Cushman & Wakefield plc

Welcome to the Cushman and Wakefield fourth quarter 2023 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. To ask a question, you may press star then one on your telephone keypad and to withdraw from the question queue, 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 & Wakefield's fourth quarter 2023 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 Notes 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 in the appendix of today's presentation. Also, please note that throughout the presentation, comparisons and growth rates are to the comparable periods of 2022 and in local currency unless otherwise stated. And with that, I'd like to turn the call over to our CEO, Michelle McKay.

Thank you, Megan. It's hard to believe this is just my third earnings call as CEO of Cushman & Wakefield, given the pace of change since I became the CEO in July of last year. Since then, we've looked at every aspect of our business, We have updated and mapped out long-term strategic plans for the first time since the IPO in 2018, and we're using data to make tough decisions around spending and capital allocation, which will set us all up for future growth. And we took actions toward deleveraging with our two refinancing transactions last year, and we plan to begin the process of reducing our leverage later this quarter. You can see the impact of the changes that we've made in our 2023 results. We've generated $570 million in adjusted EBITDA and $100 million of free cash flow, up from essentially a break-even number in 2022. And we're not done. We made extraordinary strides last year in a short period of time, operating with rigor, executing with speed and urgency, and never settling, continuing to drive the business forward. And we haven't come this far to stop now. Every day we are working to improve our financial position and flexibility and to create momentum both internally and with our clients so that we are poised to capitalize when the market inevitably rebounds. We've already started to see some green shoots. In the fourth quarter, leasing revenue grew year over year in all three of our reported regions due to growth in large office and industrial deals in the U.S. and strength in Europe and APAC. Our services businesses remained resilient, growing revenues at 3% in 2023, on top of double-digit growth in 2022. But as I've mentioned before, we are not satisfied with this level of growth. But thanks to the detailed strategy work we completed last year, we're entering 2024 with a better understanding of each of our services businesses and a clear focus on strengthening both long-term growth and profitability. Now, people have been asking about our view on 2024. Let me start with capital markets. As a longtime real estate investor, I know it's not only the absolute level of interest rates that matter, although it's important, but what also matters is the shape of the yield curve. With the inverted curve that we have today, people are hesitant to borrow and lend long. Once the Fed begins to cut rates, which seems likely to happen later this year, we've set the yield curve to begin a process of normalizing. This should help people get more comfortable about taking 5-, 10-, and 15-year risk, providing a pathway to a more active market. And while we anticipate a moderate initial reduction in interest rates later this year, we do feel closer to the restarting of capital markets activity than we have in some time. Still, even before the Fed cuts, there is a creative, profitable opportunity for us to pursue. Every week we hear about more funds being raised for real estate investment. There is roughly $400 billion of dry powder in the market waiting to deploy. And even in distress, there's opportunity for Cushman & Wakefield. Our new real estate optimization team helps our clients evaluate, monitor, and address potentially stressed or distressed assets. Now moving on to leasing. We expect stable to modest growth in this segment in 2024, supported by a solid level of lease expiration. And even with many companies still permitting hybrid work, there's 10.5 billion square feet of occupied office space globally. And finally, we see significant opportunities to organically expand our services businesses, thanks to our global scale and client-centric strategy. We remain disciplined and focused on accretive growth. For example, we recently won a long-term contract with a large global financial services company. They weren't looking for the biggest services provider, but for a thoughtful partner to help create and execute innovative solutions designed specifically for them, which is why they chose Cushman. And in another recent win, the deal never went to RFP. We won on our reputation, our relationships, and our ability to handle complicated situations. Through our commitment to streamlining our cost structure, enhancing our balance sheet and cash flow, and strengthening our client-facing initiatives, we are poised to create meaningful value as the market returns to growth. We will never settle. We're often seen as the scrappy challenger in this market, out-thinking others, brave in our decision-making and advice. The people of Cushman & Wakefield proudly lean into today's market challenges because we don't run away from our clients' biggest challenges, we run to them. And with that, I'll hand the call over to Neil.