Cushman & Wakefield Reports Financial Results for the Second Quarter 2023
- Revenue for the second quarter of 2023 decreased by 8% compared to Q2 2022, driven by a decline in brokerage revenue. Property, facilities, and project management grew by 2%. The company achieved gross cost savings of $49.0 million in the first half of 2023.
- Net loss and diluted loss per share were reported for the first half of 2023. Adjusted EBITDA and adjusted diluted earnings per share also decreased compared to the first half of 2022.
Year-to-Date Results:
-
Revenue of
$4.7 billion $3.1 billion 6% and13% , respectively, from the first half of 2022.-
Property, facilities and project management grew
4% , driven by theAmericas and APAC. -
Leasing, Capital markets and Valuation and other declined
20% ,49% and14% , respectively.
-
Property, facilities and project management grew
-
Net loss and diluted loss per share for the first half of 2023 were
$71.3 million $0.31 -
Adjusted EBITDA of
$207.0 million 57% from the first half of 2022. -
Adjusted diluted earnings per share of
$0.18 $1.10
-
Adjusted EBITDA of
-
We achieved
$49.0 million $130.0 million -
Liquidity as of June 30, 2023 was
$1.6 billion $1.1 billion $0.5 billion
Second Quarter Results:
-
Revenue of
$2.4 billion $1.6 billion 8% and15% , respectively, from the second quarter of 2022.-
Property, facilities and project management grew
2% . -
Leasing, Capital markets and Valuation and other declined
20% ,48% and13% , respectively.
-
Property, facilities and project management grew
-
Net income and diluted earnings per share for the second quarter of 2023 were
$5.1 million $0.02 -
Adjusted EBITDA of
$146.1 million 44% from the second quarter of 2022. -
Adjusted diluted earnings per share of
$0.22 $0.63
-
Adjusted EBITDA of
“I am pleased with Cushman & Wakefield’s second quarter results, as we reported sequential improvements in revenue and Adjusted EBITDA and continued to execute on our strategic priorities,” said Michelle MacKay, Cushman & Wakefield Chief Executive Officer. “As anticipated, transactional markets remained under pressure during the quarter, while our services business showed resiliency, highlighting the benefits of our diversified platform. Today’s complex macroeconomic landscape requires comprehensive and thoughtful client engagement, and Cushman & Wakefield’s teams continue to provide outstanding service across the globe. We remain focused on strategic growth areas throughout our platform and continue to strengthen our overall position.”
Consolidated Results (unaudited) |
|||||||||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||||||||
(in millions, except per share data) |
2023 |
2022 |
% Change
|
% Change
|
|
2023 |
2022 |
% Change
|
% Change
|
||||||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
||||||||||||
Property, facilities and project management |
$ |
888.9 |
|
$ |
868.8 |
|
2 |
% |
3 |
% |
|
$ |
1,785.7 |
|
$ |
1,709.8 |
|
4 |
% |
5 |
% |
Leasing |
|
441.8 |
|
|
552.8 |
|
(20 |
)% |
(20 |
)% |
|
|
804.4 |
|
|
1,007.5 |
|
(20 |
)% |
(19 |
)% |
Capital markets |
|
191.9 |
|
|
367.3 |
|
(48 |
)% |
(48 |
)% |
|
|
334.8 |
|
|
656.3 |
|
(49 |
)% |
(49 |
)% |
Valuation and other |
|
110.3 |
|
|
127.5 |
|
(13 |
)% |
(13 |
)% |
|
|
212.0 |
|
|
247.6 |
|
(14 |
)% |
(12 |
)% |
Total service line fee revenue(1) |
|
1,632.9 |
|
|
1,916.4 |
|
(15 |
)% |
(14 |
)% |
|
|
3,136.9 |
|
|
3,621.2 |
|
(13 |
)% |
(13 |
)% |
Gross contract reimbursables(2) |
|
773.1 |
|
|
696.2 |
|
11 |
% |
12 |
% |
|
|
1,518.4 |
|
|
1,322.4 |
|
15 |
% |
16 |
% |
Total revenue |
$ |
2,406.0 |
|
$ |
2,612.6 |
|
(8 |
)% |
(7 |
)% |
|
$ |
4,655.3 |
|
$ |
4,943.6 |
|
(6 |
)% |
(5 |
)% |
|
|
|
|
|
|
|
|
|
|
||||||||||||
Costs and expenses: |
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services provided to clients |
$ |
1,205.0 |
|
$ |
1,381.3 |
|
(13 |
)% |
(12 |
)% |
|
$ |
2,367.3 |
|
$ |
2,615.6 |
|
(9 |
)% |
(9 |
)% |
Cost of gross contract reimbursables |
|
773.1 |
|
|
696.2 |
|
11 |
% |
12 |
% |
|
|
1,518.4 |
|
|
1,322.4 |
|
15 |
% |
16 |
% |
Total costs of services |
|
1,978.1 |
|
|
2,077.5 |
|
(5 |
)% |
(4 |
)% |
|
|
3,885.7 |
|
|
3,938.0 |
|
(1 |
)% |
0 |
% |
Operating, administrative and other |
|
328.9 |
|
|
317.5 |
|
4 |
% |
4 |
% |
|
|
644.8 |
|
|
610.9 |
|
6 |
% |
7 |
% |
Depreciation and amortization |
|
35.7 |
|
|
39.7 |
|
(10 |
)% |
(10 |
)% |
|
|
72.6 |
|
|
80.3 |
|
(10 |
)% |
(9 |
)% |
Restructuring, impairment and related charges |
|
7.0 |
|
|
1.3 |
|
n.m. |
n.m. |
|
|
14.2 |
|
|
2.5 |
|
n.m. |
n.m. |
||||
Total costs and expenses |
|
2,349.7 |
|
|
2,436.0 |
|
(4 |
)% |
(3 |
)% |
|
|
4,617.3 |
|
|
4,631.7 |
|
0 |
% |
1 |
% |
Operating income |
|
56.3 |
|
|
176.6 |
|
(68 |
)% |
(68 |
)% |
|
|
38.0 |
|
|
311.9 |
|
(88 |
)% |
(88 |
)% |
Interest expense, net of interest income |
|
(57.9 |
) |
|
(46.1 |
) |
26 |
% |
25 |
% |
|
|
(134.7 |
) |
|
(89.3 |
) |
51 |
% |
52 |
% |
Earnings from equity method investments |
