CHICAGO--(BUSINESS WIRE)--
Cushman & Wakefield (NYSE: CWK) today reported financial results for the
first quarter ended March 31, 2019:
-
Revenue for the first quarter of 2019 was $1.9 billion, up 8% (10%
local currencyi) from first quarter 2018. Fee revenue was
$1.4 billion, up 10% (13% local currency).
-
Net loss for the first quarter of 2019 was $(20.9) million, an
improvement of $72.0 million over first quarter of 2018 with Net loss
per share of $(0.10). Adjusted earnings per share was $0.10.
-
Adjusted EBITDA was $88.4 million, up 18% (19% local currency) from
first quarter 2018. Adjusted EBITDA margin of 6.4% was up 45 bps.
“We are off to a good start in 2019 with continued momentum in the first
quarter marked by double-digit growth in Fee revenue and Adjusted
EBITDA,” said Brett White, Executive Chairman & CEO. “In addition, we
are executing our strategy, making significant progress on our
financial, operational and growth objectives. We are on track to
generate full-year Adjusted EBITDA of $685 to $735 millionii,
consistent with our guidance for 2019.”
Consolidated Results (unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
Three
|
|
|
|
|
|
|
Months
|
|
Months
|
|
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
|
March
|
|
March
|
|
% Change
|
|
in Local
|
(in millions)
|
|
31, 2019
|
|
31, 2018
|
|
in USD
|
|
Currency
|
Revenue:
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
1,903.0
|
|
|
$
|
1,767.7
|
|
|
8
|
%
|
|
10
|
%
|
Less: Gross contract costs
|
|
(531.0
|
)
|
|
(521.8
|
)
|
|
2
|
%
|
|
5
|
%
|
Acquisition accounting adjustments
|
|
—
|
|
|
0.1
|
|
|
n/m
|
|
n/m
|
Total Fee revenue(1) |
|
$
|
1,372.0
|
|
|
$
|
1,246.0
|
|
|
10
|
%
|
|
13
|
%
|
Service Lines:
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
$
|
706.8
|
|
|
$
|
615.0
|
|
|
15
|
%
|
|
18
|
%
|
Leasing
|
|
372.9
|
|
|
319.9
|
|
|
17
|
%
|
|
19
|
%
|
Capital markets
|
|
190.7
|
|
|
214.1
|
|
|
(11
|
)%
|
|
(10
|
)%
|
Valuation and other
|
|
101.6
|
|
|
97.0
|
|
|
5
|
%
|
|
9
|
%
|
Total Fee revenue(1) |
|
$
|
1,372.0
|
|
|
$
|
1,246.0
|
|
|
10
|
%
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of services, operating and administrative expenses excluding
gross contract costs
|
|
$
|
1,320.6
|
|
|
$
|
1,247.6
|
|
|
6
|
%
|
|
9
|
%
|
Gross contract costs
|
|
531.0
|
|
|
521.8
|
|
|
2
|
%
|
|
5
|
%
|
Depreciation and amortization
|
|
73.5
|
|
|
69.8
|
|
|
5
|
%
|
|
7
|
%
|
Restructuring, impairment and related charges
|
|
3.9
|
|
|
10.4
|
|
|
(63
|
)%
|
|
(62
|
)%
|
Total costs and expenses
|
|
1,929.0
|
|
|
1,849.6
|
|
|
4
|
%
|
|
7
|
%
|
Operating loss
|
|
$
|
(26.0
|
)
|
|
$
|
(81.9
|
)
|
|
(68
|
)%
|
|
(68
|
)%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
|
$
|
88.4
|
|
|
$
|
74.8
|
|
|
18
|
%
|
|
19
|
%
|
Adjusted EBITDA margin(1) |
|
6.4
|
%
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(20.9
|
)
|
|
$
|
(92.9
|
)
|
|
(78
|
)%
|
|
|
Adjusted net income(1) |
|
$
|
23.3
|
|
|
$
|
11.5
|
|
|
103
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic
|
|
216.6
|
|
145.3
|
|
|
|
|
Weighted average shares outstanding, diluted(2) |
|
224.0
|
|
156.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, basic and diluted
|
|
$
|
(0.10
|
)
|
|
$
|
(0.64
|
)
|
|
|
|
|
Adjusted earnings per share, diluted
|
|
$
|
0.10
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
First Quarter Results (unaudited)
Revenue
Revenue was $1.9 billion, an increase of $135.3 million or 8% over first
quarter of 2018. Gross contract costs, primarily in the Property,
facilities and project management service line, increased $9.2 million.
