CHICAGO , July 29 /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 $24.5 million , or $0.73 per diluted share of common stock, for the quarter ended June 30, 2008 , compared with net income of $77.9 million , or $2.32 per share, for the second quarter of 2007. On a year-to-date basis, 2008 net income was $27.4 million , or $0.82 per share, compared with net income of $105 million , or $3.12 per share in 2007. Operating income for the second quarter of 2008 was $38.2 million , compared with $101 million for the prior year, and on a year-to-date basis, operating income was $46.1 million in 2008 and $137 million in 2007. Included in the firm's 2007 results was a significant second-quarter transaction advisory fee earned in the Asia Pacific Hotels business.
Second Quarter 2008 Highlights:
-- LaSalle Investment Management's Advisory fees increased 34 percent
-- Management Services revenue increased 28 percent
-- Leasing revenue increased 23 percent
Revenue decreased in the second quarter of 2008 compared with 2007 by only two percent to $660 million , despite the significant advisory fee earned in Asia Pacific Hotels in 2007 and decreased Capital Markets and Hotels revenue in 2008. Capital Markets and Hotels revenue, excluding the Asia Pacific Hotels fee, for the second quarter decreased $34.3 million , or 30 percent, from 2007. The decline in Capital Markets and Hotels was offset by increased revenue in the quarter across other business lines, led by LaSalle Investment Management's Advisory fees, which increased 34 percent, to $72.6 million , over the prior year. The solid second-quarter performance in Transaction Services revenue included solid contribution from Leasing, which increased 23 percent to $163 million . Excluding Capital Markets and Hotels, Transaction Services revenue increased by 33 percent over 2007, to $266 million , for the second quarter, with increases across all regions. Management Services revenue increased 28 percent to $215 million for the second quarter, with all operating regions achieving revenue growth.
For the first half of 2008, revenue increased to $1.2 billion , five percent over the prior year, despite a year-over-year revenue decrease in Capital Markets and Hotels of $88.5 million and the 2007 Asia Pacific Hotels advisory fee. Factors driving year-to-date performance were similar to those experienced in the second quarter. The current revenue contribution from 2007 and 2008 acquisitions was approximately $57 million and $96 million for the 2008 second quarter and year to date, respectively.
'Solid revenue performance from LaSalle Investment Management and our
diverse business lines offset the continued impact of illiquid credit markets
on revenue generated by our Capital Markets businesses,' said
Operating expenses were $621 million for the second quarter of 2008, an increase of eight percent over 2007, and $1.2 billion year to date, a 14 percent increase. First-half operating costs increased across all investor and occupier services, principally due to costs associated with the 13 acquisitions that closed in 2007, nine of which were completed in the second half of the year, including larger transactions in India and France . 2008 operating expenses also include costs associated with 10 acquisitions completed this year, seven in the first quarter and three in the second. As a result, year-to-date 2008 operating expenses include costs from these acquired businesses, including integration and intangible amortization, of approximately $53 million for the second quarter and $92 million year to date, which were not reflected in the firm's 2007 results. The firm's earnings before interest, taxes, depreciation and amortization ('EBITDA') for the 2008 second quarter and year to date were $55.3 million and $76.9 million , respectively.
Business Segment Second Quarter Performance Highlights
Investor and Occupier Services
- In the Americas region, revenue for the second quarter of 2008 was $190
million, an increase of six percent over the same period last year. For
the first half of 2008, revenue was $364 million, an increase of 11
percent. Excluding the impact of reduced revenue from Capital Markets
and Hotels, which decreased from 2007 by $10.0 million or 40 percent for
the quarter, and by $23.1 million or 50 percent year to date, revenue
increased 14 percent for the quarter and 21 percent for the first half
of 2008.
Second-quarter revenue benefited from Management Services revenue, which
increased 10 percent over the prior year to $94.9 million, while
Transaction Services revenue excluding Capital Markets and Hotels grew
22 percent. The year-over-year revenue increase for the first half of
2008 was driven mainly by Management Services, which increased 17
percent to $184 million, and Transaction Services excluding Capital
Markets and Hotels, which grew 29 percent primarily as a result of
increased leasing activity. The region's total Leasing revenue in the
second quarter, including both Tenant Representation and Agency Leasing,
increased 17 percent to $59.8 million, and on a year-to-date basis
increased 27 percent to $117 million, compared with 2007. The growth in
Leasing was driven by activity from recruited transactors and
acquisitions completed during 2007. Additionally, revenue in the firm's
Mexico and South America businesses more than doubled for both the
second quarter and first half of the year compared with 2007.
