C&W Reports Q2 Revenue Growth of 15.6% - Cushman & Wakefield

Cushman & Wakefield Reports 2nd Quarter 2013 Revenue Growth of 15.6%

Cushman & Wakefield, the world’s largest privately held commercial real estate services firm, today reported gross revenue increased 15.6% to $582.5 million for second-quarter ended June 30, 2013, as compared with $503.7 million a year ago. Adjusted income attributable to owners of the parent for the current quarter, which excludes the impact of certain acquisition and non-recurring reorganization-related charges, increased 79.4% to $12.2 million, as compared with the prior year quarter of $6.8 million. Cushman & Wakefield is majority-owned by EXOR S.p.A., the investment company controlled by the Agnelli family.

Second-Quarter Highlights


  • 15.6% gross revenue growth and 7.4% commission and service fee revenue growth
  • Double-digit commission and service fee revenue growth in the Corporate Occupier & Investor Services (“CIS”), Capital Markets and Valuation & Advisory (“V&A”) service lines
  • Double-digit CIS and Capital Markets commission and service fee revenue growth in all three regions, including the Americas, Europe, Middle East and Africa (“EMEA”) and Asia Pacific
  • Year-over-year increases in V&A commission and service fee revenue in the Americas and Asia Pacific of 24.0% and 15.4%, respectively
  • Adjusted EBITDA  was $28.9 million vs. $30.1 million in the prior year quarter
  • Adjusted net income increased $5.4 million, or 79.4%, to $12.2 million, as compared with $6.8 million for the prior year quarter

"Business momentum in the firm’s global service lines drove solid revenue gains in the second quarter,” stated Carlo Sant’Albano, Cushman & Wakefield’s Executive Chairman. “Our strong pipeline of transaction and assignment activity is a reflection of a more confident business environment and, subject to continuation of these positive trends, we expect to complete the year with continued growth. The focus and drive of our people to deliver the best quality results for our clients contributes tremendously to our success.”

In the first half of 2013, Cushman & Wakefield made significant progress in executing its long-term strategic plan by enhancing recurring revenue streams and delivering a consistent service mix across geographies. The firm drove growth across its global service lines as the first half progressed, as evidenced by the double-digit revenue increases in the CIS, Capital Markets and V&A businesses.

Recurring revenue performance was led by the CIS year-to-date revenue growth of 17.4% year-over-year following a number of notable wins from well known global companies and iconic brands, including its appointment to provide facilities management services for a 1.2 million square foot portfolio in China and winning the property management of a 17 million square foot portfolio in India. Other successes include a mandate to provide multiple services for a 12.5 million square foot global portfolio for Capital One. Cushman & Wakefield was also named site-wide property manager for the new World Trade Center site in Lower Manhattan and extended a major contract with a key UK client, Everything Everywhere. The number of square feet managed increased to 909 msf, as compared with 809 msf this time last year. Additionally, CIS’s acquisition of the Singapore-based project management company, Project Solution Group on July 1st, positions C&W as a market leader in project management services in the Asia Pacific region. 

Capital Markets executed many high profile assignments including advising Future Fund on the sale of its 33% share of The Bullring in Birmingham, U.K. to Hammerson and CPPIB for £307 million and Mitsubishi Estate Company on the sale of King Edward Court at 10 Paternoster Square, the headquarters building of the London Stock Exchange, to Oxford Properties for £235 million. In addition, Capital Markets arranged the sale of New England Executive Park, a 10-building, 1 million square-foot park in Burlington, Massachusetts for $216 million and the 400 million euro sale of Rosengardcentre, Denmark’s second largest shopping center.

Momentum in V&A’s business was driven by a national scope assignment of over 700 department stores, distribution centers and a corporate headquarters campus for a major U.S. retailer, as well as by a portfolio valuation mandate for the largest domestic real estate fund in India and a mandate from the iconic Australian retail brand, David Jones.

Cushman & Wakefield’s Leasing business remains well positioned to capture opportunities presented by recovering markets, as the Company won over one million square feet of new instructions as joint leasing agent on Brookfield’s iconic 16 story, 600,000 square foot development, Principal Place and EC2 and winning the leasing mandate on the Scalpel, WR Berkley’s 400,000 square foot iconic development. In the first half of 2013, Cushman & Wakefield was also named exclusive leasing agent for two major office towers in Manhattan, 75 Rockefeller Plaza and 1221 Avenue of the Americas and won a number of high profile retail leasing mandates, including several major shopping centers, such as the new 184,000 square foot TAU Gallery in Russia.

Cushman & Wakefield continued to invest in targeted acquisitions and key strategic hires in 2013 as part of its long-term strategic plan, including the acquisition of Project Solution Group and the hiring of 861 professionals through June of 2013 compared to 844 for the same period 2012.

