Jones Lang LaSalle Reports First-Quarter 2010 Net Income

CHICAGO, April 27 /PRNewswire-FirstCall/ -- Jones Lang LaSalle Incorporated (NYSE: JLL), the leading integrated financial and professional services firm specializing in real estate, today reported net income of $0.2 million on a U.S. GAAP basis, or $0.01 per share, for the quarter ended March 31, 2010, compared with a net loss of $61 million on a U.S. GAAP basis, or $1.78 per share, for the quarter ended March 31, 2009.  Adjusting for Restructuring and certain non-cash co-investment charges in the first quarter of 2010, net income would have been $6 million, or $0.14 per share, compared with an adjusted net loss of $22 million, or $0.65 per share in 2009.  Net income in the first quarter benefited from continued momentum from the fourth quarter of 2009 and the transition to a more variable compensation structure in a number of the firm's transactional businesses.  The firm's adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") was $37 million for the first quarter of 2010 compared with adjusted EBITDA of $11 million for the same period in 2009.  Revenue for the first quarter of 2010 was $581 million, an increase of 18 percent in U.S. dollars, 12 percent in local currency, compared with the first quarter of 2009.

First-Quarter 2010 Highlights:

• Revenue up 12 percent in local currency driven by increased activity across all operating segments
• Transactional revenue recovering
• Continued solid growth in corporate outsourcing business
• Significant new client mandates in LaSalle Investment Management

First-quarter results included $1 million of Restructuring charges as well as $6 million of non-cash co-investment impairment charges. Restructuring charges are excluded from segment operating results although they are included for consolidated reporting.  Non-cash co-investment impairments are included in Equity losses at the consolidated and segment reporting levels.

"We are encouraged by our solid first-quarter results, which were broadly based across geographies and service lines," said Colin Dyer, Chief Executive Officer of Jones Lang LaSalle. "Business prospects for the year are improving and we are moving forward with confidence, but with a close watch on market dynamics."

Operating expenses excluding Restructuring charges were $562 million for the first quarter, compared with $505 million in 2009.  On a local currency basis, operating expenses excluding restructuring charges increased only 6 percent despite increased incentive compensation related to higher transaction activity and incremental costs related to new corporate outsourcing mandates compared with a year ago.  

Balance Sheet and Dividend

The firm's outstanding debt on its long-term credit facilities was $335 million at March 31, 2010, compared with $496 million at March 31, 2009.  The credit facilities balance was significantly lower at March 31, 2010, despite paying nearly all 2009 incentive compensation by March 31, 2010, compared with 2009 when the majority of incentive compensation was paid in the second quarter.  

The firm announced that its Board of Directors declared a semi-annual dividend of $0.10 per share, consistent with dividend payments made in December 2009.  The dividend payment will be made on June 15, 2010, to holders of record at the close of business on May 14, 2010.    

Business Segment First-Quarter Performance Highlights

Investor and Occupier Services

First-quarter revenue in the Americas region was $228 million, an increase of 14 percent over the prior year, reflecting an improved transactional environment offset by continued lower levels of client capital expenditures that negatively impacted the Project & Development Services business.  

Operating expenses were $219 million in the first quarter, 7 percent higher than a year ago, driven by higher incentive compensation expense related to increased transaction revenue as well as the cost of serving more outsourcing clients.

The region's EBITDA for the first quarter of 2010 was $18 million, compared with $11 million for the same period last year.  

EMEA's first-quarter 2010 revenue was $151 million compared with $121 million in 2009, an increase of 25 percent, 17 percent in local currency.   Revenue in England and Germany increased over the prior year by 47 percent and 14 percent, respectively, and Russia's performance stabilized as revenue increased 59 percent in the first quarter of 2010 from very low levels in 2009.

Operating expenses were $161 million in the first quarter, an increase of 13 percent from the prior year, 6 percent in local currency, primarily due to increased variable compensation expense related to increased transactional activity levels across the region.  

The region's EBITDA for the first quarter of 2010 was a loss of $5 million, compared with a $16 million loss for the same period last year.

Revenue in the Asia Pacific region was $136 million for the first quarter of 2010, compared with $105 million for the same period in 2009, an increase of 29 percent, 15 percent in local currency.  The year-over-year increase was driven by transactional revenue improvement compared with a year ago.

Operating expenses for the region were $130 million for the quarter, an increase of only 7 percent year over year in local currency, despite incremental costs related to serving more corporate outsourcing clients and higher variable compensation associated with increased transactional revenue.

The region's EBITDA for the first quarter of 2010 was $9 million, compared with a $1 million loss for the same period last year.

LaSalle Investment Management

LaSalle Investment Management's first-quarter Advisory fees were $59 million, comparable with $60 million in the first quarter of 2009, though down 7 percent in local currency. The business recognized $6 million of Incentive fees in the first quarter of 2010 after reaching specified performance objectives against established benchmarks.  Asset purchases, a key driver of Transaction fees, were limited by the low levels of attractive assets available.

During the quarter, LaSalle Investment Management secured new separate account mandates and portfolio takeovers of over $3 billion and raised nearly $400 million of net equity for its funds and public securities business.  The significant number of new commitments and portfolio takeovers reflects LaSalle's strong performance track record and reputation in the market.  Assets under management were $39.9 billion, flat compared with December 31, 2009.