Foreign currency had a $43.9 million or 2%, unfavorable impact on
Revenue.
Fee revenue was $1.4 billion, an increase of $155.9 million or 13% on a
local currency basis over first quarter 2018, reflecting increases
primarily in Property, facilities and project management and Leasing.
Property, facilities and project management Fee revenue increased $108.9
million or 18% on a local currency basis, driven by an Americas increase
of $62.5 million or 16%, on a local currency basis, with the remainder
of the Fee revenue growth primarily in APAC. Leasing Fee revenue
increased $59.4 million or 19%, on a local currency basis, driven by an
Americas increase of $52.5 million or 21%, on a local currency basis,
with the remainder of the Fee revenue growth primarily in EMEA.
Operating expenses
Operating expenses were $1.9 billion, an increase of $79.4 million or
4%. The increase in operating expenses reflected increased costs
associated with revenue growth.
Fee-based operating expenses, excluding Depreciation and amortization,
integration and other costs related to acquisitions and stock-based
compensation, were $1.3 billion, a 12% increase on a local currency
basis. The increase in Fee-based operating expenses reflected higher
cost of services associated with Fee revenue growth.
Interest expense
Net interest expense was $37.2 million, a decrease of $7.2 million,
driven by lower average borrowings during the quarter.
Benefit from income taxes
The net benefit from income taxes was $40.9 million, an increase of $8.9
million. The increase is driven primarily by a change in the mix of
geographical earnings from the prior period and release of valuation
allowances.
Net loss and Adjusted EBITDA
Net loss was $20.9 million, an improvement of $72.0 million, primarily
driven by stronger operating results, lower integration costs and a
higher benefit from income taxes.
Adjusted EBITDA was $88.4 million, an increase of $13.6 million or 19%,
on a local currency basis, driven by the increase in Fee revenue
exceeding the increase in Fee-based operating expenses. Adjusted EBITDA
margin, calculated on a Fee revenue basis, was 6.4%, compared to 6.0% in
the first quarter of 2018, driven by Fee revenue mix and operating
leverage.
Balance Sheet
-
The Company's outstanding 2018 First Lien debt, net of deferred
financing fees, was approximately $2.7 billion as of March 31, 2019,
which net of cash and cash equivalents, resulted in a net debt
position of approximately $2.2 billion.
-
Liquidity at the end of the first quarter was $1.2 billion, including
availability on our undrawn revolving credit facility of $810 million
and cash and cash equivalents of $411.0 million.
i In order to assist our investors and improve comparability
of results, we present the period-over-period changes in certain of our
financial measures, such as Fee revenue and Adjusted EBITDA, in "local"
currency. The local currency change represents the period-over-period
change assuming no movement in foreign exchange rates from the prior
period. We believe that this presentation provides our management and
investors with a better view of comparability and trends in the
underlying operating business.
