CHICAGO--(BUSINESS WIRE)--
Cushman & Wakefield (NYSE: CWK) today reported financial results for the
full year and fourth quarter ended December 31, 2018i and
provided 2019 guidance:
-
Revenue for the full year 2018 was $8.2 billion, up 19% (19% local
currencyii). Fee revenue was $6.0 billion, up 12% (12%
local currency).
-
Full year Net loss decreased $35.5 million to $(185.8) million, with
Net loss per share of $(1.09) and Adjusted earnings per share of $1.67.
-
Full year Adjusted EBITDA was $659.1 million, up 25% (26% local
currency). Adjusted EBITDA margin of 11.1% was up 115 bps.
-
Revenue for the fourth quarter was $2.4 billion, up 17% (19% local
currencyii). Fee revenue was $1.8 billion, up 8% (10% local
currency).
-
2019 Adjusted EBITDA expected to be in the range of $685 million to
$735 millioniii.
“We have strong momentum and are extremely pleased with the performance
of our business in 2018, highlighted by double-digit growth in Fee
revenue and Adjusted EBITDA and significant margin expansion,” said
Brett White, Executive Chairman & CEO. “In addition, we completed one of
the largest IPOs of the year based on offering size and made outstanding
progress on our financial, operational and growth objectives."
Consolidated Results (unaudited)
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Three
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Three
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Months
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Months
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Year
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Year
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Ended
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Ended
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% Change
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Ended
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Ended
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% Change
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December
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December
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% Change
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in Local
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December
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December
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% Change
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in Local
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(in millions)
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31, 2018
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31, 2017
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in USD
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Currency
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31, 2018
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31, 2017
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in USD
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Currency
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Revenue:
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Total revenue
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$
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2,401.9
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|
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$
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2,052.7
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17
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%
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19
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%
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|
$
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8,219.9
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$
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6,923.9
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19
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%
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19
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%
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Less: Gross contract costs
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(650.2
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)
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(440.1
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)
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48
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%
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50
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%
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(2,271.8
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)
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(1,627.3
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)
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40
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%
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40
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%
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Acquisition accounting adjustments
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—
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10.2
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n/m
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n/m
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2.5
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23.2
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n/m
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n/m
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Total Fee revenue(1) |
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$
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1,751.7
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$
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1,622.8
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8
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%
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|
10
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%
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$
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5,950.6
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$
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5,319.8
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12
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%
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12
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%
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Service Lines:
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Property, facilities and project management
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$
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697.6
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$
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668.7
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4
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%
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|
7
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%
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|
$
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2,622.1
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|
|
$
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2,488.5
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|
|
5
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%
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|
6
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%
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Leasing
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605.4
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|
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576.6
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|
|
5
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%
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|
7
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%
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1,920.7
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|
|
1,650.8
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|
|
16
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%
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|
16
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%
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Capital markets
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310.7
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|
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248.0
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|
|
25
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%
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|
27
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%
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959.6
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|
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740.5
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|
|
30
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%
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|
29
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%
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Valuation and other
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138.0
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|
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129.5
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|
|
7
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%
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|
10
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%
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448.2
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|
|
440.0
|
|
|
2
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%
|
|
1
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%
|
Total Fee revenue(1) |
|
$
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1,751.7
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|
|
$
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1,622.8
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|
|
8
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%
|
|
10
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%
|
|
$
|
5,950.6
|
|
|
$
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5,319.8
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|
|
12
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%
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|
12
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%
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Costs and expenses:
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Cost of services, operating and administrative expenses excluding
gross contract costs
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$
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1,630.5
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$
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1,482.0
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10
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%
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12
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%
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|
$
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5,641.7
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|
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$
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5,168.6
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|
|
9
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%
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|
9
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%
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Gross contract costs
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|
650.2
|
|
|
440.1
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|
|
48
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%
|
|
50
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%
|
|
2,271.8
|
|
|
1,627.3
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|
|
40
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%
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|
40
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%
|
Depreciation and amortization
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77.0
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|
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77.6
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(1
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)%
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0
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%
|
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290.0
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|
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270.6
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|
|
7
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%
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|
7
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%
|
Restructuring, impairment and related charges
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1.0
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|
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15.8
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|
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(94
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)%
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(93
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)%
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3.8
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|
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28.5
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|
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(87
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)%
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(87
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)%
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Total costs and expenses
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2,358.7
|
|
|
2,015.5
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|
|
17
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%
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|
19
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%
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8,207.3
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|
|
7,095.0
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|
|
16
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%
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|
16
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%
|
Operating income/(loss)
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|
$
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43.2
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|
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$
|
37.2
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|
|
16
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%
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|
17
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%
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|
$
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12.6
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|
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$
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(171.1
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)
|
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(107
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)%
|
|
(109
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)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
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$
|
235.5
|
|
|
$
|
266.6
|
|
|
(12
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)%
|
|
(9
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)%
|
|
$
|
659.1
|
|
|
$
|
528.5
|
|
|
25
|
%
|
|
26
|
%
|
Adjusted EBITDA Margin(1) |
|
13.4
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%
|
|
16.4
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%
|
|
|
|
|
|
11.1
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%
|
|
9.9
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%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net (loss) income
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|
$
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(18.0
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)
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$
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22.2
|
|
|
(181
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)%
|
|
|
|
$
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(185.8
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)
|
|
$
|
(221.3
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)
|
|
(16
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)%
|
|
|
Adjusted net income(1) |
|
$
|
130.4
|
|
|
$
|
133.2
|
|
|
(2
|
)%
|
|
|
|
$
|
306.6
|
|
|
$
|
181.6
|
|
|
69
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic
|
|
209.0
|
|
144.8
|
|
|
|
|
|
171.2
|
|
143.9
|
|
|
|
|
Weighted average shares outstanding, diluted(2) |
|
222.2
|
|
155.7
|
|
|
|
|
|
183.4
|
|
154.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, basic
|
|
$
|
(0.09
|
)
|
|
$
|
0.15
|
|
|
|
|
|
|
$
|
(1.09
|
)
|
|
$
|
(1.54
|
)
|
|
|
|
|
Earnings per share, diluted
|
|
$
|
(0.09
|
)
|
|
$
|
0.14
|
|
|
|
|
|
|
$
|
(1.09
|
)
|
|
$
|
(1.54
|
)
|
|
|
|
|
Adjusted earnings per share, diluted
|
|
$
|
0.59
|
|
|
$
|
0.86
|
|
|
|
|
|
|
$
|
1.67
|
|
|
$
|
1.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
(1) See the end of this press release for reconciliations of
(i) Fee revenue to revenue; (ii) Fee-based operating expenses to total
costs and expenses; (iii) Adjusted EBITDA to net loss; and (iv) Adjusted
net income to net loss; and for explanations on the calculations of
Adjusted EBITDA margin and Adjusted earnings per share, diluted. See
also the definition of, and a description of the purposes for which our
management uses these non-GAAP measures under the Use of Non-GAAP
Financial Measures section in this press release.
(2)For all periods with GAAP net loss, weighted average
shares outstanding, diluted is used to calculate Adjusted earnings per
share, diluted.
Fourth Quarter Results (unaudited)
Revenue
Revenue was $2.4 billion, an increase of $349.2 million or 17%. Gross
contract costs, primarily in the Property, facilities and project
management service line, increased $210.1 million driven by the $98.2
million impact of the adoption of Topic 606. Foreign currency had a
$45.3 million or 2%, unfavorable impact on Revenue.
