Welcome to Cushman & Wakefield's Second Quarter 2019 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce Bill Knightly, EVP of Investor Relations and Treasurer for Cushman & Wakefield. Mr. Knightly, you may begin your conference.

Thank you, and welcome again to Cushman & Wakefield's Second Quarter 2019 Earnings Conference Call. Earlier today, we issued a press release announcing our financial results for the period. This release can be found on our Investor Relations website, along with today's presentation pages that you can use to follow along. The materials can be found at ir.cushmanwakefield.com. Please turn to the page labeled 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 measures are found within the financial tables of our earnings release and appendix of today's presentation. I'd like to remind you that the company uses fee revenue, adjusted EBITDA, adjusted earnings per share and local currency to improve comparability of current results and to assist our investors in analyzing the underlying performance of our business. You will find definitions of these non-GAAP financial measures and more detailed financial information in the tables of today's earnings release and Form 8-K. In addition I would like to note that throughout the presentation comparisons and growth rates are to the comparable periods of 2018 and in local currency. For those of you following along with our presentation, we will begin on page five. And with that I'd like to turn the call over to our Executive Chairman and CEO, Brett White.

Thank You, Bill, and thank you all for joining us again today. We continue to see good momentum in the business with solid double-digit fee revenue growth year-to-date and in the second quarter. Our sustained strong performance is a result of our continued focus on our top growth priorities in an environment that remains favorable for commercial real estate services. As a reminder, here are our areas of strategic focus. Revenue and share growth through the delivery of differentiated and best-in-class service to our clients; strategic recruiting and infill M&A to continue to expand our strong global platform; leveraging our strength in our large and growing recurring revenue businesses; and continued margin growth through operational discipline. By these measures, the second quarter continued to have quite good momentum. We saw double-digit in fee revenue of 12% year-to-date and 11% in the second quarter primarily led by stronger performance in our leasing, capital markets and property facilities and project management service lines which we call PM/FM. We also saw strong growth in adjusted EBITDA by 9% year-to-date. I'm just going to speak to the second quarter results in a bit more detail later. In addition to our strong financial performance, I'd like to share a few other notable highlights in the quarter. Our leading global brand continued to earn strong third-party recognition in the second quarter of 2019, including being named once again to Forbes' list of America's Best Large Employers and receiving top honors again as the 2019 Energy Star Partner of the Year for Sustained Excellence. Cushman & Wakefield also received a perfect score of 100 that the 2019 Corporate Equality Index naming us a Best Place to Work for LGBTQ Equality. We're proud of these designations because they provide further evidence that we are creating value for our…

Thanks, Brett. And good afternoon, everyone. To start let's turn to Page 8, which summarizes our key financial data for the second quarter and year-to-date. As Brett said, we continue to deliver strong operating results. Today, we reported second quarter fee revenue of nearly $1.6 billion, an increase of 11% over the same period in 2018. Year-to-date fee revenue was $2.9 billion, a 12% increase, with double-digit growth across each of our three segments compared to the first half of last year. Second quarter adjusted EBITDA was $175 million, a 4% increase from the second quarter of 2018. And year-to-date adjusted EBITDA was $263 million, a 9% increase from the first half of 2018. EBITDA growth was driven by our strong revenue performance. Year-to-date EBITDA margin of 8.9% was about flat to prior year. Our first half results reflect a modest shift in mix toward our property facilities and project management service line, which we call PM/FM. This is generally a lower-margin business on our brokerage service lines. In addition, we made investments in the second half of 2018 mainly in broker recruitment in the Americas which are ramping up an expected to contribute in the second half of the year. We continue to expect margin accretion for the year as a whole. Second quarter adjusted earnings per share was $0.39, and year-to-date adjusted earnings per share was $0.50. Moving on to pages 9 and 10, where we show fee revenue growth rates by segment and by service line. All three segments grew strongly in the second quarter with the Americas and EMEA both at 9% and APAC up 20%. In the second quarter, growth in our capital markets and PM/FM service line was particularly strong, with capital markets growing 19% and PM/FM growing 15%. PM/FM grew double digits in…

[Operator Instructions] Your first question comes from the line of Tony Paolone with JPMorgan. Please go ahead, your line is open.

Thank you. My first question is you mentioned a number of times how hiring has been a little bit of a near-term drag and you expect that to come to fruition. How should we think about that going into the second half of the year, especially when marrying it with kind of the broader backdrop? Like should we just expect the hiring to kind of slow, and thus, the margins to catch up? Or was there just a particularly a high amount of hiring? Or kind of what happened there?

Yes. At the year end of last year, it's Duncan, at the end of last year, we did some hiring in Americas, and you'll appreciate, we do these kinds of infill-type hiring. We talked about that, as an application of our free cash flow, pretty good multiples. And these things are performing just as we expect them to perform. But then the nature of these things, they ramp up, and as you know, our business is seasonal, so they obviously tend to also ramp up with the seasonalities. So in the first half of the year, they're a bit of a drag on margin because there's costs associated with them and it's not covered by revenue. But as those deals ramp up and as the seasonality of those brokers also kicks in we'd expect them to be accretive in the second half of the year, and also, we'd expect them over time to pay back within the kind of multiples ranges that we've talked about in the past, which is typically two to four times type multiples for these kinds of recruits. And that's exactly what we did at the back end of last year.

Okay. And then second question on leasing because the environment does seem pretty good. How do we think about the comps in the second half of the year, which I know last year was pretty strong, but again it sounds like you've done some recruiting and trends are pretty good. How do we think about that?

Well, leasing, as you see, year-to-date we're up kind of in the double digits for leasing year-over-year. So we feel good about that. Obviously, last year we had very strong growth in all the courses in leasing. And not expecting to see quite such strong growth in leasing maybe as we did in some of those quarters last year, but on the other hand, I do think the market is generally supportive of real estate services and we'll continue to see growth in the leasing markets around the world.