Operating expenses were $179 million for the second quarter of 2008, an
increase of 12 percent, and $353 million for the first half of the year,
an increase of 17 percent over the prior year. Costs associated with the
hiring of revenue generators in key markets and completion of
acquisitions contributed to the increase in operating expenses. The
region's EBITDA for the 2008 second quarter and year to date was $18.1
million and $25.3 million, respectively.
On July 11, 2008, the firm completed the previously announced
transaction to merge operations with The Staubach Company, adding
significant strength to the firm's tenant representation business. Its
founder, Roger Staubach, was named to the Jones Lang LaSalle Board of
Directors and to the position of Executive Chairman, Americas.
- EMEA's second-quarter revenue was $236 million, an increase of 20
percent over the prior year, while revenue in the first half of 2008 was
$419 million, an increase of 12 percent over 2007. The growth in total
revenue occurred despite lower revenue from Capital Markets and Hotels,
which decreased in the second quarter by $17.7 million, or 26 percent,
and decreased for the first half of the year by $54.1 million, or 37
percent, compared with the prior year. Excluding Capital Markets and
Hotels, revenue for both the second quarter and year to date increased
by 44 percent over 2007. The current revenue contribution from 2007 and
2008 acquisitions was approximately $33 million and $57 million for the
2008 second quarter and year to date, respectively.
Management Services revenue grew 68 percent to $59.0 million for the
second quarter and 59 percent to $107 million for the first half of
2008. Transaction Services revenue excluding Capital Markets and Hotels
increased 38 percent for the second quarter and 40 percent for the first
half of 2008. While the firm experienced a lower volume of Capital
Markets transactions compared with the prior year, demand and market
share for other services increased. Leasing revenue, included in
Transaction Services revenue, increased over the prior year for both the
second quarter and year to date by 23 and 25 percent, respectively.
Advisory Services revenue, which is also included in Transaction
Services, increased 45 percent for second quarter and 42 percent year to
date over the prior year.
Geographically, the slowdown in Capital Markets activity during the
first half of 2008 significantly impacted the UK, Germany and France,
while Capital Markets activity and revenue increased in Dubai, Russia
and Holland, driving healthy year-to-date revenue growth over 2007 in
these markets.
Operating expenses for the second quarter increased 29 percent to $234
million, and increased 23 percent to $424 million, for the first half of
2008 compared with 2007, primarily due to the impact of acquisitions. Of
the ten acquisitions completed since the beginning of 2007, seven were
completed during or after the third quarter of 2007. Acquired businesses
added approximately $33 million of incremental operating expenses,
including integration and amortization, in the second quarter results,
and approximately $56 million year to date. Acquisitions in the second
quarter of 2008 included Kemper's, a 150-person, market-leading retail
specialist business in Germany, and the acquisition of the remaining 51
percent interest in a Finnish Leasing and Capital Markets business. The
region's EBITDA for the 2008 second quarter and year to date was $9.2
million and $8.2 million, respectively.
- Revenue for the Asia Pacific region was $142 million for the second
quarter of 2008, compared with $211 million in 2007, and $259 million
for the first half of 2008, compared with $298 million in 2007. Included
in the firm's second quarter 2007 results was the significant
transaction advisory fee earned in the Asia Pacific Hotels business.
Management Services revenue for the second quarter of 2008 was $61.4
million, an increase of 31 percent, and $119 million for the first half
of 2008, an increase of 29 percent over the prior year. The current
revenue contribution from 2007 and 2008 acquisitions was approximately
$20 million and $32 million for the 2008 second quarter and year to
date, respectively.
Capital Markets and Hotels revenue, excluding the 2007 advisory fee in
Hotels, decreased in the second quarter of 2008 by $6.6 million or 30
percent, and decreased for the first half of 2008 by $11.3 million or 33
percent. Leasing activity momentum continued from the first quarter of
2008 and, as a result, Leasing revenue increased by 32 percent for the
second quarter and 42 percent for the first half of 2008, compared with
2007.
The strongest contributors to the year-over-year revenue growth were the
growth markets of China, Japan and India. Revenue for these markets
increased 40 percent for both the second quarter and first half of the
year over 2007, as they benefited from both growing local economic
markets and the acquisition in India at the beginning of the third
quarter of 2007. The core market of Australia had second-quarter
revenue growth of 23 percent over the prior year, while Hong Kong grew
by 18 percent.