Fee revenue was $1.8 billion, an increase of $164.8 million or 10% on a
local currency basis, reflecting increases primarily in Capital markets,
Property, facilities and project management and Leasing. Capital markets
Fee revenue increased by $67.0 million or 27%, on a local currency
basis, driven by an Americas increase of $44.3 million or 27%, on a
local currency basis. Property, facilities and project management Fee
revenue increased $46.4 million or 7% on a local currency basis, driven
by an EMEA increase of $19.4 million or 28%, on a local currency basis,
with the remainder of the Fee revenue growth primarily in Americas.
Leasing Fee revenue increased $38.9 million or 7%, on a local currency
basis, driven by an Americas increase of $36.4 million or 9%, on a local
currency basis, with the remainder of the Fee revenue growth primarily
in APAC.
Operating expenses
Operating expenses were $2.4 billion, an increase of $343.2 million or
17%. The increase in operating expenses reflected increased cost
associated with revenue growth and the $98.2 million increase to gross
contract costs resulting from the adoption of Topic 606.
Fee-based operating expenses, excluding Depreciation and amortization,
integration and other costs related to acquisitions and stock-based
compensation, were $1.5 billion, a 14% increase on a local currency
basis. The growth in Fee-based operating expenses reflected higher cost
of services associated with Fee revenue growth.
Interest expense
Net interest expense was $39.7 million, a decrease of $8.5 million,
driven by lower average borrowings during the quarter. Net interest
expense does not include accounts receivable securitization costs of
$2.4 million and $3.2 million for the three months ended December 31,
2018 and 2017, respectively.
Provision/benefit from income taxes
The provision for income taxes was $23.0 million, a change of $46.0
million. The change was driven by the one-time deferred tax benefit
received from the decrease in the U.S. corporate tax rate from 35% to
21% in the fourth quarter of 2017 and the subsequent re-measurement of
deferred tax liabilities; as well as establishment of additional
valuation allowances.
Net loss and Adjusted EBITDA
Net loss was $18.0 million, a change of $40.2 million, primarily driven
by the increase in Fee-based operating expenses exceeding the increase
in Fee revenue and a higher provision for income taxes, partially offset
by lower interest expense.
Adjusted EBITDA was $235.5 million, a decrease of $25.1 million or 9%,
on a local currency basis, driven by the increase in Fee-based operating
expenses exceeding the increase in Fee revenue, partially offset by the
$8.6 million local currency impact of the adoption of Topic 606.
Adjusted EBITDA margin, calculated on a Fee revenue basis, was 13.4%,
compared to 16.4% in the prior year, driven by Fee revenue mix and
operating leverage.
Full Year Results
Revenue
Revenue was $8.2 billion, an increase of $1.3 billion or 19%. Gross
contract costs, primarily in the Property, facilities and project
management service line, increased $644.5 million driven by the $400.2
million impact of the adoption of Topic 606. Foreign currency had an
insignificant impact on Revenue growth.
Fee revenue was $6.0 billion, an increase of $643.0 million or 12%, on a
local currency basis, reflecting increases in Leasing, Capital markets
and Property, facilities and project management. Leasing Fee revenue
increased by $272.7 million or 16%, on a local currency basis driven
primarily by the Americas increase of $240.5 million or 19.3% on a local
currency basis, with the remainder of Fee revenue growth primarily in
APAC. Capital markets Fee revenue increased by $219.2 million or 29%, on
a local currency basis, driven by an Americas increase of $169.1 million
or 32% on a local currency basis, with the remainder of Fee revenue
growth primarily in APAC. Property, facilities and project management
increased by $145.7 million or 6% on a local currency basis, driven
primarily by an Americas increase of $72.0 million or 4%, on a local
currency basis, with the remainder of the Fee revenue growth primarily
in EMEA.
Operating expenses
Operating expenses were $8.2 billion, an increase of $1.1 billion or
16%. The increase in operating expenses reflected increased cost
associated with revenue growth and the $400.2 million increase to gross
contract costs resulting from the adoption of Topic 606.
Fee-based operating expenses, excluding Depreciation and amortization,
integration and other costs related to acquisitions and stock-based
compensation, were $5.3 billion, a 10% increase on a local currency
basis. The growth in Fee-based operating expenses reflected higher cost
of services associated with Fee revenue growth.
Interest expense
Net interest expense was $228.8 million, an increase of $45.7 million,
driven by $53.8 million of charges related to the 2018 debt refinancing
and extinguishment activities. Net interest expense does not include
accounts receivable securitization costs of $6.7 million and $8.2
million for the years ending December 31, 2018 and 2017, respectively.
Benefit from income taxes
The benefit from income taxes was $25.0 million, a decrease of $95.5
million. The decrease was driven by the 2017 one-time deferred tax
benefit received from the decrease in the U.S. corporate tax rate from
35% to 21% and the subsequent re-measurement of deferred tax
liabilities, a lower net loss before taxes in 2018 and the establishment
of additional valuation allowances.
Net loss and Adjusted EBITDA
Net loss was $185.8 million, a decrease of $35.5 million, primarily
driven by the increase in Fee revenue exceeding the increase in
Fee-based operating expenses, partially offset by higher interest
expense and a lower benefit from income taxes.
Adjusted EBITDA was $659.1 million, an increase of $137.1 million or
26%, on a local currency basis, driven by the increase in Fee revenue
exceeding the increase in Fee-based operating expenses and the $10.9
million local currency impact of the adoption of Topic 606. Adjusted
EBITDA margin, calculated on a Fee revenue basis, was 11.1%, compared to
9.9% in the prior year, driven by Fee revenue mix and operating leverage.
Balance Sheet
-
The Company's outstanding 2018 First Lien debt, net of deferred
financing fees, was $2.7 billion as of December 31, 2018, which net of
cash and cash equivalents, resulted in a net debt position of
approximately $1.8 billion.
-
Total ending liquidity for the fourth quarter was $1.7 billion with
the majority of the balance being made up of an $810 million undrawn
revolving credit facility, and $895 million of cash and cash
equivalents.
Change in Accounting Principle - Stock-based
Compensation
In the fourth quarter of 2018 the Company changed its policy for
recognizing stock-based compensation expense for awards with service
conditions only from the graded attribution method to the straight-line
attribution method. We are presenting our financial results for the year
ended December 31, 2018 and the previously reported financial
information included herein on a basis consistent with the adoption of
this change in accounting principle. Going forward, beginning with our
Annual Report on Form 10-K for the year 2018, our financial information
will reflect this change with prior periods adjusted ("recast")
accordingly. The impacts to our financial statements resulting in the
adoption of this new policy are discussed below.
Balance Sheet: The change impacts the balance sheet primarily through a
decrease in both additional paid-in capital and accumulated deficit. As
of December 31, 2018 and 2017, total equity decreased by $5.6 million
and $4.5 million as a result of the application of this policy.
Cash Flows: Changes to our cash flows are driven primarily by lower
stock-based compensation and lower net loss. Total cash flows from
operating activities are not affected by this change.
Income Statement: Income statement impacts are driven by the shift to
straight-line expense attribution which affect the timing of expense
recognition. For the three months and the years ended 2018 and 2017,
this change increased (decreased) net (loss)/income by $(1.4) million
and $(3.0) million and $(3.6) million and $0.8 million, respectively.
The change had an immaterial impact on net loss per share for all
periods presented.
