Cushman & Wakefield (NYSE: CWK) today reported financial
results for the fourth quarter and full year of 2023:
Fourth Quarter Results:
- Revenue of $2.6 billion and service line fee revenue of $1.8
billion for the fourth quarter of 2023 decreased 4% and 2%,
respectively, from the fourth quarter of 2022.
- Leasing increased 5%, with growth in all three geographic
segments.
- Property, facilities and project management increased 2%, with
strength in property management and facilities services.
- Capital markets and Valuation and other declined 31% and 3%,
respectively.
- Net income and diluted earnings per share for the fourth
quarter of 2023 were $69.8 million and $0.30, respectively.
- Adjusted EBITDA of $213.1 million was down 3% from the fourth
quarter of 2022.
- Adjusted diluted earnings per share of $0.45 was down from
$0.46 in the fourth quarter of 2022.
Full Year Results:
- Revenue of $9.5 billion and service line fee revenue of $6.5
billion for the year ended December 31, 2023 decreased 6% and 10%,
respectively, from the year ended December 31, 2022.
- Property, facilities and project management grew 3%, primarily
driven by the Americas and APAC.
- Leasing, Capital markets and Valuation and other declined 12%,
41% and 12%, respectively.
- Net loss and diluted loss per share for the year ended December
31, 2023 were $35.4 million and $0.16, respectively.
- Adjusted EBITDA of $570.1 million was down 37% from the year
ended December 31, 2022.
- Adjusted diluted earnings per share of $0.84 was down from
$2.00 in the year ended December 31, 2022.
- Net cash provided by operating activities was $152.2 million
and we generated $101.2 million of free cash flow during the year
ended December 31, 2023.
- Liquidity as of December 31, 2023 was $1.9 billion, consisting
of availability on the Company’s undrawn revolving credit facility
of $1.1 billion and cash and cash equivalents of $0.8 billion.
“Our Cushman & Wakefield team accomplished a great deal in
2023,” said Michelle MacKay, Cushman & Wakefield Chief
Executive Officer. “To strengthen the core of our business and
position the Company for long-term growth, we completed two debt
refinancings, improved free cash flow, and reduced costs. We remain
focused on unlocking meaningful value in 2024 and beyond by
continuing to provide insightful advice, specialized expertise and
disciplined execution for our clients.”
Consolidated
Results (unaudited)
Three Months Ended December
31,
Year Ended December
31,
(in millions, except per share data)
2023
2022
% Change in USD
% Change in Local
Currency(5)
2023
2022
% Change in USD
% Change in Local
Currency(5)
Revenue:
Property, facilities and project
management
$
908.5
$
893.0
2
%
1
%
$
3,573.0
$
3,481.1
3
%
3
%
Leasing
586.7
557.7
5
%
5
%
1,826.7
2,083.7
(12
)%
(12
)%
Capital markets
184.0
268.3
(31
)%
(32
)%
695.0
1,187.8
(41
)%
(41
)%
Valuation and other
127.2
131.0
(3
)%
(4
)%
436.7
495.5
(12
)%
(11
)%
Total service line fee revenue(1)
1,806.4
1,850.0
(2
)%
(3
)%
6,531.4
7,248.1
(10
)%
(10
)%
Gross contract reimbursables(2)
746.0
797.0
(6
)%
(6
)%
2,962.3
2,857.6
4
%
4
%
Total revenue
$
2,552.4
$
2,647.0
(4
)%
(4
)%
$
9,493.7
$
10,105.7
(6
)%
(6
)%
Costs and expenses:
Cost of services provided to clients
$
1,327.8
$
1,365.6
(3
)%
(3
)%
$
4,879.3
$
5,295.9
(8
)%
(8
)%
Cost of gross contract reimbursables
746.0
797.0
(6
)%
(6
)%
2,962.3
2,857.6
4
%
4
%
Total costs of services
2,073.8
2,162.6
(4
)%
(4
)%
7,841.6
8,153.5
(4
)%
(4
)%
Operating, administrative and other
317.1
334.8
(5
)%
(6
)%
1,262.8
1,261.3
0
%
0
%
Depreciation and amortization
36.8
32.7
13
%
11
%
145.6
146.9
(1
)%
(1
)%
Restructuring, impairment and related
charges
14.7
5.8
n.m.
n.m.
38.1
8.9
n.m.
n.m.