Operating expenses for the region were $137 million for the second
quarter of 2008 and $262 million for the first half of 2008. The
operating expenses decreased year over year for the quarter as a result
of incentive compensation recognized in 2007 related to the transaction
advisory fee in the Hotels business. The impact of acquisitions
completed since the beginning of 2007 is included in 2008 operating
expenses, adding approximately $15 million to the second quarter and
approximately $28 million to the first half of 2008. During the second
quarter of 2008, the firm completed the acquisition of a market-leading
agency business in the Philippines. The region's EBITDA for the 2008
second quarter and year to date was $8.2 million and $3.2 million,
respectively.
LaSalle Investment Management
LaSalle Investment Management continues to benefit from the growth of
its annuity-based business, which generated a year-over-year increase in
Advisory fees of 34 percent for both the second quarter and first half
of 2008. This growth in LaSalle Investment Management's annuity business
was principally due to an 18 percent increase in assets under management
over the prior year, to $54.1 billion, together with Advisory fees
generated from committed capital. Supporting this growth, the firm's
co-investment capital grew to $177 million at the end of the first
quarter of 2008, a 36 percent increase over the prior year.
During the second quarter of 2008, Incentive fees were $13.0 million,
compared with $29.8 million in 2007, reflecting varied timing in asset
sales compared with a year ago. Incentive fees vary significantly from
period to period due to both the performance of the underlying
investments and the contractual timing of the measurement periods for
different clients.
LaSalle Investment Management raised $1.0 billion of equity in the first
half of 2008, compared with $2.8 billion for the first half of 2007.
Investments made on behalf of clients in the first half of the year 2008
were $2.2 billion, compared with $3.4 billion in 2007.
Summary
The firm continued to grow its core businesses and globally diverse business platform, both through organic growth and recent targeted strategic acquisitions. LaSalle Investment Management's solid financial results reflect its outstanding track record and research-based approach for delivering value for clients. Despite the continuing uncertainty in the credit markets, the firm is actively managing its cost base, while remaining committed to its leadership position in Capital Markets and Hotels, and making selective investments in growth geographies and service lines.
Statements in this press release regarding, among other things, future
financial results and performance, achievements, plans and objectives, 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
About
Conference Call -
The firm will conduct a conference call for shareholders, analysts and investment professionals on Wednesday, July 30 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: 56375110
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=50090 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
webcastsupport@tfprn.com
Supplemental Information
Supplemental Information regarding the second quarter 2008 earnings call will be posted to the Investor Relation section of the company's Web site: www.joneslanglasalle.com approximately 15 minutes prior to the conference call and webcast and will be referred to during the call.
Conference Call Replay
Available: 11:00 a.m. EDT Wednesday, July 30 through Midnight EDT August 7 at the following numbers:
-- U.S. callers: +1 800 642 1687
-- International callers: +1 706 645 9291
-- Pass code: 56375110
Web Audio Replay
Audio replay will be available for download or stream within 24 hours of conference call. This information and link is also available on the company's Web site: www.joneslanglasalle.com
If you have any questions, call
JONES LANG LASALLE INCORPORATED
Consolidated Statements of Earnings
For the Three and Six Months Ended June 30, 2008 and 2007
(in thousands, except share data)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2008 2007 2008 2007
Revenue $659,515 $676,086 $1,223,435 $1,166,139
Operating expenses:
Compensation
and benefits 431,175 436,265 810,047 761,922
Operating,
administrative
and other 171,875 126,517 332,741 242,253
Depreciation and
amortization 18,268 12,309 34,714 24,935
