CHICAGO--(BUSINESS WIRE)--
Cushman & Wakefield (NYSE: CWK) today reported financial results for the
third quarter ended September 30, 2018i and updated its 2018
guidance:
-
Revenue for the third quarter was $2.1 billion, up 21% (23% local
currencyii). Fee revenue was $1.5 billion, up 17% (18%
local currency).
-
Net loss decreased $29.9 million to $(48.7) million, with net loss per
share of $(0.26) and Adjusted earnings per share of $0.45.
-
Adjusted EBITDA was $179.0 million, up 75% (77% local currency).
Adjusted EBITDA margin of 11.9% was up 400 bps driven by Fee revenue
mix and operating leverage.
-
2018 Adjusted EBITDA expected to be in the range of $630.0 to $650.0
million.
“We are extremely pleased with the performance of our business,
reporting double-digit fee revenue growth along with significant growth
in adjusted EBITDA,” said Brett White, Executive Chairman & CEO. “Our
results and growth, combined with a supportive external environment,
have created great momentum across our geographic segments, led by our
capital markets and leasing service lines.”
|
Consolidated Results (unaudited)
|
|
(in millions)
|
|
|
Three
Months
Ended
September
30, 2018
|
|
|
|
Three
Months
Ended
September
30, 2017
|
|
|
|
|
% Change
in USD
|
|
|
% Change
in Local
Currency
|
|
|
|
Nine
Months
Ended
September
30, 2018
|
|
|
Nine
Months
Ended
September
30, 2017
|
|
|
% Change
in USD
|
|
|
% Change
in Local
Currency
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
$
|
2,076.0
|
|
|
|
$
|
1,709.3
|
|
|
|
|
21
|
%
|
|
|
23
|
%
|
|
|
|
$
|
5,818.0
|
|
|
|
$
|
4,871.2
|
|
|
|
19
|
%
|
|
|
19
|
%
|
Less: Gross contract costs
|
|
|
(567.5
|
)
|
|
|
(417.9
|
)
|
|
|
|
36
|
%
|
|
|
39
|
%
|
|
|
|
(1,621.6
|
)
|
|
|
(1,187.2
|
)
|
|
|
37
|
%
|
|
|
36
|
%
|
Acquisition accounting adjustments
|
|
|
—
|
|
|
|
0.3
|
|
|
|
|
n/m
|
|
|
|
n/m
|
|
|
|
|
2.5
|
|
|
|
13.0
|
|
|
|
n/m
|
|
|
|
n/m
|
|
Total Fee revenue
|
|
|
$
|
1,508.5
|
|
|
|
$
|
1,291.7
|
|
|
|
|
17
|
%
|
|
|
18
|
%
|
|
|
|
$
|
4,198.9
|
|
|
|
$
|
3,697.0
|
|
|
|
14
|
%
|
|
|
13
|
%
|
Service Lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
|
$
|
652.4
|
|
|
|
$
|
614.6
|
|
|
|
|
6
|
%
|
|
|
8
|
%
|
|
|
|
$
|
1,924.5
|
|
|
|
$
|
1,819.8
|
|
|
|
6
|
%
|
|
|
5
|
%
|
Leasing
|
|
|
519.3
|
|
|
|
398.4
|
|
|
|
|
30
|
%
|
|
|
32
|
%
|
|
|
|
1,315.3
|
|
|
|
1,074.2
|
|
|
|
22
|
%
|
|
|
21
|
%
|
Capital markets
|
|
|
233.8
|
|
|
|
174.8
|
|
|
|
|
34
|
%
|
|
|
34
|
%
|
|
|
|
648.9
|
|
|
|
492.5
|
|
|
|
32
|
%
|
|
|
30
|
%
|
Valuation and other
|
|
|
103.0
|
|
|
|
103.9
|
|
|
|
|
(1
|
)%
|
|
|
1
|
%
|
|
|
|
310.2
|
|
|
|
310.5
|
|
|
|
0
|
%
|
|
|
(2
|
)%
|
Total Fee revenue
|
|
|
$
|
1,508.5
|
|
|
|
$
|
1,291.7
|
|
|
|
|
17
|
%
|
|
|
18
|
%
|
|
|
|
$
|
4,198.9
|
|
|
|
$
|
3,697.0
|
|
|
|
14
|
%
|
|
|
13
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services, operating and administrative expenses excluding
gross contract costs
|
|
|
$
|
1,427.1
|
|
|
|
$
|
1,279.4
|
|
|
|
|
12
|
%
|
|
|
13
|
%
|
|
|
|
$
|
4,017.8
|
|
|
|
$
|
3,689.2
|
|
|
|
9
|
%
|
|
|
8
|
%
|
Gross contract costs
|
|
|
567.5
|
|
|
|
417.9
|
|
|
|
|
36
|
%
|
|
|
39
|
%
|
|
|
|
1,621.6
|
|
|
|
1,187.2
|
|
|
|
37
|
%
|
|
|
36
|
%
|
Depreciation and amortization
|
|
|
71.6
|
|
|
|
64.1
|
|
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
|
213.0
|
|
|
|
193.0
|
|
|
|
10
|
%
|
|
|
9
|
%
|
Restructuring, impairment and related charges
|
|
|
(1.2
|
)
|
|
|
2.5
|
|
|
|
|
(148
|
)%
|
|
|
(151
|
)%
|
|
|
|
2.8
|
|
|
|
12.7
|
|
|
|
(78
|
)%
|
|
|
(79
|
)%
|
Total costs and expenses
|
|
|
2,065.0
|
|
|
|
1,763.9
|
|
|
|
|
17
|
%
|
|
|
19
|
%
|
|
|
|
5,855.2
|
|
|
|
5,082.1
|
|
|
|
15
|
%
|
|
|
15
|
%
|
Operating income/(loss)
|
|
|
$
|
11.0
|
|
|
|
$
|
(54.6
|
)
|
|
|
|
(120
|
)%
|
|
|
(123
|
)%
|
|
|
|
$
|
(37.2
|
)
|
|
|
$
|
(210.9
|
)
|
|
|
(82
|
)%
|
|
|
(84
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
179.0
|
|
|
|
$
|
102.2
|
|
|
|
|
75
|
%
|
|
|
77
|
%
|
|
|
|
$
|
423.6
|
|
|
|
$
|
261.9
|
|
|
|
62
|
%
|
|
|
61
|
%
|
Adjusted EBITDA margin
|
|
|
11.9
|
%
|
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
%
|
|
|
7.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(48.7
|
)
|
|
|
$
|
(78.6
|
)
|
|
|
|
(38
|
)%
|
|
|
|
|
|
|
|
$
|
(172.9
|
)
|
|
|
$
|
(245.6
|
)
|
|
|
(30
|
)%
|
|
|
|
|
Adjusted net income
|
|
|
$
|
89.3
|
|
|
|
$
|
25.5
|
|
|
|
|
250
|
%
|
|
|
|
|
|
|
|
$
|
176.3
|
|
|
|
$
|
49.1
|
|
|
|
259
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic
|
|
|
184.0
|
|
|
|
144.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158.5
|
|
|
|
143.6
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, diluted(1) |
|
|
198.0
|
|
|
|
158.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172.2
|
|
|
|
157.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, basic and diluted
|
|
|
$
|
(0.26
|
)
|
|
|
$
|
(0.55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1.09
|
)
|
|
|
$
|
(1.71
|
)
|
|
|
|
|
|
|
|
|
Adjusted earnings per share, diluted
|
|
|
$
|
0.45
|
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.02
|
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
(1) Due to GAAP net loss in all periods, Weighted
average shares outstanding, diluted is only used to calculate
Adjusted earnings per share, diluted.
