Cushman & Wakefield, the world's largest privately held commercial real estate services firm, today reported the second highest revenue in its 95-year history, as it continues to invest in targeted acquisitions and key strategic hires as part of its long-term strategic plan.
Fourth-quarter and full-year 2012 Results
Q4 2012 Highlights:
- Double-digit gross and commission and service fee revenue growth
- Operating income more than doubled and earnings before interest, taxes, depreciation and amortization ("EBITDA") grew 76.2%
- Net income ("income attributable to owners of the parent") tripled, improving $40.4 million to $60.4 million, as compared with $20.0 million for the year ago period
- Year-over-year growth in commission and service fee revenue and EBITDA in all regions, including the Americas, Europe, Middle East and Africa ("EMEA") and Asia Pacific
- Year-over-year commission & service fee revenue growth in all service lines, including Leasing, Corporate Occupier & Investor Services ("CIS"), Capital Markets, Valuation & Advisory ("V&A") and Business Consulting
- Cash dividend paid to shareholders due to positive performance momentum
- Strong Leasing and Capital Markets finish in the fourth quarter with 16.1% and 30.1% consolidated commission and service fee revenue growth, respectively, with Leasing growth being driven largely by the Americas and the Asia Pacific regions and solid Capital Markets growth in all three regions
- Sustained growth in the CIS and V&A service lines led by the Americas region
Full-year 2012 Highlights:
- Second highest gross revenue in 95-year history at $2.05B, a 2.7% increase from 2011, or a 4.7% increase excluding the impact of foreign exchange from 2011
- Operating income and EBITDA growth of 22.6% and 14.9%, respectively
- Net income improved $28.3 million to $43.2 million
- Sustained growth in the CIS and V&A businesses, also led by the Americas region
- A healthy ratio of 0.8 of net debt to EBITDA
"Despite global economic uncertainty over the past several years, Cushman & Wakefield's EBITDA increased 17% annually from the $93 million EBITDA in 2010, to our current $128 million in 2012, while maintaining a strong balance sheet with a healthy 0.8 net debt to EBITDA ratio. As confidence continues to strengthen, we expect the positive business velocity we saw at the end of 2012 to continue into 2013," said Glenn J. Rufrano, President & Chief Executive Officer of Cushman & Wakefield.
Cushman & Wakefield, which is majority-owned by EXOR S.p.A., the investment company controlled by the Agnelli family, reported that fourth-quarter 2012 gross revenue increased $65.1 million, or 11.0%, or 11.4% excluding the impact of foreign exchange, to $657.7 million, as compared with $592.6 million for the fourth quarter of 2011. Fourth quarter 2012 commission and service fee revenue, which excludes reimbursed costs related to managed properties and other costs, increased $74.0 million, or 15.9%, or 16.4% excluding the impact of foreign exchange, to $540.7 million, as compared with $466.7 million for the prior year quarter. Commission and service fee revenue performance in the fourth quarter of 2012 was driven by growth in all regions and service lines, including solid Leasing performance primarily in the Americas and Asia Pacific regions and a strong Q4 Capital Markets finish in the Americas, EMEA and Asia Pacific regions, as the Company continues to build its platform across the globe, including making key new hires in several major cities, and continued growth in the V&A and CIS businesses, major components of the firm's strategic growth plan, as Cushman & Wakefield continues to focus on enhancing its recurring revenue streams. Leasing revenue increased $40.4 million, or 16.1%, with the largest growth in Asia Pacific with 33.5%, followed by the Americas, which increased 17.9%. Capital Markets revenue grew $19.3 million, or 30.1%, also led by the Americas region, which increased 41.2%, followed by Asia Pacifica and EMEA with 18.1% and 17.3% revenue growth, respectively. V&A and CIS revenues increased $7.6 million, or 14.9%, and $6.2 million, or 6.5%, respectively, with the largest growth in the Americas region, which saw revenues increase by 19.2% and 10.8%, respectively.
Operating income increased $39.2 million to $72.8 million for the fourth quarter of 2012, as compared with $33.6 million for the fourth quarter of 2011, largely driven by the increase in commission and service fee revenue, partially offset by higher commission expense, primarily due to higher Leasing and Capital Markets revenues. As a result, EBITDA increased $38.4 million, or 76.2%, to $88.8 million for the fourth quarter, as compared with $50.4 million for the prior year quarter. The year-over-year growth in operating income and EBITDA, partially offset by higher interest expense, led to an improvement in pre- tax income of $32.9 million to $74.1 million, as compared with $41.2 million for the prior year quarter. Income tax expense for the fourth quarter of 2012 decreased $7.5 million to $13.7 million, primarily due to certain non-recurring income tax net benefits, partially offset by an increase in pre-tax income. As a result of the above, Cushman & Wakefield improved net income by $40.4 million, to $60.4 million for the fourth quarter of 2012, as compared with $20.0 million for the fourth quarter of 2011. On a U.S. GAAP basis, EBITDA increased $43.4 million, or 92.3%, to $90.4 million for the three months ended December 31, 2012, as compared with $47.0 million for the prior year fourth quarter, while net income improved $46.3 million to $69.9 million for the quarter ended December 31, 2012, as compared with $23.6 millioni for the same period in the prior year.