Total costs and expenses
2,442.4
2,535.9
(4
)%
(4
)%
9,288.1
9,570.6
(3
)%
(3
)%
Operating income
110.0
111.1
(1
)%
(3
)%
205.6
535.1
(62
)%
(62
)%
Interest expense, net of interest
income
(56.9
)
(53.4
)
7
%
6
%
(281.1
)
(193.1
)
46
%
45
%
Earnings from equity method
investments
16.8
30.5
(45
)%
(45
)%
58.1
85.0
(32
)%
(31
)%
Other income (expense), net
0.2
0.6
(67
)%
(91
)%
(12.6
)
(89.0
)
(86
)%
(86
)%
Earnings (loss) before income taxes
70.1
88.8
(21
)%
(25
)%
(30.0
)
338.0
n.m.
n.m.
Provision for income taxes
0.3
59.0
(99
)%
(99
)%
5.4
141.6
(96
)%
(96
)%
Net income (loss)
$
69.8
$
29.8
n.m.
n.m.
$
(35.4
)
$
196.4
n.m.
n.m.
Net income (loss) margin
2.7
%
1.1
%
(0.4
)%
1.9
%
Adjusted EBITDA
$
213.1
$
219.7
(3
)%
(5
)%
$
570.1
$
898.8
(37
)%
(37
)%
Adjusted EBITDA margin(3)
11.8
%
11.9
%
8.7
%
12.4
%
Adjusted net income(3)
$
102.4
$
104.1
(2
)%
$
191.5
$
455.0
(58
)%
Weighted average shares outstanding,
basic
227.2
225.8
226.9
225.4
Weighted average shares outstanding,
diluted(4)
228.9
226.5
227.7
228.0
Earnings (loss) per share, basic
$
0.31
$
0.13
$
(0.16
)
$
0.87
Earnings (loss) per share, diluted
$
0.30
$
0.13
$
(0.16
)
$
0.86
Adjusted earnings per share,
diluted(3)(4)
$
0.45
$
0.46
$
0.84
$
2.00
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 (loss) to Adjusted EBITDA and
(ii) Net income (loss) to Adjusted net income and for explanations
of the calculation 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) For all periods with a GAAP net loss,
weighted average shares outstanding, diluted is only used to
calculate Adjusted earnings per share, diluted. For all periods
with a GAAP net loss, all potentially dilutive shares would be
anti-dilutive; therefore, both basic and diluted earnings (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.
Fourth Quarter Results
(unaudited)
Revenue
Revenue of $2.6 billion decreased $94.6 million or 4% compared
to the three months ended December 31, 2022, primarily driven by
the Americas, which decreased 6%, partially offset by growth in
APAC of 9%. The decline was principally driven by a decrease in
Capital markets revenue of 31% as a challenging macroeconomic
environment and interest rate uncertainty continue to adversely
affect commercial real estate transaction volumes. Valuation and
other declined 3% as a result of lower activity in our valuation
business, stemming from the slowdown in transactions. Partially
offsetting these trends was 5% growth in Leasing and 2% growth in
our Property, facilities and project management service line,
namely in our property management and facilities services
businesses. In addition, we experienced favorable movements in
foreign currency of $13.0 million compared to the fourth quarter of
2022.
Costs of services
Costs of services of $2.1 billion decreased $88.8 million or 4%
compared to the three months ended December 31, 2022. Cost of
services provided to clients decreased 3% principally due to lower
commissions as a result of lower brokerage revenue. Cost of gross
contract reimbursables decreased 6% driven by changes in client
mix.
Operating, administrative and other
Operating, administrative and other expenses of $317.1 million
decreased $17.7 million or 5% compared to the three months ended
December 31, 2022, primarily driven by our cost savings
initiatives, including lower consulting expenses.
Restructuring, impairment and related charges
Restructuring, impairment and related charges of $14.7 million
increased $8.9 million compared to the three months ended December
31, 2022 as a result of cost savings initiatives actioned in 2023,
including a reduction in headcount across select roles to help
optimize our workforce given the current macroeconomic conditions
and operating environment, as well as property lease
rationalizations. This increase principally reflects the increase
in impairment charges of $7.5 million.
Interest expense, net of interest income
Interest expense of $56.9 million increased $3.5 million or 7%
compared to the three months ended December 31, 2022, primarily
related to higher variable interest rates on our debt compared to
the prior period.
Earnings from equity method investments
Earnings from equity method investments of $16.8 million
decreased $13.7 million compared to the three months ended December
31, 2022, primarily due to a decline of $13.6 million in earnings
recognized from our equity method investment in Cushman Wakefield
Greystone LLC (the “Greystone JV”) due to lower transaction volumes
as a result of tighter lending conditions.