|
|
Third Quarter Results (unaudited)
Revenue
Revenue was $2.1 billion, an increase of $366.7 million or 21%. Gross
contract costs, primarily in the Property, facilities and project
management service line, increased $149.6 million driven by the $98.5
million impact of the adoption of Topic 606. Foreign currency had a
$34.0 million, or 3%, unfavorable impact on Revenue.
Fee revenue was $1.5 billion, an increase of $239.2 million or 18% on a
local currency basis, reflecting increases primarily in Leasing, Capital
markets and Property, facilities and project management. Leasing Fee
revenue increased $126.6 million or 32% on a local currency basis,
driven by an Americas increase of $105.2 million or 34% on a local
currency basis, with the remainder of the Fee revenue growth primarily
in EMEA. Capital markets Fee revenue increased by $60.3 million or 34%
on a local currency basis, driven by an Americas increase of $52.5
million or 42% on a local currency basis. Property, facilities and
project management Fee revenue increased $51.7 million or 8% on a local
currency basis, driven by an Americas increase of $23.2 million or 6% on
a local currency basis, with the remainder of the Fee revenue growth
primarily in EMEA.
Operating expenses
Operating expenses were $2.1 billion, an increase of $301.1 million or
17%. The increase in operating expenses reflected increased cost
associated with revenue growth and the $98.5 million increase to gross
contract costs resulting from the adoption of Topic 606 discussed above.
Fee-based operating expenses, excluding Depreciation and amortization,
integration and other costs related to acquisitions and stock-based
compensation, were $1.3 billion, a 13% 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
Interest expense, net of interest income was $92.7 million, an increase
of $43.5 million, driven by charges related to 2018 debt refinancing and
extinguishment activities, partially offset by lower average borrowings
during the quarter.
Benefit from income taxes
The benefit for income taxes was $32.9 million, an increase of $9.1
million. The change was driven by discrete tax benefits recorded in the
third quarter of 2018, a change in estimate for the tax liability
related to the H.R. 1, the Tax Cuts and Jobs Act (the "Tax Act") and
release of valuation allowances partially offset by the effect of the
decrease in U.S. corporate tax rate from 35% in 2017 to 21% in 2018.
Net loss and Adjusted EBITDA
Net loss was $48.7 million, a decrease of $29.9 million, primarily
driven by the increase in Fee revenue exceeding the increase in
Fee-based operating expenses and a higher benefit from income taxes,
partially offset by higher interest expense.
Adjusted EBITDA was $179.0 million, an increase of $76.8 million or 77%,
on a local currency basis, driven by the increase in Fee revenue
exceeding the increase in Fee-based operating expenses and the $8.8
million local currency impact of the adoption of Topic 606. Adjusted
EBITDA margin, calculated on a Fee revenue basis, was 11.9%, compared to
7.9% in the prior year, driven by Fee revenue mix and operating leverage.
Year-to-Date Results (unaudited)
Revenue
Revenue was $5.8 billion, an increase of $946.8 million or 19%. Gross
contract costs, primarily in the Property, facilities and project
management service line, increased $434.4 million driven by the $302.0
million impact of the adoption of Topic 606. Foreign currency had a
$22.4 million favorable impact on Revenue, driving approximately 1%
growth.
Fee revenue was $4.2 billion, an increase of $478.1 million or 13% on a
local currency basis, reflecting increases in Leasing, Capital markets
and Property, facilities and project management. Leasing Fee revenue
increased by $233.8 million or 21% on a local currency basis driven
primarily by the Americas. Capital markets Fee revenue increased by
$152.2 million or 30% on a local currency basis, driven by an Americas
increase of $124.8 million or 34% on a local currency basis, with the
remainder of Fee revenue growth primarily in APAC. Property, facilities
and project management increased by $99.3 million or 5% on a local
currency basis, driven primarily by an Americas increase of $57.6
million or 5% on a local currency basis, with the remainder of the Fee
revenue growth primarily in EMEA.
Operating expenses
Operating expenses were $5.9 billion, an increase of $773.1 million or
15%. The increase in operating expenses reflected increased cost
associated with revenue growth and the $302.0 million increase to gross
contract costs resulting from the adoption of Topic 606 discussed above.
Fee-based operating expenses, excluding Depreciation and amortization,
integration and other costs related to acquisitions and stock-based
compensation, were $3.8 billion, a 9% 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
Interest expense, net of interest income was $189.1 million, an increase
of $54.2 million, driven by charges related to 2018 debt refinancing and
extinguishment activities.
Benefit from income taxes
The benefit from income taxes was $49.5 million, a decrease of $48.5
million. The change was driven by the effect of the decrease in the U.S.
corporate tax rate, from 35% in 2017 to 21% in 2018, and a lower net
loss before taxes, partially offset by discrete tax benefits recorded in
2018, a change in estimate for the income tax liability related to the
Tax Act and release of valuation allowances.
Net loss and Adjusted EBITDA
Net loss was $172.9 million, a decrease of $72.7 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 $423.6 million, an increase of $161.7 million or
61%, on a local currency basis, driven by the increase in Fee revenue
exceeding the increase in Fee-based operating expenses and the $19.5
million local currency impact of the adoption of Topic 606. Adjusted
EBITDA margin, calculated on a Fee revenue basis, was 10.1%, compared to
7.1% in the prior year, driven by Fee revenue mix and operating leverage.
Balance Sheet (unaudited)
-
The Company's outstanding First Lien debt, net of deferred financing
fees, was $2.7 billion as of September 30, 2018, which net of cash and
cash equivalents, provided for a net debt position of approximately
$1.7 billion.