ii 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. The Company has
not reconciled the 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 First Quarter 2019 Earnings Conference Call will be held
today, May 7, 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 1867538. 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 press release, 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 press
release, 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 press release 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 March 31,
|
(in millions, except per share data) (unaudited)
|
|
2019
|
|
2018
|
Revenue
|
|
$
|
1,903.0
|
|
|
$
|
1,767.7
|
|
Costs and expenses:
|
|
|
|
|
Cost of services (exclusive of depreciation and amortization)
|
|
1,564.8
|
|
|
1,473.8
|
|
Operating, administrative and other
|
|
286.8
|
|
|
295.6
|
|
Depreciation and amortization
|
|
73.5
|
|
|
69.8
|
|
Restructuring, impairment and related charges
|
|
3.9
|
|
|
10.4
|
|
Total costs and expenses
|
|
1,929.0
|
|
|
1,849.6
|
|
Operating loss
|
|
(26.0
|
)
|
|
(81.9
|
)
|
Interest expense, net of interest income
|
|
(37.2
|
)
|
|
(44.4
|
)
|
Earnings from equity method investments
|
|
0.8
|
|
|
0.4
|
|
Other income, net
|
|
0.6
|
|
|
1.0
|
|
Loss before income taxes
|
|
(61.8
|
)
|
|
(124.9
|
)
|
Benefit from income taxes
|
|
(40.9
|
)
|
|
(32.0
|
)
|
Net loss
|
|
$
|
(20.9
|
)
|
|
$
|
(92.9
|
)
|
|
|
|
|
|
Basic and diluted loss per share:
|
|
|
|
|
Net loss per share attributable to common shareholders, basic and
diluted
|
|
$
|
(0.10
|
)
|
|
$
|
(0.64
|
)
|
Weighted average shares outstanding, basic and diluted
|
|
216.6
|
|
|
145.3
|
|
|
|
|
|
|
|
|
|
Cushman & Wakefield plc
Consolidated Balance Sheets
|
|
|
|
|
|
As of
|
(in millions, except per share data)
|
|
March 31, 2019
(unaudited)
|
|
December 31, 2018
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
411.0
|
|
|
$
|
895.3
|
|
Trade and other receivables, net of allowance balance of $51.2
million and $49.5 million, as of March 31, 2019 and December 31,
2018, respectively
|
|
1,370.9
|
|
|
1,463.5
|
|
Income tax receivable
|
|
38.0
|
|
|
41.1
|
|
Prepaid expenses and other current assets
|
|
312.2
|
|
|
343.4
|
|
Total current assets
|
|
2,132.1
|
|
|
2,743.3
|
|
Property and equipment, net
|
|
306.9
|
|
|
313.8
|
|
Goodwill
|
|
1,946.9
|
|
|
1,778.5
|
|
Intangible assets, net
|
|
1,193.1
|
|
|
1,128.2
|
|
Equity method investments
|
|
9.3
|
|
|
8.7
|
|
Deferred tax assets
|
|
84.7
|
|
|
84.0
|
|
Non-current operating lease assets
|
|
531.6
|
|
|
—
|
|
Other non-current assets
|
|
502.9
|
|
|
489.5
|
|
Total assets
|
|
$
|
6,707.5
|
|
|
$
|
6,546.0
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Short-term borrowings and current portion of long-term debt
|
|
$
|
38.7
|
|
|
$
|
39.9
|
|
Accounts payable and accrued expenses
|
|
982.2
|
|
|
1,047.7
|
|
Accrued compensation
|
|
580.0
|
|
|
817.9
|
|
Income tax payable
|
|
60.1
|
|
|
43.2
|
|
Other current liabilities
|
|
201.0
|
|
