Cushman & Wakefield (NYSE: CWK) today reported financial
results for the first quarter of 2024.
Effective January 1, 2024, the Property, facilities and project
management service line was renamed to Services. The change was to
the name only and had no impact on the composition of the Company’s
service lines or its historical results.
First Quarter Results:
- Revenue of $2.2 billion for the first quarter of 2024 decreased
3% from the first quarter of 2023. Service line fee revenue was
flat compared to the first quarter of 2023.
- Strong Leasing growth of 5% was driven by broad strength across
segments, led by EMEA.
- Valuation and other grew 1%, driven by the Americas and
EMEA.
- Services and Capital markets declined 3% and 1%,
respectively.
- Net loss of $28.8 million for the first quarter of 2024
decreased 62% compared to net loss of $76.4 million for the first
quarter of 2023. Diluted loss per share for the first quarter of
2024 was $0.13.
- Adjusted EBITDA of $78.1 million increased 28% from the first
quarter of 2023, with Adjusted EBITDA margin of 5.2% expanding 117
basis points from the first quarter of 2023.
- Net cash used in operating activities was $125.1 million for
the first quarter of 2024.
- Free cash flow for the quarter was a use of $135.6 million
compared to a use of $231.5 million in the first quarter of
2023.
- In March 2024, we elected to prepay $50.0 million of the
Company’s term loans due in 2025.
- Liquidity as of March 31, 2024 was $1.7 billion, consisting of
availability on the Company’s undrawn revolving credit facility of
$1.1 billion and cash and cash equivalents of $0.6 billion.
In April 2024, we repriced $1.0 billion of the Company’s term
loans due in 2030, reducing the applicable interest rate spread on
the term loan issued in August 2023 by 25 basis points from 1-month
Term SOFR plus 4.00% to 1-month Term SOFR plus 3.75%. The Company
estimates that the repricing, together with the March 2024 optional
prepayment of debt, will result in cash interest expense savings of
approximately $6.0 million annually.
“We reported strong first quarter results that demonstrate the
breadth and strength of our service offerings as well as our
commitment to executing consistently on our strategic priorities,”
said Michelle MacKay, Cushman & Wakefield Chief Executive
Officer. “Our teams across the globe generated another quarter of
solid leasing growth and seized on opportunities in capital markets
that resulted in a meaningful improvement in sales pace during the
quarter. Additionally, we maintained our cost discipline to drive
margin improvement and recently repaid and refinanced debt to
reduce our annual interest expense. Looking forward, we will build
upon this quarter’s momentum and continue to position ourselves to
capitalize on growth opportunities as they arise.”
Consolidated Results
(unaudited)
Three Months Ended March
31,
(in millions, except per share data)
2024
2023
% Change in USD
% Change in Local
Currency(5)
Revenue:
Services
$
871.2
$
896.8
(3
)%
(3
)%
Leasing
381.7
362.5
5
%
5
%
Capital markets
141.6
142.8
(1
)%
(1
)%
Valuation and other
103.1
101.9
1
%
1
%
Total service line fee revenue(1)
1,497.6
1,504.0
0
%
0
%
Gross contract reimbursables(2)
687.2
745.3
(8
)%
(8
)%
Total revenue
$
2,184.8
$
2,249.3
(3
)%
(3
)%
Costs and expenses:
Cost of services provided to clients
$
1,145.3
$
1,162.3
(1
)%
(1
)%
Cost of gross contract reimbursables
687.2
745.3
(8
)%
(8
)%
Total costs of services
1,832.5
1,907.6
(4
)%
(4
)%
Operating, administrative and other
296.0
315.9
(6
)%
(6
)%
Depreciation and amortization
32.5
36.9
(12
)%
(12
)%
Restructuring, impairment and related
charges
5.0
7.2
(31
)%
(30
)%
Total costs and expenses
2,166.0
2,267.6
(4
)%
(4
)%
Operating income (loss)
18.8
(18.3
)
n.m.
n.m.
Interest expense, net of interest
income
(58.7
)
(76.8
)
(24
)%
(24
)%
Earnings from equity method
investments
11.7
11.9
(2
)%
(2
)%
Other income (expense), net
1.7
(6.0
)
n.m.
n.m.
Loss before income taxes
(26.5
)
(89.2
)
(70
)%
(70
)%
Provision for (benefit from) income
taxes
2.3
(12.8
)
n.m.
n.m.