-
Total ending liquidity for the third quarter was $1.7 billion with the
majority of the balance being made up of an $810 million undrawn
revolving credit facility, and $939 million of cash and cash
equivalents.
2018 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
Financial Statement Notes section for discussion of non-GAAP financial
measures in more detail. The Company now expects full year 2018 Adjusted
EBITDA to be in the range of $630.0 million to $650.0 million.
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 and nine months ended September 30, 2018 was an increase of $123.0
million and $351.4 million, respectively. This included increases of
$98.5 million and $302.0 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 $24.5 million and $49.4 million, which impacted both Revenue
and Fee Revenue. The adoption of Topic 606 resulted in a benefit to Net
loss of $7.4 million and $15.9 million and Adjusted EBITDA of $8.8
million and $19.5 million for the three and nine months ended September
30, 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 provides our management and investors with a better
view of comparability and trends in the underlying operating business.
Conference Call
The Company’s Third Quarter 2018 Earnings Conference Call will be held
today, November 13, 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 5198234. 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 by putting ideas into action for
real estate occupiers and owners. Cushman & Wakefield is among the
largest real estate services firms with 48,000 employees in
approximately 400 offices and 70 countries. In 2017, the firm had
revenue of $6.9 billion across core services of property, facilities and
project management, leasing, capital markets, valuation and other
services.
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 September 30,
|
|
|
Nine Months Ended September 30,
|
(in millions, except per share data) (unaudited)
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
Revenue
|
|
|
$
|
2,076.0
|
|
|
$
|
1,709.3
|
|
|
|
$
|
5,818.0
|
|
|
$
|
4,871.2
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of services (exclusive of depreciation and amortization)
|
|
|
1,687.2
|
|
|
1,421.3
|
|
|
|
4,725.2
|
|
|
4,037.6
|
|
Operating, administrative and other
|
|
|
307.4
|
|
|
276.0
|
|
|
|
914.2
|
|
|
838.8
|
|
Depreciation and amortization
|
|
|
71.6
|
|
|
64.1
|
|
|
|
213.0
|
|
|
193.0
|
|
Restructuring, impairment and related charges
|
|
|
(1.2
|
)
|
|
2.5
|
|
|
|
2.8
|
|
|
12.7
|
|
Total costs and expenses
|
|
|
2,065.0
|
|
|
1,763.9
|
|
|
|
5,855.2
|
|
|
5,082.1
|
|
Operating income (loss)
|
|
|
11.0
|
|
|
(54.6
|
)
|
|
|
(37.2
|
)
|
|
(210.9
|
)
|
Interest expense, net of interest income
|
|
|
(92.7
|
)
|
|
(49.2
|
)
|
|
|
(189.1
|
)
|
|
(134.9
|
)
|
Earnings from equity method investments
|
|
|
0.4
|
|
|
0.5
|
|
|
|
1.2
|
|
|
1.0
|
|
Other (expense) income, net
|
|
|
(0.3
|
)
|
|
0.9
|
|
|
|
2.7
|
|
|
1.2
|
|
Loss before income taxes
|
|
|
(81.6
|
)
|
|
(102.4
|
)
|
|
|
(222.4
|
)
|
|
(343.6
|
)
|
Benefit from income taxes
|
|
|
(32.9
|
)
|
|
(23.8
|
)
|
|
|
(49.5
|
)
|
|
(98.0
|
)
|
Net loss
|
|
|
$
|
(48.7
|
)
|
|
$
|
(78.6
|
)
|
|
|
$
|
(172.9
|
)
|
|
$
|
(245.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share:
|
|
|
|
|
|
|
|
|
|
|
Loss per share attributable to common shareholders
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.55
|
)
|
|
|
$
|
(1.09
|
)
|
|
$
|
(1.71
|
)
|
Weighted average shares outstanding for basic and diluted loss per
share
|
|
|
184.0
|
|
|
144.1
|
|
|
|
158.5
|
|
|
143.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cushman & Wakefield plc
|
Condensed Consolidated Balance Sheet
|
|
|
|
|
|
As of
|
(in millions, except per share data) (unaudited)
|
|
|
|
September 30, 2018
|
|
|
December 31, 2017
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
939.0
|
|
|
|
$
|
405.6
|
|
Trade and other receivables, net of allowance balance of $42.4
million and $35.3 million,
as of September 30, 2018 and December 31, 2017, respectively
|
|
|
|
1,299.9
|
|
|
|
1,314.0
|
|
Income tax receivable
|
|
|
|
11.0
|
|
|
|
14.6
|
|
Prepaid expenses and other current assets
|
|
|
|
373.9
|
|
|
|
176.3
|
|
Total current assets
|
|
|
|
2,623.8
|
|
|
|
1,910.5
|
|
Property and equipment, net
|
|
|
|
295.6
|
|
|
|
304.3
|
|
Goodwill
|
|
|
|
1,771.0
|
|
|
|
1,765.3
|
|
Intangible assets, net
|
|
|
|
1,166.5
|
|
|
|
1,306.0
|
|
Equity method investments
|
|
