Steady Growth from 2009 – Positive Effects of Strategic Plan

It is my pleasure to offer my perspective on Cushman & Wakefield’s financial performance in 2012. This represented our second full-year of execution of key initiatives of our long-term strategic plan, including a focus on balancing the global platform to deliver high quality service and a consistent service mix across markets on behalf of our clients, with a specific emphasis on increasing market share in key markets across the globe and continued targeted expansion into key locations to fill out strategic service line and regional needs.

From a top-line perspective, our 2012 gross revenue of $2.05 billion, which was up almost 5% over last year when adjusted for currency, represents the second highest gross revenue in Cushman & Wakefield’s 95-year history – second only to 2007, which came in at just about $2.1 billion. Our commission and service fee revenue was up almost 4% excluding the impact of foreign exchange to $1.6 billion for the year ended December 31, 2012.

With our solid revenue performance for the year and continued discipline on cost, we were able to drive EBITDA to almost $128 million for full-year 2012, a 14.9% increase following a 19.7% increase in 2011 over 2010. In addition net income improved $28.3 million to $43.2 million and net debt to EBITDA was a healthy ratio of 0.8.

These are good results – driven by the hard work of our employees around the world and the diligent execution of our strategic plan – especially in light of the global economic uncertainty we’ve seen over 2012. 

If we look at the 2012 results in a little more detail we see that gross revenue, which includes reimbursed costs – managed properties and other costs, increased $54.4 million, or 2.7%, or 4.7% excluding the impact of foreign exchange, to $2,050.1 million, while commission and service fee revenue, which excludes reimbursed costs – managed properties and other costs, increased $24.7 million, or 1.6%, or 3.8% excluding the impact of foreign exchange, to $1,597.0 million for the year ended December 31, 2012, despite the slow transactional activity due to the continued global economic uncertainty that existed throughout 2012.

The growth in commission and service fee revenue and the reduction in operating expenses partially offset by an increase in cost of services sold and slightly higher commission expense drove a year-over-year increase in C&W’s EBITDA of $16.6 million to $127.7 million, as compared with $111.1 million in the prior year. This positive growth and a reduction in interest expense, other expenses and income tax expense led to an improvement in the income attributable to owners of the parent of $28.3 million to $43.2 million for the full-year 2012, as compared with $14.9 million for the prior year.

Commission and service fee revenue experienced positive growth across all regions, even including the negative impact of foreign exchange movements, with the exception of EMEA, which reported a decline, primarily due to the ongoing challenging economic and market conditions.

From a service line perspective, the year-over-year growth in commission and service fee revenue was driven by continued CIS performance throughout 2012, with the largest increase in the Americas, where revenue increased by $21.2 million, or 11.4%, continued growth in the V&A business, also led by the Americas region, which increased $10.1 million, or 8.4%, modest growth in Leasing and essentially flat revenues in Capital Markets.

In addition to the solid P&L performance in 2012, we also continued to maintain a strong balance sheet.  As of December 31, 2012, the Company’s net debt position was $99.6 million.  With the full-year 2012 EBITDA of $128 million, the net debt to EBITDA ratio is only 0.8 – a strong indicator of C&W’s ability to service its debt obligations.

Under difficult market conditions and while still investing in the firm’s growth initiatives, we were able to complete 2012 with an increase in year-over-year gross revenue and substantial EBITDA growth. Our management team remains focused on executing our strategic plan and enhancing market share in key markets around the globe and looks forward to taking advantage of our strong brand and the optimism for further economic recovery in 2013. Our goal is to continue the positive trend you see demonstrated on the graphs in this section.