Cushman & Wakefield (NYSE: CWK) today reported financial results for the full year and fourth quarter ended December 31, 2021:

Full Year 2021 Financial Results

• Revenue of $9.4 billion and service line fee revenue of $6.9 billion increased 20% and 26%, respectively, versus the prior year.
  • Growth momentum continued in all segments and service lines, led by the Americas.
  • Continued rebound in Capital markets and Leasing with growth of 75% and 45%, respectively.
• Net income and earnings per share of $250 million and $1.10, respectively, reflect significant year-over-year growth.
  • Adjusted earnings per share of $2.04 was significantly ahead of prior year of $0.81.
  • Adjusted EBITDA of $886 million increased 76% with Adjusted EBITDA margin of 12.9% expanding nearly 365 basis points versus the prior year.
  • Achieved $125 million of gross savings from operating efficiency initiatives.
• Generated strong cash flows from operations of $550 million for the year.
• Significant liquidity as of December 31, 2021 of $1.8 billion consisting of cash and cash equivalents of $0.8 billion and availability under the Company's undrawn revolving credit facility of $1.0 billion.

Fourth Quarter 2021 Financial Results

• Revenue of $2.9 billion and service line fee revenue of $2.2 billion increased 27% and 35%, respectively, versus the prior year.
  • Leasing and Capital markets revenue surpassed pre-pandemic levels.
• Net income and earnings per share were $146 million and $0.64, respectively.
  • Adjusted earnings per share was $0.94 more than double from $0.43 in the prior year.
  • Adjusted EBITDA of $348 million increased 76% and Adjusted EBITDA margin of 15.7% increased nearly 365 basis points versus the prior year.

Completed Key Strategic Investments

• Strategic joint venture with Greystone to deliver leading multifamily agency lending & servicing platform, investing $500 million to acquire a 40% stake.
• Investment of $150 million in WeWork as part of an exclusive strategic partnership to provide clients best-in-class workplace experience.

“Our teams' relentless focus on operational excellence has had a profound impact on the profitability of the Company, which registered a record high for 2021 as margins increased nearly 365 and 150 basis points compared to 2020 and pre-pandemic levels of 2019, respectively. Equally encouraging was the strength across our entire portfolio of service offerings, particularly brokerage. We are well positioned to build on the incredible momentum of our business and industry as owners and occupiers continue to rely on Cushman & Wakefield as a trusted business partner,” said John Forrester, Cushman & Wakefield's CEO.

“It was an incredible six years serving Cushman & Wakefield as CEO and leading our exceptional employees. I look forward to continuing to work with John as our new CEO,” said Brett White, Cushman & Wakefield's Executive Chairman. "2021 was a record year for Cushman & Wakefield as we achieved significant revenue, adjusted EBITDA and margin growth, as well as strong operating cash flow. Additionally, we executed our operating efficiency programs and invested in key strategic partnerships that further enable us to deliver significant value for our clients and shareholders for years to come.”

Fourth Quarter Results (unaudited)

Revenue

Revenue was $2.9 billion, an increase of $610.6 million or 27% compared to the fourth quarter of 2020. Revenue growth in Capital markets and Leasing of 80% and 65% on a local currency basis, respectively, reflects the recovery of brokerage activity, particularly in the Americas, led by the logistics and multifamily sectors. Revenue growth in Property, facilities and project management, Valuation and other, and Gross contract reimbursables of 7%, 11%, and 6% on a local currency basis, respectively, reflects the continued stability of the business, along with owners and occupiers' reliance on and confidence in the Company's industry-leading capabilities and thought leadership during the pandemic recovery.

Costs of services

Costs of services of $2.2 billion increased $423.3 million or 23% compared to the quarter ended December 31, 2020. Cost of services provided to clients increased 28% on a local currency basis principally due to higher variable costs including commissions, direct labor and compensation costs as a result of the recovery of brokerage activity. Cost of gross contract reimbursables increased 6%, driven by the continued stability and growth in our Property, facilities and project management service line. These increases were partially offset by operating efficiency initiatives. Total costs of services as a percentage of total revenue were 77% as compared to 79% for three months ended December 31, 2021 and 2020, respectively.