Restructuring
credits - - (188) (411)
Total
operating
expenses 621,318 575,091 1,177,314 1,028,699
Operating
income 38,197 100,995 46,121 137,440
Interest
expense, net
of interest
income 3,560 3,830 4,736 5,668
Gain on sale of
investments - 3,703 - 6,129
Equity in
earnings/
(loss) from
unconsolidated
ventures 969 6,368 (1,244) 6,502
Income before
provision for
income taxes
and minority
interest 35,606 107,236 40,141 144,403
Provision for
income taxes 8,973 28,632 10,116 38,556
Minority
interest, net
of income taxes 1,114 - 1,666 -
Net income $25,519 $78,604 $28,359 $105,847
Net income
available to
common
shareholders $24,516 $77,932 $27,356 $105,175
Basic earnings
per common
share $0.77 $2.45 $0.86 $3.30
Basic weighted
average
shares
outstanding 31,876,045 31,828,364 31,824,435 31,878,811
Diluted
earnings per
common share $0.73 $2.32 $0.82 $3.12
Diluted
weighted
average
shares
outstanding 33,458,081 33,655,359 33,340,225 33,664,471
EBITDA $55,317 $122,703 $76,922 $174,334
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Segment Operating Results
For the Three and Six Months Ended June 30, 2008 and 2007
(in thousands)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2008 2007 2008 2007
INVESTOR & OCCUPIER SERVICES
AMERICAS
Revenue:
Transaction
services $88,065 $85,070 $167,424 $157,759
Management
services 94,945 86,021 183,692 156,952
Equity
earnings 41 270 41 420
Other services 6,824 7,638 12,580 12,134
189,875 178,999 363,737 327,265
Operating expenses:
Compensation,
operating and
administrative 171,825 153,792 338,394 289,675
Depreciation
and
amortization 7,494 6,084 14,542 12,006
179,319 159,876 352,936 301,681
Operating income $10,556 $19,123 $10,801 $25,584
EBITDA $18,050 $25,207 $25,343 $37,590
EMEA
Revenue:
Transaction
services $174,456 $157,903 $306,872 $300,041
Management
services 59,027 35,181 107,204 67,264
Equity
earnings (loss) 85 172 102 (195)
Other services 2,530 3,730 4,985 6,767
236,098 196,986 419,163 373,877
Operating expenses:
Compensation,
operating and
administrative 226,900 177,830 410,960 335,555
Depreciation
and
amortization 6,866 3,931 12,886 8,447
233,766 181,761 423,846 344,002
Operating
income (loss) $2,332 $15,225 $(4,683) $29,875
EBITDA $9,198 $19,156 $8,203 $38,322
ASIA PACIFIC
Revenue:
Transaction
services $77,748 $162,312 $136,630 $201,908
Management
services 61,444 47,018 118,518 92,077
Equity earnings
(loss) (88) 210 (150) 231
Other services 2,674 1,691 4,178 3,410
141,778 211,231 259,176 297,626
Operating expenses:
Compensation,
operating and
administrative 133,553 165,194 255,961 252,715
Depreciation
and
amortization 3,451 1,857 6,328 3,630
137,004 167,051 262,289 256,345
Operating
income (loss) $4,774 $44,180 $(3,113) $41,281
EBITDA $8,225 $46,037 $3,215 $44,911
LASALLE INVESTMENT
MANAGEMENT
Revenue:
Transaction
services $6,214 $5,411 $10,439 $7,930
Advisory fees 72,552 54,295 144,683 108,214
Incentive fees 13,036 29,817 26,230 51,683
Equity earnings
(loss) 931 5,716 (1,237) 6,046
92,733 95,239 180,115 173,873
Operating expenses:
Compensation,
operating and
administrative 70,772 65,966 137,474 126,230
Depreciation
and amortization 457 437 957 852
71,229 66,403 138,431 127,082
Operating income $21,504 $28,836 $41,684 $46,791
EBITDA $21,961 $29,273 $42,641 $47,643
Total segment
revenue 660,484 682,454 1,222,191 1,172,641
Reclassification
of equity
earnings (loss) 969 6,368 (1,244) 6,502
Total revenue $659,515 $676,086 $1,223,435 $1,166,139
Total
operating
expenses
before
restructuring
credits $621,318 $575,091 $1,177,502 $1,029,110
Operating
income
before
restructuring
credits $38,197 $100,995 $45,933 $137,029
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Consolidated Balance Sheets
June 30, 2008, December 31, 2007 and June 30, 2007
(in thousands)
June 30, June 30,
2008 December 31, 2007
(Unaudited) 2007 (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $67,650 $78,580 $37,513
Trade receivables, net of
allowances 665,137 834,865 581,272
Notes and other receivables 65,155 52,695 60,408
Prepaid expenses 39,017 26,148 30,319
Deferred tax assets 89,281 64,872 48,034
Other assets 22,857 13,816 22,346
Total current assets 949,097 1,070,976 779,892
Property and equipment, at cost,
less accumulated depreciation 220,174 193,329 146,926
Goodwill, with indefinite useful
lives 865,184 694,004 580,237
Identified intangibles, with
finite useful lives, at cost,
