Cushman & Wakefield(CWK) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Contains the company's unaudited interim financial statements and management's discussion of financial condition and results of operations Item 1. Financial Statements Presents the unaudited condensed consolidated financial statements and accompanying notes for the period ended March 31, 2025 Condensed Consolidated Balance Sheets Details the company's assets, liabilities, and shareholders' equity as of March 31, 2025, compared to December 31, 2024 Condensed Consolidated Balance Sheets | (in millions) | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Assets | | | | Cash and cash equivalents | $623.2 | $793.3 | | Total current assets | $2,604.8 | $2,690.4 | | Goodwill | $2,020.8 | $1,998.3 | | Total assets | $7,407.5 | $7,549.2 | | Liabilities and Shareholders' Equity | | | | Total current liabilities | $2,203.2 | $2,329.9 | | Long-term debt, net | $2,910.5 | $2,939.6 | | Total liabilities | $5,630.6 | $5,793.8 | | Total equity | $1,776.9 | $1,755.4 | | Total liabilities and shareholders' equity | $7,407.5 | $7,549.2 | - Total assets decreased by $141.7 million from December 31, 2024, to March 31, 2025, primarily due to a decrease in cash and cash equivalents[11] - Total liabilities decreased by $163.2 million, mainly driven by a reduction in accrued compensation and long-term debt[11] Condensed Consolidated Statements of Operations Summarizes revenues, expenses, and net income for the three months ended March 31, 2025, compared to the prior-year period Condensed Consolidated Statements of Operations | (in millions, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $2,284.6 | $2,184.8 | | Total costs and expenses | $2,239.3 | $2,166.0 | | Operating income | $45.3 | $18.8 | | Net income (loss) | $1.9 | $(28.8) | | Basic earnings (loss) per share | $0.01 | $(0.13) | | Diluted earnings (loss) per share | $0.01 | $(0.13) | - Revenue increased by 4.6% year-over-year, from $2,184.8 million in Q1 2024 to $2,284.6 million in Q1 2025[13] - The company reported a net income of $1.9 million in Q1 2025, a significant improvement from a net loss of $28.8 million in Q1 2024[13] Condensed Consolidated Statements of Comprehensive Income (Loss) Details the components of comprehensive income, including net income and other comprehensive income items like currency translation adjustments Condensed Consolidated Statements of Comprehensive Income (Loss) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $1.9 | $(28.8) | | Other comprehensive income (loss), net of tax: | | | | Designated hedge (loss) gain | $(9.4) | $10.7 | | Defined benefit plan actuarial (loss) gain | $(1.4) | $0.9 | | Foreign currency translation | $24.5 | $(32.9) | | Total other comprehensive income (loss) | $13.7 | $(21.3) | | Total comprehensive income (loss) | $15.6 | $(50.1) | - Total comprehensive income improved significantly to $15.6 million in Q1 2025 from a loss of $50.1 million in Q1 2024, primarily driven by positive foreign currency translation effects[16] Condensed Consolidated Statements of Changes in Equity Reconciles the beginning and ending balances of shareholders' equity, detailing the impact of net income, stock compensation, and other equity transactions Condensed Consolidated Statements of Changes in Equity | (in millions) | Balance as of Dec 31, 2024 | Net Income | Stock-based Compensation | Vesting of Shares | Unrealized Loss on Hedging Instruments | Amounts Reclassified from AOCI | Foreign Currency Translation | Defined Benefit Plans Actuarial Loss | Balance as of Mar 31, 2025 | | :-------------------------------- | :------------------------- | :--------- | :----------------------- | :---------------- | :------------------------------------- | :---------------------------- | :--------------------------- | :--------------------------------- | :------------------------- | | Total Equity Attributable to the Company | $1,754.9 | $1.9 | $15.9 | $(10.0) | $(4.0) | $(5.4) | $24.5 | $(1.4) | $1,776.4 | - Total equity attributable to the company increased from $1,754.9 million at December 31, 2024, to $1,776.4 million at March 31, 