Strong top-line performance by annuity-based businesses
across the globe offset softness in Capital Markets
CHICAGO, Nov. 2, 2022
/PRNewswire/ -- Jones Lang LaSalle Incorporated (NYSE: JLL) today
reported operating performance for the third quarter of 2022 with
diluted earnings per share of $2.88,
compared with $4.57 in the prior-year
quarter, and adjusted diluted earnings per share1 of
$3.40, compared with $4.56 last year.
- Revenue was $5.2 billion, up 10%
in local currency, and fee revenue1 was $2.0 billion, up 4% in local currency
-
- Outsourcing wins and continued Project Management demand drove
14% increase in Work Dynamics fee revenue
- Stable Markets Advisory fee revenue highlighted by Property
Management in the Americas and growth in office Leasing
- Industry-wide lower market volumes and elongated deal cycles
across the globe contributed to the 5% decline in Capital
Markets
- Margin contraction was due to higher compensation expense and
incremental T&E and marketing costs
- Increased borrowing capacity of Credit Facility to $3.35 billion and redeemed $275 million of Senior Notes
"During the latter half of the quarter, the commercial real
estate industry experienced a more rapid slowdown in Capital
Markets volumes than was expected three months ago," said
Christian Ulbrich, JLL CEO. "In the
current environment, the time to close deals has elongated and
bid-ask spreads have widened. At the same time, Work Dynamics, one
of our more resilient segments, continued to show strength with
double-digit fee revenue growth. We see significant opportunity to
leverage JLL's global platform and industry expertise to serve
clients during a more challenging macro-economic period."
Summary Financial Results
|
Three Months Ended September
30,
|
|
Nine Months Ended September 30,
|
($ in millions, except per share data, "LC" = local
currency)
|
2022
|
|
2021
|
% Change
in USD
|
% Change
in LC
|
|
2022
|
|
2021
|
% Change
in USD
|
% Change
in LC
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
5,177.5
|
|
$
4,889.2
|
6 %
|
10 %
|
|
$
15,257.3
|
|
$ 13,421.3
|
14 %
|
17 %
|
Fee
revenue1
|
2,048.6
|
|
2,050.6
|
—
|
4
|
|
6,087.9
|
|
5,269.4
|
16
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to common shareholders
|
$
140.2
|
|
$
237.2
|
(41) %
|
(40) %
|
|
$
479.7
|
|
$
540.2
|
(11) %
|
(10) %
|
Adjusted net income
attributable to common shareholders1
|
165.3
|
|
236.8
|
(30)
|
(29)
|
|
564.5
|
|
566.6
|
—
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
2.88
|
|
$
4.57
|
(37) %
|
(36) %
|
|
$
9.65
|
|
$
10.35
|
(7) %
|
(6) %
|
Adjusted diluted
earnings per share1
|
3.40
|
|
4.56
|
(25)
|
(24)
|
|
11.35
|
|
10.86
|
5
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA1
|
$
276.2
|
|
$
352.0
|
(22) %
|
(19) %
|
|
$
908.8
|
|
$
874.5
|
4 %
|
6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
6
|
$
88.4
|
|
$
414.6
|
(79) %
|
n/a
|
|
$
(537.9)
|
|
$
98.7
|
(645) %
|
n/a
|
Note: For discussion
and reconciliation of non-GAAP financial measures, see the Notes
following the Financial Statements in this news release.
|
Consolidated Third-Quarter 2022 Performance
Highlights:
|
|
Consolidated
|
Three Months Ended September
30,
|
|
%
Change
in USD
|
|
%
Change
in LC
|
|
Nine Months Ended September 30,
|
|
%
Change
in USD
|
|
%
Change
in LC
|
($ in millions, "LC" = local
currency)
|
2022
|
|
2021
|
|
|
|
2022
|
|
2021
|
|
|
Markets
Advisory
|
$
1,111.5
|
|
$
1,079.9
|
|
3 %
|
|
6 %
|
|
$
3,229.2
|
|
$
2,823.9
|
|
14 %
|
|
17 %
|
Capital
Markets
|
595.2
|
|
680.3
|
|
(13)
|
|
(8)
|
|
1,880.3
|
|
1,644.1
|
|
14
|
|
18
|
Work
Dynamics
|
3,289.8
|
|
2,960.4
|
|
11
|
|
16
|
|
9,633.9
|
|
8,494.7
|
|
13
|
|
17
|
JLL
Technologies
|
56.5
|
|
38.8
|
|
46
|
|
47
|
|
156.6
|
|
121.8
|
|
29
|
|
29
|
LaSalle
|
124.5
|
|
129.8
|
|
(4)
|
|
5
|
|
357.3
|
|
336.8
|
|
6
|
|
13
|
Total revenue
|
$
5,177.5
|
|
$
4,889.2
|
|
6 %
|
|
10 %
|
|
$
15,257.3
|
|
$
13,421.3
|
|
14 %
|
|
17 %
|
Gross contract
costs1
|
(3,123.7)
|
|
(2,810.5)
|
|
11
|
|
16
|
|
(9,156.6)
|
|
(8,108.4)
|
|
13
|
|
16
|
Net non-cash MSR and
mortgage banking derivative activity
|
(5.2)
|
|
(28.1)
|
|
(81)
|
|
(81)
|
|
(12.8)
|
|
(43.5)
|
|
(71)
|
|
(71)
|
Total fee revenue1
|
$
2,048.6
|
|
$
2,050.6
|
|
— %
|
|
4 %
|
|
$
6,087.9
|
|
$
5,269.4
|
|
16 %
|
|
19 %
|
Markets Advisory
|
847.9
|
|
837.0
|
|
1
|
|
4
|
|
2,444.9
|
|
2,100.6
|
|
16
|
|
19
|
Capital Markets
|
579.1
|
|
639.2
|
|
(9)
|
|
(5)
|
|
1,831.3
|
|
1,565.9
|
|
17
|
|
21
|
Work Dynamics
|
452.9
|
|
416.6
|
|
9
|
|
14
|
|
1,330.4
|
|
1,188.6
|
|
12
|
|
16
|
JLL Technologies
|
52.7
|
|
34.4
|
|
53
|
|
54
|
|
146.0
|
|
97.1
|
|
50
|
|
51
|
LaSalle
|
116.0
|
|
123.4
|
|
(6)
|
|
3
|
|
335.3
|
|
317.2
|
|
6
|
|
13
|
Operating income
|
$
202.6
|
|
$
292.9
|
|
(31) %
|
|
(30) %
|
|
$
613.4
|
|
$
597.9
|
|
3 %
|
|
4 %
|
Equity earnings
|
$
0.5
|
|
$
17.4
|
|
(97) %
|
|
(97) %
|
|
$
72.6
|
|
$
106.7
|
|
(32) %
|
|
(32) %
|
Adjusted EBITDA1
|
$
276.2
|
|
$
352.0
|
|
(22) %
|
|
(19) %
|
|
$
908.8
|
|
$
874.5
|
|
4 %
|
|
6 %
|
Note: For discussion
and reconciliation of non-GAAP financial measures, see the Notes
following the Financial Statements in this news release. Percentage
variances in the Performance Highlights below are calculated and
presented on a local currency basis, unless otherwise
noted.
|
The company achieved revenue and fee revenue increases of 10%
and 4%, respectively, compared with the prior-year quarter.
Annuity-based businesses continued to deliver solid fee revenue
growth as Workplace Management, within Work Dynamics, grew 19% and
Property Management, within Markets Advisory, grew 12%.
Transaction-based businesses, specifically Capital Markets as well
as Leasing within Markets Advisory, experienced challenges from the
sharp increases in interest rates and swift changes in the economic
sentiment across the globe. Refer to segment performance highlights
for additional detail.
The following charts reflect the segment proportion of revenue
and fee revenue for the current quarter and also the decomposition
of Adjusted EBITDA by segment for the third quarter of 2022 and
2021.
Net income attributable to common shareholders for the third
quarter was $140.2 million, compared
with $237.2 million in 2021, and
Adjusted EBITDA was $276.2 million,
compared with $352.0 million last
year. Interest expense, net of interest income, increased
$13.6 million, due to an increase in
the average outstanding borrowings under our Facility in addition
to a higher effective interest rate.
Diluted earnings per share for the third quarter were
$2.88, down from $4.57 in 2021; adjusted diluted earnings per
share were $3.40, compared with
$4.56 last year.
Adjusted EBITDA margin for the quarter, calculated on a
fee-revenue basis, was 13.5% in USD (and 13.3% local currency),
compared with 17.2% in 2021. The decrease in margin against an
outsized prior-year performance was primarily due to lower Capital
Markets revenue coupled with higher compensation expense and
incremental T&E and marketing expenses. The higher compensation
expense reflected increased headcount and wage inflation over the
trailing twelve months as well as higher commissions associated
with the strong year-to-date Leasing revenue growth and changes to
Capital Markets variable compensation structures. Refer to the
segment performance highlights for additional detail.
