Q2 2024 Cushman & Wakefield PLC Earnings Call

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Speaker Change: Johnston, Megan McGrath, Johnston, Megan, Johnston, Johnston, Johnston, Johnston, Johnston, [inaudible]

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Operator: Good day and welcome to Christian and Wakefield's second quarter, 2024, earnings conference calls. All participants will be in listen-only mode. Should you need assistance, please signal an office conference specialist by pressing the star key followed by zero.

Operator: Good day, and welcome to Cushman & Wakefield's second quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Megan McGrath, head of investor relations. Please go ahead.

Speaker Change: Good day and welcome to Cushman & Wakefield's 2nd Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode.

Speaker Change: Should you need assistance, please signal an office conference specialist by pressing the star key followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on attached tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded.

Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone.

Speaker Change: To withdraw your question, please press star, then 2.

Megan Madrock: I would now like to turn the conference over to Megan Madrock, Head of Investor Relations. Please go ahead. Thank you and welcome to Christian and Wakefield's second quarter, 2024, earnings conference calls. Earlier today, we issued a press release announcing our financial results for the period.

Megan McGrath: Please note, this event is being recorded. I would now like to turn the conference over to Megan McGrath, Head of Investor Relations. Please go ahead. Thank you, and welcome to Cushman & Wakefield's second quarter 2024 earnings conference call.

Megan McGrath: Thank you, and welcome to Cushman & Wakefield's 2nd Quarter 2024 Earnings Conference Call. Earlier today, we issued a press release announcing our financial results for the peers. This release, along with today's presentation, can be found on our Investor Relations website at ir.cushmanwakefield.com.

Speaker Change: Earlier today, we issued a press release announcing our financial results for the period.

Megan Madrock: 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 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. Reconciliation of gap-to-non-gap financial measures, definitions of non-gap financial measures, and other related information are found within the financial tables of our earnings release and the appendix of today's presentation.

Speaker Change: This release, along with today's presentation, can be found on our Investor Relations website at ir.cushmanwakefield.com.

Megan McGrath: 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 gap-to-non-gap financial measures, definitions of non-gap financial measures, and other related information are found within the financial tables of our earnings release and the appendix of today's presentation.

Speaker Change: Please turn to the page in our presentation labeled Cautionary Note on Forward-Looking Statements.

Speaker Change: 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.

Speaker Change: During today's call, we will refer to non-GAAP financial measures as outlined by SEC guidelines.

Speaker Change: Reconciliations of gap-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 and the appendix of today's presentation.

Megan McGrath: Also, please note that throughout the presentation, comparisons and growth rates are to the comparable periods of 2023 and in local currency unless otherwise stated. And with that, I'd like to turn the call over to our CEO, Michelle MacKay.

Megan Madrock: Also, please note that throughout the presentation, comparisons and growth rates are to the comparable periods of 2023, and then local currency, unless otherwise stated.

Speaker Change: Also, please note that throughout the presentation, comparisons and growth rates are to the comparable periods of 2023 and in local currency unless otherwise stated. And with that, I'd like to turn the call over to our CEO , Michelle MacKay.

Michelle Mackay: And with that, I'd like to turn the call over to our CEO, Michelle MacKay. Thank you, Megan. I've now been the CEO of Cushman & Wakefield for a year, and the progress our teams have made during that time has been impressive. We have never settled, committing to what we have said in executing on our plan relentlessly, setting clear targets and goals for what we needed to achieve for ourselves and for our investors, and then getting it done. Let me speak about exceeding those targets. A year ago, we started off strong, refinancing over a billion dollars of debt and committing to reducing our leverage by a minimum of 200 million by mid-year 2025.

Michelle M. MacKay: Thank you, Megan. I've now been the CEO of Cushman & Wakefield for a year, and the progress our teams have made during that time has been impressive. We have never settled, committing to what we have said and executing on our plan relentlessly, setting clear targets and goals for what we needed to achieve for ourselves and for our investors and then getting it done. Now, let me speak about exceeding those targets.

Michelle M. MacKay: Thank you, Megan. I've now been the CEO of Cushman & Wakefield for a year, and the progress our teams have made during that time has been impressive.

Speaker Change: We have never settled, committing to what we have said and executing on our plan relentlessly, setting clear targets and goals for what we needed to achieve for ourselves and for our investors, and then getting it done.

Michelle M. MacKay: A year ago, we started off strong, refinancing over $1 billion of debt and committing to reducing our leverage by a minimum of $200 million by mid-year 2025. We have already reduced our debt by $100 million through the second quarter, and we plan to make another $50 million reduction this quarter, putting us ahead of our plans. We have also reduced our interest costs twice this year on both of our outstanding term loans as we continue to have staunch support from our term loan lenders, in both cases exceeding our plans.

Speaker Change: Let me speak about exceeding those targets. A year ago, we started off strong, refinancing over $1 billion of debt and committing to reducing our leverage by a minimum of $200 million by mid-year 2025.

Michelle Mackay: We have already reduced our debt by 100 millions for the second quarter, and we plan to make another 50 million dollar reduction this quarter, putting us ahead of our plans. We have also reduced our interest cost twice this year on both of our outstanding turn loans, as we continue to have staunch support from our turn loan lenders. In both cases, exceeding our plans. We have also exceeded our plans on free cash flow conversion, reporting a substantial improvement of more than 130 million dollars in year-to-date free cash flow versus the prior year period. And today, we are reporting our third consecutive quarter of leasing revenue growth, our fifth consecutive quarter of meeting or beating expectations, and for the first half of 2024, our adjusted EBITDA margins are up over 40 basis points compared to the same period last year.

Speaker Change: We have already reduced our debt by $100 million through the second quarter, and we plan to make another $50 million reduction this quarter, putting us ahead of our plans.

Speaker Change: We have also reduced our interest costs twice this year on both of our outstanding term loans as we continue to have staunch support from our term loan lenders.

Michelle M. MacKay: We have also exceeded our plans on free cash flow conversion, reporting a substantial improvement of more than $130 million in year-to-date free cash flow versus the prior year period. And today, we are reporting our third consecutive quarter of leasing revenue growth, our fifth consecutive quarter of meeting or beating expectations, and for the first half of 2024, our adjusted EBITDA margins are up over 40 basis points compared to the same period last year.

Speaker Change: In both cases, exceeding our plan. We have also exceeded our plans on free cash flow conversion, reporting a substantial improvement of more than $130 million in year-to-date free cash flow versus the prior year period.

Speaker Change: And today, we are reporting our third consecutive quarter of leasing revenue growth, our fifth consecutive quarter of meeting or beating expectations.

Speaker Change: And, for the first half of 2024, our adjusted EBITDA margins are up over 40 basis points compared to the same period last year.

Michelle Mackay: To add to all of this, we announced the sale of a non-core asset, which was targeted for sale late last year, and whose proceeds will be used to reduce leverage and fuel growth. We are getting it done in every aspect of our business every day.

Michelle M. MacKay: To add to all of this, we announced the sale of a non-core asset that was targeted for sale late last year and whose proceeds will be used to reduce leverage and fuel growth. We are getting it done in every aspect of our business, every day. Now I'll turn the call over to Neil to review the second quarter financials, and then I'll come back and speak to you in more detail about our plans for growth.

Speaker Change: To add to all of this, we announced the sale of a non-core asset which was targeted for sale late last year and whose proceeds will be used to reduce leverage and fuel growth.

Speaker Change: We are getting it done, in every aspect of our business, every day.

Neil Johnston: Now, I'll turn the call over to Neil to review the second quarter financials, and then I'll come back and speak to you in more detail about our plans for growth. Thank you, Michelle, and good afternoon, everyone. Second quarter trends demonstrated continued strength in our leasing business and highlighted the work we've done to drive improved profitability in cash flow. While fee revenue at $1.6 billion for the second quarter was down 2% for the prior year, an adjusted EBITDA of $139 million was down 4%. Adjusted EBITDA on a year-to-date basis has grown 6%; an adjusted EBITDA of $0.20 is 2 cents higher in the last year for the 6-month period.

