Cushman & Wakefield (NYSE: CWK) today reported financial
results for the full year and fourth quarter of 2022:
Full Year 2022 Results
- Revenue of $10.1 billion and service line fee revenue of $7.2
billion for the year ended December 31, 2022 increased 8% and 5%,
respectively, from the year ended December 31, 2021.
- Leasing and Property, facilities and project management
experienced continued growth, led by the Americas.
- Capital markets and Valuation and other declined 12% and 3%,
respectively.
- Net income and diluted earnings per share for the year ended
December 31, 2022 were $196.4 million and $0.86, respectively.
- Adjusted EBITDA of $898.8 million increased 1% from the prior
year.
- Adjusted earnings per share of $2.00 was down from $2.04 in the
year ended December 31, 2021.
- Liquidity as of December 31, 2022 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.
- On January 31, 2023, we extended the maturity date of $1.0
billion of our $2.6 billion term loan facility to January 31,
2030.
Fourth Quarter 2022 Results
- Revenue of $2.6 billion and service line fee revenue of $1.9
billion for the fourth quarter of 2022 decreased 8% and 17%,
respectively, from the fourth quarter of 2021.
- Property, facilities and project management grew 5%, led by the
Americas and APAC.
- Leasing, Capital markets and Valuation and other declined 13%,
53% and 16%, respectively.
- Net income and diluted earnings per share for the fourth
quarter of 2022 were $29.8 million and $0.13, respectively.
- Adjusted EBITDA of $219.7 million was down 37% from the fourth
quarter of 2021.
- Adjusted earnings per share of $0.46 was down from $0.94 in the
fourth quarter of 2021.
“I am extremely proud of the Cushman & Wakefield teams
around the world as their relentless focus resulted in strong
revenue and Adjusted EBITDA performance in 2022, despite an
uncertain macroeconomic environment,” said John Forrester, Chief
Executive Officer of Cushman & Wakefield. “Our Property,
facilities and project management business continued to demonstrate
strength and resilience throughout the year and the growth in our
Leasing revenues highlights the benefits of our investments in
strategic growth areas. With our disciplined cost management,
strong balance sheet and liquidity, and diverse portfolio and
service offerings we remain well-positioned to execute on our
strategic priorities while delivering long-term value for both our
clients and shareholders.”
Consolidated
Results (unaudited)
Three Months Ended December
31,
Year Ended December
31,
(in millions, except per share data)
2022
2021
% Change in USD
% Change in Local
Currency(4)
2022
2021
% Change in USD
% Change in Local
Currency(4)
Revenue:
Property, facilities and project
management
$
893.0
$
851.9
5
%
8
%
$
3,481.1
$
3,185.4
9
%
12
%
Leasing
557.7
639.5
(13
)%
(10
)%
2,083.7
1,843.4
13
%
15
%
Capital markets
268.3
571.7
(53
)%
(52
)%
1,187.8
1,350.2
(12
)%
(10
)%
Valuation and other
131.0
156.5
(16
)%
(10
)%
495.5
512.1
(3
)%
2
%
Total service line fee revenue(1)
1,850.0
2,219.6
(17
)%
(14
)%
7,248.1
6,891.1
5
%
8
%
Gross contract reimbursables(2)
797.0
664.1
20
%
22
%
2,857.6
2,497.6
14
%
16
%
Total revenue
$
2,647.0
$
2,883.7
(8
)%
(6
)%
$
10,105.7
$
9,388.7
8
%
10
%
Costs and expenses:
Cost of services provided to clients
$
1,365.6
$
1,562.2
(13
)%
(10
)%
$
5,295.9
$
4,950.8
7
%
10
%
Cost of gross contract reimbursables
797.0
664.1
20
%
22
%
2,857.6
2,497.6
14
%
16
%
Total costs of services
2,162.6
2,226.3
(3
)%
0
%
8,153.5
7,448.4
9
%
12
%
Operating, administrative and other
334.8
359.2
(7
)%
(2
)%
1,261.3
1,226.7
3
%
6
%
Depreciation and amortization
32.7
43.8
(25
)%
(23
)%
146.9
172.1
(15
)%
(13
)%
Restructuring, impairment and related
charges
5.8
5.0
16
%
23
%
8.9
44.5
(80
)%
(79
)%
Total costs and expenses
2,535.9
2,634.3
(4
)%
(1
)%
9,570.6
8,891.7
8
%
10
%
Operating income
111.1
249.4
(55
)%
(56
)%
535.1
497.0
8
%
9
%
Interest expense, net of interest
income
(53.4
)
(47.5
)
12
%
15
%
(193.1
)
(179.5
)
8
%
10
%
Earnings from equity method
investments
30.5
10.3
n.m.
n.m.