Provision for income taxes
Provision for income taxes for the fourth quarter of 2023 was
$0.3 million on earnings before income taxes of $70.1 million. For
the fourth quarter of 2022, provision for income taxes was $59.0
million on earnings before income taxes of $88.8 million. The
decrease in income tax expense for the three months ended December
31, 2023 was mainly driven by the jurisdictional mix of earnings
and discrete tax benefits recognized in 2023, including the release
of uncertain tax positions. Additionally, in 2022, unrealized
losses on fair value investments were 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.
Net income and Adjusted EBITDA
Net income of $69.8 million increased $40.0 million compared to
the three months ended December 31, 2022, principally driven by
lower income tax expense.
Adjusted EBITDA of $213.1 million decreased by $6.6 million or
3%, driven by declines in our Capital markets and Valuation and
other service lines and lower earnings from the Greystone JV,
partially offset by growth in our Leasing service line and our cost
savings initiatives.
Full Year Results
(unaudited)
Revenue
Revenue of $9.5 billion decreased $612.0 million or 6% compared
to the year ended December 31, 2022, primarily driven by the
Americas which decreased 8%. This decline was principally driven by
decreases in Leasing and Capital markets revenue of 12% and 41%,
respectively, as a challenging macroeconomic environment and
interest rate uncertainty continue to adversely affect commercial
real estate transaction volumes and delay occupier decision making.
Valuation and other also declined 12% as a result of lower activity
in our valuation business, stemming from the slowdown in
transactions. In addition, we experienced unfavorable movements in
foreign currency of $23.4 million compared to the year ended
December 31, 2022 as a result of a stronger USD in 2023. Partially
offsetting these trends was the continued growth of our Property,
facilities and project management service line, namely in our
property management and facilities management businesses, and Gross
contract reimbursables revenue, which were up 3% and 4%,
respectively.
Costs of services
Costs of services of $7.8 billion decreased $311.9 million or 4%
compared to the year ended December 31, 2022. Cost of services
provided to clients decreased 8% principally driven by a $450.0
million decrease in commissions, as a result of lower brokerage
revenue, offset by an increase of $50.0 million in sub-contractor
costs. Cost of gross contract reimbursables increased 4% driven by
the continued stability and growth in our Property, facilities and
project management service line and cost inflation. Total costs of
services as a percentage of total revenue were 83% for 2023
compared to 81% for 2022 due to business mix and cost
inflation.
Operating, administrative and other
Operating, administrative and other expenses of $1.3 billion
increased $1.5 million compared to the year ended December 31,
2022, principally driven by an increase in stock-based compensation
expense of $15.4 million, primarily as a result of the accelerated
expense associated with our 2023 CEO transition and new awards
granted during 2023, and an increase of $23.0 million in technology
and other miscellaneous costs, offset by a decrease of
approximately $40.0 million in consulting expenses. Operating,
administrative and other expenses as a percentage of total revenue
were 13% for 2023 compared to 12% for 2022.
Restructuring, impairment and related charges
Restructuring, impairment and related charges of $38.1 million
increased $29.2 million compared to the year ended December 31,
2022 as a result of cost savings initiatives actioned in 2023,
including a reduction in headcount across select roles to help
optimize our workforce given the current macroeconomic conditions
and operating environment, as well as property lease
rationalizations. This reflects an increase in severance and
employment-related costs of $17.2 million, as well as an increase
in impairment charges of $12.0 million.
Interest expense, net of interest income
Interest expense of $281.1 million increased $88.0 million or
46% compared to the year ended December 31, 2022, primarily related
to an aggregate loss on debt extinguishment of $41.9 million, as
well as $8.7 million of new transaction costs expensed in 2023 in
connection with the refinancing of a portion of the borrowings
under our 2018 Credit Agreement in both January and August 2023
(see Note 10: Long-Term Debt and Other Borrowings of the Notes to
the Consolidated Financial Statements for further information). The
increase in interest expense was also partially driven by higher
variable interest rates on our Term Loans compared to 2022.
Earnings from equity method investments
Earnings from equity method investments of $58.1 million
decreased $26.9 million compared to the year ended December 31,
2022, primarily due to a decline of $29.2 million in earnings
recognized from the Greystone JV due to lower transaction volumes
as a result of tighter lending conditions given the volatility in
interest rates.
Other expense, net
Other expense of $12.6 million decreased $76.4 million or 86%
compared to the year ended December 31, 2022, principally driven by
lower net unrealized losses on our fair value investments,
primarily related to our investment in WeWork. 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.
Provision for income taxes
Provision for income taxes for the year ended December 31, 2023
was $5.4 million on a loss before income taxes of $30.0 million.