Speaker Change: Now, I'll turn the call over to Neil to review the second quarter financials, and then I'll come back and speak to you in more detail about our plans for growth.

Neil O. Johnston: Thank you, Michelle, and good afternoon, everyone. Second quarter trends demonstrated continued strength in our leasing business and highlighted the work we've done to drive improved profitability and cash flow. While fee revenue of $1.6 billion for the second quarter was down 2% from its prior year and adjusted EBITDA of $139 million was down 4%, adjusted EBITDA on a year-to-date basis has grown 6%, and adjusted EPS of $0.20 is $0.02 higher than last year for the six-month period.

Neil: Thank you, Michelle, and good afternoon, everyone.

Neil: Second quarter trends demonstrated continued strength in our leasing business and highlighted the work we've done to drive improved profitability and cash flow.

Neil: While fee revenue of $1.6 billion for the second quarter was down 2% first prior year, and adjusted EBITDA of $139 million was down 4%, adjusted EBITDA on a year-to-date basis has grown 6%.

Neil: An adjusted EPS of $0.20 is $0.02 higher than last year for the six-month period.

Neil Johnston: I would just leave it a margin for the second quarter, increased sequentially to 8.8%, taking the margins for the first six months to 7%, up 44 basis points of a prior year, as cost savings and operational efficiencies offset the impact of inflation and lower revenue. Taking a look at our services line results, our leasing business continues to perform well, growing 2% in the quarter. The growth in Q2 is, again, largely global in nature, with America's leasing up 2%, A-packed leasing up 7%, and a mea-leasing flat. In the Americas, we continue to see solid performance in mid-sized leasing deals, which demonstrates the breadth of stabilization in the leasing market.

Neil O. Johnston: Our adjusted EBITDA margin for the second quarter increased sequentially to 8.8 percent, taking the margin for the first six months to 7 percent, up 44 basis points from the prior year, as cost savings and operational efficiencies offset the impact of inflation and lower revenue.

Neil: Our adjusted EBITDA margin for the second quarter increased sequentially to 8.8%, taking the margin for the first six months to 7%, up 44 basis points of a prior year, as cost savings and operational efficiencies offset the impact of inflation and lower revenue.

Neil O. Johnston: Taking a look at our services line results, our leasing business continues to perform well, growing 2% in the quarter. The growth in Q2 was again largely global in nature, with Americas leasing up 2%, APAC leasing up 7%, and EMEA leasing flat. In the Americas, we continue to see solid performance in mid-sized leasing deals, which demonstrates the breadth of stabilization in the leasing market. Industrial, office, and retail leasing all grew in the quarter. In EMEA, we experienced growth in Central and Eastern Europe, while Germany underperformed. APAC saw particular strength in India and Japan.

Speaker Change: Taking a look at our services line results, our leasing business continues to perform well, growing 2% in the quarter. But growth in Q2 is again largely global in nature, with Americas leasing up 2%, APAC leasing up 7%, and EMEA leasing flat.

Speaker Change: In the Americas, we continue to see solid performance in mid-sized leasing deals, which demonstrates the breadth of stabilization in the leasing market.

Neil Johnston: Industrial, office, and retail leasing all grew in the quarter. In a mea-leasing experience grows in Central and Eastern Europe, while Germany underperformed. A-packed saw particular strength in India and Japan. Our capital markets view revenue to climb 14%, facing the strong second quarter last year, which was our highest quarter of capital markets revenue for the year. America's capital markets revenue to climb 19%, but grew 19% sequentially, showing increased momentum. Revenues and the quarter increased in industrial and retail, while the office and multi-family sectors saw declines. A mea and A-pack continued to share strength, up 7% and 19% respectively.

Speaker Change: Industrial, office, and retail leasing all grew in the quarter. In EMEA, we experienced growth in Central and Eastern Europe , while Germany underperformed. APAC saw particular strength in India and Japan.

Neil O. Johnston: Our capital markets fee revenue declined 14%. Facing a strong second quarter last year, which was our highest quarter of capital markets revenue for the year, America's capital markets revenue declined 19%, but it grew 19% sequentially, showing increased momentum. Revenues in the quarter increased in industrial and retail, while the office and multifamily sectors saw declines, and me and APAC continue to share strength, up 7% and 19%, respectively. Turning to services, revenue was flat versus the prior year, adjusting for the previously discussed contract change, or down 2% as reported.

Speaker Change: Our capital markets fee revenue declined 14%. Facing a strong second quarter last year, which was our highest quarter of capital markets revenue for the year, America's capital markets revenue declined 19%, but grew 19% sequentially, showing increased momentum.

Speaker Change: Revenues in the quarter increased in industrial and retail, while the office and multifamily sectors saw declines.

Speaker Change: EMEA and APAC continue to show strength, up 7% and 19% respectively.

Neil Johnston: Turning to services, revenue was flat versus the prior, adjusting for the previously discussed contract change, or down 2% as reported. Our A-packed services business remained strong, achieving the second quarter growth of 9%, once again driven by strong project management performance, particularly in India and Australia. While a mea-services revenue is declined in the quarter, we did see services margins grow, setting a solid foundation for profitable growth. In the Americas, services revenue was flat for the quarter, excluding the contract change, or down 3% as reported. Facility services grew 2%; property management revenues were flat, while project development services declined as office clients deferred expansion plans.

Speaker Change: Turning to services, revenue was flat versus the prior year, adjusting for the previously discussed contract change, or down 2% as reported.

Neil O. Johnston: Our APEC services business remains strong, achieving second quarter growth of 9%, once again driven by strong project management performance, particularly in India and Australia. While EMEA services revenues declined in the quarter, we did see services margins grow, setting a solid foundation for profitable growth. In the Americas, services revenue was flat for the quarter, excluding a contract change or down 3% as reported.

Speaker Change: Our APAC Services business remains strong, achieving second quarter growth of 9%, once again driven by strong project management performance, particularly in India and Australia.

Speaker Change: While EMEA services revenues declined in the quarter, we did see services margins grow, setting a solid foundation for profitable growth.

Speaker Change: In the Americas, services revenue was flat for the quarter, excluding a contract change, or down 3% as reported. Facilities services grew 2%, property management revenues were flat, while project development services declined as office clients deferred expansion plans.

Neil O. Johnston: Facility services grew 2%, property management revenues were flat, while project development services declined as office clients deferred expansion plans. We expect to see improvements in this business line as office leasing activity accelerates. In our GOS business, we are pleased with some very large wins that we've signed this year, including the global mandate for standard chartered banks.

Neil Johnston: We expect to see improvements in this business line as office leasing activity accelerates.

Speaker Change: We expect to see improvements in this business line as office leasing activity accelerates.

Neil Johnston: In our GOS business, we are pleased with some very large wins that we've signed this year, including the global mandate for Standard Chartered Bank. We can multi-family transactional volumes have impacted our race-to-endurance venture, which experienced the $6 million year-over-year decline in equity income contribution. We expect race-to-end earnings to remain pressured in the short term, but to benefit from a transactional market recovery and multi-family when it occurs.

Speaker Change: In our GOS business, we are pleased with some very large wins that we've signed this year, including the global mandate for Standard Chartered Bank.

Neil O. Johnston: Weak and multifamily transactional volumes have impacted our Greystone joint venture, which experienced a $6 million year-over-year decline in equity income contribution. We expect Greystone earnings to remain pressured in the short term but to benefit from a transactional market recovery and multifamily when it occurs. Today we announce the divestiture of a small non-core services business. This business has historically contributed $120 to $140 million in annual revenue to the mid-teen

Speaker Change: Weak and multi-family transactional volumes have impacted our Greystone joint venture, which experienced a $6 million year-over-year decline in equity income contribution. We expect Greystone earnings to remain pressured in the short term, but to benefit from a transactional market recovery and multi-family when it occurs.