2025, primarily due to net income and foreign currency translation gains, partially offset by stock-based compensation adjustments and hedging losses[19] Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities for the quarter Condensed Consolidated Statements of Cash Flows | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(162.0) | $(125.1) | | Net cash provided by (used in) investing activities | $20.6 | $(10.8) | | Net cash used in financing activities | $(41.3) | $(72.9) | | Change in cash, cash equivalents and restricted cash | $(182.7) | $(208.8) | | Cash, cash equivalents and restricted cash, end of period | $640.2 | $585.8 | - Net cash used in operating activities increased to $162.0 million in Q1 2025 from $125.1 million in Q1 2024, primarily due to higher net working capital used for operations[24][183] - Net cash provided by investing activities improved significantly to $20.6 million in Q1 2025 from a use of $10.8 million in Q1 2024, driven by increased net capital funding from the A/R Securitization and lower capital expenditures[24][184] - Net cash used in financing activities decreased to $41.3 million in Q1 2025 from $72.9 million in Q1 2024, mainly due to a $30.0 million decrease in principal repayments under the 2018 Credit Agreement[24][185] Notes to the Condensed Consolidated Financial Statements Provides detailed explanations of the accounting policies and financial data presented in the statements Note 1: Basis of Presentation The unaudited financial statements are prepared under U.S. GAAP for interim reporting and are subject to normal recurring adjustments - Financial statements are unaudited and prepared in conformity with U.S. GAAP for quarterly reports[27] - Results for the three months ended March 31, 2025, are not necessarily indicative of the full year due to seasonality[29] Note 2: New Accounting Pronouncements Details the adoption and potential impact of new accounting standards on the company's financial statements - Adopted ASU 2023-05 (Business Combinations – Joint Ventures) effective January 1, 2025, with no impact on financial position or results[31] - Will adopt ASU 2023-09 (Income Taxes) prospectively for annual periods beginning after December 15, 2024, resulting in expanded disclosures but no impact on financial position or results[32] - Evaluating ASU 2024-03 (Income Statement – Expense Disaggregation), effective for annual periods after December 15, 2026, which will expand expense disclosures but not impact financial position or results[34] Note 3: Segment Data Presents financial data for the company's reportable segments: Americas, EMEA, and APAC - Reportable segments are Americas, Europe, Middle East and Africa (EMEA), and Asia Pacific (APAC)[35] - Adjusted EBITDA is the primary profitability metric for segment performance and resource allocation[36] Segment Revenue and Adjusted EBITDA | (in millions) | Americas (2025) | EMEA (2025) | APAC (2025) | Total (2025) | Americas (2024) | EMEA (2024) | APAC (2024) | Total (2024) | | :-------------------- | :-------------- | :---------- | :---------- | :----------- | :-------------- | :---------- | :---------- | :----------- | | Revenue | $1,688.3 | $205.0 | $391.3 | $2,284.6 | $1,621.0 | $222.4 | $341.4 | $2,184.8 | | Adjusted EBITDA | $79.3 | $2.0 | $14.9 | $96.2 | $64.4 | $9.0 | $4.7 | $78.1 | - Total Adjusted EBITDA increased by 23% from $78.1 million in Q1 2024 to $96.2 million in Q1 2025[38] Note 4: Earnings Per Share Provides the calculation of basic and diluted earnings per share for the reported periods Earnings Per Share Calculation | (in millions, except per share amounts) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $1.9 | $(28.8) | | Weighted average shares outstanding for basic EPS | 230.4 | 227.9 | | Basic earnings (loss) per share | $0.01 | $(0.13) | | Weighted average shares outstanding for diluted EPS | 232.3 | 227.9 | | Diluted earnings (loss) per share | $0.01 | $(0.13) | - Diluted EPS improved to $0.01 in Q1 2025 from a loss of $0.13 in Q1 2024[41] - Approximately 3.3 million potentially dilutive shares were excluded from diluted EPS calculation in Q1 2024 