Jones Lang LaSalle Reports Revenue Growth of 18 Percent for the First Quarter of 2012

CHICAGO, May 1, 2012 /PRNewswire/ -- Jones Lang LaSalle Incorporated (NYSE: JLL) today reported $22 million of adjusted net income, or $0.50 per share, for the first quarter of 2012, compared with $1 million of adjusted net income, or $0.03 per share, for the first quarter of last year.

• Market share gains drove 18 percent consolidated revenue growth
• Operating income margins expanded in all operating segments
• LaSalle incentive fees and equity earnings reflected solid results for clients
• Semi-annual dividend declared, increased to $0.20 per share from $0.15 per share

"We drove strong first-quarter revenue and profit growth by building both market share and margins," said Colin Dyer, President and Chief Executive Officer. "World real estate markets continue their cyclical recovery, and we will continue our successful drive for revenue and margin growth."

Consolidated Performance Highlights

Consolidated revenue grew 18 percent for the quarter, 19 percent in local currency, to $813 million, driven by double-digit growth in all geographic segments and Real Estate Services business lines.  This growth was achieved despite lower transactional market activity in many of the firm's core markets.  LaSalle Investment Management, which continued to perform well for its clients, delivered both incentive fees and equity earnings in the period.  Strong revenue growth in the quarter resulted in improved operating income and margins in each of the firm's operating segments.

Operating expenses, excluding restructuring and acquisition charges, were $790 million for the quarter, an increase of 17 percent, 18 percent in local currency, compared with $676 million in the first quarter of 2011. The increase was driven by higher fixed compensation resulting from an increased number of employees compared with a year ago, higher variable compensation from improved transactional revenue, and increases in vendor and subcontractor costs in the Property & Facility Management service line.

First-quarter results also included $9 million of restructuring and acquisition charges(4) and $2 million of intangible amortization related to the second quarter 2011 addition of King Sturge(5). 

A portion of the consolidated revenue and operating expense growth in the quarter resulted from new and expanded contracts in the Property & Facility Management and Project & Development Services ("PDS") business lines for which U.S. GAAP gross accounting was required.  Gross contract costs(1), which are included in both revenue and expenses, totaled $69 million in the first quarter of 2012, compared with $47 million in the first quarter last year.  Excluding these costs from revenue and operating expenses more accurately reflects how the firm manages its expense base and its operating margins.  On a fee revenue basis, consolidated firm revenue grew 17 percent in local currency, to $744 million, compared with the same period last year.  Fee-based operating expenses(1), excluding restructuring and acquisition charges, were $721 million for the quarter, an increase of 15 percent in U.S. dollars and local currency, compared with $629 million in the first quarter of 2011.  Neither operating income nor net income was impacted by the exclusion of gross contract costs.

Balance Sheet and Dividend

Outstanding debt on the firm's long-term credit facility increased by $169 million to $632 million during the quarter, driven by incentive compensation payments after the firm's solid 2011 performance.  The firm's net debt position, which includes deferred acquisition obligations, was $868 million as of March 31, 2012.  The firm continues to maintain its investment-grade ratings.  Its low leverage balance sheet generated interest expense in the first quarter of $7.4 million, down from $8.0 million in the first quarter of 2011. 

Reflecting confidence in the firm's current trading prospects, the Board of Directors has announced a semi-annual dividend of $0.20 per share, a 33 percent increase from the $0.15 per share dividend payment made in December 2011.  The dividend payment will be made on June 15, 2012, to holders of record at the close of business on May 15, 2012. 

Business Segment Performance Highlights

Americas Real Estate Services

First-quarter revenue in the Americas region was $346 million, an increase of 20 percent over the prior year. Americas Leasing revenue grew 5 percent despite overall office leasing volumes dropping 23 percent in the United States.  Excluding gross contract costs, Fee Revenue was $327 million in the first quarter of 2012, an increase of 15 percent from the first quarter of 2011.  The growth was led by Property & Facility Management, which increased 32 percent on a fee revenue basis from last year, and Capital Markets & Hotels, which increased 41 percent. 

Fee-based operating expenses were $316 million for the year, a 14 percent increase compared with the prior year.  The increase was the result of higher fixed compensation costs due to a larger number of employees compared with a year ago and higher commission expenses related to improved transactional revenue. 

Americas operating income improved to $12 million for the quarter, from $9 million in 2011.  Operating income margin calculated as a percentage of Fee Revenue was 3.6 percent in 2012, compared with 3.0 percent in 2011.  EBITDA for the quarter ended March 31, 2012, was $22 million, compared with $19 million last year.

EMEA Real Estate Services

EMEA's first-quarter revenue was $213 million, compared with $168 million in the first quarter of 2011, an increase of 27 percent, 31 percent in local currency.  Excluding gross contract costs, Fee Revenue in the region was $187 million, compared with $148 million last year, a 31 percent increase in local currency.  The fee revenue increase was the result of growth and market share gains in the transactional businesses, the continued expansion of the Tetris fit-out business and the successful integration of the 2011 King Sturge acquisition.

Fee-based operating expenses for the region were $197 million in the first quarter compared with $161 million in the first quarter of 2011.  Gross contract costs in the region were $26 million in the first quarter compared with $21 million in the prior year.  These gross contract costs are related to the Tetris fit-out business included in the PDS service line.  Fee-based operating expenses include $2 million of King Sturge intangibles amortization(5) in the first quarter of 2012.  

The first quarter has historically been a seasonal loss-making quarter in the region; however, there was year-over-year margin improvement.  Adjusting for the impact of King Sturge intangibles amortization, EMEA's operating income margin calculated as a percentage of Fee Revenue was a 4.5 percent loss compared with an 8.9 percent loss in the first quarter of 2011.  EBITDA for the quarter was a loss of $4 million, compared with a loss of $8 million in 2011.

