pat for is on

PM/FM to and building baked pretty it. quarter for follow-up It John's question But conservatism a going sounds like Anthony's understand were there? environment. business strong to given what pretty is there So, unique some response that the it's well the factors business that a after in as considering everything Or a was when in what operating and year and here? guidance, you is

John Forrester

a question. actually we for something Thanks It's the think that lot. about

comes in a We of are growth and contract PM/FM our based through nature get given is like on the lot wins a in particularly -- in this. changes business by guidance, environment conservative And year. the that

about So our sitting here business. got very and a ability strong we've pipeline, in retain to yes, good January, we win feel

rate here make success renewal retention of points basis XXX the basis or will XXX there. that to ultimately, the But within points and difference

based time on the we've we that because we positive at and guidance take But very do availability be So they of to will that contracts we More share. it's boarded. market given, than a feel achieve. continue the when will given on are

renewal idea, a Just to as long pursuit the markets, bid you an particular give be the contract outsourcing global of can months. or in out XX as

timeline we potentially really as a up and shorter end bidding contracts as today others until show are show that QX. revenue much as XXXX, up could So the soon of won't on on back

So that's number of give caution to guidance year. we financial will really the that at where the beginning just

Patrick McIlwee

talk leasing anything is And can bit you office returning for PM/FM both in share your about work more Can higher how both one Okay. a in and And future of a at term hybrid that those office exposure kind looks the you trends impacts outlook Thank business level, also -- nature. just business? on in to lines? in properties your to plateau of you. the to bit or there seem longer as a

John Forrester

seeing the market talk is also the PM/FM I'll show more a proportion the our with derived the ever about office sector pass within I'll peers how the of on as up transactions typical and this organization, think from activity right our platform of Kevin, revenues I within ready whole. is business. across over to have regards who'll to. office data What to has and Happy we're from they

classes as other has growing. asset the been to now have primarily been compared of size the Pre-pandemic falling

But they've just from still gone very to over revenues reported, XX% So last so. the office. XX actually a majority are below over small or in months our as XX% strong

that though And growth we may fall well to see revenues been successful We've as see derived we continue we to taking our market in office over time. expect in proportion, even and teams maturing in very high still growing have markets are ability opportunities quality underrepresented. penetrate teams in who and to build win. grow and we we where their offices are to share, And

So time, guide secular will office a less of that but large ultimately particularly I over our growth. multifamily and the would just remain as anchor the very fundamentally become part portfolio, industrial their long-term continue on

you have Kevin, return office about utilization? the actually the to got any observations and

Kevin Thorpe

Yes.

to So, last if this the office we surge, January back XX% given during were on is kind at workers of any of go Omicron year, of roughly day. the

to hovering earlier, X mentioned I And do indicates just back that at XX%. we'll office you sure the million was more closer a again. people I'm if in on time to given get math year XX%. I back pre-pandemic there that day point that, the The of any norm to not ago. the ever think same envelope U.S. the that roughly that's on versus back is now closer

attendance with pandemic do recovery. to office in-person attendance, think their stating office regularly. seeing people important with do And office more to back to are a drift the we potentially higher. imminent seemingly continue recession, to in the that's But more desire expect have I I companies the the

I assume we XX% we'll teamwork need if than particular, that's ultimately maximum peak for And there think the office is in needs for and you number for to be to the when just we the so more XX% the going to going say day. if and the that demand forth, even communication given space. space is drive And the still in of as have business add, office when office just in new accommodate any on employees for just is norm, days

higher continuing in do so concentrated leasing the that the segment which more means be to point have also end occupier the decade, question. just market. going office right. occupied through And, quality space of Hopefully pie the space, of it's this answers At just the grows, to your grow of amount we

Patrick McIlwee

thanks, Yes, definitely, Thanks, John. and it's helpful. very Kevin,

Operator

Michael Your go Griffin with next question from ahead. Please Citi. comes

Michael Griffin

of Great, to asset more estate non-traditional real thanks. Maybe classes. switching those

to exposure got lab/office. You've I of think

know favorably positive expect pie? in the your secular the past. in across about in the I how a helpful. trends much then you're term logistics, business to mean, think you've talked I any near segments, the sort data expecting of grow do as would I you existing growth And percentage be about this centers commentary of

John Forrester

going I'm from sectors this to make a seeing more activity data specifically. of level we are And again, bringing office. I'd think probably Okay. the with to toggle the potentially Kevin, I hand comments, you'll of have couple in

been I in the tech few think utilization by particularly are of there. there's a seeing layoffs lot we the said written and the last weeks and office about sector that

them impact working been been that engine sector particularly on seen has there's the I've high offices, career, market. we've of of And then has last the What was investment the driving afraid, what technology, a the It big globally, a driver. XX what's very GFC XXXX, long over banking has was there driven office the very growth engine in Millennium services, that office lot market. of always I would the and after say is became financial of just seen driven then throughout, course, and services through professional quality particularly before office years proportion the uptake I'm driving being just that of large

engine. And now a we're being of actually the been the use growth what There's diversification seeing growth engine. always is

is which last would lot ultimately in datacenters, life that mile like So or prior the have accommodation absorption seeing sciences cycles. classes logistics, alternative we're the ultimately offices a in been of

the this a they're our in XX% fast the these to increase you from going be of as And in place strong growth life the get an growth of markets, idea engine technology. year sciences if take can with same revenue revenues of our and growth of you year-over-year, markets taking rate

because positive accurate about ever probably office to now, as some whole far has he's demand I'll drivers pass of always a feel got still sector muted over relatively the within overall, So some data. Kevin we and some been more more as that. growing becoming