as they were anti-dilutive[40] Note 5: Revenue Disaggregates revenue by service line and segment and details contract-related balances Revenue by Service Line and Segment | (in millions) | Americas (2025) | EMEA (2025) | APAC (2025) | Total (2025) | Americas (2024) | EMEA (2024) | APAC (2024) | Total (2024) | | :-------------------- | :-------------- | :---------- | :---------- | :----------- | :-------------- | :---------- | :---------- | :----------- | | Services | $1,186.7 | $105.0 | $311.9 | $1,603.6 | $1,167.8 | $109.1 | $273.8 | $1,550.7 | | Leasing | $346.3 | $39.4 | $32.7 | $418.4 | $305.5 | $53.7 | $28.5 | $387.7 | | Capital markets | $115.9 | $18.0 | $24.0 | $157.9 | $111.6 | $15.6 | $14.9 | $142.1 | | Valuation and other | $39.4 | $42.6 | $22.7 | $104.7 | $36.1 | $44.0 | $24.2 | $104.3 | | Total revenue | $1,688.3 | $205.0 | $391.3 | $2,284.6 | $1,621.0 | $222.4 | $341.4 | $2,184.8 | - Total revenue increased by $99.8 million (5%) year-over-year, with Leasing revenue up 8% and Capital markets revenue up 11%[42][151] Contract Balances | (in millions) | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Short-term contract assets, net | $303.8 | $301.4 | | Non-current contract assets, net | $67.0 | $66.8 | | Total contract assets, net | $370.8 | $368.2 | | Contract liabilities | $74.0 | $68.0 | Note 6: Goodwill and Other Intangible Assets Details changes in goodwill and the carrying amounts of other intangible assets, such as trade names and customer relationships Goodwill Rollforward | (in millions) | Americas | EMEA | APAC | Total | | :-------------------------- | :------- | :--- | :--- | :---- | | Balance as of Dec 31, 2024 | $1,469.2 | $309.4 | $219.7 | $1,998.3 | | Acquisitions | — | $8.8 | — | $8.8 | | Effect of exchange rates | — | $11.6 | $2.1 | $13.7 | | Balance as of Mar 31, 2025 | $1,469.2 | $329.8 | $221.8 | $2,020.8 | - Goodwill increased by $22.5 million from December 31, 2024, to March 31, 2025, driven by acquisitions ($8.8 million) and foreign exchange movements ($13.7 million)[47] Intangible Assets, Net | (in millions) | March 31, 2025 Net Value | December 31, 2024 Net Value | | :-------------------- | :----------------------- | :------------------------ | | C&W trade name | $546.0 | $546.0 | | Customer relationships | $136.4 | $144.1 | | Total intangible assets | $682.4 | $690.1 | - Amortization expense for intangible assets was $9.9 million in Q1 2025, down from $13.3 million in Q1 2024[49] Note 7: Equity Method Investments Discloses information about the company's investments in joint ventures accounted for using the equity method - Material equity method investments are Greystone JV (40% interest) and Onewo JV (35% interest)[51] Equity Method Investment Balances | (in millions) | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Greystone JV | $591.6 | $585.2 | | Onewo JV | $131.6 | $126.8 | | Total Equity method investments | $735.4 | $723.6 | Earnings from Equity Method Investments | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Greystone JV | $6.3 | $9.3 | | Onewo JV | $4.1 | $1.0 | | Total Earnings from equity method investments | $11.1 | $11.7 | - Royalty fee income from Onewo JV increased to $2.3 million in Q1 2025 from $1.6 million in Q1 2024[51] Note 8: Derivative Financial Instruments and Hedging Activities Describes the company's use of derivatives to manage interest rate and foreign currency risks - Interest rate hedging instruments consisted of twelve interest rate swap agreements with a notional amount of $1.97 billion as of March 31, 2025[55][61] - Entered into three forward-starting interest rate swap agreements for $200.0 million in March 2025, effective August 21, 2025, expiring August 21, 2027[55] - Foreign currency forward contracts outstanding covered a notional amount of $554.0 million as of March 31, 2025[60][61] - Gains of $5.4 million related to interest rate hedges were reclassified into earnings and recognized in Interest expense, net of interest income, in Q1 2025[62] Note 9: Long-Term Debt and Other Borrowings Details the components of the company's long-term debt, recent financing activities, and covenant