Full-year 2012 Results
For the year ended December 31, 2012, Cushman & Wakefield reported an increase in gross revenue of 2.7%, or 4.7% excluding the impact of foreign exchange, to $2,050.1 million, as compared with $1,995.7 million for the prior year. Commission and service fee revenue increased 1.6%, or 3.8% excluding the impact of foreign exchange, to $1,597.0 million for the full-year 2012, as compared with $1,572.3 million for the prior year. The increase was driven by continued CIS and V&A performance, primarily in the Americas and Asia Pacific regions, modest growth in Leasing and essentially flat revenues in Capital Markets, with the Leasing and Capital Markets year-over-year performance being largely attributable to a strong finish in the fourth quarter of 2012 despite the negative impact from foreign exchange and slow transactional activity due to the continued global economic uncertainty that existed throughout 2012.
The increase in commission and service fee revenue and a reduction in operating expenses, partially offset by an increase in commission expense and cost of services sold, drove a year-over-year increase of $14.6 million, or 22.6%, in C&W Group's operating income, to $79.1 million for the full-year 2012, as compared with $64.5 million in the prior year, while EBITDA increased $16.6 million, or 14.9%, to $127.7 million, from $111.1 million for full-year 2011.
This increase in operating income and EBITDA and a reduction in interest expense led to an improvement of $18.9 million in pre-tax income to $69.4 million for the full-year 2012, as compared with $50.5 million for the prior year period.
Income tax expense decreased $9.3 million to $26.3 million for the full-year 2012, as compared with $35.6 million in the prior year, primarily due to certain non-recurring income tax net benefits, partially offset by an increase in pre-tax income. As a result, the income attributable to owners of the parent improved $28.3 million to $43.2 million for the full-year 2012, as compared with $14.9 million for the prior year. As reported under U.S. GAAP, EBITDA increased to $131.3 million for the full-year 2012, as compared with $109.4 million for the prior year period, while the Company's net income increased $31.9 million to $50.9 million, as compared with $19.0 million for full-year 2011.
In addition to the solid financial performance in 2012, Cushman & Wakefield continued to maintain a strong balance sheet. As of December 31, 2012, the Company's net debt position was $99.6 million. With the full-year 2012 EBITDA of $128 million, the net debt to EBITDA ratio is only 0.8 - a strong indicator of Cushman & Wakefield's ability to service its debt obligations.
For full-year 2012, Cushman & Wakefield executed some of the largest real estate assignments in the world including: the largest industrial lease in the UK in the last two years (one million square feet ["msf"] for Sainsbury); the largest H&M store in the world (589 Fifth Avenue, NYC); the largest office lease in San Francisco in a decade (Salesforce.com), and two of the largest sales in Hong Kong (Monterey Court in Jardine Lookout and Kowloon Commercial Center).
The firm's Capital Markets group executed many high profile assignments including; the $230 million senior mortgage loan for 100 Church Street in Manhattan; the 99-year, triple-net lease to RXR Realty at 75 Rockefeller Plaza in NYC; the $610 million sale of 100 Federal Street Tower in Boston on behalf of Bank of America and the €302 million sale of a Junction LP's UK retail portfolio.
The Company's primary service lines include Leasing, CIS, Capital Markets, V&A and Business Consulting. The Company's fourth-quarter 2012 results reflect strong Leasing and Capital Markets performance and continued growth in the CIS and V&A businesses. CIS revenue increased 6.1% globally, while CIS revenue in the U.S. increased 16.7%. In 2012, Cushman & Wakefield's CIS business continued to gain major assignments globally and regionally on behalf of major corporations and institutions, including its appointment to manage the Crown Estate's £1.5 billion regional portfolio in the U.K. and being awarded the facilities and project management for Kraft Foods Global 4.1 msf portfolio in the U.S. and Canada and renewing its contract with Symantec to provide transaction management, project management, facilities management and property management for its 5 msf portfolio. CIS was also awarded significant assignments from MetLife Real Estate Investors, CWCapital Asset Management, Crow Holdings Capital Partners and Industrial Income Trust. The number of square feet managed increased to 902 msf, as compared with 806 msf this time last year.
Cushman & Wakefield continued to invest in targeted acquisitions and key strategic hires in 2012 as part of its long-term strategic plan. CIS's acquisition of the third-party client services business of Cousins Properties will provide enhanced client support capabilities in two key, strategic growth areas, Dallas and Atlanta. The firm also hired more than 1,700 professionals worldwide in 2012.
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About Cushman & Wakefield, Inc.
Cushman & Wakefield is the world's largest privately-held commercial real estate services firm. The company advises and represents clients on all aspects of property occupancy and investment, and has established a preeminent position in the world's major markets, as evidenced by its frequent involvement in many of the most significant property leases, sales and assignments. Founded in 1917, it has 253 offices in 60 countries and more than 14,000 employees. It offers a complete range of services for all property types, including leasing, sales and acquisitions, equity, debt and structured finance, corporate finance and investment banking, corporate services, property management, facilities management, project management, consulting and appraisal. The firm has more than $4 billion in assets under management through its wholly-owned subsidiary Cushman & Wakefield Investors. A recognized leader in local and global real estate research, the firm publishes its market information and studies online at www.cushmanwakefield.com/knowledge.
NOTE: This release may include forward-looking statements. These statements may relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. These forward-looking statements are made based on our management's expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. These uncertainties and factors could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements.
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