Neil Johnston: Today, we announce the divestiture of a small non-call services business. This business has historically contributed 120 to 140 million in annual revenue at mid-teens margins. We saw the business for a transaction value of $165 million, and we'll receive gross cash proceeds of approximately 130 million at close, which we expected to occur during the third quarter. We try to use the proceeds for strategic growth investments and debt paydown, consistent with our long-term capital allocation strategy.

Speaker Change: Today we announce the divestiture of a small non-core services business.

Speaker Change: This business has historically contributed $120 to $140 million in annual revenue at mid-teens margins.

Neil O. Johnston: We sold the business for a transaction value of $165 million, and we will receive gross cash proceeds of approximately $130 million at close, which is expected to occur during the third quarter. We plan to use the proceeds for strategic growth investments and debt paydown, consistent with our long-term capital allocation strategy. Shifting to cash flow and the balance sheet, we continue to make considerable progress on free cash flow conversion. Free cash flow for the quarter was $10 million versus a $27 million use of cash in the second quarter of 2023.

Speaker Change: We sold the business for a transaction value of $165 million.

Speaker Change: and will receive gross cash proceeds of approximately $130 million at close, which is expected to occur during the third quarter.

Speaker Change: We plan to use the proceeds for strategic growth investments and debt paydown, consistent with our long-term capital allocation strategy.

Neil Johnston: Shifting to cash flow and the balance sheet, we continue to make considerable progress on free cash flow conversion. Free cash flow for the quarter was $10 million versus a $27 million early use of cash in the second quarter of 2023. Our first half cash flow, usage of $126 million, compares favorably to 2023, improving by over $130 million, driven by ongoing efforts around working capital efficiencies. During the quarter, we repaid $45 million of term-loan debt due in 2025, reducing the outstanding balance to $98 million. We also reprised an additional $1 million of term-learned debt due in 2030, late in the quarter, learning the applicable interest rate by 35 basis points.

Speaker Change: Shifting to cash flow and the balance sheet, we continue to make considerable progress on free cash flow conversion. Free cash flow for the quarter was $10 million versus a $27 million use of cash in the second quarter of 2023.

Neil O. Johnston: Our first half cash flow usage of $126 million compares favorably to 2023, improving by over $130 million, driven by our ongoing efforts around working capital efficiencies. During the quarter, we repaid $45 million of terminal debt in 2025, reducing the outstanding balance to $98 million. We also repriced an additional $1 billion of Terminal B during 2030 later in the quarter, lowering the applicable interest rate by 35 basis points. Year-to-date, we've repriced $2 billion in term loans and paid down $100 million in debt, all of which is expected to reduce our annual cash interest expense by approximately $14 million.

Speaker Change: Our first half cash flow, usage of $126 million, compares favorably to 2023, improving by over $130 million, driven by our ongoing efforts around working capital efficiencies.

Speaker Change: During the quarter, we repaid $45 million of terminal debt due in 2025, reducing the outstanding balance to $98 million.

Speaker Change: We also repriced an additional $1 billion of Terminal B due in 2030 later in the quarter, lowering the applicable interest rate by 35 basis points.

Neil Johnston: Yet a date, we have reprised $2 billion in term-learns and paid down a hundred million in debt, all of which is expected to reduce our annual cash interest expense by approximately $14 million.

Speaker Change: Year-to-date, we've repriced $2 billion in term loans and paid down $100 million in debt, all of which is expected to reduce our annual cash interest expense by approximately $14 million.

Neil Johnston: Finally, moving to our four-year outlook. On the revenue side, we continue to expect leasing revenue growth in the low-to-mid single-digit range and improving capital markets revenue growth in the second half of the year. In services, we expect flat organic revenue growth returning to mid-single-digit organic growth during 2025. On the cost side, we expect inflation and higher incentive compensation to be mostly offset by our cost efficiency measures for the four-year. In the third quarter, we expect expenses to be roughly $25 to $30 million higher than last year, primarily due to a resetting of incentive compensation, which had been reduced in last year's third quarter.

Neil O. Johnston: Finally, moving to our 4-year outlook. On the revenue side, we continue to expect leasing revenue growth in the low to mid-single-digit range and improving capital markets revenue growth in the second half of the year. In services, we expect flat organic revenue growth, returning to mid-single-digit organic growth during 2025. On the cost side, we expect inflation and high-end incentive compensation to be mostly offset by our cost-efficiency measures for the fall year. In the third quarter, we expect expenses to be roughly $25 to $30 million higher than last year, primarily due to a resetting of incentive compensation, which had been reduced in last year's third quarter.

Speaker Change: Finally, doing trial for your outlook.

Speaker Change: On the revenue side, we continue to expect leasing revenue growth in the low- to mid-single-digit range and improving capital markets revenue growth in the second half of the year. In services, we expect flat organic revenue growth, returning to mid-single-digit organic growth during 2025.

Speaker Change: On the cost side, we expect inflation and high-end incentive compensation to be mostly offset by our cost-efficiency measures for the fall year.

Speaker Change: In the third quarter, we expect expenses to be roughly $25-30 million higher than last year, primarily due to a resetting of incentive compensation, which had been reduced in last year's third quarter.

Michelle Mackay: With that, I'll turn the call back over to Michelle. Thanks, Neil.

Neil O. Johnston: With that, I'll turn the call back over to Michelle. Thanks, Neil.

Michelle M. MacKay: Thanks Neil. Now, let's pivot to growth. We've spent the last year building the foundation of an enterprise that creates the best platform possible to accelerate and drive performance for 2025 and beyond. Our strategy for growth and the allocation of capital to drive our business forward are predicated on the philosophy that the world of commercial real estate has fundamentally changed, and if we want to win, old playbooks must be thrown out. The way that we approach and engage with clients involves a more integrated built world.

Speaker Change: With that, I'll turn the call back over to Michelle.

Michelle Mackay: Now, let's pivot to growth. We've spent a last year building the foundation of an enterprise that creates the best platform possible to accelerate and drive performance for 2025 and beyond. Our strategy for growth and the allocation of capital to drive our business forward is predicated on the philosophy that the world of commercial real estate has fundamentally changed, and if we want to win, old playbooks must be thrown out. The way that we approach and engage with clients incorporates a more integrated built world. Siloes must be broken down, and the enterprise must be connected in the way that we recruit talent, manage relationships, and invest in our portfolio of services.

Michelle M. MacKay: Thanks, Neil. Now, let's pivot to growth.

Michelle M. MacKay: We've spent the last year building the foundation of an enterprise that creates the best platform possible to accelerate and drive performance for 2025 and beyond.

Michelle M. MacKay: Our strategy for growth and the allocation of capital to drive our business forward is predicated on the philosophy that the world of commercial real estate has fundamentally changed and if we want to win, old playbooks must be thrown out.

Michelle M. MacKay: The way that we approach and engage with clients incorporates a more integrated, built world. Silos must be broken down and the enterprise must be connected in the way that we recruit talent, manage relationships, and invest in our portfolio of services.

Michelle M. MacKay: Silos must be broken down, and the enterprise must be connected in the way that we recruit talent, manage relationships, and invest in our portfolio of services. And we see huge potential for our integrated platform and the more connected way in which we are now operating. Since the beginning of the year, we have been realigning our capital allocation to this philosophy. We have heightened collaboration between our research and our sales teams, allowing us to more effectively target regions and subsectors for growth investments in our leasing business.

Michelle Mackay: And we see huge potential for our integrated platform and the more connected way in which we are now operating. Since the beginning of the year, we have been realigning our capital allocation to this philosophy. We have heightened collaboration between our research and our sales teams, allowing us to more effectively target regions and subsectors for growth investments in our leasing business. And it is clear, through our results over the past few quarters, that our strategy has paid off. We are laser focused on providing integrated insights and execution for our clients. And to that end, we have been recruiting and protecting a creative talent and modernizing our capital markets platform to provide the sophisticated service and data our clients need.

Michelle M. MacKay: And we see huge potential for our integrated platform and the more connected way in which we are now operating.

