CWK - Earnings call transcript Q2 2024 | Cushman & Wakefield plc

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Operator

Good day, and welcome to Cushman & Wakefield's Second 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

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

estimates presentation may future Please on Cautionary should events. forward based These Forward-Looking in forecast differ current considered contains Note on presentation statements labeled our turn only, Today's and page results to statements the materially. and our actual Statements. estimates be of

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

the rates MacKay. stated. otherwise the to that and of call comparison our periods comparable over note like are Michelle the with and please in currency, growth XXXX to turn that, I'd Also, throughout local to And unless presentation, CEO,

Michelle MacKay

now of has been Thank progress made time that Megan. year, Cushing during our teams the the a for I've impressive. and you, Wakefield have & been CEO

goals for have what achieve getting committing to what and on our needed we we We it our and plan investors relentlessly, never and for clear done. targets said ourselves in to setting have settled executing for then

by $X speak of Let minimum over and those of billion we midyear our a refinancing targets. by about strong, debt leverage exceeding to started me A year $XXX off ago, XXXX. committing million reducing

this us of to the quarter our already and reduced through putting we have plan ahead reduction another million debt make second plans. by million $XXX our $XX We quarter,

this term our as our plan. reduced to stance we loans our both from in our of on also exceeding year have support cases, interest lenders continue have costs loan both term twice We outstanding

we for And quarter half exceeded the to of free of free fifth year XXXX, up than adjusted period. growth, and our last flow the reporting have consecutive first consecutive the third compared of expectations, basis improvement versus are cash We period beating reporting our same revenue prior of quarter year. substantial points our in are XX margins more leasing our cash over million meeting plans today, on conversion, a or flow $XXX year-to-date also EBITDA

to announced a this, used add of asset, To last and for fuel sale those was we proceeds of sale all targeted to noncore and the reduce year, be growth. will leverage which late

every aspect We in business of every are getting it day. done our

then over come our turn growth. Neil you I'll I'll in to to review quarter to more speak the back detail and financials, Now call the about and second for plans

Neil Johnston

Thank you, afternoon, Michelle, everyone. and good

quarter work Second we've our in flow. drive strength improved continued and the highlights business leasing profitability and cash to done trends demonstrated

fee prior for of and grown adjusted X%, of million higher adjusted $X.XX down revenue EBITDA $X.XX year the X-month on X%, EBITDA the is $X.X second was versus adjusted X% and While EPS year, than down quarter billion period. year-to-date was for last a $XXX basis has of

up taking to lower the XX efficiencies margin and months cost savings the impact basis for Our X margin second revenue. X%, quarter EBITDA over and for inflation as first X.X%, to the sequentially adjusted year of points prior increased offset the operational

services at look a line our results. Taking

the Leasing quarter. with breadth the flat. Americas Our growing nature, The stabilization perform Leasing up EMEA In which X% business demonstrates in was leasing continue the in Leasing we solid see in to midsized global well, X% up leasing again Leasing to of the in Americas, APAC in continues market. largely deals, and growth performance QX X%,

in saw office while and in Central we Germany quarter. retail all EMEA, Industrial, APAC Europe, the underperformed. Japan. India and leasing In grew strength growth particular in and Eastern experienced

markets office which year. revenue increased was XX% in and and fee Revenues quarter Markets year, revenue of XX% sequentially, the APAC XX%, retail, capital while sectors in second industrial quarter declined up Markets highest last show for and a the respectively. saw increased grew multifamily Americas declined continued but revenue declines. and XX%, the X% strong to Capital facing Capital momentum. quarter Our strength, showing our EMEA and

to versus prior previously change Turning year, the reported. down discussed adjusting flat for Services. contract Revenue was or as X% the

Our and performance, management and APAC driven of second Services X% India quarter strong again business remained growth Australia. in project strong, achieving particularly once by

a profitable flat declined revenue was the In expansion deferred as office revenues Services reported. while quarter, grew the as property Development in Project growth. Americas, contract margins for solid Services change did setting or flat the management EMEA for Services we see X% excluding down While Facility X%, Services plans. clients the grow, Services were foundation quarter, revenues declined

We this line business office expect in leasing improvements activity to as see accelerates.

venture, decline business, year-over-year Standard large year, our our Greystone Bank. income pleased contribution. with we this the some mandate for Charter that wins which In $X a multifamily global experienced in joint signed are very million including transactional volumes impacted we've Greystone equity have Weaker

expect multifamily occurs. recovery but it We transactional earnings pressured in and when from market to the Greystone term a benefit short remain to

a business. proceeds long-term debt million of will which quarter. proceeds announced contributed value our margins. million plan historically occur of sold during the we strategy. is cash We with at $XXX of growth $XXX business transaction million down strategic and divestiture third capital a pay Today, to approximately the the use allocation We million revenue to in close, mid-teens This investments small noncore $XXX consistent services the gross business expected annual for at has $XXX receive to and for