compliance Long-Term Debt, Net | (in millions) | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Term Loan, due January 2030 Tranche-1 | $980.5 | $980.5 | | Term Loan, due January 2030 Tranche-2 | $955.6 | $979.7 | | 6.750% Senior Secured Notes, due May 2028 | $645.5 | $645.1 | | 8.875% Senior Secured Notes, due September 2031 | $394.4 | $394.2 | | Total Long-term debt, net | $2,910.5 | $2,939.6 | - Repriced the 2030 Tranche-1 Term Loan in January 2025, reducing the interest rate from 1-month Term SOFR plus 3.00% to 1-month Term SOFR plus 2.75%[67] - Prepaid $25.0 million in principal outstanding under the 2030 Tranche-2 in March 2025[68] - Revolver capacity was $1.1 billion and was undrawn as of March 31, 2025[71] - The company was in compliance with all debt covenants as of March 31, 2025[75] Note 10: Commitments and Contingencies Discloses potential liabilities from litigation, claims, and other contingent obligations Contingent Liabilities | (in millions) | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Contingent liabilities (current) | $99.8 | $81.4 | | Contingent liabilities (non-current) | $61.1 | $59.9 | | E&O and other litigation claims | $57.9 | $56.7 | | General liability, workers' compensation, medical claims | $103.0 | $84.6 | - Estimated range of reasonably possible loss for non-U.S. payroll tax claims, in excess of accrued amounts, is up to $43.0 million, net of tax benefit[82] - The company is a defendant in a DOJ civil lawsuit regarding RealPage's revenue management software, but does not expect a material impact on its business, financial condition, or results of operations[84] - Maximum potential future payments for guarantees are approximately $111.0 million, with the probability of future payment considered remote[85] Note 11: Related Party Transactions Details transactions with related parties, including equity method investments and employee receivables - Recognized royalty fee income from equity method investments (see Note 7)[90] Receivables from Brokers and Other Employees | (in millions) | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Receivables from brokers and other employees (current) | $57.5 | $47.5 | | Receivables from brokers and other employees (non-current) | $402.5 | $364.5 | Note 12: Fair Value Measurements Provides information on how the company measures assets and liabilities at fair value using a three-level hierarchy - Fair value hierarchy levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), Level 3 (unobservable inputs)[96] Fair Value of Financial Instruments | (in millions) | March 31, 2025 Total | March 31, 2025 Level 1 | March 31, 2025 Level 2 | March 31, 2025 Level 3 | | :-------------------------------- | :------------------- | :------------------- | :------------------- | :------------------- | | Assets | | | | | | Cash equivalents - money market funds | $1.1 | $1.1 | — | — | | Deferred compensation plan assets | $28.1 | $28.1 | — | — | | Interest rate swap agreements | $4.2 | — | $4.2 | — | | Foreign currency forward contracts | $1.0 | — | $1.0 | — | | Liabilities | | | | | | Deferred compensation plan liabilities | $22.1 | $22.1 | — | — | | Interest rate swap agreements | $1.6 | — | $1.6 | — | | Foreign currency forward contracts | $1.8 | — | $1.8 | — | | Earn-out liabilities | $16.7 | — | — | $16.7 | - Earn-out liabilities, classified as Level 3, increased to $16.7 million as of March 31, 2025, with a maximum potential payment of $19.1 million[97][103][105] - Unrealized loss of $0.7 million recognized on real estate investments in Q1 2025[109] Note 13: Accounts Receivable Securitization Describes the company's program for selling eligible trade receivables to an unaffiliated financial institution - Receivables sold under the A/R Securitization were $676.6 million in Q1 2025, with cash collections of $701.3 million reinvested[113] A/R Securitization Details | (in millions) | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | DPP receivable | $250.3 | $310.9 | | Outstanding principal on receivables sold | $412.9 | $437.6 | | Aggregate capital outstanding under facility | $130.0 | $100.0 | | Unused portion