85.0
21.2
n.m.
n.m.
Other (expense) income, net
0.6
(14.6
)
n.m.
n.m.
(89.0
)
1.2
n.m.
n.m.
Earnings before income taxes
88.8
197.6
(55
)%
(54
)%
338.0
339.9
(1
)%
1
%
Provision for income taxes
59.0
51.8
14
%
16
%
141.6
89.9
58
%
61
%
Net income
$
29.8
$
145.8
(80
)%
(79
)%
$
196.4
$
250.0
(21
)%
(21
)%
Net income margin
1.1
%
5.1
%
1.9
%
2.7
%
Adjusted EBITDA(3)
$
219.7
$
347.7
(37
)%
(35
)%
$
898.8
$
886.4
1
%
4
%
Adjusted EBITDA margin(3)
11.9
%
15.7
%
12.4
%
12.9
%
Adjusted net income(3)
$
104.1
$
213.9
(51
)%
$
455.0
$
461.2
(1
)%
Weighted average shares outstanding,
basic
225.8
223.5
225.4
223.0
Weighted average shares outstanding,
diluted
226.5
228.7
228.0
226.5
Earnings per share, basic
$
0.13
$
0.65
$
0.87
$
1.12
Earnings per share, diluted
$
0.13
$
0.64
$
0.86
$
1.10
Adjusted earnings per share,
diluted(3)
$
0.46
$
0.94
$
2.00
$
2.04
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 income to Adjusted EBITDA and (ii) Net
income to Adjusted net income 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 management uses, these non-GAAP measures
under the Use of Non-GAAP Financial Measures section in this press
release.
(4)
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
Fee-based operating expenses 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.
Fourth Quarter Results
(unaudited)
Revenue
Revenue of $2.6 billion decreased $236.7 million or 8% compared
to the three months ended December 31, 2021, principally driven by
the Americas, which declined 8%. The decline in revenue was
primarily driven by lower brokerage activity, with Leasing and
Capital markets down 13% and 53%, respectively. The decline in
Leasing and Capital markets revenue reflects a less constructive
macroeconomic environment, including increases in interest rates,
which resulted in lower commercial real estate transaction volumes.
Partially offsetting these trends was growth in Property,
facilities and project management revenues of 5%, primarily driven
by performance in our project management and facilities management
businesses, which also resulted in Gross contract reimbursables
growth of 20%.
Costs of services
Costs of services of $2.2 billion decreased $63.7 million or 3%
compared to the three months ended December 31, 2021. Cost of
services provided to clients decreased 13% principally due to lower
commissions as a result of lower brokerage revenue. Cost of gross
contract reimbursables increased 20% driven by the continued growth
in our Property, facilities and project management service
line.
Operating, administrative and other
Operating, administrative and other expenses of $334.8 million
decreased by $24.4 million or 7% compared to the three months ended
December 31, 2021, primarily due to lower employment costs.
Restructuring, impairment and related charges
Restructuring, impairment and related charges were $5.8 million,
an increase of $0.8 million compared to the three months ended
December 31, 2021. This increase principally reflects an increase
in severance and employment-related costs in the fourth quarter of
2022 in connection with a reduction in headcount across select
roles.
Earnings from equity method investments
Earnings from equity method investments of $30.5 million
increased by $20.2 million compared to the three months ended
December 31, 2021, primarily due to the earnings recognized from
our equity method investment with Greystone in the Americas, which
was finalized in December 2021.
Other (expense) income, net
Other income during the three months ended December 31, 2022 of
$0.6 million reflects royalty income, partially offset by net
unrealized losses on fair value investments of $1.9 million.
Comparatively, other expense recognized during the three months
ended December 31, 2021 of $14.6 million reflects net unrealized
losses on fair value investments of $17.7 million, partially offset
by royalty income.
Provision for income taxes
Provision for income taxes for the fourth quarter of 2022 was
$59.0 million on earnings before income taxes of $88.8 million. For
the fourth quarter of 2021, the provision for income taxes was
$51.8 million on earnings before income taxes of $197.6 million.
The increase in provision for income taxes was driven by changes in
the jurisdictional mix of earnings. In addition, unrealized losses
on fair value investments are included in earnings before income
taxes but excluded from the tax computation which resulted in a
higher effective tax rate in the three months ended December 31,
2022 compared to the same period last year.
Net income and Adjusted EBITDA
Net income of $29.8 million decreased $116.0 million compared to
the three months ended December 31, 2021, principally due to lower
brokerage activity and higher income tax expense, partially offset
by earnings recognized from our equity method investment with
Greystone in the Americas.