|
|
8.1
|
|
|
|
7.9
|
|
Deferred tax assets
|
|
|
|
67.4
|
|
|
|
71.1
|
|
Other non-current assets
|
|
|
|
500.0
|
|
|
|
432.8
|
|
Total assets
|
|
|
$
|
6,432.4
|
|
|
|
$
|
5,797.9
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Short-term borrowings and current portion of long-term debt
|
|
|
$
|
40.6
|
|
|
|
$
|
59.5
|
|
Accounts payable and accrued expenses
|
|
|
|
748.4
|
|
|
|
771.2
|
|
Accrued compensation
|
|
|
|
874.9
|
|
|
|
864.8
|
|
Income tax payable
|
|
|
|
8.9
|
|
|
|
35.7
|
|
Other current liabilities
|
|
|
|
228.1
|
|
|
|
234.4
|
|
Total current liabilities
|
|
|
|
1,900.9
|
|
|
|
1,965.6
|
|
Long-term debt
|
|
|
|
2,646.5
|
|
|
|
2,784.0
|
|
Deferred tax liabilities
|
|
|
|
107.9
|
|
|
|
157.5
|
|
Other non-current liabilities
|
|
|
|
368.0
|
|
|
|
386.9
|
|
Total liabilities
|
|
|
|
5,023.3
|
|
|
|
5,294.0
|
|
Commitments and contingencies (See Note 11)
|
|
|
|
|
|
|
|
Shareholders' Equity:
|
|
|
|
|
|
|
|
Ordinary shares, nominal value $0.10 per share, 208.7 issued and
outstanding at September 30, 2018 and ordinary shares nominal value
$10.00 per share, 145.1 shares issued and outstanding at December
31, 2017
|
|
|
|
20.9
|
|
|
|
1,451.3
|
|
Additional paid-in capital
|
|
|
|
2,789.2
|
|
|
|
305.0
|
|
Accumulated deficit
|
|
|
|
(1,302.2
|
)
|
|
|
(1,165.2
|
)
|
Accumulated other comprehensive loss
|
|
|
|
(98.8
|
)
|
|
|
(87.2
|
)
|
Total equity
|
|
|
|
1,409.1
|
|
|
|
503.9
|
|
Total liabilities and shareholders' equity
|
|
|
$
|
6,432.4
|
|
|
|
$
|
5,797.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Cushman & Wakefield plc
|
Condensed Consolidated Statement of Cash Flows
|
|
|
|
|
Nine Months Ended
|
(in millions) (unaudited)
|
|
|
September 30, 2018
|
|
|
September 30, 2017
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(172.9
|
)
|
|
|
$
|
(245.6
|
)
|
Reconciliation of net loss to net cash used in operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
213.0
|
|
|
|
193.0
|
|
Unrealized foreign exchange loss (gain)
|
|
|
7.8
|
|
|
|
(12.2
|
)
|
Stock-based compensation
|
|
|
49.7
|
|
|
|
37.4
|
|
Loss on debt extinguishment
|
|
|
50.4
|
|
|
|
—
|
|
Amortization of debt issuance costs
|
|
|
10.4
|
|
|
|
11.2
|
|
Change in deferred taxes
|
|
|
(62.2
|
)
|
|
|
(139.6
|
)
|
Bad debt expense
|
|
|
12.4
|
|
|
|
6.0
|
|
Other non-cash operating activities
|
|
|
(3.5
|
)
|
|
|
4.0
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
(3.3
|
)
|
|
|
(162.4
|
)
|
Income taxes payable
|
|
|
(24.2
|
)
|
|
|
8.7
|
|
Prepaid expenses and other current assets
|
|
|
(69.5
|
)
|
|
|
(23.8
|
)
|
Other non-current assets
|
|
|
68.8
|
|
|
|
26.9
|
|
Accounts payable and accrued expenses
|
|
|
(10.6
|
)
|
|
|
67.7
|
|
Accrued compensation
|
|
|
(67.1
|
)
|
|
|
(47.7
|
)
|
Other current and non-current liabilities
|
|
|
(39.3
|
)
|
|
|
33.9
|
|
Net cash used in operating activities
|
|
|
(40.1
|
)
|
|
|
(242.5
|
)
|
Cash flows from investing activities
|
|
|
|
|
|
|
Payment for property and equipment
|
|
|
(61.5
|
)
|
|
|
(95.4
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
0.5
|
|
|
|
0.3
|
|
Acquisitions of businesses, net of cash acquired
|
|
|
(22.2
|
)
|
|
|
(82.7
|
)
|
Investments in equity securities
|
|
|
(7.2
|
)
|
|
|
—
|
|
Return of beneficial interest in a securitization
|
|
|
(85.0
|
)
|
|
|
—
|
|
Collection on beneficial interest in a securitization
|
|
|
—
|
|
|
|
84.8
|
|
Other investing activities, net
|
|
|
0.1
|
|
|
|
—
|
|
Net cash used in investing activities
|
|
|
(175.3
|
)
|
|
|
(93.0
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
Net proceeds from issuance of shares
|
|
|
9.0
|
|
|
|
10.5
|
|
Shares repurchased for payment of employee taxes on stock awards
|
|
|
(6.7
|
)
|
|
|
(3.9
|
)
|
Payment of contingent consideration
|
|
|
(22.3
|
)
|
|
|
(7.1
|
)
|
Proceeds from long-term borrowings
|
|
|
2,936.5
|
|
|
|
310.7
|
|
Repayment of borrowings
|
|
|
(3,126.1
|
)
|
|
|
(132.6
|
)
|
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
|
|
|
(17.0
|
)
|
|
|
—
|
|
Payment of finance lease liabilities
|
|
|
(8.8
|
)
|
|
|
(5.2
|
)
|
Other financing activities, net
|
|
|
(6.9
|
)
|
|
|
—
|
|
Net cash provided by financing activities
|
|
|
744.2
|
|
|
|
168.0
|
|
Change in cash, cash equivalents and restricted cash
|
|
|
528.8
|
|
|
|
(167.5
|
)
|
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
|
|
|
0.5
|
|
|
|
14.5
|
|
Cash, cash equivalents and restricted cash, end of the period
|
|
|
$
|
997.2
|
|
|
|
$
|