Asia Pacific Real Estate Services

Revenue in Asia Pacific was $186 million in the first quarter, compared with $166 million in 2011, an increase of 13 percent, 12 percent in local currency.  Excluding gross contract costs, Fee Revenue increased $22 million to $163 million, or 15 percent, 14 percent in local currency.  Continued expansion of the firm's market-leading positions in the corporate occupier space and improved year-over-year performance in Australia drove the fee revenue improvement from last year.  Despite investment volumes across Asia Pacific markets dropping 28 percent compared with a year ago, Capital Markets & Hotels revenue increased 19 percent in local currency from the first quarter of 2011.

Fee-based operating expenses were $156 million in the first quarter compared with $135 million in the first quarter of 2011, an increase of 15 percent, 13 percent in local currency.  The year-over-year increase in fee-based operating expenses was due to a higher number of employees compared with a year ago, and to compensation increases, particularly in the growth markets of China and India.

Gross contract costs in the region were $24 million compared with $25 million in the first quarter of last year.  The gross contract costs in Asia Pacific were attributable primarily to the Property & Facility Management business, with some costs related to the PDS business. 

Asia Pacific's operating income margin calculated on a fee revenue basis was 4.3 percent compared with 3.9 percent in the first quarter of 2011.  EBITDA for the quarter was $10 million, compared with $8 million in 2011.

LaSalle Investment Management

LaSalle Investment Management's first-quarter advisory fees were $57 million, compared with $61 million in 2011. The business recognized $8 million of incentive fees resulting from investment performance for clients.  The business also recognized nearly $12 million of equity earnings in the quarter, driven by the sale of a fund in Japan.  Although the sale took place during the quarter, the associated incentive fees are expected to be recognized later in the year when all contingencies are satisfied.

LaSalle's assets under management were $47 billion on March 31, 2012.  Operating income margin was 34.2 percent in the first quarter, compared with 14.1 percent in the first quarter last year.  EBITDA was $28 million, compared with $10 million in the first quarter of 2011.

Summary

The firm had a good start to the year in the seasonally slow first quarter with solid revenue growth from expanded market share gains and improved operating income margins.  The firm's business pipelines are encouraging against the backdrop of a mixed economic outlook across the globe.

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 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 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 $47.2 billion of assets under management. For further information, please visit www.joneslanglasalle.com.

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Statements in this press release regarding, among other things, future financial results and performance, achievements, plans and objectives, and dividend payments 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, and dividend payments 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, 2011, 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.

Conference Call

The firm will conduct a conference call for shareholders, analysts and investment professionals on Tuesday, May 1 at 6:00 p.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:              +1 877 800 0896
• International callers:   +1 706 679 7364
• Pass code:               69902819

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=86398 and follow instructions

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

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

Supplemental Information

Supplemental information regarding the first-quarter 2012 earnings call has been posted to the Investor Relations section of the company's website:  www.joneslanglasalle.com.

Conference Call Replay

Available: 7:00 p.m. EDT Tuesday, May 1 through 11:59 p.m. EDT May 8 at the following numbers:

• U.S. callers:                +1 855 859 2056 or 1 800 585 8367
• International callers:     +1 404 537 3406
• Pass code:                 69902819

Web Audio Replay

Audio replay will be available for download or stream. This information and link is also available on the company's website  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.  Consistent with U.S. GAAP ("GAAP"), gross contract vendor and subcontractor costs ("gross contract costs"), which are managed on certain client assignments in the Property & Facility Management and Project & Development Services business lines, are presented on a gross basis in both revenue and operating expenses.  Gross contract costs are excluded from revenue and operating expenses in determining "fee revenue" and "fee-based operating expenses," respectively.  Excluding these costs from revenue and operating expenses more accurately reflects how the firm manages its expense base and its operating margins.  Adjusted operating income excludes the impact of restructuring and acquisition charges and intangible amortization related to the King Sturge acquisition.  "Adjusted operating income margin" is calculated by dividing adjusted operating income by fee revenue.  Below are reconciliations of revenue and operating expenses to fee revenue and fee-based operating expenses, as well as adjusted operating income margin calculations, for the quarters ended March 31, 2012, and March 31, 2011.

2.  Charges excluded from GAAP net income attributable to common shareholders to arrive at adjusted net income for the quarters ended March 31, 2012, and March 31, 2011, are primarily Restructuring and acquisition charges and intangible amortization related to the King Sturge acquisition. Below are reconciliations of GAAP net income attributable to common shareholders to adjusted net income and calculations of earnings per share ("EPS") for each net income total:

3.   Adjusted EBITDA represents earnings before interest expense, net of interest income, income taxes, depreciation and amortization, adjusted for restructuring and acquisition charges, and non-cash co-investment charges. 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. EBITDA is 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 an alternative to net income 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 to EBITDA and adjusted EBITDA.  Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by fee revenue.

4.  Restructuring and acquisition charges are excluded from segment operating results, although they are included for consolidated reporting. 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.

5.  Intangible amortization from the second-quarter 2011 King Sturge acquisition is included in depreciation and amortization in the firm's consolidated results, as well as in EMEA's segment results, but has been excluded from adjusted operating income and adjusted net income.

6.  Each geographic region offers the firm's full range of Real Estate Services businesses consisting 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.

7.  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, 2012, to be filed with the Securities and Exchange Commission shortly.

8.  EMEA refers to Europe, Middle East and Africa.  MENA refers to Middle East and North Africa.  Greater China includes China, Hong Kong, Macau and Taiwan.

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

SOURCE Jones Lang LaSalle Incorporated