Good afternoon, and welcome to the Cushman & Wakefield Q1 2023 Earnings Conference Call. All participants will be in a listen-only mode. Should you need any assistance, please signal a conference specialist by pressing the star key followed by the zero. After today's presentation, there'll be an opportunity to ask questions. To ask a question, you must press the star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to run the conference over to Megan McGrath, Head of Investor Relations. Please go ahead. Thank you, and welcome to Cushman & Wakefield's Q1 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 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 in the appendix of today's presentation. Please note that throughout the presentation, comparisons and growth rates are to the comparable periods of 2022 and 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 Chief Executive Officer, John Forrester. Thanks, Megan, and thank you to everybody joining our call. First, I want to thank all our employees around the world that continue to deliver outstanding service and value to our clients through such fluid times. The Q1, as anticipated, experienced similar trends to the Q4 of 2022, with significantly lower transaction activity versus the prior year, but continued strength in our property and facilities management business. Fee revenue of $1.5 billion and Adjusted EBITDA of $61 million reflect the quarter's muted higher margin transactional activity, which we believe is currently sitting at or near trough levels. The current macro environment remains complex, with elevated inflation and interest rates, as well as recent banking stress, all contributing in effect to recessionary conditions in commercial real estate. We expect the near term outlook to remain challenging. An increasingly complicated economic and real estate environment is resulting in an ongoing flight to quality, and we believe that diversified global service providers of true scale, like Cushman & Wakefield, are best positioned to successfully navigate through economic cycles for both clients and talent. Turning to capital markets. Capital continues to remain on the sidelines as banking industry volatility at the end of the quarter increased overall market uncertainty and further tightened lending standards. Whilst in this constrained environment, we are observing meaningful appetite from our clients to deploy capital when market conditions improve, and we are meeting regularly with them to review portfolios, discuss financing options, and help strategically plan for the recovery. To reiterate, it is a matter of when, not if, deal volumes return, and we are allocating our resources to areas where deals are happening and finding new areas of opportunity, such as our recently created asset optimization practice focused on delivering investors an integrated, tailored, and strategic solution across underperforming assets. On the leasing side, consistent with our expectations, total office leasing activity in the U.S. trended lower sequentially and year-over-year in the Q1. Occupiers have grown increasingly cautious in their leasing decisions and are looking for cost-cutting opportunities as the odds of a recession remain elevated and as hybrid work strategies continue to filter through. Although we expect these headwinds to continue in the near term, we also think it's important to note that the impact of more aggressive hybrid work models started nearly three years ago, and as of today, there is still some 10.5 billion sq ft of occupied office space globally. This supports our view that although the office sector faces challenges, it will remain a preeminent asset class into the future. It's critical to company functionality, and its sheer size will continue to create opportunities for our firm to execute on transactions and advise our clients through the ongoing evolution. Notwithstanding this, other large asset classes will provide both growth and greater resilience. In the industrial leasing sector, industry fundamentals are strong, with vacancies remaining near all-time lows and well below historical averages. The industrial sector, like office, continues to see a flight to quality. During the Q1, U.S. industrial tenants executed nearly 60 million sq ft of deals in facilities built since 2020, representing just under half of the total. Net absorption in Q1 did slow relative to the outsized growth experienced over the previous two years. Although some moderation is expected, we anticipate the industrial sector to remain healthy, supported by long-term secular growth trends such as e-commerce and consumer spending. Looking ahead, we continue to look for green shoots in both interest rate clarity and the macroeconomic environment. At this point, we are not anticipating anything material this year. Regardless of the ultimate inflection point, the medium and long-term market opportunity for our business is substantial, and we are positioning ourselves to achieve incremental market share gains when transactional activity resumes. Moving on to our property, facilities and project management business. This continues to perform well and demonstrate its resiliency in the current environment, most notably in facilities