Shifting to cash flow sheet. and the balance

flow million flow a cash in $XX use million XXXX. of conversion. on was $XX progress versus of the We second quarter for continue to make Free cash cash considerable quarter the free

cash favorably Our to driven efforts first million, efficiencies. usage XXXX, $XXX compares our capital flow million by $XXX working around of over improving half ongoing by

quarter, $XX debt the $XX the XXXX, we of terminal balance During to million. in repaid outstanding reducing due million

repriced lowering term loans the in applicable cash We of all approximately $X expected to quarter, debt, interest billion have Term expense by interest of down the in also points. basis annual repriced in paid an XX additional due million XXXX rate in billion million. reduce B by is and $XX our $X Year-to-date, we $XXX which Loan later

our full year to moving outlook. Finally,

On year. to half expect growth mid-single-digit low the capital revenue to the mid-single-digit second XXXX. In improving the returning markets organic of side, we Services, we range and Leasing revenue revenue revenue in flat to growth in continue during growth growth, the expect organic

a by cost the third to than last In reduced measures expect full offset be On quarter, been cost side, last million higher had roughly the $XX to efficiency of higher position, which primarily year we the to in quarter. expect mostly and to year. $XX we compensation third incentive million inflation be for our resetting year's expenses due

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

Michelle MacKay

Neil. Thanks,

an Now growth. accelerate enterprise year creates let's platform the possible the to foundation that building last to drive pivot of the beyond. and performance for best We've XXXX spent and

business the playbooks Our the to we capital out. predicated to strategy world our be must that drive forward for And on estate is of allocation if win, of changed. the commercial real philosophy want thrown old and growth has fundamentally

in our way talent platform we huge we now way see must and manage and more The the relationships the invest with integrated must in we integrated recruit way broken for and which we potential in operating. approach connected silos that engage enterprise portfolio and built are more the that be our clients be a world, and down services, connected of incorporates

year, allocation of this our the beginning Since philosophy. to have we been capital realigning the

over have sales clear for effectively our us past We target it allowing our leasing between has teams to few regions the research through subsectors heightened in investments that collaboration is strategy and our our results and our quarters more off. And growth paid business.

position and integrated sophisticated we growth. talents service provide our And And accretive balance Markets' are need. and providing have company the recruiting for sheet We that future to insights platform are managing and clients. execution data and our the on and portfolio actively profitable we laser-focused Capital for our our been protecting to modernizing clients end, to

sold invest noncore and have taking assets stronger base walked benefit Services of businesses away opportunities. We to some a for clear flexibility client from increasing less pain services accretive higher-value long-term in the short-term and

inorganic drive You to investments organic option growth. will us see and into

the reflect and that results dedication clients teams at and hard-earned the culture the year Our define our Cushman Wakefield. past over grit to &

delivered what in the have ahead. and We on we are years the will about quarters energized create of opportunities and proud we

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

Operator

[Operator Stephen question Sheldon from comes Instructions] with First William Blair.

Stephen Sheldon

First, how as head seem order count has versus senior your And Michelle, head just of you here. you Activity some commentary this just of volumes year? last about producer maybe about your about report your count do don't the looking Capital increase? I But think Can some positioning know how to poised to Markets wanted you to think transaction as producer continues benefit peers. point capacity about your now generally, Leasing recover had. you you I talk to ask producer industry. and to many

Michelle MacKay

are Yes, last from out an We if producer up year report we number, as you're overall right. don't number. will, you but

And the been capacity so has great.

where doing in larger just of earnings in I lot the but XXX,XXX think couple is exceptionally, that the of really especially doing about talent retained and calls is and our play as seeing square foot a deals core XXX,XXX I a our of first well transactions, leasing we through that markets you're times have some as well. the leasing talked they're on

the up in And spread say, a foot foot we in locking and tenant Markets, talent. and we're beginning our markets the capital in sure down of the between, XX,XXX-square that ensure year key to equally and we're make tenant. So and well set XXX,XXX-square the program really Capital locking

Stephen Sheldon

about large hear. about that give contracts? can types now in Got it. that to you your That's just And talk that expectations? some relative winning you seeing solutions you're some How seeing helpful. demand of of detail are right in Good then more us . segment? just terms services, in maybe is new stronger And the progressing to can what

Michelle MacKay

Yes.

go into changed. a me have things Let bit how

there's platform play employees And What going I today see commuting experience, to have conversation. ESG, clients supply power is a think shifting embedded global to have with complexities, be side that our trends, won't games the the be helpful. usage. workplace we've includes you into demographics, and that can having e-commerce things the you going of on, where decision on multi-pronged chain data, client services like you the in talked that's about big how out patterns

reference to to able have of right organizations. be the that script. in clients, I solid now made to So have you to my the these needs address

leadership together and and across Your always. to be practices best has and the senior the in share pulled all again again globe