Adjusted EBITDA of $219.7 million decreased by $128.0 million or
37%, driven by the same factors impacting Net income discussed
above, with the exception of income tax expense.
Full Year Results
(unaudited)
Revenue
Revenue of $10.1 billion increased 8% compared to the year ended
December 31, 2021, led by the Americas which increased 10%. Service
line fee revenue growth was led by our Leasing and Property,
facilities and project management service lines, which were up 13%
and 9%, respectively. Leasing revenue growth was principally driven
by steady improvement in the office sector during the first nine
months of 2022, as well as continued strength in the industrial
sector. Property, facilities and project management revenue growth
was primarily driven by growth in our project management and
facilities management businesses, which also resulted in Gross
contract reimbursables growth of 14%. Partially offsetting these
trends were unfavorable movements in foreign currency of $218.9
million or 2.0% compared to the year ended December 31, 2021 as a
result of a stronger U.S. Dollar. In addition, in the second half
of 2022, a less constructive macroeconomic environment, including
increases in interest rates, adversely affected commercial real
estate transaction volume, which contributed to a 12% decline in
Capital markets revenue from the prior year.
Costs of services
Costs of services of $8.2 billion increased $705.1 million or 9%
compared to the year ended December 31, 2021. Cost of services
provided to clients increased 7% principally due to higher variable
costs, including commissions as a result of higher Leasing revenue,
as well as higher subcontractor costs due to revenue growth in
Property, facilities and project management. Cost of gross contract
reimbursables increased 14% driven by the continued stability and
growth in our Property, facilities and project management service
line. Total costs of services as a percentage of total revenue were
81% for 2022 compared to 79% for 2021.
Operating, administrative and other
Operating, administrative and other expenses of $1.3 billion
increased by $34.6 million or 3% compared to the year ended
December 31, 2021, primarily driven by higher salaries and wages,
as well as higher technology, communication and consulting
expenses. Operating, administrative and other expenses as a
percentage of total revenue were 12% for 2022 compared to 13% for
2021.
Restructuring, impairment and related charges
Restructuring, impairment and related charges were $8.9 million,
a decrease of $35.6 million compared to the year ended December 31,
2021. This decrease principally reflects the reduction of
severance-related costs and impairment charges in connection with
the Company's previously announced strategic realignment of the
business, which was substantially complete at the end of 2021,
partially offset by severance-related costs in the fourth quarter
of 2022 in connection with an initial reduction in our workforce
across select roles.
Earnings from equity method investments
Earnings from equity method investments of $85.0 million
increased by $63.8 million compared to the year ended December 31,
2021, primarily due to the earnings recognized from our equity
method investment with Greystone in the Americas, which was
finalized in December 2021.
Other (expense) income, net
Other expense during the year ended December 31, 2022 of $89.0
million reflects net unrealized losses on fair value investments of
$84.2 million, primarily related to our investment in WeWork, which
closed during the fourth quarter of 2021, partially offset by
royalty income. In addition, the Company recognized a loss of $13.8
million in the first quarter of 2022 related to the disposal of our
operations in Russia. Comparatively, other income during the year
ended December 31, 2021 of $1.2 million reflects royalty income
partially offset by net unrealized losses on fair value investments
of $10.4 million.
Provision for income taxes
Provision for income taxes for 2022 was $141.6 million on
earnings before income taxes of $338.0 million. For 2021, the
provision for income taxes was $89.9 million on earnings before
income taxes of $339.9 million. The increase in provision for
income taxes was primarily driven by utilization of net operating
losses in the U.S. in the prior year not available in the current
year and changes in the jurisdictional mix of earnings. In
addition, unrealized losses on fair value investments are included
in earnings before income taxes but excluded from the tax
computation which resulted in a higher effective tax rate when
compared to the prior year.
Net income and Adjusted EBITDA
Net income of $196.4 million decreased by $53.6 million or 21%
compared to the year ended December 31, 2021, primarily driven by a
decline in Capital markets revenue of 12% due to a less
constructive macroeconomic environment which resulted in lower
commercial real estate transaction volumes, COVID-19 related
restrictions in China, higher commissions expense, unfavorable
movements in foreign currency, and unrealized losses on fair value
investments. Partially offsetting these trends was an increase in
earnings recognized from our equity method investment with
Greystone in the Americas, as well as the strong revenue
performance of our Leasing and Property, facilities and project
management service lines which grew 13% and 9%, respectively.