|
12.8 |
|
|
17.5 |
|
(27 |
)% |
(26 |
)% |
|
|
24.7 |
|
|
34.4 |
|
(28 |
)% |
(28 |
)% |
Other expense, net |
|
(4.8 |
) |
|
(25.0 |
) |
(81 |
)% |
(81 |
)% |
|
|
(10.8 |
) |
|
(57.9 |
) |
(81 |
)% |
(83 |
)% |
Earnings (loss) before income taxes |
|
6.4 |
|
|
123.0 |
|
(95 |
)% |
(95 |
)% |
|
|
(82.8 |
) |
|
199.1 |
|
n.m. |
n.m. |
||
Provision for (benefit from) income taxes |
|
1.3 |
|
|
25.8 |
|
(95 |
)% |
(95 |
)% |
|
|
(11.5 |
) |
|
56.4 |
|
n.m. |
n.m. |
||
Net income (loss) |
$ |
5.1 |
|
$ |
97.2 |
|
(95 |
)% |
(95 |
)% |
|
$ |
(71.3 |
) |
$ |
142.7 |
|
n.m. |
n.m. |
||
Net income (loss) margin |
|
0.2 |
% |
|
3.7 |
% |
|
|
|
|
(1.5 |
)% |
|
2.9 |
% |
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Adjusted EBITDA(3) |
$ |
146.1 |
|
$ |
262.8 |
|
(44 |
)% |
(44 |
)% |
|
$ |
207.0 |
|
$ |
477.1 |
|
(57 |
)% |
(56 |
)% |
Adjusted EBITDA margin(3) |
|
8.9 |
% |
|
13.7 |
% |
|
|
|
|
6.6 |
% |
|
13.2 |
% |
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Adjusted net income(3) |
$ |
50.5 |
|
$ |
142.9 |
|
(65 |
)% |
|
|
$ |
41.1 |
|
$ |
252.2 |
|
(84 |
)% |
|
||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average shares outstanding, basic |
|
227.1 |
|
|
225.6 |
|
|
|
|
|
226.7 |
|
|
225.1 |
|
|
|
||||
Weighted average shares outstanding, diluted(4) |
|
227.1 |
|
|
228.0 |
|
|
|
|
|
227.2 |
|
|
228.6 |
|
|
|
||||
Earnings (loss) per share, basic |
$ |
0.02 |
|
$ |
0.43 |
|
|
|
|
$ |
(0.31 |
) |
$ |
0.63 |
|
|
|
||||
Earnings (loss) per share, diluted |
$ |
0.02 |
|
$ |
0.43 |
|
|
|
|
$ |
(0.31 |
) |
$ |
0.62 |
|
|
|
||||
Adjusted earnings per share, diluted(3)(4) |
$ |
0.22 |
|
$ |
0.63 |
|
|
|
|
$ |
0.18 |
|
$ |
1.10 |
|
|
|
||||
n.m. not meaningful |
(1) Service line fee revenue represents revenue for fees generated from each of our service lines. |
(2) Gross contract reimbursables reflects revenue from clients which have substantially no margin. |
(3) See the end of this press release for reconciliations of (i) Net income (loss) to Adjusted EBITDA and (ii) Net income (loss) to Adjusted net income and for explanations of the calculation of Adjusted EBITDA margin and Adjusted earnings per share, diluted. See also the definition of, and a description of the purposes for which management uses, these non-GAAP measures under the Use of Non-GAAP Financial Measures section in this press release. |
(4) For all periods with a GAAP net loss, weighted average shares outstanding, diluted is only used to calculate Adjusted earnings per share, diluted. For all periods with a GAAP net loss, all potentially dilutive shares would be anti-dilutive; therefore, both basic and diluted earnings (loss) per share are calculated using weighted average shares outstanding, basic. |
(5) In order to assist our investors and improve comparability of results, we present the period-over-period changes in certain of our non-GAAP financial measures, such as Adjusted EBITDA, in “local” currency. The local currency change represents the period-over-period change assuming no movement in foreign exchange rates from the prior period. We believe that this presentation provides our management and investors with a better view of comparability and trends in the underlying operating business.
|
Second Quarter Results (unaudited)
Revenue
Revenue of
Costs of services
Costs of services of
Operating, administrative and other
Operating, administrative and other expenses of
Restructuring, impairment and related charges
Restructuring, impairment and related charges of
Interest expense, net of interest income
Interest expense, net of interest income of
Earnings from equity method investments
Earnings from equity method investments of
Other expense, net
Other expense of
Provision for income taxes
Provision for income taxes for the second quarter of 2023 was
Net income and Adjusted EBITDA
Net income of
Adjusted EBITDA of
Year-to-Date Results (unaudited)
Revenue
Revenue of
Costs of services
Costs of services of
Operating, administrative and other
Operating, administrative and other expenses of
Restructuring, impairment and related charges
Restructuring, impairment and related charges of
Interest expense, net of interest income
Interest expense, net of interest income of
Earnings from equity method investments
Earnings from equity method investments of
Other expense, net
Other expense of
Provision for (benefit from) income taxes
Benefit from income taxes for the six months ended June 30, 2023 was
Net (loss) income and Adjusted EBITDA
Net loss of
Adjusted EBITDA of
Balance Sheet
Liquidity at the end of the second quarter was
Net debt as of June 30, 2023 was
Conference Call
The Company’s Second Quarter 2023 Earnings Conference Call will be held today, July 31, 2023, at 5:00 p.m. Eastern Time. A webcast, along with an associated slide presentation, will be accessible through the Investor Relations section of the Company’s website at http://ir.cushmanwakefield.com.