2019 Outlook
Cushman & Wakefield provides guidance on a non-GAAP basis, as the
Company cannot predict some elements that are included in reported GAAP
results, including the impact of foreign exchange. Refer to the Use of
Non-GAAP Financial Measures section for a more detailed discussion of
non-GAAP financial measures in more detail. The Company expects full
year 2019 Adjusted EBITDA to be in the range of $685.0 million to $735.0
millioniii, reflecting strong market fundamentals.
i The Company adopted Accounting Standard Update No. 2014-09, Revenue
from Contracts with Customers (together with all subsequent
amendments, "Topic 606") effective January 1, 2018
using the modified retrospective transition approach. Comparative
information continues to be reported under the accounting standards in
effect for periods prior to 2018. The impact to GAAP revenue for the
three months and year ended December 31, 2018 was an increase of $81.4
million and $432.8 million, respectively, over the GAAP revenue that
would have been reported if Topic 606 was not applicable. This impact
included increases of $98.2 million and $400.2 million related to
reimbursed expenses due to implementation of the updated principal
versus agent considerations in Topic 606, which had no impact on Fee
revenue, Operating loss, Adjusted EBITDA or Net loss, and the
acceleration in the timing of revenue recognition related to variable
consideration primarily for leasing services of $(16.8) million and
$32.6 million, which impacted both Revenue and Fee Revenue. The adoption
of Topic 606 resulted in a (provision)/benefit to Net loss of $(8.4)
million and $6.4 million and Adjusted EBITDA of $(8.6) million and $10.9
million for the three months and the year ended December 31, 2018,
respectively.
ii In order to assist our investors and improve comparability
of results, we present the year-over-year changes in certain of our
financial measures, such as Fee revenue and Adjusted EBITDA, in "local"
currency. The local currency change represents the year-over-year change
assuming no movement in foreign exchange rates from the prior year. We
believe that this presentation provides our management and investors
with a better view of comparability and trends in the underlying
operating business.
iii The Company has not reconciled the (non-GAAP) Adjusted
EBITDA forward-looking guidance included in this press release to the
most directly comparable GAAP measure because this cannot be done
without unreasonable effort due to the variability and low visibility
with respect to costs related to integration and other costs related to
acquisitions and share-based compensation, which are potential
adjustments to future earnings. We expect the variability of these items
to have a potentially unpredictable, and a potentially significant,
impact on our future GAAP financial results.
Conference Call
The Company’s Fourth Quarter 2018 Earnings Conference Call will be held
today, February 27, 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 877-683-2081 for
U.S. callers and 647-689-5424 for international callers. The Conference
ID is 9656185. A replay of the call will be available approximately two
hours after the conference call by accessing http://ir.cushmanwakefield.com.
A transcript of the call will be available on the Company’s Investor
Relations website at http://ir.cushmanwakefield.com.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services
firm that delivers exceptional value for real estate occupiers and
owners. Cushman & Wakefield is among the largest real estate services
firms with approximately 51,000 employees in 400 offices and 70
countries. In 2018, the firm had revenue of $8.2 billion across core
services of property, facilities and project management, leasing,
capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com
or follow @CushWake
on Twitter.
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, uncertainty regarding and changes in global economic or market
conditions and changes in government policies, laws, regulations and
practices. Should any Cushman & Wakefield estimates, projections and
assumptions or these other uncertainties and factors materialize in ways
that Cushman & Wakefield did not expect, there is no guarantee of future
performance and the actual results could differ materially from the
forward-looking statements in this presentation, including the
possibility that recipients may lose a material portion of the amounts
invested. While Cushman & Wakefield believes the assumptions underlying
these forward-looking statements are reasonable under current
circumstances, recipients should bear in mind that such assumptions are
inherently uncertain and subjective and that past or projected
performance is not necessarily indicative of future results. No
representation or warranty, express or implied, is made as to the
accuracy or completeness of the information contained in this
presentation, and nothing shall be relied upon as a promise or
representation as to the performance of any investment. You are
cautioned not to place undue reliance on such forward-looking statements
or other information in this presentation and should rely on your own
assessment of an investment or a transaction. Any estimates or
projections as to events that may occur in the future are based upon the
best and current judgment of Cushman & Wakefield as actual results may
vary from the projections and such variations may be material. Opinions
expressed are current opinions as of the date of this release.
|
Cushman & Wakefield plc
Condensed Consolidated Statement of Operations
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Year Ended December 31,
|
(in millions, except per share data) (unaudited)
|
|
2018
|
2017
|
|
2018
|
2017
|
Revenue
|
|
$
|
2,401.9
|
|
$
|
2,052.7
|
|
|
$
|