For the year ended December 31, 2022, the provision for income
taxes was $141.6 million on earnings before income taxes of $338.0
million. The negative effective tax rate for the year ended
December 31, 2023 was principally driven by the increase in the
valuation allowance the Company has placed on a portion of our
deferred tax assets and permanent nondeductible items.
Additionally, the decrease in income tax expense was driven by
lower earnings, the utilization of net operating losses and foreign
tax credits in 2023, and lower nondeductible losses related to
unrealized losses on fair value investments.
Net (loss) income and Adjusted EBITDA
Net loss was $35.4 million compared to net income of $196.4
million for the year ended December 31, 2022. The decrease was
principally driven by declines in our Leasing, Capital markets and
Valuation and other service lines. An aggregate loss on debt
extinguishment, estimated losses accrued during the current period
related to certain legal and compliance matters (see Note 16:
Commitments and Contingencies of the Notes to the Consolidated
Financial Statements) and lower earnings from the Greystone JV also
contributed to the year over year decline. These trends were
partially offset by our cost savings initiatives.
Adjusted EBITDA of $570.1 million decreased $328.7 million or
37% compared to prior year, driven by the same factors impacting
Net loss above, with the exception of the aggregate loss on debt
extinguishment and estimated losses accrued during the current
period related to certain legal and compliance matters. Adjusted
EBITDA margin, measured against service line fee revenue, of 8.7%
for the year ended December 31, 2023 decreased 367 basis points
compared to 12.4% in the year ended December 31, 2022.
Balance Sheet
Liquidity at the end of the fourth quarter was $1.9 billion,
consisting of availability on the Company’s undrawn revolving
credit facility of $1.1 billion and cash and cash equivalents of
$0.8 billion.
Net debt as of December 31, 2023 was $2.4 billion including the
Company’s outstanding term loans of $2.2 billion and senior secured
notes totaling $1.0 billion, net of cash and cash equivalents of
$0.8 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 2023 Earnings Conference Call will
be held today, February 20, 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 services of (i) Property,
facilities and project management, (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), Environmental,
Social and Governance (ESG) 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 inability of
our acquisitions and joint ventures to perform as expected and the
unavailability 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 natural disasters, global health crises, building
defects, terrorist attacks and mass shootings may disrupt our
ability to manage client properties; 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 operation; 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 December
31,
Year Ended December
31,
(in millions, except per share data)
2023
2022
2023
2022
Revenue
$
2,552.4
$
2,647.0
$
9,493.7
$
10,105.7
Costs and expenses:
Costs of services (exclusive of
depreciation and amortization)
2,073.8
2,162.6
7,841.6
8,153.5
Operating, administrative and other
317.1
334.8
1,262.8
1,261.3
Depreciation and amortization
36.8
32.7
145.6
146.9
Restructuring, impairment and related
charges
14.7
5.8
38.1
8.9
Total costs and expenses
2,442.4
2,535.9
9,288.1
9,570.6
Operating income
110.0
111.1
205.6
535.1
Interest expense, net of interest
income
(56.9
)
(53.4
)
(281.1
)
(193.1
)
Earnings from equity method
investments
16.8
30.5
58.1
85.0
Other income (expense), net
0.2
0.6
(12.6
)
(89.0
)
Earnings (loss) before income taxes
70.1
88.8
(30.0
)
338.0
Provision for income taxes
0.3
59.0
5.4
141.6
Net income (loss)
$
69.8
$
29.8
$
(35.4
)
$
196.4
Basic earnings (loss) per share:
Earnings (loss) per share attributable to
common shareholders, basic
$
0.31
$
0.13
$
(0.16
)
$
0.87
Weighted average shares outstanding for
basic earnings (loss) per share
227.2
225.8
226.9
225.4
Diluted earnings (loss) per share:
Earnings (loss) per share attributable to
common shareholders, diluted
$
0.30
$
0.13
$
(0.16
)
$
0.86
Weighted average shares outstanding for
diluted earnings (loss) per share
228.9
226.5
226.9
228.0
Cushman & Wakefield
plc
Consolidated Balance
Sheets
As of December 31,