Michelle M. MacKay: Since the beginning of the year, we have been realigning our capital allocation to this philosophy.

Michelle M. MacKay: We have heightened collaboration between our research and our sales teams, allowing us to more effectively target regions and subsectors for growth investments in our leasing business. And it is clear through our results over the past few quarters that our strategy has paid off.

Michelle M. MacKay: And it is clear from our results over the past few quarters that our strategy has paid off. We are laser-focused on providing integrated insights and execution for our clients. To that end, we have been recruiting and protecting accretive talent and modernizing our capital markets platform to provide the sophisticated service and data our clients need. And we are actively managing our portfolio and balance sheet to position the company for profitable future growth.

Michelle M. MacKay: We are laser-focused on providing integrated insights and execution for our clients. And to that end, we have been recruiting and protecting accretive talent and modernizing our capital markets platform to provide the sophisticated service and data our clients need.

Michelle Mackay: And we are actively managing our portfolio and balance sheet to position the company for profitable future growth. We have sold non-core assets and walked away from less accretive services businesses, taking some short-term pain for the clear long-term benefit of a stronger client base and increasing flexibility to invest in higher value services opportunities. You will see us option into organic and inorganic investments to drive growth. Our hard-earned results over the past year reflect the grit and the dedication to clients that define our teams and culture at Cushman & Wakefield.

Michelle M. MacKay: And we are actively managing our portfolio and balance sheet to position the company for profitable future growth.

Michelle M. MacKay: We have sold non-core assets and walked away from less accretive services businesses, taking some short-term pain for the clear long-term benefit of a stronger client base and increasing flexibility to invest in higher value services opportunities. You will see us make organic and inorganic investments to drive growth. Our hard-earned results over the past year reflect the grit and the dedication to clients that define our teams and culture at Cushman & Wakefield. We are proud of what we have delivered and energized about the opportunities we will create in the quarters and years ahead. Now, I'll turn the call over to the operator for your questions.

Michelle M. MacKay: We have sold non-core assets and walked away from less accretive services businesses, taking some short-term pain for the clear long-term benefit of a stronger client base and increasing flexibility to invest in higher value services opportunities.

Michelle M. MacKay: You will see us option into organic and inorganic investments to drive growth.

Speaker Change: Our hard-earned results over the past year reflect the grit and the dedication to clients that define our teams and culture at Cushman & Wakefield. We are proud of what we have delivered on and energized about the opportunities we will create in the quarters and years ahead.

Michelle Mackay: We are proud of what we have delivered on and energized about the opportunities we will create in the quarters and years ahead.

Operator: Now I'll turn the call over to the operator for your questions. Operator? Thank you.

Speaker Change: Now I'll turn the call over to the operator for your questions. Operator?

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press 2 and 1 on the touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. We ask that you limit yourself to one question and a follow-up question. If at any time your question has been answered and you would like to withdraw your question, please press stars 1 and 2. The first question comes from Stephen Sheldon with Williamsfair. Please go ahead.

Operator: We will now begin the question and ask a question. Do I ask a question? You may present one on touch on phone. If you are using a speaker phone, please pick up your handsets before pressing the keys. The asset should limit yourself to one question and follow-up questions.

Speaker Change: Thank you. We will now begin the question and answer session. To ask a question, you may press star 1 on the touch-tone phone.

Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys. We ask that you limit yourself to one question and a follow-up question. If at any time your question has been addressed and you would like to withdraw your question, please press star and 2.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star and choose to ask questions from Stephen Stelden with William Fair.

Stephen Sheldon: Hey, thanks. Really appreciate you taking my questions here. First, Michelle, I wanted to maybe ask about, you know, some of the commentary you just had.

Speaker Change: First question comes from Stephen Sheldon with Video Fair. Please go ahead.

Stephen Sheldon: Please go ahead. Hey, thanks. I really appreciate you taking that question here.

Michelle M. MacKay: Can you just talk some about your producer capacity, you know, as you think about leasing and capital markets as industry activity continues to recover here? I know you don't report producer headcount, nor do any of your peers, but how is your senior producer headcount looking now versus this point last year? And generally, how do you think about your positioning for the benefit of transaction volumes to employees to increase? Yeah.

Michelle Mackay: Michelle, I wanted to be asked about some of the commentary you just had. I think you just talked some about your producer capacity as you think about releasing in capital markets as industry activity continues to recover here. I know you don't report producer head down or your peers, but how has your senior producer head count looking now versus this point last year and generally how do you think about your positioning, the benefit of transaction volumes seem poised and increased? Yeah, you're right. We don't report out producer number, if you will, but we are up from last year as an overall number.

Stephen Sheldon: Hey, thanks, really appreciate you taking my questions here.

Stephen Sheldon: First, Michelle, I wanted to be asked about...

Michelle M. MacKay: Some of the commentary you just had, can you just talk some about your producer capacity, as you think about leasing and capital markets as industry activity continues to recover here. I know you don't report producer headcount on your peers, but how is your senior producer headcount looking now versus this point last year, and generally how do you think about your positioning to benefit transaction volumes?

Michelle M. MacKay: Yeah, you're right; we don't report our producer numbers, if you will, but we are up from last year as an overall number, and so the capacity has been great. I think where you're seeing that really play out first is our leasing. And a lot of our leasing talent that we have retained is just doing exceptionally well, especially in some of the larger deals. I talked a couple times on the earnings calls about 100 and 200,000 square foot transactions, but they're doing as well in the core markets as well.

Speaker Change: seem poised and graceful.

Speaker Change: Yeah, you're right, we don't report out producer number, if you will, but we are up from last year as an overall number, and so the capacity has been great. I think where you're seeing that really play through first is our leasing.

Michelle Mackay: And so the capacity has been great. I think where you're seeing that really play through first is our leasing. And a lot of our leasing talent that we have retained is just doing exceptionally, especially in some of the larger deals. I talk a couple times on the earnings calls about 100,000 and 200,000 for put transactions, but they're doing as well in the core markets as well. So we're really spread equally and well between, say, the 20,000 square foot tenant and the 200,000 square foot tenant, and in capital markets, we set up a program in the beginning of the year to make sure and ensure that we're locking down and locking in our key capital market talent.

Speaker Change: and a lot of our leasing talent that we have retained.

Speaker Change: just doing exceptionally, especially in some of the larger deals.

Speaker Change: I talked a couple times on the earnings calls about 100,000 and 200,000 square foot transactions, but they're doing as well in the core markets as well. So we're really spread equally and well between, say, the 20,000 square foot tenant and the 200,000 square foot tenant.

Michelle M. MacKay: So we're really spread equally and well between, say, the 20,000 square foot tenant and the 200,000 square foot tenant. And in capital markets, we set up a program at the beginning of the year to make sure and ensure that we're locking down and locking in our key capital markets talent.

Speaker Change: In capital markets, we set up a program in the beginning of the year to make sure and ensure that we were locking down and locking in our key capital markets talent.

Speaker: Got it. Next couple. Good to hear.

Michelle M. MacKay: Got it. That's helpful. Good to hear. And then maybe just in services, can you talk some about what you're seeing in terms of winning new large contracts? How is that progressing relative to your expectations? And can you just give some more detail about the types of solutions that are seeing stronger demand right now in that segment?

Michelle Mackay: And then maybe just in services, can you talk some about what you're seeing in terms of winning new large contracts? How is that progressing relative to your expectations? Can you just get some more detail about the types of solutions that are seeing stronger demand right now in that segment? Yeah.

Speaker Change: Got it, that's helpful, good to hear. And then maybe just in services, can you talk some about what you're seeing in terms of winning new large contracts? How is that progressing relative to your expectations? And can you just give some more detail about the types of solutions that are seeing stronger demand right now in that segment?

Michelle M. MacKay: Yeah, let me go a bit into how things have changed. I think that's going to be helpful.

