CHICAGO, July 29 /PRNewswire-FirstCall/ -- Jones Lang LaSalle Incorporated , 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 Colin Dyer, Chief Executive Officer of Jones Lang LaSalle. "We are focused on driving our expenses to appropriately reflect current operating conditions, while maintaining leadership positions in Capital Markets and Hotels to respond to the anticipated needs of the marketplace," Dyer added.
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 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 the Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and in other reports filed with the Securities and Exchange Commission. 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 180 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 more than $54 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, 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
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3. Download free Windows Media Player software: (link located under
registration form)
4. If you experience problems listening, send an e-mail to
Supplemental Information regarding the second quarter 2008 earnings call will be posted to the Investor Relation section of the company's Web site: http://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: 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 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.