(in millions, except per share data)
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
767.7
$
644.5
Trade and other receivables, net of
allowance of $85.2 and $88.2 as of December 31, 2023 and 2022,
respectively
1,468.0
1,462.4
Income tax receivable
67.1
55.4
Short-term contract assets, net
311.0
358.2
Prepaid expenses and other current
assets
189.4
246.3
Total current assets
2,803.2
2,766.8
Property and equipment, net
163.8
172.6
Goodwill
2,080.9
2,065.5
Intangible assets, net
805.9
874.5
Equity method investments
708.0
677.3
Deferred tax assets
67.4
58.6
Non-current operating lease assets
339.0
358.0
Other non-current assets
805.8
976.0
Total assets
$
7,774.0
$
7,949.3
Liabilities and Shareholders’
Equity
Current liabilities:
Short-term borrowings and current portion
of long-term debt
$
149.7
$
49.8
Accounts payable and accrued expenses
1,157.7
1,199.0
Accrued compensation
851.4
916.5
Income tax payable
20.8
33.1
Other current liabilities
217.6
192.0
Total current liabilities
2,397.2
2,390.4
Long-term debt, net
3,096.9
3,211.7
Deferred tax liabilities
13.7
57.2
Non-current operating lease
liabilities
319.6
334.6
Other non-current liabilities
268.6
293.3
Total liabilities
6,096.0
6,287.2
Shareholders’ equity:
Ordinary shares, nominal value $0.10 per
share, 800,000,000 shares authorized; 227,282,173 and 225,780,535
shares issued and outstanding as of December 31, 2023 and 2022,
respectively
22.7
22.6
Additional paid-in capital
2,957.3
2,911.5
Accumulated deficit
(1,117.2
)
(1,081.8
)
Accumulated other comprehensive loss
(185.4
)
(191.0
)
Total equity attributable to the
Company
1,677.4
1,661.3
Non-controlling interests
0.6
0.8
Total equity
1,678.0
1,662.1
Total liabilities and shareholders’
equity
$
7,774.0
$
7,949.3
Cushman & Wakefield
plc
Consolidated Statements of
Cash Flows
Year Ended December
31,
(in millions)
2023
2022
Cash flows from operating
activities
Net (loss) income
$
(35.4
)
$
196.4
Reconciliation of net (loss) income to net
cash provided by operating activities:
Depreciation and amortization
145.6
146.9
Impairment charges
13.6
1.6
Unrealized foreign exchange loss
(gain)
1.9
(4.0
)
Stock-based compensation
54.1
40.3
Lease amortization
97.8
102.2
Loss on debt extinguishment
19.3
—
Amortization of debt issuance costs
7.5
9.6
Earnings from equity method investments,
net of distributions received
(33.7
)
(45.4
)
Change in deferred taxes
(50.4
)
14.6
Provision for loss on receivables and
other assets
10.6
31.7
Loss on disposal of business
1.3
13.2
Unrealized loss on equity securities,
net
27.8
84.2
Other operating activities, net
16.7
(3.4
)
Changes in assets and liabilities:
Trade and other receivables
62.5
(298.9
)
Income taxes payable
(34.1
)
(96.1
)
Short-term contract assets and Prepaid
expenses and other current assets
72.8
(102.7
)
Other non-current assets
(24.7
)
(30.6
)
Accounts payable and accrued expenses
(49.4
)
125.1
Accrued compensation
(67.7
)
(41.4
)
Other current and non-current
liabilities
(83.9
)
(94.2
)
Net cash provided by operating
activities
152.2
49.1
Cash flows from investing
activities
Payment for property and equipment
(51.0
)
(50.7
)
Acquisitions of businesses, net of cash
acquired
—
(32.8
)
Investments in equity securities and
equity method joint ventures
(6.9
)
(26.4
)
Return of beneficial interest in a
securitization
(330.0
)
(80.0
)
Collection on beneficial interest in a
securitization
430.0
80.0
Other investing activities, net
6.8
(10.8
)
Net cash provided by (used in) investing
activities
48.9
(120.7
)
Cash flows from financing
activities
Shares repurchased for payment of employee
taxes on stock awards
(8.1
)
(27.2
)
Payment of deferred and contingent
consideration
(14.5
)
(11.0
)
Proceeds from borrowings
2,400.0
—
Repayment of borrowings
(2,405.0
)
(26.7
)
Debt issuance costs
(65.1
)
—
Payment of finance lease liabilities
(29.2
)
(17.3
)
Other financing activities, net
1.1
2.9
Net cash used in financing activities
(120.8
)
(79.3
)
Change in cash, cash equivalents and
restricted cash
80.3
(150.9
)
Cash, cash equivalents and restricted
cash, beginning of the year
719.0
890.3
Effects of exchange rate fluctuations on
cash, cash equivalents and restricted cash
1.9
(20.4
)
Cash, cash equivalents and restricted
cash, end of the year
$
801.2
$
719.0
Segment Results
The following tables summarize our results of operations for our
operating segments for the three months and years ended December
31, 2023 and 2022.