and project management, which both achieved double-digit growth in the quarter. Our PMFM business has benefited both from the build-out of our global outsourcing capabilities to take share in this fragmented market, as well as our diversification into asset classes such as multifamily and property management and life sciences in project management. Our new business pipeline remains strong, highlighting the long-term positive secular growth trends in this business, even during a challenging time in the transactional market. In summary, there is no doubt that this is a challenging operating environment for all participants in commercial real estate. However, our global capabilities, deep expertise and operational efficiency will continue to steer us through the near term headwinds and, more importantly, allow us to emerge with strength and improved market positioning. Now I'd like to turn the call over to Neil to discuss in more detail our financial performance. Neil. Thank you, John. Good afternoon, everyone. For the Q1, fee revenue of $1.5 billion declined 10% versus prior year. Adjusted EBITDA of $61 million was down 71% versus a record Q1 2022. Adjusted earnings per share for the quarter was a loss of $0.04, a decrease of $0.52 versus prior year. Our revenue performance in the Q1 reflected continued weakness in capital markets, which were down 50%, similar to the decline experienced in the Q4 of 2022. Leasing revenue declined 19% versus the prior year. This decline was against a strong Q1 of 2022, when leasing revenue was up 58% versus Q1 2021. Office leasing activity declined as occupiers continued to delay decision making and reduce CapEx spend. The industrial sector performed relatively well, but was lower against the challenging prior year comparison. Performance in our PMFM service offering was strong, with PMFM in total up 8%, especially in our facilities management and project management businesses. Valuation and other declined 12% in the quarter as the slowdown in transactions resulted in lower valuation activity. The decline in Adjusted EBITDA was principally driven by three main components. First, the most significant component was the decline in high-margin transactional brokerage business, as well as our Greystone joint venture, which experienced lower multifamily lending volumes. Second, the operating expenses in the quarter were higher year-over-year due to inflation and prior year investment wrap from the high growth environment of early 2022. We are focused on our cost initiatives and as we move through the balance of the year, we expect these inflation and investment impacts to moderate and to be fully offset by our cost actions. Lastly, we experienced roughly $10 million in discrete headwinds in the quarter, primarily from the non-occurrence of government subsidies in our APAC business versus the prior year, as well as foreign currency headwinds. In terms of our cost saving plans, we achieved approximately $21 million of cost savings in the Q1 and are currently on track to achieve the full $90 million cost saving target in 2023. Given the current environment, we are further tightening our spending on discretionary costs and are actioning additional items that will allow us to operate more efficiently. Turning to our segment results for the quarter. In the Americas, we experienced declines in brokerage across all asset types due to the higher interest rate environment and macroeconomic headwinds. These declines were most prominent in the office sector. Declines in brokerage were partially offset by continued resiliency in PMFM, most notably in facilities and project management. The adjusted EBIT decline was principally driven by the lower brokerage activity, lower contribution from Greystone, and the impact of prior year cost inflation and investment in the business. EMEA and APAC both saw similar declines in brokerage as the Americas, while our PMFM business in the APAC segment continued to perform well, specifically in facilities and project management. The lower fee revenue in brokerage in each segment was the primary driver of the declines in adjusted EBITDA. Additionally, in APAC, the non-recurrence of the government subsidies received in the prior year also contributed to the year-over-year decline. Moving to our balance sheet and cash flow. We entered the Q1 with an operating cash outflow of $222 million. This level is in line with historical Q1 working capital trends and reflects typical seasonal patterns in our business. Given the seasonality, our full year cash flow performance will depend highly on the size and timing of any market recovery in the latter half of the year. As a part of our efforts to improve efficiency and performance, our teams are focused on driving cash flow improvements through disciplined working capital management. From a capital allocation standpoint, we are currently prioritizing spend in three areas. Cash to achieve our cost takeout targets, focused talent acquisition in high growth markets and high growth sectors, and investment in our services businesses where we continue to see significant long- term market opportunity. Overall, our financial position remains strong with $1.6 billion of liquidity, consisting of cash on hand