Net income attributable to common shareholders was $479.7 million for the nine months ended
September 30, 2022, compared with $540.2 million last year, and Adjusted EBITDA was
$908.8 million, compared with
$874.5 million in 2021. Diluted
earnings per share were $9.65 for the
nine months ended September 30, 2022, down from $10.35 in 2021; adjusted diluted earnings per
share were $11.35, compared with
$10.86 last year.
Cash Flows and Capital Allocation:
Free Cash Flow6 was an inflow of $88.4 million for the third quarter of 2022,
compared with an inflow of $414.6
million in the prior-year quarter. This lower
quarter-to-date cash inflow was primarily attributable to higher
commission payments, a net outflow related to changes in net
reimbursable receivables/payables balances, an increase in cash
paid for taxes, and lower cash provided by earnings. Year to date,
Free Cash Flow6 was an outflow of $537.9 million through September 30, 2022, compared with an inflow of
$98.7 million in the prior year. The
greater cash outflow was driven by higher annual incentive
compensation paid in 2022, compared with 2021, and an incremental
$108.0 million of cash paid for
taxes, partially offset by an increase in cash provided by
earnings.
During the third quarter of 2022, the company repurchased
909,200 shares for $153.5 million.
Year to date, 2,922,446 shares have been repurchased returning
$601.2 million to shareholders,
compared with 853,000 shares repurchased and $189.5 million of capital returned through
September 30, 2021.
Net Debt, Leverage and Liquidity6:
Total net debt was $1,697.6
million as of September 30,
2022, representing an increase of $121.7 million from June
30, 2022, and an increase of $1,210.3
million from September 30, 2021. The increase from
June 30, 2022, primarily reflected
share repurchase activity as discussed in the Capital Allocation
section above.
During the third quarter, the company increased the borrowing
capacity of its Credit Facility from $2.75
billion to $3.35 billion. In
addition, the company redeemed its 4.4% Senior Notes due
November 2022, using the Facility to
pay the $275.0 million principal plus
accrued and unpaid interest.
The company's Net Leverage Ratio was 1.1x as of September 30, 2022, compared with 1.0x as of
June 30, 2022, and 0.4x as of
September 30, 2021.
Corporate Liquidity was $2.1
billion as of September 30,
2022.
Markets Advisory Third-Quarter 2022 Performance
Highlights:
|
|
Markets Advisory
|
Three Months Ended September
30,
|
|
%
Change
in USD
|
|
%
Change
in LC
|
|
Nine Months Ended September 30,
|
|
%
Change
in USD
|
|
%
Change
in LC
|
($ in millions, "LC" = local
currency)
|
2022
|
|
2021
|
|
|
|
2022
|
|
2021
|
|
|
Revenue
|
$
1,111.5
|
|
$
1,079.9
|
|
3 %
|
|
6 %
|
|
$
3,229.2
|
|
$
2,823.9
|
|
14 %
|
|
17 %
|
Gross contract
costs1
|
(263.6)
|
|
(242.9)
|
|
9
|
|
13
|
|
(784.3)
|
|
(723.3)
|
|
8
|
|
11
|
Fee revenue1
|
$
847.9
|
|
$
837.0
|
|
1 %
|
|
4 %
|
|
$
2,444.9
|
|
$
2,100.6
|
|
16 %
|
|
19 %
|
Leasing
|
696.4
|
|
689.1
|
|
1
|
|
3
|
|
1,996.8
|
|
1,669.9
|
|
20
|
|
22
|
Property Management
|
122.9
|
|
115.9
|
|
6
|
|
12
|
|
363.7
|
|
344.9
|
|
5
|
|
10
|
Advisory, Consulting and Other
|
28.6
|
|
32.0
|
|
(11)
|
|
(3)
|
|
84.4
|
|
85.8
|
|
(2)
|
|
4
|
Segment operating income
|
$
113.0
|
|
$
131.7
|
|
(14) %
|
|
(13) %
|
|
$
320.6
|
|
$
276.6
|
|
16 %
|
|
18 %
|
Adjusted EBITDA1
|
$
132.1
|
|
$
149.2
|
|
(11) %
|
|
(8) %
|
|
$
377.3
|
|
$
329.1
|
|
15 %
|
|
18 %
|
Note: For discussion
and reconciliation of non-GAAP financial measures, see the Notes
following the Financial Statements in this news release. Percentage
variances in the Performance Highlights below are calculated and
presented on a local currency basis, unless otherwise
noted.
|
Markets Advisory achieved modest revenue and fee revenue growth
following a strong prior-year quarter. Leasing was mixed as
broad-based growth in the office sector across geographies and an
over $30 million outsized non-office
transaction in the U.S. were largely offset by declines in
industrial and retail. While average deal size again increased,
particularly in office, deal volume fell in substantially all asset
classes. The Americas, with both organic and inorganic
contributions, led the increase in Property Management fee
revenue.
Adjusted EBITDA margin for the quarter, calculated on a
fee-revenue basis, was 15.6% in USD (15.8% in local currency),
compared with 17.8% in 2021. The lower margin was primarily due to
higher compensation expenses, specifically, (i) additional Leasing
brokers achieving higher commission tiers in 2022 compared with
2021, (ii) higher fixed compensation driven by wage inflation and
incremental headcount over the trailing twelve months to meet
revenue growth demands, and (iii) the timing of bonus accruals year
over year. In addition, incremental T&E and marketing expenses
contributed to the margin contraction.
Capital Markets Third-Quarter 2022 Performance
Highlights:
|
|
Capital Markets
|
Three Months Ended September
30,
|
|
%
Change
in USD
|
|
%
Change
in LC
|
|
Nine Months Ended September 30,
|
|
%
Change
in USD
|
|
%
Change
in LC
|
($ in millions, "LC"
= local currency)
|
2022
|
|
2021
|
|
|
|
2022
|
|
2021
|
|
|
Revenue
|
$
595.2
|
|
$
680.3
|
|
(13) %
|
|
(8) %
|
|
$
1,880.3
|
|
$
1,644.1
|
|
14 %
|
|
18 %
|
Gross contract
costs1
|
(10.9)
|
|
(13.0)
|
|
(16)
|
|
(6)
|
|
(36.2)
|
|
(34.7)
|
|
4
|
|
14
|
Net non-cash MSR and
mortgage banking derivative activity
|
(5.2)
|
|
(28.1)
|
|
(81)
|
|
(81)
|
|
(12.8)
|
|
(43.5)
|
|
(71)
|
|
(71)
|
Fee revenue1
|
$
579.1
|
|
$
639.2
|
|
(9) %
|
|
(5) %
|
|
$
1,831.3
|
|
$
1,565.9
|
|
17 %
|
|
21 %
|
Investment Sales, Debt/Equity Advisory and
Other
|
452.1
|
|
516.6
|
|
(12)
|
|
(8)
|
|
1,448.6
|
|
1,216.0
|
|
19
|
|
23
|
Valuation Advisory
|
86.5
|
|
84.1
|
|
3
|
|
12
|
|
261.9
|
|
250.8
|
|
4
|
|
11
|
Loan Servicing
|
40.5
|
|
38.5
|
|
5
|
|
5
|
|
120.8
|
|
99.1
|
|
22
|
|
22
|
Segment operating income
|
$
72.5
|
|
$
149.2
|
|
(51) %
|
|
(49) %
|
|
$
292.5
|
|
$
310.7
|
|
(6) %
|
|
(3) %
|
Adjusted EBITDA1
|
$
83.2
|
|
$
138.4
|
|
(40) %
|
|
(37) %
|
|
$
328.1
|
|
$
318.3
|
|
3 %
|
|
6 %
|
Note: For discussion
and reconciliation of non-GAAP financial measures, see the Notes
following the Financial Statements in this news release. Percentage
variances in the Performance Highlights below are calculated and
presented on a local currency basis, unless otherwise
noted.
|
The decline in Capital Markets revenue and fee revenue was
primarily driven by lower Investment Sales and Equity Advisory fees
as rising interest rates and economic uncertainty impacted
transaction volumes and elongated the deal-cycle time. Globally,
market volumes of investment sales were down 24% in USD (18% in
local currency) according to JLL Research. Valuation Advisory fee
revenue growth was led by Australia, the U.S. - with both organic and
inorganic contributions - and France. In addition, higher Loan Servicing
revenue reflected continued growth of the servicing portfolio,
particularly from loans originated under the Fannie Mae DUS
program, tempered by lower prepayment fees compared with the
prior-year quarter.
Adjusted EBITDA margin for the quarter, calculated on a
fee-revenue basis, was 14.4% in USD (14.3% in local currency),
compared with 21.7% in 2021. The margin contraction was primarily
due to (i) the decline in fee revenue, (ii) higher fixed
compensation expense related to incremental headcount and wage
inflation over the trailing twelve months, (iii) higher commissions
payments, reflecting changes to the incentive compensation
structure, which were partially offset by a reduction to
non-commission bonus plans, and (iv) an increase in T&E and
marketing expenses.