Adjusted EBITDA of $898.8 million increased by $12.4 million or
1% compared to prior year, driven by the same factors impacting Net
income discussed above, with the exception of unrealized losses on
fair value investments. Adjusted EBITDA margin, measured against
service line fee revenue, of 12.4% for the year ended December 31,
2022 decreased 46 basis points compared to 12.9% in the year ended
December 31, 2021.
Balance Sheet
Liquidity at the end of the fourth quarter was $1.7 billion,
including 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 December 31, 2022 was $2.6 billion including the
Company's outstanding term loan of $2.6 billion and senior secured
notes of $0.6 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 measure.
Conference Call
The Company’s Fourth Quarter 2022 Earnings Conference Call will
be held today, February 23, 2023, at 5:00 p.m. Eastern Time. A
webcast, along with an associated slide presentation, will be
accessible through the Investor Relations section of the Company’s
website at http://ir.cushmanwakefield.com.
The direct dial-in number for the conference call is
1-866-652-5200 for U.S. callers and 1-412-317-6060 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 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 52,000
employees in over 400 offices and approximately 60 countries. In
2022, the firm had revenue of $10.1 billion across core services of
Property, facilities and project management, Leasing, Capital
markets, and 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 geopolitical, general macroeconomic or market conditions and
their impact on global and regional demand for commercial real
estate, as well as changes in government policies (including fiscal
and monetary policy), 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. 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 soon to be filed Annual Report on Form 10-K for the year
ended December 31, 2022 and in its other periodic reports filed
with the Securities and Exchange Commission.
Cushman & Wakefield
plc
Condensed Consolidated
Statements of Operations
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
(in millions, except per share data)
2022
2021
2022
2021
Revenue
$
2,647.0
$
2,883.7
$
10,105.7
$
9,388.7
Costs and expenses:
Costs of services (exclusive of
depreciation and amortization)
2,162.6
2,226.3
8,153.5
7,448.4
Operating, administrative and other
334.8
359.2
1,261.3
1,226.7
Depreciation and amortization
32.7
43.8
146.9
172.1
Restructuring, impairment and related
charges
5.8
5.0
8.9
44.5
Total costs and expenses
2,535.9
2,634.3
9,570.6
8,891.7
Operating income
111.1
249.4
535.1
497.0
Interest expense, net of interest
income
(53.4
)
(47.5
)
(193.1
)
(179.5
)
Earnings from equity method
investments
30.5
10.3
85.0
21.2
Other (expense) income, net
0.6
(14.6
)
(89.0
)
1.2
Earnings before income taxes
88.8
197.6
338.0
339.9
Provision for income taxes
59.0
51.8
141.6
89.9
Net income
$
29.8
$
145.8
$
196.4
$
250.0
Basic earnings per share:
Earnings per share attributable to common
shareholders, basic
$
0.13
$
0.65
$
0.87
$
1.12
Weighted average shares outstanding for
basic earnings per share
225.8
223.5
225.4
223.0
Diluted earnings per share:
Earnings per share attributable to common
shareholders, diluted
$
0.13
$
0.64
$
0.86
$
1.10
Weighted average shares outstanding for
diluted earnings per share
226.5
228.7
228.0
226.5
Cushman & Wakefield
plc
Consolidated Balance
Sheets
(unaudited)
As of December 31,
(in millions, except per share data)
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
644.5
$
770.7
Trade and other receivables, net of
allowance of $88.2 and $72.2 as of December 31, 2022 and 2021,
respectively
1,462.4
1,446.0
Income tax receivable
55.4
30.0
Short-term contract assets, net
358.2
318.9
Prepaid expenses and other current
assets
246.3
264.7
Total current assets
2,766.8
