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Cushman & Wakefield reports its first quarterly results

Cushman & Wakefield (CWK) reported a narrower loss in the second quarter, primarily driven by the increase in fee revenue exceeding the rise in Fee-based operating expenses. Despite the top line exceeding consensus, the bottom line missed analysts’ expectations. This is the company’s first official quarterly release after its IPO.

The company has successfully completed initial public offering and private placement in early August, resulting in net proceeds of about $1 billion. Subsequent to quarter close, the commercial real estate services provider entered into a new Credit Agreement, repaid the First Lien debt and expanded its revolving credit facility.

Net loss for the quarter narrowed to $32.2 million or $0.22 per share from $47.3 million or $0.33 per share a year ago. Adjusted earnings per share jumped by 59% to $0.46.

Revenue grew 16% to $2 billion, helped by an increase in the gross contract costs, primarily in the property, facilities and project management service line. Foreign currency had a favorable impact on revenue, driving about 1% growth.

Fee revenue increased by 11% to $1.4 billion, reflecting rises primarily in leasing and property, facilities and project management.

The company’s outstanding First Lien and Second Lien debt, net of deferred financing fees, was $3 billion as of June 30, 2018, which net of cash and cash equivalents, provided for a net debt position of about $2.6 billion. Net debt increased $34 million from last quarter, primarily driven by lower cash due to the seasonality of its business.

Total ending liquidity for the second quarter was $868 million with the majority of the balance being made up of a $486 million undrawn revolving credit facility, and $382 million of cash and cash equivalents.

In August 2018, the $450 million Second Lien Loan was repaid with IPO proceeds, a new Credit Agreement was raised to increase liquidity and extend maturity, and the revolving credit facility was expanded from $486 million to $810 million. The expanded revolving credit facility, along with cash to balance sheet of $403 million from IPO proceeds, increased liquidity, on a pro-forma basis, to $1.6 billion.

Shares of Cushman & Wakefield ended Wednesday’s regular session up 0.06% at $17.56 on the NYSE. The stock had fallen about 1.4% since IPO and more than 5% in the past one month.

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