Work Dynamics Third-Quarter 2022 Performance
Highlights:
|
|
Work Dynamics
|
Three Months Ended September
30,
|
|
%
Change
in USD
|
|
%
Change
in LC
|
|
Nine Months Ended September 30,
|
|
%
Change
in USD
|
|
%
Change
in LC
|
($ in millions, "LC" = local
currency)
|
2022
|
|
2021
|
|
|
|
2022
|
|
2021
|
|
|
Revenue
|
$
3,289.8
|
|
$
2,960.4
|
|
11 %
|
|
16 %
|
|
$
9,633.9
|
|
$
8,494.7
|
|
13 %
|
|
17 %
|
Gross contract
costs1
|
(2,836.9)
|
|
(2,543.8)
|
|
12
|
|
16
|
|
(8,303.5)
|
|
(7,306.1)
|
|
14
|
|
17
|
Fee revenue1
|
$
452.9
|
|
$
416.6
|
|
9 %
|
|
14 %
|
|
$
1,330.4
|
|
$
1,188.6
|
|
12 %
|
|
16 %
|
Workplace Management
|
183.6
|
|
160.0
|
|
15
|
|
19
|
|
550.5
|
|
478.3
|
|
15
|
|
18
|
Project Management
|
210.0
|
|
193.6
|
|
8
|
|
16
|
|
600.6
|
|
541.3
|
|
11
|
|
16
|
Portfolio Services and Other
|
59.3
|
|
63.0
|
|
(6)
|
|
(2)
|
|
179.3
|
|
169.0
|
|
6
|
|
9
|
Segment operating income
|
$
35.7
|
|
$
20.5
|
|
74 %
|
|
61 %
|
|
$
93.8
|
|
$
63.8
|
|
47 %
|
|
39 %
|
Adjusted EBITDA1
|
$
53.4
|
|
$
37.7
|
|
42 %
|
|
38 %
|
|
$
146.2
|
|
$
113.8
|
|
28 %
|
|
26 %
|
"Workplace Management"
was previously called Integrated Facilities Management (IFM).
"Project Management" was previously called Project &
Development Services.
|
Note: For discussion
and reconciliation of non-GAAP financial measures, see the Notes
following the Financial Statements in this news release. Percentage
variances in the Performance Highlights below are calculated and
presented on a local currency basis, unless otherwise
noted.
|
The increase in Work Dynamics fee revenue was driven by
Workplace Management and Project Management. Both achieved
double-digit fee revenue growth across Americas, EMEA and
Asia Pacific, compared with the
same quarter in the prior year. New client wins and the expansion
of existing global mandates drove the growth in Workplace
Management. Project Management saw continued momentum in project
demand from the return-to-office movement and fewer pandemic-driven
restrictions.
Adjusted EBITDA margin for the quarter, calculated on a
fee-revenue basis, was 11.8% in USD (10.9% in local currency),
compared with 9.0% in 2021. The margin expansion was attributable
to the fee revenue growth described above and cost management
strategies, partially offset by incremental T&E and marketing
expenses.
JLL Technologies Third-Quarter 2022 Performance
Highlights:
|
|
JLL Technologies
|
Three Months Ended September
30,
|
|
%
Change
in USD
|
|
%
Change
in LC
|
|
Nine Months Ended September 30,
|
|
%
Change
in USD
|
|
%
Change
in LC
|
($ in millions, "LC" = local
currency)
|
2022
|
|
2021
|
|
|
|
2022
|
|
2021
|
|
|
Revenue
|
$
56.5
|
|
$
38.8
|
|
46 %
|
|
47 %
|
|
$
156.6
|
|
$
121.8
|
|
29 %
|
|
29 %
|
Gross contract
costs1
|
(3.8)
|
|
(4.4)
|
|
(14)
|
|
(12)
|
|
(10.6)
|
|
(24.7)
|
|
(57)
|
|
(57)
|
Fee revenue1
|
$
52.7
|
|
$
34.4
|
|
53 %
|
|
54 %
|
|
$
146.0
|
|
$
97.1
|
|
50 %
|
|
51 %
|
Segment operating loss
|
$
(20.0)
|
|
$
(20.2)
|
|
1 %
|
|
(3) %
|
|
$
(90.5)
|
|
$
(63.6)
|
|
(42) %
|
|
(44) %
|
Equity earnings
|
$
1.0
|
|
$
7.3
|
|
(86) %
|
|
(86) %
|
|
$
64.5
|
|
$
58.1
|
|
11 %
|
|
11 %
|
Adjusted EBITDA1
|
$
(15.3)
|
|
$
(10.7)
|
|
(43) %
|
|
(50) %
|
|
$
(14.7)
|
|
$
1.8
|
|
(917) %
|
|
(946) %
|
Note: For discussion
and reconciliation of non-GAAP financial measures, see the Notes
following the Financial Statements in this news release. Percentage
variances in the Performance Highlights below are calculated and
presented on a local currency basis, unless otherwise
noted.
|
JLL Technologies top-line growth included $9.2 million of incremental fee revenue from
acquisitions closed in late 2021. Organic fee revenue increased
28%, driven by new customers as well as growth from existing
customers in software and solutions offerings.
Equity earnings in 2021 were primarily attributable to valuation
increases to JLL Technologies' investments in early to mid-stage
proptech companies as well as proptech funds, primarily reflecting
subsequent financing rounds at increased per-share values. In 2022,
valuation increases reflecting subsequent financing rounds were
more modest and were largely offset by valuation declines related
to a handful of investments.
Adjusted EBITDA margin for the quarter, calculated on a
fee-revenue basis, was negative 29.0% in USD (negative 30.1% in
local currency), compared with negative 31.1% in 2021. The slight
margin improvement was driven by fee revenue growth, largely offset
by lower equity earnings and incremental compensation related to
the continued ramp up of operations to support future growth.
LaSalle Third-Quarter 2022 Performance
Highlights:
|
|
LaSalle
|
Three Months Ended September
30,
|
|
%
Change
in USD
|
|
%
Change
in LC
|
|
Nine Months Ended September 30,
|
|
%
Change
in USD
|
|
%
Change
in LC
|
($ in millions, "LC"
= local currency)
|
2022
|
|
2021
|
|
|
|
2022
|
|
2021
|
|
|
Revenue
|
$
124.5
|
|
$
129.8
|
|
(4) %
|
|
5 %
|
|
$
357.3
|
|
$
336.8
|
|
6 %
|
|
13 %
|
Gross contract
costs1
|
(8.5)
|
|
(6.4)
|
|
33
|
|
32
|
|
(22.0)
|
|
(19.6)
|
|
12
|
|
12
|
Fee revenue1
|
$
116.0
|
|
$
123.4
|
|
(6) %
|
|
3 %
|
|
$
335.3
|
|
$
317.2
|
|
6 %
|
|
13 %
|
Advisory fees
|
95.4
|
|
92.8
|
|
3
|
|
11
|
|
284.3
|
|
257.0
|
|
11
|
|
17
|
Transaction fees and other
|
8.7
|
|
8.3
|
|
5
|
|
14
|
|
33.9
|
|
22.7
|
|
49
|
|
59
|
Incentive fees
|
11.9
|
|
22.3
|
|
(47)
|
|
(35)
|
|
17.1
|
|
37.5
|
|
(54)
|
|
(47)
|
Segment operating income
|
$
22.4
|
|
$
27.3
|
|
(18) %
|
|
(13) %
|
|
$
63.4
|
|
$
61.3
|
|
3 %
|
|
8 %
|
Equity (losses) earnings
|
$
(1.1)
|
|
$
8.4
|
|
(113) %
|
|
(114) %
|
|
$
4.0
|
|
$
44.8
|
|
(91) %
|
|
(91) %
|
Adjusted EBITDA1
|
$
22.8
|
|
$
37.4
|
|
(39) %
|
|
(35) %
|
|
$
71.9
|
|
$
111.5
|
|
(36) %
|
|
(33) %
|
Note: For discussion
and reconciliation of non-GAAP financial measures, see the Notes
following the Financial Statements in this news release. Percentage
variances in the Performance Highlights below are calculated and
presented on a local currency basis, unless otherwise
noted.
|
LaSalle continued to deliver
advisory fee growth, concentrated in core open-end funds, driven by
strong capital raising and increases in the fair value of assets
under management over the trailing twelve months. Lower incentive
fees, which related to real estate dispositions on behalf of
clients, were attributable to greater economic uncertainty, which
slowed transaction activity.
The current quarter's equity losses were attributable to a
negative share price movement for a co-investment in a LaSalle-managed publicly traded REIT in
Japan as the remainder of the
co-investment portfolio was largely flat. Equity earnings in the
prior-year quarter were largely driven by net valuation
increases.
Adjusted EBITDA margin for the quarter, calculated on a
fee-revenue basis, was 19.7% in USD (19.0% in local currency),
compared with 30.3% in 2021. The decline in margin was primarily
driven by lower equity earnings and incentive fees as well as
expenses associated with the loss of a client mandate in the UK to
right-size the advisory fee platform. These drivers were partially
offset by incremental advisory fee platform scale.