Net loss
$
(28.8
)
$
(76.4
)
(62
)%
(62
)%
Net loss margin
(1.3
)%
(3.4
)%
Adjusted EBITDA(3)
$
78.1
$
60.9
28
%
29
%
Adjusted EBITDA margin(3)
5.2
%
4.0
%
Adjusted net income (loss)(3)
$
0.6
$
(9.4
)
106
%
Weighted average shares outstanding,
basic
227.9
226.2
Weighted average shares outstanding,
diluted(4)
231.2
228.0
Loss per share, basic
$
(0.13
)
$
(0.34
)
Loss per share, diluted
$
(0.13
)
$
(0.34
)
Adjusted earnings (loss) per share,
diluted(3)(4)
$
0.00
$
(0.04
)
n.m. not meaningful
(1) Service line fee revenue represents
revenue for fees generated from each of our service lines.
(2) Gross contract reimbursables reflects
revenue from clients which have substantially no margin.
(3) See the end of this press release for
reconciliations of (i) Net loss to Adjusted EBITDA and (ii) Net
loss to Adjusted net income (loss) and for explanations of the
calculation of Adjusted EBITDA margin and Adjusted earnings (loss)
per share, diluted. See also the definition of, and a description
of the purposes for which management uses, these non-GAAP financial
measures under the Use of Non-GAAP Financial Measures section in
this press release.
(4) For all periods with a GAAP net loss,
weighted average shares outstanding, diluted is only used to
calculate Adjusted earnings (loss) per share, diluted. For all
periods with a GAAP net loss, all potentially dilutive shares would
be anti-dilutive; therefore, both basic and diluted loss per share
are calculated using weighted average shares outstanding,
basic.
(5) In order to assist our investors and
improve comparability of results, we present the period-over-period
changes in certain of our non-GAAP financial measures, such as
Adjusted EBITDA, in “local” currency. The local currency change
represents the period-over-period change assuming no movement in
foreign exchange rates from the prior period. We believe that this
presentation provides our management and investors with a better
view of comparability and trends in the underlying operating
business.
First Quarter Results
(unaudited)
Revenue
Revenue of $2.2 billion decreased $64.5 million or 3% compared
to the three months ended March 31, 2023, primarily driven by the
Americas, which decreased 6%. This decline was principally driven
by decreases in Services and Gross contract reimbursables revenue
of 3% and 8%, respectively, primarily due to changes in client mix.
Capital markets revenue declined 1%, driven by a 6% decline in the
Americas, as volatility and uncertainty in the interest rate
environment continued to challenge investment sales activity.
Partially offsetting these trends was 5% growth in Leasing revenue,
principally driven by EMEA, and 1% growth in Valuation and other
revenue compared to the three months ended March 31, 2023.
Costs of services
Costs of services of $1.8 billion decreased $75.1 million or 4%
compared to the three months ended March 31, 2023, principally
driven by a decrease in third-party consumables of approximately
$70.0 million. Cost of services provided to clients decreased 1%
and Cost of gross contract reimbursables decreased 8%, primarily
driven by the Americas, due to changes in client mix.
Operating, administrative and other
Operating, administrative and other expenses of $296.0 million
decreased $19.9 million or 6% compared to the three months ended
March 31, 2023, principally driven by a decrease in employment
costs and the impact of cost savings initiatives.
Restructuring, impairment and related charges
Restructuring, impairment and related charges of $5.0 million
decreased $2.2 million compared to the three months ended March 31,
2023, which reflected a decrease in severance and
employment-related costs of $1.5 million, as well as a decrease in
right-of-use asset impairment charges of $0.7 million. In 2023, the
Company actioned certain cost savings initiatives, including a
reduction in headcount across select roles to help optimize our
workforce given the challenging macroeconomic conditions and
operating environment, as well as property lease rationalizations.
These actions continued into the first quarter of 2024.
Interest expense, net of interest income
Interest expense of $58.7 million decreased $18.1 million or 24%
compared to the three months ended March 31, 2023, primarily
related to a loss on debt extinguishment of $16.9 million, as well
as $4.7 million of new transaction costs expensed in the first
quarter of 2023 in connection with the refinancing of a portion of
the borrowings under our 2018 Credit Agreement (see Note 9:
Long-Term Debt and Other Borrowings in the Notes to the Condensed
Consolidated Financial Statements in our Quarterly Report on Form
10-Q for the quarter ended March 31, 2024 for further information).
