Cushman & Wakefield Ltd. 2026 Q2 Earnings Call

Ma'am, please go ahead. Thank you, and welcome to Cushman & Wakefield second quarter 2026 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.

Comparisons discussed on today's call are against the second quarter of the prior year in local currency unless otherwise noted. With that, I'd like to turn the call over to our CEO, Michelle MacKay.

Thank you, Megan, and thank you everyone for joining us today. Our results this year demonstrated that we have hit our stride and we've gotten there fast. We didn't just meet the bar this quarter, we moved it, setting several company records, including the highest second quarter total revenue in the history of the company, the highest second quarter leasing and services revenue in the history of the company, and the lowest gross debt balance in the history of the company. Along with this, we achieved our 6th consecutive quarter of double-digit adjusted EPS growth. Back in December at our Investor Day, we laid out our current 3-year growth plan and provided annual EPS targets. Today, just 2 quarters later, we are raising our guidance for year 1. Here's what excites us most. This performance is organic, driven by a global platform with significant white space still ahead.

We are a company of builders. Our strength and foundation creates optionality for what we build next. We're expanding our footprint, scaling our service lines. Our recent growth investments are just beginning to contribute. Let me give you some examples. Our project management business grew over 20% in the quarter, with strong growth in the Americas, APAC, and EMEA. We are scaling this business profitably using proprietary AI tools that create internal efficiencies for our teams and help our clients achieve meaningful project savings. Our leasing business is a consistent standout, the results of pairing global strategic advisory with precise local execution. We are gaining share globally as we advise on some of the largest and most complex leasing transactions in the world. We continue to build our platform in high growth asset classes.

Our data center work is diversified and expanding, with data center related revenue up 83% year to date. While we have strong transactional presence, integrated facilities management is actually the largest of our data center businesses. 25% of our pipeline in the broader IFM business is now data center related. What's exciting about all of these initiatives and many more in process, is that we're just getting started. Year one of our current three-year growth plan has confirmed we're building momentum. We are more confident than ever in our ability to deliver strong value for our shareholders. Now, I'll turn the call over to Neil to walk you through the numbers.

Thank you, Michelle. Good morning, everyone. As a reminder, all comparisons are against the second quarter of the prior year and in local currency. We delivered another strong quarter on both the top and bottom line. Second quarter revenue was $2.8 billion, up 11%. Brokerage revenue, comprised of leasing and capital markets, rose 19%, while services grew 7% and valuation and other grew 8%. Adjusted EBITDA of $184 million was up 13% as we continue to drive operating leverage across our platform. Adjusted EPS of $0.35 rose 17%. Year to date adjusted EPS of $0.50 represents 28% growth versus the first half of 2025, reflecting the combined impact of operational improvements and interest expense reductions. Looking at our results by geographic segment, we drove double digit revenue growth in the Americas, APAC, and EMEA.

Adjusted EBITDA in the Americas and APAC was up 23% and 17% respectively. While adjusted EBITDA in EMEA declined primarily due to the non-recurrence of FX gains in the prior year. Moving to revenue performance by service line, leasing grew 27% globally, with Americas leasing up 35%. Our leasing growth in the Americas continued to be very broad-based, with double-digit growth across all deal sizes and strength in nearly every major market. Office leasing remained strong, reflecting continued demand from occupiers for high-quality space. We saw particular strength in the legal, accounting, insurance and tech sectors in key gateway markets. Industrial was also a standout performer, benefiting from robust activity across transaction sizes and continued momentum in the data center-related assignments. Chicago, New Jersey, and the West Coast are some of our strongest performing regions in industrial.

Outside the Americas, APAC leasing increased 6%, supported by solid performance in Greater China. In EMEA, leasing trends remained mixed, down 6%, due primarily to quarterly deal timing variances and increased macroeconomic uncertainty in the region. Turning to capital markets, revenue declined 1% globally, following six consecutive quarters of strong growth. In the Americas, revenue was down 6%, driven primarily by industry softness in office and midsize multifamily transactions, where our business is more highly concentrated. Importantly, we are seeing improved momentum early in the third quarter. APAC and EMEA capital markets grew 50% and 11% respectively, with particular strength in Singapore, Greater China, Sweden and the Netherlands. Our services business expanded 7% globally, with Americas up 5%, EMEA up 21%, and APAC up 10%. We saw strong growth across all geographies in project management and facilities management, up 20% and 8% respectively.

Turning to our balance sheet and cash flow, we have continued to make meaningful progress on strengthening our balance sheet, ending the second quarter at three times net leverage compared to 3.7 times a year ago. Since April, we have paid down an additional $150 million of debt, including $50 million of our 2028 senior secured notes announced today. This brings our cumulative debt repayment to approximately $650 million since the start of 2024. During the quarter, we also amended and extended $850 million of our term loan to 2033, repricing it 50 basis points lower to SOFR plus 225, the lowest pricing spread in our company's history. We also upsized the term loan by $350 million and concurrently redeemed an equal amount of our 2028 senior secured notes. We now have $150 million outstanding on the 2028 senior notes, which we intend to fully redeem by mid-year 2027.

Our trailing 12-month free cash flow was $249 million, up $123 million from the same period last year and representing a 79% conversion rate of adjusted net income, which is at the high end of our targeted 60%-80% conversion rate. We closed the quarter with approximately $500 million in cash and cash equivalents and $1.5 billion in total liquidity. Moving to our 2026 outlook, we now expect revenue growth to be at the mid to high end of our guidance range of 6%-8%. We are also raising our 2026 annual adjusted EPS growth target from 15%-20% to 18%-23%. Now I'll turn the call back over to Michelle.

Thank you, Neil. Let me take a moment on the market backdrop, because our performance is this quarter's story, but the market is the foundation under it, and that foundation is solid. This market has been tested by every disruption you can name: rate volatility, shifting occupier behavior, geopolitical uncertainty, new technology. Each time, it did what healthy markets do, absorb the shock, reprice, and move forward. Why? There is a deep structural demand from a diverse capital base seeking real assets. Here's what's important to understand. We're no longer talking about the traditional definition of commercial real estate, and we haven't been for quite some time. We're talking about the built world. Whether it's called commercial real estate, infrastructure, or energy, our expertise extends across the entire real asset ecosystem.

Subway systems and stadiums, solar panels and EV charging stations, airports and hospital systems, housing and logistics centers, working for governments across the world. The breadth of the real asset ecosystem is enormous. The real assets of any type for global companies in any industries are increasingly strategic, requiring thoughtful advice and careful management. We're convinced this market will keep growing through change. Our strategy is designed for it, and it starts with clients. The world's top companies partner with us on what's foundational to their business. You don't just hand that to anyone. They hand it to a brand and a company that has earned trust for a century. That trust compounds deeper, more durable relationships, leading to expanding opportunities. Earning that trust and delivering on it doesn't happen in one office or one service line.