Kevin Thorpe

Yes, sure.

think might I be helpful. So data points that couple of

So office. first just on quality high

over there pandemic highest space. absorption space So what really in highest States in since built, million quality has XX% is prime as actually think than feet I sustainability United this square qualifies that less U.S. started of product. inventory in the is the been terms absorbed segment, interesting quality location, -- the office positive newly stock of And the in of in the XXX features, the

you relevancy the sort to of what up reposition just curves. if opportunity that, office move a think So about make massive assets them

been in would would I So that's Industrial any globally. say say far demand that that slowdown logistics, trends no office. there's evidence and there's so I

do So in QX, quarter in mentioned in actually X.X%. vacancy the in under forth. absorption and very have same and the U.S., of Canada. recession as strong very In rate a the was eye keep very think vacancy be remarks, demand Canada, of so close the absorption, drivers, on state a his the we Neil e-commerce, to vacancy X% record mindful EMEA, I low of consumer low in

mile as more products But the are online. U.S. grow sort Demand push over as to continue will and the tailwinds e-commerce shop the the get of to long logistics, to remain globally for space term for people possible. the people as will quickly very time last strong given in industrial fierce,

continue to grow. spending will So the pie consumer

our So there's on reasons and to longer-term be certainly of industrial clients. logistics bullish lot a investor,

Our the even grow. people lowest Vacancy been XX retail. as to economic is for in Multifamily a There's strong downturn. a is retail. of retail regardless and in XX, we need is very rent experience strong another continue household fundamentals sort place investors an going to maybe an is it's formation only growth live darling to for there of demand cyclicality as very go years, is been into still has surprise. in There pent-up

by the the And States globally. drivers for Multifamily way is number And growing. and growing cyclical United datacenters sector. and asset class you very consumption how quickly the very now one that's data the in strong rest about clearly that think demand

the very fundamentals all. yes, long and tailwinds for the and property term So confident in

Michael Griffin

highest A the Kevin, stock. let's XX% And of that those Class -- quality on kind call buildings trophy

You mentioned expectations. the vacancy

for a that XX% and highest what for of maybe the declining end year next Do to year, is the overall of think this I market? you the have XX% market. that sense going for

Kevin Thorpe

half. About

that. isolate of So newly Vacancy if all how prime in built prime, we you the -- and product of look and key than features cities is the lower XX% at, define some key than that it's built sustainably some and that XX% for is in markets. prime -- the office. Manhattan, lower if the somewhere what other newly example, -- features between you of

Michael Griffin

just no sort Got But the you your outlook on anticipation remarks, in you. recession around at additional thoughts toward around one, you this rates there your that's probably where mentioned helpful. for then be peaking this last any see prepared just sort for geared back some one's Kevin, I'm you, best of inflation might some 'XX, think of point, year, expectations And wondering maybe, of or at would half this macroeconomic point one I surprise. the maybe a have maybe getting commentary year, general

Kevin Thorpe

Yes, sure.

difficult we're in time, and forecasting just right would lots I a showed uncertainty. very heightened of have very unknowns, situation think to any forecast preface, So fluid, is the now,

confidence mild recession yield and indicators much inverted, Our suddenly other baseline a pointing studying curve firmly which down, to and just to high very for am that. still that is I the the inflation does point you indicators remains mentioned that, call are

year both of good to X% of year the news States Europe, inflation was now in around, have there terms X.X% inflation, And the is at peaked. CPI on U.S. and year-over in was it It latest was United nose. the lower to I headline the think the So that trended January. last appears in June inflation in

the heading wage wage that there. the still pressures direction, pressure we So in -- right is have but

I for to markets is cool off inflation take going and to so do very labor do difficult we back to think see time. target going And that get until the be it's

the -- So inflation in finishing have CPI U.S. end lower do trending of towards we we have and X% range. this X.X% to that's year, the

the have it settling yield means for this that it then treasury X.X% the what we in to And as we we XX in hovering in X.X% model that. at next U.S. for X.X% the months as the beyond year have and XX range

over strong this. Our would to year, will pretty that into expectation of because this will confidence in growth in recession QX resume of underlying and the going is that fundamentals in that be the point good XXXX, a

balance are as strong potential sheets into shape, strongest recession, household the Some the all seen we ever in I've commonly fundamentals a things enter savings. cited, are excellent of FX

problem, I we XXXX Fed the early then economy the get pivot So lowering the and start will should inflation we pass think rates, to think rebound. I do see when once in that's to

Michael Griffin

you. it Really me. from Got That's appreciate it. Thanks.

