Cushman & Wakefield Ltd. · NYSE:CWK
Cushman & Wakefield — Q2 2018 Earnings Presentation
31 slides from Cushman & Wakefield's earnings presentation, Sep 5, 2018
Slide 1: Q2 Earnings Presentation
Cushman & Wakefield Q2 Earnings Presentation September 5, 2018
Slide 2: Cautionary Note on Forward-Looking Statements
Cautionary Note on Forward-Looking Statements All statements in this presentation (and oral statements made regarding the subjects of this presentation) other than historical facts are forward-looking statements, which rely on a number of estimates, projections and assumptions concerning future even
Slide 3: Non-GAAP Financial Measures and Other Financial Information
Non-GAAP Financial Measures and Other Financial Information The following measures are considered “non-GAAP financial measures” under SEC guidelines: i. Fee revenue and fee-based operating expenses ii. Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") and Ad
Slide 4: Today's Presenters
Today’s Presenters Brett White Duncan Palmer Bill Knightly Executive Chairman & CEO Chief Financial Officer Investor Relations & Treasurer Cushman & Wakefield | Q2 2018 Earnings Conference Call 4
Slide 5: Cushman & Wakefield Today
Cushman & Wakefield Today • $5.3B of Fee revenue • Top three firm in most of the world’s major markets • 3.5B square feet managed • 48k employees • ~400 offices in 350 cities across 70 countries • Leading global brand Cushman & Wakefield | Q2 2018 Earnings Conference Call 5
Slide 6: Breadth of Our Service Offerings
Breadth of Our Service Offerings Fee Revenue by Segment (TTM as of June 30, 2018) Fee Revenue by Service Line (TTM as of June 30, 2018) Capital Markets EMEA 15% Property, Facilities, 15% & Project Management 46% Valuation & Other 8% Recurring(1) APAC Highly Visible(2) 18% Leasing Americas 31% 67% 46
Slide 7: History of Strategic and In-fill M&A
History of Strategic and In-fill M&A M&A Track Record M&A Opportunity and Strategy 2014 • Acquisition and integration capabilities combined with our scalable global platform drive significant opportunities for growth through M&A • On average, deals have been executed at 6x EBITDA on a post-synergy b
Slide 8: Industry Tailwinds Continue to Drive Growth
Industry Tailwinds Continue to Drive Growth Global GDP vs. Demand for Office Space GDP change Global office net absorption, m SF 6% 400 5% 300 4% 200 3.9% 3.9% 3.7% 3% 100 3.1% Global GDP growth and real estate demand generally 2% 0 move in tandem 1% (100) 0% (200) (1)% (300) 2000 2002 2004 2006 200
Slide 9: Global Real Estate Market Outlook
Global Real Estate Market Outlook • Demand metrics for office space slightly higher 1H 2018 versus a year ago and global industrial boom continues Global Macro-Economic Trends • Capital markets remain active globally. Sales volume of all product types was up 13% in 1H 2018 year-over-year, but office
Slide 10: Business Highlights – First Half
Business Highlights – First Half Completed successful IPO and Vanke private placement on August 6 resulting in proceeds of $1.0 billion Solid Fee revenue growth of 10% year-over-year • Strong Capital Markets growth of 28% driven by Americas and APAC • Solid 16% growth in Leasing led by Americas and
Slide 11: Financial Results
Financial Results Fee Revenue (USD $m) $5,320 $2,690 $4,694 $2,405 (1) 2014 2017 1H17 1H18 DTZ/CT/CW Adjusted EBITDA (USD $m) $529 $245 $346 $160 (1) 2014 2017 1H17 1H18 DTZ/CT/CW Margin 7.4% 9.9% +250bps of margin improvement Source: Historical financials per company filings, including S-1 filing N
Slide 12: Financial Overview
Financial Overview
Slide 13: Q2 and YTD Financial Highlights
Q2 and YTD Financial Highlights USD in Millions, unless otherwise indicated Adj. EBITDA Fee Revenue Adj. EBITDA Adjusted EPS Margin Q2 $1,444 $170 11.8% $0.46 +10% Growth +28% Growth +180 bps +$0.17 $2,690 $245 9.1% $0.53 YTD +10% Growth +51% Growth +250 bps +$0.38 Led by strong Capital Driven by re
Slide 14: Q2 and YTD Fee Revenue by Segment
Q2 and YTD Fee Revenue by Segment Second Quarter and First Half Performance (USD $m) Three Months Ended June 30 % Change Six Months Ended June 30 % Change 2018 2017 LC 2018 2017 LC Americas $992 $891 11% $1,842 $1,657 11% EMEA 200 180 4% 363 309 7% APAC 253 230 7% 486 439 7% Total Fee Revenue $1,444
Slide 15: Q2 & YTD 2018 Service Line Performance
Q2 Fee Revenue by Service Line Q2 & YTD 2018 Service Line Performance Second Quarter and First Half Performance (USD $m) Three Months Ended June 30 % Change Six Months Ended June 30 % Change 2018 2017 LC 2018 2017 LC Prop, Fac & Proj Management $657 $617 6% $1,272 $1,205 4% Leasing 476 397 18% 796 6
Slide 16: Second Quarter 2018 Performance: Americas
Americas - Q2 and YTD Performance Second Quarter 2018 Performance: Americas Second Quarter and First Half Performance (USD $m) Three Months Ended June 30 % Change Six Months Ended June 30 % Change 2018 2017 LC 2018 2017 LC Prop, Fac & Proj Management $426 $407 5% $830 $798 4% Leasing 374 306 22% 620