of $460 million and availability on our revolving credit facility of $1.1 billion. We had no outstanding borrowings on our revolver and net leverage was 3.7 x at the end of the Q1. Our debt maturities are long-dated and our debt profile is more than 70% fixed on a net basis. Finally, moving to our outlook. The macroeconomic environment remains highly uncertain. Market participants continue to await further clarity on both interest rates and the economic outlook, challenging both leasing and capital markets activity. Given these factors, we anticipate the following. Our recurring revenue PMF and business is expected to provide continued stability in this environment, generating low to mid-single-digit revenue growth in 2023. Although Q1 results came in above this expectation, the growth rate of existing business will naturally normalize as we lap the larger new business wins of the prior year. In addition, beginning in the Q2 of this year, a change in the gross contract reimbursables of one of our facility services contracts will result in lower fee revenue of about $90 million on an annualized basis, with no impact on total revenue or Adjusted EBITDA. In brokerage, consistent with our previous comments, we expect trends in the Q2 of 2023 to resemble the previous two quarters as we've seen no material shift in the markets. Although we expect brokerage to remain under pressure in 2023, we are maintaining a strong position to benefit from a market recovery in 2024. As a result of these expectations, we expect full year Adjusted EBITDA margins to be in the range of 9%-10%, which incorporates our view of a mild recession in 2023 with no significant recovery in brokerage this year. As macroeconomic trends improve and the brokerage business experiences a more meaningful recovery, we expect to see our full year margins trend back upwards both through revenue growth and cost efficiencies. We now anticipate an adjusted effective tax rate of 28% for the year. That concludes the financial review. With that, I'll turn the call back to John. Thanks, Neil. You've likely seen the announcement we made this evening about my decision to retire from Cushman & Wakefield after over 35 years at the company. It's been a true honor to lead the business. I'm incredibly proud of what we've all built and accomplished together. This really is a special place with so many of the most talented people in our industry. I've thoroughly enjoyed working with all these special people, both as colleagues and as friends. Over the past months, as myself and the management team have contemplated the company's next stage evolution and growth strategy, it became clear to me that the person making the decisions in the Chief Executive Officer seat today must be the person guiding and accountable for those strategies far into the future. As I think about Cushman & Wakefield's bright future, I could not be leaving the company in better hands than with Michelle MacKay as Chief Executive Officer. Michelle and I have worked together since our IPO in 2018 when she became a board member more closely over recent years as Michelle agreed to become our Chief Operating Officer. I am confident that her long experience in commercial real estate and her commitment to the values and unique culture of Cushman & Wakefield will shepherd the company forward, drive continued growth and shareholder value at the company. Now I'll turn over to Michelle. Thank you. John, I want to be the first person to personally thank you for your leadership and collaboration over the past several years. The impact that you've made on the business is large, but the impact that you've made on the careers and lives of an untold number of people will inevitably be part of your legacy. I'm excited to take on the role of Chief Executive Officer of Cushman & Wakefield in July. Let's talk about the future. I don't require time to integrate into Cushman & Wakefield. As you probably know, I joined the board about five years ago, right after the company went public, and have been inside the company for more than three years. I have the great fortune of stepping onto the foundation that many dedicated and talented people have built. The foundation is strong and will allow me the ability to reassess and reconfirm what is the core business, ensuring that we're spending our time, our money and our energy where it makes sense today, and more importantly, for the future. This assessment will of course, lead to an evaluation of our growth model for the future and aligning our capital allocation model and balance sheet accordingly. I expect a continued focus on the high growth and resilient services business as part of this plan, with brokerage as a key driver. I look forward to speaking with all of you as we map out the future of Cushman & Wakefield. Now I'll turn the call back to the operator, and we'll be happy to take your questions. Thank you. We will now begin the Q&A session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Your first question comes from Anthony Paolone from JP Morgan. Please go ahead. Thank you. Thank you. First, best wishes, John, and congratulations, Michelle. My first question, though, is going to be a bit more mundane. I want to ask a bit about