CWK - Earnings call transcript Q1 2024 | Cushman & Wakefield plc

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Operator

Good day, and welcome to the Cushman & Wakefield First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Megan McGrath, Head of Investor Relations. Please go ahead.

Megan McGrath

Thank you, and welcome to Cushman & Wakefield's First Quarter 2024 Earnings Conference Call. Earlier today, we issued a press release announcing our financial results for the period. on today's at be page ir.cushmanwakefield.com. Please presentation cautionary with Investor on in along labeled website Relations turn note release, presentation, found can our our This statements. forward-looking to the of forward-looking contains our and based Today's future presentation statements events. current on forecasts estimates These materially. considered may be should only, and statements results actual estimates differ

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

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

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

Michelle MacKay

with actions And can as in we thoughtful about we Megan. ourselves positioning you, the a you support recovery. quarter these XXXX, created In performance, way that Thank the our strong you frequently first for words results. took of from spoke see in

Since teams annual XXXX and have successfully our in as from step growth our last we as quarter optional our reducing another strengthen to loan, a prepayment businesses services of in month seized saw reported spoke, continue had We costs. in sheet, accretive alone we first balance well our away global the and the markets. wins transactions. continue improvements to services opportunities, our We've leasing of we repricing market as cash capital meaningful couple debt that less key interest term our last time including of

adjusted margin. an improvement maintaining while basis results discipline, of points these to XXX achieved leading we importantly, And more than EBITDA in cost

initial with our in big rates progressing later moderate in the the earnings I we in sometime a are expectations. is generally call, at picture, year that said year. Looking reduction On expecting last the line

made been our that that in was and budgeting onset the likely were and year, the decisions strategy remain view. cautious Our this view Fed accordance from has to with

Our in optimism for recovery are cycle. next the our we business thoughtful strong, a for the outlook this and position in and way continue to stage

Given a the couple share our accelerator minutes not relationship rate Fed but only overall, an how cuts we the to on we of our recent I'd the business, parts the like between avenue to rate the view business. cuts view in in improvements. volatility, increase take Fed for of rate of Because thoughts transactional certain the as

pipeline there provide some illustrating teams a armed rate Our strong these insights of deals when strategy. occurs defined stability, what results first a with clearly optimism, quarter is dynamics and solid into economic

We expect we that across platform several allows quarters. leasing move as classes do have asset regions a from particular to economic us global pockets for the will strength which to benefit of cycle, and ours, our the resiliency we positioned and capture as is through ourselves strength diverse to of continue past

transactions when from quarter, the continued markets solid business, reflected rate closing leasing the early more row. the the a in for saw the X% optimism quarter global on there side And in first we platform across in potential activity with of During up our capital part was the over Fed. revenues of second the cut a growth quarter QX in

confidence a experienced and are in Although will we pause rate pipelines gives sales solid global the likely in ready that QX are when engage time to is improvement volatility most that right. QX, recent uptick cause investors more transaction in the investment in the volumes us

interacting with paying reset our operating to connected a way management that the geographies. and first already in to way strategy approach and clarity I'm and The opportunities dividends pleased are and quarter given with our is which performance find execute we and continue the across clients. more our the teams our in segments the has cohesive company that

that, turn call Neil. I'll over With the to

Neil Johnston

you, guidance EBITDA first our and of expectations prior year. fee quarter and which results, up million, $X.X pleased revenue Thank exceeded of and good $XX versus our year with the were with adjusted prior XX% afternoon, We billion, Michelle, everyone. flat with

grew EBITDA from adjusted points basis we Adjusted revenue higher taken actions margin cost as from ago. loss XXX was Our the of well $X.XX a breakeven, quarter during for X.X% share as leasing an benefited XXXX. per earnings year savings as improvement the the

APAC. revenue We both By cost actions, Americas slightly due APAC Americas, due strong to in grew to expansion EMEA in while X% grew X% in X% the segment, the mix. saw and growth our declined margins fee EMEA in and contracted primarily XXXX margin leasing and in

Taking a look service service facilities we at change and and only the line to property, lines composition impact name our the in This historical renamed have our Services. no management X, service lines. of is Effective our had on results. January or project