8,219.9
|
|
$
|
6,923.9
|
|
Costs and expenses:
|
|
|
|
|
|
|
Cost of services (exclusive of depreciation and amortization)
|
|
1,915.4
|
|
1,603.1
|
|
|
6,642.4
|
|
5,639.8
|
|
Operating, administrative and other
|
|
365.3
|
|
319.0
|
|
|
1,271.1
|
|
1,156.1
|
|
Depreciation and amortization
|
|
77.0
|
|
77.6
|
|
|
290.0
|
|
270.6
|
|
Restructuring, impairment and related charges
|
|
1.0
|
|
15.8
|
|
|
3.8
|
|
28.5
|
|
Total costs and expenses
|
|
2,358.7
|
|
2,015.5
|
|
|
8,207.3
|
|
7,095.0
|
|
Operating income (loss)
|
|
43.2
|
|
37.2
|
|
|
12.6
|
|
(171.1
|
)
|
Interest expense, net of interest income
|
|
(39.7
|
)
|
(48.2
|
)
|
|
(228.8
|
)
|
(183.1
|
)
|
Earnings from equity method investments
|
|
0.7
|
|
0.4
|
|
|
1.9
|
|
1.4
|
|
Other income, net
|
|
0.8
|
|
9.8
|
|
|
3.5
|
|
11.0
|
|
Earnings (loss) before income taxes
|
|
5.0
|
|
(0.8
|
)
|
|
(210.8
|
)
|
(341.8
|
)
|
Provision/(benefit) from income taxes
|
|
23.0
|
|
(23.0
|
)
|
|
(25.0
|
)
|
(120.5
|
)
|
Net (loss) income
|
|
$
|
(18.0
|
)
|
$
|
22.2
|
|
|
$
|
(185.8
|
)
|
$
|
(221.3
|
)
|
|
|
|
|
|
|
|
Basic and diluted loss per share:
|
|
|
|
|
|
|
Net (loss) earnings per share attributable to common shareholders,
basic
|
|
$
|
(0.09
|
)
|
$
|
0.15
|
|
|
$
|
(1.09
|
)
|
$
|
(1.54
|
)
|
Net (loss) earnings per share attributable to common shareholders,
diluted
|
|
$
|
(0.09
|
)
|
$
|
0.14
|
|
|
$
|
(1.09
|
)
|
$
|
(1.54
|
)
|
Weighted average shares outstanding, basic
|
|
209.0
|
|
144.8
|
|
|
171.2
|
|
143.9
|
|
Weighted average shares outstanding, diluted
|
|
209.0
|
|
155.7
|
|
|
171.2
|
|
143.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cushman & Wakefield plc
Consolidated Balance Sheets
|
|
|
|
|
|
As of
|
(in millions, except per share data) (unaudited)
|
|
December 31, 2018
|
|
December 31, 2017
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
895.3
|
|
|
$
|
405.6
|
|
Trade and other receivables, net of allowance balance of $49.5
million and $35.3 million,
as of December 31, 2018 and 2017, respectively
|
|
1,463.5
|
|
|
1,314.0
|
|
Income tax receivable
|
|
41.1
|
|
|
14.6
|
|
Prepaid expenses and other current assets
|
|
343.4
|
|
|
176.3
|
|
Total current assets
|
|
2,743.3
|
|
|
1,910.5
|
|
Property and equipment, net
|
|
313.8
|
|
|
304.3
|
|
Goodwill
|
|
1,778.5
|
|
|
1,765.3
|
|
Intangible assets, net
|
|
1,128.2
|
|
|
1,306.0
|
|
Equity method investments
|
|
8.7
|
|
|
7.9
|
|
Deferred tax assets
|
|
84.0
|
|
|
66.6
|
|
Other non-current assets
|
|
489.5
|
|
|
432.8
|
|
Total assets
|
|
$
|
6,546.0
|
|
|
$
|
5,793.4
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Short-term borrowings and current portion of long-term debt
|
|
$
|
39.9
|
|
|
$
|
59.5
|
|
Accounts payable and accrued expenses
|
|
1,047.7
|
|
|
771.2
|
|
Accrued compensation
|
|
817.9
|
|
|
864.8
|
|
Income tax payable
|
|
43.2
|
|
|
35.7
|
|
Other current liabilities
|
|
90.0
|
|
|
234.4
|
|
Total current liabilities
|
|
2,038.7
|
|
|
1,965.6
|
|
Long-term debt
|
|
2,644.2
|
|
|
2,784.0
|
|
Deferred tax liabilities
|
|
136.4
|
|
|
157.5
|
|
Other non-current liabilities
|
|
366.6
|
|
|
386.9
|
|
Total liabilities
|
|
5,185.9
|
|
|
5,294.0
|
|
Commitments and contingencies (See Note 14)
|
|
|
|
|
Shareholders' Equity:
|
|
|
|
|
Ordinary shares, nominal value $0.10 per share, 216.6 issued and
outstanding at December 31, 2018 and ordinary shares nominal value
$10.00 per share, 145.1 shares issued and outstanding at December
31, 2017
|
|
21.7
|
|
|
1,451.3
|
|
Additional paid-in capital
|
|
2,791.2
|
|
|
283.8
|
|
Accumulated deficit
|
|
(1,298.4
|
)
|
|
(1,148.5
|
)
|
Accumulated other comprehensive loss
|
|
(154.4
|
)
|
|
(87.2
|
)
|
Total equity
|
|
1,360.1
|
|
|
499.4
|
|
Total liabilities and shareholders' equity
|
|
$
|
6,546.0
|
|
|
$
|
5,793.4
|
|
|
|
|
|
|
|
|
|
|
|
Cushman & Wakefield plc
Consolidated Statements of Cash Flows
|
|
|
|
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
(in millions) (unaudited)
|
|
2018
|
|
2017
|
Cash flows from operating activities
|
|
|
|
|
Net loss
|
|
$
|
(185.8
|
)
|
|
$
|
(221.3
|
)
|
Reconciliation of net loss to net cash used in operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
290.0
|
|
|
270.6
|
|
Impairment charges
|
|
2.7
|
|
|
—
|
|
Unrealized foreign exchange loss (gain)
|
|
8.4
|
|
|
(7.3
|
)
|
Stock-based compensation
|
|
81.9
|
|
|
52.4
|
|
Loss on debt extinguishment
|
|
50.4
|
|
|
—
|
|
Amortization of debt issuance costs
|
|
12.5
|
|
|
16.5
|
|
Change in deferred taxes
|
|
(58.9
|
)
|
|
(170.3
|
)
|
Gain on pension curtailment
|
|
—
|
|
|
(10.0
|
)
|
Bad debt expense
|
|
21.7
|
|
|
3.9
|
|
Other non-cash operating activities
|
|
(3.6
|
)
|
|
7.0
|
|
Changes in assets and liabilities:
|
|
|
|
|
Trade and other receivables
|
|
(235.5
|
)
|
|
(173.4
|
)
|
Income taxes payable
|
|
(19.6
|
)
|
|
10.1
|
|
Prepaid expenses and other current assets
|
|
(26.9
|
)
|
|
(17.6
|
)
|
Other non-current assets
|
|
84.6
|
|
|
44.0
|
|
Accounts payable and accrued expenses
|
|
74.9
|
|
|
42.6
|
|
Accrued compensation
|
|
117.8
|
|
|
98.4
|
|
Other current and non-current liabilities
|
|
(216.8
|
)
|
|
58.8
|
|
Net cash (used in) provided by operating activities
|
|
(2.2
|
)
|
|
4.4
|
|
Cash flows from investing activities
|
|
|
|
|
Payment for property and equipment
|
|
(84.2
|
)
|
|
(129.1
|
)
|
Acquisitions of businesses, net of cash acquired
|
|
(35.5
|
)
|
|
(99.9
|
)
|
Investments in equity securities
|
|
(8.7
|
)
|
|
—
|
|
Return of beneficial interest in a securitization
|
|
(85.0
|
)
|
|
—
|
|
Collection on beneficial interest in a securitization
|
|
—
|
|
|
84.8
|
|
Other investing activities, net
|
|
(4.6
|
)
|
|
1.0
|
|
Net cash used in investing activities
|
|
(218.0
|
)
|
|
(143.2
|
)
|
Cash flows from financing activities
|
|
|
|
|
Net proceeds from issuance of shares
|
|
9.0
|
|
|
23.4
|
|