expenses. Neil, the $90 million that you all are targeting, I think you mentioned, actioning some additional items as well. Is that part of the $90 million or is there more coming beyond that? I guess I was a little confused by the comment. Yes, sure, Tony. Our guidance assumes the full $90 million takeout in the guidance we've provided. We are currently evaluating additional cost measures. At this point, I can't quantify them, so the guidance does not contemplate any additional cost measures. Given we are already halfway through the year, the impact on any year will be fairly muted, but certainly will provide run rate savings and efficiency as we move into next year. Okay. Then, in the margin guidance that you provided, so it sounds like the $90 million is in there. Could you maybe just talk to, you know, I don't know that you gave a guidance number for margins last quarter, I can't recall. What's kinda really changed in terms of your thinking and to get to that 9%-10% margin? I know the brokerage business is, you know, more difficult right now, just what else may be changed in the calculus there? Yeah, I think, Tony, our guidance is very consistent with what we gave last quarter. The only change is we believe that the recovery in brokerage will be slightly delayed, probably delayed by about a quarter. In our guidance, we are not assuming a meaningful recovery in brokerage through the year. Naturally, we do have easier comps as we move into, especially the Q4. The year-over-year declines will be a lot better. As we look at the Q2, we're sort of assuming that brokerage will be at a similar level to the Q1. Okay. Then just last one. Any comments you could provide on just thinking about CapEx for the year and any thoughts on free cash flow conversion or anything we should be thinking about there as we, you know, we think about EBITDA flowing down? No. Our free cash flow that we saw in the Q1 was very consistent with normal seasonality in the business. As you well know, as we move through the year, certainly the cash outflow improves dramatically through the back half of the year. We still maintain our target of a free cash flow conversion of 20%-30%. Naturally, with brokerage staying muted through the year, we do not expect to see that this year. We'll see that in the medium term, certainly as we see brokerage recover through the back half of the year. A lot will depend on how quickly brokerage recovers. Generally, the trends we expect are very consistent with what we've seen historically. Okay. Thank you. Thanks, Tony. Thank you. Your next question comes from Stephen Sheldon from William Blair. Please go ahead. Hey, everyone. You have Matt Filek on for Stephen Sheldon. Thank you for taking my questions. You know, to start here, in the event the return to office movement starts to lose some traction, do you see that dampening demand for things like janitorial services and the PFM segment overall? Thanks for the question, Matt. It's a very good question. Ultimately, we believe at the moment, in our forward forecast that the pretty strong recessionary decision-making by clients out there is driving the main performance in offices in particular. The hybrid and return to work trends that we've seen are to an extent priced in to the market as we see it. The additional services other than brokerage, such as project management, facilities management and services, of course, go along with volume. Again, what I would say is that the office market is a massive sector. I think that the relative size of that sector versus others is misplaced as we talk about the headwinds sitting within office. We are seeing very strong growth in our outsourcing business at this point. That growth, a lot of it comes from winning new office contracts. I still see Cushman & Wakefield and companies like Cushman & Wakefield actually growing our office exposure year-on-year, quarter-on-quarter going forwards. Even with the margins, any individual occupier might be just pulling a little bit back on their reins of how much space they have within their portfolio. That rationalization is ongoing and has been now for, as I said in the prepared remarks, nearly three years. Got it. That's helpful color. Thank you. Somewhat as a follow-up on office leasing, are you still seeing that flight to quality narrative hold up where tenants are looking to lease higher quality office space to encourage their employees to come back in? Are tenants starting to shift their focus to reducing cost given the challenging macro environment that persists? Both of your questions or observations there actually are both accurate because what we are seeing is that those deals that are happening, particularly in gateway cities around the world where we are very large market shares, the deals we're seeing are in Class A, best in class, ESG qualified space. Then what you see is ultimately then the rest of the market where we're not as exposed, having tougher times. Yeah, I think both of those components within your questions, last observation are fair at this point. Great. Thanks. That's it for me. I'll jump back in the queue. Thank you. Again, if you have a question, please press star then one. Your next question comes from Ronald Kamdem from Morgan