Americas in with to QX in Beginning leasing we global growth. was leasing X%, stabilizing again with continued the up with brokerage, nature, quarter and experience trends business our revenue X% leasing leasing EMEA up reported XX% fourth XX%. growth APAC The up in

office strength time which the fourth quarter the a the in Americas, since saw we grew and subregions in first leasing In for each industrial midsized particular of of our XXXX.

the with all deal EMEA, region. classes The retail from major each Germany, came and of X/X up industrial growth of on quarter. XX% transacted office, in our leasing strength asset large we which growth in in accounted the In for remaining the a in of roughly that

supported and APAC, in durable data healthy growth centers. In continues global to megatrends India outsourcing by see

X%, revenue meaningful revenues APAC Cap respectively. capital revenue decline was declined year. XX% improvement X%, over a down year-over-year reported Our quarter up and XX% XX%, and were fourth the EMEA in Americas the markets last while sequential Markets of

conversion the transactions, the experienced as and early in in rates relatively particularly Americas, narrowed. as office a stable quarter, in we In pickup pipeline interest spreads were bid

that cause a made trends volatility as on the to locations. likely sales quarter of these We're prime reversal pricing we've in office better the interest in investments. second some short-term where notably encouraged values and the in EMEA, most in acknowledge Australia, In and were APAC, realigning, and growth rate seller increase are in recent buyer assets expectations And results adjusts. is but in particularly industrial market by recent strong,

first our however, greater return increased provide in stability when volume quarter achieved. that us rate Ultimately, will to the market is confidence transactions results

APAC, Services growth strong, management. reposition we business Turning change. to by for with prior previously year X% discussed or revenue for in services down flat the or X% was and our was to X% as In declined up facilities Services contract adjusting Revenue X%, growth. Services. revenue contract profitable In the X% solid driven declined portfolio management Services EMEA, excluding our Americas, the And in project change. continue

pleased are in seeing we the Overall, with Services. momentum we are

some business recently our had have wins We is new strong. notable new and business pipeline

some mid-single-digit focus we've As year and a in near-term a return while growth discussed, least our see growth revenue previously XXXX. margin headwinds, to reacceleration is expect we at in the of of resulting to and in growth a accretive second this on half rate

$XXX cash first compared cash of to was of to flow. Turning quarter flow million. XXXX, for $XXX the use where use cash million. Free a free This the was favorably of quarter flow a

capital quarter U.S. use seasonal with in annual typical historical working and payment trends, bonuses first the business. in including patterns is reflects line our of of As cash

on strengthening progress balance the We continued sheet. our

XXXX, the B of due During balance Loan the in to quarter, outstanding repaid we Term reducing $XX million. $XXX million

$X month subsequent Loan term by rate Term net the plus X reducing $X million. B cash applicable XX expense by is expected interest due roughly addition, interest points XXXX, reduce In these X.XX% plus to impact X.XX%. quarter to of from to end, basis The of SOFR we SOFR billion repriced annual X-month actions

our to moving outlook. Finally,

the continue second We in contingent sustained markets to likely expect upon of sometime half this year, most the conducive a rate is more begin growth in interest capital to environment.

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

side, as the inflation higher to driven we expect cost cost for company the growth. by positioning increases we On market comp focus continue incentive and normal on

we cost offset within initiatives call turn over efficiency to With the these year. However, Michelle. expect back I'll our cost the headwinds to that, do mostly

Michelle MacKay

Neil. Thanks,

to from that incredible to pace, all witnessed content and to settling. the past and will our quarter, we've constituencies evolve promised our rapid of and clients, never commitment push lenders, we ourselves to a fire loyalty Over people. investors at an continue us We never our

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

Operator

question JPMorgan. Instructions] The from first with comes Anthony Paolone [Operator

Anthony Paolone

know much of too put right them? just about the about is quarter at the question slow magnitude make that basis first of businesses expansion order hit think being But think around XXXX, we you looking the seasonally a as quarter, to I as it's so if XXX margin. points First it. margin don't want bracket I we of the or should and

Neil Johnston

into Tony, was cost because reason we in program XXXX. quarter on guidance the I think did the have we rolled gave our savings the that first

savings which of we had So offset in first cost more quarter, the the saw. increases $XX million we did than

half was at of if that half by those savings essentially driven the of it So by look other flow-through the cost leasing driven the leasing. we improvement improvement, margin and

As to increases. actions inflation our we year, basically now the offset for we remaining cost said year rest look on the full as we expect of do the the and cost outlook,

margin in the we is So half that back tied expansion the will leverage. of get operating to primarily the year

about what's think in growth capital happening about markets think leasing, the year, So and as services. you in

of is to margins sort frame the for And so how year. full that up

Anthony Paolone

Okay.

