CHICAGO, April 29 /PRNewswire-FirstCall/ -- Jones Lang LaSalle Incorporated , the leading integrated financial and professional services firm specializing in real estate, today reported net income of $2.8 million, or $0.09 per diluted share of common stock, for the quarter ended March 31, 2008, compared with net income of $27.3 million, or $0.81 per share, for the first quarter of 2007. Revenue for the first quarter of 2008 was $564 million, an increase of 15 percent in U.S. dollars and nine percent in local currencies from the prior year. Operating income for the first quarter of 2008 was $7.9 million compared with $36.5 million for the prior year. Included in the firm's 2007 results was a significant Capital Markets performance fee from a portfolio transaction completed in Germany.
All operating segments achieved revenue growth in the first quarter of 2008 compared with the same period in 2007. Revenue from LaSalle Investment Management's Advisory fees and the Asia Pacific region each increased approximately 35 percent over the prior year. The firm's Hotels and broader Capital Markets businesses, which had been involved in large portfolio transactions in previous quarters, were significantly impacted in the first quarter of 2008 by liquidity conditions in credit markets. Offsetting this impact, however, was solid revenue performance in the remaining business.
First Quarter 2008 Highlights: -- Revenue increased 15 percent to $564 million with growth in all business segments -- Revenue growth of 34 percent in LaSalle Investment Management's Advisory fees -- Semi-annual dividend declared
"While the credit environment slowed our Capital Markets transactions worldwide, we continued to grow our revenue with solid performance across the rest of our broad geographic and client-service platform. LaSalle Investment Management also produced a healthy quarter," said Colin Dyer, Chief Executive Officer of Jones Lang LaSalle. "We remain focused on actively managing our cost base while we continue to deliver real value to our clients and build strong market positions globally," Dyer added.
Operating expenses of $556 million for the first quarter of 2008 represented an increase of 23 percent in U.S. dollars and 16 percent in local currencies compared with the prior year's expenses of $454 million. Operating expenses increased as a result of acquisition costs and global platform improvements added throughout 2007. During the first quarter of each year, the firm's results also are influenced by the seasonal nature of the business, as greater proportions of annual revenue and profits are realized in subsequent quarters. The firm is actively managing expenses, while remaining focused on growth opportunities.
In addition to the 13 acquisitions closed in 2007, the firm completed an additional seven in the first quarter of 2008. The recent acquisitions were made in all regions and have expanded the firm's presence as well as further diversified its product lines.
Declaration of Semi-Annual Dividend
The Board of Directors declared a semi-annual dividend of $0.50 per share of its common stock. The dividend payment will be made on June 13, 2008, to holders of record at the close of business on May 15, 2008.
Business Segment First Quarter Performance Highlights Investor and Occupier Services -- In the Americas region, revenue for the first quarter of 2008 was $174 million, an increase of 17 percent over the same period last year, despite a decrease of 54 percent in Capital Markets revenue and fewer transactions completed in the Americas Hotels business. The growth in revenue was driven mainly by Management services, which increased 25 percent for the quarter compared with 2007. Transaction services grew nine percent for the same period over last year as a result of the firm's healthy market leasing activity. Revenue from Account Management, including leasing revenue, increased 54 percent over the prior year, benefiting from new and expanded relationships with corporate clients. The region's total leasing revenue increased nearly 40 percent over 2007, driven by activity from the investment hires and acquisitions that were completed in the prior year. The growth in both of these businesses, as well as a year-over- year increase of 65 percent in revenue from Latin America, offset the decline in Capital Markets revenue. Total operating expenses increased 22 percent for the first quarter of 2008 compared with 2007. Contributing to the increase were the impact of expenses relating to the addition of revenue generators in key markets during 2007, as well as the impact of strategic acquisitions. -- EMEA's revenue for the first quarter of 2008 was $183 million compared with $177 million in the prior year. Management services revenue grew 50 percent to $48.2 million for the quarter. Transaction services revenue decreased seven percent to $132 million as a result of reduced transaction volume in Capital Markets. Revenue from the firm's Capital Markets decreased 29 percent in the first quarter of 2008 excluding the performance fee generated from the significant portfolio transaction completed in Germany in 2007, while market volumes as a whole in Europe were down 38 percent. Despite the lower volume of Capital Markets transactions compared with the prior year, demand for other services increased. Agency Leasing momentum continued from the end of 2007, with revenue increasing approximately 30 percent in the first quarter year over year. Advisory Services revenue increased 38 percent for the same period. While the slowdown in Capital Markets activity significantly impacted Germany and the UK, Capital Markets activity increased in the growth markets of Dubai and Finland, while the growth in the mature markets of Holland and Belgium was driven by growth in market share. Geographically, France, Dubai, Russia and Holland had healthy growth in total revenue over 2007. Operating expenses increased by 17 percent for the first quarter of 2008 compared with the prior year, primarily due to the impact of acquisitions. -- Revenue for the Asia Pacific region for the first quarter of 2008 was $117 million, an increase of 36 percent over the prior year despite several large Capital Markets transactions being delayed. Growth for the quarter resulted from both Transaction services revenue, which increased nearly 50 percent, and Management services revenue, which increased 27 percent. Australia, the largest market in the Asia Pacific region, benefited from growth across all of its business lines, resulting in overall revenue growth of nearly 50 percent over the prior year. The growth markets of China, Japan and India had strong increases in revenue over the prior year. Revenue in China and Japan increased 45 and 20 percent, respectively. India had strong revenue growth over the prior year, benefiting both from economic growth and the acquisition the firm completed in the third quarter of 2007. Operating expenses for the region increased 40 percent over the prior year. Operating expenses increased at a faster pace than revenue due to the growing geographic platform, enhanced client service capabilities and technology infrastructure added to serve the large potential of the region. LaSalle Investment Management
LaSalle Investment Management's first-quarter revenue increased to $87.4 million, up 11 percent over the prior year. The increase in revenue was driven by the continued growth of the annuity-based business, leading to a year-over- year increase in Advisory fees of 34 percent, with particularly strong results in Asia Pacific. This growth in LaSalle Investment Management's annuity business was principally due to a healthy increase in assets under management over the prior year to $50 billion, together with Advisory fees generated from recently committed capital. Supporting this growth, the firm's co-investment capital at the end of the first quarter of 2008 grew to $164 million, a 23 percent increase over the prior year.
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. During the first quarter of 2008, Incentive fees were $13.2 million compared with $21.9 million in 2007.
LaSalle Investment Management raised approximately $600 million of equity in the first quarter of 2008. Investments made on behalf of clients in the first quarter of 2008 were $1.4 billion, slightly above the amount invested in the first quarter of 2007.
Summary
The firm experienced revenue growth across all geographic segments in the first quarter of 2008, the result of expanded market share, focused strategic investments, and its globally diverse business platform and service lines. LaSalle Investment Management's solid financial results were a reflection of its outstanding track record and research-based approach for delivering value for clients. In the face of uncertainty in the credit markets, which is slowing Capital Markets activity around the world, the firm is focused on driving performance across the balance of its diverse platform.
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, 2007 and in other reports filed with the Securities and Exchange Commission. There can be no assurance that future dividends will be declared since the actual declaration of future dividends, and the establishment of record and payment dates, remains subject to final determination by the Company's Board of Directors. Statements speak only as of the date of this release. Jones Lang LaSalle expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in Jones Lang LaSalle's expectations or results, or any change in events.