The decrease in interest expense was partially offset by higher
variable interest rates on our term loans compared to the prior
year period.
Provision for (benefit from) income taxes
Provision for income taxes for the first quarter of 2024 was
$2.3 million on a loss before income taxes of $26.5 million. For
the first quarter of 2023, the benefit from income taxes was $12.8
million on a loss before income taxes of $89.2 million. The
increase in income tax expense compared to the three months ended
March 31, 2023 was primarily driven by a lower loss before income
taxes and changes in the jurisdictional mix of earnings resulting
in higher nondeductible losses when compared to the same period in
2023.
Net loss and Adjusted EBITDA
Net loss of $28.8 million decreased 62% compared to net loss of
$76.4 million in the three months ended March 31, 2023. Net loss
margin was 1.3% compared to net loss margin of 3.4% the three
months ended March 31, 2023. The decrease in net loss was
principally driven by growth in our Leasing and Valuation and other
service lines as well as the impact of our cost savings
initiatives. In addition, a loss on debt extinguishment incurred in
the first quarter of 2023 contributed to the larger net loss in the
prior year period. These favorable trends were partially offset by
declines in Services.
Adjusted EBITDA of $78.1 million increased $17.2 million or 28%
compared to the prior year period, driven by the same factors
impacting Net loss above, with the exception of the loss on debt
extinguishment incurred in the prior year period. Adjusted EBITDA
margin, measured against service line fee revenue, of 5.2% expanded
117 basis points from the first quarter of 2023.
Balance Sheet
Liquidity at the end of the first quarter was $1.7 billion,
consisting of availability on the Company’s undrawn revolving
credit facility of $1.1 billion and cash and cash equivalents of
$0.6 billion.
Net debt as of March 31, 2024 was $2.6 billion reflecting the
Company’s outstanding term loans of $2.1 billion and senior secured
notes totaling $1.1 billion, net of cash and cash equivalents of
$0.6 billion. See the “Use of Non-GAAP Financial Measures” section
in this press release for the definition of, and a description of
the purposes for which management uses, this non-GAAP financial
measure.
Conference Call
The Company’s First Quarter 2024 Earnings Conference Call will
be held today, April 29, 2024, at 5:00 p.m. Eastern Time. A
webcast, along with an associated slide presentation, will be
accessible through the Investor Relations section of the Company’s
website at http://ir.cushmanwakefield.com.
The direct dial-in number for the conference call is
1-844-825-9789 for U.S. callers and 1-412-317-5180 for
international callers. 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 Investor Relations section of the Company’s
website at http://ir.cushmanwakefield.com.
About Cushman &
Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global
commercial real estate services firm for property owners and
occupiers with approximately 52,000 employees in nearly 400 offices
and approximately 60 countries. In 2023, the firm reported revenue
of $9.5 billion across its core service lines of (i) Services, (ii)
Leasing, (iii) Capital markets, and (iv) Valuation and other. It
also receives numerous industry and business accolades for its
award-winning culture and commitment to Diversity, Equity and
Inclusion (DEI), sustainability and more. For additional
information, visit www.cushmanwakefield.com.
Cautionary Note on Forward-Looking
Statements
All statements in this release other than historical facts are
forward-looking statements, which rely on a number of estimates,
projections and assumptions concerning future events. Such
statements are also subject to a number of uncertainties and
factors outside Cushman & Wakefield’s control. Such factors
include, but are not limited to, disruptions in general
macroeconomic conditions and global and regional demand for
commercial real estate; our ability to attract and retain qualified
revenue producing employees and senior management; the failure of
our acquisitions and joint ventures to perform as expected or the
lack of similar future opportunities; our ability to preserve, grow
and leverage the value of our brand; the concentration of business
with specific corporate clients; our ability to appropriately
address actual or perceived conflicts of interest; our ability to
maintain and execute our information technology strategies;
interruption or failure of our information technology,
communications systems or data services; our vulnerability to
potential breaches in security related to our information systems;
our ability to comply with current and future data privacy
regulations and other confidentiality obligations; the extent to
which infrastructure disruptions may affect our ability to provide
our services; the potential impairment of our goodwill and other
intangible assets; our ability to comply with laws and regulations
and any changes thereto; changes in tax laws or tax rates and our
ability to make correct determinations in complex tax regimes; our
ability to successfully execute on our strategy for operational
efficiency; the failure of third parties performing on our behalf
to comply with contract, regulatory or legal requirements; risks
associated with the climate change and ability to achieve our
sustainability goals; foreign currency volatility; social,
geopolitical and economic risks associated with our international
operations; risks associated with sociopolitical polarization;
restrictions imposed on us by the agreements governing our
indebtedness; our amount of indebtedness and its potential adverse
impact on our available cash flow and the operation of our
business; our ability to incur more indebtedness; our ability to
generate sufficient cash flow from operations to service our
existing indebtedness; our ability to compete globally, regionally
and locally; the seasonality of significant portions of our revenue
and cash flow; our exposure to environmental liabilities due to our
role as a real estate services provider; the ability of our
principal shareholders to exert influence over us; potential price
declines resulting from future sales of a large number of our
ordinary shares; risks related to our capital allocation strategy
including current intentions to not pay cash dividends; risks
related to litigation; the fact that the rights of our shareholders
differ in certain respects from the rights typically offered to
shareholders of a Delaware corporation; the fact that U.S.