2,830.3
Property and equipment, net
172.6
194.6
Goodwill
2,065.5
2,081.9
Intangible assets, net
874.5
922.2
Equity method investments
677.3
641.3
Deferred tax assets
58.6
65.5
Non-current operating lease assets
358.0
413.5
Other non-current assets
976.0
741.1
Total assets
$
7,949.3
$
7,890.4
Liabilities and Shareholders'
Equity
Current liabilities:
Short-term borrowings and current portion
of long-term debt
$
49.8
$
42.4
Accounts payable and accrued expenses
1,199.0
1,106.2
Accrued compensation
916.5
976.3
Income tax payable
33.1
105.1
Other current liabilities
192.0
204.5
Total current liabilities
2,390.4
2,434.5
Long-term debt, net
3,211.7
3,220.5
Deferred tax liabilities
57.2
48.7
Non-current operating lease
liabilities
334.6
394.6
Other non-current liabilities
293.3
343.5
Total liabilities
6,287.2
6,441.8
Shareholders' equity:
Ordinary shares, nominal value $0.10 per
share, 800,000,000 shares authorized; 225,780,535 and 223,709,308
shares issued and outstanding as of December 31, 2022 and 2021,
respectively
22.6
22.4
Additional paid-in capital
2,911.5
2,896.6
Accumulated deficit
(1,081.8
)
(1,278.2
)
Accumulated other comprehensive loss
(191.0
)
(193.0
)
Total equity attributable to the
Company
1,661.3
1,447.8
Non-controlling interests
0.8
0.8
Total equity
1,662.1
1,448.6
Total liabilities and shareholders'
equity
$
7,949.3
$
7,890.4
Cushman & Wakefield
plc
Consolidated Statements of
Cash Flows
(unaudited)
Year Ended December
31,
(in millions)
2022
2021
Cash flows from operating
activities
Net income
$
196.4
$
250.0
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization
146.9
172.1
Impairment charges
1.6
18.3
Unrealized foreign exchange (gain)
loss
(4.0
)
9.8
Stock-based compensation
40.3
58.2
Lease amortization
102.2
104.2
Amortization of debt issuance costs
9.6
9.4
Earnings from equity method investments,
net of dividends received
(45.4
)
(19.9
)
Change in deferred taxes
14.6
(56.3
)
Provision for loss on receivables and
other assets
31.7
38.0
Loss on disposal of business
13.2
—
Unrealized loss on equity securities,
net
84.2
10.4
Other operating activities, net
(3.4
)
(8.9
)
Changes in assets and liabilities:
Trade and other receivables
(298.9
)
(212.5
)
Income taxes payable
(96.1
)
91.5
Short-term contract assets and Prepaid
expenses and other current assets
(102.7
)
(105.2
)
Other non-current assets
(30.6
)
(63.5
)
Accounts payable and accrued expenses
125.1
131.1
Accrued compensation
(41.4
)
227.1
Other current and non-current
liabilities
(94.2
)
(104.3
)
Net cash provided by operating
activities
49.1
549.5
Cash flows from investing
activities
Payment for property and equipment
(50.7
)
(53.8
)
Acquisitions of businesses, net of cash
acquired
(32.8
)
(7.0
)
Investments in equity securities and
equity method joint ventures
(26.4
)
(688.9
)
Return of beneficial interest in a
securitization
(80.0
)
—
Collection on beneficial interest in a
securitization
80.0
—
Other investing activities, net
(10.8
)
0.2
Net cash used in investing activities
(120.7
)
(749.5
)
Cash flows from financing
activities
Shares repurchased for payment of employee
taxes on stock awards
(27.2
)
(8.6
)
Payment of deferred and contingent
consideration
(11.0
)
(23.5
)
Repayment of borrowings
(26.7
)
(26.7
)
Payment of finance lease liabilities
(17.3
)
(13.4
)
Other financing activities, net
2.9
6.4
Net cash used in financing activities
(79.3
)
(65.8
)
Change in cash, cash equivalents and
restricted cash
(150.9
)
(265.8
)
Cash, cash equivalents and restricted
cash, beginning of the year
890.3
1,164.1
Effects of exchange rate fluctuations on
cash, cash equivalents and restricted cash
(20.4
)
(8.0
)
Cash, cash equivalents and restricted
cash, end of the year
$
719.0
$
890.3
Segment
Results
The following tables summarize our results
of operations for our operating segments for the three months and
year ended December 31, 2022 and 2021.
