Cushman & Wakefield plc

welcome to cushman and wakefield second quarter 2022 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 press the pound key followed by two it is now my pleasure to introduce Len Texter, Head of Investor Relations, Global Controller and Chief Accounting Officer for Cushman & Wakefield. Mr. Texter, you may begin the conference.

Thank you, and welcome again to Cushman & Wakefield's second quarter 2022 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 cautionary note on forward-looking statements. Today's presentation contains forward-looking statements based on our current forecast 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, definitions of non-GAAP financial measures, and other related information 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 2021 and are in local currency unless otherwise stated. For those of you following along with our presentation, we will begin on page four. With that, I'd like to turn the call over to our CEO, John Forrester.

Thank you, Len. And thank you to everybody joining our call today. I am pleased to announce another exceptionally strong quarter of earnings. We posted record results for the second quarter, reporting fee revenue of $1.9 billion and adjusted EBITDA of $263 million, reflecting year-over-year growth of 21% and 23%, respectively. Over the last 12 months, we have now delivered 27% revenue growth, adjusted EBITDA growth of 64%, and margin expansion of approximately 315 basis points. The strength of our comprehensive, diverse and resilient global service offering is evident in our performance and highlights the progress we have made in our multi-year strategy of prioritizing investment in the long-term growth sectors of our industry. Our focus to grow our company, create value and generate strong performance is unwavering and our performance this quarter reflected it. in terms of service line performance recurring revenues in our property facility and project management service line continue to generate very pleasing growth from both occupier and investor clients increasing 16 in the second quarter year over year these services comprise nearly half of our total fee revenue and historically have proven to be increasingly resilient through times of volatility In fact, we've seen clients often accelerate strategic decision making in harsher economic environments. Our project management business has also grown significantly, up 45% in the second quarter versus prior year, as occupiers and investors alike re-evaluate their post-COVID occupancy requirements and sustainability objectives. On our last earnings call, I noted that project management, like many of our operations, benefit from client activity, not just incremental changes in the amount of space occupied. And this pickup in activity can be seen in our growth. In addition, our global occupier outsourcing platform continues to win mandates of increasing scale as clients turn to Cushman & Wakefield to help reduce costs and drive further real estate operating efficiencies within their organizations. Our leasing business has been strong through the first half. In the office sector, the leasing environment continues to improve steadily. U.S. office using employment increased 1.9%, adding 635,000 jobs in the first half. There are now 1 million more office-using workers in the U.S. as of June 2022 than prior to the commencement of the pandemic. And as we know, more jobs over time means more demand for all types of useful space, particularly office. And more broadly, global office leasing activity continues its recovery, as preliminary data shows an increase of 21% in the first half of 2022 over the prior year, while about 50% of office markets globally registered positive demand for office space in the first half. Part of this growth and recovery is attributable to the emergence of areas like life sciences, which now represents around 10% of all U.S. leasing. Lastly, within the office sector, we continue to observe other trends consistent with pre-pandemic norms, specifically the split of new leases versus short-term renewals and average lease lengths that are both reverting back to pre-pandemic levels. The industrial logistics sector continues to perform strongly, given a persistent supply-demand imbalance driven by the secular ramp in e-commerce activity. As of the second quarter, U.S. vacancy rates are at a new record low of 3.1%, and rental growth increased 19% year over year. For the first half of the year, the market has absorbed over 236 million square feet, which is broadly in line with the record-setting levels of 2021. At the start of this year, many commentators reflected concerns that the logistics market would face supply shortages. The fact that some high-profile occupiers have pushed space back into the market has provided other active tenants the opportunity to participate. In terms of capital markets fundamentals, capital inflows to the commercial real estate sector remain elevated, given the general attractiveness of real estate assets across multiple sectors, despite rising interest rates. As evidenced by real capital analytics, U.S. transaction volumes are $190 billion, up 17% for the second quarter and above pre-COVID levels. Additionally, Cushman & Wakefield continues to take share, with our transaction volumes rising 116 basis points in the quarter compared to prior year. Our strategic investments made over recent years in those property sectors which we believe would benefit from outsized growth are reflected in our strong performance and will continue to drive further value for our clients and shareholders. We are capitalizing on the growth in the U.S. multifamily sector by building an industry-leading multifamily full-service platform with further opportunity for continued growth globally. The asset class landscape is evolving. According to RCA, multifamily comprised about 45% of the overall U.S. capital transaction volume in the quarter. While our business continues to perform with deep-rooted momentum, we have at least not yet seen material evidence of changing client behavior. However, we are monitoring the changing macroeconomic environment and growing uncertainty closely. While there are areas within our industry that may be impacted by economic volatility, we continue to see strengths across the fundamentals of our portfolio. In addition, I would reiterate that we continue to build our capabilities and scale in key sectors where expansion is anticipated despite the potential of more difficult economic environments ahead. Areas such as life sciences, biotechnology, and data centers. This all positions Cushman and Wakefield better than at any time in our history, regardless of economic environment. In addition, our exceptional leaders and dedicated teams in the field continue to deliver exceptional service every day to our clients around the world. I would like to highlight a couple of examples that illustrate both our leadership in the industry, but also the exceptional performance of our teams. Cushman & Wakefield is among the first group of companies to have its net zero target approved by the SBTI's recently launched Net Zero Corporate Standard, the world's first framework for corporate net zero target setting in line with climate science. This is an important progression of our long-standing commitment to sustainability and our journey to take bold action for the future of our firm, our industry and society. Our European, Middle Eastern, and Africa operations have long been a center of excellence and leadership in the many diverse and unique markets found in the region. But I'm particularly pleased to congratulate our talented leaders in their discipline and focus, which has resulted in our business achieving industry-leading earnings and profit margins. Finally, I'd like to touch on our capital allocation framework. We are continuously weighing the most attractive returns to drive shareholder value. Our continuous improvement initiatives, highly accretive M&A record, and our talent recruiting capabilities, alongside our strong balance sheet, have positioned us extremely well. We will continue to deploy capital into the most accretive areas as opportunities present themselves, whether that be through service or market expansion or back to our shareholders. We remain confident about the performance of the business and our progress against our strategy in the ever-expanding market for our services. And with that, I'd like to turn the call to Neil to discuss our financial performance. Neil.