About JLL
JLL (NYSE: JLL) is a leading professional services firm that
specializes in real estate and investment management. JLL shapes
the future of real estate for a better world by using the most
advanced technology to create rewarding opportunities, amazing
spaces and sustainable real estate solutions for our clients, our
people and our communities. JLL is a Fortune 500 company with
annual revenue of $19.4 billion,
operations in over 80 countries and a global workforce of more than
102,000 as of September 30, 2022. JLL
is the brand name, and a registered trademark, of Jones Lang
LaSalle Incorporated. For further information, visit
ir.jll.com.
Connect with us
https://www.linkedin.com/company/jll
https://www.facebook.com/jll
https://twitter.com/jll
Live Webcast
|
|
Conference Call
|
Management will offer a
live webcast for shareholders, analysts and investment
professionals on Wednesday, November 2, 2022, at 9:00 a.m. Eastern.
Following the live broadcast, an audio replay will be available for
download or stream.
The link to the live
webcast and audio replay can be accessed at the Investor Relations
website: ir.jll.com.
|
|
Refer to
ir.jll.com for a registration link to receive unique
credentials to access the presentation of earnings via
phone.
|
|
|
|
|
Supplemental Information
|
|
Contact
|
Supplemental
information regarding the third quarter 2022 earnings call has been
posted to the Investor Relations section of JLL's website:
ir.jll.com.
|
|
If you have any
questions, please contact Scott Einberger, Investor Relations
Officer.
|
|
Phone:
|
+1 312 252
8943
|
|
Email:
|
JLLInvestorRelations@am.jll.com
|
Cautionary Note Regarding Forward-Looking
Statements
Statements in this news release regarding, among other
things, future financial results and performance, achievements,
plans, objectives and shares 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, the
occurrence of which are outside JLL's control which may cause JLL's
actual results, performance, achievements, plans, and objectives to
be materially different from those expressed or implied by such
forward-looking statements. For additional information concerning
risks, uncertainties, and other factors that could cause actual
results to differ materially from those anticipated in
forward-looking statements, and risks to JLL's business in general,
please refer to those factors discussed under "Risk Factors,"
"Business," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Quantitative and Qualitative
Disclosures about Market Risk," and elsewhere in JLL's filed Annual
Report on Form 10-K for the year ended December 31, 2021, our Quarterly Report on Form
10-Q for the quarter ended March 31,
2022 and June 30, 2022, and
other reports filed with the Securities and Exchange Commission.
Any forward-looking statements speak only as of the date of this
release, and except to the extent required by applicable securities
laws, JLL expressly disclaims any obligation or undertaking to
publicly update or revise any forward-looking statements contained
herein to reflect any change in expectations or results, or any
change in events.
JONES LANG LASALLE INCORPORATED
|
Consolidated Statements of Operations
(Unaudited)
|
|
|
Three Months Ended September
30,
|
|
Nine Months Ended September 30,
|
(in millions, except
share and per share data)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Revenue
|
$
5,177.5
|
|
$
4,889.2
|
|
$
15,257.3
|
|
$
13,421.3
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Compensation and
benefits
|
$
2,496.2
|
|
$
2,416.1
|
|
$
7,461.4
|
|
$
6,613.9
|
Operating,
administrative and other
|
2,402.0
|
|
2,111.8
|
|
6,950.6
|
|
5,998.3
|
Depreciation and
amortization
|
55.7
|
|
52.8
|
|
165.5
|
|
160.3
|
Restructuring and
acquisition charges3
|
21.0
|
|
15.6
|
|
66.4
|
|
50.9
|
Total operating
expenses
|
$
4,974.9
|
|
$
4,596.3
|
|
$
14,643.9
|
|
$
12,823.4
|
|
|
|
|
|
|
|
|
Operating
income
|
$
202.6
|
|
$
292.9
|
|
$
613.4
|
|
$
597.9
|
|
|
|
|
|
|
|
|
Interest expense, net
of interest income
|
23.2
|
|
9.6
|
|
49.1
|
|
30.6
|
Equity
earnings
|
0.5
|
|
17.4
|
|
72.6
|
|
106.7
|
Other
income(a)
|
0.5
|
|
1.3
|
|
136.0
|
|
12.9
|
|
|
|
|
|
|
|
|
Income before income
taxes and noncontrolling interest
|
180.4
|
|
302.0
|
|
772.9
|
|
686.9
|
Income tax
provision
|
42.3
|
|
65.3
|
|
155.4
|
|
148.4
|
Net income
|
138.1
|
|
236.7
|
|
617.5
|
|
538.5
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to noncontrolling interest(a)
|
(2.1)
|
|
(0.5)
|
|
137.8
|
|
(1.7)
|
|
|
|
|
|
|
|
|
Net income attributable
to common shareholders
|
$
140.2
|
|
$
237.2
|
|
$
479.7
|
|
$
540.2
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
2.93
|
|
$
4.67
|
|
$
9.83
|
|
$
10.57
|
Basic weighted average
shares outstanding (in 000's)
|
47,863
|
|
50,851
|
|
48,782
|
|
51,101
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share
|
$
2.88
|
|
$
4.57
|
|
$
9.65
|
|
$
10.35
|
Diluted weighted
average shares outstanding (in 000's)
|
48,629
|
|
51,944
|
|
49,727
|
|
52,178
|
|
|
|
|
|
|
|
|
Please reference
accompanying financial statement notes.
|
|
|
(a)
|
During the second
quarter of 2022, Other income included a $142.3 million gain by a
consolidated variable interest entity in which the company held no
equity interest. This gain, therefore, is also included in the
period's net income attributable to noncontrolling interest. As a
result, there is no net impact to Net income attributable to common
shareholders (or other measures like Adjusted EBITDA, Adjusted net
income and Adjusted diluted earnings per share).
|
JONES LANG LASALLE INCORPORATED
|
Selected Segment Financial Data
(Unaudited)
|
|
|
Three Months Ended September
30,
|
|
Nine Months Ended September 30,
|
(in
millions)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
MARKETS ADVISORY
|
|
|
|
|
|
|
|
Compensation,
operating and administrative expenses
|
$
980.9
|
|
$
931.8
|
|
$
2,856.6
|
|
$
2,498.3
|
Depreciation and
amortization
|
17.6
|
|
16.4
|
|
52.0
|
|
49.0
|
Total segment
operating expenses
|
998.5
|
|
948.2
|
|
2,908.6
|
|
2,547.3
|
Gross contract
costs1
|
(263.6)
|
|
(242.9)
|
|
(784.3)
|
|
(723.3)
|
Total fee-based
segment operating expenses
|
$
734.9
|
|
$
705.3
|
|
$
2,124.3
|
|
$
1,824.0
|
|
|
|
|
|
|
|
|
Segment operating
income
|
$
113.0
|
|
$
131.7
|
|
$
320.6
|
|
$
276.6
|
Add:
|
|
|
|
|
|
|
|
Equity (losses)
earnings
|
(0.2)
|
|
0.1
|
|
0.7
|
|
0.6
|
Depreciation and
amortization(a)
|
16.6
|
|
16.4
|
|
50.0
|
|
49.0
|
Other
income
|
0.4
|
|
0.6
|
|
132.9
|
|
1.2
|
Net loss (income)
attributable to noncontrolling interest
|
2.3
|
|
0.8
|
|
(137.4)
|
|
2.1
|
Adjustments:
|
|
|
|
|
|
|
|
(Gain) loss on
disposition
|
—
|
|
(0.4)
|
|
10.5
|
|
(0.4)
|
Adjusted
EBITDA1
|
$
132.1
|
|
$
149.2
|
|
$
377.3
|
|
$
329.1
|
|
|
|
|
|
|
|
|
CAPITAL MARKETS
|
|
|
|
|
|
|
|
Compensation,
operating and administrative expenses
|
$
507.5
|
|
$
516.0
|
|
$
1,541.6
|
|
$
1,285.7
|
Depreciation and
amortization
|
15.2
|
|
15.1
|
|
46.2
|
|
47.7
|
Total segment
operating expenses
|
522.7
|
|
531.1
|
|
1,587.8
|
|
1,333.4
|
Gross contract
costs1
|
(10.9)
|
|
(13.0)
|
|
(36.2)
|
|
(34.7)
|
Total fee-based
segment operating expenses
|
$
511.8
|
|
$
518.1
|
|
$
1,551.6
|
|
$
1,298.7
|
|
|
|
|
|
|
|
|
Segment operating
income
|
$
72.5
|
|
$
149.2
|
|
$
292.5
|
|
$
310.7
|
Add:
|
|
|
|
|
|
|
|
Equity
earnings
|
0.7
|
|
1.3
|
|
2.1
|
|
3.1
|
Depreciation and
amortization
|
15.2
|
|
15.1
|
|
46.2
|
|
47.7
|
Other
income
|
—
|
|
0.9
|
|
0.1
|
|
0.3
|
Adjustments:
|
|
|
|
|
|
|
|
Net non-cash MSR and
mortgage banking derivative activity
|
(5.2)
|
|
(28.1)
|
|
(12.8)
|
|
(43.5)
|
Adjusted
EBITDA1
|
$
83.2
|
|
$
138.4
|
|
$
328.1
|
|
$
318.3
|
|
|
(a)
|
This adjustment
excludes the noncontrolling interest portion of amortization of
acquisition-related intangibles which is not attributable to common
shareholders.