Summary

The firm's solid start to 2010 resulted from improved revenue from transactional businesses, the growing annuity revenue base and ongoing expense management.  The transition to a more variable compensation structure also contributed to improved profitability in the typically loss-making first quarter.  The firm is encouraged by a solid first-quarter performance and will continue to focus on providing superior service to clients to grow market share.

Statements in this press release regarding, among other things, future financial results and performance, achievements, plans and objectives, dividend payments and share repurchases may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance, achievements, plans and objectives of Jones Lang LaSalle to be materially different from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include those discussed under "Business," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures about Market Risk," and elsewhere in Jones Lang LaSalle's Annual Report on Form 10-K for the year ended December 31, 2009, and in other reports filed with the Securities and Exchange Commission.  There can be no assurance that future dividends will be declared since the actual declaration of future dividends, and the establishment of record and payment dates, remains subject to final determination by the Company's Board of Directors.  Statements speak only as of the date of this release. Jones Lang LaSalle expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in Jones Lang LaSalle's expectations or results, or any change in events.

About Jones Lang LaSalle

Jones Lang LaSalle (NYSE: JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2009 global revenue of $2.5 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.6 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with approximately $40 billion of assets under management. For further information, please visit our Web site, www.joneslanglasalle.com.

200 East Randolph Drive Chicago Illinois 60601 │ 22 Hanover Square London W1A 2BN │ 9 Raffles Place #39–00 Republic Plaza Singapore 048619

Conference Call

The firm will conduct a conference call for shareholders, analysts and investment professionals on Wednesday, April 28 at 9:00 a.m. EDT.

To participate in the teleconference, please dial into one of the following phone numbers five to 10 minutes before the start time:

• U.S. callers:  +1 877 809 9540
• International callers:  +1 706 679 7364
• Pass code:  68684735

Webcast

Follow these steps to listen to the webcast:

1. You must have a minimum 14.4 Kbps Internet connection

2. Log on to http://www.videonewswire.com/event.asp?id=68027 and follow instructions

3. Download free Windows Media Player software: (link located under registration form)

4. If you experience problems listening, send an e-mail to [email protected]  

Supplemental Information

Supplemental information regarding the first quarter 2010 earnings call has been posted to the Investor Relations section of the company's Web site:  www.joneslanglasalle.com.

Conference Call Replay

Available: 12:00 p.m. EDT Wednesday, April 28 through 11:59 p.m. EDT May 5 at the following numbers:

• U.S. callers:  +1 800 642 1687
• International callers:  +1 706 645 9291
• Pass code:  68684735

Web Audio Replay

Audio replay will be available for download or stream. This information and link is also available on the company's Web site:  www.joneslanglasalle.com.

If you have any questions, call Yvonne Peterson of Jones Lang LaSalle's Investor Relations department at +1 312 228 2919.

JONES LANG LASALLE INCORPORATED

Financial Statement Notes

1. Charges excluded from GAAP net income (loss) to arrive at adjusted net income (loss) for the quarters ended March 31, 2010, and March 31, 2009, respectively, are integration costs related to the Staubach and Kemper's acquisitions completed in 2008, severance costs and non-cash co-investment charges.

Below are reconciliations of GAAP net income (loss) to adjusted net income (loss) and calculations of earnings (loss) per share ("EPS") for each net income (loss) total (in millions after tax, except per share):

Basic shares outstanding were used in the calculations of 2009 GAAP and adjusted EPS as the use of dilutive shares outstanding would have caused those EPS calculations to be anti-dilutive.

2. Adjusted EBITDA represents EBITDA adjusted for Restructuring and non-cash co-investment charges.  EBITDA represents earnings before interest expense, net of interest income, income taxes, depreciation and amortization. Although adjusted EBITDA and EBITDA are non-GAAP financial measures, they are used extensively by management and are useful to investors and lenders as metrics for evaluating operating performance and liquidity. The firm believes that adjusted EBITDA and EBITDA are indicators of ability to service existing debt, to sustain potential future increases in debt and to satisfy capital requirements.  EBITDA is also used in the calculations of certain covenants related to the firm's revolving credit facility. However, adjusted EBITDA and EBITDA should not be considered as alternatives either to net income (loss) or net cash provided by (used in) operating activities, both of which are determined in accordance with GAAP. Because adjusted EBITDA and EBITDA are not calculated under GAAP, the firm's adjusted EBITDA and EBITDA may not be comparable to similarly titled measures used by other companies.

Below is a reconciliation of net income (loss) to EBITDA and adjusted EBITDA (in thousands):

Below is a reconciliation of net cash used in operating activities, the most comparable cash flow measure on the consolidated statements of cash flows, to EBITDA and adjusted EBITDA (in thousands):

3. For purposes of segment operating results, the allocation of restructuring charges to the segments has been determined to not be meaningful to investors, so the performance of segment results has been evaluated without allocation of these charges.

4. Each geographic region offers the firm's full range of Investor Services, Capital Markets and Occupier Services.  The Investor and Occupier Services business consists primarily of tenant representation and agency leasing; capital markets; property management and facilities management; project and development services; and advisory, consulting and valuations services.  The Investment Management segment provides investment management services to institutional investors and high-net-worth individuals.

5. The consolidated statements of cash flows are presented in summarized form. For complete consolidated statements of cash flows, please refer to the firm's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, to be filed with the Securities and Exchange Commission shortly.

6. EMEA refers to Europe, Middle East, and Africa.  MENA refers to Middle East and North Africa.

7. Certain prior year amounts have been reclassified to conform to the current presentation.

SOURCE Jones Lang LaSalle Incorporated