Neil And of Chartered. getting, Standard that of and reference to wins kind work examples some we're this made

space much win we won global right? to perspective. thinking also transaction in I a a about optimization and That's was where to is am had in DTCC RFP, also us, work, earlier in big now, We portfolio bring the up. client year just how a very how EMEA not very take for going that large worldwide complicated the

So does we've transactions, consulting the workplace into these together bringing stuff, location team analysis, rep. on expanded that material analysis, financial tenant

firms And something the firms we really qualified those like how compete to is, Not integrated? But many. of that. truth many X think or against do we're do something you not

to now continue client, a And embraces with have to that so that service change. order what know and culture grow is have we in to the constant you

Operator

Kamdem Morgan comes next The from Stanley. with question . Ronald

Ronald Kamdem

Just X quick ones.

talked I year. So potentially organic sort you staying think next digits 'XX, on of but in growth to Services revenue getting flat a little mid-single bit, about

if of visibility sort there you get comment. you on kind gives click confidence of could Just forth? what you that double so What can and just that or

Neil Johnston

Ron. Sure,

there lots to think you are about If of Services, components that.

it consistent this business to up APAC, and pretty year. It's If year-over-year has remained by seen growth, break X% geography, strong. in the grow. for we continues it story is example, Our

nice We there. have provided facilities our Singapore. margins we client expanding are manage the and in base very seeing And largest

is great is we there worked design On are focused I margins. side did those term some The the our improving and where lot build where the during on projects we of restructuring EMEA on more business short year. of nature. a mean in basically news

see look we as we through contracts, those pickup there. should a So

like us, Our Facilities lot. Services business particularly in business for large a a the very U.S. is

growing some wins this X% we but this think is there. seeing are year, I good

back that we to 'XX. I so single-digit look growth feel as pretty high good getting And about through

occupier once Michelle wins. business, services That about global big business. our primarily spoke again,

Now those very are contracts. long

be So for while that Global us of Services business. momentum fuels build, what sort will the take see to that but a would that

property That's very then short And management the quickly we with And the term, that very project seen again, term challenged we've expect once so office, business in where in we it's nature. the short be the pressure the that had and pick drive constraints growth term. build-out finally, and to up But really through. short that around office is business. some all in of have management,

Ronald Kamdem

just know then of second had question a capital coming And markets and fits was my little we've of I back Great. starts. lot to a just bit. kind

in so that you're sort messaging of Just to of sort forth. the curious to And is? in sense green it Is July Is ground on too seeing early? the it get the what of a Just still where process. are what recovery trying and market we shoots?

Michelle MacKay

going internally to answer you. is a waterfall one looking at we're calling what we I'm Yes. are for What that here effect.

we rates and into the really uncertainty So the know, move inflation We've the inflation like on started of the all rearview resilient. data, majority better believe era. remained and we has seen economy has to

this markets, see to and capital is for the positive the started So lead. take we leasing

estate we to real showing signal you cuts the rates, And the But believe move in close market may the when to beginning the in done we And Fed quickly. up expect it haven't of we that it's really Markets. assume time it Capital the to into engage commercial which will some money into transactions XXXX. that if of will sidelines on result already believe

Subsequent capital more rate start investors reduced. XXXX assets for going cuts And XXXX be is increase smart real people will rates commercial markets are think to waterfall this move as a going year that effect in are to that because to and into got estate. remember we

up back looking trends, to we of really when especially last in where pipeline X%, strong like year. On we markets we're look markets like up Australia, especially course there, really our invested that invested the the and in, APAC areas at starting in were capital over if we're EMEA XX%, the U.K. happening, last see we in in in what's side, some strong quarter, particular,

started is up Americas, quarters to decline. after the Industrial in to that And return we're over growth period X up XX% and sequentially of quarter-to-quarter, consecutive

really of looking really advantage well intentionally have ourselves market to forward it. up coming the we're to and really So set that's take

Operator

The with from comes next Paolone question Anthony JPMorgan.

Anthony Paolone

for just feeling about quarter. as not the year first in quarter? would and the to to to read or us you good Maybe the last language understand trying entirety full better it up the I'm were how here. like sum of as Because brackets business mean comparison in you versus just through around compare I XXXX gives last how its some

Neil Johnston

year the driving Tony, the on exactly think margin focused as we of half I expense expected. and turning certainly margin, we first it's But on saw the the out side, really we improvement.

very and actually was a step Markets encouraging. XX%. around grew So Capital did that back expect sequentially We in

So we seeing are up. that business pick

the Leasing are then And on numbers leasing the second strong particularly side, ago, very by we really exceeded a a in expectations hidden year quarter York. slightly New

And we've the is so leasing the and see with new third the of market, of the we've But broadening a seen tough side. on seen had quarter we you what growth. comp leasing