|
JONES LANG LASALLE INCORPORATED
|
|
Selected Segment Financial Data (Unaudited)
Continued
|
|
|
|
|
|
|
|
Three Months Ended September
30,
|
|
Nine Months Ended September 30,
|
|
(in
millions)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
WORK DYNAMICS
|
|
|
|
|
|
|
|
|
Compensation,
operating and administrative expenses
|
$
3,236.5
|
|
$
2,923.0
|
|
$
9,489.0
|
|
$
8,381.0
|
|
Depreciation and
amortization
|
17.6
|
|
16.9
|
|
51.1
|
|
49.9
|
|
Total segment
operating expenses
|
3,254.1
|
|
2,939.9
|
|
9,540.1
|
|
8,430.9
|
|
Gross contract
costs1
|
(2,836.9)
|
|
(2,543.8)
|
|
(8,303.5)
|
|
(7,306.1)
|
|
Total fee-based
segment operating expenses
|
$
417.2
|
|
$
396.1
|
|
$
1,236.6
|
|
$
1,124.8
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income
|
$
35.7
|
|
$
20.5
|
|
$
93.8
|
|
$
63.8
|
|
Add:
|
|
|
|
|
|
|
|
|
Equity
earnings
|
0.1
|
|
0.3
|
|
1.3
|
|
0.1
|
|
Depreciation and
amortization
|
17.6
|
|
16.9
|
|
51.1
|
|
49.9
|
|
Other
income
|
0.1
|
|
—
|
|
0.1
|
|
—
|
|
Net income
attributable to noncontrolling interest
|
(0.1)
|
|
—
|
|
(0.1)
|
|
—
|
|
Adjusted
EBITDA1
|
$
53.4
|
|
$
37.7
|
|
$
146.2
|
|
$
113.8
|
|
|
|
|
|
|
|
|
|
|
JLL TECHNOLOGIES
|
|
|
|
|
|
|
|
|
Compensation,
operating and administrative expenses(a)
|
$
72.8
|
|
$
56.8
|
|
$
235.7
|
|
$
178.1
|
|
Depreciation and
amortization
|
3.7
|
|
2.2
|
|
11.4
|
|
7.3
|
|
Total segment
operating expenses
|
76.5
|
|
59.0
|
|
247.1
|
|
185.4
|
|
Gross contract
costs1
|
(3.8)
|
|
(4.4)
|
|
(10.6)
|
|
(24.7)
|
|
Total fee-based
segment operating expenses
|
$
72.7
|
|
$
54.6
|
|
$
236.5
|
|
$
160.7
|
|
|
|
|
|
|
|
|
|
|
Segment operating
loss
|
$
(20.0)
|
|
$
(20.2)
|
|
$
(90.5)
|
|
$
(63.6)
|
|
Add:
|
|
|
|
|
|
|
|
|
Equity
earnings
|
1.0
|
|
7.3
|
|
64.5
|
|
58.1
|
|
Depreciation and
amortization
|
3.7
|
|
2.2
|
|
11.4
|
|
7.3
|
|
Other
income
|
—
|
|
—
|
|
2.9
|
|
12.0
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Gain on
disposition
|
—
|
|
—
|
|
(3.0)
|
|
(12.0)
|
|
Adjusted
EBITDA1
|
$
(15.3)
|
|
$
(10.7)
|
|
$
(14.7)
|
|
$
1.8
|
|
|
|
(a)
|
Included in
Compensation, operating and administrative expenses for JLL
Technologies is carried interest expense related to equity earnings
of the segment. Such amounts were $0.6 million and $16.6 million
for the three and nine months ended September 30, 2022,
respectively, and $0.7 million and $9.5 million for the three and
nine months ended September 30, 2021.
|
JONES LANG LASALLE INCORPORATED
|
|
Selected Segment Financial Data (Unaudited)
Continued
|
|
|
|
|
|
|
|
Three Months Ended September
30,
|
|
Nine Months Ended September 30,
|
|
(in
millions)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
LASALLE
|
|
|
|
|
|
|
|
|
Compensation,
operating and administrative expenses
|
$
100.5
|
|
$
100.3
|
|
$
289.1
|
|
$
269.1
|
|
Depreciation and
amortization
|
1.6
|
|
2.2
|
|
4.8
|
|
6.4
|
|
Total segment
operating expenses
|
102.1
|
|
102.5
|
|
293.9
|
|
275.5
|
|
Gross contract
costs1
|
(8.5)
|
|
(6.4)
|
|
(22.0)
|
|
(19.6)
|
|
Total fee-based
segment operating expenses
|
$
93.6
|
|
$
96.1
|
|
$
271.9
|
|
$
255.9
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income
|
$
22.4
|
|
$
27.3
|
|
$
63.4
|
|
$
61.3
|
|
Add:
|
|
|
|
|
|
|
|
|
Equity (losses)
earnings
|
(1.1)
|
|
8.4
|
|
4.0
|
|
44.8
|
|
Depreciation and
amortization
|
1.6
|
|
2.2
|
|
4.8
|
|
6.4
|
|
Other
expense
|
—
|
|
(0.2)
|
|
—
|
|
(0.6)
|
|
Net income
attributable to noncontrolling interest
|
(0.1)
|
|
(0.3)
|
|
(0.3)
|
|
(0.4)
|
|
Adjusted
EBITDA1
|
$
22.8
|
|
$
37.4
|
|
$
71.9
|
|
$
111.5
|
|
JONES LANG LASALLE INCORPORATED
|
Summarized Consolidated Statements of Cash
Flows4 (Unaudited)
|
|
Nine Months Ended September 30,
|
(in
millions)
|
2022
|
|
2021
|
|
|
|
|
Net cash (used in)
provided by operating activities
|
$
(401.9)
|
|
$
210.3
|
|
|
|
|
Net cash used in
investing activities
|
(147.8)
|
|
(316.0)
|
|
|
|
|
Net cash provided by
financing activities
|
500.5
|
|
39.3
|
|
|
|
|
Effect of currency
exchange rate changes on cash, cash equivalents and restricted
cash
|
(63.6)
|
|
(17.3)
|
|
|
|
|
Net change in cash,
cash equivalents and restricted cash
|
$
(112.8)
|
|
$
(83.7)
|
|
|
|
|
Cash, cash equivalents
and restricted cash, beginning of year
|
841.6
|
|
839.8
|
|
|
|
|
Cash, cash equivalents
and restricted cash, end of period
|
$
728.8
|
|
$
756.1
|
|
|
|
|
Reconciliation to Free Cash
Flow
|
|
Nine Months Ended September 30,
|
(in
millions)
|
2022
|
|
2021
|
|
|
|
|
Net cash (used in)
provided by operating activities
|
$
(401.9)
|
|
$
210.3
|
|
|
|
|
Net capital additions -
property and equipment
|
(136.0)
|
|
(111.6)
|
|
|
|
|
Free Cash
Flow6
|
$
(537.9)
|
|
$
98.7
|
|
|
|
|
|
|
|
|
Please reference
accompanying financial statement notes.