Is kind quarter first that than of in of that that and a bit of it's you more the basically had seems So mind. sort takeaway? kind like keep

Neil Johnston

exactly. Yes. That's Yes.

It depends. the on depends recovery. all So it

Anthony Paolone

Okay. where growth a waiting high to X% contracts my wondering speculative just commence? X% the versus visibility is still second things And terms to Services that you're how XXXX, to yet that for of that full then for put in degree you for question you I in of win in you're segment. of still just year. is I'm looking much guess the and

the since in in segment. only 'XX? think than make you guess, EBITDA 'XX Do been I you And line more reworking you'll you same that did

Michelle MacKay

Tony, it's Michelle.

in Services. our I'm start about we've excited on accretive really in that quarters, hyperfocused to prior we're with as said growth off Just And long-term in Services. business. positioning

globally wins we're So in agility color a when we're be win and and that business we've deals having key as it's the to what's also had mid-single on being give digits business, client the our in you just to balancing we've where but of scaled, our the marquee fine-tuning XXXX. And winning know, rate year. to here we're growth strategy a expect this to couple in to happening, important then GOS beginning and long-term -- little you in back been

and will And them play around more speculative, later for point then are of our in bringing those brain the best them And year. in in honestly, them play typically. to those are will Cushman critical what's to experience. great your clients, smaller the of transact year. And into the next quickly the revenue Some can year, into some more they're from us, do way practices deals. clients higher entire by we to treat we Those margin their that the

what and on be the do to such agile finding to is real we're want but large a now to to small given or shift clients areas as workplace to got in scaled as that advice ESG there's particular, So it, you've business, to well. in and be be do it solutions you've got GOS really

Operator

The next question with Citi. Griffin Michael comes from

Michael Griffin

wanted seems to the like I there little particularly seeing what you're than leasing is better It about first office. talk negative Great. seen out bit ground on headlines business, we've there. probably the the a on

and being want of increase office your trophy pipeline geared was indicative the that Or leased, product? commodity of get -- including in that the of to I some Is kind toward kind deals just quality B products? clarity. A are all of C Class mainly

Michelle MacKay

So in in year, higher-quality last leases I buildings. largely of cut larger being say was that it would QX

Now soever, still see but to tenants, of starting in mix those mix leases, the in a this smaller a buildings, year. first in but combination same of we're see smaller to in leases we're starting high-quality a of quarter

Michael Griffin

And initiatives. you. cost on Got That's maybe helpful. the just then savings

you quarter. flowing think kind first of had that of I still the some into

say balancing increased to those costs. initiatives you're other relative You

increasing But back be in the to and an capital we that kind you materially to if business staffing think an count anticipation head of half Wouldn't improve is up want going of that? of the markets year. the

Neil Johnston

point. So Michael, you great a raised

right. exactly that's So

savings our our rolled our we XXXX. as that of programs year. Essentially, savings cost have for incurred majority are announced any savings were even primarily, not we -- savings program run All cost of rate new last cost out

million But Of remain to of to the We last primarily is we result cost always efficient. looking ways the referred of the are more nimble. that course, savings $XX for took year. actions are become essentially, we

the as back the business we then and that advisory we very to As are side we year. on back positioned that half look grow both the on are year, growth we sure half also making on services of well side in focused the the the and of

Operator

Alex next from The UBS. comes question Kramm with

Alex Kramm

markets in choppy. good I but see mean, guess, first obviously, capital tone obviously stability second your a Great I the business. to quarter, the in quarter. little more quickly, Just the bit on

quarter visibility as specifically Obviously, be do second a great. seasonally, little could second you like year So bit the look related have first the you given than that get seem the any were maybe is that, ago worse better, about on confident changed. things feel then of to usually half quarter And recovery. as XQ would a lot quarter, you a this

So to do maybe if level I at think that higher make heard you're of a or reacting just from to you uncertainty that here all? wanted I sure there's if right and