of facility limit | $36.6 | $100.0 | - The A/R Securitization facility has a maximum limit of $200.0 million and expires on June 19, 2026[114] Note 14: Supplemental Cash Flow Information Provides a reconciliation of cash balances and details on non-cash activities and cash paid for interest and taxes Reconciliation of Cash, Cash Equivalents and Restricted Cash | (in millions) | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $623.2 | $793.3 | | Restricted cash | $17.0 | $21.3 | | Total cash, cash equivalents and restricted cash | $640.2 | $814.6 | Supplemental Cash Flow Data | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Cash paid for: Interest | $54.5 | $61.6 | | Cash paid for: Income taxes | $16.1 | $12.5 | | Non-cash investing/financing: Property and equipment additions through finance leases | $2.6 | $4.7 | Note 15: Subsequent Events Confirms the evaluation of events occurring after the balance sheet date for potential disclosure - No material subsequent events were identified through April 29, 2025[116] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's analysis of financial condition, results of operations, liquidity, and capital resources for the quarter Cautionary Note Regarding Forward-Looking Statements Highlights that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties, covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[119] - Key risk factors include macroeconomic conditions, ability to attract/retain talent, brand value, IT strategies, cybersecurity, competition, acquisitions, goodwill impairment, regulatory compliance, and international operations[120][125] Overview Provides a high-level summary of the company's business, global presence, and core service offerings - Cushman & Wakefield is a leading global commercial real estate services firm with approximately 52,000 employees in nearly 400 offices across 60 countries[124] - The firm manages approximately 6.0 billion square feet of commercial real estate space globally[124] - Core service offerings include Services, Leasing, Capital markets, and Valuation and other services[124] Recent Developments and Outlook Discusses recent performance highlights, key financial results, and strategic initiatives like the proposed redomicile - First quarter 2025 revenue increased 5% to $2.3 billion, with Leasing revenue up 8% and Capital markets revenue up 11%[133] - Net income for Q1 2025 was $1.9 million, a $30.7 million improvement from a net loss of $28.8 million in Q1 2024[133] - Adjusted EBITDA increased 23% to $96.2 million in Q1 2025[133] - The company is seeking to redomicile its parent company to Bermuda, subject to shareholder and court approvals[128] Critical Accounting Policies and Estimates Confirms that financial statements are prepared under U.S. GAAP and notes no material changes to critical accounting policies - Unaudited interim Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions[130] - No material changes to critical accounting policies or estimates as of March 31, 2025[130] Recently Issued Accounting Pronouncements Refers readers to Note 2 for details on new accounting standards - Refer to Note 2: New Accounting Pronouncements for details on recently issued accounting pronouncements[131] Items Affecting Comparability Explains factors that can impact year-over-year comparisons, including macroeconomic conditions, acquisitions, and seasonality - Results are significantly impacted by macroeconomic conditions, including economic activity, financial market volatility, interest rates, inflation, and demand for commercial real estate[134] - Acquisitions and dispositions can affect year-over-year comparability due to incremental revenues, expenses, and transaction-related costs[136] - International operations expose the company to global economic trends, foreign government policies, and foreign currency fluctuations (e.g., Australian dollar, Singapore dollar, euro, British pound sterling)[137][138] - A significant portion of revenue, especially from Leasing and Capital markets, is seasonal, with the first quarter typically being the lowest and the fourth quarter the highest[140] Use