Operating, administrative and other

Operating, administrative and other expenses of $359.2 million increased by $48.8 million compared to the quarter ended December 31, 2020, principally due to higher compensation costs and annual bonuses for non-fee earners. This increase was partially offset by operating efficiency initiatives. Overall, as a percentage of total revenue, operating, administrative and other costs were 12% as compared to 14% for the three months ended December 31, 2021 and 2020, respectively.

Depreciation and amortization

Depreciation and amortization of $43.8 million decreased $8.3 million compared to the fourth quarter of 2020, due to the complete amortization of certain merger-related customer relationships that occurred in the third quarter of 2020.

Restructuring, impairment and related charges

Restructuring, impairment and related charges were $5.0 million, a decrease of $7.1 million compared to the fourth quarter of 2020, due to a decline in severance and other separation benefits incurred in connection with the Company's strategic realignment of the business.

Interest expense, net

Net interest expense was $47.5 million, an increase of $3.9 million compared to the fourth quarter of 2020 primarily due to lower interest income in 2021.

Earnings from equity method investments

Earnings from equity method investments of $10.3 million increased by $7.8 million compared to the quarter ended December 31, 2020, due to the performance of our joint venture with Vanke Service in APAC, and earnings recognized from our joint venture with Greystone in the Americas which was finalized in December 2021.

Other income, net

During the quarter ended December 31, 2021, we recognized a loss of $14.6 million, which principally reflects an unrealized loss on fair value investments of $17.7 million, partially offset by dividend income.

Provision for income taxes

Provision for income taxes for the fourth quarter of 2021 was $51.8 million on the earnings before income taxes of $197.6 million. For the fourth quarter of 2020, the provision for income taxes was $82.7 million on earnings before income taxes of $55.4 million. The year over year decline was primarily driven by the benefits of utilizing historical net operating losses and tax credits, and a lower effective tax rate.

Net income and Adjusted EBITDA

Net income of $145.8 million principally reflects the improvements of brokerage activity as Leasing and Capital markets revenue increased 65% and 80% on a local currency basis, respectively. Revenue in Property, facilities and project management and Valuation and other also increased by 7% and 11%, respectively.

Adjusted EBITDA of $347.7 million increased by $149.6 million or 77% on a local currency basis, primarily due to the impact of revenue growth in all service lines, particularly Leasing and Capital markets, and savings generated by operating efficiency initiatives. As a result, Adjusted EBITDA margin, measured against service line fee revenue, was 15.7% for the fourth quarter of 2021, compared to 12.0% in the fourth quarter of 2020.

Full Year Results (unaudited)

Revenue

Revenue was $9.4 billion, an increase of $1,545.0 million or 20% compared to the year ended December 31, 2020. We generated strong revenue growth across all service lines including brokerage where revenue exceeded pre-pandemic levels. Revenue growth in Capital markets and Leasing of $580.5 million and $567.8 million, respectively, reflects the recovery of brokerage activity, particularly in the Americas led by the logistics and multifamily sectors. Revenue growth in Property, facilities and project management, Gross contract reimbursables and Valuation and other of $215.7 million, $119.7 million, and $61.3 million, respectively, reflects the continued stability of the business, along with owners and occupiers' reliance on and confidence in the Company’s industry leading capabilities and thought leadership during the pandemic recovery. Geographically, Americas, EMEA and APAC contributed 85%, 9% and 6%, respectively, of the consolidated revenue growth.

Costs of services

Costs of services of $7.4 billion increased $993.1 million or 15% compared to the year ended December 31, 2020. Cost of services provided to clients increased 18% on a local currency basis principally due to higher variable costs including commissions, annual bonuses for non-fee earners and direct labor, and higher compensation costs overall, as a result of the recovery of brokerage activity. Cost of gross contract reimbursables increased 5% driven by the continued stability and growth in our Property, facilities and project management service line. These increases were partially offset by operating efficiency initiatives. Total costs of services as a percentage of total revenue were 79% for 2021 as compared to 82% for 2020.

Operating, administrative and other

Operating, administrative and other expenses of $1.2 billion increased by $105.9 million compared to the year ended December 31, 2020, principally due to higher compensation costs and annual bonuses for non-fee earners. This increase was partially offset by operating efficiency initiatives. Overall, as a percentage of total revenue, operating, administrative and other costs were 13% for 2021 as compared to 14% for 2020.

