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Revenue of $708 million, up 20 percent in local currency
CHICAGO, October 26, 2010 – Jones Lang LaSalle Incorporated (NYSE: JLL), the leading integrated financial and professional services firm specializing in real estate, today reported net income of $37 million on a U.S. GAAP basis, or $0.84 per share, for the quarter ended September 30, 2010. This compares with net income of $20 million on a U.S. GAAP basis, or $0.46 per share, for the quarter ended September 30, 2009. Adjusting for Restructuring and certain non-cash co-investment charges in the third quarter of 2010, net income would have been $38 million, or $0.86 per share, compared with adjusted net income of $27 million, or $0.61 per share, in 2009. The firm’s adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) were $79 million for the third quarter of 2010 compared with adjusted EBITDA of $66 million for the same period in 2009. Revenue for the third quarter of 2010 was $708 million, compared with $595 million in the third quarter of 2009, an increase of 19 percent in U.S. dollars, 20 percent in local currency.
On a year-to-date basis net income was $69 million, or $1.57 per share, compared with a net loss of $56 million, or $1.50 per share, for the first nine months of 2009. Adjusted EBITDA on a year-to-date basis was $194 million compared with adjusted EBITDA of $126 million in 2009. Revenue for the first nine months of 2010 was $2.0 billion, compared with $1.7 billion in 2009, an increase of 18 percent, 17 percent in local currency.
Third-Quarter 2010 Highlights:
§ Steady, broad-based revenue improvement continues
§ Leasing revenue up 36 percent in local currency
§ Corporate outsourcing growth continues driven by new wins
§ Semi-annual dividend declared
Results included less than $1 million of Restructuring charges in the third quarter of 2010, compared with $4 million in 2009. Third-quarter results also included approximately $1 million of non-cash co-investment impairment charges, compared with $4 million in 2009. Restructuring charges are excluded from segment operating results although they are included for consolidated reporting. Non-cash co-investment impairments are included in Equity earnings (losses) at the consolidated and segment reporting levels.
On a year-to-date basis, results included $6 million of Restructuring charges, compared with $37 million in 2009, and $10 million of co-investment impairment charges compared with $48 million in 2009.
"We strengthened our market positions and expanded businesses around the world, with healthy revenue growth in both our transactional and annuity businesses," said Colin Dyer, Chief Executive Officer of Jones Lang LaSalle. "We posted solid results in the third quarter, as the broad market recovery continued."
Business Line Revenue Comparison (in millions, “LC” = local currency)
Operating expenses excluding Restructuring charges were $646 million for the third quarter, compared with $546 million in 2009. On a local currency basis, operating expenses excluding Restructuring charges increased 19 percent, primarily as a result of increased incentive compensation related to transactional revenue and costs associated with new business pursuits. Total compensation as a percentage of firm revenue for the third quarter was 65.4 percent, compared with 63.8 percent in the third quarter of last year. The increase resulted from recent Corporate Solutions wins that required start-up hiring and transition costs in the third quarter in advance of revenue generation to begin in the fourth quarter, adding new clients for which reimbursed payroll costs are reported on a “gross” basis, and differences in timing of certain incentive compensation accruals between years.
Year-to-date operating expenses excluding Restructuring charges were $1.8 billion, an increase of 13 percent in local currency compared with the first nine months of 2009. Total compensation as a percent of firm revenue on a year-to-date basis was 65.4 percent in 2010, compared with 66.3 percent for the first nine months of 2009.
Adjusted operating income margin improved to 8.8 percent in the third quarter, compared with an 8.2 percent margin in the same period of 2009. Year-to-date adjusted operating income margin was 7.2 percent, up from 4.3 percent in the first nine months of 2009.
Balance Sheet and Dividend
The firm’s outstanding debt on its long-term credit facility was $253 million at September 30, 2010, compared with $292 million at September 30, 2009. During the third quarter, the firm made the first deferred payment related to the Staubach acquisition.
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The firm also announced it renewed and extended its bank credit facility, increasing the capacity to $1.1 billion from $840 million and extending the maturity to September 2015 from June 2012. The increased capacity provides strength and liquidity to meet current commitments and capitalize on new opportunities, and the maturity extension to 2015 is well past the due date of all deferred acquisition payments.