271.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Results (unaudited)
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
Three
Months
Ended
September
30, 2018
|
|
|
Three
Months
Ended
September
30, 2017
|
|
|
% Change
in USD
|
|
|
% Change
in Local
Currency
|
|
|
|
Nine
Months
Ended
September
30, 2018
|
|
|
Nine
Months
Ended
September
30, 2017
|
|
|
% Change
in USD
|
|
|
% Change
in Local
Currency
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
$
|
2,076.0
|
|
|
|
$
|
1,709.3
|
|
|
|
21
|
%
|
|
|
23
|
%
|
|
|
|
$
|
5,818.0
|
|
|
|
$
|
4,871.2
|
|
|
|
19
|
%
|
|
|
19
|
%
|
Less: Gross contract costs
|
|
|
(567.5
|
)
|
|
|
(417.9
|
)
|
|
|
36
|
%
|
|
|
39
|
%
|
|
|
|
(1,621.6
|
)
|
|
|
(1,187.2
|
)
|
|
|
37
|
%
|
|
|
36
|
%
|
Acquisition accounting adjustments
|
|
|
—
|
|
|
|
0.3
|
|
|
|
n/m
|
|
|
|
n/m
|
|
|
|
|
2.5
|
|
|
|
13.0
|
|
|
|
n/m
|
|
|
|
n/m
|
|
Total Fee revenue
|
|
|
$
|
1,508.5
|
|
|
|
$
|
1,291.7
|
|
|
|
17
|
%
|
|
|
18
|
%
|
|
|
|
$
|
4,198.9
|
|
|
|
$
|
3,697.0
|
|
|
|
14
|
%
|
|
|
13
|
%
|
Service Lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
|
$
|
652.4
|
|
|
|
$
|
614.6
|
|
|
|
6
|
%
|
|
|
8
|
%
|
|
|
|
$
|
1,924.5
|
|
|
|
$
|
1,819.8
|
|
|
|
6
|
%
|
|
|
5
|
%
|
Leasing
|
|
|
519.3
|
|
|
|
398.4
|
|
|
|
30
|
%
|
|
|
32
|
%
|
|
|
|
1,315.3
|
|
|
|
1,074.2
|
|
|
|
22
|
%
|
|
|
21
|
%
|
Capital markets
|
|
|
233.8
|
|
|
|
174.8
|
|
|
|
34
|
%
|
|
|
34
|
%
|
|
|
|
648.9
|
|
|
|
492.5
|
|
|
|
32
|
%
|
|
|
30
|
%
|
Valuation and other
|
|
|
103.0
|
|
|
|
103.9
|
|
|
|
(1
|
)%
|
|
|
1
|
%
|
|
|
|
310.2
|
|
|
|
310.5
|
|
|
|
0
|
%
|
|
|
(2
|
)%
|
Total Fee revenue
|
|
|
$
|
1,508.5
|
|
|
|
$
|
1,291.7
|
|
|
|
17
|
%
|
|
|
18
|
%
|
|
|
|
$
|
4,198.9
|
|
|
|
$
|
3,697.0
|
|
|
|
14
|
%
|
|
|
13
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services, operating and administrative expenses excluding
gross contract costs
|
|
|
$
|
1,427.1
|
|
|
|
$
|
1,279.4
|
|
|
|
12
|
%
|
|
|
13
|
%
|
|
|
|
$
|
4,017.8
|
|
|
|
$
|
3,689.2
|
|
|
|
9
|
%
|
|
|
8
|
%
|
Gross contract costs
|
|
|
567.5
|
|
|
|
417.9
|
|
|
|
36
|
%
|
|
|
39
|
%
|
|
|
|
1,621.6
|
|
|
|
1,187.2
|
|
|
|
37
|
%
|
|
|
36
|
%
|
Depreciation and amortization
|
|
|
71.6
|
|
|
|
64.1
|
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
|
213.0
|
|
|
|
193.0
|
|
|
|
10
|
%
|
|
|
9
|
%
|
Restructuring, impairment and related charges
|
|
|
(1.2
|
)
|
|
|
2.5
|
|
|
|
(148
|
)%
|
|
|
(151
|
)%
|
|
|
|
2.8
|
|
|
|
12.7
|
|
|
|
(78
|
)%
|
|
|
(79
|
)%
|
Total costs and expenses
|
|
|
2,065.0
|
|
|
|
1,763.9
|
|
|
|
17
|
%
|
|
|
19
|
%
|
|
|
|
5,855.2
|
|
|
|
5,082.1
|
|
|
|
15
|
%
|
|
|
15
|
%
|
Operating income/(loss)
|
|
|
$
|
11.0
|
|
|
|
$
|
(54.6
|
)
|
|
|
(120
|
)%
|
|
|
(123
|
)%
|
|
|
|
$
|
(37.2
|
)
|
|
|
$
|
(210.9
|
)
|
|
|
(82
|
)%
|
|
|
(84
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
179.0
|
|
|
|
$
|
102.2
|
|
|
|
75
|
%
|
|
|
77
|
%
|
|
|
|
$
|
423.6
|
|
|
|
$
|
261.9
|
|
|
|
62
|
%
|
|
|
61
|
%
|
Adjusted EBITDA margin
|
|
|
11.9
|
%
|
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
%
|
|
|
7.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(48.7
|
)
|
|
|
$
|
(78.6
|
)
|
|
|
(38
|
)%
|
|
|
|
|
|
|
|
$
|
(172.9
|
)
|
|
|
$
|
(245.6
|
)
|
|
|
(30
|
)%
|
|
|
|
|
Adjusted net income
|
|
|
$
|
89.3
|
|
|
|
$
|
25.5
|
|
|
|
250
|
%
|
|
|
|
|
|
|
|
$
|
176.3
|
|
|
|
$
|
49.1
|
|
|
|
259
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic
|
|
|
184.0
|
|
|
|
144.1
|
|
|
|
|
|
|
|
|
|
|
|
|
158.5
|
|
|
|
143.6
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, diluted(1) |
|
|
198.0
|
|
|
|
158.0
|
|
|
|
|
|
|
|
|
|
|
|
|
172.2
|
|
|
|
157.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, basic and diluted
|
|
|
$
|
(0.26
|
)
|
|
|
$
|
(0.55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1.09
|
)
|
|
|
$
|
(1.71
|
)
|
|
|
|
|
|
|
|
|
Adjusted earnings per share, diluted
|
|
|
$
|
0.45
|
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.02
|
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Due to GAAP net loss in all periods, Weighted
average shares outstanding, diluted is only 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 and nine months ended September 30,
2018 and 2017.
Americas Results
(in millions) (unaudited)
|
|
|
Three
Months
Ended
September
30, 2018
|
|
|
Three
Months
Ended
September
30, 2017
|
|
|
%
Change
in USD
|
|
|
%
Change
in Local
Currency
|
|
|
Nine
Months
Ended
September
30, 2018
|
|
|
Nine
Months
Ended
September
30, 2017
|
|
|
%