-- XX% in leasing anecdote, midsized our office second an the you the give to in and the Just quarter was in deals up Americas, core quarter. rather, X% versus first in

working out months. I building. -- ahead of So think plan X it's we're lot -- to overall, out to Yes, be pipeline the it's a so of just turning

Anthony Paolone

second of I the Okay. the in about things should tracking of up year margins, terms change? then the have, I then guess, year of just year. way and full are versus I the question order And the picked we magnitude the how last first mean, would bps XX you in think half on

Neil Johnston

sure. Sure,

the of year. at consistent beginning with we the exactly what said So

year teams Our and of drive we saw the margin did towards margins, we earlier exceptional expected. accretion last to and end this year work as the those

difference a the incentive we down incentive in year the compensation ago. of half result a QX back of have we As to year, will as the look compensation pulling

that offset growth the our investment. expect we any of that, efficiencies than other will But

for investing the how really between looking and are a manage we're we balance we how As we margins. look forward,

focused growth, spend the bottom on our like So for at feel but are we're so time, the same We very very cycle. very that the at accretive the being intentional of recovery. positioned around well we

end into the come so year we of as And next the year. ahead out we that to want be towards of

Operator

Griffin The Michael Citi. next comes with from question

Michael Griffin

leasing kind to there, commentary for wanted office Neil, your back go to market, side. on I the of particularly the

it think what we've of those deals. think of that As it, seems heard kind to I continues still the Class most product trophy given be and we winning that's A about But picture is for that and kind up? still of maybe you mainly geared rosier lower-tier leasing a the overall, a pickup product? it office space like market have high-quality that noticed Or toward

Neil Johnston

I stayed think on it Michael, it's the quality. -- high

and think other well large in high-quality exceptionally major markets, I New has York just performed markets. in

smaller in and pickup, seen We a deals. though, the midsized have

a that's is change broadening leasing the a a market. what we're So we're change. and of positive Because seeing seeing

in need has Companies week. for the say, phenomenon a We rearview days the now is to we least are our be space now work-from-home at -- people in to starting have X okay, to mirror.

that's think broadening. I by consistently then So after geography. leasing goal it was was And also

so look And year half healthier and back market we that of into a points all to as into the next of year. the

Michael Griffin

just kind trying the opportunities about think your whether allocation Or down kind M&A of your or helpful. prioritize That's pivot external the balance I in you right Great. laid capital I other we it's remarks, to half then if of of priorities, should but is for Michelle, you back know . right could the sheet, we to And along? thoughts now out mean prepared comes thing the year the paying see growth debt? offense, turning

Michelle MacKay

that Yes, and space, time. head walk a mean and chew can we absolutely. same are gum I know we in the mindset we growth at

So quarter. down today another to $XX announce you pay million us going this heard we're

are sale. equally as free the important, flow. have cash really on We from some cash we well in coming But doing asset

organic or opens investing small whether pockets up the the all M&A in that us, businesses. So that's M&A, for

Operator

question [Operator Abramowitz Peter comes with Instructions] next Jefferies. from The

Peter Abramowitz

uncertainty how the like and I on here seems comment stability with just And in rate Can kind in markets, terms you months. had of quarter It guess, of the things rate -- environment. start things weakness the some of just here timing July? due for to into progressed quarter. out inflect? the the sort have you through turnaround capital quarter of just may just to potentially do the of the the third you you in couple a late market be just turning last of So also to when in called then expect

Michelle MacKay

will all, the right inflection be but will time the I into people be probably place first we're July. But That first makes to to comment of think, I make point to a move. lead the not mean, move. to on start going the going it's Fed a small decisions,

Let's XX year you'll basis is believe waterfall will it's material next and immediately. say, or the see as late in assets What to the that it, will XXXX But the the points. of be beginning we refer move small. to some year into first because happen begin volume, the actually probably and we transacting isn't

Peter Abramowitz

just one, it then And strength into some a helpful. on leasing. follow-up of more. Similar Michael's comments a little on the question, your around That's Okay. but digging bit just given question. just

within that and markets the of of any would you within gateway Just office seen strength have some office geographically, specifically you points wondering call out?

Michelle MacKay

too. pick I lot year, the particular. in the like you're Francisco, markets gateway I positive in strength to progress starting mean, starting see up. But over you're areas of a the in of New that certainly we've some there, see seen think And San even to course York,

Operator

go over ahead. the a to This turn Michelle closing remarks. would Please I to conference like concludes for MacKay session. back any question-and-answer

Michelle MacKay

today, today's joining This for next we to concludes everyone, with you speaking again call. and us forward look you, conference Thank quarter.

day. and you a You your Thank for lines. may pleasant participating, disconnect have

Cushman & Wakefield (CWK) 29 Jul 242024 Q2 Earnings call transcript