Second-Quarter 2013 Results


Second-quarter 2013 gross revenue increased $78.8 million, or 15.6%, or 16.1% excluding the impact of foreign exchange, to $582.5 million, as compared with $503.7 million for the second quarter of 2012. Second-quarter 2013 commission and service fee revenue, which excludes reimbursed costs related to managed properties and other costs, increased $28.3 million, or 7.4%, or 7.9% excluding the impact of foreign exchange, to $409.9 million, as compared with $381.6 million for the prior year quarter.

From a service line perspective, commission and service fee revenue performance in the second quarter of 2013 which increased across all regions was driven by year-over-year, double-digit growth in our CIS, Capital Markets and V&A businesses, which were up 19.3%, 24.7% and 17.5%, respectively, partially offset by a modest decline in Leasing revenue of 3.8%.

Operating expenses increased $19.8 million, or 9.6%, to $225.8 million for the quarter ended June 30, 2013, as compared with $206.0 million for same period in the prior year, primarily due to increases in employment-related expenses, as well as other direct costs in line with the Company’s revenue growth and strategic plan initiatives. Also included in operating expenses for the current year quarter are certain acquisition and non-recurring reorganization-related charges of approximately $1.3 million, which are excluded from Adjusted EBITDA.

As a result, the Company’s operating income decreased by $4.4 million, or 20.6%, to $17.0 million for the quarter ended June 30, 2013, as compared with $21.4 million for the same period in the prior year.

Adjusted EBITDA, which excludes the impact of certain acquisition and non-recurring reorganization-related charges that are reported in operating expenses and other expense of $1.3 million and $5.8 million, respectively, was $28.9 million for the current year quarter, representing a slight decrease relative to EBITDA of $30.1 million for the prior year quarter, which was not impacted by any charges. EBITDA as reported decreased $8.3 million, or 27.6%, to $21.8 million for the current quarter, as compared with the prior year quarter.

Adjusted income attributable to owners of the parent, which excludes the tax-affected impacts of certain acquisition and non-recurring reorganization-related charges was $12.2 million for the current year quarter, representing an increase of $5.4 million, or 79.4%, over the income attributable to owners of the parent of $6.8 million for the prior year quarter. The income attributable to owners of the parent as reported increased $1.0 million, or 14.7%, to $7.8 million for the three months ended June 30, 2013, as compared with the prior year quarter. Despite the decrease in EBITDA as reported in the second quarter of 2013, as compared with the same period in the prior year, the income attributable to owners of the parent increased due to the income tax benefit of $0.3 million for the second quarter of 2013, as compared with an income tax expense of $8.6 million for the same period in the prior year.

Under U.S. GAAP , Adjusted EBITDA decreased $4.1 million, or 12.0%, to $30.0 million for the second quarter of 2013 as compared with EBITDA of $34.1 million in the prior year second quarter, while EBITDA as reported decreased $8.4 million, or 24.6%, to $25.7 million for the second quarter of 2013. Adjusted income attributable to owners of the parent improved $3.4 million, or 79.1%, to $7.7 million, as compared with income attributable to owners of the parent of $4.3 million in the prior year period. Income attributable to owners of the parent as reported improved $0.8 million, or 18.6%, to $5.1 million for the second quarter of 2013, as compared with the prior year period.

Year-to-Date 2013 Results


For the six months ended June 30, 2013, gross revenue increased $127.4 million, or 14.1%, or 14.9% excluding the impact of foreign exchange, to $1,033.9 million, as compared with $906.5 million for the same period in the prior year.

Commission and service fee revenue increased $42.8 million, or 6.3%, or 7.2% excluding the impact of foreign exchange, to $721.0 million for the six months ended June 30, 2013, as compared with $678.2 million for the prior year period. The commission and service fee revenue growth which increased across all regions was driven by year-over-year, double-digit growth in CIS, Capital Markets and V&A, which were up 17.4%, 19.6% and 13.4%, respectively, partially offset by a modest decline in Leasing revenue of 3.5%.

Operating expenses increased $31.8 million, or 7.8%, to $440.3 million for the first half of 2013, as compared with $408.5 million for the same period in the prior year, primarily due to increases in employment-related expenses, as well as other direct costs in line with the Company’s revenue growth and strategic plan initiatives. Also included in operating expenses for the current year six month period are certain acquisition and non-recurring reorganization-related charges of approximately $1.3 million, which are excluded from Adjusted EBITDA.

At the operating level, the Company’s results decreased by $4.3 million to an operating loss of $7.1 million for the first half of 2013, as compared with an operating loss of $2.8 million in the prior year period.