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The Board of Directors declared a semi-annual dividend of $0.10 per share of its common stock, consistent with the semi-annual dividends paid in recent periods. The dividend payment will be made on Wednesday, December 15, 2010, to holders of record at the close of business on Monday, November 15, 2010.
Business Segment Third-Quarter and Year-to-Date Performance Highlights
Americas Real Estate Services
Third-quarter revenue in the Americas region was $309 million, an increase of 29 percent in US dollars and local currency over the prior year, driven by increased transactional activities, both in Leasing, which increased 38 percent in local currency year over year, and Capital Markets and Hotels.
Operating expenses were $272 million in the third quarter, 29 percent higher in local currency than a year ago, driven primarily by transition costs supporting recent wins from which the firm will begin to earn revenue in the fourth quarter as well as higher incentive compensation expenses related to increased transaction revenue. Year-to-date operating expenses were $754 million, compared with $644 million for the same period in 2009, a 17 percent increase in local currency.
EBITDA for the third quarter of 2010 was $46 million, compared with $39 million for the third quarter of 2009. Year-to-date EBITDA for 2010 was $105 million compared with $82 million for the first nine months of 2009.
EMEA Real Estate Services
EMEA’s third-quarter revenue was $169 million in 2010 compared with $154 million in 2009, an increase of 10 percent, 18 percent in local currency, with the most significant contribution from Leasing. Revenue in France and England was up 32 percent and 28 percent, respectively, in local currency compared with the third quarter of 2009. Year-to-date revenue in the region was $491 million in 2010 compared with $418 million in 2009, an increase of 18 percent, 21 percent in local currency.
Operating expenses were $166 million in the third quarter, an increase of 5 percent from the prior year, 13 percent in local currency, primarily due to increased variable compensation expense related to improved year-over-year performance. Year-to-date operating expenses were $492 million, an increase of 11 percent, 13 percent in local currency.
The region’s EBITDA for the third quarter of 2010 was $7 million, compared with $1 million for the same period last year. Year-to-date EBITDA for 2010 was $13 million compared with an EBITDA loss of $10 million for the first nine months of 2009.
Asia Pacific Real Estate Services
Revenue in the Asia Pacific region was $165 million for the third quarter of 2010, compared with $136 million for the same period in 2009, an increase of 21 percent, 15 percent in local currency. The year-over-year increase was principally driven by transactional revenue improvement across most countries in the region compared with a year ago. Year-to-date revenue in the region was $455 million in 2010, an increase of 26 percent compared with 2009, 17 percent in local currency.
Operating expenses for the region were $158 million for the quarter, compared with $129 million in 2009, an increase of 16 percent year over year in local currency. Operating expenses were $432 million for the first nine months of 2010, compared with $354 million in 2009, an increase of 13 percent in local currency.
The region’s EBITDA for the third quarter of 2010 was $11 million, compared with $10 million for the same period last year. Year-to-date EBITDA for 2010 was $34 million compared with $15 million for the first nine months of 2009.
LaSalle Investment Management
LaSalle Investment Management’s third-quarter Advisory fees were $62 million, up 1 percent compared with last year in both US dollars and local currency. Year-to-date Advisory fees were $176 million, compared with $180 million through the first nine months of 2009, a decrease of 4 percent in local currency.
During the quarter, LaSalle Investment Management raised net capital of $1.0 billion, bringing the year-to-date net capital raise to $5.3 billion. Investments totalled $1.7 billion during the third quarter, $2.5 billion year to date. At the end of the third quarter assets under management were $40.2 billion.
Throughout the downturn, the firm has strengthened its corporate business and redefined its cost base across transactional businesses. It has maintained steady margin improvements in line with stable revenue growth. LaSalle Investment Management has raised strong levels of capital through the first nine months of the year and remains strategically positioned as opportunities arise. The firm is encouraged by three solid quarters of performance and is well positioned to take advantage of the opportunities that will arise from recovering markets.
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 the Quarterly Report on Form 10-Q for the quarters ended March 31, 2010, and June 30, 2010, 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.
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