Shares repurchased for payment of employee taxes on stock awards
|
|
(15.2
|
)
|
|
(4.5
|
)
|
Payment of contingent consideration
|
|
(22.3
|
)
|
|
(8.4
|
)
|
Proceeds from long-term borrowings
|
|
2,936.5
|
|
|
318.7
|
|
Repayment of borrowings
|
|
(3,133.2
|
)
|
|
(150.3
|
)
|
Debt issuance costs
|
|
(24.4
|
)
|
|
(4.4
|
)
|
Proceeds from initial public offering, net of underwriting
|
|
831.4
|
|
|
—
|
|
Proceeds from private placement
|
|
179.5
|
|
|
—
|
|
Payments of initial offering and private placement costs
|
|
(17.3
|
)
|
|
—
|
|
Payment of finance lease liabilities
|
|
(10.8
|
)
|
|
(9.1
|
)
|
Other financing activities, net
|
|
(7.3
|
)
|
|
2.3
|
|
Net cash provided by financing activities
|
|
725.9
|
|
|
167.7
|
|
|
|
|
|
|
Change in cash, cash equivalents and restricted cash
|
|
505.7
|
|
|
28.9
|
|
Cash, cash equivalents and restricted cash, beginning of the period
|
|
467.9
|
|
|
424.8
|
|
Effects of exchange rate fluctuations on cash, cash equivalents and
restricted cash
|
|
(8.2
|
)
|
|
14.2
|
|
Cash, cash equivalents and restricted cash, end of the period
|
|
$
|
965.4
|
|
|
$
|
467.9
|
|
|
|
|
|
|
|
|
|
|
Consolidated Results (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
Three
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Months
|
|
Months
|
|
|
|
|
|
Year
|
|
Year
|
|
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
|
December
|
|
December
|
|
% Change
|
|
in Local
|
|
December
|
|
December
|
|
% Change
|
|
in Local
|
(in millions)
|
|
31, 2018
|
|
31, 2017
|
|
in USD
|
|
Currency
|
|
31, 2018
|
|
31, 2017
|
|
in USD
|
|
Currency
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
2,401.9
|
|
|
$
|
2,052.7
|
|
|
17
|
%
|
|
19
|
%
|
|
$
|
8,219.9
|
|
|
$
|
6,923.9
|
|
|
19
|
%
|
|
19
|
%
|
Less: Gross contract costs
|
|
(650.2
|
)
|
|
(440.1
|
)
|
|
48
|
%
|
|
50
|
%
|
|
(2,271.8
|
)
|
|
(1,627.3
|
)
|
|
40
|
%
|
|
40
|
%
|
Acquisition accounting adjustments
|
|
—
|
|
|
10.2
|
|
|
n/m
|
|
n/m
|
|
2.5
|
|
|
23.2
|
|
|
n/m
|
|
n/m
|
Total Fee revenue
|
|
$
|
1,751.7
|
|
|
$
|
1,622.8
|
|
|
8
|
%
|
|
10
|
%
|
|
$
|
5,950.6
|
|
|
$
|
5,319.8
|
|
|
12
|
%
|
|
12
|
%
|
Service Lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
$
|
697.6
|
|
|
$
|
668.7
|
|
|
4
|
%
|
|
7
|
%
|
|
$
|
2,622.1
|
|
|
$
|
2,488.5
|
|
|
5
|
%
|
|
6
|
%
|
Leasing
|
|
605.4
|
|
|
576.6
|
|
|
5
|
%
|
|
7
|
%
|
|
1,920.7
|
|
|
1,650.8
|
|
|
16
|
%
|
|
16
|
%
|
Capital markets
|
|
310.7
|
|
|
248.0
|
|
|
25
|
%
|
|
27
|
%
|
|
959.6
|
|
|
740.5
|
|
|
30
|
%
|
|
29
|
%
|
Valuation and other
|
|
138.0
|
|
|
129.5
|
|
|
7
|
%
|
|
10
|
%
|
|
448.2
|
|
|
440.0
|
|
|
2
|
%
|
|
1
|
%
|
Total Fee revenue
|
|
$
|
1,751.7
|
|
|
$
|
1,622.8
|
|
|
8
|
%
|
|
10
|
%
|
|
$
|
5,950.6
|
|
|
$
|
5,319.8
|
|
|
12
|
%
|
|
12
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services, operating and administrative expenses excluding
gross contract costs
|
|
$
|
1,630.5
|
|
|
$
|
1,482.0
|
|
|
10
|
%
|
|
12
|
%
|
|
$
|
5,641.7
|
|
|
$
|
5,168.6
|
|
|
9
|
%
|
|
9
|
%
|
Gross contract costs
|
|
650.2
|
|
|
440.1
|
|
|
48
|
%
|
|
50
|
%
|
|
2,271.8
|
|
|
1,627.3
|
|
|
40
|
%
|
|
40
|
%
|
Depreciation and amortization
|
|
77.0
|
|
|
77.6
|
|
|
(1
|
)%
|
|
0
|
%
|
|
290.0
|
|
|
270.6
|
|
|
7
|
%
|
|
7
|
%
|
Restructuring, impairment and related charges
|
|
1.0
|
|
|
15.8
|
|
|
(94
|
)%
|
|
(93
|
)%
|
|
3.8
|
|
|
28.5
|
|
|
(87
|
)%
|
|
(87
|
)%
|
Total costs and expenses
|
|
2,358.7
|
|
|
2,015.5
|
|
|
17
|
%
|
|
19
|
%
|
|
8,207.3
|
|
|
7,095.0
|
|
|
16
|
%
|
|
16
|
%
|
Operating income/(loss)
|
|
$
|
43.2
|
|
|
$
|
37.2
|
|
|
16
|
%
|
|
17
|
%
|
|
$
|
12.6
|
|
|
$
|
(171.1
|
)
|
|
(107
|
)%
|
|
(109
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
235.5
|
|
|
$
|
266.6
|
|
|
(12
|
)%
|
|
(9
|
)%
|
|
$
|
659.1
|
|
|
$
|
528.5
|
|
|
25
|
%
|
|
26
|
%
|
Adjusted EBITDA margin
|
|
13.4
|
%
|
|
16.4
|
%
|
|
|
|
|
|
11.1
|
%
|
|
9.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(18.0
|
)
|
|
$
|
22.2
|
|
|
(181
|
)%
|
|
|
|
$
|
(185.8
|
)
|
|
$
|
(221.3
|
)
|
|
(16
|
)%
|
|
|
Adjusted net income
|
|
$
|
130.4
|
|
|
$
|
133.2
|
|
|
(2
|
)%
|
|
|
|
$
|
306.6
|
|
|
$
|
181.6
|
|
|
69
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic
|
|
209.0
|
|
144.8
|
|
|
|
|
|
171.2
|
|
143.9
|
|
|
|
|
Weighted average shares outstanding, diluted(1) |
|
222.2
|
|
155.7
|
|
|
|
|
|
183.4
|
|
154.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per share, basic
|
|
$
|
(0.09
|
)
|
|
$
|
0.15
|
|
|
|
|
|
|
$
|
(1.09
|
)
|
|
$
|
(1.54
|
)
|
|
|
|
|
(Loss) earnings per share, diluted
|
|
$
|
(0.09
|
)
|
|
$
|
0.14
|
|
|
|
|
|
|
$
|
(1.09
|
)
|
|
$
|
(1.54
|
)
|
|
|
|
|
Adjusted earnings per share, diluted
|
|
$
|
0.59
|
|
|
$
|
0.86
|
|
|
|
|
|
|
$
|
1.67
|
|
|
$
|
1.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For all periods with a GAAP net loss, Weighted average
shares outstanding, diluted is used to calculate Adjusted earnings per
share, diluted.
Segment Results
The following tables summarize our results of operations for our
operating segments for the three months and the years ended December 31,
2018 and 2017.
Corporate expenses are allocated to the segments based upon Fee revenue
of each segment. Gross contract costs are excluded from operating
expenses in determining “Fee-based operating expenses”. Adjusted EBITDA
is the profitability metric reported to the chief operating decision
maker for purposes of making decisions about allocation of resources to
each segment and assessing performance of each segment. Adjusted EBITDA
excludes depreciation and amortization, interest expense, net of
interest income, income taxes, as well as integration and other costs
related to acquisitions, expenses related to the Cassidy Turley deferred
payment obligation, stock-based compensation for plans enacted before
the Company's initial public offering and other charges.