Americas Results
Three Months Ended December
31,
Year Ended December
31,
(in millions) (unaudited)
2023
2022
% Change in USD
% Change in Local
Currency
2023
2022
% Change in USD
% Change in Local
Currency
Revenue:
Property, facilities and project
management
$
625.9
$
619.7
1
%
1
%
$
2,494.7
$
2,434.0
2
%
3
%
Leasing
439.1
430.6
2
%
2
%
1,420.9
1,669.7
(15
)%
(15
)%
Capital markets
138.1
214.0
(35
)%
(36
)%
556.5
987.1
(44
)%
(44
)%
Valuation and other
47.5
50.0
(5
)%
(4
)%
150.0
198.1
(24
)%
(24
)%
Total service line fee revenue(1)
1,250.6
1,314.3
(5
)%
(5
)%
4,622.1
5,288.9
(13
)%
(12
)%
Gross contract reimbursables(2)
620.3
680.7
(9
)%
(9
)%
2,506.9
2,462.1
2
%
2
%
Total revenue
$
1,870.9
$
1,995.0
(6
)%
(6
)%
$
7,129.0
$
7,751.0
(8
)%
(8
)%
Costs and expenses:
Americas Fee-based operating expenses
$
1,127.1
$
1,179.4
(4
)%
(4
)%
$
4,237.5
$
4,650.3
(9
)%
(9
)%
Cost of gross contract reimbursables
620.3
680.7
(9
)%
(9
)%
2,506.9
2,462.1
2
%
2
%
Segment operating expenses
$
1,747.4
$
1,860.1
(6
)%
(6
)%
$
6,744.4
$
7,112.4
(5
)%
(5
)%
Net income
$
28.0
$
45.7
(39
)%
(42
)%
$
17.8
$
202.6
(91
)%
(92
)%
Adjusted EBITDA
$
139.1
$
163.4
(15
)%
(16
)%
$
429.6
$
715.5
(40
)%
(40
)%
(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)
2023
2022
% Change in USD
% Change in Local
Currency
2023
2022
% Change in USD
% Change in Local
Currency
Revenue:
Property, facilities and project
management
$
91.3
$
96.5
(5
)%
(11
)%
$
371.4
$
373.7
(1
)%
(3
)%
Leasing
81.1
67.9
19
%
13
%
229.6
233.9
(2
)%
(5
)%
Capital markets
30.9
39.8
(22
)%
(26
)%
83.3
142.1
(41
)%
(43
)%
Valuation and other
50.9
50.7
0
%
(5
)%
174.2
177.7
(2
)%
(4
)%
Total service line fee revenue(1)
254.2
254.9
0
%
(6
)%
858.5
927.4
(7
)%
(10
)%
Gross contract reimbursables(2)
32.1
33.5
(4
)%
(9
)%
115.2
102.7
12
%
9
%
Total revenue
$
286.3
$
288.4
(1
)%
(6
)%
$
973.7
$
1,030.1
(5
)%
(8
)%
Costs and expenses:
EMEA Fee-based operating expenses
$
210.4
$
226.4
(7
)%
(12
)%
$
779.3
$
827.6
(6
)%
(8
)%
Cost of gross contract reimbursables
32.1
33.5
(4
)%
(9
)%
115.2
102.7
12
%
9
%
Segment operating expenses
$
242.5
$
259.9
(7
)%
(11
)%
$
894.5
$
930.3
(4
)%
(6
)%
Net income (loss)
$
19.0
$
(30.0
)
n.m.
n.m.
$
(46.5
)
$
(24.7
)
88
%
58
%
Adjusted EBITDA
$
46.1
$
29.2
58
%
48
%
$
77.4
$
106.0
(27
)%
(30
)%
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)
2023
2022
% Change in USD
% Change in Local
Currency
2023
2022
% Change in USD
% Change in Local
Currency
Revenue:
Property, facilities and project
management
$
191.3
$
176.8
8
%
7
%
$
706.9
$
673.4
5
%
6
%
Leasing
66.5
59.2
12
%
14
%
176.2
180.1
(2
)%
2
%
Capital markets
15.0
14.5
3
%
5
%
55.2
58.6
(6
)%
(2
)%
Valuation and other
28.8
30.3
(5
)%
(4
)%
112.5
119.7
(6
)%
(2
)%
Total service line fee revenue(1)
301.6
280.8
7
%
7
%
1,050.8
1,031.8
2
%
4
%
Gross contract reimbursables(2)
93.6
82.8
13
%
14
%
340.2
292.8
16
%
21
%
Total revenue
$
395.2
$
363.6
9
%
9
%
$
1,391.0
$
1,324.6
5
%
8
%
Costs and expenses:
APAC Fee-based operating expenses
$
278.2
$
255.5
9
%
8
%
$
1,008.9
$
962.5
5
%
7
%
Cost of gross contract reimbursables
93.6
82.8
13
%
14
%
340.2
292.8
16
%
21
%
Segment operating expenses
$
371.8
$
338.3
10
%
10
%
$
1,349.1
$
1,255.3
7
%
10
%
Net income (loss)
$
22.8
$
14.1
62
%
46
%
$
(6.7
)
$
18.5
n.m.
n.m.