investors may have difficulty enforcing liabilities against us or
be limited in their ability to bring a claim in a judicial forum
they find favorable in the event of a dispute; and the possibility
that English law and provisions in our articles of association may
have anti-takeover effects that could discourage an acquisition of
us by others or require shareholder approval for certain capital
structure decisions. 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, such assumptions are inherently uncertain and
subjective and 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. Any
forward-looking statements speak only as of the date of this press
release and, except to the extent required by applicable securities
laws, Cushman & Wakefield expressly disclaims any obligation to
update or revise any of them, whether as a result of new
information, future events or otherwise. Additional information
concerning factors that may influence the Company’s results is
discussed under “Risk Factors” in Part I, Item 1A of its Annual
Report on Form 10-K for the year ended December 31, 2023 and in its
other periodic reports filed with the Securities and Exchange
Commission (the “SEC”).
Cushman & Wakefield
plc
Condensed Consolidated
Statements of Operations
(unaudited)
Three Months Ended March
31,
(in millions, except per share data)
2024
2023
Revenue
$
2,184.8
$
2,249.3
Costs and expenses:
Costs of services (exclusive of
depreciation and amortization)
1,832.5
1,907.6
Operating, administrative and other
296.0
315.9
Depreciation and amortization
32.5
36.9
Restructuring, impairment and related
charges
5.0
7.2
Total costs and expenses
2,166.0
2,267.6
Operating income (loss)
18.8
(18.3
)
Interest expense, net of interest
income
(58.7
)
(76.8
)
Earnings from equity method
investments
11.7
11.9
Other income (expense), net
1.7
(6.0
)
Loss before income taxes
(26.5
)
(89.2
)
Provision for (benefit from) income
taxes
2.3
(12.8
)
Net loss
$
(28.8
)
$
(76.4
)
Basic loss per share:
Loss per share attributable to common
shareholders, basic
$
(0.13
)
$
(0.34
)
Weighted average shares outstanding for
basic loss per share
227.9
226.2
Diluted loss per share:
Loss per share attributable to common
shareholders, diluted
$
(0.13
)
$
(0.34
)
Weighted average shares outstanding for
diluted loss per share
227.9
226.2
Cushman & Wakefield
plc
Condensed Consolidated Balance
Sheets
As of
(in millions, except per share data)
March 31, 2024
December 31, 2023
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$
553.5
$
767.7
Trade and other receivables, net of
allowance of $85.1 and $85.2, as of March 31, 2024 and December 31,
2023, respectively
1,265.9
1,468.0
Income tax receivable
86.4
67.1
Short-term contract assets, net
317.0
311.0
Prepaid expenses and other current
assets
237.0
189.4
Total current assets
2,459.8
2,803.2
Property and equipment, net
155.1
163.8
Goodwill
2,064.3
2,080.9
Intangible assets, net
791.3
805.9
Equity method investments
713.6
708.0
Deferred tax assets
99.8
67.4
Non-current operating lease assets
320.3
339.0
Other non-current assets
886.9
805.8
Total assets
$
7,491.1
$
7,774.0
Liabilities and Shareholders’
Equity
Current liabilities:
Short-term borrowings and current portion
of long-term debt
$
125.0
$
149.7
Accounts payable and accrued expenses
1,093.6
1,157.7
Accrued compensation
708.1
851.4
Income tax payable
19.9
20.8
Other current liabilities