|
90.0
|
|
Total current liabilities
|
|
1,862.0
|
|
|
2,038.7
|
|
Long-term debt
|
|
2,639.1
|
|
|
2,644.2
|
|
Deferred tax liabilities
|
|
77.3
|
|
|
136.4
|
|
Non-current operating lease liabilities
|
|
492.9
|
|
|
—
|
|
Other non-current liabilities
|
|
305.8
|
|
|
366.6
|
|
Total liabilities
|
|
5,377.1
|
|
|
5,185.9
|
|
Commitments and contingencies (See Note 11 to financial statements)
|
|
|
|
|
Shareholders' Equity:
|
|
|
|
|
Ordinary shares, nominal value $0.10 per share, 216.7 and 216.6
issued and outstanding at March 31, 2019 and December 31, 2018
|
|
21.7
|
|
|
21.7
|
|
Additional paid-in capital
|
|
2,801.4
|
|
|
2,791.2
|
|
Accumulated deficit
|
|
(1,318.1
|
)
|
|
(1,298.4
|
)
|
Accumulated other comprehensive loss
|
|
(174.6
|
)
|
|
(154.4
|
)
|
Total equity
|
|
1,330.4
|
|
|
1,360.1
|
|
Total liabilities and shareholders' equity
|
|
$
|
6,707.5
|
|
|
$
|
6,546.0
|
|
|
Cushman & Wakefield plc
Consolidated Statements of Cash Flows
|
|
|
|
|
|
Three Months Ended
|
(in millions) (unaudited)
|
|
March 31, 2019
|
|
March 31, 2018
|
Cash flows from operating activities
|
|
|
|
|
Net loss
|
|
$
|
(20.9
|
)
|
|
$
|
(92.9
|
)
|
Reconciliation of net loss to net cash used in operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
73.5
|
|
|
69.8
|
|
Impairment charges
|
|
3.9
|
|
|
—
|
|
Unrealized foreign exchange loss
|
|
—
|
|
|
1.4
|
|
Stock-based compensation
|
|
14.5
|
|
|
13.1
|
|
Lease Amortization
|
|
27.8
|
|
|
—
|
|
Amortization of debt issuance costs
|
|
1.0
|
|
|
3.4
|
|
Change in deferred taxes
|
|
(76.5
|
)
|
|
(54.0
|
)
|
Bad debt expense
|
|
6.0
|
|
|
5.5
|
|
Other non-cash operating activities
|
|
0.2
|
|
|
1.3
|
|
Changes in assets and liabilities:
|
|
|
|
|
Trade and other receivables
|
|
128.5
|
|
|
31.6
|
|
Income taxes payable
|
|
21.8
|
|
|
10.2
|
|
Prepaid expenses and other current assets
|
|
7.8
|
|
|
(37.3
|
)
|
Other non-current assets
|
|
(5.3
|
)
|
|
21.2
|
|
Accounts payable and accrued expenses
|
|
(116.0
|
)
|
|
(0.7
|
)
|
Accrued compensation
|
|
(243.9
|
)
|
|
(146.7
|
)
|
Other current and non-current liabilities
|
|
(37.3
|
)
|
|
3.5
|
|
Net cash used in operating activities
|
|
(214.9
|
)
|
|
(170.6
|
)
|
Cash flows from investing activities
|
|
|
|
|
Payment for property and equipment
|
|
(13.7
|
)
|
|
(20.6
|
)
|
Proceeds from sale of property, plant and equipment
|
|
—
|
|
|
0.2
|
|
Acquisitions of businesses, net of cash acquired
|
|
(262.2
|
)
|
|
—
|
|
Other investing activities, net
|
|
—
|
|
|
0.2
|
|
Net cash used in investing activities
|
|
(275.9
|
)
|
|
(20.2
|
)
|
Cash flows from financing activities
|
|
|
|
|
Net proceeds from issuance of shares
|
|
—
|
|
|
6.4
|
|
Shares repurchased for payment of employee taxes on stock awards
|
|
(3.1
|
)
|
|
(2.1
|
)
|
Payment of contingent consideration
|
|
—
|
|
|
(2.5
|
)
|
Proceeds from long-term borrowings
|
|
—
|
|
|
250.0
|
|
Repayment of borrowings
|
|
(6.8
|
)
|
|
(26.6
|
)
|
Debt issuance costs
|
|
—
|
|
|
(1.8
|
)
|