Adjusted EBITDA
$
27.9
$
27.1
3
%
4
%
$
63.1
$
77.3
(18
)%
(15
)%
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.
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. Adjusted earnings before interest, taxes,
depreciation and amortization (“Adjusted EBITDA”) and Adjusted
EBITDA margin; ii. Segment operating expenses and Fee-based
operating expenses; iii. Adjusted net income and Adjusted earnings
per share; iv. Free cash flow; v. Local currency; and vi. 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.
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 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 depreciation and amortization related to merger and
acquisition activity, 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 per share (“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 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 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
Unrealized loss on investments, net represents net unrealized
losses on fair value investments during the years ended December
31, 2023 and 2022, primarily related to 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,
which 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 2023
actions to reduce headcount across select roles to help optimize
our workforce given the current macroeconomic conditions and
operating environment, as well as property lease
rationalizations.
CEO transition costs reflects accelerated stock-based
compensation expense associated with stock awards granted to John
Forrester, the Company’s former Chief Executive Officer who stepped
down from that position as of June 30, 2023, but who remained
employed by the Company as a Strategic Advisor until December 31,
2023. The requisite service period under the applicable award
agreements was satisfied upon Mr. Forrester’s retirement from the
Company on December 31, 2023. In addition, this includes Mr.
Forrester’s salary and bonus accruals for the second half of 2023.
We believe the accelerated expense for these stock awards, as well
as the salary and bonus accruals, are similar in nature to one-time
severance benefits and are not normal, recurring operating expenses
necessary to operate the business.
Servicing liability fees and amortization reflects the
additional non-cash servicing liability fees accrued in connection
with the A/R Securitization (as defined below) amendments during
the years ended December 31, 2023 and 2022. The liability will be
amortized through June 2026.
Legal and compliance matters includes estimated losses and
settlements for certain legal matters which are not considered
ordinary course legal matters given the infrequency of similar
cases brought against the Company, complexity of the matter, nature
of the remedies sought and/or our overall litigation strategy. We
exclude such losses from the calculation of Adjusted EBITDA to
improve the comparability of our operating results for the current
period to prior and future periods.
The interim financial information for the three months ended
December 31, 2023 and 2022 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, 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.
Reconciliations
of Non-GAAP financial measures
Reconciliation of Net income (loss) to
Adjusted EBITDA:
Three Months Ended December
31,
Year Ended December
31,
(in millions) (unaudited)
2023
2022
2023
2022
Net income (loss)
$
69.8
$
29.8
$
(35.4
)
$
196.4
Add/(less):
Depreciation and amortization
36.8
32.7
145.6
146.9
Interest expense, net of interest
income
56.9
53.4
281.1
193.1
Provision for income taxes
0.3
59.0
5.4
141.6
Unrealized loss on investments, net
4.9
1.9
27.8
84.2
Integration and other costs related to
merger
4.4
2.8
11.2
14.0
Pre-IPO stock-based compensation
—
0.6
—
3.1
Acquisition related costs and efficiency
initiatives
2.5
39.6
14.2
93.8
Cost savings initiatives
14.2
—
55.6
—
CEO transition costs
2.8
—
8.3
—
Servicing liability fees and
amortization
(0.6
)
1.0
11.7
7.9
Legal and compliance matters
8.9
—
23.0
—
Other(1)
12.2
(1.1
)
21.6
17.8
Adjusted EBITDA
$
213.1
$
219.7
$
570.1
$
898.8
(1) For the year ended December 31, 2023,
Other primarily reflects non-cash stock-based compensation expense
associated with certain one-time retention awards, one-time
consulting costs associated with certain legal entity
reorganization projects, a loss on disposal of a business, and a
one-time impairment of certain customer relationship intangible
assets. For the year ended December 31, 2022, Other predominantly
includes a loss of $13.8 million related to the disposal of
operations in Russia, as well as one-time consulting costs
associated with certain statutory reporting and legal entity
reorganization projects.