Change in
USD
|
|
|
%
Change
in Local
Currency
|
Total revenue
|
|
|
$
|
1,475.6
|
|
|
|
$
|
1,137.4
|
|
|
|
30
|
%
|
|
|
31
|
%
|
|
|
$
|
4,053.9
|
|
|
|
$
|
3,253.3
|
|
|
|
25
|
%
|
|
|
25
|
%
|
Less: Gross contract costs
|
|
|
(424.9
|
)
|
|
|
(255.4
|
)
|
|
|
66
|
%
|
|
|
67
|
%
|
|
|
(1,164.2
|
)
|
|
|
(726.8
|
)
|
|
|
60
|
%
|
|
|
60
|
%
|
Acquisition accounting adjustments
|
|
|
—
|
|
|
|
0.4
|
|
|
|
n/m
|
|
|
|
n/m
|
|
|
|
2.5
|
|
|
|
13.0
|
|
|
|
n/m
|
|
|
|
n/m
|
|
Total Fee revenue
|
|
|
$
|
1,050.7
|
|
|
|
$
|
882.4
|
|
|
|
19
|
%
|
|
|
20
|
%
|
|
|
$
|
2,892.2
|
|
|
|
$
|
2,539.5
|
|
|
|
14
|
%
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
|
$
|
427.4
|
|
|
|
$
|
408.9
|
|
|
|
5
|
%
|
|
|
6
|
%
|
|
|
$
|
1,257.8
|
|
|
|
$
|
1,206.6
|
|
|
|
4
|
%
|
|
|
5
|
%
|
Leasing
|
|
|
410.7
|
|
|
|
307.9
|
|
|
|
33
|
%
|
|
|
34
|
%
|
|
|
1,031.0
|
|
|
|
828.0
|
|
|
|
25
|
%
|
|
|
25
|
%
|
Capital markets
|
|
|
177.3
|
|
|
|
125.0
|
|
|
|
42
|
%
|
|
|
42
|
%
|
|
|
491.3
|
|
|
|
366.3
|
|
|
|
34
|
%
|
|
|
34
|
%
|
Valuation and other
|
|
|
35.3
|
|
|
|
40.6
|
|
|
|
(13
|
)%
|
|
|
(12
|
)%
|
|
|
112.1
|
|
|
|
138.6
|
|
|
|
(19
|
)%
|
|
|
(19
|
)%
|
Total Fee revenue
|
|
|
$
|
1,050.7
|
|
|
|
$
|
882.4
|
|
|
|
19
|
%
|
|
|
20
|
%
|
|
|
$
|
2,892.2
|
|
|
|
$
|
2,539.5
|
|
|
|
14
|
%
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating expenses
|
|
|
$
|
1,346.6
|
|
|
|
$
|
1,061.4
|
|
|
|
27
|
%
|
|
|
28
|
%
|
|
|
$
|
3,742.1
|
|
|
|
$
|
3,064.7
|
|
|
|
22
|
%
|
|
|
22
|
%
|
Less: Gross contract costs
|
|
|
(424.9
|
)
|
|
|
(255.4
|
)
|
|
|
66
|
%
|
|
|
67
|
%
|
|
|
(1,164.2
|
)
|
|
|
(726.8
|
)
|
|
|
60
|
%
|
|
|
60
|
%
|
Total Fee-based operating expenses
|
|
|
$
|
921.7
|
|
|
|
$
|
806.0
|
|
|
|
14
|
%
|
|
|
15
|
%
|
|
|
$
|
2,577.9
|
|
|
|
$
|
2,337.9
|
|
|
|
10
|
%
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
128.8
|
|
|
|
$
|
76.3
|
|
|
|
69
|
%
|
|
|
69
|
%
|
|
|
$
|
314.2
|
|
|
|
$
|
201.3
|
|
|
|
56
|
%
|
|
|
56
|
%
|
Adjusted EBITDA Margin
|
|
|
12.3
|
%
|
|
|
8.6
|
%
|
|
|
|
|
|
|
|
|
|
|
10.9
|
%
|
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA Results
(in millions) (unaudited)
|
|
|
Three
Months
Ended
September
30, 2018
|
|
|
Three
Months
Ended
September
30, 2017
|
|
|
%
Change
in USD
|
|
|
%
Change
in Local
Currency
|
|
|
Nine
Months
Ended
September
30, 2018
|
|
|
Nine
Months
Ended
September
30, 2017
|
|
|
%
Change
in USD
|
|
|
%
Change
in Local
Currency
|
Total revenue
|
|
|
$
|
226.9
|
|
|
|
$
|
199.6
|
|
|
|
14
|
%
|
|
|
15
|
%
|
|
|
$
|
650.9
|
|
|
|
$
|
546.4
|
|
|
|
19
|
%
|
|
|
13
|
%
|
Less: Gross contract costs
|
|
|
(15.4
|
)
|
|
|
(21.6
|
)
|
|
|
(29
|
)%
|
|
|
(27
|
)%
|
|
|
(76.4
|
)
|
|
|
(59.4
|
)
|
|
|
29
|
%
|
|
|
20
|
%
|
Acquisition accounting adjustments
|
|
|
—
|
|
|
|
(0.1
|
)
|
|
|
n/m
|
|
|
|
n/m
|
|
|
|
—
|
|
|
|
(0.1
|
)
|
|
|
n/m
|
|
|
|
n/m
|
|
Total Fee revenue
|
|
|
$
|
211.5
|
|
|
|
$
|
177.9
|
|
|
|
19
|
%
|
|
|
21
|
%
|
|
|
$
|
574.5
|
|
|
|
$
|
486.9
|
|
|
|
18
|
%
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
|
$
|
60.0
|
|
|
|
$
|
45.7
|
|
|
|
31
|
%
|
|
|
33
|
%
|
|
|
$
|
178.1
|
|
|
|
$
|
132.3
|
|
|
|
35
|
%
|
|
|
27
|
%
|
Leasing
|
|
|
67.2
|
|
|
|
54.8
|
|
|
|
23
|
%
|
|
|
25
|
%
|
|
|
173.9
|
|
|
|
154.0
|
|
|
|
13
|
%
|
|
|
7
|
%
|
Capital markets
|
|
|
40.0
|
|
|
|
37.0
|
|
|
|
8
|
%
|
|
|
10
|
%
|
|
|
98.5
|
|
|
|
91.0
|
|
|
|
8
|
%
|
|
|
3
|
%
|
Valuation and other
|
|
|
44.3
|
|
|
|
40.4
|
|
|
|
10
|
%
|
|
|
11
|
%
|
|
|
124.0
|
|
|
|
109.6
|
|
|
|
13
|
%
|
|
|
7
|
%
|
Total Fee revenue
|
|
|
$
|
211.5
|
|
|
|
$
|
177.9
|
|
|
|
19
|
%
|
|
|
21
|
%
|
|
|
$
|
574.5
|
|
|
|
$
|
486.9
|
|
|
|
18
|
%
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating expenses
|
|
|
$
|
198.3
|
|
|
|
$
|
187.4
|
|
|
|
6
|
%
|
|
|
7
|
%
|
|
|
$
|
613.5
|
|
|
|
$
|
525.4
|
|
|
|
17
|
%
|
|
|
10
|
%
|
Less: Gross contract costs
|
|
|
(15.4
|
)
|
|
|
(21.6
|
)
|
|
|
(29
|
)%
|
|
|
(27
|
)%
|
|
|
(76.4
|
)
|
|
|
(59.4
|
)
|
|
|
29
|
%
|
|
|
20
|
%
|
Total Fee-based operating expenses
|
|
|
$
|
182.9
|
|
|
|
$
|
165.8
|
|
|
|
10
|
%
|
|
|
12
|
%
|
|
|
$
|
537.1
|
|
|
|
$
|
466.0
|
|
|
|
15
|
%
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
29.0
|
|
|
|
$
|
13.0
|
|
|
|
123
|
%
|
|
|
126
|
%
|
|
|
$
|
40.5
|
|
|
|
$
|
22.6
|
|
|
|
79
|
%
|
|
|
76
|
%
|
Adjusted EBITDA Margin
|
|
|
13.7
|
%
|
|
|
7.3
|
%
|
|
|
|
|
|
|
|
|
|
|
7.0
|
%
|
|
|
4.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC Results