The direct dial-in number for the conference call is 1-855-327-6837 for
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in over 400 offices and approximately 60 countries. In 2022, the firm reported revenue of
Cautionary Note on Forward-Looking Statements
All statements in this release other than historical facts are forward-looking statements, which rely on a number of estimates, projections and assumptions concerning future events. Such statements are also subject to a number of uncertainties and factors outside Cushman & Wakefield’s control. Such factors include, but are not limited to, disruptions in general macroeconomic conditions and global and regional demand for commercial real estate; our ability to attract and retain members of our senior management and qualified revenue producing employees; disruptions to our business and to our clients’ businesses caused by COVID-19; the inability of our acquisitions and joint ventures to perform as expected and the unavailability of similar future opportunities; our ability to preserve, grow and leverage the value of our brand; the concentration of business with corporate clients; our ability to appropriately address actual or perceived conflicts of interest; our ability to maintain and execute information technology strategies, maintain the security of our information and adapt to changes in technology; interruption or failure of our information technology, communications systems or data services; our vulnerability to material breaches related to our information technology; our ability to comply with current and future data privacy regulations and other confidentiality obligations; the extent to which natural disasters, global health crises, building defects, terrorist attacks and mass shootings may disrupt our ability to manage client properties; the potential impairment of our goodwill and other intangible assets; our ability to comply with new laws or regulations or changes in existing laws or regulations and to make correct determinations in complex tax regimes; our ability to execute on our strategy for operational efficiency; the seasonality of significant portions of our revenue and cash flow; the failure of third parties to comply with contract, regulatory or legal requirements; risks associated with the effects of climate change and ability to achieve our sustainability goals; the possibility that we may be subject to environmental liability as a result of our role as a real estate services provider; our ability to compete globally, regionally and locally; social, political and economic risks in different countries as well as foreign currency volatility; the ability of our principal shareholders to exert significant influence over us; the effects from either us or our existing shareholders selling a large number of ordinary shares in the market; our intention or ability to pay cash dividends on our ordinary shares; uncertainties related to the timing and amount of any potential share repurchases; the operating and financial restrictions that our 2018 Credit Agreement and the indenture governing the 2020 Notes impose on us and the possibility that in an event of default all of our borrowings may become immediately payable; our substantial indebtedness; the potential that we may incur more debt; our ability to generate sufficient cash flow from operations to satisfy our debt service obligations; risks related to litigation; the fact that the rights of our shareholders differ in certain respects from the rights typically offered to shareholders of a
Cushman & Wakefield plc |
|||||||||||||
Condensed Consolidated Statements of Operations |
|||||||||||||
(unaudited) |
|||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||
(in millions, except per share data) |
2023 |
2022 |
|
2023 |
2022 |
||||||||
Revenue |
$ |
2,406.0 |
|
$ |
2,612.6 |
|
|
$ |
4,655.3 |
|
$ |
4,943.6 |
|
Costs and expenses: |
|
|
|
|
|
||||||||
Costs of services (exclusive of depreciation and amortization) |
|
1,978.1 |
|
|
2,077.5 |
|
|
|
3,885.7 |
|
|
3,938.0 |
|
Operating, administrative and other |
|
328.9 |
|
|
317.5 |
|
|
|
644.8 |
|
|
610.9 |
|
Depreciation and amortization |
|
35.7 |
|
|
39.7 |
|
|
|
72.6 |
|
|
80.3 |
|
Restructuring, impairment and related charges |
|
7.0 |
|
|
1.3 |
|
|
|
14.2 |
|
|
2.5 |
|
Total costs and expenses |
|
2,349.7 |
|
|
2,436.0 |
|
|
|
4,617.3 |
|
|
4,631.7 |
|
Operating income |
|
56.3 |
|
|
176.6 |
|
|
|
38.0 |
|
|
311.9 |
|
Interest expense, net of interest income |
|
(57.9 |
) |
|
(46.1 |
) |
|
|
(134.7 |
) |
|
(89.3 |
) |
Earnings from equity method investments |
|
12.8 |
|
|
17.5 |
|
|
|
24.7 |
|
|
34.4 |
|
Other expense, net |
|
(4.8 |
) |
|
(25.0 |
) |
|
|
(10.8 |
) |
|
(57.9 |
) |
Earnings (loss) before income taxes |
|
6.4 |
|
|
123.0 |
|
|
|
(82.8 |
) |
|
199.1 |
|
Provision for (benefit from) income taxes |
|
1.3 |
|
|
25.8 |
|
|
|
(11.5 |
) |
|
56.4 |
|
Net income (loss) |
$ |
5.1 |
|
$ |
97.2 |
|
|
$ |
(71.3 |
) |
$ |
142.7 |
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share: |
|
|
|
|
|
||||||||
Earnings (loss) per share attributable to common shareholders, basic |
$ |
0.02 |
|
$ |
0.43 |
|
|
$ |
(0.31 |
) |
$ |
0.63 |
|
Weighted average shares outstanding for basic earnings (loss) per share |
|
227.1 |
|
|
225.6 |
|
|
|
226.7 |
|
|
225.1 |
|
Diluted earnings (loss) per share: |
|
|
|
|
|
||||||||
Earnings (loss) per share attributable to common shareholders, diluted |
$ |
0.02 |
|
$ |
0.43 |
|
|
$ |
(0.31 |
) |
$ |
0.62 |
|
Weighted average shares outstanding for diluted earnings (loss) per share |
|
227.1 |
|
|
228.0 |