About Jones Lang LaSalle
Jones Lang LaSalle is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2007 global revenue of $2.7 billion, Jones Lang LaSalle has approximately 170 offices worldwide and operates in more than 700 cities in 60 countries. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.2 billion square feet worldwide. LaSalle Investment Management, the company's investment management business, is one of the world's largest and most diverse in real estate with approximately $50 billion of assets under management. For further information, please visit our Web site, http://www.joneslanglasalle.com/
Conference Call
The firm will conduct a conference call for shareholders, analysts and investment professionals on Wednesday, April 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: 43977105
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=47769 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
Available: 11:00 a.m. EDT Wednesday, April 30 through Midnight EDT May 7 at the following numbers:
U.S. callers: +1 800 642 1687 International callers: +1 706 645 9291 Pass code: 43977105 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: http://www.joneslanglasalle.com/.
If you have any questions, call Yvonne Peterson of Jones Lang LaSalle's Investor Relations department at +1 312 228 2919.
JONES LANG LASALLE INCORPORATED Consolidated Statements of Earnings For the Three Months Ended March 31, 2008 and 2007 (in thousands, except share data) (Unaudited) Three Months Ended March 31, 2008 2007 Revenue $563,920 $490,054 Operating expenses: Compensation and benefits 378,873 325,657 Operating, administrative and other 160,866 115,685 Depreciation and amortization 16,446 12,625 Restructuring credits (188) (411) Total operating expenses 555,997 453,556 Operating income 7,923 36,498 Interest expense, net of interest income 1,176 1,838 Gain on sale of investments - 2,426 Equity in (loss) earnings from unconsolidated ventures (2,213) 134 Income before provision for income taxes and minority interest 4,534 37,220 Provision for income taxes 1,143 9,924 Minority interest, net of tax 552 - Net income $2,839 $27,296 Basic earnings per common share $0.09 $0.85 Basic weighted average shares outstanding 31,772,825 31,929,818 Diluted earnings per common share $0.09 $0.81 Diluted weighted average shares outstanding 33,229,444 33,687,389 EBITDA $21,604 $51,683 Please reference attached financial statement notes. JONES LANG LASALLE INCORPORATED Segment Operating Results For the Three Months Ended March 31, 2008 and 2007 (in thousands) (Unaudited) Three Months Ended March 31, 2008 2007 INVESTOR & OCCUPIER SERVICES AMERICAS Revenue: Transaction services $79,360 $72,690 Management services 88,748 70,933 Equity earnings - 150 Other services 5,757 4,496 173,865 148,269 Operating expenses: Compensation, operating and administrative 166,569 135,886 Depreciation and amortization 7,048 5,922 173,617 141,808 Operating income $248 $6,461 EMEA Revenue: Transaction services $132,414 $142,138 Management services 48,177 32,082 Equity earnings (loss) 16 (367) Other services 2,455 3,037 183,062 176,890 Operating expenses: Compensation, operating and administrative 184,060 157,725 Depreciation and amortization 6,021 4,515 190,081 162,240 Operating (loss) income $(7,019) $14,650 ASIA PACIFIC Revenue: Transaction services 58,883 39,596 Management services 57,073 45,059 Equity (loss) earnings (62) 21 Other services 1,504 1,719 117,398 86,395 Operating expenses: Compensation, operating and administrative 122,407 87,468 Depreciation and amortization 2,877 1,773 125,284 89,241 Operating loss $(7,886) $(2,846) LASALLE INVESTMENT MANAGEMENT Revenue: Transaction services $4,225 $2,519 Advisory fees 72,130 53,919 Incentive fees 13,194 21,866 Equity (loss) earnings (2,167) 330 87,382 78,634 Operating expenses: Compensation, operating and administrative 66,703 60,263 Depreciation and amortization 500 415 67,203 60,678 Operating income $20,179 $17,956 Total segment revenue 561,707 