Payment of finance lease liabilities
|
|
(2.8
|
)
|
|
(0.9
|
)
|
Other financing activities, net
|
|
0.7
|
|
|
(1.5
|
)
|
Net cash (used in) provided by financing activities
|
|
(12.0
|
)
|
|
221.0
|
|
|
|
|
|
|
Change in cash, cash equivalents and restricted cash
|
|
(502.8
|
)
|
|
30.2
|
|
Cash, cash equivalents and restricted cash, beginning of the period
|
|
965.4
|
|
|
467.9
|
|
Effects of exchange rate fluctuations on cash, cash equivalents and
restricted cash
|
|
0.7
|
|
|
5.2
|
|
Cash, cash equivalents and restricted cash, end of the period
|
|
$
|
463.3
|
|
|
$
|
503.3
|
|
|
|
|
|
|
|
|
|
|
Consolidated Results (unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
Three
|
|
|
|
|
|
|
Months
|
|
Months
|
|
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
|
March
|
|
March
|
|
% Change
|
|
in Local
|
(in millions)
|
|
31, 2019
|
|
31, 2018
|
|
in USD
|
|
Currency
|
Revenue:
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
1,903.0
|
|
|
$
|
1,767.7
|
|
|
8
|
%
|
|
10
|
%
|
Less: Gross contract costs
|
|
(531.0
|
)
|
|
(521.8
|
)
|
|
2
|
%
|
|
5
|
%
|
Acquisition accounting adjustments
|
|
—
|
|
|
0.1
|
|
|
n/m
|
|
n/m
|
Total Fee revenue(1) |
|
$
|
1,372.0
|
|
|
$
|
1,246.0
|
|
|
10
|
%
|
|
13
|
%
|
Service Lines:
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
$
|
706.8
|
|
|
$
|
615.0
|
|
|
15
|
%
|
|
18
|
%
|
Leasing
|
|
372.9
|
|
|
319.9
|
|
|
17
|
%
|
|
19
|
%
|
Capital markets
|
|
190.7
|
|
|
214.1
|
|
|
(11
|
)%
|
|
(10
|
)%
|
Valuation and other
|
|
101.6
|
|
|
97.0
|
|
|
5
|
%
|
|
9
|
%
|
Total Fee revenue(1) |
|
$
|
1,372.0
|
|
|
$
|
1,246.0
|
|
|
10
|
%
|
|
13
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of services, operating and administrative expenses excluding
gross contract costs
|
|
$
|
1,320.6
|
|
|
$
|
1,247.6
|
|
|
6
|
%
|
|
9
|
%
|
Gross contract costs
|
|
531.0
|
|
|
521.8
|
|
|
2
|
%
|
|
5
|
%
|
Depreciation and amortization
|
|
73.5
|
|
|
69.8
|
|
|
5
|
%
|
|
7
|
%
|
Restructuring, impairment and related charges
|
|
3.9
|
|
|
10.4
|
|
|
(63
|
)%
|
|
(62
|
)%
|
Total costs and expenses
|
|
1,929.0
|
|
|
1,849.6
|
|
|
4
|
%
|
|
7
|
%
|
Operating loss
|
|
$
|
(26.0
|
)
|
|
$
|
(81.9
|
)
|
|
(68
|
)%
|
|
(68
|
)%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
|
$
|
88.4
|
|
|
$
|
74.8
|
|
|
18
|
%
|
|
19
|
%
|
Adjusted EBITDA margin(1) |
|
6.4
|
%
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(20.9
|
)
|
|
$
|
(92.9
|
)
|
|
(78
|
)%
|
|
|
Adjusted net income(1) |
|
$
|
23.3
|
|
|
$
|
11.5
|
|
|
103
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic
|
|
216.6
|
|
145.3
|
|
|
|
|
Weighted average shares outstanding, diluted(2) |
|
224.0
|
|
156.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share, basic and diluted
|
|
$
|
(0.10
|
)
|
|
$
|
(0.64
|
)
|
|
|
|
|
Adjusted earnings per share, diluted
|
|
$
|
0.10
|
|
|
$
|
0.07
|
|
|
|
|
|
(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 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 ended March 31, 2019 and 2018.