(in millions) (unaudited)
|
|
|
Three
Months
Ended
September
30, 2018
|
|
|
Three
Months
Ended
September
30, 2017
|
|
|
%
Change
in USD
|
|
|
%
Change
in Local
Currency
|
|
|
Nine
Months
Ended
September
30, 2018
|
|
|
Nine
Months
Ended
September
30, 2017
|
|
|
%
Change
in USD
|
|
|
%
Change
in Local
Currency
|
Total revenue
|
|
|
$
|
373.5
|
|
|
|
$
|
372.3
|
|
|
|
0
|
%
|
|
|
6
|
%
|
|
|
$
|
1,113.2
|
|
|
|
$
|
1,071.5
|
|
|
|
4
|
%
|
|
|
4
|
%
|
Less: Gross contract costs
|
|
|
(127.2
|
)
|
|
|
(140.9
|
)
|
|
|
(10
|
)%
|
|
|
(3
|
)%
|
|
|
(381.0
|
)
|
|
|
(401.0
|
)
|
|
|
(5
|
)%
|
|
|
(4
|
)%
|
Acquisition accounting adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
n/m
|
|
|
|
n/m
|
|
|
|
—
|
|
|
|
0.1
|
|
|
|
n/m
|
|
|
|
n/m
|
|
Total Fee revenue
|
|
|
$
|
246.3
|
|
|
|
$
|
231.4
|
|
|
|
6
|
%
|
|
|
11
|
%
|
|
|
$
|
732.2
|
|
|
|
$
|
670.6
|
|
|
|
9
|
%
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
|
$
|
165.0
|
|
|
|
$
|
160.0
|
|
|
|
3
|
%
|
|
|
8
|
%
|
|
|
$
|
488.6
|
|
|
|
$
|
480.9
|
|
|
|
2
|
%
|
|
|
1
|
%
|
Leasing
|
|
|
41.4
|
|
|
|
35.7
|
|
|
|
16
|
%
|
|
|
20
|
%
|
|
|
110.4
|
|
|
|
92.2
|
|
|
|
20
|
%
|
|
|
18
|
%
|
Capital markets
|
|
|
16.5
|
|
|
|
12.8
|
|
|
|
29
|
%
|
|
|
33
|
%
|
|
|
59.1
|
|
|
|
35.2
|
|
|
|
68
|
%
|
|
|
69
|
%
|
Valuation and other
|
|
|
23.4
|
|
|
|
22.9
|
|
|
|
2
|
%
|
|
|
5
|
%
|
|
|
74.1
|
|
|
|
62.3
|
|
|
|
19
|
%
|
|
|
16
|
%
|
Total Fee revenue
|
|
|
$
|
246.3
|
|
|
|
$
|
231.4
|
|
|
|
6
|
%
|
|
|
11
|
%
|
|
|
$
|
732.2
|
|
|
|
$
|
670.6
|
|
|
|
9
|
%
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating expenses
|
|
|
$
|
352.2
|
|
|
|
$
|
360.0
|
|
|
|
(2
|
)%
|
|
|
3
|
%
|
|
|
$
|
1,045.2
|
|
|
|
$
|
1,034.4
|
|
|
|
1
|
%
|
|
|
1
|
%
|
Less: Gross contract costs
|
|
|
(127.2
|
)
|
|
|
(140.9
|
)
|
|
|
(10
|
)%
|
|
|
(3
|
)%
|
|
|
(381.0
|
)
|
|
|
(401.0
|
)
|
|
|
(5
|
)%
|
|
|
(4
|
)%
|
Total Fee-based operating expenses
|
|
|
$
|
225.0
|
|
|
|
$
|
219.1
|
|
|
|
3
|
%
|
|
|
7
|
%
|
|
|
$
|
664.2
|
|
|
|
$
|
633.4
|
|
|
|
5
|
%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
21.2
|
|
|
|
$
|
12.9
|
|
|
|
64
|
%
|
|
|
69
|
%
|
|
|
$
|
68.9
|
|
|
|
$
|
38.0
|
|
|
|
81
|
%
|
|
|
77
|
%
|
Adjusted EBITDA Margin
|
|
|
8.6
|
%
|
|
|
5.6
|
%
|
|
|
|
|
|
|
|
|
|
|
9.4
|
%
|
|
|
5.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cushman & Wakefield plc
Financial Statement Notes
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 and nine months ended
September 30, 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 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, 2017.
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
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
Net loss
|
|
|
$
|
(48.7
|
)
|
|
$
|
(78.6
|
)
|
|
|
$
|
(172.9
|
)
|
|
$
|
(245.6
|
)
|
Add/(less):
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization(1)
|
|
|
71.6
|
|
|
64.1
|
|
|
|
213.0
|
|
|
193.0
|
|
Interest expense, net of interest income(2)
|
|
|
92.7
|
|
|
49.2
|
|
|
|
189.1
|
|
|
134.9
|
|
Benefit from income taxes
|
|
|
(32.9
|
)
|
|
(23.8
|
)
|
|
|
(49.5
|
)
|
|
(98.0
|
)
|
Integration and other costs related to acquisitions(3)
|
|
|
71.5
|
|
|
71.5
|
|
|
|
178.3
|
|
|
213.3
|
|
Pre-IPO stock-based compensation (4)
|
|
|
10.8
|
|
|
6.2
|
|
|
|
25.7
|
|
|
20.5
|
|
Cassidy Turley deferred payment obligation (5)
|
|
|
11.0
|
|
|
10.2
|
|
|
|
32.3
|
|
|
32.3
|
|
Other (6)
|
|
|
3.0
|
|
|
3.4
|
|
|
|
7.6
|
|
|
11.5
|
|
Adjusted EBITDA
|
|
|
$
|
179.0
|
|
|
$
|
102.2
|
|
|
|
$
|
423.6
|
|
|
$
|
261.9
|
|
(1)
|
|
Depreciation and amortization includes merger and
acquisition-related depreciation and amortization of $51.3 million
and $48.2 million for the three months ended September 30, 2018 and
2017, respectively, and $155.0 million and $141.1 million for the
nine months ended September 30, 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 $50.4 million and $53.8 million
for the three and nine months ended September 30, 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 10: Stock-based Payments of the Notes to the unaudited
interim Condensed Consolidated Financial Statements for the three
and nine months ended September 30, 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 will be
paid out before the end of 2018. Refer to Note 10: Stock-based
Payments of the Notes to the unaudited interim Condensed
Consolidated Financial Statements for the three and nine months
ended September 30, 2018 for additional information.