490,188 Reclassification of equity (loss) earnings (2,213) 134 Total revenue $563,920 $490,054 Total operating expenses before restructuring credits $556,185 $453,967 Operating income before restructuring credits $7,735 $36,087 Please reference attached financial statement notes. JONES LANG LASALLE INCORPORATED Consolidated Balance Sheets March 31, 2008, December 31, 2007 and March 31, 2007 (in thousands) March 31, March 31, 2008 December 31, 2007 (Unaudited) 2007 (Unaudited) ASSETS Current assets: Cash and cash equivalents $74,648 $78,580 $43,254 Trade receivables, net of allowances 749,300 834,865 565,654 Notes and other receivables 68,642 52,695 44,162 Prepaid expenses 28,268 26,148 23,859 Deferred tax assets 64,999 64,872 47,806 Other assets 13,994 13,816 27,668 Total current assets 999,851 1,070,976 752,403 Property and equipment, at cost, less accumulated depreciation 200,909 193,329 131,024 Goodwill, with indefinite useful lives, at cost, less accumulated amortization 731,501 694,004 529,912 Identified intangibles, with finite useful lives, at cost, less accumulated amortization 44,673 41,670 37,959 Investments in real estate ventures 164,042 151,800 133,227 Long-term receivables 42,733 33,219 27,978 Deferred tax assets 84,914 58,584 39,434 Other assets 47,051 48,292 48,815 $2,315,674 $2,291,874 $1,700,752 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $255,564 $302,976 $176,108 Accrued compensation 320,784 655,895 283,099 Short-term borrowings 29,698 14,385 29,090 Deferred tax liabilities 13,811 727 1,734 Deferred income 22,504 29,756 22,988 Deferred business acquisition obligations 44,542 45,363 18,800 Other liabilities 64,312 60,193 41,079 Total current liabilities 751,215 1,109,295 572,898 Long-term liabilities: Credit facilities 350,599 29,205 236,770 Deferred tax liabilities 1,910 6,577 2,090 Deferred compensation 41,468 46,423 29,883 Minimum pension liability 1,096 1,096 19,749 Deferred business acquisition obligations 33,102 36,679 21,519 Other liabilities 50,484 43,794 40,919 Total liabilities 1,229,874 1,273,069 923,828 Minority Interest 8,767 8,272 - Shareholders' equity: Common stock, $.01 par value per share, 100,000,000 shares authorized; 31,816,980, 31,722,587 and 36,785,205 shares issued and outstanding as of March 31, 2008, December 31, 2007 and March 31, 2007, respectively 318 317 368 Additional paid-in capital 458,776 441,951 693,572 Retained earnings 487,679 484,840 283,263 Stock held by subsidiary - - (219,359) Stock held in trust (1,930) (1,930) (1,427) Accumulated other comprehensive income 132,190 85,355 20,507 Total shareholders' equity 1,077,033 1,010,533 776,924 $2,315,674 $2,291,874 $1,700,752 Please reference attached financial statement notes. JONES LANG LASALLE INCORPORATED Summarized Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2008 and 2007 (in thousands) (Unaudited) Three Months Ended March 31, 2008 2007 Cash used in operating activities $(271,850) $(182,417) Cash used in investing activities (69,933) (24,547) Cash provided by financing activities 337,851 199,606 Net decrease in cash and cash equivalents (3,932) (7,358) Cash and cash equivalents, beginning of period 78,580 50,612 Cash and cash equivalents, end of period $74,648 $43,254 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 March 31, 2008 2007 Net income $2,839 $27,296 Add: Interest expense, net of interest income 1,176 1,838 Provision for income taxes 1,143 9,924 Depreciation and amortization 16,446 12,625 EBITDA $21,604 $51,683 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 March 31, 2008 2007 Net cash used in operating activities $(271,850) $(182,417) Add: Interest expense, net of interest income 1,176 1,838 Change in working capital and non-cash expenses 291,135 222,338 Provision for income taxes 1,143 9,924 EBITDA $21,604 $51,683 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 March 31, 2008, to be filed with the Securities and Exchange Commission shortly. 4. EMEA refers to Europe, Middle East, and Africa.