|
|
|
226.7 |
|
|
228.6 |
|
Cushman & Wakefield plc |
||||||
Condensed Consolidated Balance Sheets |
||||||
|
As of |
|||||
(in millions, except per share data) |
June 30, 2023 |
December 31, 2022 |
||||
Assets |
(unaudited) |
|
||||
Current assets: |
|
|
||||
Cash and cash equivalents |
$ |
502.3 |
|
$ |
644.5 |
|
Trade and other receivables, net of allowance of |
|
1,336.1 |
|
|
1,462.4 |
|
Income tax receivable |
|
144.8 |
|
|
55.4 |
|
Short-term contract assets, net |
|
374.6 |
|
|
358.2 |
|
Prepaid expenses and other current assets |
|
266.8 |
|
|
246.3 |
|
Total current assets |
|
2,624.6 |
|
|
2,766.8 |
|
Property and equipment, net |
|
166.0 |
|
|
172.6 |
|
Goodwill |
|
2,073.3 |
|
|
2,065.5 |
|
Intangible assets, net |
|
841.0 |
|
|
874.5 |
|
Equity method investments |
|
681.9 |
|
|
677.3 |
|
Deferred tax assets |
|
57.1 |
|
|
58.6 |
|
Non-current operating lease assets |
|
345.8 |
|
|
358.0 |
|
Other non-current assets |
|
850.4 |
|
|
976.0 |
|
Total assets |
$ |
7,640.1 |
|
$ |
7,949.3 |
|
|
|
|
||||
Liabilities and Shareholders' Equity |
|
|
||||
Current liabilities: |
|
|
||||
Short-term borrowings and current portion of long-term debt |
$ |
36.7 |
|
$ |
49.8 |
|
Accounts payable and accrued expenses |
|
1,125.2 |
|
|
1,199.0 |
|
Accrued compensation |
|
694.7 |
|
|
916.5 |
|
Income tax payable |
|
55.4 |
|
|
33.1 |
|
Other current liabilities |
|
211.3 |
|
|
192.0 |
|
Total current liabilities |
|
2,123.3 |
|
|
2,390.4 |
|
Long-term debt, net |
|
3,226.4 |
|
|
3,211.7 |
|
Deferred tax liabilities |
|
56.3 |
|
|
57.2 |
|
Non-current operating lease liabilities |
|
324.3 |
|
|
334.6 |
|
Other non-current liabilities |
|
287.8 |
|
|
293.3 |
|
Total liabilities |
|
6,018.1 |
|
|
6,287.2 |
|
|
|
|
||||
Shareholders' equity: |
|
|
||||
Ordinary shares, nominal value |
|
22.7 |
|
|
22.6 |
|
Additional paid-in capital |
|
2,929.8 |
|
|
2,911.5 |
|
Accumulated deficit |
|
(1,153.1 |
) |
|
(1,081.8 |
) |
Accumulated other comprehensive loss |
|
(178.0 |
) |
|
(191.0 |
) |
Total equity attributable to the Company |
|
1,621.4 |
|
|
1,661.3 |
|
Non-controlling interests |
|
0.6 |
|
|
0.8 |
|
Total equity |
|
1,622.0 |
|
|
1,662.1 |
|
Total liabilities and shareholders' equity |
$ |
7,640.1 |
|
$ |
7,949.3 |
|
Cushman & Wakefield plc |
||||||
Condensed Consolidated Statements of Cash Flows |
||||||
(unaudited) |
||||||
|
Six Months Ended June 30, |
|||||
(in millions) |
2023 |
2022 |
||||
Cash flows from operating activities |
|
|
||||
Net (loss) income |
$ |
(71.3 |
) |
$ |
142.7 |
|
Reconciliation of net (loss) income to net cash used in operating activities: |
|
|
||||
Depreciation and amortization |
|
72.6 |
|
|
80.3 |
|
Impairment charges |
|
2.1 |
|
|
0.1 |
|
Unrealized foreign exchange gain |
|
(3.5 |
) |
|
(9.7 |
) |
Stock-based compensation |
|
25.3 |
|
|
20.5 |
|
Lease amortization |
|
48.5 |
|
|
49.8 |
|
Loss on debt extinguishment |
|
8.7 |
|
|
— |
|
Amortization of debt issuance costs |
|
3.9 |
|
|
3.5 |
|
Earnings from equity method investments, net of dividends received |
|
(10.4 |
) |
|
(21.9 |
) |
Change in deferred taxes |
|
(4.1 |
) |
|
(38.7 |
) |
Provision for loss on receivables and other assets |
|
1.8 |
|
|
9.9 |
|
Loss on disposal of business |
|
1.4 |
|
|
14.0 |
|
Unrealized loss on equity securities, net |
|
18.9 |
|
|
48.8 |
|
Other operating activities, net |
|
9.4 |
|
|
(6.8 |
) |
Changes in assets and liabilities: |
|
|
||||
Trade and other receivables |
|
114.4 |
|
|
(159.6 |
) |
Income taxes payable |
|
(67.4 |
) |
|
(54.1 |
) |
Short-term contract assets and Prepaid expenses and other current assets |
|
(19.2 |
) |
|
(146.9 |
) |
Other non-current assets |
|
(38.7 |
) |
|
(94.9 |
) |
Accounts payable and accrued expenses |
|
(72.2 |
) |
|
13.1 |
|
Accrued compensation |
|
(227.7 |
) |
|
(85.0 |
) |
Other current and non-current liabilities |
|
(30.8 |
) |
|
(11.4 |
) |
Net cash used in operating activities |
|
(238.3 |
) |
|
(246.3 |
) |
Cash flows from investing activities |
|
|
||||
Payment for property and equipment |
|
(20.6 |
) |
|
(30.5 |
) |
Acquisitions of businesses, net of cash acquired |
|
— |
|
|
(19.2 |
) |
Investments in equity securities and equity method joint ventures |
|
(5.5 |
) |
|
(18.3 |
) |
Return of beneficial interest in a securitization |
|
(40.0 |
) |
|
— |
|
Collection on beneficial interest in a securitization |
|
210.0 |
|
|
80.0 |
|
Other investing activities, net |
|
1.5 |
|
|
(9.4 |
) |
Net cash provided by investing activities |
|
145.4 |
|
|
2.6 |
|
Cash flows from financing activities |
|
|
||||
Shares repurchased for payment of employee taxes on stock awards |
|
(7.4 |
) |
|
(26.6 |
) |
Payment of deferred and contingent consideration |
|
(12.6 |
) |
|
(0.1 |
) |
Proceeds from borrowings |
|
1,000.0 |
|
|
— |
|
Repayment of borrowings |
|
(1,000.0 |
) |
|
(13.3 |
) |
Debt issuance costs |
|
(23.5 |
) |
|
— |
|
Payment of finance lease liabilities |
|
(13.6 |
) |
|
(7.7 |
) |
Other financing activities, net |
|
2.1 |
|
|
2.4 |
|
Net cash used in financing activities |
|
(55.0 |
) |
|
(45.3 |
) |
|
|
|
||||
Change in cash, cash equivalents and restricted cash |
|
(147.9 |
) |
|
(289.0 |
) |
Cash, cash equivalents and restricted cash, beginning of the period |
|
719.0 |
|
|
890.3 |
|
Effects of exchange rate fluctuations on cash, cash equivalents and restricted cash |
|
1.7 |
|
|
(18.6 |
) |
Cash, cash equivalents and restricted cash, end of the period |
$ |
572.8 |
|
$ |
582.7 |
|
Segment Results
The following tables summarize our results of operations for our operating segments for the three and six months ended June 30, 2023 and 2022.