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
|
|
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
|
March
|
|
March
|
|
% Change
|
|
in Local
|
(in millions) (unaudited)
|
|
31, 2019
|
|
31, 2018
|
|
in USD
|
|
Currency
|
Total revenue
|
|
$
|
1,347.6
|
|
|
$
|
1,206.2
|
|
|
12
|
%
|
|
12
|
%
|
Less: Gross contract costs
|
|
(410.5
|
)
|
|
(356.3
|
)
|
|
15
|
%
|
|
15
|
%
|
Acquisition accounting adjustments
|
|
—
|
|
|
0.1
|
|
|
n/m
|
|
n/m
|
Total Fee revenue
|
|
$
|
937.1
|
|
|
$
|
850.0
|
|
|
10
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
Service lines:
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
$
|
463.0
|
|
|
$
|
404.2
|
|
|
15
|
%
|
|
16
|
%
|
Leasing
|
|
297.3
|
|
|
246.0
|
|
|
21
|
%
|
|
21
|
%
|
Capital markets
|
|
140.4
|
|
|
163.1
|
|
|
(14
|
)%
|
|
(14
|
)%
|
Valuation and other
|
|
36.4
|
|
|
36.7
|
|
|
(1
|
)%
|
|
—
|
%
|
Total Fee revenue
|
|
$
|
937.1
|
|
|
$
|
850.0
|
|
|
10
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
Segment operating expenses
|
|
$
|
1,277.3
|
|
|
$
|
1,143.9
|
|
|
12
|
%
|
|
12
|
%
|
Less: Gross contract costs
|
|
(410.5
|
)
|
|
(356.3
|
)
|
|
15
|
%
|
|
15
|
%
|
Total Fee-based operating expenses
|
|
$
|
866.8
|
|
|
$
|
787.6
|
|
|
10
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
70.3
|
|
|
$
|
62.5
|
|
|
12
|
%
|
|
13
|
%
|
Adjusted EBITDA Margin
|
|
7.5
|
%
|
|
7.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA Results
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
Three
|
|
|
|
|
|
|
Months
|
|
Months
|
|
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
|
March
|
|
March
|
|
% Change
|
|
in Local
|
(in millions) (unaudited)
|
|
31, 2019
|
|
31, 2018
|
|
in USD
|
|
Currency
|
Total revenue
|
|
$
|
202.6
|
|
|
$
|
209.2
|
|
|
(3
|
)%
|
|
5
|
%
|
Less: Gross contract costs
|
|
(18.8
|
)
|
|
(45.9
|
)
|
|
(59
|
)%
|
|
(56
|
)%
|
Total Fee revenue
|
|
$
|
183.8
|
|
|
$
|
163.3
|
|
|
13
|
%
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
Service lines:
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
$
|
69.8
|
|
|
$
|
54.6
|
|
|
28
|
%
|
|
38
|
%
|
Leasing
|
|
48.8
|
|
|
47.9
|
|
|
2
|
%
|
|
11
|
%
|
Capital markets
|
|
26.4
|
|
|
23.9
|
|
|
10
|
%
|
|
19
|
%
|
Valuation and other
|
|
38.8
|
|
|
36.9
|
|
|
5
|
%
|
|
14
|
%
|
Total Fee revenue
|
|
$
|
183.8
|
|
|
$
|
163.3
|
|
|
13
|
%
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
Segment operating expenses
|
|
$
|
204.2
|
|
|
$
|
219.2
|
|
|
(7
|
)%
|
|
1
|
%
|
Less: Gross contract costs
|
|
(18.8
|
)
|
|
(45.9
|
)
|
|
(59
|
)%
|
|
(56
|
)%
|
Total Fee-based operating expenses
|
|
$
|
185.4
|
|
|
$
|
173.3
|
|
|
7
|
%
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
(0.2
|
)
|
|
$
|
(8.6
|
)
|
|
n/m
|
|
n/m
|
Adjusted EBITDA Margin
|
|
(0.1
|
)%
|
|
(5.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC Results
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
Three
|
|
|
|
|
|
|
Months
|
|
Months
|
|
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
% Change
|
|
|
March
|
|
March
|
|
% Change
|
|
in Local
|
(in millions) (unaudited)
|
|
31, 2019
|
|
31, 2018
|
|
in USD
|
|
Currency
|