Americas Results
Three Months Ended December
31,
Year Ended December
31,
(in millions) (unaudited)
2022
2021
% Change in USD
% Change in Local
Currency
2022
2021
% Change in USD
% Change in Local
Currency
Revenue:
Property, facilities and project
management
$
619.7
$
588.5
5
%
6
%
$
2,434.0
$
2,221.9
10
%
10
%
Leasing
430.6
476.5
(10
)%
(9
)%
1,669.7
1,392.8
20
%
20
%
Capital markets
214.0
470.2
(54
)%
(54
)%
987.1
1,110.9
(11
)%
(11
)%
Valuation and other
50.0
65.2
(23
)%
(22
)%
198.1
193.7
2
%
3
%
Total service line fee revenue(1)
1,314.3
1,600.4
(18
)%
(18
)%
5,288.9
4,919.3
8
%
8
%
Gross contract reimbursables(2)
680.7
563.1
21
%
21
%
2,462.1
2,096.0
17
%
18
%
Total revenue
$
1,995.0
$
2,163.5
(8
)%
(8
)%
$
7,751.0
$
7,015.3
10
%
11
%
Costs and expenses:
Americas Fee-based operating expenses
$
1,179.4
$
1,355.8
(13
)%
(13
)%
$
4,650.3
$
4,281.8
9
%
9
%
Cost of gross contract reimbursables
680.7
563.1
21
%
21
%
2,462.1
2,096.0
17
%
18
%
Segment operating expenses
$
1,860.1
$
1,918.9
(3
)%
(3
)%
$
7,112.4
$
6,377.8
12
%
12
%
Net income
$
45.7
$
110.5
(59
)%
(59
)%
$
202.6
$
185.9
9
%
9
%
Adjusted EBITDA
$
163.4
$
251.4
(35
)%
(35
)%
$
715.5
$
647.0
11
%
11
%
(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 December
31,
Year Ended December
31,
(in millions) (unaudited)
2022
2021
% Change in USD
% Change in Local
Currency
2022
2021
% Change in USD
% Change in Local
Currency
Revenue:
Property, facilities and project
management
$
96.5
$
103.3
(7
)%
6
%
$
373.7
$
370.3
1
%
14
%
Leasing
67.9
86.0
(21
)%
(11
)%
233.9
246.5
(5
)%
6
%
Capital markets
39.8
75.1
(47
)%
(41
)%
142.1
168.8
(16
)%
(6
)%
Valuation and other
50.7
57.8
(12
)%
(1
)%
177.7
190.9
(7
)%
5
%
Total service line fee revenue(1)
254.9
322.2
(21
)%
(11
)%
927.4
976.5
(5
)%
7
%
Gross contract reimbursables(2)
33.5
34.1
(2
)%
11
%
102.7
136.6
(25
)%
(16
)%
Total revenue
$
288.4
$
356.3
(19
)%
(9
)%
$
1,030.1
$
1,113.1
(7
)%
4
%
Costs and expenses:
EMEA Fee-based operating expenses
$
226.4
$
268.5
(16
)%
(5
) %
$
827.6
$
864.7
(4
)%
7
%
Cost of gross contract reimbursables
33.5
34.1
(2
)%
11
%
102.7
136.6
(25
)%
(16
)%
Segment operating expenses
$
259.9
$
302.6
(14
)%
(3
) %
$
930.3
$
1,001.3
(7
)%
4
%
Net income (loss)
$
(30.0
)
$
8.7
n.m.
n.m.
$
(24.7
)
$
2.8
n.m.
n.m.
Adjusted EBITDA
$
29.2
$
55.1
(47
)%
(41
) %
$
106.0
$
117.9
(10
)%
3
%
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 December
31,
Year Ended December
31,
(in millions) (unaudited)
2022
2021
% Change in USD
% Change in Local
Currency
2022
2021
% Change in USD
% Change in Local
Currency
Revenue:
Property, facilities and project
management
$
176.8
$
160.1
10
%
19
%
$
673.4
$
593.2
14
%
20
%
Leasing
59.2
77.0
(23
)%
(16
)%
180.1
204.1
(12
)%
(6
)%
Capital markets
14.5
26.4
(45
)%
(38
)%
58.6
70.5
(17
)%
(10
)%
Valuation and other
30.3
33.5
(10
)%
(2
)%
119.7
127.5
(6
)%
(2
)%
Total service line fee revenue(1)
280.8
297.0
(5
)%
2
%
1,031.8
995.3
4
%
10
%
Gross contract reimbursables(2)
82.8
66.9
24
%
37
%
292.8
265.0
10
%
19
%
Total revenue
$
363.6
$
363.9
0
%
9
%
$
1,324.6
$
1,260.3
5
%
12
%
Costs and expenses:
APAC Fee-based operating expenses
$
255.5
$
261.3
(2
)%
6
%
$
962.5
$
891.8
8
%
14
%
Cost of gross contract reimbursables
82.8
66.9
24
%
37
%
292.8
265.0
10
%
19
%
Segment operating expenses
$
338.3
$
328.2
3
%
12
%
$
1,255.3
$
1,156.8
9
%
15
%
Net income
$
14.1
$
26.6
(47
)%
(36
)%
$
18.5
$
61.3
(70
)%
(62
)%
Adjusted EBITDA
$
27.1
$
41.2
(34
)%
(27
)%
$
77.3
$
121.5
(36
)%
(32
)%
(1)
Service line fee revenue represents
revenue for fees generated from each of our service lines.
(2)
Gross contract reimbursables reflects
revenue from clients which have substantially no margin.
Cushman & Wakefield plc
Use of Non-GAAP Financial Measures
We have used the following measures, which are considered
"non-GAAP financial measures" under SEC guidelines:
i.