Michelle Mackay: Let me go a bit into how things have changed. I think that's going to be helpful. What you can see play out in the big games today with our services clients is you have to have the global platform where you won't be invited into the conversation. And we talked about how there's a multi-pronged decision going on on the client side. It includes meeting patterns and employees and having that data, workplace experience, shifting demographics, ESG, supply chain complexities, commerce trends, things like power usage. So to be able to address the right now needs of the clients, you have to have these solid organizations that may reference it out in my script.

Michelle M. MacKay: What you can see play out in the big game today with our services clients is you have to have the global platform or you won't be invited into the conversation. And we've talked about how there's a multi-pronged decision going on on the client side that includes meeting patterns and employees and having that data, workplace experience, shifting demographics, ESG, supply chain complexities, e-commerce trends, things like power usage. So to be able to address the immediate needs of the client, you have to have these solid organizations. I made reference to that in my script.

Speaker Change: Yeah, let me go a bit into how things have changed. I think that's going to be helpful.

Speaker Change: What you can see play out in the big game today with our services clients is you have to have the global platform or you won't be invited into the conversation. And we've talked about how there's a multi-pronged decision going on on the client side that includes

Speaker Change: meeting patterns of employees and having that data, workplace experience, shipping demographics, ESG, supply chain complexities, e-commerce trends, things like power usage.

Speaker Change: So to be able to address the right now needs of the clients, you have to have these solid organizations. I made reference to that in my script. Your senior leadership across the globe has to be pulled in together and share all the best practices again and again and always. And some examples of this kind of work and...

Michelle M. MacKay: Your senior leadership across the globe has to be pulled together and share all the best practices again and again and always. Neil made reference to Standard Charter. We also won a very large transaction in EMEA earlier in the year where we had to bring in that worldwide perspective, and DTCC was also a big win for us.

Michelle Mackay: Your senior leadership across the globe has to be pulled in together and share all the best practices again and again and always. And some examples of this kind of work and wins that we're getting, Neil made reference to Standard Charter. We also won a very large transaction in a media earlier in the year where we had to bring in that worldwide perspective. And DTCC was also a big win for us; it's very complicated RFP, global portfolio optimization work. That's how the client is thinking now, not just about how much space am I going to take up?

Neil: Neil made reference to Standard Charter. We also won a very large transaction in EMEA earlier in the year where we had to bring in that worldwide perspective.

Michelle M. MacKay: It's a very complicated RFP, global portfolio optimization work. That's how the client is thinking now, not just about how much space I am going to take up. So we've expanded into consulting on these transactions, bringing a team together that does financial analysis, interior workplace stuff, location analysis, and tenant representation. And we compete against nine firms for something like that. But the truth is, how many of those firms do you really think were qualified to do something that integrated? Not many. And so, what we know now is that in order to continue to service and grow a client, you have to have a culture that embraces constant change.

Speaker Change: And DTCC was also a big win for us, a very complicated RFP.

Speaker Change: Global Portfolio Optimization work, right? That's how the client is thinking now, not just about how much space am I going to take up?

Michelle Mackay: So we've expanded into consulting on these transactions, bringing the team together that says financial analysis, interior workplace stuff, location analysis, tenant reps, and we compete against nine firms for something like that. But the truth is how many of those firms do really think we're qualified to do something that integrated? Not many.

Speaker Change: So we've expanded into consulting on these transactions, bringing the team together that does financial analysis, interior workplace stuff.

Speaker Change: Location Analysis, Tenant Rep, and we competed against nine firms for something like that, but the truth is, how many of those firms do you really think were qualified to do something that integrated? Not many.

Michelle Mackay: And so what we know now is that, in order to continue to service and grow the client, you have to have a culture that embraces constant change.

Speaker Change: And so what we know now is that in order to continue to service and grow the client, you have to have a culture that embraces constant change.

Stephen Sheldon: Got it. Thank you. I appreciate all the coverage.

Speaker Change: Got it. Thank you. Appreciate all the coverage.

Ronald Kamdem: The next question comes from Ronald Kamdem, but Morgan Stanley. Please go ahead. Hey, just two quick ones. So staying on service is a little bit, I think you talked about organic revenue growth flat in 24, but potentially getting to mid-single digits sort of next year.

Ronald Kamdem: The next question comes from Ronald Kamdem with Morgan Stanley. Please go ahead.

Speaker Change: The next question comes from Ronald Kamdem with Morgan Stanley . Please go ahead.

Ronald Kamdem: Hey, just two quick ones. So staying on services a little bit, I think you talked about organic revenue growth flattened out at 24, but potentially getting to mid-single digits sort of next year. If you could just double-click on that comment, what kind of visibility or what gives you sort of confidence that you can get there and so forth? Sure, Ron.

Ronald Kamdem: Hey, just two quick ones. So staying on services a little bit, I think you talked about organic revenue growth, Platinum 24.

Neil Johnston: Just if you could just double-click on that comment, what kind of visibility or what gives you sort of confidence that you can get there until fourth. Sure, Ron, you know, we think about services that they've been lots of components to that. Our story has remained pretty consistent this year. If we break it up by geography, for example, in APAC, the business is strong and it's seen 8% year-of-year growth. And it continues to grow. We are the largest facilities managed by this in Singapore. And we are expanding our client base and seeing, you know, very nice margin there.

Ronald Kamdem: but potentially getting to mid-single digits sort of next year. If you could just double-click on that comment, what kind of visibility or what gives you sort of confidence that you can get there and so forth.

Neil O. Johnston: Sure, Ron. You know, if we think about services, there are lots of components to that. Our story has remained pretty consistent this year. If we break it up by geography, for example, in APAC, the business is strong. It's seen 8% year-over-year growth, and it continues to grow. We are one of the largest facilities management providers in Singapore, and we are expanding our client base and seeing very nice margins there. On the EMEA side, we did a lot of restructuring during the year, and we focused on our design and build business, where we basically worked on improving margins.

Ronald Kamdem: Sure, Ron. You know, if you think about services, there are lots of components to that. Our story has remained pretty consistent this year.

Speaker Change: If we break it up by geography, for example, in APEC the business is strong, it's seen 8% year-over-year growth, and it continues to grow. We are one of the largest facilities management providers in Singapore.

Speaker Change: And we are expanding our client base and seeing very nice margins there.

Neil Johnston: On the idea side is where we could a lot of restructuring during the year. And we focused on our design and build business, where we basically worked on improving margins. And the great thing is there are some of those projects that are more short term in nature. So we, as we look through those contracts, we should see a pick up there. Our facility services business in the US is a very large business, but it's just been likely a lot. I think this is probably 2% this year, but we are seeing some good ones there. And so feel pretty good about getting back to high-single digit growth as we look through 25.

Speaker Change: On the EMEA side is where we did a lot of restructuring during the year, and we focused on our design and build business, where we basically worked on improving margins. The great news there is some of those projects are more short-term in nature, so as we move through those contracts, we should see a pickup there. Our facility services business in the U.S. is a very large business for us, a business we like a lot. Our business has grown 2% this year, but we are seeing some good wins there.

Neil O. Johnston: The great news there is some of those projects are more short-term in nature, so as we move through those contracts, we should see a pickup there. Our facility services business in the U.S. is a very large business for us, a business we like a lot. That business is growing 2% this year, but we are seeing some good wins there, and so I feel pretty good about getting that back to high single-digit growth as we look through 2025.

Speaker Change: And so I feel pretty good about getting that back to live to high single digit growth as we look through 25.

Neil Johnston: Michelle spoke about primary and global occupies services business. That business once again, big wins. Now those are very long contracts. So that will take a while for us to see that momentum build. But that will sort of be what fuels the global services business. And finally, where we have had some pressure is around the property management project management business. That's all very short to the nature. And with the office and constraints in build-outs and office between that business, we challenged an initial term. But once again, it's a very short term, so they expect that to come back quickly.