232.8
217.6
Total current liabilities
2,179.4
2,397.2
Long-term debt, net
3,065.9
3,096.9
Deferred tax liabilities
58.9
13.7
Non-current operating lease
liabilities
296.9
319.6
Other non-current liabilities
264.6
268.6
Total liabilities
5,865.7
6,096.0
Shareholders’ equity:
Ordinary shares, nominal value $0.10 per
share, 800,000,000 shares authorized; 228,992,219 and 227,282,173
shares issued and outstanding as of March 31, 2024 and December 31,
2023, respectively
22.9
22.7
Additional paid-in capital
2,954.6
2,957.3
Accumulated deficit
(1,146.0
)
(1,117.2
)
Accumulated other comprehensive loss
(206.7
)
(185.4
)
Total equity attributable to the
Company
1,624.8
1,677.4
Non-controlling interests
0.6
0.6
Total equity
1,625.4
1,678.0
Total liabilities and shareholders’
equity
$
7,491.1
$
7,774.0
Cushman & Wakefield
plc
Condensed Consolidated
Statements of Cash Flows
(unaudited)
Three Months Ended March
31,
(in millions)
2024
2023
Cash flows from operating
activities
Net loss
$
(28.8
)
$
(76.4
)
Reconciliation of net loss to net cash
used in operating activities:
Depreciation and amortization
32.5
36.9
Impairment charges
1.1
1.8
Unrealized foreign exchange (gain)
loss
(2.4
)
1.3
Stock-based compensation
6.4
11.3
Lease amortization
22.0
24.7
Loss on debt extinguishment
—
8.7
Amortization of debt issuance costs
1.5
2.0
Earnings from equity method investments,
net of distributions received
(7.7
)
(7.8
)
Change in deferred taxes
8.1
3.5
Provision for loss on receivables and
other assets
2.4
1.9
Loss on disposal of business
—
1.3
Unrealized loss on equity securities,
net
1.0
10.7
Other operating activities, net
(5.2
)
1.6
Changes in assets and liabilities:
Trade and other receivables
138.0
118.3
Income taxes payable
(20.3
)
(32.4
)
Short-term contract assets and Prepaid
expenses and other current assets
(32.0
)
(56.1
)
Other non-current assets
(45.8
)
(21.7
)
Accounts payable and accrued expenses
(55.0
)
(69.1
)
Accrued compensation
(137.0
)
(158.9
)
Other current and non-current
liabilities
(3.9
)
(23.1
)
Net cash used in operating activities
(125.1
)
(221.5
)
Cash flows from investing
activities
Payment for property and equipment
(10.5
)
(10.0
)
Investments in equity securities and
equity method joint ventures
(0.4
)
(4.8
)
Return of beneficial interest in a
securitization
(100.0
)
—
Collection on beneficial interest in a
securitization
100.0
90.0
Other investing activities, net
0.1
(1.9
)
Net cash (used in) provided by investing
activities
(10.8
)
73.3
Cash flows from financing
activities
Shares repurchased for payment of employee
taxes on stock awards
(9.1
)
(7.2
)
Payment of deferred and contingent
consideration
(1.9
)
(6.5
)
Proceeds from borrowings
—
1,000.0
Repayment of borrowings
(55.0
)
(1,000.0
)
Debt issuance costs
—
(23.5
)
Payment of finance lease liabilities
(6.9
)
(7.3
)
Other financing activities, net
—
1.7
Net cash used in financing activities
(72.9
)
(42.8
)
Change in cash, cash equivalents and
restricted cash
(208.8
)
(191.0
)
Cash, cash equivalents and restricted
cash, beginning of the period
801.2
719.0
Effects of exchange rate fluctuations on
cash, cash equivalents and restricted cash
(6.6
)
2.5
Cash, cash equivalents and restricted
cash, end of the period
$
585.8
$
530.5
Segment Results
The following tables summarize the results of operations for the
Company’s segments for the three months ended March 31, 2024 and
2023.