Operator

Our Suisse. Harter go Credit with ahead. next question comes Doug from Please

Unidentified Analyst

of how had buyers guys market Doug perform on in have markets there that in Will for sort in just tonight. early the might the give any any coming conversations year? the it's are We're just with real signs or conversations, of curious early you confidence sellers you Hi,

John Forrester

at aimed question Market that is Will, Capital the side?

Unidentified Analyst

Yes.

John Forrester

Okay.

there to times very a what our all I geographies level these transparent activity investors. dry all markets as there year very so significant become seen positivity in is acquisitions. markets, that powder. levels and sectors many of think all far clear calls, from on remarkable from be across sales and in has mentioned But will of actually amount and It is seems capital a of view There the that we've peers. been both fundamentals be high this

fundamental capital -- the remaining the largest we're been and of to in months, extremely whether ready of that of the what conversation of ultimately last scale. Kevin But I strong, very I've in as for us by of couple later really mentioned. basis. world client half investors the year, large a So deploy around the very is remains seeing sort in client the markets on remain point many which doesn't large global on deploy later outcomes potentially a of And it's matter even depending when, this the back that opportunity a

Unidentified Analyst

Thanks. Great. Okay.

Operator

Morgan Stanley. [Operator with question from Kamdem Instructions] ahead. Please Our go next comes Ronald

Ronald Kamdem

just Hi, ones. quick two

here. to So some connect just trying dots

So looking and to the and for your I for that think expected would FM, mid-single-digits. FM think in low I revenue also heard. heard incremental the and PM be the at what I guidance the I decremental that's margins earlier comments PM But

think that I'm guess if is or see or guidance, number, obviously, adjusted as just is thinking flattish PM/FM supposed my how I even just to we flows how sort about of a giving about sort Thanks. EBITDA that through? negative that So without question should of that we maybe -- are

Neil Johnston

we to on incrementals Yes. see not clear, -- in very talking decremental do we about be side. just were the And services

the providing first go margin we of mix guidance to as on as giving the is half brokerage XX% we revenue, XX% that especially will declines as change our expected in just services as range. contribution through We're contrast just So grow the business year. in and see the the to decrementals the

do EBITDA growth business. the in in we clear, very So expect services

Ronald Kamdem

it. Got

for similar and revenue line EBITDA fair? PM So on of sort the FM the the sort line, that basically that growth is as of

Neil Johnston

Yes, that's fair.

Ronald Kamdem

cash operating how that have does terms remind and how question flow whatever does But my in is rate or you that Thanks. follow -- guess up just we going capture of flow that What would how impact? 'XX you changing second number, I my flow, trying free historically? then And cash think in the to a been forward? then 'XX prefer. should adjusted about maybe EBITDA from cash rate conversion to sort just, And question, us Excellent. can sort of of

Neil Johnston

Sure. Yes.

conversion, flow said flow to term EBITDA. conversion I'm we've And referring As our adjusted before, when I free say conversion free cash from rate. cash long

target XX%. it's it's That from conversion XX% our rate from to EBITDA. So earnings, not is

strength a that cash long that really the we so first XX% XX% the What during to we see weakness over half the has the range as last especially we -- over year look over at two said, we that guide weakness/strength. As to the where cycle. flow guidance years, changes is in a cycle, look as given we give to mid as saw

So it's over multiple period. a year

historically the and years, two at last back look look we If we 'XX. 'XX at

right guidance you gave with in XX%, last was around we the year. cash slightly below look earlier As that it free line conversion, at that flow XX% but

to And 'XX, we ranges the to the grow the look then to lower as of that conversion high and those we'd the weaker see expect year into margin be that we'll at expect cycle. in brokerage given over at half we fact first then

Ronald Kamdem

you. That's Great. Thank Super helpful. it for me.

Neil Johnston

Right.

Operator

concludes the question-and-answer closing I over This to turn to conference John like back our for Forrester session. would remarks. any

John Forrester

results. our joining for to our everybody today call to full-year hear Thanks XXXX

going we to As said, and strong long is positioned another industry industry a we term which that one very strong. challenging well believe XXXX remains and was our of are within despite and our for year, be it the position weather fundamentals but year, challenges we

periods like end complex As and a by out markets We in volatility up always we're the this. that energized the market taking provide opportunity in environment. company, and coming share macro stronger

drive scale continue us opportunity the the good of platform So to the into outsized diversified our to and organization, returns. grow about lean strategy the benefit very of makes feel

for next time. So speak thank all you to you joining and

Operator

The Thank for conference has attending you now concluded. today's presentation.

You may disconnect. now

Cushman & Wakefield (CWK) 23 Feb 232022 Q4 Earnings call transcript