Okay, thank you.

Your next question comes from the line of Vikram Malhotra with Morgan Stanley. Please go ahead, your line is open. Again your next question comes from the line of Vikram Malhotra with Morgan Stanley. Please go ahead, your line is open.

Vikram stepped out for a glass of water. Let's go to our next. Next question please.

Certainly. Your next question comes from the line of Josh Lambers with William Blair. Please go ahead, your line is open.

Great, thanks and good afternoon, gentlemen. Curious to get a little bit more feedback on the Fifth Wall partnership, essentially how it's structured. And I'm wondering also if it reflects a bit of a change in your technology strategy by looking at some earlier-stage CRE tech firms, or what your thoughts are on that?

Yes, this is Brett. We've had a very good relationship with Fifth Wall for actually a number of years now. We've worked on a lot of things together. Fifth Wall has evolved into one of our strategic partners in sourcing and vetting technologies both internally for the company but also technologies that we can apply in the client environment. We are both investors in a couple of their funds. But really the primary impetus of this relationship is this ability to use Fifth Wall and their very large group of analysts and consultants to vet and look at the myriad of technologies coming forth every day in the property tech space. And it's a good question, but no, it is not a change on our strategy. In fact, Fifth Wall, interestingly, they are as active in seasoned technology as they are in emerging technology. So we use them not just to bring us new ideas of technologies we've not seen before, we also use Fifth wall to help us think about technologies that have been existent in the marketplace for a period of time. And as you know, our technology strategy involves both investment in technologies for the business that we develop on our own, but also partnership and subscription to what we think are best-in-class technologies for the client set and our own use. And Fifth Wall is a very important piece of that equation as is MetaProp and others that we work with in that environment.

Sure, that helps. And then secondly for me, in the last couple of quarters you've called out some larger wins on the leasing and sales side. And I'm just wondering if given some of the volatility in both of those service lines kind of globally if you could just talk to the extent of how the pipeline looks in any region and the potential for some larger wins in the back half of the year.

Sure. Well I would say first and foremost, 2019 is shaping up to be another good year. There is a lot of strength in both the capital markets and among corporate occupiers to lease new space. We like obviously those trends. We are seeing – I'll give you an example. We had a very, very strong first half last year in Asia Pacific on the capital markets side, and we lapped that strong first half. And when you think about all of the headwinds that have been in the marketplace, trade tensions between the U.S. and China, Brexit, and so forth, to see capital markets up in the UK, to see capital markets up as strongly in Asia Pacific, I think, is indicative of the fundamental strength and dynamics behind the business at the moment. So while I can't reference specific deals that we may see getting closed in the second half of the year, I can tell you that our pipelines look quite good, and we're excited about the back half of the year.

Okay, thanks.

Your next question comes from the line of Mitch Germain with JMP Securities. Please go ahead. Your line is open.

It's Corey DeVito here for Mitch. I just wondering how the QSI integration is going and how it's performing relative to your underwriting.

It's going very well. As you know QSI was an important transaction for us in our Facilities Management, Facilities Services businesses. As we do with all of our acquisitions, small and large, we spend an awful lot of time on integration planning pre close. And when we hit the close date, we are off and running with our integration. QSI is no different than the other transactions that we have closed in the last few years, the integration was well planned, it's being well executed, and it's performing quite well against its underwriting.

Alright. That's it from me. Thank you.

You bet.

Your next question comes from the line of Douglas Harter with Credit Suisse. Please go ahead, your line is open.

Hi, this is actually Sam Cho filling in for Doug. I was just wondering if you had an updated view on how you're seeing expected growth and whether I guess what percentage will come from the organic versus acquisitions.

Well I'll let Duncan take that.

Yes. So as you've heard, we think the market is very supportive of real estate services, and so our business is growing well in the first half, as you've seen. We expect to see some of those trends continue in the second half. You've heard Brett talk about the strength in pipelines, so that's pretty good. From an organic/inorganic perspective, over time what we've said is infill acquisitions typically over time maybe make up about one third of our revenue growth, and obviously, it'll be a bit clumpy year-over-year and all that kind of stuff. But generally speaking, I would have thought that this year would not be much dissimilar to that.

Got it. That's it for me. Thank you.

And your next question comes from the line of Jason Weaver with Compass Point. Please go ahead, your line is open.

Hi, good afternoon. Thanks for taking my question. In the U.S., we've seen you and your peers post some pretty strong capital markets growth in the second quarter, I was curious about your visibility into the second half given that we have the lower interest rate tailwind behind us.

Look, it's a great question, and you've answered it, I think, or you've begun to answer it yourself. Spreads are very favorable right now, liquidity is plentiful in the marketplace, a lot of transactions getting done and nothing we see at the moment would imply any diminution of that pace of transaction closing in the capital markets space, either here or in Asia Pacific, and to the extent in much of Europe.

Okay. And just a quick follow-up, you may have mentioned it in your prepared remarks, and I might have missed it. But the proportion of that 114% growth in Asia Pacific, what was the Mapletree transaction? How much did that represent of that growth?

We don't break that down. I will tell you that the Asia Pacific region in capital markets, we tend to do very large deals, particularly in Australia and in Hong Kong, and Mainland China. And certainly the Mapletree deals were of that ilk, but we don't break down revenue by transaction. So that's as much as I think I'll say on that.

Okay. Well, congrats on the quarter.

Yes. Welcome to for the remark. Thanks.

There are no further questions at this time. I'll now turn the call back over to the presenters.

Great. Well thanks, everybody. Looking forward to a good year here in 2019. We'll talk to you at the end of the third quarter.

This concludes today’s conference call. You may now disconnect.