Michelle MacKay

the pullback of in of market But Sure. changed view markets I'm hasn't couple current changed. of significantly is the short-term the for in outlook has as that very weeks. and bullish mood some capital last the for the point recovery,

the is know, let's swing or we markets that plot not pieces the market a key a as we've to lose think as can work be recovery. we line and the But there. But mood think here, data. positive I couple view, our you is of all like which next on witnessed how strong quarter of digest volatility what interesting. for might happens calling But long-term how data the

Alex Kramm

then Okay. talked the here. a about just looked of since kind I big Like at quarters And think and different strategic you businesses. you've review, we're for maybe obviously enough. the last your Fair all picture few have very

you stuff Or never you finished, still review? that and of but of can feel the focus So new like that you've essentially that completed gets do area that, that biggest I anything know share ongoing? is

Michelle MacKay

I opportunistic said and with ongoing. to what do, think shows first continue quarter we're do to the But be we're we're really always would of and capable I those did that it. we we No, on performance your And and -- priorities. it's to point, executing that. we think going that intentional

the reduced paying strength debt. So and repricing just interest reiterate, and core, by costs to leverage some loan we in the term the down

with operate contracts. prioritizing to is revenue margin We're leasing continue We and better the rigor, We services improved even is flat. growing.

to couple away accretive from made walking I've a of less deals. references

of to the of see matter opportunity. every active an terms no that's going is strategy. the managing advantage So you're us way take what And here backdrop in continue the of to economy

the say would pace of a we're have awareness differently before where highly need So firm with working all at seen focused has than to I we exactly an we activated. we're historically at unlike what be times.

Operator

Ronald The with next Kamdem Morgan question Stanley. comes from

Ronald Kamdem

Just X quick ones.

statement, year a the So cash and almost greater on release. like a was delta operations, flow one, use, the flow. the It there's like in cash net appreciate it with starting seems focus it said seems like I seemed versus sort comments cash from certainly you $XXX but press million of a a free It ago.

of flow? talk So about a can How on guess you sustainable cash really performance much versus the something that's is question going what great is of that forward? sort such I my drove onetime

Neil Johnston

starting the extremely to we've as flow, really see cash Yes, focused and free it, you Ron. it's and on results. off pay start to great Look, say, you question, in been

quarter ago absolutely better. of year, first a year this You're it's $XX the right, million quarter first

So great working by driven performance, primarily capital.

And we real XX% performance, as look it say is is actions I probably it so took. about we XX% and of that timing that would of at

to from XX receivable XX -- reduce accounts to in around XX days days example, for able, actually. were we So our DSOs days

saw improvement look. X good feel the of and flow we about so very free as cash And in so quarter days we

year a has given start full one. good feel guidance the free been certainly but on not flow, the to the have cash We year like for

Ronald Kamdem

about still update second so sort the asset plan? deleveraging for my going? and one that is I remember Any that then forth. just Is -- we and of potential there? sales And talked was Great. How a

Michelle MacKay

in We still the do a the That have Yes. couple out assets of is market. plan.

the able have update identified half latter organization be in consider the assets several that. say to we'll give an I the smaller on And in that would of We you sale. to for year,

Operator

The with William from Blair. Sheldon next comes question Stephen

Patrick McIlwee

for You've Stephen McIlwee got Pat on today.

expect to guidance the little it this here? And I the with So has like so on talk play a you of you've revenue single-digit it it all, light a you're out, just low more. to year is but platform? If repositioning growth how I more in reimbursables, or about can turnover for if that to pressure the wanted do talked kind of driving the service a looks know competitive first what touch any adjusting of might in asset even this quarter. I just exactly this contract bit dig you one, that? mean then can achieve bit about came at you what's seeing rest driving

Neil Johnston

Pat, think things it, about as it. are I X Sure. driving there really

remember, all, we of quarter. million $XX have First the accounts in contract change. for about That did that

for instead want we our being and flat not the certainly X% that of would So Services declining, overall sort flat where be, the down baseline. Not have of them been certainly, but to quarter.

looking The we to looking self-inflicted probably is for We're contracts. looking you second as pain, are growth. it's This accretive our our thing, We're at at say, best describe it. margins. way the more

We prepared we have clients found to the for. that are provide services pay

have they like for cases, actually actually work. certain it to those to contracts and said back would in So and clients actually worked us come we've

know need also a are management Services took seen money, the Europe We business at look project is is that's so very And said, business. And making that a at that the portfolio improve Services and we we and down. us margins in you business. contracts what, saw in Europe. actually saying, in short-term not That's hard our where if our business looking and to really we've

it's every it's and of out work. that growth We're reallocation. you're walk we not going going money, up more profitable growth takes resources, our to not to all and said easier bit of do drive making allocation capital because much it's So to And quickly.