|
JONES LANG LASALLE INCORPORATED
|
Consolidated Balance Sheets
|
|
|
|
|
September 30,
|
|
December
31,
|
|
|
|
|
September 30,
|
|
December
31,
|
(in millions, except
share and per share data)
|
2022
|
|
2021
|
|
|
|
|
2022
|
|
2021
|
ASSETS
|
(Unaudited)
|
|
|
|
LIABILITIES AND EQUITY
|
(Unaudited)
|
|
|
Current
assets:
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Cash and cash
equivalents
|
$
489.4
|
|
$
593.7
|
|
|
Accounts payable and
accrued liabilities
|
$
858.4
|
|
$
1,262.8
|
|
Trade receivables, net
of allowance
|
1,912.5
|
|
2,004.1
|
|
|
Reimbursable
payables
|
1,309.4
|
|
1,350.0
|
|
Notes and other
receivables
|
377.9
|
|
389.3
|
|
|
Accrued compensation
and benefits
|
1,512.0
|
|
2,029.5
|
|
Reimbursable
receivables
|
1,840.5
|
|
1,734.5
|
|
|
Short-term
borrowings
|
244.2
|
|
147.9
|
|
Warehouse
receivables
|
671.9
|
|
822.3
|
|
|
Current maturities of
long-term debt, net
|
—
|
|
274.7
|
|
Short-term contract
assets, net of allowance
|
369.9
|
|
343.1
|
|
|
Short-term contract
liability and deferred income
|
221.0
|
|
208.2
|
|
Prepaid and
other
|
707.8
|
|
500.7
|
|
|
Short-term
acquisition-related obligations
|
45.2
|
|
45.8
|
|
|
Total current
assets
|
6,369.9
|
|
6,387.7
|
|
|
Warehouse
facilities
|
685.0
|
|
795.7
|
Property and equipment,
net of accumulated depreciation
|
731.5
|
|
740.0
|
|
|
Short-term operating
lease liability
|
147.8
|
|
153.8
|
Operating lease
right-of-use asset
|
776.6
|
|
723.4
|
|
|
Other
|
380.7
|
|
218.1
|
Goodwill
|
4,454.8
|
|
4,611.6
|
|
|
|
Total current
liabilities
|
5,403.7
|
|
6,486.5
|
Identified intangibles,
net of accumulated amortization
|
861.6
|
|
887.0
|
|
Noncurrent
liabilities:
|
|
|
|
Investments
|
890.9
|
|
745.7
|
|
|
Credit facility, net of
debt issuance costs
|
1,587.9
|
|
138.2
|
Long-term
receivables
|
306.0
|
|
316.4
|
|
|
Long-term debt, net of
debt issuance costs
|
341.5
|
|
395.6
|
Deferred tax assets,
net
|
249.6
|
|
330.8
|
|
|
Long-term deferred tax
liabilities, net
|
199.6
|
|
179.7
|
Deferred compensation
plans
|
520.2
|
|
528.8
|
|
|
Deferred
compensation
|
483.6
|
|
525.4
|
Other
|
217.5
|
|
233.6
|
|
|
Long-term
acquisition-related obligations
|
59.3
|
|
66.3
|
|
|
Total assets
|
$
15,378.6
|
|
$
15,505.0
|
|
|
Long-term operating
lease liability
|
739.5
|
|
714.4
|
|
|
|
|
|
|
|
|
Other
|
554.1
|
|
577.7
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
$
9,369.2
|
|
$
9,083.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
$
7.2
|
|
$
7.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company shareholders'
equity
|
|
|
|
|
|
|
|
|
|
Common stock
|
0.5
|
|
0.5
|
|
|
|
|
|
|
|
|
Additional paid-in
capital
|
2,034.5
|
|
2,053.7
|
|
|
|
|
|
|
Retained
earnings
|
5,415.6
|
|
4,937.6
|
|
|
|
|
|
|
|
|
Treasury
stock
|
(950.9)
|
|
(406.3)
|
|
|
|
|
|
|
|
|
Shares held in
trust
|
(5.1)
|
|
(5.2)
|
|
|
|
|
|
|
|
Accumulated other
comprehensive loss
|
(723.0)
|
|
(395.4)
|
|
|
|
|
|
|
|
Total company
shareholders' equity
|
5,771.6
|
|
6,184.9
|
|
|
|
|
|
|
Noncontrolling
interest
|
230.6
|
|
228.5
|
|
|
|
|
|
|
|
Total equity
|
6,002.2
|
|
6,413.4
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
$
15,378.6
|
|
$
15,505.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please reference
accompanying financial statement notes.
|
JONES LANG LASALLE INCORPORATED
Financial
Statement Notes
1. Management uses certain non-GAAP financial
measures to develop budgets and forecasts, measure and reward
performance against those budgets and forecasts, and enhance
comparability to prior periods. These measures are believed to be
useful to investors and other external stakeholders as supplemental
measures of core operating performance and include the
following:
(i)
Fee revenue and Fee-based operating expenses,
(ii)
Adjusted EBITDA attributable to common shareholders ("Adjusted
EBITDA") and Adjusted EBITDA margin,
(iii)
Adjusted net income attributable to common shareholders and
Adjusted diluted earnings per share,
(iv)
Percentage changes against prior periods, presented on a local
currency basis, and
(v)
Free Cash Flow.
However, non-GAAP financial measures should not be considered
alternatives to measures determined in accordance with U.S.
generally accepted accounting principles ("GAAP"). Any measure that
eliminates components of a company's capital structure, cost of
operations or investments, or other results has limitations as a
performance measure. In light of these limitations, management also
considers GAAP financial measures and does not rely solely on
non-GAAP financial measures. Because the company's non-GAAP
financial measures are not calculated in accordance with GAAP, they
may not be comparable to similarly titled measures used by other
companies.
Adjustments to GAAP Financial Measures Used to Calculate
non-GAAP Financial Measures
Gross Contract Costs represent certain costs
associated with client-dedicated employees and third-party vendors
and subcontractors and are directly or indirectly reimbursed
through the fees we receive. These costs are presented on a gross
basis in Operating expenses with the equal amount of corresponding
fees in Revenue. Excluding gross contract costs from both Fee
revenue and Fee-based operating expenses more accurately reflects
how the company manages its expense base and operating margins and
also enables a more consistent performance assessment across a
portfolio of contracts with varying payment terms and
structures.
Net Non-Cash Mortgage Servicing Rights ("MSR") and
Mortgage Banking Derivative Activity consists of the
balances presented within Revenue composed of (i) derivative
gains/losses resulting from mortgage banking loan commitment and
warehousing activity and (ii) gains recognized from the retention
of MSR upon origination and sale of mortgage loans, offset by (iii)
amortization of MSR intangible assets over the period that net
servicing income is projected to be received. Non-cash derivative
gains/losses resulting from mortgage banking loan commitment and
warehousing activity are calculated as the estimated fair value of
loan commitments and subsequent changes thereof, primarily
represented by the estimated net cash flows associated with future
servicing rights. MSR gains and corresponding MSR intangible assets
are calculated as the present value of estimated cash flows over
the estimated mortgage servicing periods. The above activity is
reported entirely within Revenue of the Capital Markets segment.
Excluding net non-cash MSR and mortgage banking derivative activity
reflects how the company manages and evaluates performance because
the excluded activity is non-cash in nature.
Restructuring and Acquisition Charges primarily
consist of: (i) severance and employment-related charges, including
those related to external service providers, incurred in
conjunction with a structural business shift, which can be
represented by a notable change in headcount, change in leadership
or transformation of business processes; (ii) acquisition,
transaction and integration-related charges, including fair value
adjustments, which are generally non-cash in the periods such
adjustments are made, to assets and liabilities recorded in
purchase accounting such as earn-out liabilities and intangible
assets; and (iii) lease exit charges. Such activity is excluded as
the amounts are generally either non-cash in nature or the
anticipated benefits from the expenditures would not likely be
fully realized until future periods. Restructuring and acquisition
charges are excluded from segment operating results and therefore
not a line item in the segments' reconciliation to Adjusted
EBITDA.
Amortization of Acquisition-Related Intangibles,
primarily composed of the estimated fair value ascribed at closing
of an acquisition to assets such as acquired management contracts,
customer backlog and relationships, and trade name, is more notable
following the company's increase in acquisition activity in recent
years. Such non-cash activity is excluded as the change in
period-over-period activity is generally the result of longer-term
strategic decisions and therefore not necessarily indicative of
core operating results.
Gain or Loss on Disposition reflects the gain or
loss recognized on the sale of businesses. Given the low frequency
of business disposals by the company historically, the gain or loss
directly associated with such activity is excluded as it is not
considered indicative of core operating performance. In 2022, the
$7.5 million net loss in the second
quarter included $10.5 million of
loss related to the disposition of the Russia business, partially offset by a
$3.0 million gain related to a
disposition within JLL Technologies. In 2021, $12.0 million of the activity related to a
business disposition within JLL Technologies during the first
quarter and $0.4 million related to a
sold business within Markets Advisory during the third quarter.
Reconciliation of Non-GAAP Financial Measures
Below are reconciliations of (i) Revenue to Fee revenue and (ii)
Operating expenses to Fee-based operating expenses:
|
Three months ended September
30,
|
|
Nine months ended September 30,
|
(in
millions)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Revenue
|
$
5,177.5
|
|
$
4,889.2
|
|
$
15,257.3
|
|
$
13,421.3
|
Gross contract
costs1
|
(3,123.7)
|
|
(2,810.5)
|
|
(9,156.6)
|
|
(8,108.4)
|
Net non-cash MSR and
mortgage banking derivative activity
|
(5.2)
|
|
(28.1)
|
|
(12.8)
|
|
(43.5)
|
Fee revenue
|
$
2,048.6
|
|
$
2,050.6
|
|
$
6,087.9
|
|
$
5,269.4
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
4,974.9
|
|
$
4,596.3
|
|
$
14,643.9
|
|
$
12,823.4
|
Gross contract
costs1
|
(3,123.7)
|
|
(2,810.5)
|
|
(9,156.6)
|
|
(8,108.4)
|
Fee-based operating
expenses
|
$
1,851.2
|
|
$
1,785.8
|
|
$
5,487.3
|
|
$
4,715.0
|
Below is (i) a reconciliation of Net income attributable to
common shareholders to EBITDA and Adjusted EBITDA, (ii) the Net
income margin attributable to common shareholders (against
Revenue), and (iii) the Adjusted EBITDA margin (presented on a
local currency and on a fee-revenue basis). Following this is the
(i) reconciliation to adjusted net income and (ii) components of
adjusted diluted earnings per share.