Americas Results
|
|
Three
|
|
Three
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Months
|
|
Months
|
|
|
|
|
|
Year
|
|
Year
|
|
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
|
December
|
|
December
|
|
% Change
|
|
in Local
|
|
December
|
|
December
|
|
% Change
|
|
in Local
|
(in millions) (unaudited)
|
|
31, 2018
|
|
31, 2017
|
|
in USD
|
|
Currency
|
|
31, 2018
|
|
31, 2017
|
|
in USD
|
|
Currency
|
Total revenue
|
|
$
|
1,670.8
|
|
|
$
|
1,346.9
|
|
|
24
|
%
|
|
25
|
%
|
|
$
|
5,724.7
|
|
|
$
|
4,600.2
|
|
|
24
|
%
|
|
25
|
%
|
Less: Gross contract costs
|
|
(520.3
|
)
|
|
(296.6
|
)
|
|
75
|
%
|
|
76
|
%
|
|
(1,684.5
|
)
|
|
(1,023.4
|
)
|
|
65
|
%
|
|
65
|
%
|
Acquisition accounting adjustments
|
|
—
|
|
|
7.0
|
|
|
n/m
|
|
n/m
|
|
2.5
|
|
|
20.0
|
|
|
n/m
|
|
n/m
|
Total Fee revenue
|
|
$
|
1,150.5
|
|
|
$
|
1,057.3
|
|
|
9
|
%
|
|
10
|
%
|
|
$
|
4,042.7
|
|
|
$
|
3,596.8
|
|
|
12
|
%
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
$
|
440.8
|
|
|
$
|
431.7
|
|
|
2
|
%
|
|
3
|
%
|
|
$
|
1,698.6
|
|
|
$
|
1,638.3
|
|
|
4
|
%
|
|
4
|
%
|
Leasing
|
|
450.6
|
|
|
416.6
|
|
|
8
|
%
|
|
9
|
%
|
|
1,481.6
|
|
|
1,244.6
|
|
|
19
|
%
|
|
19
|
%
|
Capital markets
|
|
208.1
|
|
|
164.1
|
|
|
27
|
%
|
|
27
|
%
|
|
699.4
|
|
|
530.4
|
|
|
32
|
%
|
|
32
|
%
|
Valuation and other
|
|
51.0
|
|
|
44.9
|
|
|
14
|
%
|
|
15
|
%
|
|
163.1
|
|
|
183.5
|
|
|
(11
|
)%
|
|
(10
|
)%
|
Total Fee revenue
|
|
$
|
1,150.5
|
|
|
$
|
1,057.3
|
|
|
9
|
%
|
|
10
|
%
|
|
$
|
4,042.7
|
|
|
$
|
3,596.8
|
|
|
12
|
%
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating expenses
|
|
$
|
1,534.7
|
|
|
$
|
1,210.4
|
|
|
27
|
%
|
|
27
|
%
|
|
$
|
5,276.9
|
|
|
$
|
4,275.1
|
|
|
23
|
%
|
|
24
|
%
|
Less: Gross contract costs
|
|
(520.3
|
)
|
|
(296.6
|
)
|
|
75
|
%
|
|
76
|
%
|
|
(1,684.5
|
)
|
|
(1,023.4
|
)
|
|
65
|
%
|
|
65
|
%
|
Total Fee-based operating expenses
|
|
$
|
1,014.4
|
|
|
$
|
913.8
|
|
|
11
|
%
|
|
12
|
%
|
|
$
|
3,592.4
|
|
|
$
|
3,251.7
|
|
|
10
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
136.1
|
|
|
$
|
143.3
|
|
|
(5
|
)%
|
|
(4
|
)%
|
|
$
|
450.3
|
|
|
$
|
344.6
|
|
|
31
|
%
|
|
31
|
%
|
Adjusted EBITDA Margin
|
|
11.8
|
%
|
|
13.6
|
%
|
|
|
|
|
|
11.1
|
%
|
|
9.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
Three
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Months
|
|
Months
|
|
|
|
|
|
Year
|
|
Year
|
|
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
|
December
|
|
December
|
|
% Change
|
|
in Local
|
|
December
|
|
December
|
|
% Change
|
|
in Local
|
(in millions) (unaudited)
|
|
31, 2018
|
|
31, 2017
|
|
in USD
|
|
Currency
|
|
31, 2018
|
|
31, 2017
|
|
in USD
|
|
Currency
|
Total revenue
|
|
$
|
348.9
|
|
|
$
|
316.9
|
|
|
10
|
%
|
|
15
|
%
|
|
$
|
999.8
|
|
|
$
|
863.3
|
|
|
16
|
%
|
|
13
|
%
|
Less: Gross contract costs
|
|
(35.5
|
)
|
|
(21.9
|
)
|
|
62
|
%
|
|
70
|
%
|
|
(111.9
|
)
|
|
(81.3
|
)
|
|
38
|
%
|
|
33
|
%
|
Acquisition accounting adjustments
|
|
—
|
|
|
3.3
|
|
|
n/m
|
|
n/m
|
|
—
|
|
|
3.2
|
|
|
n/m
|
|
n/m
|
Total Fee revenue
|
|
$
|
313.4
|
|
|
$
|
298.3
|
|
|
5
|
%
|
|
9
|
%
|
|
$
|
887.9
|
|
|
$
|
785.2
|
|
|
13
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
$
|
84.0
|
|
|
$
|
68.2
|
|
|
23
|
%
|
|
28
|
%
|
|
$
|
262.1
|
|
|
$
|
200.5
|
|
|
31
|
%
|
|
27
|
%
|
Leasing
|
|
91.1
|
|
|
102.5
|
|
|
(11
|
)%
|
|
(7
|
)%
|
|
265.0
|
|
|
256.5
|
|
|
3
|
%
|
|
2
|
%
|
Capital markets
|
|
75.0
|
|
|
63.3
|
|
|
18
|
%
|
|
23
|
%
|
|
173.5
|
|
|
154.3
|
|
|
12
|
%
|
|
11
|
%
|
Valuation and other
|
|
63.3
|
|
|
64.3
|
|
|
(2
|
)%
|
|
2
|
%
|
|
187.3
|
|
|
173.9
|
|
|
8
|
%
|
|
5
|
%
|
Total Fee revenue
|
|
$
|
313.4
|
|
|
$
|
298.3
|
|
|
5
|
%
|
|
9
|
%
|
|
$
|
887.9
|
|
|
$
|
785.2
|
|
|
13
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating expenses
|
|
$
|
283.0
|
|
|
$
|
244.4
|
|
|
16
|
%
|
|
26
|
%
|
|
$
|
896.5
|
|
|
$
|
769.8
|
|
|
16
|
%
|
|
15
|
%
|
Less: Gross contract costs
|
|
(35.5
|
)
|
|
(21.9
|
)
|
|
62
|
%
|
|
70
|
%
|
|
(111.9
|
)
|
|
(81.3
|
)
|
|
38
|
%
|
|
33
|
%
|
Total Fee-based operating expenses
|
|
$
|
247.5
|
|
|
$
|
222.5
|
|
|
11
|
%
|
|
21
|
%
|
|
$
|
784.6
|
|
|
$
|
688.5
|
|
|
14
|
%
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
67.4
|
|
|
$
|
86.2
|
|
|
(22
|
)%
|
|
(18
|
)%
|
|
$
|
107.9
|
|
|
$
|
108.8
|
|
|
(1
|
)%
|
|
2
|
%
|
Adjusted EBITDA Margin
|
|
21.5
|
%
|
|
28.9
|
%
|
|
|
|
|
|
12.2
|
%
|
|
13.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
Three
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Months
|
|
Months
|
|
|
|
|
|
Year
|
|
Year
|
|
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
|
December
|
|
December
|
|
% Change
|
|
in Local
|
|
December
|
|
December
|
|
% Change
|
|
in Local
|
(in millions) (unaudited)
|
|
31, 2018
|
|
31, 2017
|
|
in USD
|
|
Currency
|
|
31, 2018
|
|
31, 2017
|
|
in USD
|
|
Currency
|
Total revenue
|
|
$
|
382.2
|
|
|
$
|
388.9
|
|
|
(2
|
)%
|
|
4
|
%
|
|
$
|
1,495.4
|
|
|
$
|
1,460.4
|
|
|
2
|
%
|
|
4
|
%
|
Less: Gross contract costs
|
|
(94.4
|
)
|
|
(121.6
|
)
|
|
(22
|
)%
|
|
(17
|
)%
|
|
(475.4
|
)
|
|
(522.6
|
)
|
|
(9
|
)%
|
|
(7
|
)%
|
Acquisition accounting adjustments
|
|
—
|
|
|
(0.1
|
)
|
|
n/m
|
|
n/m
|
|
—
|
|
|
—
|
|
|
n/m
|
|
n/m
|
Total Fee revenue
|
|
$
|
287.8
|
|
|
$
|
267.2
|
|
|
8
|
%
|
|
13
|
%
|
|
$
|
1,020.0
|
|
|
$
|
937.8
|
|
|
9
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
$
|
172.8
|
|
|
$
|
168.8
|
|
|
2
|
%
|
|
7
|
%
|
|
$
|
661.4
|
|
|
$
|
649.7
|
|
|
2
|
%
|
|
2
|
%
|
Leasing
|
|
63.7
|
|
|
57.5
|
|
|
11
|
%
|
|
17
|
%
|
|
174.1
|
|
|
149.7
|
|
|
16
|
%
|
|
18
|
%
|
Capital markets
|
|
27.6
|
|
|
20.6
|
|
|
34
|
%
|
|
38
|
%
|
|
86.7
|
|
|
55.8
|
|
|
55
|
%
|
|
57
|
%
|
Valuation and other
|
|
23.7
|
|
|
20.3
|
|
|
17
|
%
|
|
21
|
%
|
|
97.8
|
|
|
82.6
|
|
|
18
|
%
|
|
17
|
%
|
Total Fee revenue
|
|
$
|
287.8
|
|
|
$
|
267.2
|
|
|
8
|
%
|
|
13
|
%
|
|
$
|
1,020.0
|
|
|
$
|
937.8
|
|
|
9
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating expenses
|
|
$
|
350.2
|
|
|
$
|
351.7
|
|
|
—
|
%
|
|
5