But And at of global still have some nice needs. a early our the we GOS thing as so look couple focused strength, there, We forward. is global wins then on very did the about excited you had year. third contract very of GOS we look seeing pipeline end that We in on the that Services nice and a in platform. we've this tail see as business, in very

Patrick McIlwee

then And Great. Okay. more just quickly.

you debt last to maturities So XXXX your out pushed year.

thoughts that you can repayment environment? this it's with So pretty capital the looking M&A towards whether best be, will liquidity solid structure of feel and leaning any more that's this use this liquidity what point, share just you at in or on debt

Michelle MacKay

Sure. I of mean all but to deleveraging need be we're the time the and to very both, the going to capital, allocation about focused growth. and we're on doing right? point be making we decisions

you just the how you I ourselves take first not that here. we're share with a sure conversation that's the saw to any deleveraging you be conversation specifics enough making And to having going we're we're a understand and recovery. in going advantage do having us of to that in best that We're not the position to investing I'm here capital. growth on allocating what But to want quarter. put

Operator

[Operator Instructions]

next question Your comes with from Patrick James. O'Shaughnessy Raymond

Patrick O'Shaughnessy

obviously, recession is at and To improving have your have that seem leasing extent concert abated. growth economic outlook an moved resilient but and fears, Services and businesses? higher, least for So remained generally behavior what I now, with client think growth in driving rates has to

Michelle MacKay

Yes.

though with this focused and important, correlated the it's businesses. really -- are performance solid our decisions And conversation. people in there's very having that's servicing that leasing because cut think conversation decisions on to obviously even GDP we're is I interesting who Fed

together. is they're X to cutting, the same forward GDP if in a is or firing of what those start over connected, not and firing, to prong have looking much course rates time. growth And X the if when is do meaning solid the And you'll So more prong. next at markets see we leasing year higher X, the capital Fed not we're

Patrick O'Shaughnessy

shadow progresses? Got on lease for it. road? management. that I want for down I to What's outlook management improving does appreciate as the And that. leasing -- XXXX And project improving then activity project your touch

Neil Johnston

as there sales should as right. picking be think I see somewhat leases the Yes, improvement our the of And that year. back certainly through will ] that's in we an [ start exactly half We up. move

Operator

question next UBS. Alex The comes from Kramm with

Alex Kramm

totally confident on bit question. follow-up Just my Capital a XQ still but then Markets to you the in mean, earlier maybe softer, I hear recovery. a little quick

that, so? that's building the over talk we speak about maybe to bit, pipeline So I've Can quarter So how the a maybe how to or a maybe sense the when it. environment? little is a last missed for changed just have get business better for you

Michelle MacKay

Yes. it's Friday, in volume the in the business past are build. Capital this to and out in terms continues offices was I of about our a of I focused, decision-making. pipeline, X Markets really people here of And there's and lot mean just

been So I that's is would say anything process in closing.

been consideration have a under start hold would the that put in bit. on of anything think couple is last to or I for probably weeks transacting

when tone I a there's But move really I the market start again. just say pause, want the reiterate, X weeks resets forward that and to be could for resets long and that pause to people

Alex Kramm

quantitative? of peers of can pipeline. terms growth in with the not anything And in sometimes talk share about the Some to? ready or you us of Any Okay. that your

Neil Johnston

sequentially be Alex, that can say quarter. Look, I to expect the the bigger than second quarter we what first is

about in a of been in what the thinking on that still So early almost the quarter. It's sort we've quarter. second floor puts second

exactly So Michelle we know certainly and to be, feel plot said looking really, it's sequentially, good. but to where difficult as lines are good it's going

Operator

Michelle [Operator any for Instructions] This remarks. conference concludes to our question-and-answer over the session. MacKay turn like back I to closing would

Michelle MacKay

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

Operator

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

You may now disconnect.

Cushman & Wakefield (CWK) 29 Apr 242024 Q1 Earnings call transcript