CWK - Earnings call 4 2023 | Cushman & Wakefield plc

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Cushman & Wakefield Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce Megan McGrath, Head of Investor Relations for Cushman & Wakefield. Ms. McGrath, you may begin the conference.

Megan McGrath

Thank you, and welcome to Cushman & Wakefield's Fourth Quarter 2023 Earnings Conference Call. a announcing issued for financial we period. the today, press our release results Earlier with can the today's our along on release, This presentation, website presentation, cautionary ir.cushmanwakefield.com. Please forward-looking our statements. Investor be at turn in to page labeled note Relations on found events. forward-looking future presentation estimates contains current and based statements Today's our on forecasts of These statements only, estimates results actual should and be considered materially. may differ

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

note to otherwise currency, please growth unless throughout periods and in comparisons rates the local Also, stated. are the of that presentation, comparable XXXX and

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

Michelle MacKay

Thank my just looked of & change aspect this our in the you, third of business. at of to given CEO earnings since the It's Megan. Cushman believe then, we've CEO of year. Since pace became Wakefield as is every hard I last call July

for and and updated our will the first up process quarter. data reducing growth. in X make plans using all for of around and have since and this future actions plan which with the took begin to us We out leverage refinancing And year, IPO toward long-term deleveraging we we transactions time XXXX, decisions tough to last capital we're mapped allocation, our later spending strategic the set

we and strides to done. and and period in the urgency come executing last from never speed cash with a of not this $XXX million time, XXXX. We $XXX EBITDA business in the stop short continuing forward, settling, breakeven now. operating that haven't And made generated number XXXX the essentially million flow our drive far in results. and of see with rigor, to We adjusted made impact a up changes can of free we're extraordinary year You in we've

create we market internally are working with financial clients our to our inevitably momentum both to the flexibility and capitalize we rebounds. day, Every and when that are improve poised to position and so

to all grew our and due APAC. We've industrial large U.S. of some office In and reported leasing in to year-over-year started see deals the green in revenue X growth quarter, Europe regions fourth strength already in shoots. and in the

businesses at of X% strategy level a growing in we're on the services Our entering before, I've XXXX. in as both last work and growth. on services strengthening growth are focus this with thanks satisfied we we remained revenues double-digit year, of But top better to But our XXXX with not detailed resilient, businesses XXXX growth a mentioned long-term completed understanding each and profitability. of clear of

on our Now XXXX. asking view people been about have

markets. capital with start me Let

not the As important, a also long-time it's the know I real it's matters curve. level absolute estate what but of that only shape interest rates investor, the yield although of is matter,

happen and normalizing. later the we curve help to pathway expect providing the more that law. to cut to which seems Fed today, we are rates, begins the this lend borrow inverted to hesitant With Once likely people have comfortable should X-, process market. people yield a taking a active more risk, a and curve of about to XX-year XX- begin This get year,

than time. some the this markets initial we activity year, we while later in have restarting And in rates capital a feel we moderate of anticipate interest to do reduction closer

accretive, even cuts, So is pursue. before for there Fed opportunities to us the profitable

Wakefield. in investments. for for raised waiting about & real roughly distress, deploy. Every billion to dry week, being more opportunity we Cushman estate funds of $XXX market is even powder in There hear the there's And

helps or new Our distressed assets. and estate team clients potentially address stressed our real optimization monitor, evaluate,

on moving leasing. to Now

of level this globally. segment in a space feet implementing solid stable even office many hybrid occupied growth work, with expect to square XX.X And We of there's XXXX, by billion lease modest expirations. in companies supported

opportunities to disciplined services to accretive see our focused scale we growth. finally, organically businesses, and And expand and significant on strategy. client-centric thanks our We remain global

won financial looking services chose which global thoughtful specifically long-term create why For partner recently They contract them, solutions biggest innovative with a example, the Cushman. provider a a for to for execute we and large weren't for but is help services company. they designed

to won poised recent another our meaningful to situations. Through RFP. never create initiatives, flow, the client-facing our We and cost growth. and the strengthening our and in balance And our enhancing structure, on to our to as commitment returns market are we to deal cash streamlining our ability went relationships handle reputation, our sheet win, complicated value

them. this We we don't run as away in in market, seen brave challenges people out and of advice. & the lean market will Wakefield our often never thinking into run our proudly because we to others, settle. decision-making biggest Cushman challenger today's challenges, scrappy clients' The We're from