of Non-GAAP Financial Measures Defines and explains the rationale for using non-GAAP measures like Adjusted EBITDA and local currency metrics - Non-GAAP financial measures used include Adjusted EBITDA, Adjusted EBITDA margin, Segment operating expenses, Fee-based operating expenses, and Local currency[141][148] - Adjusted EBITDA is the primary measure of segment profitability, excluding unrealized loss on investments, impairment, acquisition costs, cost savings initiatives, and other non-recurring items[143] - Local currency metrics are calculated by holding foreign currency exchange rates constant to provide greater visibility into business performance without currency fluctuations[145] Results of Operations Provides a consolidated overview of the company's operating results, comparing the current quarter to the prior-year period Consolidated Results of Operations | (in millions) | Q1 2025 (USD) | Q1 2024 (USD) | % Change (USD) | % Change (Local Currency) | | :-------------------------- | :------------ | :------------ | :------------- | :------------------------ | | Revenue | $2,284.6 | $2,184.8 | 5% | 6% | | Services | $866.6 | $871.2 | (1)% | 1% | | Leasing | $412.5 | $381.7 | 8% | 9% | | Capital markets | $157.4 | $141.6 | 11% | 11% | | Valuation and other | $104.2 | $103.1 | 1% | 3% | | Total service line fee revenue | $1,540.7 | $1,497.6 | 3% | 4% | | Gross contract reimbursables | $743.9 | $687.2 | 8% | 9% | | Total costs and expenses | $2,239.3 | $2,166.0 | 3% | 4% | | Operating income | $45.3 | $18.8 | n.m. | n.m. | | Net income (loss) | $1.9 | $(28.8) | n.m. | n.m. | | Adjusted EBITDA | $96.2 | $78.1 | 23% | 24% | - Total revenue increased by $99.8 million (5% in USD, 6% in local currency) year-over-year, driven by Leasing (up 8%) and Capital markets (up 11%)[151] - Net income improved by $30.7 million to $1.9 million in Q1 2025, primarily due to growth in Leasing and Capital markets, cost savings, lower interest expense, and lower depreciation/amortization[157] - Adjusted EBITDA increased by $18.1 million (23%) to $96.2 million, with Adjusted EBITDA margin rising to 6.2% from 5.2%[158] Segment Results Analyzes the financial performance of each geographic segment: Americas, EMEA, and APAC Americas Results Americas revenue increased 4%, driven by strong growth in Leasing, while Adjusted EBITDA rose 23% Americas Segment Results | (in millions) | Q1 2025 (USD) | Q1 2024 (USD) | % Change (USD) | % Change (Local Currency) | | :-------------------------- | :------------ | :------------ | :------------- | :------------------------ | | Total revenue | $1,688.3 | $1,621.0 | 4% | 5% | | Services | $603.2 | $599.4 | 1% | 1% | | Leasing | $341.1 | $299.5 | 14% | 14% | | Capital markets | $115.4 | $111.1 | 4% | 4% | | Valuation and other | $39.1 | $35.4 | 10% | 12% | | Adjusted EBITDA | $79.3 | $64.4 | 23% | 24% | - Americas Leasing revenue increased 14% due to higher tenant representation in office and industrial sectors and a higher number of large deals[164] - Adjusted EBITDA increased by $14.9 million (23%), driven by growth across service lines, partially offset by higher employment costs and lower earnings from Greystone JV[166] EMEA Results EMEA revenue decreased 8% due to lower Leasing and Services activity, causing a 78% decline in Adjusted EBITDA EMEA Segment Results | (in millions) | Q1 2025 (USD) | Q1 2024 (USD) | % Change (USD) | % Change (Local Currency) | | :-------------------------- | :------------ | :------------ | :------------- | :------------------------ | | Total revenue | $205.0 | $222.4 | (8)% | (6)% | | Services | $72.7 | $81.0 | (10)% | (8)% | | Leasing | $39.4 | $53.7 | (27)% | (26)% | | Capital markets | $18.0 | $15.6 | 15% | 17% | | Adjusted EBITDA | $2.0 | $9.0 | (78)% | (85)% | - EMEA Leasing revenue declined 26% (local currency) due to lower volumes and timing of large contracts[168] - EMEA Capital markets revenue increased 17% (local currency), driven by rate stability and built-up demand, particularly in the U.K. and Netherlands[168] - Adjusted EBITDA decreased by $7.0 million (78%), primarily due to declines in Services and Leasing, and cost