|
%
|
|
$
|
1,395.4
|
|
|
$
|
1,386.1
|
|
|
1
|
%
|
|
2
|
%
|
Less: Gross contract costs
|
|
(94.4
|
)
|
|
(121.6
|
)
|
|
(22
|
)%
|
|
(17
|
)%
|
|
(475.4
|
)
|
|
(522.6
|
)
|
|
(9
|
)%
|
|
(7
|
)%
|
Total Fee-based operating expenses
|
|
$
|
255.8
|
|
|
$
|
230.1
|
|
|
11
|
%
|
|
16
|
%
|
|
$
|
920.0
|
|
|
$
|
863.5
|
|
|
7
|
%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
32.0
|
|
|
$
|
37.1
|
|
|
(14
|
)%
|
|
(9
|
)%
|
|
$
|
100.9
|
|
|
$
|
75.1
|
|
|
34
|
%
|
|
35
|
%
|
Adjusted EBITDA Margin
|
|
11.1
|
%
|
|
13.9
|
%
|
|
|
|
|
|
9.9
|
%
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cushman & Wakefield plc
Use of Non-GAAP Financial Measures
The following measures are considered "non-GAAP financial measures"
under SEC guidelines:
i. Fee revenue and Fee-based operating expenses;
ii. Adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") and Adjusted EBITDA margin;
iii. Adjusted net income and Adjusted earnings per share; and
iv. Local currency.
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.
Fee revenue: The Company believes that
investors may find this measure useful to analyze the financial
performance of our Property, facilities and project management service
line and our business generally. Fee revenue is GAAP revenue excluding
costs reimbursable by clients which have substantially no margin, and as
such provides greater visibility into the underlying performance of our
business.
Additionally, pursuant to business combination accounting rules, certain
fees that may have been deferred by the acquiree may be recorded as a
receivable on the acquisition date by the Company. Such fees are
included in Fee revenue as acquisition accounting adjustments based on
when the acquiree would have recognized revenue in the absence of being
acquired by the Company.
Fee-based operating expenses: Consistent
with GAAP, reimbursed costs for certain customer contracts are presented
on a gross basis (“gross contract costs”) in both revenue and operating
expenses. As described above, gross contract costs are excluded from
revenue in determining “Fee revenue.” Gross contract costs are similarly
excluded from operating expenses in determining “Fee-based operating
expenses.” Excluding gross contract costs from Fee-based operating
expenses more accurately reflects how we manage our expense base and
operating margins and, accordingly, is useful to investors and other
external stakeholders for evaluating performance.
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 acquisitions, stock-based compensation for plans
enacted before the Company's IPO (“pre-IPO stock-based compensation”),
the deferred payment obligation related to the acquisition of Cassidy
Turley and other 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
calculated by dividing Adjusted EBITDA by Fee revenue.
Adjusted net income/loss (“Adjusted net income”)
and Adjusted earnings per share (“Adjusted EPS”): 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
acquisitions, pre-IPO stock-based compensation, the deferred payment
obligation related to the acquisition of CT and other items. Similarly,
depreciation and amortization related to merger and acquisition activity
and one-time financing related to debt extinguishment and modification
are excluded from this measure. Income tax, as adjusted, reflects
management’s expectation about our long-term effective rate as a public
company. The Company also uses Adjusted 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
outstanding shares.
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.
The interim financial information for the three months ended December
31, 2018 and 2017 is unaudited. All adjustments, consisting of normal
recurring adjustments, except as otherwise noted, considered necessary
for a fair presentation of the unaudited interim 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, 2018.
Please see the following tables for reconciliations of our non-GAAP
financial measures to the most comparable GAAP measures.
Adjustments to GAAP financial measures used to
calculate non-GAAP financial measures
Reconciliation of Net (loss) income to Adjusted
EBITDA:
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Year Ended December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net (loss) income
|
|
$
|
(18.0
|
)
|
|
$
|
22.2
|
|
|
$
|
(185.8
|
)
|
|
$
|
(221.3
|
)
|
Add/(less):
|
|
|
|
|
|
|
|
|
Depreciation and amortization(1) |
|
77.0
|
|
|
77.6
|
|
|
290.0
|
|
|
270.6
|
|
Interest expense, net of interest income(2) |
|
39.7
|
|
|
48.2
|
|
|
228.8
|
|
|
183.1
|
|
Provision (benefit) from income taxes
|
|
23.0
|
|
|
(23.0
|
)
|
|
(25.0
|
)
|
|
(120.5
|
)
|
Integration and other costs related to acquisitions(3) |
|
70.6
|
|
|
113.5
|
|
|
244.7
|
|
|
328.3
|
|
Pre-IPO stock-based compensation (4) |
|
38.5
|
|
|
10.7
|
|
|
63.4
|
|
|
27.1
|
|
Cassidy Turley deferred payment obligation (5) |
|
2.2
|
|
|
11.7
|
|
|
33.0
|
|
|
44.0
|
|
Other (6) |
|
2.5
|
|
|
5.7
|
|
|
10.0
|
|
|
17.2
|
|
Adjusted EBITDA
|
|
$
|
235.5
|
|
|
$
|
266.6
|
|
|
$
|
659.1
|
|
|
$
|
528.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Depreciation and amortization includes merger and
acquisition-related depreciation and amortization of $50.8 million
and $51.4 million for the three months ended December 31, 2018 and
2017, respectively, and $205.8 million and $193.0 million for the
years ended December 31, 2018 and 2017, respectively.
|
|
|
|
(2)
|
|
Interest expense, net of interest income includes one-time write-off
of financing fees and other fees incurred in relation to debt
extinguishments and modifications of $0.0 million and $53.8 million
for the three months and year ended December 31, 2018.
|
|
|
|
(3)
|
|
Integration and other costs related to acquisitions represents
certain direct and incremental costs resulting from acquisitions and
certain related integration efforts as a result of those
acquisitions, as well as costs related to our restructuring efforts
and initial public offering/private placement.