Americas Results
Three Months Ended March
31,
(in millions) (unaudited)
2024
2023
% Change in USD
% Change in Local
Currency
Revenue:
Services
$
599.4
$
628.4
(5
)%
(5
)%
Leasing
299.5
295.4
1
%
1
%
Capital markets
111.1
118.8
(6
)%
(7
)%
Valuation and other
35.4
33.0
7
%
8
%
Total service line fee revenue(1)
1,045.4
1,075.6
(3
)%
(3
)%
Gross contract reimbursables(2)
575.6
644.4
(11
)%
(11
)%
Total revenue
$
1,621.0
$
1,720.0
(6
)%
(6
)%
Costs and expenses:
Americas Fee-based operating expenses
$
993.1
$
1,029.4
(4
)%
(3
)%
Cost of gross contract reimbursables
575.6
644.4
(11
)%
(11
)%
Segment operating expenses
$
1,568.7
$
1,673.8
(6
)%
(6
)%
Net loss
$
(16.8
)
$
(40.5
)
(59
)%
(59
)%
Adjusted EBITDA
$
64.4
$
56.7
14
%
14
%
(1) Service line fee revenue represents
revenue for fees generated from each of our service lines.
(2) Gross contract reimbursables reflects
revenue from clients which have substantially no margin.
EMEA Results
Three Months Ended March
31,
(in millions) (unaudited)
2024
2023
% Change in USD
% Change in Local
Currency
Revenue:
Services
$
81.0
$
86.8
(7
)%
(9
)%
Leasing
53.7
40.3
33
%
30
%
Capital markets
15.6
13.6
15
%
12
%
Valuation and other
43.6
42.2
3
%
1
%
Total service line fee revenue(1)
193.9
182.9
6
%
3
%
Gross contract reimbursables(2)
28.5
22.3
28
%
24
%
Total revenue
$
222.4
$
205.2
8
%
6
%
Costs and expenses:
EMEA Fee-based operating expenses
$
185.6
$
186.1
0
%
(2
)%
Cost of gross contract reimbursables
28.5
22.3
28
%
24
%
Segment operating expenses
$
214.1
$
208.4
3
%
1
%
Net loss
$
(10.5
)
$
(24.3
)
(57
)%
(53
)%
Adjusted EBITDA
$
9.0
$
(2.1
)
n.m.
n.m.
n.m. not meaningful
(1) Service line fee revenue represents
revenue for fees generated from each of our service lines.
(2) Gross contract reimbursables reflects
revenue from clients which have substantially no margin.
APAC Results
Three Months Ended March
31,
(in millions) (unaudited)
2024
2023
% Change in USD
% Change in Local
Currency
Revenue:
Services
$
190.8
$
181.6
5
%
7
%
Leasing
28.5
26.8
6
%
10
%
Capital markets
14.9
10.4
43
%
52
%
Valuation and other
24.1
26.7
(10
)%
(6
)%
Total service line fee revenue(1)
258.3
245.5
5
%
8
%
Gross contract reimbursables(2)
83.1
78.6
6
%
8
%
Total revenue
$
341.4
$
324.1
5
%
8
%
Costs and expenses:
APAC Fee-based operating expenses
$
255.0
$
247.0
3
%
6
%
Cost of gross contract reimbursables
83.1
78.6
6
%
9
%
Segment operating expenses
$
338.1
$
325.6
4
%
7
%
Net loss
$
(1.5
)
$
(11.6
)
(87
)%
(86
)%
Adjusted EBITDA
$
4.7
$
6.3
(25
)%
(25
)%
(1) Service line fee revenue represents
revenue for fees generated from each of our service lines.
(2) Gross contract reimbursables reflects
revenue from clients which have substantially no margin.
Cushman & Wakefield plc Use of
Non-GAAP Financial Measures
We have used the following measures, which are considered
“non-GAAP financial measures” under SEC guidelines:
- Adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”) and Adjusted EBITDA margin;
- Segment operating expenses and Fee-based operating
expenses;
- Adjusted net income (loss) and Adjusted earnings (loss) per
share;
- Free cash flow;
- Local currency; and
- Net debt.
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.
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 unrealized loss on investments, net,
integration and other costs related to merger, acquisition related
costs and efficiency initiatives, cost savings initiatives, CEO
transition costs, servicing liability fees and amortization,
certain legal and compliance matters, and other non-recurring
items. Adjusted EBITDA also excludes the effects of financings,
income tax and the non-cash accounting effects of depreciation and
intangible asset amortization. Adjusted EBITDA margin, a non-GAAP
measure of profitability as a percent of revenue, is measured
against service line fee revenue.