Americas Results |
||||||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||||||||
(in millions) (unaudited) |
2023 |
2022 |
% Change
|
% Change
|
|
2023 |
2022 |
% Change
|
% Change
|
|||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|||||||||
Property, facilities and project management |
$ |
628.7 |
$ |
605.3 |
4 |
% |
4 |
% |
|
$ |
1,257.0 |
|
$ |
1,196.5 |
5 |
% |
5 |
% |
Leasing |
|
345.5 |
|
446.0 |
(23 |
)% |
(22 |
)% |
|
|
640.9 |
|
|
814.2 |
(21 |
)% |
(21 |
)% |
Capital markets |
|
163.5 |
|
308.9 |
(47 |
)% |
(47 |
)% |
|
|
282.4 |
|
|
550.3 |
(49 |
)% |
(49 |
)% |
Valuation and other |
|
38.4 |
|
53.1 |
(28 |
)% |
(26 |
)% |
|
|
71.8 |
|
|
100.3 |
(28 |
)% |
(27 |
)% |
Total service line fee revenue(1) |
|
1,176.1 |
|
1,413.3 |
(17 |
)% |
(17 |
)% |
|
|
2,252.1 |
|
|
2,661.3 |
(15 |
)% |
(15 |
)% |
Gross contract reimbursables(2) |
|
660.4 |
|
598.1 |
10 |
% |
10 |
% |
|
|
1,304.6 |
|
|
1,135.5 |
15 |
% |
15 |
% |
Total revenue |
$ |
1,836.5 |
$ |
2,011.4 |
(9 |
)% |
(9 |
)% |
|
$ |
3,556.7 |
|
$ |
3,796.8 |
(6 |
)% |
(6 |
)% |
|
|
|
|
|
|
|
|
|
|
|||||||||
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|||||||||
Americas Fee-based operating expenses |
$ |
1,067.0 |
$ |
1,219.7 |
(13 |
)% |
(12 |
)% |
|
$ |
2,093.2 |
|
$ |
2,306.4 |
(9 |
)% |
(9 |
)% |
Cost of gross contract reimbursables |
|
660.4 |
|
598.1 |
10 |
% |
10 |
% |
|
|
1,304.6 |
|
|
1,135.5 |
15 |
% |
15 |
% |
Segment operating expenses |
$ |
1,727.4 |
$ |
1,817.8 |
(5 |
)% |
(5 |
)% |
|
$ |
3,397.8 |
|
$ |
3,441.9 |
(1 |
)% |
(1 |
)% |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
$ |
9.6 |
$ |
75.2 |
(87 |
)% |
(87 |
)% |
|
$ |
(30.9 |
) |
$ |
132.4 |
n.m. |
n.m. |
||
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ |
116.4 |
$ |
210.5 |
(45 |
)% |
(44 |
)% |
|
$ |
173.1 |
|
$ |
386.5 |
(55 |
)% |
(55 |
)% |
n.m. not meaningful |
(1) Service line fee revenue represents revenue for fees generated from each of our service lines. |
(2) Gross contract reimbursables reflects revenue from clients which have substantially no margin. |
EMEA Results |
|||||||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||||||
(in millions) (unaudited) |
2023 |
2022 |
% Change
|
% Change
|
|
2023 |
2022 |
% Change
|
% Change
|
||||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
||||||||||
Property, facilities and project management |
$ |
94.3 |
|
$ |
95.3 |
(1 |
)% |
(3 |
)% |
|
$ |
181.2 |
|
$ |
188.9 |
(4 |
)% |
(2 |
)% |
Leasing |
|
54.0 |
|
|
64.3 |
(16 |
)% |
(17 |
)% |
|
|
94.4 |
|
|
113.6 |
(17 |
)% |
(16 |
)% |
Capital markets |
|
18.0 |
|
|
45.5 |
(60 |
)% |
(61 |
)% |
|
|
31.6 |
|
|
74.3 |
(57 |
)% |
(57 |
)% |
Valuation and other |
|
41.8 |
|
|
43.5 |
(4 |
)% |
(4 |
)% |
|
|
83.8 |
|
|
87.1 |
(4 |
)% |
0 |
% |
Total service line fee revenue(1) |
|
208.1 |
|
|
248.6 |
(16 |
)% |
(17 |
)% |
|
|
391.0 |
|
|
463.9 |
(16 |
)% |
(14 |
)% |
Gross contract reimbursables(2) |
|
31.8 |
|
|
23.3 |
36 |
% |
34 |
% |
|
|
54.2 |
|
|
45.6 |
19 |
% |
21 |
% |
Total revenue |
$ |
239.9 |
|
$ |
271.9 |
(12 |
)% |
(13 |
)% |
|
$ |
445.2 |
|
$ |
509.5 |
(13 |
)% |
(11 |
)% |
|
|
|
|
|
|
|
|
|
|
||||||||||
Costs and expenses: |
|
|
|
|
|
|
|
|
|
||||||||||
EMEA Fee-based operating expenses |
$ |
191.4 |
|
$ |
213.9 |
(11 |
)% |
(12 |
)% |
|
$ |
377.0 |
|
$ |
414.4 |
(9 |
)% |
(7 |
)% |
Cost of gross contract reimbursables |
|
31.8 |
|
|
23.3 |
36 |
% |
34 |
% |
|
|
54.2 |
|
|
45.6 |
19 |
% |
21 |
% |
Segment operating expenses |
$ |
223.2 |
|
$ |
237.2 |
(6 |
)% |
(7 |
)% |
|
$ |
431.2 |
|
$ |
460.0 |
(6 |
)% |
(4 |
)% |
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income |
$ |
(5.2 |
) |
$ |
20.4 |
n.m. |
n.m. |
|
$ |
(29.5 |
) |
$ |
0.1 |
n.m. |
n.m. |
||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA |
$ |
16.9 |
|
$ |
35.3 |
(52 |
)% |
(54 |
)% |
|
$ |
14.8 |
|
$ |
52.0 |
(72 |
)% |
(72 |
)% |
n.m. not meaningful |
(1) Service line fee revenue represents revenue for fees generated from each of our service lines. |
(2) Gross contract reimbursables reflects revenue from clients which have substantially no margin. |
APAC Results |
||||||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||||||||
(in millions) (unaudited) |
2023 |
2022 |
% Change
|
% Change
|
|
2023 |
2022 |
% Change
|
% Change
|
|||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|||||||||
Property, facilities and project management |
$ |
165.9 |
$ |
168.2 |
(1 |
)% |
1 |
% |
|
$ |
347.5 |
|
$ |
324.4 |
7 |
% |
10 |
% |
Leasing |
|
42.3 |
|
42.5 |
0 |
% |
5 |
% |
|
|
69.1 |
|
|
79.7 |
(13 |
)% |
(8 |
)% |
Capital markets |
|
10.4 |
|
12.9 |
(19 |
)% |
(15 |
)% |
|
|
20.8 |
|
|
31.7 |
(34 |
)% |
(31 |
)% |
Valuation and other |
|
30.1 |
|
30.9 |
(3 |