|
Three months ended September
30,
|
|
Nine months ended September 30,
|
($ in
millions)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Net income attributable
to common shareholders
|
$
140.2
|
|
$
237.2
|
|
$
479.7
|
|
$
540.2
|
Add:
|
|
|
|
|
|
|
|
Interest expense, net
of interest income
|
23.2
|
|
9.6
|
|
49.1
|
|
30.6
|
Provision for income
taxes
|
42.3
|
|
65.3
|
|
155.4
|
|
148.4
|
Depreciation and
amortization(a)
|
54.7
|
|
52.8
|
|
163.5
|
|
160.3
|
EBITDA
|
$
260.4
|
|
$
364.9
|
|
$
847.7
|
|
$
879.5
|
Adjustments:
|
|
|
|
|
|
|
|
Restructuring and
acquisition charges3
|
21.0
|
|
15.6
|
|
66.4
|
|
50.9
|
Net (gain) loss on
disposition
|
—
|
|
(0.4)
|
|
7.5
|
|
(12.4)
|
Net non-cash MSR and
mortgage banking derivative activity
|
(5.2)
|
|
(28.1)
|
|
(12.8)
|
|
(43.5)
|
Adjusted
EBITDA
|
$
276.2
|
|
$
352.0
|
|
$
908.8
|
|
$
874.5
|
Net income margin
attributable to common shareholders
|
2.7 %
|
|
4.9 %
|
|
3.1 %
|
|
4.0 %
|
Adjusted EBITDA
margin
|
13.3 %
|
|
17.2 %
|
|
14.8 %
|
|
16.6 %
|
|
|
Three months ended September
30,
|
|
Nine months ended September 30,
|
(In millions, except
share and per share data)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Net income attributable
to common shareholders
|
$
140.2
|
|
$
237.2
|
|
$
479.7
|
|
$
540.2
|
Diluted shares (in
thousands)
|
48,629
|
|
51,944
|
|
49,727
|
|
52,178
|
Diluted earnings per
share
|
$
2.88
|
|
$
4.57
|
|
$
9.65
|
|
$
10.35
|
|
|
|
|
|
|
|
|
Net income attributable
to common shareholders
|
$
140.2
|
|
$
237.2
|
|
$
479.7
|
|
$
540.2
|
Adjustments:
|
|
|
|
|
|
|
|
Restructuring and
acquisition charges3
|
21.0
|
|
15.6
|
|
66.4
|
|
50.9
|
Net non-cash MSR and
mortgage banking derivative activity
|
(5.2)
|
|
(28.1)
|
|
(12.8)
|
|
(43.5)
|
Amortization of
acquisition-related intangibles(a)
|
16.9
|
|
12.4
|
|
49.5
|
|
38.7
|
Net (gain) loss on
disposition
|
—
|
|
(0.4)
|
|
7.5
|
|
(12.4)
|
Tax impact of adjusted
items(b)
|
(7.6)
|
|
0.1
|
|
(25.8)
|
|
(7.3)
|
Adjusted net income
attributable to common shareholders
|
$
165.3
|
|
$
236.8
|
|
$
564.5
|
|
$
566.6
|
Diluted shares (in
thousands)
|
48,629
|
|
51,944
|
|
49,727
|
|
52,178
|
Adjusted diluted
earnings per share
|
$
3.40
|
|
$
4.56
|
|
$
11.35
|
|
$
10.86
|
|
|
(a)
|
This adjustment
excludes the noncontrolling interest portion of amortization of
acquisition-related intangibles which is not attributable to common
shareholders.
|
(b)
|
For the second quarter
of 2022, the tax impact of adjusted items was calculated using the
applicable statutory rates by tax jurisdiction. For the first and
third quarter of 2022 and the first nine months of 2021, the tax
impact of adjusted items was calculated using the consolidated
effective tax rate as this was deemed to approximate the tax impact
of adjusted items calculated using applicable statutory tax
rates.
|
Operating Results - Local Currency
In discussing operating results, the company reports Adjusted
EBITDA margins and refers to percentage changes in local currency,
unless otherwise noted. Amounts presented on a local currency basis
are calculated by translating the current period results of foreign
operations to U.S. dollars using the foreign currency exchange
rates from the comparative period. Management believes this
methodology provides a framework for assessing performance and
operations excluding the effect of foreign currency
fluctuations.
The following table reflects the reconciliation to local
currency amounts for consolidated (i) revenue, (ii) fee revenue,
(iii) operating income and (iv) Adjusted EBITDA.
|
Three Months Ended September
30,
|
|
Nine Months Ended September 30,
|
($ in
millions)
|
2022
|
|
% Change
|
|
2022
|
|
% Change
|
Revenue:
|
|
|
|
|
|
|
|
At current period
exchange rates
|
$
5,177.5
|
|
6 %
|
|
$
15,257.3
|
|
14 %
|
Impact of change in
exchange rates
|
223.6
|
|
n/a
|
|
475.7
|
|
n/a
|
At comparative period
exchange rates
|
$
5,401.1
|
|
10 %
|
|
$
15,733.0
|
|
17 %
|
|
|
|
|
|
|
|
|
Fee revenue:
|
|
|
|
|
|
|
|
At current period
exchange rates
|
$
2,048.6
|
|
— %
|
|
$
6,087.9
|
|
16 %
|
Impact of change in
exchange rates
|
90.6
|
|
n/a
|
|
190.2
|
|
n/a
|
At comparative period
exchange rates
|
$
2,139.2
|
|
4 %
|
|
$
6,278.1
|
|
19 %
|
|
|
|
|
|
|
|
|
Operating income:
|
|
|
|
|
|
|
|
At current period
exchange rates
|
$
202.6
|
|
(31) %
|
|
$
613.4
|
|
3 %
|
Impact of change in
exchange rates
|
1.5
|
|
n/a
|
|
7.6
|
|
n/a
|
At comparative period
exchange rates
|
$
204.1
|
|
(30) %
|
|
$
621.0
|
|
4 %
|
|
|
|
|
|
|
|
|
Adjusted EBITDA:
|
|
|
|
|
|
|
|
At current period
exchange rates
|
$
276.2
|
|
(22) %
|
|
$
908.8
|
|
4 %
|
Impact of change in
exchange rates
|
8.6
|
|
n/a
|
|
18.3
|
|
n/a
|
At comparative period
exchange rates
|
$
284.8
|
|
(19) %
|
|
$
927.1
|
|
6 %
|
2. As part of the last phase of the company's Beyond
transformation, effective January 1,
2022, the company changed from its geographic-centric Real
Estate Services segments of Americas, EMEA and Asia Pacific to global business line segments
of Markets Advisory, Capital Markets, Work Dynamics and JLL
Technologies. The company's real estate investment management
business, LaSalle, continues as a
reporting segment. Beginning with the first quarter of 2022, the
company's financial results are presented on this basis. Comparable
periods in 2021 have been recast to align with the new reporting
structure.
3. Restructuring and acquisition charges are
excluded from the company's measure of segment operating results,
although they are included within consolidated Operating income
calculated in accordance with GAAP. For purposes of segment
operating results, the allocation of restructuring and acquisition
charges to the segments is not a component of management's
assessment of segment performance. The table below shows
restructuring and acquisition charges.
|
Three Months Ended September
30,
|
|
Nine Months Ended September 30,
|
(in
millions)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Severance and other
employment-related charges
|
$
9.4
|
|
$
1.2
|
|
$
21.0
|
|
$
2.1
|
Restructuring,
pre-acquisition and post-acquisition charges
|
11.7
|
|
14.4
|
|
45.2
|
|
47.8
|
Fair value adjustments
that resulted in a net decrease to earn-out liabilities from
prior-period acquisition activity
|
(0.1)
|
|
—
|
|
0.2
|
|
1.0
|
Total restructuring and
acquisition charges
|
$
21.0
|
|
$
15.6
|
|
$
66.4
|
|
$
50.9
|
4. The consolidated statements of cash flows are
presented in summarized form. For complete consolidated statements
of cash flows, please refer to the company's Form 10-Q for the
quarter ended September 30, 2022, to
be filed with the SEC in the near future.
5. As of September 30,
2022, LaSalle had
$81.7 billion of real estate assets
under management (AUM), composed of $39.1
billion invested in separate accounts, $39.2 billion invested in fund management
vehicles and $3.4 billion invested in
public securities. The geographic distribution of separate accounts
and fund management investments was $30.5
billion in North America,
$20.0 billion in the UK, $13.1 billion in Asia
Pacific and $6.8 billion in
continental Europe. The remaining
$7.9 billion relates to Global
Partner Solutions which is a global business line.
AUM changed less than 1% in USD (increased 4% in local currency)
from $82.1 billion as of June 30, 2022. The AUM change resulted from (i)
$3.5 billion of foreign currency
decreases and (ii) $1.0 billion of
dispositions and withdrawals, partially offset by (iii)
$3.2 billion of acquisitions and (iv)
$0.9 billion of net valuation
increases.