inflation[170] APAC Results APAC revenue grew 15%, led by strong performance in Capital markets and Leasing, resulting in a significant improvement in Adjusted EBITDA APAC Segment Results | (in millions) | Q1 2025 (USD) | Q1 2024 (USD) | % Change (USD) | % Change (Local Currency) | | :-------------------------- | :------------ | :------------ | :------------- | :------------------------ | | Total revenue | $391.3 | $341.4 | 15% | 18% | | Services | $190.7 | $190.8 | 0% | 3% | | Leasing | $32.0 | $28.5 | 12% | 16% | | Capital markets | $24.0 | $14.9 | 61% | 59% | | Adjusted EBITDA | $14.9 | $4.7 | n.m. | n.m. | - APAC Leasing revenue increased 16% (local currency) due to strength in Australia and China[172] - APAC Capital markets revenue surged 59% (local currency), primarily driven by large deals in Japan[172] - Adjusted EBITDA increased by $10.2 million, driven by growth in Leasing and Capital markets and higher earnings from Onewo JV[174] Liquidity and Capital Resources Details the company's sources of liquidity, debt management activities, and overall capital structure - Primary liquidity sources are cash flows from operations, available cash reserves, debt capacity under the Revolver, and funding from the A/R Securitization[175] - As of March 31, 2025, liquidity was $1.7 billion, comprising $0.6 billion in cash and cash equivalents and $1.1 billion availability on the undrawn Revolver[180] - The company repriced the 2030 Tranche-1 Term Loan and prepaid $25.0 million of the 2030 Tranche-2 in Q1 2025, reducing leverage[179] - Operating cash flow is seasonal, typically lowest in Q1 and highest in Q4, managed with cash on hand and Revolver/A/R Securitization funding[177] Off-Balance Sheet Arrangements Describes the off-balance sheet accounts receivable securitization program - The company is party to an off-balance sheet revolving A/R Securitization program, selling eligible trade receivables to an unaffiliated financial institution[181] - As of March 31, 2025, $130.0 million in capital was outstanding under this facility, with $36.6 million unused capacity[181] Cash Flow Summary Provides a summary and detailed analysis of cash flows from operating, investing, and financing activities Summary of Cash Flows | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(162.0) | $(125.1) | | Net cash provided by (used in) investing activities | $20.6 | $(10.8) | | Net cash used in financing activities | $(41.3) | $(72.9) | | Total change in cash, cash equivalents and restricted cash | $(174.4) | $(215.4) | Operating Activities Net cash used in operating activities increased due to higher net working capital usage - Net cash used in operating activities increased by $36.9 million to $162.0 million in Q1 2025[183] - Increased use of net working capital for operations by $99.7 million, driven by higher cash payments for prepaid expenses and bonuses, and lower collections of trade receivables[183] Investing Activities Net cash from investing activities improved, driven by increased funding from the A/R Securitization - Net cash generated from investing activities was $20.6 million, an improvement of $31.4 million year-over-year[184] - Improvement driven by a $30.0 million increase in net capital funding from the A/R Securitization and lower capital expenditures, partially offset by a $4.9 million increase in cash paid for business acquisitions[184] Financing Activities Net cash used in financing activities decreased due to lower principal repayments on debt - Net cash used in financing activities decreased by $31.6 million to $41.3 million[185] - Decrease primarily due to a $30.0 million reduction in principal repayments under the 2018 Credit Agreement[185] Item 3. Quantitative and Qualitative Disclosures About Market Risk Outlines the company's exposure to market risks, primarily interest rate and foreign exchange risk, and its management strategies Market Risk Identifies principal market risks and the strategies used to mitigate them - Principal market risks are interest rates on debt obligations and foreign exchange risk[186][189] - Risks are managed by controlling debt funding, using