Stanley. Please go ahead. Great. Congrats, John and Michelle. Just a quick one on the on the EBITDA guidance, which I think you sort of quantified this quarter. You know, clearly there's, you know, if you did sort of 4% in 1Q, just trying to get a little bit more of color of what assumptions are going into it to get to that 9-10% by the end of the year. I understand brokerage is staying pretty depressed, but what is some of the other pieces to get you to that 9% for the 9%-10% for the full year? Thanks. Yeah, sure, Ronald. Look, as we look at that, as you know, in the business, it's very seasonal. The Q1 is by far our smallest quarter. Just the base revenue in the Q1 is a lot less than the rest of the year. As we contemplate the year, we feel pretty good about getting to that 9%-10% margin. You will naturally see the margin improve as the base business, the natural business in the quarter increases all the way through to the Q4, where we always see our highest margins and the most revenue. The only difference this year, I think, is that we will have more of our earnings in the back half of the year than the front of the year, certainly than last year, where we had record growth in the first half of the year. Slightly different, but pretty consistent with historical trends in the industry. Just to reiterate one point, ultimately, whilst the revenue grows quarter on quarter through the year, actually proportionately, a lot of the cost shows up in Q1, and that's why margins will always be more muted at this point with confidence that they'll grow as the year moves through. Great. Then my second question, you know, obviously going to the cash flow statement, fully appreciate the seasonality in Q1, of course, but maybe some comments on what that EBITDA to cash conversion looks like as you're going through the year, would be helpful. Thanks. Yeah, sure. You know, with the cash outflow, in the first half of the year, it's very difficult to calculate what a cash conversion ratio is. I will tell you we're highly focused on free cash flow. We were very pleased in the Q1 of all the work we are doing around working capital. We saw a nice improvement in our receivables. That, of course, is muted by the decline in brokerage, certainly seeing some good trends there in our working capital. As we move through the year, once again, the cash flow, as I mentioned earlier, the cash flow conversion, will not be in that 20%-30% range, certainly in the medium run, as brokerage comes back, that's where we expect to be. Excellent. That's it for me. Thanks so much. Thank you. Once again, if you'd like to ask a question, please press star then 1 on your telephone and wait for your name to be announced. Your next question comes from Michael Griffin from Citi. Please go ahead. Great, thanks. Congrats again, John Forrester. Pleasure working with you. Michelle MacKay, congrats to you as well. Maybe piggybacking on Ronald Kamdem's question there, just on more of a leverage question. You know, I'm curious if you do annualize that run rate, you know, you get to pretty elevated leverage level. Talk about seasonality in the back half of the year. You know, that makes pretty sense. If I'm putting a number around it, right? So it's 3.7x last 12 months. You know, what do you think that number is a good run rate for going forward and any commentary around that? Sure. As, you know, with the lower EBITDA, we expect leverage to be in the low fours by the end of the year, probably in that 4.1x-4.2x range. The net will then once again come down as EBITDA grows and as brokerage comes back. You know, we feel pretty comfortable. Clearly leverage is higher than we'd like it to be. Our goal is always to be in that 2x-3 x. Naturally, as we move through the cycle, we'll see that leverage go up. Feel very good. Feel certainly good about our maturities. As you know, we amended and extended $1 billion of our Term Loan B, which we pushed out to 2030. Feel good about our maturities, and feel very good about our liquidity. While leverage is a little higher than we'd like, you know, feel like the balance sheet is in very good shape. Neil, just a reminder on that debt. It was SOFR + 375, right? No, SOFR + 3.25. Got you. Okay, that's helpful. Maybe just one on the transition. Looks like John will stay on as Chief Executive Officer until the end of June and advisor until the end of the year. You know, I'm just curious, John, or maybe Michelle, if you can add any comments around, you know, talks with the board, discussion. Obviously, Michelle, in your prepared remarks, you said, "Let's talk about the future." It seems like, you know, you're there here. I'm just curious if there were any conversations about strategic alternatives, kind of stuff like that, and how this came to be the right resolution for shareholders. It's Michelle. I will answer. Thank you for your question. I think as John said, in the conversations that we've been having about the future of the company, we realized that we probably needed to pull the session forward a little bit faster than we initially anticipated. I can't share any specific thoughts with you today, but we're gonna be focused on mapping out the next 10 years of the company, and that's the goal. Great. Just a