Assets under management data for separate accounts and fund
management amounts are reported on a one-quarter lag. In addition,
LaSalle raised $1.2 billion in private equity capital for the
quarter ended September 30, 2022.
6. "Net Debt" is defined as the sum of the (i)
Credit facility, (ii) Long-term debt and (iii) Short-term
borrowings liability balances less Cash and cash equivalents.
"Net Leverage Ratio" is defined as Net Debt divided by the
trailing-twelve-month adjusted EBITDA.
"Corporate Liquidity" is defined as the unused portion of the
company's Credit Facility plus cash and cash equivalents.
"Free Cash Flow" is defined as cash provided by operating
activities less net capital additions - property and equipment.
"EMEA" is defined as Europe,
Middle East and Africa.
7. n.m.: "not meaningful", represented by a
percentage change of greater than 1,000%, favorably or
unfavorably.
Appendix: Revenue
and Fee Revenue Segment Detail
|
|
|
Three months ended September 30,
2022
|
(in
millions)
|
Markets Advisory
|
|
Capital Markets
|
|
Work Dynamics
|
|
|
|
|
|
|
|
Leasing
|
Property
Mgmt
|
Advisory,
Consulting
and Other
|
|
Total
Markets
Advisory
|
|
Invt Sales,
Debt/Equity
Advisory
and Other
|
Valuation
Advisory
|
Loan
Servicing
|
|
Total
Capital
Markets
|
|
Workplace
Mgmt
|
Project
Mgmt
|
Portfolio
Services
and Other
|
|
Total
Work
Dynamics
|
|
JLLT
|
|
LaSalle
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$ 703.3
|
377.8
|
30.4
|
|
$
1,111.5
|
|
$ 465.0
|
89.7
|
40.5
|
|
$ 595.2
|
|
$
2,429.1
|
748.3
|
112.4
|
|
$
3,289.8
|
|
$
56.5
|
|
$ 124.5
|
|
$
5,177.5
|
Gross contract
costs1
|
(6.9)
|
(254.9)
|
(1.8)
|
|
(263.6)
|
|
(7.7)
|
(3.2)
|
—
|
|
(10.9)
|
|
(2,245.5)
|
(538.3)
|
(53.1)
|
|
(2,836.9)
|
|
(3.8)
|
|
(8.5)
|
|
(3,123.7)
|
Net non-cash MSR and
mortgage banking
derivative activity
|
—
|
—
|
—
|
|
—
|
|
(5.2)
|
—
|
—
|
|
(5.2)
|
|
—
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
(5.2)
|
Fee revenue
|
$ 696.4
|
122.9
|
28.6
|
|
$ 847.9
|
|
$ 452.1
|
86.5
|
40.5
|
|
$ 579.1
|
|
$ 183.6
|
210.0
|
59.3
|
|
$ 452.9
|
|
$
52.7
|
|
$ 116.0
|
|
$
2,048.6
|
|
Three months ended
September 30, 2021
|
(in
millions)
|
Markets
Advisory
|
|
Capital
Markets
|
|
Work
Dynamics
|
|
|
|
|
|
|
|
Leasing
|
Property
Mgmt
|
Advisory,
Consulting
and Other
|
|
Total
Markets
Advisory
|
|
Invt Sales,
Debt/Equity
Advisory
and Other
|
Valuation
Advisory
|
Loan
Servicing
|
|
Total
Capital
Markets
|
|
Workplace
Mgmt
|
Project
Mgmt
|
Portfolio
Services
and Other
|
|
Total
Work
Dynamics
|
|
JLLT
|
|
LaSalle
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$ 694.9
|
351.3
|
33.7
|
|
$
1,079.9
|
|
$ 554.7
|
87.1
|
38.5
|
|
$ 680.3
|
|
$
2,138.4
|
707.8
|
114.2
|
|
$
2,960.4
|
|
$ 38.8
|
|
$ 129.8
|
|
$
4,889.2
|
Gross contract
costs1
|
(5.8)
|
(235.4)
|
(1.7)
|
|
(242.9)
|
|
(10.0)
|
(3.0)
|
—
|
|
(13.0)
|
|
(1,978.4)
|
(514.2)
|
(51.2)
|
|
(2,543.8)
|
|
(4.4)
|
|
(6.4)
|
|
(2,810.5)
|
Net non-cash MSR and
mortgage banking
derivative activity
|
—
|
—
|
—
|
|
—
|
|
(28.1)
|
—
|
—
|
|
(28.1)
|
|
—
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
(28.1)
|
Fee revenue
|
$ 689.1
|
115.9
|
32.0
|
|
$ 837.0
|
|
$ 516.6
|
84.1
|
38.5
|
|
$ 639.2
|
|
$ 160.0
|
193.6
|
63.0
|
|
$ 416.6
|
|
$ 34.4
|
|
$ 123.4
|
|
$
2,050.6
|
Appendix: Revenue
and Fee Revenue Segment Detail (continued)
|
|
|
Nine months ended September 30,
2022
|
(in
millions)
|
Markets Advisory
|
|
Capital Markets
|
|
Work Dynamics
|
|
|
|
|
|
|
|
Leasing
|
Property
Mgmt
|
Advisory,
Consulting
and Other
|
|
Total
Markets
Advisory
|
|
Invt Sales,
Debt/Equity
Advisory
and Other
|
Valuation
Advisory
|
Loan
Servicing
|
|
Total
Capital
Markets
|
|
Workplace
Mgmt
|
Project
Mgmt
|
Portfolio
Services
and Other
|
|
Total
Work
Dynamics
|
|
JLLT
|
|
LaSalle
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
2,012.6
|
1,126.5
|
90.1
|
|
$
3,229.2
|
|
$
1,490.8
|
268.7
|
120.8
|
|
$
1,880.3
|
|
$
7,183.5
|
2,115.4
|
335.0
|
|
$
9,633.9
|
|
$ 156.6
|
|
$ 357.3
|
|
$
15,257.3
|
Gross contract
costs1
|
(15.8)
|
(762.8)
|
(5.7)
|
|
(784.3)
|
|
(29.4)
|
(6.8)
|
—
|
|
(36.2)
|
|
(6,633.0)
|
(1,514.8)
|
(155.7)
|
|
(8,303.5)
|
|
(10.6)
|
|
(22.0)
|
|
(9,156.6)
|
Net non-cash MSR and
mortgage banking
derivative activity
|
—
|
—
|
—
|
|
—
|
|
(12.8)
|
—
|
—
|
|
(12.8)
|
|
—
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
(12.8)
|
Fee revenue
|
$
1,996.8
|
363.7
|
84.4
|
|
$
2,444.9
|
|
$
1,448.6
|
261.9
|
120.8
|
|
$
1,831.3
|
|
$ 550.5
|
600.6
|
179.3
|
|
$
1,330.4
|
|
$ 146.0
|
|
$ 335.3
|
|
$
6,087.9
|
|
Nine months ended
September 30, 2021
|
(in
millions)
|
Markets
Advisory
|
|
Capital
Markets
|
|
Work
Dynamics
|
|
|
|
|
|
|
|
Leasing
|
Property
Mgmt
|
Advisory,
Consulting
and Other
|
|
Total
Markets
Advisory
|
|
Invt Sales,
Debt/Equity
Advisory
and Other
|
Valuation
Advisory
|
Loan
Servicing
|
|
Total
Capital
Markets
|
|
Workplace
Mgmt
|
Project
Mgmt
|
Portfolio
Services
and Other
|
|
Total
Work
Dynamics
|
|
JLLT
|
|
LaSalle
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
1,683.9
|
1,046.7
|
93.3
|
|
$
2,823.9
|
|
$
1,286.8
|
258.2
|
99.1
|
|
$
1,644.1
|
|
$
6,294.0
|
1,877.4
|
323.3
|
|
$
8,494.7
|
|
$ 121.8
|
|
$ 336.8
|
|
$ 13,421.3
|
Gross contract
costs1
|
(14.0)
|
(701.8)
|
(7.5)
|
|
(723.3)
|
|
(27.3)
|
(7.4)
|
—
|
|
(34.7)
|
|
(5,815.7)
|
(1,336.1)
|
(154.3)
|
|
(7,306.1)
|
|
(24.7)
|
|
(19.6)
|
|
(8,108.4)
|
Net non-cash MSR and
mortgage banking
derivative activity
|
—
|
—
|
—
|
|
—
|
|
(43.5)
|
—
|
—
|
|
(43.5)
|
|
—
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
(43.5)
|
Fee revenue
|
$
1,669.9
|
344.9
|
85.8
|
|
$
2,100.6
|
|
$
1,216.0
|
250.8
|
99.1
|
|
$
1,565.9
|
|
$ 478.3
|
541.3
|
169.0
|
|
$
1,188.6
|
|
$ 97.1
|
|
$ 317.2
|
|
$
5,269.4
|
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SOURCE JLL-IR