Adjusted EBITDA, which excludes the impact of certain acquisition and non-recurring reorganization-related charges that are reported in operating expenses and other expense, net of $1.3 million and $5.8 million, respectively, was $17.5 million for the current year-to-date period, representing a 5.4 % increase over EBITDA of $16.6 million for the same period in the prior year which was not impacted by any charges. EBITDA as reported declined $6.2 million to $10.4 million in the first half of 2013, as compared with the first half of 2012.

Adjusted loss attributable to owners of the parent, which excludes the tax-affected impacts of certain acquisition and non-recurring reorganization-related charges, was $10.2 million for the current year six month period, representing an improvement of $8.2 million, or 44.6%, over the loss attributable to owners of the parent of $18.4 million for the prior year six month period. The loss attributable to owners of the parent as reported improved by $3.8 million, or 20.7%, to $14.6 million for the six months ended June 30, 2013, as compared with the prior year six month period. Consistent with the three months ended June 30, 2013, despite the decrease in EBITDA as reported in the first six months of 2013, as compared with the same period in the prior year, the loss attributable to owners of the parent decreased due to the income tax benefit of $3.3 million for the first half of 2013, as compared with an income tax expense of $6.2 million for the same period in the prior year.

Under U.S. GAAP, Adjusted EBITDA decreased $3.5 million, or 19.2%, to $14.7 million as compared with EBITDA of $18.2 million in the prior year first half, while EBITDA as reported decreased $7.9 million, or 43.4%, to $10.4 million for the first half of 2013. Adjusted loss attributable to owners of the parent improved $5.4 million, or 31.4%, to $11.8 million, as compared with loss attributable to owners of the parent of $17.2 million in the prior year six month period. The loss attributable to owners of the parent as reported improved $2.8 million, or 16.3%, to $14.4 million for the first half of 2013, as compared with the prior year period.

In addition to the strong revenue performance and solid earnings results year-over-year, Cushman & Wakefield continued to maintain a strong balance sheet. As of June 30, 2013, the Company’s net debt position (U.S. GAAP consolidated debt less cash and cash equivalents) was $141.2 million, as compared with a net debt position of $159.6 as of June 30, 2012.

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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 nearly 15,000 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 $3.7 billion in assets under management globally. A recognized leader in local and global real estate research, the firm publishes its market information and studies online at www.cushmanwakefield.com/research-and-insight.

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.

Forward-looking statements speak only as of the date the statements are made. Undue reliance should not be made on any forward-looking statements. C&W assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If forward-looking statements are updated, no inference should be drawn that C&W will make additional updates with respect to those or other forward-looking statements.


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All numbers are reported under International Financial Reporting Standards (“IFRS”), except as noted.
Reconciliations of income (loss) attributable to owners of the parent (“net income (loss)”) to Adjusted income (loss) attributable to owners of the parent (“Adjusted net income (loss)”), as reported under IFRS and accounting principles generally accepted in the United States of America (“U.S. GAAP”) are provided in the section of this press release entitled “Non-GAAP Financial Measures”.

EBITDA represents earnings before net interest expense, income taxes and depreciation and amortization, while adjusted EBITDA removes the impact of acquisition-related charges of $2.4 million and non-recurring reorganization-related charges of $4.7 million. Our management believes that EBITDA and Adjusted EBITDA are useful in evaluating our operating performance compared to that of other companies in our industry, as they assist in providing a more complete picture of our results from operations. Because EBITDA and Adjusted EBITDA are not calculated under IFRS or U.S. GAAP, our Company’s EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

For a reconciliation of EBITDA and Adjusted EBITDA to income (loss) attributable to owners of the parent as reported under IFRS and U.S. GAAP, see the section of this press release titled “Non-GAAP Financial Measures”.

For the purpose of adhering to regulatory reporting requirements for EXOR S.p.A., Cushman & Wakefield’s majority shareholder, Cushman & Wakefield’s financial results are presented by EXOR under IFRS, as opposed to under U.S. GAAP. Cushman & Wakefield’s financial results under IFRS vary from those presented on a U.S. GAAP basis. The difference between the IFRS and U.S. GAAP measures of net income and loss is primarily due to the accounting for compensation–related taxes and charges, the non-controlling interests’ put option rights and certain income tax adjustments. The difference between the EBITDA under IFRS and the EBITDA under U.S. GAAP is attributable to those same items, excluding the income tax impacts.

Non-GAAP Financial Measures


The following measures are considered “non-GAAP financial measures” under SEC guidelines:

  • Adjusted income (loss) attributable to owners of the parent
  • EBITDA and Adjusted EBITDA

The Company believes that these non-GAAP financial measures provide a more complete picture of our results from operations and enhance comparability of current results to prior periods as well as presenting the effects of non-recurring charges in all periods presented. The Company believes that investors may find it useful to see these non-GAAP financial measures to analyze financial performance without the impact of non-recurring charges that may obscure trends in the underlying performance of its business.