I'll over Neil. call to that, hand with the And

Neil Johnston

afternoon, and Thank you, everyone. good Michelle,

flow environment macro strength the prudently well our proactively enhanced working XXXX for market a balance which sheet in challenging, free . While better flexibility, through efficiency, us improved position capital persistently and recovery. conversion cash of was our and costs cut we all

revenue to last For billion, up continue X.X%, change half change of decrease to contract first quarter. year. the impact the the fee year, headwind revenue in to million $XX quarter, impact discussed $X.X This was we will but X% fee EBITDA. up the X% no a roughly from fourth revenue the excluding resulting a was PM/FM prior or

each markets improved regions. continue Capital versus quarter be to the we X% we transactional as interest have results first declined XXXX volatility fourth grew revenues rate result by in Leasing reported impacted positive since revenue XX% segment in uncertainty. reported Markets year, the our this as in quarter of and prior saw third

$X.XX, EBITDA million $XXX down prior improvement the $X quarter our share for was commitment down other cost to down and Adjusted from year-over-year, revenue, Despite flat Adjusted in $X.XX Valuation year. the the per earnings the X%, decline reflecting prior was sequential our EBITDA fourth the in of margin was essentially quarter XX.X% the year-over-year million, adjusted discipline. from trend. was year. a for

we the a XX% decline capital leasing for Americas, Turning brokerage quarter. our and down year-over-year the X%. with saw to revenue revenue revenues markets up segment In XX% results in

encouraged and are large the increased fourth number deals. of leasing industrial office we an performance by executed in as quarter successfully We

PM/FM our or significant increased of as with X% attributable the million Americas prior the of FHA contract year, change. revenue or million X.X%, million volumes joint EBITDA excluding XX% remained adjusted versus decline venture the quarter. pressure $XX impact the to Greystone in Americas declined under of $XXX $XX

to in long-term multifamily the that in in believe are we this compelling, stabilize XXXX. to business continue market and fundamentals expect We results

declined basis as well primarily well capital EBITDA with as to with as XX% XXX to revenues margins down due with up leasing our lower focus brokerage management XX% adjusted revenue on discipline. activity X% in budgets in grew the down XX%, particular and in quarter, growth. driven the the Adjusted driving reduced PM/FM CapEx revenue project was reflecting EMEA mix strength U.K. change EMEA EBITDA tight markets in XX% by cost points, profitable as leasing higher-margin up

as and down XX% with quarter. all facilities by Asia Our up India. APAC other Southeast and X% leasing solid was PM/FM and growth X%, strong project X% and revenue Markets well Capital performed management property, and grew reported in region in driven Valuation up another quarter the

results. full our year Now turning to

strong a markets by year For for we prior of property $X.X generated Partially valuation Capital full the XX%, year, revenue growth and over year. facilities management XX% XX% was leasing the billion, X% fee revenue supported declined these declines, was and down decrease XXXX, PM/FM the other and XX%. full down offsetting grew management. in

a million, adjusted XX% was with EBITDA EBITDA Adjusted We share earnings decrease $XXX the achieved year per from of adjusted X.X%. margins of XXXX for $X.XX.

free full flow compared use free with I $XXX of a and $X generation. of million expect to this significant cash our It in am global to team's effort begin efficiency the very Turning and repayments We year flow. results. to debt functional strong took cooperation for deleveraging We cash flow to committed cash to working capital and quarter. cost generated work proud deliver our remain XXXX. these of later cash million increase a improve

sheet is balance Our secure.