derivative financial instruments (interest rate swaps, foreign currency contracts), and diversifying counterparties[186] Interest Rate Risk Details the company's exposure to interest rate volatility on its variable-rate debt - Exposed to interest rate volatility on Term Loans and Revolver borrowings[187] - Term Loans bear variable interest rates (1-month Term SOFR plus 2.75% for 2030 Tranche-1, 1-month Term SOFR plus 3.25% for 2030 Tranche-2)[188] - A hypothetical 100 basis point increase in variable interest rates would result in approximately $2.0 million in incremental annualized interest expense[191] Foreign Exchange Risk Discusses the impact of foreign currency fluctuations on revenue and the methods used to manage this risk - Approximately 30% of Q1 2025 revenue was transacted in currencies other than USD[192] Revenue by Currency | (in millions) | Q1 2025 Revenue | % of Total Revenue | | :------------------ | :-------------- | :----------------- | | United States dollar | $1,608.0 | 70% | | Singapore dollar | $104.7 | 5% | | Euro | $99.6 | 4% | | Australian dollar | $94.3 | 4% | | Other | $378.0 | 17% | | Total revenue | $2,284.6 | 100% | - A hypothetical 10% increase in USD value against Singapore dollar, euro, and Australian dollar would decrease revenue by approximately $9.5 million, $9.1 million, and $8.6 million, respectively[192] - Foreign exchange risk is managed by establishing local operations, invoicing in local currencies, and using foreign currency forward contracts[193] Item 4. Controls and Procedures Reports on the effectiveness of the company's disclosure controls and any changes in internal control over financial reporting Disclosure Controls and Procedures Confirms the effectiveness of disclosure controls as of the end of the reporting period - CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025[196] Changes in Internal Control Over Financial Reporting States whether any material changes to internal controls occurred during the quarter - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2025[197] PART II - OTHER INFORMATION Contains other required disclosures, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings Discloses that the company is not involved in any legal proceedings expected to have a material adverse effect - No current legal proceedings are expected to have a material adverse effect on the company's business, financial condition, results of operations, or liquidity[199] Item 1A. Risk Factors Notes no material changes to previously disclosed risks, except for a new risk related to the proposed redomicile to Bermuda - No material changes to risk factors previously disclosed in the 2024 Annual Report, except for an additional risk factor[200] - New risk factor: No guarantee the Proposed Redomicile to Bermuda will be completed or result in anticipated benefits; failure or delay could negatively impact share price and divert management attention[201] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Confirms no unregistered sales of equity securities occurred during the period - None[202] Item 3. Defaults Upon Senior Securities Confirms no defaults upon senior securities occurred during the period - None[203] Item 4. Mine Safety Disclosures States that this disclosure requirement is not applicable to the company - Not applicable[204] Item 5. Other Information Provides information on information dissemination practices and insider trading arrangements - Material information is disseminated via the company's website, press releases, and SEC filings[205] - No directors or officers adopted or terminated Rule 10b5-1(c) trading arrangements during Q1 2025[206] Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL documents - Includes Form of 2025 Performance-Vested RSU Agreement, Offer Letter, Compensation Update Letters, and Amendment No. 10 to the Credit Agreement[208] - Certifications by CEO and CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a) and Section 302/906 of Sarbanes-Oxley Act of 2002 are filed/furnished[208] - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents, and Cover Page Interactive Data File) are included[208]