Reconciliation of Net income (loss) to
Adjusted net income:
Three Months Ended December
31,
Year Ended December
31,
(in millions, except per share data)
(unaudited)
2023
2022
2023
2022
Net income (loss)
$
69.8
$
29.8
$
(35.4
)
$
196.4
Add/(less):
Merger and acquisition related
depreciation and amortization
15.6
17.7
68.3
73.2
Unrealized loss on investments, net
4.9
1.9
27.8
84.2
Financing and other facility fees(1)
—
—
50.6
—
Integration and other costs related to
merger
4.4
2.8
11.2
14.0
Pre-IPO stock-based compensation
—
0.6
—
3.1
Acquisition related costs and efficiency
initiatives
2.5
39.6
14.2
93.8
Cost savings initiatives
14.2
—
55.6
—
CEO transition costs
2.8
—
8.3
—
Servicing liability fees and
amortization
(0.6
)
1.0
11.7
7.9
Legal and compliance matters
8.9
—
23.0
—
Other
12.2
(1.1
)
21.6
17.8
Income tax adjustments(2)
(32.3
)
11.8
(65.4
)
(35.4
)
Adjusted net income
$
102.4
$
104.1
$
191.5
$
455.0
Weighted average shares outstanding,
basic
227.2
225.8
226.9
225.4
Weighted average shares outstanding,
diluted(3)
228.9
226.5
227.7
228.0
Adjusted earnings per share, basic
$
0.45
$
0.46
$
0.84
$
2.02
Adjusted earnings per share, diluted
$
0.45
$
0.46
$
0.84
$
2.00
(1) Financing and other facility fees
reflects costs related to the refinancing of a portion of the
borrowings under our 2018 Credit Agreement in both January and
August 2023, including a loss on debt extinguishment of $41.9
million, consisting of unamortized deferred financing costs and
certain new transaction costs paid to creditors, as well as $8.7
million of new transaction costs expensed directly in 2023.
(2) Reflective of management’s estimation
of an adjusted effective tax rate (adjusted for certain items) of
24% and 31% for the three months ended December 31, 2023 and 2022,
respectively, and 27% and 28% for the years ended December 31, 2023
and 2022, respectively.
(3) Weighted average shares outstanding,
diluted is calculated by taking basic weighted average shares
outstanding and adding dilutive shares of 1.7 million and 0.7
million for the three months ended December 31, 2023 and 2022,
respectively, and dilutive shares of 0.8 million and 2.6 million
for the years ended December 31, 2023 and 2022, respectively.
Reconciliation of Net cash provided by
operating activities to Free cash flow:
Year Ended December
31,
(in millions) (unaudited)
2023
2022
Net cash provided by operating
activities
$
152.2
$
49.1
Payment for property and equipment
(51.0
)
(50.7
)
Free cash flow
$
101.2
$
(1.6
)
Summary of Total costs and expenses:
Three Months Ended December
31,
Year Ended December
31,
(in millions) (unaudited)
2023
2022
2023
2022
Americas Fee-based operating expenses
$
1,127.1
$
1,179.4
$
4,237.5
$
4,650.3
EMEA Fee-based operating expenses
210.4
226.4
779.3
827.6
APAC Fee-based operating expenses
278.2
255.5
1,008.9
962.5
Cost of gross contract reimbursables
746.0
797.0
2,962.3
2,857.6
Segment operating expenses:
2,361.7
2,458.3
8,988.0
9,298.0
Depreciation and amortization
36.8
32.7
145.6
146.9
Integration and other costs related to
merger
4.4
2.8
11.2
14.0
Pre-IPO stock-based compensation
—
0.6
—
3.1
Acquisition related costs and efficiency
initiatives
2.5
39.6
14.2
93.8
Cost savings initiatives
14.2
—
55.6
—
CEO transition costs
2.8
—
8.3
—
Servicing liability fees and
amortization
(0.6
)
1.0
11.7
7.9
Legal and compliance matters
8.9
—
23.0
—
Other, including foreign currency
movements(1)
11.7
0.9
30.5
6.9
Total costs and expenses
$
2,442.4
$
2,535.9
$
9,288.1
$
9,570.6
(1) For the year ended December 31, 2023,
Other primarily reflects non-cash stock-based compensation expense
associated with certain one-time retention awards, one-time
consulting costs associated with certain legal entity
reorganization projects, a one-time impairment of certain customer
relationship intangible assets and the effects of movements in
foreign currency. For the year ended December 31, 2022, Other
includes one-time consulting costs associated with certain
statutory reporting and legal entity reorganization projects, and
the effects of movements in foreign currency.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240220371500/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
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