|
|
|
|
(4)
|
|
Pre-IPO stock-based compensation represents non-cash compensation
expense associated with our pre-IPO equity compensation plans. Refer
to Note 13: Stock-based Payments of the Notes to the Consolidated
Financial Statements for the year ended December 31, 2018 for
additional information.
|
|
|
|
(5)
|
|
Cassidy Turley deferred payment obligation represents expense
associated with a deferred payment obligation related to the
acquisition of Cassidy Turley on December 31, 2014, which was paid
out before the end of 2018. Refer to Note 13: Stock-based Payments
of the Notes to the Consolidated Financial Statements for the year
ended December 31, 2018 for additional information.
|
|
|
|
(6)
|
|
Other includes sponsor monitoring fees of approximately $0.0 million
and $1.1 million for the three months ended December 31, 2018 and
2017, respectively, and $3.4 million and $5.0 million for the years
ended December 31, 2018 and 2017, respectively; accounts receivable
securitization costs of approximately $2.4 million and $3.2 million
for the three months ended December 31, 2018 and 2017, respectively,
and $6.7 million and $8.2 million for the years ended December 31,
2018 and 2017, respectively; and other items.
|
|
|
|
Reconciliation of Net (loss) income to Adjusted Net Income:
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Year Ended December 31,
|
(in millions) (unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net (loss) income
|
|
$
|
(18.0
|
)
|
|
$
|
22.2
|
|
|
$
|
(185.8
|
)
|
|
$
|
(221.3
|
)
|
|
|
|
|
|
|
|
|
|
Merger and acquisition-related depreciation and amortization(1) |
|
50.8
|
|
|
51.4
|
|
|
205.8
|
|
|
192.5
|
|
Financing and other facility costs
|
|
(2.4
|
)
|
|
(3.2
|
)
|
|
47.1
|
|
|
(8.2
|
)
|
Integration and other costs related to acquisitions
|
|
70.6
|
|
|
113.5
|
|
|
244.7
|
|
|
328.3
|
|
Pre-IPO stock-based compensation
|
|
38.5
|
|
|
10.7
|
|
|
63.4
|
|
|
27.1
|
|
Cassidy Turley deferred payment obligation
|
|
2.2
|
|
|
11.7
|
|
|
33.0
|
|
|
44.0
|
|
Other
|
|
2.5
|
|
|
5.7
|
|
|
10.0
|
|
|
17.2
|
|
Income tax adjustments(2) |
|
(13.8
|
)
|
|
(78.8
|
)
|
|
(111.6
|
)
|
|
(198.0
|
)
|
Adjusted Net Income
|
|
$
|
130.4
|
|
|
$
|
133.2
|
|
|
$
|
306.6
|
|
|
$
|
181.6
|
|
Weighted average shares outstanding, basic
|
|
209.0
|
|
|
144.8
|
|
|
171.2
|
|
|
143.9
|
|
Weighted average shares outstanding, diluted (3) |
|
222.2
|
|
|
155.7
|
|
|
183.4
|
|
|
154.1
|
|
Adjusted earnings per share, basic
|
|
$
|
0.62
|
|
|
$
|
0.92
|
|
|
$
|
1.79
|
|
|
$
|
1.26
|
|
Adjusted earnings per share, diluted
|
|
$
|
0.59
|
|
|
$
|
0.86
|
|
|
$
|
1.67
|
|
|
$
|
1.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes amortization of acquired intangible assets.
|
|
|
|
(2)
|
|
Reflective of management's estimation of an adjusted effective tax
rate determined for business as usual effective tax rate if a public
company of 23% and 30% for the three months ended December 31, 2018
and 2017, respectively, and 23% and 30% for the years ended December
31, 2018 and 2017, respectively.
|
|
|
|
(3)
|
|
Weighted average shares outstanding, diluted ("WACS, diluted") is
calculated by taking WACS, basic and adding in dilutive shares of
13.2 million and 10.9 million for the three months ended December
31, 2018 and 2017, respectively, and 12.2 million and 10.2 million
for the years ended December 31, 2018 and 2017, respectively, which
is used to calculate Adjusted earnings per share, diluted.
|
|
|
|
Reconciliation of Revenue to Fee revenue:
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Year Ended December 31,
|
(in millions) (unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenue:
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
2,401.9
|
|
|
$
|
2,052.7
|
|
|
$
|
8,219.9
|
|
|
$
|
6,923.9
|
|
Less: Gross contract costs
|
|
(650.2
|
)
|
|
(440.1
|
)
|
|
(2,271.8
|
)
|
|
(1,627.3
|
)
|
Acquisition accounting adjustments
|
|
—
|
|
|
10.2
|
|
|
2.5
|
|
|
23.2
|
|
Total Fee revenue
|
|
$
|
1,751.7
|
|
|
$
|
1,622.8
|
|
|
$
|
5,950.6
|
|
|
$
|
5,319.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Total costs and expenses to Fee-based operating
expenses:
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Year Ended December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Total costs and expenses
|
|
$
|
2,358.7
|
|
|
$
|
2,015.5
|
|
|
$
|
8,207.3
|
|
|
$
|
7,095.0
|
|
Less: Gross contract costs
|
|
(650.2
|
)
|
|
(440.1
|
)
|
|
(2,271.8
|
)
|
|
(1,627.3
|
)
|
Fee-based operating expenses
|
|
$
|
1,708.5
|
|
|
$
|
1,575.4
|
|
|
$
|
5,935.5
|
|
|
$
|
5,467.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Fee-based operating expenses by segment to
Consolidated Fee-based operating expenses:
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Year Ended December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Americas Fee-based operating expenses
|
|
$
|
1,014.4
|
|
|
$
|
913.8
|
|
|
$
|
3,592.4
|
|
|
$
|
3,251.7
|
EMEA Fee-based operating expenses
|
|
247.5
|
|
|
222.5
|
|
|
784.6
|
|
|
688.5
|
APAC Fee-based operating expenses
|
|
255.8
|
|
|
230.1
|
|
|
920.0
|
|
|
863.5
|
Segment Fee-based operating expenses
|
|
1,517.7
|
|
|
1,366.4
|
|
|
5,297.0
|
|
|
4,803.7
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
77.0
|
|
|
77.6
|
|
|
290.0
|
|
|
270.6
|
Integration and other costs related to acquisitions (1) |
|
70.6
|
|
|
103.3
|
|
|
242.1
|
|
|
305.1
|
Pre-IPO stock-based compensation
|
|
38.5
|
|
|
10.7
|
|
|
63.4
|
|
|
27.1
|
Cassidy Turley deferred payment obligation
|
|
2.2
|
|
|
11.7
|
|
|
33.0
|
|
|
44.0
|
Other
|
|
2.5
|
|
|
5.7
|
|
|
10.0
|
|
|
17.2
|
Fee-based operating expenses
|
|
$
|
1,708.5
|
|
|
$
|
1,575.4
|
|
|
$
|
5,935.5
|
|
|
$
|
5,467.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents integration and other costs related to acquisitions,
comprised of certain direct and incremental costs resulting from
acquisitions and related integration efforts, as well as costs
related to our restructuring programs, excluding the impact of
acquisition accounting revenue adjustments as these amounts do not
impact operating expenses.
|
Source: Cushman & Wakefield
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190227005966/en/
INVESTOR RELATIONS
Bill Knightly
Investor
Relations
+1 312 338 7860
[email protected]
MEDIA CONTACT
Brad Kreiger
Corporate
Communications
+1 312 424 8010
[email protected]
Source: Cushman & Wakefield