Segment operating expenses and Fee-based
operating expenses: Consistent with GAAP, reimbursed costs
for certain customer contracts are presented on a gross basis in
both revenue and operating expenses for which the Company
recognizes substantially no margin. Total costs and expenses
include segment operating expenses, as well as other expenses such
as depreciation and amortization, integration and other costs
related to merger, acquisition related costs and efficiency
initiatives, cost savings initiatives, CEO transition costs,
servicing liability fees and amortization, certain legal and
compliance matters, and other non-recurring items. Segment
operating expenses includes Fee-based operating expenses and Cost
of gross contract reimbursables.
We believe Fee-based operating expenses more accurately reflects
the costs we incur during the course of delivering services to our
clients and is more consistent with how we manage our expense base
and operating margins.
Adjusted net income (loss) and Adjusted
earnings (loss) per share: Management also assesses the
profitability of the business using Adjusted net income (loss). 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 depreciation and amortization
related to merger, unrealized loss on investments, net, financing
and other facility fees, integration and other costs related to
merger, acquisition related costs and efficiency initiatives, cost
savings initiatives, CEO transition costs, servicing liability fees
and amortization, certain legal and compliance matters, and other
non-recurring items. Income tax, as adjusted, reflects management’s
expectation about our long-term effective rate as a public company.
The Company also uses Adjusted earnings (loss) per share (“EPS”) as
a component when measuring operating performance. Management
defines Adjusted EPS as Adjusted net income (loss) divided by total
basic and diluted weighted average shares outstanding.
Free cash flow: Free cash flow is a
financial performance metric that is calculated as net cash
provided by (used in) operating activities, less capital
expenditures (reflected as Payment for property and equipment in
the investing section of the Condensed Consolidated Statements of
Cash Flows).
Local currency: In discussing our
results, we refer to percentage changes in local currency. These
metrics are calculated by holding foreign currency exchange rates
constant in year-over-year comparisons. Management believes that
this methodology provides investors with greater visibility into
the performance of our business excluding the effect of foreign
currency rate fluctuations.
Net debt: Net debt is used as a
measure of our liquidity and is calculated as total debt minus cash
and cash equivalents.
Adjustments to U.S. GAAP Financial
Measures Used to Calculate Non-GAAP Financial
Measures
During the periods presented in this earnings release, the
Company had the following adjustments:
Unrealized loss on investments, net represents net unrealized
losses on fair value investments. Prior to 2024, this primarily
reflected unrealized losses on our investment in WeWork.
Integration and other costs related to merger reflects the
non-cash amortization expense of certain merger related retention
awards that will be amortized through 2026, and the non-cash
amortization expense of merger related deferred rent and tenant
incentives which will be amortized through 2028.
Acquisition related costs and efficiency initiatives includes
internal and external consulting costs incurred to implement
certain distinct operating efficiency initiatives designed to
realign our organization to be a more agile partner to our clients.
These initiatives vary in frequency, amount and occurrence based on
factors specific to each initiative. In addition, this includes
certain direct costs incurred in connection with acquiring
businesses.
Cost savings initiatives primarily reflects severance and other
one-time employment-related separation costs related to actions to
reduce headcount across select roles to help optimize our workforce
given the challenging macroeconomic conditions and operating
environment, as well as property lease rationalizations. These
actions continued into the first quarter of 2024.
Servicing liability fees and amortization reflects the
additional non-cash servicing liability fees accrued in connection
with the A/R Securitization amendments in prior years. The
liability will be amortized through June 2026.
The interim financial information for the three months ended
March 31, 2024 and 2023 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, 2023 in the Company’s 2023 Annual
Report on Form 10-K.
Please see the following tables for reconciliations of our
non-GAAP financial measures to the most closely comparable GAAP
measures.
Reconciliations of Non-GAAP financial
measures
Reconciliation of Net loss to Adjusted EBITDA:
Three Months Ended March
31,
(in millions) (unaudited)
2024
2023
Net loss
$
(28.8
)
$
(76.4
)
Add/(less):
Depreciation and amortization
32.5
36.9
Interest expense, net of interest
income
58.7
76.8
Provision for (benefit from) income
taxes
2.3
(12.8
)
Unrealized loss on investments, net
1.0
10.7
Integration and other costs related to
merger
1.3
2.4
Acquisition related costs and efficiency
initiatives
—
6.6
Cost savings initiatives
7.2
15.0
Servicing liability fees and
amortization
(0.4
)
—
Other(1)
4.3
1.7
Adjusted EBITDA
$
78.1
$
60.9
(1)
For the three months ended March 31, 2024,
Other primarily reflects non cash stockbased compensation expense
associated with certain onetime retention awards which vested in
February 2024 and bad debt expense driven by a sublessee default.