Slide 17: Second Quarter 2018 Performance: EMEA
EMEA - Q2 and YTD Performance Second Quarter 2018 Performance: EMEA Second Quarter and First Half Performance (USD $m) Three Months Ended June 30 % Change Six Months Ended June 30 % Change 2018 2017 LC 2018 2017 LC Prop, Fac & Proj Management $64 $48 24% $118 $87 24% Leasing 59 58 (5)% 107 99 (2)% C
Slide 18: Second Quarter 2018 Performance: APAC
APAC - Q2 and YTD Performance Second Quarter 2018 Performance: APAC Second Quarter and First Half Performance (USD $m) Three Months Ended June 30 % Change Six Months Ended June 30 % Change 2018 2017 LC 2018 2017 LC Prop, Fac & Proj Management $167 $163 1% $324 $321 (3)% Leasing 43 33 27% 69 57 17% C
Slide 19: Adjustments to EBITDA: 2018 - 2020
Adjustments to EBITDA: 2018 - 2020 2018 2019E 2020E USD in $m H1 Act H2 Est FY Est FY FY Integration and other costs related to acquisitions (1) $ 107 $ 166 $ 273 $ 56 $ 45 (2) Stock-based compensation 15 10 25 9 4 Cassidy Turley deferred payment obligation 21 17 38 0 0 Other 5 10 15 15 10 Adjustmen
Slide 20: Sources and Uses of Cash
Sources and Uses of Cash Illustrative Sources & Uses Pro Forma 6/30/18 Capital Structure IPO/Private Placement Sources (USD $m, unless otherwise indicated) PF 6/30/18 (USD $m) $ % of Total $810m Revolving Credit Facility (Undrawn) - Gross proceeds $1,059 100.0% Total Sources $1,059 100.0% First Lien
Slide 21: Outlook
Outlook First half was a solid start to the year Global markets continue to show strong fundamentals Fourth quarter is generally the largest quarter of the year in terms of EBITDA Will provide revised full-year guidance on the third quarter earnings call Cushman & Wakefield | Q2 2018 Earnings Confer
Slide 22: Q&A
Q&A
Slide 23: Supplemental slides and reconciliations of GAAP to Non-GAAP financial measures
Supplemental slides and reconciliations of GAAP to Non-GAAP financial measures
Slide 24: New Revenue Recognition Standard – ASC 606
New Revenue Recognition Standard – ASC 606 ⦁ Gross Up of Third Party Costs: Increase in gross pass- 2Q18 QTD 2Q18 YTD through expenses and reimbursed revenue Impact Impact (USD $m) ⦁ Acceleration of At-Risk Incentive Fees: Upfront GAAP Revenue $99m $228m recognition of incentive fees required if pas
Slide 25: 2014 DTZ, CT and C&W Group Historical Results
2014 DTZ, CT and C&W Group Historical Results In order to provide investors with additional information on the historical performance of the three companies we have combined through execution of mergers and acquisitions during 2014 and 2015, the following consolidated information includes 2014 histo
Slide 26: 2014 DTZ, CT and C&W Group GAAP to Non-GAAP Reconciliations
2014 DTZ, CT and C&W Group GAAP to Non-GAAP Reconciliations Reconciliation of GAAP Revenue to Fee Revenue DTZ, CT, CW DTZ CT CW (USD $m) Historical 2014(1) Total revenue $2,294.9 $738.7 $2,849.0 5,882.6 Less: Gross contract costs (428.9) (14.0) (745.5) (1,188.4) Total Fee revenue 1,866.0 724.7 2,103
Slide 27: Reconciliation of GAAP Revenue to Fee Revenue
Reconciliation of GAAP Revenue to Fee Revenue Three Months Ended Three Months Ended Six Months Ended Six Months Ended (USD $m) June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 Americas Revenue Total revenue $1,372.1 $1,128.7 $2,578.3 $2,115.9 Less: gross contract costs (383.0) (239.8) (739.3)
Slide 28: Reconciliation of Total Costs and Expenses to Fee-based Operating Expenses
Reconciliation of Total Costs and Expenses to Fee-based Operating Expenses Three Months Ended Three Months Ended Six Months Ended Six Months Ended (USD $m) June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 Total Operating expenses $1,941.8 $1,736.7 $3,790.2 $3,318.2 Less: gross contract costs
Slide 29: Reconciliation of Fee-based Operating Expenses by Segment
Reconciliation of Fee-based Operating Expenses by Segment to Consolidated Fee-based Operating Expenses Three Months Ended Three Months Ended Six Months Ended Six Months Ended (USD $m) June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 Americas fee-based operating expenses $868.6 $801.2 $1,656.2
Slide 30: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Net Income (Loss) to Adjusted EBITDA Three Months Ended Three Months Ended Six Months Ended Six Months Ended (USD $m) June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 Net income / (loss) $(32.2) $(47.3) $(124.2) $(167.0) Add/(less): Depreciation and amortization(1) 71.6 65.9
Slide 31: Reconciliation of Net Income to Adjusted Net Income
Reconciliation of Net Income to Adjusted Net Income Three Months Ended Three Months Ended Six Months Ended Six Months Ended (USD $m, unless otherwise indicated) June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 Net income / (loss) $(32.2) $(47.3) $(124.2) $(167.0) Add / (less): Merger and acqu