Following our to cash which we in quarter, the of loan interest is X.Xx, significant the $X.X was million $XXX refinancings available credit of facility. in million on with rate. XXXX, due on had the of fixed had XX% currently outside on our revolving our We leverage of hand. of our At expect XXXX, billion we until XXXX, liquidity, debt our no consisting of outstanding no have borrowings cash funded billion into end X on and we hand account repay rate $XXX hedges, maturity net $X.X our turn and revolver, taking

outlook. our to on moving Finally,

as growth improvement in slight For quarter, we year-over-year brokerage profitable we trends driving and revenue flat on a first services relatively that to modest revenue the be in sequential focus business. growth expect with

improvement first quarter are in cost achieve offset EBITDA year-over-year last cost expected to expect We increases. year's as a than to slight more actions

are improve guidance thinking to We year. XXXX. providing and do We expect on you are today, the not full but for in throughout I'd currently trends markets year some about tailwinds color the we how give headwinds capital like to

However, before rate more when conducive we a second environment. occur sustained of interest anticipate growth the is unlikely to half year this

relatively rate leasing We our stable to at similar year grow services to and business the be for XXXX. market expect the to for a

on higher side, cost positioning driven well we company by as normal pressure market in incentive growth. inflation some XXXX, the as cost we On focus as for the anticipate comp

will headwinds mostly be our cost initiatives. offset these by efficiency expect We cost

we in year XXXX, free significantly flow, momentum. balance and ending cash the the with conclusion, positive In solidified sheet improved

growth growth, capital We are once financially consistent market well positioned improvements further structure and margin for enhancements returns.

to with And over Michael. the call I'll back that, turn

Michelle MacKay

that the transformational future and see unlocking Cushman's be the writing Thanks, term, discipline meaningful the of execute foundation, of our our for history us year capital in year as maintain to the another continue XXX-plus years long century. building drive value our company. allocation begin will we was opportunities in to XXXX focus next Neil. growth we for XXXX on our story strengthened on

operator the take I'll the to turn Now over questions. to your call Operator?

Operator

Instructions] comes [Operator Anthony question first JPMorgan. with Paolone from Today's

Anthony Paolone

my guess one. I first

Because when what about I'm understand is revenue here your that trying kind services to rolls where fee picture wanted Just outlook? is to like guess clarify, given of up the X in you what I to all talk just bullets in included 'XX the revenue, Neil, just bucket? I

Neil Johnston

Tony. Sure,

the project facilities janitorial; X management; facilities property then which project business, the management, CWS is management. which then our more and management. And will essentially finally, in include areas: So management

If we management which certainly, project But quarter. Management hoc more property really the the ad budgets were 'XX, the CapEx year, property management, we saw got management think during was Facilities decline, the especially about as in fourth it was declined. and where strong. it constrained

quarter, XXXX, focused accretive on in look we growth. are we hyper first As to the particularly long-term

profitability over and contracts, look service are are we long we historically really long our how which the the at focused we if so is And what term run. improve on recurring,

remains So for services a focus us. key area

on are service. high-quality, We differentiated focused delivering

And move that growth do the so strong into margin the is the the lead as year XXXX. and of what may through in back we year half accretive but pressure ultimately to early certainly

Anthony Paolone

I you'll be flat, sensitivity offset, you've that what sort fairly if maybe even put if cost down top headwinds, a try to be I outlook little trying mean you're take of in flattish the Just But bit? line, get margins. the the of running that to to noting just we out a on will some to take here should margins

Neil Johnston

Sure.

we've see halves. lot margin how we back. margins, think year if the to So into got X on brokerage at of the we coming break depend I will a Obviously, look

really brokerage come will see when that's back, As we see the we margin when we accretion. know,

specifically we that quarter, the we drive year, our we points what approximately look of to see if If reverse benefit be a the expect net XXX about we 'XX margin to first benefit quarter savings. of cost to expect full 'XX some to able basis in we do of as action. first net And cost lap that as then improvement we think the

the but well Taking at cost will we brokerage the our on did the longer-term on margin comes a has work side set of speed depend view, that us in back, 'XX the recovery. for look up when accretion