For the three months ended March 31, 2023, Other primarily includes
non cash stockbased compensation expense associated with certain
onetime retention awards.
Reconciliation of Net loss to Adjusted net income (loss):
Three Months Ended March
31,
(in millions, except per share data)
(unaudited)
2024
2023
Net loss
$
(28.8
)
$
(76.4
)
Add/(less):
Merger and acquisition related
depreciation and amortization
13.9
18.1
Unrealized loss on investments, net
1.0
10.7
Financing and other facility fees(1)
—
21.6
Integration and other costs related to
merger
1.3
2.4
Acquisition related costs and efficiency
initiatives
—
6.6
Cost savings initiatives
7.2
15.0
Servicing liability fees and
amortization
(0.4
)
—
Other
4.3
1.7
Tax impact of adjusted items(2)
2.1
(9.1
)
Adjusted net income (loss)
$
0.6
$
(9.4
)
Weighted average shares outstanding,
basic
227.9
226.2
Weighted average shares outstanding,
diluted(3)
231.2
226.2
Adjusted earnings (loss) per share,
basic
$
0.00
$
(0.04
)
Adjusted earnings (loss) per share,
diluted(3)
$
0.00
$
(0.04
)
(1)
Financing and other facility fees reflects
costs related to the refinancing of a portion of the borrowings
under our 2018 Credit Agreement in January 2023, including a loss
on debt extinguishment of $16.9 million as well as $4.7 million of
new transaction costs expensed directly in the first quarter of
2023.
(2)
Reflective of management’s estimation of
an adjusted effective tax rate of 28% for both the three months
ended March 31, 2024 and 2023, respectively.
(3)
Weighted average shares outstanding,
diluted is calculated by taking basic weighted average shares
outstanding and adding dilutive shares of 3.3 million for the three
months ended March 31, 2024. As the Company was in an Adjusted net
loss position for the three months ended March 31, 2023, all
potentially dilutive shares would be anti-dilutive in this period
and therefore, approximately 1.8 million of these potentially
dilutive shares were excluded from the calculation of diluted
weighted average shares outstanding for the three months ended
March 31, 2023. This resulted in the calculation of weighted
average shares outstanding to be the same for both basic and
diluted Adjusted EPS for the three months ended March 31, 2023.
Reconciliation of Net cash used in operating activities to Free
cash flow:
Three Months Ended March
31,
(in millions) (unaudited)
2024
2023
Net cash used in operating activities
$
(125.1
)
$
(221.5
)
Payment for property and equipment
(10.5
)
(10.0
)
Free cash flow
$
(135.6
)
$
(231.5
)
Summary of Total costs and expenses:
Three Months Ended March
31,
(in millions) (unaudited)
2024
2023
Americas Fee-based operating expenses
$
993.1
$
1,029.4
EMEA Fee-based operating expenses
185.6
186.1
APAC Fee-based operating expenses
255.0
247.0
Cost of gross contract reimbursables
687.2
745.3
Segment operating expenses
2,120.9
2,207.8
Depreciation and amortization
32.5
36.9
Integration and other costs related to
merger
1.3
2.4
Acquisition related costs and efficiency
initiatives
—
6.6
Cost savings initiatives
7.2
15.0
Servicing liability fees and
amortization
(0.4
)
—
Other, including foreign currency
movements(1)
4.5
(1.1
)
Total costs and expenses
$
2,166.0
$
2,267.6
(1)
For the three months ended March 31, 2024,
Other primarily reflects non-cash stock-based compensation expense
associated with certain one-time retention awards which vested in
February 2024, bad debt expense driven by a sublessee default, and
the effects of movements in foreign currency. For the three months
ended March 31, 2023, Other primarily includes non-cash stock-based
compensation expense associated with certain one-time retention
awards and the effects of movements in foreign currency.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240428370170/en/
INVESTOR RELATIONS Megan
McGrath Investor Relations +1 312 338 7860 IR@cushwake.com
MEDIA CONTACT Aixa Velez
Corporate Communications +1 312 424 8195
aixa.velez@cushwake.com
Cushman and Wakefield (NYSE:CWK)
過去 株価チャート
から 5 2024 まで 6 2024
Cushman and Wakefield (NYSE:CWK)
過去 株価チャート
から 6 2023 まで 6 2024