Cushman & Wakefield plc

Greetings. Welcome to Cushman and Wakefield's first quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star and then the number two. It is now my pleasure to introduce Mr. Lynn Texter, Head of Investor Relations and Global Controller for Cushman & Wakefield. Mr. Texter, you may begin the conference.

Thank you, and welcome again to Cushman & Wakefield's first quarter 2021 earnings conference call. Earlier today, we issued a press release announcing our financial results for the period. This release, along with today's presentation, can be found on our investor relations website at ir.cushmanwakefield.com. Please turn to the page labeled Forward-Looking Statements. Today's presentation contains forward-looking statements based on current forecasts and estimates of future events. These statements should be considered estimates only, and actual results may differ materially. During today's call, we will refer to non-GAAP financial measures as outlined by SEC guidelines. Reconciliations of GAAP to non-GAAP financial measures and definitions of non-GAAP financial measures are found within the financial tables of our earnings release and appendix of today's presentation. Also, please note that throughout the presentation, comparison and growth rates are to comparable periods of 2020 and are in local currencies. For those of you following along with our presentation, we'll begin on page five. And with that, I'd like to turn the call over to our Executive Chairman and CEO, Brett White. Brett?

Thank you, Len, and thank you to everyone joining us today. Before starting with our first quarter performance, I'd like to again thank our team of Cushman & Wakefield professionals around the world for their continued determination and service to our clients throughout the pandemic. Since the beginning of COVID-19, we've been recognized as a leader in the industry as companies continue to turn to Cushman & Wakefield for our expert advice to help them navigate these challenging times. We will continue to play that role as we help our clients through this recovery. We are pleased with our first quarter performance and are off to a very strong start to 2021. For the quarter, we reported fee revenue of $1.3 billion, down 1% to prior year, but well ahead of expectations. Adjusted EBITDA was $100 million for the quarter, 38% ahead of prior year, as a result of our continued delivery of significant cost savings across the business. Revenue trends were better than expected across all segments and service lines. Brokerage revenue was down 7% for the quarter, with leasing and capital markets down 5% and 10%, respectively, year over year. This is the lowest rate of year-over-year percentage decline we have seen since the trough in the second quarter of last year. PMFM service lines continue to be a source of stability. These contractual fee-based revenue streams represent just over half of the total portfolio. Throughout the pandemic, our teams have been supporting our clients by keeping essential buildings open, reconfiguring offices and retail outlets for social distancing, and providing enhanced cleaning and facility services to ensure buildings are safe for tenants. In addition, our global occupier services business continues to win new assignments and renew existing client engagements for outsourcing services in the first quarter. On balance, we expect to continue to benefit from these trends as Cushman & Wakefield is one of the three large firms that provides comprehensive and scaled outsourcing solutions on a global basis. As we stated on our last earnings call, property recovery continues to be uneven with strong performance in some sectors, weak performance in others, and varying degrees in between. The industrial sector is one of the clearest examples of a strong performer. Continuing to benefit from the shift to online shopping, the U.S. industrial sector absorbed more than 82 million square feet of space in the first quarter of 2021. In fact, the last two quarters were among the highest readings on record in terms of demand for industrial warehouse space. In addition to industrial, data centers, life sciences, cell storage, apartments, are other sectors that are benefiting from secular shifts and accelerating trends. And we expect these strong trends to continue for the remainder of 2021 and beyond. In office, near-term fundamentals remain less clear as businesses continue to assess space requirements, which of course is difficult to do in the middle of a pandemic. That said, we do see green shoots emerging. The first is on office using employment, which is clearly rebounding as the economy gains strength. Since the low point in April 2020, the U.S. has added back 1.9 million office using jobs to March 2021, and most economists expect strong job growth to continue from this point forward. Now that the U.S. economy is creating office jobs again, even assuming more people will work remotely post COVID, it is only a matter of time before office buildings repopulate. In other words, our thesis that the office sector will fully recover from this event remains intact. The second green shoot I'll mention is that as the vaccine gets rolled out to more people, we are clearly seeing an increase in tenant tour activity of office space. Our internal tracking shows that tenant tours were up significantly in March versus the beginning of the year. Granted, tour activity is still down from pre-pandemic levels, but it's definitely trending in the right direction. The increase in tour activity is a solid leading indicator for accelerated leasing activity. Also, As we noted at year end, we saw an abnormally high percentage of short-term renewals, as well as a disruption to the normal churn in leasing. These pent-up demand dynamics should translate into an increase in leasing volume activity later this year and into 2022, as there is a broader return to the office. Following near record volume for the month of December, Capital markets continues to show encouraging momentum with first quarter volume of $97 billion, according to RCA, which was well above the volume reported in the second and third quarter of 2020, despite Q1 being the seasonally slowest period of the year. Demand drivers remain favorable with low interest rates, attractive yield gap, that is the cap rate spread over long-term bonds, pent-up demand for real estate assets, and pent-up demand from cross-border capital. Additionally, while organizations continue to sort out the flexible work dynamic, it is evident that the need for strategic advice and problem solving has increased significantly, which bodes well both for our outsourcing and transactional businesses as companies navigate through these decisions. In short, Volatility in a recovery is a very good thing for a business like ours. Last year, we hosted an investor day in early March, just as COVID was becoming a global event. At that time, we unveiled the results of nearly six months of work that we had done to strategically realign the business to enable us to become a leaner, faster, more efficient organization. We identified a number of operating efficiency initiatives to optimize each of our businesses across our entire organization. These actions represent permanent savings that include initiatives ranging from streamlining our organization to better match our service delivery model to the optimization of business functions through automation and technology. In connection with these actions, we achieved $125 million of permanent savings last year and are on track to achieve an additional $125 million in 2021. These efforts are a key strategic advantage that will enhance our agility and speed in the marketplace, as well as improve our profitability and build significant operating leverage in the business compared with even just one year ago. As we look forward and as we enter 2022, we will have executed a significant reduction of permanent costs in the range of $250 million over the past two years. But more directly, a rising tide should lift every competitor in our business, but we firmly believe the significant actions we will have taken to optimize our operating model will disproportionately aid and accelerate our margin expansion in the coming years. Lastly, before I turn the call over to Neil, I'd like to emphasize one last point about Cushman & Wakefield that's been slightly overlooked the past year. We are on the forefront with industry-leading capabilities in terms of acquisitions and integration. We have completed 27 in-fill M&A deals since the merger and have a demonstrated track record of accretive M&A and broker team onboarding. We have a distinct advantage of one of the few firms that can deploy solutions on a global scale while also growing our platform as a result of the additional white space to fill across geographies and service lines. I bring this up because in our experience, periods of volatility can drive opportunity for companies that are well capitalized and strategic. As you know, in 2020, we solidified an already strong liquidity position and currently have over $2 billion of available capital to augment our growth through acquisition as opportunities avail themselves during this recovery. Despite the near-term challenges faced in the industry and what will likely be an uneven recovery, we believe there will be consolidation of share to firms like Cushman and Wakefield that have the capability resources, and scale to solve the challenges our clients face each day. I continue to be very proud of our team and our execution throughout this challenging period. Krishman and Wakefield's holistic expertise, global market intelligence, and thought leadership have never been more important to our clients. Thank you again. And with that, let me turn the call over to Neil to detail our quarter. Neil?