)% |
2 |
% |
|
|
56.4 |
|
|
60.2 |
(6 |
)% |
(1 |
)% |
Total service line fee revenue(1) |
|
248.7 |
|
254.5 |
(2 |
)% |
1 |
% |
|
|
493.8 |
|
|
496.0 |
0 |
% |
3 |
% |
Gross contract reimbursables(2) |
|
80.9 |
|
74.8 |
8 |
% |
14 |
% |
|
|
159.6 |
|
|
141.3 |
13 |
% |
20 |
% |
Total revenue |
$ |
329.6 |
$ |
329.3 |
0 |
% |
4 |
% |
|
$ |
653.4 |
|
$ |
637.3 |
3 |
% |
7 |
% |
|
|
|
|
|
|
|
|
|
|
|||||||||
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|||||||||
APAC Fee-based operating expenses |
$ |
240.7 |
$ |
239.0 |
1 |
% |
4 |
% |
|
$ |
486.9 |
|
$ |
461.8 |
5 |
% |
9 |
% |
Cost of gross contract reimbursables |
|
80.9 |
|
74.8 |
8 |
% |
14 |
% |
|
|
159.6 |
|
|
141.3 |
13 |
% |
20 |
% |
Segment operating expenses |
$ |
321.6 |
$ |
313.8 |
2 |
% |
7 |
% |
|
$ |
646.5 |
|
$ |
603.1 |
7 |
% |
12 |
% |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
$ |
0.7 |
$ |
1.6 |
(56 |
)% |
(25 |
)% |
|
$ |
(10.9 |
) |
$ |
10.2 |
n.m. |
n.m. |
||
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ |
12.8 |
$ |
17.0 |
(25 |
)% |
(22 |
)% |
|
$ |
19.1 |
|
$ |
38.6 |
(51 |
)% |
(48 |
)% |
n.m. not meaningful |
(1) Service line fee revenue represents revenue for fees generated from each of our service lines. |
(2) Gross contract reimbursables reflects revenue from clients which have substantially no margin.
|
Cushman & Wakefield plc
Use of Non-GAAP Financial Measures
We have used the following measures, which are considered “non-GAAP financial measures” under SEC guidelines:
i. |
Segment operating expenses and Fee-based operating expenses; |
||
ii. |
Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) and
|
||
iii. |
Adjusted net income and Adjusted earnings per share; |
||
iv. |
Local currency; and |
||
v. |
Net debt. |
Our management principally uses these non-GAAP financial measures to evaluate operating performance, develop budgets and forecasts, improve comparability of results and assist our investors in analyzing the underlying performance of our business. These measures are not recognized measurements under GAAP. When analyzing our operating results, investors should use them in addition to, but not as an alternative for, the most directly comparable financial results calculated and presented in accordance with GAAP. Because the Company’s calculation of these non-GAAP financial measures may differ from other companies, our presentation of these measures may not be comparable to similarly titled measures of other companies.
The Company believes that these measures provide a more complete understanding of ongoing operations, enhance comparability of current results to prior periods and may be useful for investors to analyze our financial performance. The measures eliminate the impact of certain items that may obscure trends in the underlying performance of our business. The Company believes that they are useful to investors for the additional purposes described below.
Segment operating expenses and Fee-based operating expenses: Consistent with GAAP, reimbursed costs for certain customer contracts are presented on a gross basis in both revenue and operating expenses for which the Company recognizes substantially no margin. Total costs and expenses include segment operating expenses as well as other expenses such as depreciation and amortization, integration and other costs related to merger, pre-IPO stock-based compensation, acquisition related costs and efficiency initiatives, cost savings initiatives, CEO transition costs and other non-recurring items. Segment operating expenses includes Fee-based operating expenses and Cost of gross contract reimbursables.
We believe Fee-based operating expenses more accurately reflects the costs we incur during the course of delivering services to our clients and is more consistent with how we manage our expense base and operating margins.
Adjusted EBITDA and Adjusted EBITDA margin: We have determined Adjusted EBITDA to be our primary measure of segment profitability. We believe that investors find this measure useful in comparing our operating performance to that of other companies in our industry because these calculations generally eliminate integration and other costs related to merger, pre-IPO stock-based compensation, unrealized (gains) / losses on investments, acquisition related costs and efficiency initiatives, cost savings initiatives, CEO transition costs and other non-recurring items. Adjusted EBITDA also excludes the effects of financings, income tax and the non-cash accounting effects of depreciation and intangible asset amortization. Adjusted EBITDA margin, a non-GAAP measure of profitability as a percent of revenue, is measured against service line fee revenue.