Neil O. Johnston: Michelle spoke primarily about our global occupied services business. That business, once again, had big wins. Those are very long contracts, so it will take a while for us to see that momentum build, but that will be what fuels the global services business. Finally, where we have had some pressure is around the property project management business. That's all very short-term in nature, and with the office and the constraints of building out an office, we've seen that business be challenged in the short term, but once again, it's very short-term, so we expect that to be.

Speaker Change: Michelle spoke about primarily our Global Occupier Services business. That business, once again, big wins. Now, those are very long contracts. So that will take a while for us to see that momentum build.

Michelle M. MacKay: That will sort of be what fuels the global services business. And finally, where we have had some pressure is around the property management, project management business. That's all very short-term in nature.

Michelle M. MacKay: and the constraints in building out an office and keeping that business challenged in the short term. But once again, it's very short term, so we expect that to pick up quite quickly and really drive the growth through 2025.

Neil Johnston: I'm really glad because through 2025. Great.

Neil O. Johnston: Great, and then just my second question was just going to go back to capital markets a little bit. I know we've had a lot of fits and starts. Just curious what you're seeing on the ground in July and so forth and what the messaging to the market is. Is it is it sort of green shoots? Is it still too early? Just trying to get a sense of where we are in that sort of recovery process.

Michelle Mackay: And then just my second question. We're just going to come back to capital markets a little bit. I know we've had a lot of fits and starts. Just curious, what you're seeing on the ground in July and so forth. And what the messaging to the market is. Is it sort of green to you? Is it still too early? Just trying to get a sense of where we are in that sort of recovery process. Thanks.

Speaker Change: Great and then just my second question was just going to go coming back to capital markets a little bit I know we've had a lot of fits and starts

Speaker Change: Just curious what you're seeing on the ground in July and so forth and what the messaging to the market is. Is it sort of green shoots? Is it still too early? Just trying to get a sense of where we are in that sort of recovery process. Thanks.

Neil O. Johnston: Yeah, I'm going to answer that one for you. What we are looking at here is what we're calling internally a waterfall effect. So we believe the majority of the uncertainty around rates and inflation has started to move into the rear view mirror. We've seen better inflation data, as we all know, and the economy has remained really resilient. So this is positive for the capital market. We started to see leasing take the lead, and we believe when the Fed cuts rates, which we believe will be soon, it'll signal to the market that it's time to move into commercial real estate if you haven't done it already.

Michelle Mackay: Yeah, I'm going to answer that one for you. What we are looking at here is what we're calling internally a water fall fact. So we believe the majority of the uncertainty around race and inflation started to move into the rearview, Europe. We see better inflation data, like we all know, and the economy has remained really resilient. So this is positive for capital markets. And we started to see the same take the lead. And we believe when the Fed cuts race, which we believe will lose soon, it'll signal to the market that it's time to move into commercial state if you haven't done it already.

Speaker Change: I'm going to answer that one for you. What we are looking at here is what we're calling internally a waterfall effect.

Speaker Change: We believe the majority of the uncertainty around race and inflation has started to move into the rear view mirror.

Speaker Change: We've seen better inflation data, like we all know, and the economy has remained really resilient, so this is positive.

Speaker Change: We started to see leasing take the lead and we believe when the Fed cuts rates, which we believe will be soon, it will signal to the market that it's time to move into commercial real estate if you haven't done it already.

Michelle Mackay: In capital markets. And we expect some of the money on the sidelines to be extremely quickly. So that may result in close transactions showing up in the beginning of 2025. Subsequent rate cuts are going to create this waterfall effect. Because we think that more assets will start to move in as race are reduced. And that 2023 and 2024 for capital markets is going to be a year. That people are members to smart investors got into commercial real estate. On our side, when we're looking at what's happening, we look back at last quarter, when starting to see some really strong trends, especially in areas that we invested in, like APAC, up 19%, where we invested in capital markets in Australia.

Speaker Change: We expect some of the money on the sidelines to engage really quickly, but that may result in closed transactions showing up at the beginning of 2025. Subsequent rate cuts are going to create this waterfall effect.

Speaker Change: because we think that more assets will start to move in as rates are reduced.

Neil O. Johnston: And we expect some of the money on the sidelines to engage really quickly, but that may result in closed transactions showing up in the beginning of 2025, and that 2023 and 2024 for capital markets is going to be a year that people remember is just smart investors got into commercial real estate. On our side when we're looking at what's happening we look back at last quarter we started to see some really strong trends especially in areas that we invested in like APAC up 19% where we invested in capital markets in Australia in particular over the course of the last year AMEA up 7% we're seeing some really strong pipelines there especially markets like the UK and in the Americas we're sequentially up quarter to quarter and industrial started to return to growth it's up 72% over that period after six consecutive quarters of decline so we're really looking forward to the market that's coming and have really intentionally set ourselves up really well to take advantage of it. [inaudible]

Speaker Change: and that 2023 and 2024 for capital markets is going to be a year...

Speaker Change: As people remember, smart investors got into commercial real estate.

Speaker Change: On our side, when we're looking at what's happening...

Speaker Change: If you look back at last quarter, we started to see some really strong trends, especially in areas that we invested in, like APAC.

Speaker Change: up 19%.

Michelle Mackay: And to take a look over the course of last year, I mean, up 70%. We're seeing some really strong pipelines there, especially markets like the UK. And in America, we're sequentially up quarter to quarter. And industrial started to return to growth at 72% over that period after 60% of the quarters were decline. So we're really looking forward to the market that's coming and have really intentionally set ourselves up. We're really well to take advantage of it.

Speaker Change: where we invested in capital markets in Australia in particular over the course of the last year.

Speaker Change: AMEA up 7%. We're seeing some really strong pipelines there, especially in markets like the UK. And in the Americas, we're sequentially up quarter to quarter. And industrial started to return to growth. It's up 72% over that period after six consecutive quarters of decline.

Speaker Change: So, we're really looking forward to the market that's coming and have really intentionally set ourselves up really well to take advantage of it.

Ronald Kamdem: Great. Thanks so much.

Speaker: Great, thanks so much.

Speaker Change: Great, thanks so much.

Anthony Paolone: The next question comes from Anthony Paolone with JP Morgan.

Anthony Paolone: The next question comes from Anthony Paolone with J.P. Morgan. Please go ahead.

Speaker Change: The next question comes from Anthony Paolone with J.P. Morgan. Please go ahead.

Michelle Mackay: Please go ahead. Thanks. Maybe just first to understand the brackets around the business for the full year versus last quarter. How would you sum it up in comparison to how you were feeling about 2024 and its entirety? Like, is this better or not as good as last quarter? Is it just trying to read through some of the language here?

Anthony Paolone: Thanks. Maybe just first to understand the brackets around the business for the full year versus last quarter. I mean, how would you sum it up in comparison to how you were feeling about 2024 in its entirety? Like, is this better or not as good as last quarter? I'm just trying to read through some of the language here.

Anthony Paolone: Thanks. Maybe just first to understand the brackets around the business for the full year versus last quarter. I mean, how would you sum it up in comparison to how you were feeling about 2024 in its entirety?

Speaker Change: better or not as good as last quarter. I'm just trying to read through.

Neil Johnston: You know, Tony, I think it's turning out exactly as we expected. You know, certainly on the expense side, we focused on the first half of the year, really driving margin, and we saw the margin improvements, so that was very encouraging. We did expect a step back in capital markets and actually sequentially grew around 19%, so we are seeing that business pick up, and then on the leasing side really exceeded expectations. The leasing numbers are slightly hidden by a very strong second quarter a year ago, particularly in New York, and so we had tough comp with new on the leasing side. But what we see is you see the organ in the leasing market, and you see the third quarter of growth.

Neil O. Johnston: You know, Tony, I think it's turning out exactly as we expected. You know, certainly on the expense side, we focused on the first half of the year, really driving margin, and we saw the margin improvements, so that was very encouraging. We did expect a step back in capital markets, and actually sequentially grew around 19%, so we are seeing that business pick up. And then on the leasing side, we really exceeded expectations.

Speaker Change: Some of the language here.