Segment operating expenses and Fee-based
operating expenses;
ii.
Adjusted earnings before interest, taxes,
depreciation and amortization ("Adjusted EBITDA") and Adjusted
EBITDA margin;
iii.
Adjusted net income and Adjusted earnings
per share;
iv.
Local currency; and
v.
Net debt.
Our management principally uses these non-GAAP financial
measures to evaluate operating performance, develop budgets and
forecasts, improve comparability of results and assist our
investors in analyzing the underlying performance of our business.
These measures are not recognized measurements under GAAP. When
analyzing our operating results, investors should use them in
addition to, but not as an alternative for, the most directly
comparable financial results calculated and presented in accordance
with GAAP. Because the Company’s calculation of these non-GAAP
financial measures may differ from other companies, our
presentation of these measures may not be comparable to similarly
titled measures of other companies.
The Company believes that these measures provide a more complete
understanding of ongoing operations, enhance comparability of
current results to prior periods and may be useful for investors to
analyze our financial performance. The measures eliminate the
impact of certain items that may obscure trends in the underlying
performance of our business. The Company believes that they are
useful to investors for the additional purposes described
below.
Segment operating expenses and Fee-based
operating expenses: Consistent with GAAP, reimbursed costs
for certain customer contracts are presented on a gross basis in
both revenue and operating expenses for which the Company
recognizes substantially no margin. Total costs and expenses
include segment operating expenses as well as other expenses such
as depreciation and amortization, integration and other costs
related to merger, pre-IPO stock-based compensation, acquisition
related costs and efficiency initiatives, and other items. Segment
operating expenses includes Fee-based operating expenses and Cost
of gross contract reimbursables.
We believe Fee-based operating expenses more accurately reflects
the costs we incur during the course of delivering services to our
clients and is more consistent with how we manage our expense base
and operating margins.
Adjusted EBITDA and Adjusted EBITDA
margin: We have determined Adjusted EBITDA to be our primary
measure of segment profitability. We believe that investors find
this measure useful in comparing our operating performance to that
of other companies in our industry because these calculations
generally eliminate integration and other costs related to merger,
pre-IPO stock-based compensation, unrealized (gains) / losses on
investments, acquisition related costs and efficiency initiatives,
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 measured against service line fee revenue.
Adjusted net income and Adjusted earnings
per share: Management also assesses the profitability of the
business using Adjusted net income. We believe that investors find
this measure useful in comparing our profitability to that of other
companies in our industry because this calculation generally
eliminates integration and other costs related to merger, pre-IPO
stock-based compensation, unrealized (gains) / losses on
investments, acquisition related costs and efficiency initiatives,
depreciation and amortization related to merger and acquisition
activity and other items. Income tax, as adjusted, reflects
management’s expectation about our long-term effective rate as a
public company. The Company also uses Adjusted earnings per share
("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.
Net debt: Net debt is used as a
measure of our liquidity and is calculated as total debt minus cash
and cash equivalents.
The interim financial information for the three months ended
December 31, 2022 and 2021 is unaudited. All adjustments,
consisting of normal recurring adjustments, except as otherwise
noted, considered necessary for a fair presentation of the
unaudited interim condensed consolidated financial information for
these periods have been included. Users of all of the
aforementioned unaudited interim financial information should refer
to the audited Consolidated Financial Statements of the Company and
notes thereto for the year ended December 31, 2022 in the Company's
2022 Annual Report on Form 10-K, to be filed with the SEC in the
near future.
Please see the following tables for reconciliations of our
non-GAAP financial measures to the most closely comparable GAAP
measures.
Adjustments to GAAP financial measures
used to calculate non-GAAP financial measures
Reconciliation of Net income to Adjusted EBITDA:
Three Months Ended December
31,
Year Ended December
31,
(in millions) (unaudited)
2022
2021
2022
2021
Net income
$
29.8
$
145.8
$
196.4
$
250.0
Add/(less):
Depreciation and amortization
32.7
43.8
146.9
172.1
Interest expense, net of interest
income
53.4
47.5
193.1
179.5
Provision for income taxes
59.0
51.8
141.6
89.9
Unrealized loss on investments, net(1)
1.9
17.7
84.2
10.4
Integration and other costs related to
merger(2)
2.8
5.8
14.0
32.4
Pre-IPO stock-based compensation(3)
0.6
1.3
3.1
5.4
Acquisition related costs and efficiency
initiatives(4)
39.6
33.7
93.8
140.4
Other(5)
(0.1
)
0.3
25.7
6.3
Adjusted EBITDA
$
219.7
$
347.7
$
898.8
$
886.4
(1)
Represents net unrealized losses on fair
value investments during the years ended December 31, 2022 and
2021, primarily related to our investment in WeWork, which closed
during the fourth quarter of 2021.