|
(6)
|
|
Other includes sponsor monitoring fees of approximately $1.1 million
and $1.1 million for the three months ended September 30, 2018 and
2017, respectively, and $3.4 million and $3.4 million for the nine
months ended September 30, 2018 and 2017, respectively; accounts
receivable securitization costs of approximately $1.9 million and
$0.7 million for the three months ended September 30, 2018 and 2017,
respectively, and $4.3 million and $5.1 million for the nine months
ended September 30, 2018 and 2017, respectively; and other items.
|
Adjusted Net Income is calculated as follows:
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
(in millions) (unaudited)
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
Net loss
|
|
|
$
|
(48.7
|
)
|
|
$
|
(78.6
|
)
|
|
|
$
|
(172.9
|
)
|
|
$
|
(245.6
|
)
|
Add/(less):
|
|
|
|
|
|
|
|
|
|
|
Merger and acquisition-related depreciation and amortization(1) |
|
|
51.3
|
|
|
48.2
|
|
|
|
155.0
|
|
|
141.2
|
|
Financing and other facility costs
|
|
|
48.5
|
|
|
(0.7
|
)
|
|
|
49.5
|
|
|
(5.1
|
)
|
Integration and other costs related to acquisitions
|
|
|
71.5
|
|
|
71.5
|
|
|
|
178.3
|
|
|
213.3
|
|
Pre-IPO stock-based compensation
|
|
|
10.8
|
|
|
6.2
|
|
|
|
25.7
|
|
|
20.5
|
|
Cassidy Turley deferred payment obligation
|
|
|
11.0
|
|
|
10.2
|
|
|
|
32.3
|
|
|
32.3
|
|
Other
|
|
|
3.0
|
|
|
3.4
|
|
|
|
7.6
|
|
|
11.5
|
|
Income tax adjustments(2) |
|
|
(58.1
|
)
|
|
(34.7
|
)
|
|
|
(99.2
|
)
|
|
(119.0
|
)
|
Adjusted Net Income
|
|
|
$
|
89.3
|
|
|
$
|
25.5
|
|
|
|
$
|
176.3
|
|
|
$
|
49.1
|
|
Weighted average shares outstanding, basic
|
|
|
184.0
|
|
|
144.1
|
|
|
|
158.5
|
|
|
143.6
|
|
Weighted average shares outstanding, diluted (3) |
|
|
198.0
|
|
|
158.0
|
|
|
|
172.2
|
|
|
157.3
|
|
Adjusted earnings per share, basic
|
|
|
$
|
0.49
|
|
|
$
|
0.18
|
|
|
|
$
|
1.11
|
|
|
$
|
0.34
|
|
Adjusted earnings per share, diluted
|
|
|
$
|
0.45
|
|
|
$
|
0.16
|
|
|
|
$
|
1.02
|
|
|
$
|
0.31
|
|
(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 22% and 30% for the three months ended September 30, 2018
and 2017, respectively, and 22% and 30% for the nine months ended
September 30, 2018 and 2017, respectively.
|
(3)
|
|
Weighted average shares outstanding, diluted ("WACS, diluted") is
calculated by taking WACS, basic and adding in dilutive shares of
14.0 million and 13.9 million for the three months ended September
30, 2018 and 2017, respectively, and 13.7 million and 13.7 million
for the nine months ended September 30, 2018 and 2017, respectively,
which is used to calculate Adjusted earnings per share, diluted.
|
Reconciliation of revenue to fee revenue:
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
(in millions) (unaudited)
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
$
|
2,076.0
|
|
|
$
|
1,709.3
|
|
|
|
$
|
5,818.0
|
|
|
$
|
4,871.2
|
|
Less: Gross contract costs
|
|
|
(567.5
|
)
|
|
(417.9
|
)
|
|
|
(1,621.6
|
)
|
|
(1,187.2
|
)
|
Acquisition accounting adjustments
|
|
|
—
|
|
|
0.3
|
|
|
|
2.5
|
|
|
13.0
|
|
Total Fee revenue
|
|
|
$
|
1,508.5
|
|
|
$
|
1,291.7
|
|
|
|
$
|
4,198.9
|
|
|
$
|
3,697.0
|
|
Reconciliation of total costs and expenses to Fee-based operating
expenses:
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
Total costs and expenses
|
|
|
$
|
2,065.0
|
|
|
$
|
1,763.9
|
|
|
|
$
|
5,855.2
|
|
|
$
|
5,082.1
|
|
Less: Gross contract costs
|
|
|
(567.5
|
)
|
|
(417.9
|
)
|
|
|
(1,621.6
|
)
|
|
(1,187.2
|
)
|
Fee-based operating expenses
|
|
|
$
|
1,497.5
|
|
|
$
|
1,346.0
|
|
|
|
$
|
4,233.6
|
|
|
$
|
3,894.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Fee-based operating expenses by segment to
Consolidated Fee-based operating expenses:
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
Americas Fee-based operating expenses
|
|
|
$
|
921.7
|
|
|
$
|
806.0
|
|
|
|
$
|
2,577.9
|
|
|
$
|
2,337.9
|
EMEA Fee-based operating expenses
|
|
|
182.9
|
|
|
165.8
|
|
|
|
537.1
|
|
|
466.0
|
APAC Fee-based operating expenses
|
|
|
225.0
|
|
|
219.1
|
|
|
|
664.2
|
|
|
633.4
|
Segment Fee-based operating expenses
|
|
|
1,329.6
|
|
|
1,190.9
|
|
|
|
3,779.2
|
|
|
3,437.3
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
71.6
|
|
|
64.1
|
|
|
|
213.0
|
|
|
193.0
|
Integration and other costs related to acquisitions (1) |
|
|
71.5
|
|
|
71.2
|
|
|
|
175.8
|
|
|
200.3
|
Pre-IPO stock-based compensation
|
|
|
10.8
|
|
|
6.2
|
|
|
|
25.7
|
|
|
20.5
|
Cassidy Turley deferred payment obligation
|
|
|
11.0
|
|
|
10.2
|
|
|
|
32.3
|
|
|
32.3
|
Other
|
|
|
3.0
|
|
|
3.4
|
|
|
|
7.6
|
|
|
11.5
|
Fee-based operating expenses
|
|
|
$
|
1,497.5
|
|
|
$
|
1,346.0
|
|
|
|
$
|
4,233.6
|
|
|
$
|
3,894.9
|
(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.
|
Note – 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, share-based compensation and the Cassidy Turley deferred
payment obligation, 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.
Source: Cushman & Wakefield
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181113006170/en/
Cushman & Wakefield
INVESTOR RELATIONS
Bill
Knightly
Investor Relations
+1 312 338 7860
IR@cushwake.com
or
MEDIA
CONTACT
Brad Kreiger
Corporate Communications
+1
312 424 8010
brad.kreiger@cushwake.com
Source: Cushman & Wakefield