Speaker Change: You know, Tony, I think it's turning out exactly as we expected. You know, certainly on the expense side, we focused on the first half of the year, really driving margin, and we saw the margin improvements, so that was very encouraging.

Speaker Change: We did expect a step back in capital markets and actually sequentially grew around 19% so we are seeing that business pick up.

Speaker Change: And then on the leasing side, really exceeded expectations.

Neil O. Johnston: The leasing numbers are slightly hidden by a very strong second quarter a year ago, particularly in New York, and so we had a tough comp, we knew, on the leasing side. But what we've seen is a broadening of the leasing market, and we've seen, you know, this is the third quarter of growth. Just to give you an anecdote, you know, in the Americas, our office leasing in call and midsize deals was at 19%, that's 8% in the second quarter, or rather in the first quarter. So just a lot of pipeline building. So overall, I think it's working out, it's turning out to be, we're ahead of schedule with the six-part plan.

Speaker Change: The leasing numbers are slightly hidden by a very strong second quarter a year ago, particularly in New York.

Speaker Change: And so we had a tough comp, we knew, on the leasing side, but what we've seen is we've seen the broadening of the leasing market and we've seen, you know, this is the third quarter of growth.

Neil Johnston: Just to give you an anecdote in the Americas, our office leasing in coal and mid-sized deals was 19% to this 8% in the second quarter, rather in the first quarter. So just a lot of pipeline building. So overall, I think it's working out; it's turning out to be we were ahead of plans with the six stops.

Speaker Change: Just to give you an anecdote, in the Americas, our office leasing in core and midsize deals was at 19% versus 8% in the second quarter, or rather in the first quarter. So just a lot of pipeline building.

Speaker Change: So, overall, I think it's turning out to be, we're ahead of plan through the six months.

Anthony Paolone: Okay, and then I guess on the second question, I would have the margins you picked up 40 BIPs in the first half of the year versus last year. I mean, how should we think about just the full year and the way things are tracking in terms of order of magnitude of change?

Neil Johnston: Okay, and then I guess then on the second question, I would have the margins you picked up 40 bits in the first half of the year versus last year. I mean, how should we think about just the full year and the way things are tracking in terms of order of magnitude change? Sure, sure. So exactly consistent with what we said at the beginning of the year. Our teams did exceptional work towards end of last year and early this year to drive those margins, and we saw the margin of creation as we expected. You know, as we look to the back half of the year, we will have the incentive compensation difference in Q3 as a result of pulling down incentive compensation a year ago.

Speaker Change: Okay and then I guess then on the second question I would have the margins you picked up 40 BIPs in the first half of the year versus last year I mean how should we think about just the full year and the way things are tracking in terms of order of magnitude of change?

Neil O. Johnston: Sure, sure. Exactly consistent with what we said at the beginning of the year, our teams did exceptional work towards the end of last year and early this year to drive those margins, and we saw the margin accretion as we expected. You know, as we look to the back half of the year, we will have the incentive compensation difference in Q3 as a result of pulling down incentive compensation a year ago.

Speaker Change: Sure, sure. So exactly consistent with what we said at the beginning of the year, our teams did exceptional work towards the end of last year and early this year to drive those margins and we saw the margin accretion as we expected.

Speaker Change: You know, as we look to the back half of the year...

Speaker Change: We will have the incentive compensation difference in Q3 as a result of pulling down incentive compensation a year ago.

Neil O. Johnston: But other than that, we expect that our efficiencies will offset any of the growth investment. You know, as we look forward, we really are looking for a balance between how we're investing and how we manage the margins. So very focused on accretive growth, but at the same time, being very intentional around our spend so that we're very well positioned for the recovery. We feel like we are at the bottom of the cycle, and so we want to be ahead of that as we come out towards the end of next year.

Neil Johnston: But other than that, we expect that our efficiencies will offset any of the growth investment. And as we look forward, we really are looking for a balance between how we're investing and how we manage the margins to very focus on a pretty growth. But at the same time, being very intentional around our spend so that we are very well positioned for the recovery, we feel like we are at the bottom of the cycle. And so we want to be ahead of that as we come out towards the end of the year.

Speaker Change: But other than that, we expect that our efficiencies will offset any of the growth investment.

Speaker Change: As we look forward, we really are looking for a balance.

Speaker Change: between how we're investing and how we how we manage the margins. It's very focused on accretive growth.

Speaker Change: But at the same time,

Speaker Change: are being very intentional around our spend so that we are very well positioned for the recovery. We feel like we are at the bottom of the cycle and so we want to be ahead of that as we come out towards the end of the year and into next year.

Neil Johnston: Okay, thank you. The next question comes from Michael Griffin with City. Please go ahead. Great, thanks. I wanted to go back to kind of your commentary there, Neil, on the leasing market, particularly for the office side. You know, as we think about it, I think we've heard that it continues to be those trophy and Class A product that's still winning kind of most of the deals. But given what seems like a rosier picture for the market overall, have you noticed a pick up, and maybe that kind of lower tier office space leasing up, or is it still mainly geared toward that high quality product?

Anthony Paolone: Thank you.

Speaker Change: Okay, thank you.

Michael Anderson Griffin: The next question comes from Michael Griffin with Citi.

Speaker Change: The next question comes from Michael Griffin with Citi. Please go ahead.

Michael Anderson Griffin: Great, thanks. I wanted to go back to your kind of commentary there, Neil, on the leasing market, particularly on the office side. You know, as we think about it, I think we've heard that it continues to be the trophy and class A product that's still winning kind of most of the deals, but given what seems like a rosier picture for the market overall, have you noticed a pickup and maybe that kind of lower tier office space leasing up, or is it still mainly geared toward that high quality product?

Michael Anderson Griffin: Great, thanks. I wanted to go back to kind of your commentary there, Neil, on the leasing market, particularly for the office side. You know, as we think about it, I think we've heard that it continues to be this trophy and Class A product that's still winning.

Michael Anderson Griffin: kind of most of the deals, but given what seems like a rosier picture for the market overall, have you noticed a pickup in maybe that kind of lower tier office space leasing up, or is it still mainly geared toward that high quality product?

Neil Johnston: Well, I think, Michael, it stayed on the high quality. I think high quality has just performed exceptionally well in major markets, in New York and other large markets.

Neil O. Johnston: I think, Michael, it stayed on high quality. I think high quality has just performed exceptionally well in major markets, in New York and other large markets. We have seen a pickup, though, in the smaller and mid-sized deals. So that's a change and a positive change because what we're seeing is a broadening of the leasing market. Companies are now starting to say, OK, the work-from-home phenomenon is now in the rear-view mirror.

Neil: I think it's, Michael, it stayed on the high quality. I think high quality has just performed exceptionally well in major markets in New York and other large markets. We have seen a pickup, though.

Neil Johnston: We have seen a pickup, though, in the smaller and mid-sized fields. So that's a change, and a part of the change is what we've seen as we've seen a broadening of the leasing market. Companies have now started to say, okay, you know, if you look from home, the phenomenon has now since it's in the way of you, Merit. We need to have the space for our people to be in at least three days a week. So, you know, I think that's broadening. And then also, you know, leasing globally was after this because it's a biogeography.

Speaker Change: in the smaller and mid-sized deals. So that's a change, and a positive change, is what we're seeing is we're seeing a broadening.

Speaker Change: of the leasing market. Companies have now started to say, okay, you know, the work-from-home phenomenon has now sort of

Michael Anderson Griffin: We need to have the space for our people to be in for at least three days a week, so I think that's broadening. And then also, leasing globally was up, and there was consistency by geography. And so all of that points to a healthier market as we look into the back half again next year.

Speaker Change: It's in the way of your mirror.

Speaker Change: We need to have the space for our people to be in at least three days a week. So, you know, I think that that's broadening. And then also, you know, leasing globally was up. There was consistency by geography. And so all of that points to a healthier market as we look into the back half again next year.

Neil Johnston: That's all of that points to a healthy market as we go into the back half of the damage next year. Great, that's helpful.