Total revenue
|
|
$
|
352.8
|
|
|
$
|
352.3
|
|
|
0
|
%
|
|
7
|
%
|
Less: Gross contract costs
|
|
(101.7
|
)
|
|
(119.6
|
)
|
|
(15
|
)%
|
|
(7
|
)%
|
Total Fee revenue
|
|
$
|
251.1
|
|
|
$
|
232.7
|
|
|
8
|
%
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
Service lines:
|
|
|
|
|
|
|
|
|
Property, facilities and project management
|
|
$
|
174.0
|
|
|
$
|
156.2
|
|
|
11
|
%
|
|
19
|
%
|
Leasing
|
|
26.8
|
|
|
26.0
|
|
|
3
|
%
|
|
10
|
%
|
Capital markets
|
|
23.9
|
|
|
27.1
|
|
|
(12
|
)%
|
|
(11
|
)%
|
Valuation and other
|
|
26.4
|
|
|
23.4
|
|
|
13
|
%
|
|
18
|
%
|
Total Fee revenue
|
|
$
|
251.1
|
|
|
$
|
232.7
|
|
|
8
|
%
|
|
14 %
|
|
|
|
|
|
|
|
|
|
Segment operating expenses
|
|
$
|
334.5
|
|
|
$
|
331.3
|
|
|
1
|
%
|
|
8
|
%
|
Less: Gross contract costs
|
|
(101.7
|
)
|
|
(119.6
|
)
|
|
(15
|
)%
|
|
(7
|
)%
|
Total Fee-based operating expenses
|
|
$
|
232.8
|
|
|
$
|
211.7
|
|
|
10
|
%
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
18.3
|
|
|
$
|
20.9
|
|
|
(12
|
)%
|
|
(9
|
)%
|
Adjusted EBITDA Margin
|
|
7.3
|
%
|
|
9.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 other 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
period-over-period 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 March 31,
2019 and 2018 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 to Adjusted EBITDA:
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2019
|
|
2018
|
Net loss
|
|
$
|
(20.9
|
)
|
|
$
|
(92.9
|
)
|
Add/(less):
|
|
|
|
|
Depreciation and amortization(1) |
|
73.5
|
|
|
69.8
|
|
Interest expense, net of interest income(2) |
|
37.2
|
|
|
44.4
|
|
Benefit from income taxes
|
|
(40.9
|
)
|
|
(32.0
|
)
|
Integration and other costs related to acquisitions(3) |
|
21.4
|
|
|
66.2
|
|
Pre-IPO stock-based compensation (4) |
|
11.6
|
|
|
6.8
|
|
Cassidy Turley deferred payment obligation (5) |
|
—
|
|
|
10.4
|
|
Other (6) |
|
6.5
|
|
|
2.1
|
|
Adjusted EBITDA
|
|
$
|
88.4
|
|
|
$
|
74.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Depreciation and amortization includes merger and
acquisition-related depreciation and amortization of $52.8 million
and $51.6 million for the three months ended March 31, 2019 and
2018, respectively.
|
|
|
|
(2)
|
|
Interest expense, net of interest income includes one-time write-off
of financing fees and other fees incurred in relation to debt
modifications of $0.0 million and $3.4 million for the three months
ended March 31, 2019 and 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 9: Stock-based Payments of the Notes to the unaudited
interim Condensed Consolidated Financial Statements for the three
months ended March 31, 2019 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.
|
|
|
|
(6)
|
|
Other includes sponsor monitoring fees of approximately $0.0 million
and $1.1 million for the three months ended March 31, 2019 and 2018,
respectively; accounts receivable securitization costs of
approximately $0.3 million and $0.9 million for the three months
ended March 31, 2019 and 2018, respectively; merger and acquisition
related costs of $3.7 million for the three months ended March 31,
2019; and other items.
