Cushman & Wakefield plc

Welcome to the Cushman and Wakefield's fourth 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, please press star, then two. It is now my pleasure to introduce Megan McGrath, head of investor relations for Cushman and Wakefield. Ms. McGrath, you may begin the conference.

Thank you, and welcome to Cushman and Wakefield's fourth 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 in our presentation labeled Cautionary Note on Forward-Looking Statements. Today's presentation contains forward-looking statements based on our 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, definitions of non-GAAP financial measures, and other related information are found within the financial tables of our earnings release and the appendix of today's presentation. Also, please note that throughout the presentation, comparisons and growth rates are to the comparable periods of 2021 and in local currency unless otherwise stated. For those of you following along with our presentation, we will begin on page four. And with that, I'd like to turn the call over to our CEO, John Forrester.

Thanks, Megan, and thank you to everyone joining our call. With me today is Neil Johnson, our CFO, And I have also invited Kevin Thorpe, our chief economist, to participate in the Q&A portion of the call to provide insight into our macroeconomic and market outlook. I am proud of the results we have reported today, and I want to thank our team of exceptional professionals around the world. 2022 was a year like no other, and our team's ability to provide value to our clients in such volatile times is a testament to their hard work, and the strategic groundwork that we as a company have been laying to enhance the strength and resiliency of our platform. 2022 was, of course, a year of two contrasting halves, with record results in the first half offset somewhat by a second half that presented considerable macroeconomic headwinds. Despite the uncertain environment, Cushman and Wakefield reported strong results for the full year. Fee revenue of $7.2 billion and adjusted EBITDA of $899 million, growing 8% and 4% respectively, were record company highs. Our 2022 results reflect the consistent execution of our multi-year strategy of building a fully diversified global platform with a strong mix of highly recurring revenues. During the year, we continued to invest in long-term strategic growth areas, completing and integrating six acquisitions, and further enhancing our position in growing asset classes such as life sciences and logistics. A few notable highlights of the year include an exceptional growth year for our occupier outsourcing business as we won and onboarded several of the largest available mandates. Our new business pipelines continue to grow strongly with a mix of competitive second and third generation contracts and first generation outsourcing as corporates look to reduce costs. We had a successful year with our Greystone joint venture, and we remain excited about this partnership and continue to build out our full-service multifamily platform to drive market share gains in what is now the largest asset class for institutional investors in the United States. Additionally, we achieved double-digit growth in industrial leasing, while life sciences leasing grew by more than 60% versus the prior year, both reflecting our prior investments in these key growth areas. And lastly, despite the challenging environment in capital markets in the second half of the year, our overall market share for investment sales volumes in the U.S. increased 11 basis points in 2022, according to Real Capital Analytics. We finished third overall in total investment sales volumes, while moving up to second and fourth in the industrial and multifamily asset classes respectively. Our ability to gain market share, even during challenging times, demonstrates the quality of our teams and the impact of our strategic investments in the highest growth sectors in commercial real estate. These notable highlights were accomplished while further strengthening our balance sheet, putting us in an excellent position to take advantage of future growth opportunities. Our industry remains relatively fragmented in many markets, and times of volatility provide the opportunity to add depth to our global capabilities at attractive returns. Now I want to turn to 2023 and how the year might progress. We enter the year having experienced a significant downward shift in transactional momentum experienced in our fourth quarter results. Capital sat on the sidelines during the fourth quarter and is likely to remain there in early 2023. Enleasing the shifting macroeconomic resulted in lower overall activity across most asset classes. However, long-term commercial real estate fundamentals remain strongly intact. There is significant dry powder available for deployment, but market participants crave greater clarity on interest rate trajectory in order to facilitate price discovery. We believe that economic green shoots, such as continued moderation in inflationary data and a clearer path for those critical interest rate policies, could appear relatively soon. Whilst the leasing market is likely to remain under pressure in the short term, we anticipate demand for higher quality assets and locations to remain strong. In addition, we expect that over the next few years, an elevated level of expiring leases, roughly 300 million square feet per annum on par with levels observed in 2021 and 2022, will keep the office leasing market relatively active. We also continue to feel confident in the scale of opportunity and the capabilities we have built in other fast-growing asset classes. We expect continued positive absorption trends in industrial leasing in 2023, with employment in the industrial labor market over 1.3 million jobs higher than pre-pandemic levels, and with e-commerce, third-party logistics, and global reshoring trends continuing to grow. Our near-term transactional market caution does not apply to our large recurring revenue service lines. In the fourth quarter of 2022, our PM and FM businesses grew strongly, up 8% versus prior year, with solid growth across all segments of that business. In particular, our project management business had a strong year as we helped our clients reconfigure and redesign space, most notably in life sciences. We expect the positive momentum in our recurring revenue business lines to continue in 2023. demonstrating the power of our long-term diversification strategy. Looking across our large global platform, I can give some additional color on where we believe market tailwinds will occur in 2023. We have a leading presence in Greater China. With COVID-related restrictions now eased after a substantial term of muted activity, we are expecting a solid recovery this year. In addition, we expect the fast-growing India economy continue to expand as the property market matures. In Europe, challenges such as the Russia-Ukraine conflict resulted in difficult operating environment in 2022, especially towards the end of the year. Looking forward, we are seeing somewhat better inflation data points in Europe, and we believe that ESG drivers and a flight to quality could provide some resilience in the leasing markets as the year progresses. We have a world-class team in Europe that was able to successfully navigate 2022's challenges, and we are confident in their ability to continue to execute. We have high conviction in our long-term strategy and in the results of our investment in targeted growth areas designed to drive long-term shareholder value. Our clients come to us for our exceptional expertise, our unrivaled focus on meeting their needs, and our commitment to creating value in every engagement. and they will continue to rely on us to navigate this complex landscape that we all face. In our day-to-day operations, everything we do is built around our four strategic pillars. Client centricity, relentless operating excellence, being a leading people and talent platform, and increasingly leveraging our data with analytics that provide unique insight and value. We are focused on exciting growth sectors with a complete suite of services and solutions to both owner and occupier clients around the world. We're building market-leading platforms in these secular growth areas as we continue to transform our business by operating efficiently and at scale, all the while maintaining a focus on our client-first culture and commitment to diversity, equity, and inclusion. We have a well-balanced business model, and the foundational work we have put in place over the past several years positioned us for success in 2022. Given the current economic backdrop, we are being prudent in our investment and capital allocation decisions, prioritizing long-term growth areas, managing our cost base in order to drive further operating efficiencies, which Neil will touch on in more detail in a moment, and positioning the business to emerge out of the current environment, firing on all cylinders. We have an experienced management team that has led through previous economic cycles, and that knowledge base is invaluable. We also have exceptional leaders and employees around the world proven in the execution of our business priorities. We have the platform, the people, and the expertise to continue taking market share and delivering value to our clients and shareholders. And with that, I'd like to turn the call over to Neil to discuss in more detail our financial performance. Neil?