Operator

question next Kamdem Stanley. Ronald Morgan with The from comes

Ronald Kamdem

XXXX, just was into second some And thinking provide thinking a of just that. of guys on flow we're in can if So half, breakdown, first thinking how a view? you the about I sort about conversion. your Maybe about guess XXXX how closed flow it's the are question you going you're first cash my conversion as half cash curious out how context even

Neil Johnston

Ron. Absolutely, Sure.

in pleased the certainly able So to with the as our I capital into be that on exceptionally cash said drive teams to were 'XX that free we most well to use call, flow has XXXX. us as in work And accretive the positioned go we did that manner.

from it And in Several capital what the release contributors we capital, it positive was the primarily as at half slowed. natural capital. look drove was of outcome, about business the working were factors but working working if of the

and The other really our driven by was initiatives. half internal focus

So a strengthened. as we of not which expect to initiatives, And good natural were already 'XX. the through especially -- XXXX, put of focus that place as to free is back flow the priority, into sheet us can we on see those in continue start cash in we we release those in look It business very we it's saw year. level as expect our same the do I as fact, 'XX shoots seeing to conversion. us you high use will but half in drive growth, to a green balance the

Ronald Kamdem

outlook, was to the back super helpful. going then And XQ just which

slight a EBITDA. increase adjusted sort of talked You in about

basis the I roll a the of if year. that basically we mind about there because the compared like half be margin points think thinking EBITDA, sort the half should Like be is XXX thinking last be presumably, back be could margin I forward, flat, of we coming roll little for what depending and we should up. forward the outlook, of EBITDA the could about recovery right, comp sounds on the gains it on year, trajectory you versus how slightly we EBITDA in guess of year-over-year mentioned keeping some as to sort back 'XX? bit, year. of sort in But

Neil Johnston

Yes.

the is the you're think We'll the on that really leave on side, we're costs. I to not cost the how full providing side, asking question assumptions about Ron, and thinking We're revenue think, you. I'll make I guidance.

full for headwinds are balancing as we some But tailwinds. we the some the costs about think year, and

incentive And see with first inflation, year. will facing some come are performance addition, improves. the we as As half our back the particularly most companies, comp certainly in of some we in of

offset offset the our So cost but the our look of what mostly year. all the that completely. in we means is we as we year, But of certainly half increases over will back will increases, first not

accretion on And in back extent of be in half timing recovery that driven so and the will margin brokerage, by the that. really depending

Operator

is Michael question from Citi. next with The Griffin

Michael Griffin

guess, a expectation, balance in. Neil, maybe get I just and sheet range But if kind above a the it's and the leverage. of question you're on historical it know to going EBITDA that that read still to looking it get on maybe metric to is take to level? this flat wrong, I for down leverage to be a year-over-year I comfortable basis. what's more the

Neil Johnston

very year. if we we a look, cash free Michael, think 'XX, flow had about strong

call, us So we 'XX. Leverage clearly will at debt at and on end that's given as the the priority. look I lot key repaying And a is the of flexibility we of said begin a quarter. optionality as

depend of the out down term that is timing pay exact to we is intent the XX $XXX Our recovery. will by on loan August million the that on But 'XX. see how

about We the optimistic are fairly year.

naturally as come see will leverage EBITDA down improves. so we And

was We remains We things: our X with but operate line we intact. that ended what And the X like driven Xx, long-run in year is by leverage target in and right debt to at guided to. would naturally X.Xx, EBITDA. to which

so see levels. like And we just place. leverage. comfortable a EBITDA, in we good see we're as at recovery that's very decline the feel really these Yes, that we in I'll where We add, in

Michael Griffin

the were results for seems particularly make about it. estate question decisions were better you around maybe more to just occupiers office like broader leasing are into effort these And real expectations the I in going concerted a fourth of a seeing leasing? mean, quarter then market. what It than

guess, making delayed side, decisions. in big are occupiers on still more we've that of large heard, the these kind mean, I REIT I

the anything first So lease, to that changed has the Or historical with relative to broker long time pretty assign there? the from interacting has is still levels?