|
|
|
|
Reconciliation of Net loss to Adjusted Net Income:
|
|
|
|
|
Three Months Ended March 31,
|
(in millions) (unaudited)
|
|
2019
|
|
2018
|
Net (loss) income
|
|
$
|
(20.9
|
)
|
|
$
|
(92.9
|
)
|
|
|
|
|
|
Merger and acquisition-related depreciation and amortization(1) |
|
52.8
|
|
|
51.6
|
|
Financing and other facility costs
|
|
(0.3
|
)
|
|
2.5
|
|
Integration and other costs related to acquisitions
|
|
21.4
|
|
|
66.2
|
|
Pre-IPO stock-based compensation
|
|
11.6
|
|
|
6.8
|
|
Cassidy Turley deferred payment obligation
|
|
—
|
|
|
10.4
|
|
Other
|
|
6.5
|
|
|
2.1
|
|
Income tax adjustments(2) |
|
(47.8
|
)
|
|
(35.2
|
)
|
Adjusted Net Income
|
|
$
|
23.3
|
|
|
$
|
11.5
|
|
Weighted average shares outstanding, basic
|
|
216.6
|
|
|
145.3
|
|
Weighted average shares outstanding, diluted (3) |
|
224.0
|
|
|
156.2
|
|
Adjusted earnings per share, basic
|
|
$
|
0.11
|
|
|
$
|
0.08
|
|
Adjusted earnings per share, diluted
|
|
$
|
0.10
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 22% for the three months ended March 31, 2019 and
2018, respectively.
|
|
|
|
(3)
|
|
Weighted average shares outstanding, diluted ("WACS, diluted") is
calculated by taking WACS, basic and adding in dilutive shares of
7.4 million and 10.9 million for the three months ended March 31,
2019 and 2018, respectively, which is used to calculate Adjusted
earnings per share, diluted.
|
|
|
|
Reconciliation of Revenue to Fee revenue:
|
|
|
|
|
Three Months Ended March 31,
|
(in millions) (unaudited)
|
|
2019
|
|
2018
|
Revenue:
|
|
|
|
|
Total revenue
|
|
$
|
1,903.0
|
|
|
$
|
1,767.7
|
|
Less: Gross contract costs
|
|
(531.0
|
)
|
|
(521.8
|
)
|
Acquisition accounting adjustments
|
|
—
|
|
|
0.1
|
|
Total Fee revenue
|
|
$
|
1,372.0
|
|
|
$
|
1,246.0
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Total costs and expenses to Fee-based operating
expenses:
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2019
|
|
2018
|
Total costs and expenses
|
|
$
|
1,929.0
|
|
|
$
|
1,849.6
|
|
Less: Gross contract costs
|
|
(531.0
|
)
|
|
(521.8
|
)
|
Fee-based operating expenses
|
|
$
|
1,398.0
|
|
|
$
|
1,327.8
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Fee-based operating expenses by segment to
Consolidated Fee-based operating expenses:
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2019
|
|
2018
|
Americas Fee-based operating expenses
|
|
$
|
866.8
|
|
|
$
|
787.6
|
EMEA Fee-based operating expenses
|
|
185.4
|
|
|
173.3
|
APAC Fee-based operating expenses
|
|
232.8
|
|
|
211.7
|
Segment Fee-based operating expenses
|
|
1,285.0
|
|
|
1,172.6
|
|
|
|
|
|
Depreciation and amortization
|
|
73.5
|
|
|
69.8
|
Integration and other costs related to acquisitions(1) |
|
21.4
|
|
|
66.1
|
Pre-IPO stock-based compensation
|
|
11.6
|
|
|
6.8
|
Cassidy Turley deferred payment obligation
|
|
—
|
|
|
10.4
|
Other
|
|
6.5
|
|
|
2.1
|
Fee-based operating expenses
|
|
$
|
1,398.0
|
|
|
$
|
1,327.8
|
|
|
|
|
|
|
|
|
|
|
|
(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/20190507006084/en/
INVESTOR RELATIONS
Bill Knightly
Investor
Relations
+1 312 338 7860
IR@cushwake.com
MEDIA
CONTACT
Brad Kreiger
Corporate Communications
+1
312 424 8010
brad.kreiger@cushwake.com
Source: Cushman & Wakefield