clarification for John. When you took over at the beginning of 2022, I think from the gentleman who's the current chairman, was the plan always more of a interim kind of thing? I mean, you've been there for 35 years. That's a fantastic career. Was it always kind of your thought that you weren't gonna be in the role for, you know, five or 10 years? I've been very consistent in discussing this with anybody who's prepared to listen to me that, ultimately, leaders who take big decisions need to be around to see those decisions out and be accountable for them. Also pretty contemporary, leadership is important in a fast-moving market and very dynamic industry such as the real estate services industry. That really just gives color to the fact that the organization is very diligent and serious about its succession planning. Since we went public and Michelle joined our board, this day today was always going to occur at some point. I just reiterate what Michelle said. The timing is really based on the fact that we've done already the majority of work that is required to push this company through in very solid positive sense, the recession that we are in as an industry, that actually decisions now are about future direction and growth of the company. To an extent, We believe this is a great industry to be in. The secular growth trends that we see, our ability to ride many of those trends and grow accordingly means that, you know, Michelle is taking over at a time where that forward focus is very important in how we operate as a company. Well, great. That's it for me. Congrats to you both. Thank you. Thank you. Your next question comes from Patrick O'Shaughnessy from Raymond James. Please go ahead. Hey, good evening. Can you provide an update on the status of your partnership with WeWork? Obviously, it's no mystery that WeWork has been struggling, kinda curious about how the effort is going of you partnering with them. Hi, this is John. I'll take that. There's a slight disconnect, actually, as to how we work with WeWork and, you know, the issues on, that you mentioned there. Actually, our relationship with WeWork has been highly positive. Really focusing to the two strategic areas that we made our investment on. One was to partner with WeWork in major client pursuit. That is ongoing and has been successful and we believe will continue to be successful. And secondly, where we have become a key supplier, and therefore client of WeWork in helping them with running the real estate services within their portfolio. Those two aspects are ongoing, remain healthy, and that's how we think about our relationship with WeWork. Great. Appreciate that. Can you provide your outlook for the Greystone joint venture over the remainder of the year? Would you expect that to roughly track the rest of your brokerage business, or would you expect multifamily to maybe rebound a little bit more robustly? We certainly do expect sectors like multifamily, like industrial to rebound faster to see growth and improvement more quickly than certain other sectors. That's for sure. You know, again, I'd focus for us more on the strategic proposition that the joint venture we have with WeWork itself is becoming more fundamentally important and valuable to our company every day. The joint mandates that we're working on, the market share gains that we're making are actually irrespective of a very short- term, one quarter snapshot, make us feel very good about the incremental value and performance that this relationship adds going forwards quarter by quarter this year and into the future. Great. Thank you. Maybe one last one, if I could. How is the environment in terms of attracting and retaining brokerage talent? You know, in a backdrop where, you know, it looks like things are gonna be lean for an extended period of time, how does that impact what that environment looks like? Again, this is John. The market for high talent doesn't actually correlate to the ebb and flow of, say, brokerage revenues or any service line revenue. Great people are always in demand, and in particular, those that are in areas where potentially our industry sees a faster rebound or high growth prospects in the future. Every day, the leaders across our organization come into the office, very important they're in the office, and they are thinking about both the retention and the recruitment of high talent. That's no different today than it was 12 months ago, 24 months ago. One thing we are seeing, though, is that the overall inflation being driven through, in our non-revenue facing business is becoming more muted and far more manageable than it was, say, in Q1 last year. We are seeing some benefits in the slowdown in the overall labor markets and reduced attrition as well as lower inflation there. Great. Thank you very much. Thank you. Once again, if you have a question, please press star then one. There are no further questions at this time, this does conclude our Q&A session. I'll now like to turn the conference back over to Mr. John Forrester for any closing remarks. Thank you all for joining us today. Michelle, Neil, and the rest of the team look forward to speaking with you again at our Q2 earnings call. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.