Adjusted net income and Adjusted earnings per share: Management also assesses the profitability of the business using Adjusted net income. We believe that investors find this measure useful in comparing our profitability to that of other companies in our industry because this calculation generally eliminates integration and other costs related to merger, pre-IPO stock-based compensation, unrealized (gains) / losses on investments, financing and other facility fees, acquisition related costs and efficiency initiatives, cost savings initiatives, CEO transition costs, depreciation and amortization related to merger and acquisition activity and other non-recurring items. Income tax, as adjusted, reflects management’s expectation about our long-term effective rate as a public company. The Company also uses Adjusted earnings per share (“EPS”) as a significant component when measuring operating performance. Management defines Adjusted EPS as Adjusted net income divided by total basic and diluted weighted average shares outstanding.
Local currency: In discussing our results, we refer to percentage changes in local currency. These metrics are calculated by holding foreign currency exchange rates constant in year-over-year comparisons. Management believes that this methodology provides investors with greater visibility into the performance of our business excluding the effect of foreign currency rate fluctuations.
Net debt: Net debt is used as a measure of our liquidity and is calculated as total debt minus cash and cash equivalents.
The interim financial information for the three and six months ended June 30, 2023 and 2022 is unaudited. All adjustments, consisting of normal recurring adjustments, except as otherwise noted, considered necessary for a fair presentation of the unaudited interim condensed consolidated financial information for these periods have been included. Users of all of the aforementioned unaudited interim financial information should refer to the audited Consolidated Financial Statements of the Company and notes thereto for the year ended December 31, 2022 in the Company's 2022 Annual Report on Form 10-K.
Please see the following tables for reconciliations of our non-GAAP financial measures to the most closely comparable GAAP measures.
Adjustments to GAAP financial measures used to calculate non-GAAP financial measures |
||||||||||
Reconciliation of Net income (loss) to Adjusted EBITDA: |
||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||
(in millions) (unaudited) |
2023 |
2022 |
|
2023 |
2022 |
|||||
Net income (loss) |
$ |
5.1 |
$ |
97.2 |
|
$ |
(71.3 |
) |
$ |
142.7 |
Add/(less): |
|
|
|
|
|
|||||
Depreciation and amortization |
|
35.7 |
|
39.7 |
|
|
72.6 |
|
|
80.3 |
Interest expense, net of interest income |
|
57.9 |
|
46.1 |
|
|
134.7 |
|
|
89.3 |
Provision for (benefit from) income taxes |
|
1.3 |
|
25.8 |
|
|
(11.5 |
) |
|
56.4 |
Unrealized loss on investments, net(1) |
|
8.2 |
|
27.3 |
|
|
18.9 |
|
|
48.8 |
Integration and other costs related to merger(2) |
|
2.0 |
|
4.3 |
|
|
4.4 |
|
|
7.9 |
Pre-IPO stock-based compensation |
|
— |
|
1.0 |
|
|
— |
|
|
1.7 |
Acquisition related costs and efficiency initiatives(3) |
|
5.1 |
|
17.8 |
|
|
11.7 |
|
|
35.0 |
Cost savings initiatives(4) |
|
12.2 |
|
— |
|
|
27.2 |
|
|
— |
CEO transition costs(5) |
|
2.3 |
|
— |
|
|
2.3 |
|
|
— |
Other(6) |
|
16.3 |
|
3.6 |
|
|
18.0 |
|
|
15.0 |
Adjusted EBITDA |
$ |
146.1 |
$ |
262.8 |
|
$ |
207.0 |
|
$ |
477.1 |
(1) |
Represents net unrealized losses on fair value investments during the three and six months ended June 30, 2023 and 2022, primarily related to our investment in WeWork. |
(2) |
Integration and other costs related to merger reflects the non-cash amortization expense of certain merger related retention awards that will be amortized through 2026, and the non-cash amortization expense of merger related deferred rent and tenant incentives which will be amortized through 2028. |
(3) |
Includes internal and external consulting costs incurred to implement certain distinct operating efficiency initiatives which include significant company-wide changes to realign our organization to allow the Company to be a more agile partner to its clients, and vary in frequency, amount and occurrence based on factors specific to each initiative. In addition, this includes certain direct costs incurred in connection with acquiring businesses. |
(4) |
Cost savings initiatives primarily reflects severance and other one-time employment-related separation costs related to 2023 actions to reduce headcount across select roles to help optimize our workforce given the current macroeconomic conditions and operating environment, as well as property lease rationalizations. |
(5) |
CEO transition costs reflect accelerated stock-based compensation expense associated with stock awards granted to John Forrester, the Company’s former Chief Executive Officer who stepped down from that position as of June 30, 2023, but remains employed by the Company as a Strategic Advisor. The requisite service period under the applicable award agreements will be satisfied upon Mr. Forrester’s planned retirement from the Company on December 31, 2023. We believe the accelerated expense for these stock awards is similar in nature to one-time severance benefits and is not a normal, recurring operating expense necessary to operate the business. |
(6) |
For the three and six months ended June 30, 2023, Other primarily reflects the additional non-cash servicing liability fee of |
Reconciliation of Net income (loss) to Adjusted net income: |
|||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||