less accumulated
amortization 44,663 41,670 38,822
Investments in real estate
ventures 177,399 151,800 130,698
Long-term receivables 46,927 33,219 30,744
Deferred tax assets 52,578 58,584 40,967
Other assets 55,740 48,292 47,607
$2,411,762 $2,291,874 $1,795,893
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $254,221 $302,976 $192,377
Accrued compensation 290,533 655,895 365,679
Short-term borrowings 23,288 14,385 30,239
Deferred tax liabilities 4,997 727 2,027
Deferred income 30,364 29,756 22,796
Deferred business acquisition
obligations 45,168 45,363 19,400
Other liabilities 73,354 60,193 39,593
Total current liabilities 721,925 1,109,295 672,111
Long-term liabilities:
Credit facilities 441,529 29,205 117,710
Deferred tax liabilities 1,470 6,577 1,289
Deferred compensation 40,718 46,423 47,267
Pension liability 1,101 1,096 20,152
Deferred business acquisition
obligations 34,384 36,679 26,039
Other liabilities 53,237 43,794 41,266
Total liabilities 1,294,364 1,273,069 925,834
Minority interest 9,939 8,272 -
Shareholders' equity:
Common stock, $.01 par value per
share, 100,000,000 shares
authorized; 31,929,669,
31,722,587 and 36,821,901 shares
issued and outstanding as of
June 30, 2008, December 31, 2007
and June 30, 2007, respectively 319 317 368
Additional paid-in capital 476,312 441,951 706,050
Retained earnings 495,908 484,840 349,705
Stock held by subsidiary - - (219,359)
Stock held in trust (1,980) (1,930) (1,427)
Accumulated other comprehensive
income 136,900 85,355 34,722
Total shareholders' equity 1,107,459 1,010,533 870,059
$2,411,762 $2,291,874 $1,795,893
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Summarized Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2008 and 2007
(in thousands)
(Unaudited)
Six Months Ended June 30,
2008 2007
Cash (used in) provided by
operating activities $ (173,205) $ 20,303
Cash used in investing activities (242,671) (108,681)
Cash provided by financing
activities 404,946 75,279
Net decrease in cash and
cash equivalents (10,930) (13,099)
Cash and cash equivalents,
beginning of period 78,580 50,612
Cash and cash equivalents, end of
period $ 67,650 $ 37,513
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Financial Statement Notes
1. EBITDA represents earnings before interest expense, net of interest
income, income taxes, depreciation and amortization. Although EBITDA is
a non-GAAP financial measure, it is used extensively by management and
is useful to investors as one of the primary metrics for evaluating
operating performance and liquidity. The firm believes that an increase
in EBITDA is an indicator of improved 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,
EBITDA should not be considered as an alternative either to net income
or net cash provided by operating activities, both of which are
determined in accordance with GAAP. Because EBITDA is not calculated
under GAAP, the firm's EBITDA may not be comparable to similarly titled
measures used by other companies.
Below is a reconciliation of net income to EBITDA (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net income
$ 24,516 $ 77,932 $ 27,356 $ 105,175
Add:
Interest expense, net
of interest income 3,560 3,830 4,736 5,668
Provision for income
taxes 8,973 28,632 10,116 38,556
Depreciation and
amortization 18,268 12,309 34,714 24,935
EBITDA
$ 55,317 $ 122,703 $ 76,922 $ 174,334
Below is a reconciliation of net cash provided by operating activities,
the most comparable cash flow measure on the consolidated statements of
cash flows, to EBITDA (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net cash provided by (used
in) operating activities $ 98,645 $ 202,720 $ (173,205) $ 20,303
Add:
Interest expense, net of
interest income 3,560 3,830 4,736 5,668
Change in working capital
and non-cash expenses (55,861) (112,479) 235,275 109,807
Provision for income taxes 8,973 28,632 10,116 38,556
EBITDA $ 55,317 $ 122,703 $ 76,922 $ 174,334
2. For purposes of segment operating results, the allocation of
restructuring credits to our segments has been determined to not be
meaningful to investors. Additionally, the performance of segment
results has been evaluated without these charges being allocated.
3. 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
June 30, 2008, to be filed with the Securities and Exchange Commission
shortly.
4. EMEA refers to Europe, Middle East, and Africa.
SOURCE Jones Lang LaSalle Incorporated