Depreciation and amortization

Depreciation and amortization of $172.1 million decreased $91.5 million compared to the prior year due to the complete amortization of certain merger-related customer relationship intangibles that occurred in the third quarter of 2020.

Restructuring, impairment and related charges

Restructuring, impairment and related charges were $44.5 million, a decrease of $12.6 million or 22% compared to the year ended December 31, 2020. Severance and employment-related charges taken in connection with the Company's operating efficiency initiatives and strategic realignment of the business declined from the prior year by $29.6 million, partially offset by an increase in impairment charges of $15.2 million.

Interest expense, net

Net interest expense was $179.5 million, an increase of $15.7 million or 10% compared to the year ended December 31, 2020 primarily due to the issuance of the 2020 senior secured notes in the second quarter of 2020 and lower interest income in 2021.

Earnings from equity method investments

Earnings from equity method investments of $21.2 million increased by $12.9 million compared to the year ended December 31, 2020, due to the performance of our joint venture with Vanke Service in APAC, and earnings recognized from our joint venture with Greystone in the Americas which was finalized in December 2021.

Other income, net

Other income, net of $1.2 million decreased $30.8 million compared to the prior year. In 2020, we recognized a gain of $36.9 million as a result of the formation of the Cushman & Wakefield Vanke Service joint venture in APAC, which was partially offset by losses incurred from the disposal of holding companies in connection with the Company's strategic realignment of the business. In 2021, other income reflects dividend income partially offset by a net unrealized loss on fair value investments of $10.4 million.

Provision for income taxes

Provision for income taxes for 2021 was $89.9 million on the earnings before income taxes of $339.9 million. For 2020, the provision for income taxes was $43.9 million on a loss before income taxes of $176.6 million. The increase in tax expense from the prior year was primarily driven by higher pre-tax earnings, as well as the impact of benefits from establishing a valuation allowance in 2020.

Net income and Adjusted EBITDA

Net income of $250.0 million principally reflects the improvement of brokerage activity as Leasing and Capital markets revenue increased 43% and 74% on a local currency basis, respectively. Revenue in Property, facilities and project management and Valuation and other also increased by 6% and 10%, respectively.

Adjusted EBITDA of $886.4 million increased by $382.1 million or 73%, on a local currency basis, primarily due to the impact of revenue growth in all service lines, particularly Leasing and Capital markets, and $125 million of savings generated by operating efficiency initiatives. As a result, Adjusted EBITDA margin, measured against service line fee revenue of 12.9% for the year ended December 31, 2021, increased 365 basis points as compared to 9.2% in the year ended December 31, 2020.

Balance Sheet

• Liquidity at the end of the year was $1.8 billion, including availability on our undrawn revolving credit facility of $1.0 billion and cash and cash equivalents of $0.8 billion.
• Net debt as of December 31, 2021 was $2.4 billion including the Company's outstanding 2018 First Lien debt of $2.6 billion and the 2020 Notes of $0.6 billion, net of cash and cash equivalents of $0.8 billion.

Conference Call

The Company’s Fourth Quarter 2021 Earnings Conference Call will be held today, February 24, 2022, 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 877-407-9208 for U.S. callers and 201-493-6784 for international callers. The Conference ID is 13726162. 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 Company’s Investor Relations 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 50,000 employees in over 400 offices and approximately 60 countries. In 2021, the firm had revenue of $9.4 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 global economic or market conditions and changes in government policies, 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 Annual Report on Form 10-K for the year ended December 31, 2021.

Segment Results

The following tables summarize our results of operations for our operating segments for the three months ended and years ended December 31, 2021 and 2020.

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:

1. Segment operating expenses and Fee-based operating expenses;
2. Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") and Adjusted EBITDA margin;
3. Adjusted net income and Adjusted earnings per share; and
4. Local currency.

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. Segment operating expense 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 ("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.

The interim financial information for the three months ended December 31, 2021 and 2020 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, 2021.

Please see the following tables for reconciliations of our non-GAAP financial measures to the most comparable GAAP measures.