Michael Anderson Griffin: Great, that's helpful. And then just turning kind of the capital allocation priorities, Michelle, I know you kind of laid out your thoughts for the back half of the year and your pair of remarks, but I mean, what should we think about right now as you're trying to prioritize the balance sheet, you know, paying down debt? Or could we see you pivot to offense, whether it's M&A or other external growth opportunities, if the right thing comes along?

Michelle Mackay: And then just turning kind of to capital allocation priorities, Michelle, I know you kind of laid out your thoughts to the back half of the year and your parader marks. But, I mean, should we think about right now as, you know, trying to prioritize the balance sheet, you know, paying down debt, or could we see you pivot to offense, whether it's M&A or, you know, other external growth opportunities, if the right thing comes along? Yeah, absolutely. I mean, we are in a growth mindset headspace, and we know that we can walk and chew down at the same time.

Speaker Change: Great, that's helpful. And then just turning kind of to capital allocation priorities, Michelle, I know you kind of laid out your thoughts for the back half of the year in your prepared remarks, but I mean, should we think about right now as you're trying to prioritize the balance sheet, you know, paying down debt? Or could we see you pivot to offense, whether it's M&A or other external growth opportunities, if the right thing comes along?

Michelle M. MacKay: Yeah, absolutely. We are in a growth mindset headspace, and we know that we can walk and chew gum at the same time.

Michelle M. MacKay: Yeah, absolutely. I mean, we are in a growth mindset headspace, and we know that we can walk and chew gum at the same time. So, you heard us today announce we're going to pay down another $50 million this quarter.

Michelle Mackay: So, you heard us today announce we're going to pay down a 50, note, another 50 million in this quarter. We have some cash coming in from the asset sale, but equally as important, we are doing really well on free cash flow. So, that opens up all the pockets for us, whether that's small M&A, M&A, or organic investing in businesses.

Michelle M. MacKay: So you heard us today announce we're going to pay down another $50 million this quarter. We have some cash coming in from the asset sale, but equally as important, we are doing really well on free cash flow. So that opens up all the pockets for us, whether that's small M&A, big M&A, or organic investing in businesses.

Michelle M. MacKay: We have some cash coming in from the asset sale, but equally as important, we are doing really well on free cash flow. So that opens up all the pockets for us, whether that's small M&A, M&A, or organic investing in businesses.

Speaker: Great, that's it for me.

Michael Anderson Griffin: Great, that's it for me. Thanks for the time.

Speaker: Thanks for the time.

Speaker Change: Great. That's it for me. Thanks for the time.

Operator: Once again, if you have a question, please press star, then we'll end.

Operator: Once again, if you have a question, please press star, then we'll... The next question comes from Peter Abramowitz with Jeffries. Please go ahead.

Speaker Change: Once again, if you have a question, please press star, then one.

Peter Abramowitz: The next question comes from Peter Abramowitz with Jeff Reese. Please go ahead. Yes, thank you. So, you just, you'd call it out weekends in the capital markets. Just kind of due to the uncertainty of the rate environment. Just seems like the market may be turning a corner here late in the quarter, and potentially in the third quarter. You just comment on how things have sort of progressed through July. And then also, you know, just in terms of the timing going to turn around with some rates to ability here for the last couple of months, I guess.

Speaker Change: The next question comes from Peter Abramowitz with Jeffries. Please go ahead.

Peter Abramowitz: Yes, thank you. So you'd call it out weakness in the capital markets, just kind of due to the uncertainty of the rate environment. It just seems like the market may be turning a corner here late in the quarter and potentially into the third quarter. Could you just comment on how things have sort of progressed through July? And then also, you know, just in terms of the timing of a turnaround with some rate stability here for the last couple of months, I guess, when do you expect things to start to unflag?

Peter Abramowitz: Yes, thank you. So you just, you'd call it out a weakness in the capital markets, just kind of due to the uncertainty of the rate environment.

Speaker Change: It just seems like the market may be turning a corner.

Speaker Change: here late in the quarter and potentially in the third quarter. Could you just comment on how things have sort of progressed through July ? And then also, you know, just in terms of

Speaker Change: The timing of a turnaround.

Michelle Mackay: What do you expect things to start to reflect?

Speaker Change: with some rate stability here for the last couple of months. I guess when do you expect things to start to inflect?

Michelle Mackay: I mean, I think first of all, we're not going to comment on July, but the inflection point will be the first time the Fed makes a move. That will start to lead people into the right place to make decisions, but it's probably going to be a small move. Let's say it's 25 basis points; what you'll see is some assets transacting immediately, but we believe the volume, or the waterfalls we refer to, will actually begin to happen late in the year and the beginning of the next year into 2025, because the first move isn't material in that it will probably be small.

Neil O. Johnston: I mean, I think, first of all, we're not going to comment on July, but the inflection point will be the first time the Fed makes a move. That will start to lead people into the right place to make decisions, but it's probably going to be a small move. Let's say it's 25 basis points. What you'll see is some assets transacting immediately, but we believe the volume, or the waterfall, as we refer to it, will actually begin to happen late in the year, at the beginning of next year, into 2025. Because the first move isn't material in that it will probably be small.

Speaker Change: I mean, I think, first of all, we're not going to comment on July , but the inflection point will be the first time the Fed makes a move.

Speaker Change: That will start to lead people into the right place to make decisions, but it's probably going to be a small move. Let's say it's 25 basis points. What you'll see is some assets transacting

Speaker Change: immediately but we believe the volume or the waterfall as we refer to it will actually begin to happen late in the year in the beginning of next year into 2025 because the first move isn't material in that will probably be small.

Speaker: Okay, that's helpful. Thank you.

Peter Abramowitz: Okay, that's helpful. Thank you. And then one just to follow up on Michael's question, a similar question, but digging into it a little bit more. Just given some of the comments around your strength on leasing, just wondering, within office and geographically, have you seen any points of strength specifically within some of the gateway office markets that you would call out?

Neil Johnston: And then one, just to follow up on Michael's question, similar question, but just digging into it a little bit more, just given some of the comments around your strength on leasing. Just wondering, within office and geographically, have you seen any points of strength specifically within some of the gateway office markets that you would call out? I mean, I think we've seen over the course of years, certainly strength in New York in particular, but a lot of the gateway markets, you're starting to see pickup, and even in areas like San Francisco, you're starting to see some positive progress there too.

Speaker Change: Okay, that's helpful. Thank you. And then one, just to follow up on...

Speaker Change: on Michael's question. Similar question but just digging into it a little bit more.

Speaker Change: Just given some of the comments around your strength on leasing, just wondering within office and geographically, have you seen any points of strength specifically within some of the gateway office markets that you would call out?

Neil O. Johnston: I mean, I think that we've seen over the course of the year certainly strength in New York, in particular, but a lot of the gateway markets are starting to pick up, and even in areas like San Francisco, you're starting to see some positive progress there too.

Speaker Change: I mean, I think that we've seen over the course of the year certainly strength in New York in particular, but a lot of the gateway markets, you're starting to see pick up and even in areas like San Francisco, you're starting to see some positive progress there too.

Speaker: All right, that's all from me. Thank you.

Peter Abramowitz: All right, that's all for me. Thank you.

Speaker Change: All right, that's all for me. Thank you.

Operator: This concludes a question and answer session.

Michelle M. MacKay: This concludes our question and answer session. I would like to turn the conference back over to Michelle MacKay for any closing remarks. Please call.

Michelle Mackay: I would like to turn the conference back over to Michelle MacKay for any closing remarks. Please go. Thank you, everyone, for joining us today, and we look forward to speaking with you again next quarter.

Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Michelle MacKay for any closing remarks. Please go ahead.

Michelle M. MacKay: Thank you everyone for joining us today, and we look forward to speaking with you again next quarter.

Michelle M. MacKay: Thank you everyone for joining us today and we look forward to speaking with you again next quarter.

Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Speaker Change: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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Operator: BF-WATCH TV 2021

Speaker Change: [inaudible]