Michelle MacKay

Michael, this is Michelle.

we've and the for that solid really strength Cushman you. driven of size Wakefield. lot more average a for did and you me driven a if been It we in look is performance unpack by And leasing it's larger, so by increase global for has that seeing those looking at been Let particular, larger office at Net-net, has transactions. XXXX, & in deals. seen, concentrated us, the deal are industrial office us

strength the in Europe, And saw call would out would particular, U.S., the we Northeast the out in in Midwest. in I I Tri-State, markets, the U.K. in APAC, India. And call the And

So we're feeling about in optimistic pretty leasing XXXX. going forward

question your about decisions. To occupiers making

really that decisions. I think that dealing A to Class type product has are and work those we the occupiers in are of the making occupier that of we kind performance because with driven tend

Operator

Steve Blair. comes [Operator from Instructions] question The Sheldon with next William

Patrick McIlwee

on You've got Pat today. McIlwee that

you're essentially for question. this be for if initiatives quarter rate into first at like to ask feel quantify at that to It areas of run wanted you're my heading sounds those there you'd rate efficiency. your an run point. at at I you're saving just appropriate any the additional cost So in initiatives if the you able and the impact Or looking targeted still still if XXXX? are

Neil Johnston

Yes.

we are cost our efficiency year comfortable standpoint. was the very when So set are base. really cost we where at we 'XX

target to take out was $XXX million. cost. achieved million Our of $XXX We

feel world teams achieved about cost proud we throughout savings. just of what what and in the achieving we So the did those very good

a good We place. pretty now are at

impact in markets. we happening in of growth our start obviously, sort on half on million, year. look we'll in primarily see the attention forward, we how the we're we $XX which now company the of what carryover have turning will So $XXX million about seeding depending as That of the first brokerage see a

we But we'll and pull, levers prudent to seeding we is continue but and good that there on discipline more same point, focus cost. at clearly our a turning not like be specific planning very continue. very XXXX. attention are time, At a we time that management growth. are Cost We'll this over cost at in can the are we initiatives any did always to we're

Patrick McIlwee

you then some some I it -- the you saw? the weakness that additional accelerated quickly, provide and of on specifically of exactly said what quarter. the color And or you bit services underlying driving can any is think just within PM/FM in fourth trends a

broadly. on what's Just going there

Neil Johnston

for make accounting If we we contract, year. our 'XX. win and 'XX services. are our in The large single $XX that the $XX in Services have line expectations about contract. changed performed you one a in million full to about we guidance and for million with right look where for is adjustment at which the That's

So if at revenue exclude is our contract, year, way which the or changes line change the but that just you we which business EBITDA with X% the for not right gross our grew really services guidance. our net is does the the profitability contract, of reflected in

and We similar expect look slight strong, it but those property was we 'XX. facilities the management at essentially, and well. we we performance where particularly growth where strong where saw management performed saw saw it, businesses we businesses, If services were project large a Asia have in in in management, and we very slowdown, Pacific,

side, I was business that long-term healthy the On a as at as what really more and in at very, very services say, EMEA. look to efficient, business management focus, drive look decline the making accretion. A certainly, the long-term project and we really drove in the

and growth we in in we of achieve to in level second quarter, continue we'll same achieved focus on 'XX profitability as the the and first 'XX. expect as So to look

Operator

And are like I'd we for turn showing time, closing back our to question-and-answer to remarks. further this the questions. Michelle concludes no MacKay call session. any At This

Michelle MacKay

you Thank on speaking in again today. call. look earnings you, quarter for you, We forward first operator, to our with and dialing everyone, thank

Operator

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

your lines. disconnect now may You

Cushman & Wakefield (CWK) 20 Feb 242023 Q4 Earnings call transcript