(in millions, except per share data) (unaudited) |
2023 |
2022 |
|
2023 |
2022 |
||||||||
Net income (loss) |
$ |
5.1 |
|
$ |
97.2 |
|
|
$ |
(71.3 |
) |
$ |
142.7 |
|
Add/(less): |
|
|
|
|
|
||||||||
Merger and acquisition related depreciation and amortization |
|
17.7 |
|
|
18.7 |
|
|
|
35.8 |
|
|
38.0 |
|
Unrealized loss on investments, net |
|
8.2 |
|
|
27.3 |
|
|
|
18.9 |
|
|
48.8 |
|
Financing and other facility fees(1) |
|
— |
|
|
— |
|
|
|
21.6 |
|
|
— |
|
Integration and other costs related to merger |
|
2.0 |
|
|
4.3 |
|
|
|
4.4 |
|
|
7.9 |
|
Pre-IPO stock-based compensation |
|
— |
|
|
1.0 |
|
|
|
— |
|
|
1.7 |
|
Acquisition related costs and efficiency initiatives |
|
5.1 |
|
|
17.8 |
|
|
|
11.7 |
|
|
35.0 |
|
Cost savings initiatives |
|
12.2 |
|
|
— |
|
|
|
27.2 |
|
|
— |
|
CEO transition costs |
|
2.3 |
|
|
— |
|
|
|
2.3 |
|
|
— |
|
Other |
|
16.3 |
|
|
3.6 |
|
|
|
18.0 |
|
|
15.0 |
|
Income tax adjustments(2) |
|
(18.4 |
) |
|
(27.0 |
) |
|
|
(27.5 |
) |
|
(36.9 |
) |
Adjusted net income |
$ |
50.5 |
|
$ |
142.9 |
|
|
$ |
41.1 |
|
$ |
252.2 |
|
Weighted average shares outstanding, basic |
|
227.1 |
|
|
225.6 |
|
|
|
226.7 |
|
|
225.1 |
|
Weighted average shares outstanding, diluted(3) |
|
227.1 |
|
|
228.0 |
|
|
|
227.2 |
|
|
228.6 |
|
Adjusted earnings per share, basic |
$ |
0.22 |
|
$ |
0.63 |
|
|
$ |
0.18 |
|
$ |
1.12 |
|
Adjusted earnings per share, diluted |
$ |
0.22 |
|
$ |
0.63 |
|
|
$ |
0.18 |
|
$ |
1.10 |
|
(1) |
Financing and other facility fees reflects costs related to the refinancing of a portion of the borrowings under our 2018 Credit Agreement in January 2023, including a loss on debt extinguishment of |
(2) |
Reflective of management's estimation of an adjusted effective tax rate (adjusted for certain items) of |
(3) |
Weighted average shares outstanding, diluted is calculated by taking basic weighted average shares outstanding and adding dilutive shares of 0.0 million and 0.5 million for the three and six months ended June 30, 2023, respectively, and dilutive shares of 2.4 million and 3.5 million for the three and six months ended June 30, 2022, respectively. |
Summary of Total costs and expenses: |
|||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||
(in millions) (unaudited) |
2023 |
2022 |
|
2023 |
2022 |
||||
Americas Fee-based operating expenses |
$ |
1,067.0 |
$ |
1,219.7 |
|
$ |
2,093.2 |
$ |
2,306.4 |
EMEA Fee-based operating expenses |
|
191.4 |
|
213.9 |
|
|
377.0 |
|
414.4 |
APAC Fee-based operating expenses |
|
240.7 |
|
239.0 |
|
|
486.9 |
|
461.8 |
Cost of gross contract reimbursables |
|
773.1 |
|
696.2 |
|
|
1,518.4 |
|
1,322.4 |
Segment operating expenses |
|
2,272.2 |
|
2,368.8 |
|
|
4,475.5 |
|
4,505.0 |
Depreciation and amortization |
|
35.7 |
|
39.7 |
|
|
72.6 |
|
80.3 |
Integration and other costs related to merger(1) |
|
2.0 |
|
4.3 |
|
|
4.4 |
|
7.9 |
Pre-IPO stock-based compensation |
|
— |
|
1.0 |
|
|
— |
|
1.7 |
Acquisition related costs and efficiency initiatives(2) |
|
5.1 |
|
17.8 |
|
|
11.7 |
|
35.0 |
Cost savings initiatives(3) |
|
12.2 |
|
— |
|
|
27.2 |
|
— |
CEO transition costs(4) |
|
2.3 |
|
— |
|
|
2.3 |
|
— |
Other, including foreign currency movements(5) |
|
20.2 |
|
4.4 |
|
|
23.6 |
|
1.8 |
Total costs and expenses |
$ |
2,349.7 |
$ |
2,436.0 |
|
$ |
4,617.3 |
$ |
4,631.7 |
(1) |
Integration and other costs related to merger reflects the non-cash amortization expense of certain merger related broker retention awards that will be amortized through 2026, and the non-cash amortization expense of merger related deferred rent and tenant incentives which will be amortized through 2028. |
(2) |
Includes internal and external consulting costs incurred to implement certain distinct operating efficiency initiatives which include significant company-wide changes to realign our organization to allow the Company to be a more agile partner to its clients, and vary in frequency, amount and occurrence based on factors specific to each initiative. In addition, this includes certain direct costs incurred in connection with acquiring businesses. |
(3) |
Cost savings initiatives primarily reflects severance and other one-time employment-related separation costs actioned in 2023 to reduce headcount across select roles to help optimize our workforce given the current macroeconomic conditions and operating environment, as well as property lease rationalizations. |
(4) |
CEO transition costs reflect accelerated stock-based compensation expense associated with stock awards granted to John Forrester, the Company’s former Chief Executive Officer who stepped down from that position as of June 30, 2023, but remains employed by the Company as a Strategic Advisor. The requisite service period under the applicable award agreements will be satisfied upon Mr. Forrester’s planned retirement from the Company on December 31, 2023. We believe the accelerated expense for these stock awards is similar in nature to one-time severance benefits and is not a normal, recurring operating expense necessary to operate the business. |
(5) |
For the three and six months ended June 30, 2023, Other primarily reflects the additional non-cash servicing liability fee of |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230730099188/en/
INVESTOR RELATIONS
Megan McGrath
Investor Relations
+1 312 338 7860
IR@cushwake.com
MEDIA CONTACT
Aixa Velez
Corporate Communications
+1 312 424 8195
aixa.velez@cushwake.com
Source: Cushman & Wakefield
FAQ
What was the revenue change for the second quarter of 2023 compared to Q2 2022?
Which service line showed growth in Q2 2023?
How much gross cost savings did the company achieve in the first half of 2023?