(2)
Integration and other costs related to
merger include certain direct and incremental integration
efforts.
(3)
Pre-IPO stock-based compensation
represents non-cash compensation expense associated with our
pre-IPO equity compensation plans and certain other retention
awards.
(4)
Acquisition related costs and efficiency
initiatives reflect costs incurred to implement operating
efficiency initiatives to realign our organization to allow the
Company to be a more agile partner to its clients, as well as
severance and employment related costs due to reductions in
headcount and property lease rationalization initiatives.
(5)
During the year ended December 31, 2022,
Other includes a charge of $5.0 million related to the amendment of
our accounts receivable securitization arrangement, as well as a
loss of $13.8 million related to the disposal of operations in
Russia. During the year ended December 31, 2021, Other includes
COVID-19 related charges and preparation costs for employees
returning to the office of $5.6 million.
Reconciliation of Net income to Adjusted net income:
Three Months Ended December
31,
Year Ended December
31,
(in millions, except per share data)
(unaudited)
2022
2021
2022
2021
Net income
$
29.8
$
145.8
$
196.4
$
250.0
Add/(less):
Merger and acquisition related
depreciation and amortization
17.7
21.1
73.2
83.0
Unrealized loss on investments, net
1.9
17.7
84.2
10.4
Integration and other costs related to
merger
2.8
5.8
14.0
32.4
Pre-IPO stock-based compensation
0.6
1.3
3.1
5.4
Acquisition related costs and efficiency
initiatives
39.6
33.7
93.8
140.4
Other
(0.1
)
0.3
25.7
6.3
Income tax adjustments(1)
11.8
(11.8
)
(35.4
)
(66.7
)
Adjusted net income
$
104.1
$
213.9
$
455.0
$
461.2
Weighted average shares outstanding,
basic
225.8
223.5
225.4
223.0
Weighted average shares outstanding,
diluted(2)
226.5
228.7
228.0
226.5
Adjusted earnings per share, basic
$
0.46
$
0.96
$
2.02
$
2.07
Adjusted earnings per share, diluted
$
0.46
$
0.94
$
2.00
$
2.04
(1)
Reflective of management's estimation of
an adjusted effective tax rate (adjusted for certain items) of 31%
and 23% for the three months ended December 31, 2022 and 2021,
respectively, and 28% and 25% for the year ended December 31, 2022
and 2021, respectively.
(2)
Weighted average shares outstanding
("WACS"), diluted is calculated by taking WACS, basic and adding in
dilutive shares of 0.7 million and 5.2 million for the three months
ended December 31, 2022 and 2021, respectively, and dilutive shares
of 2.6 million and 3.5 million for the year ended December 31, 2022
and 2021, respectively, which is used to calculate Adjusted
earnings per share, diluted.
Summary of Total costs and expenses:
Three Months Ended December
31,
Year Ended December
31,
(in millions) (unaudited)
2022
2021
2022
2021
Americas Fee-based operating expenses
$
1,179.4
$
1,355.8
$
4,650.3
$
4,281.8
EMEA Fee-based operating expenses
226.4
268.5
827.6
864.7
APAC Fee-based operating expenses
255.5
261.3
962.5
891.8
Cost of gross contract reimbursables
797.0
664.1
2,857.6
2,497.6
Segment operating expenses:
2,458.3
2,549.7
9,298.0
8,535.9
Depreciation and amortization
32.7
43.8
146.9
172.1
Integration and other costs related to
merger(1)
2.8
5.8
14.0
32.4
Pre-IPO stock-based compensation(2)
0.6
1.3
3.1
5.4
Acquisition related costs and efficiency
initiatives(3)
39.6
33.4
93.8
139.6
Other
1.9
0.3
14.8
6.3
Total costs and expenses
$
2,535.9
$
2,634.3
$
9,570.6
$
8,891.7
(1)
Integration and other costs related to
merger include certain direct and incremental integration
efforts.
(2)
Pre-IPO stock-based compensation
represents non-cash compensation expense associated with our
pre-IPO equity compensation plans and certain other retention
awards.
(3)
Acquisition related costs and efficiency
initiatives reflect costs incurred to implement operating
efficiency initiatives to realign our organization to allow the
Company to be a more agile partner to its clients, as well as
severance and employment related costs due to reductions in
headcount and property lease rationalization initiatives.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230222006097/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)
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