CHICAGO, April 28 /PRNewswire-FirstCall/ -- Jones Lang LaSalle Incorporated , the leading integrated financial and professional services firm specializing in real estate, today reported a net loss of $61 million on a U.S. GAAP basis, or $1.78 per share, for the quarter ended March 31, 2009. Adjusting for Restructuring and certain non-cash charges in the first quarter of 2009, the net loss would have been $16 million, or $0.47 per share. The firm's adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") was $11 million for the first quarter of 2009 compared with adjusted EBITDA of $22 million for the same period in 2008. The adjusted net loss and adjusted EBITDA are consistent with the seasonal nature of the business as well as the lack of significant transaction and incentive fees within the challenging operating environment. Revenue for the first quarter of 2009 was $494 million, a 12 percent decrease in U.S. dollars, but down only 1 percent in local currency, compared with the first quarter of 2008.
First-Quarter 2009 Highlights: -- Revenue down only 1 percent in local currency despite weak market conditions -- Americas revenue growth driven by successful Staubach integration and continued Corporate Solutions wins -- Improved performance in Asia Pacific with strong annuity revenue -- Restructuring charges of $17 million; cumulative 2008 and 2009 actions result in estimated annualized base compensation and benefits savings of $100 million -- Leverage ratio equals 2.34x -- Semi-annual dividend declared
First-quarter results included $17 million of Restructuring charges, primarily severance costs, as well as $29 million of non-cash co-investment related charges, primarily impairments, and $7 million of intangibles amortization from the 2008 acquisitions of The Staubach Company and Kemper's. Restructuring charges are excluded from segment operating results although they are included for consolidated reporting. The non-cash charges are included in Equity losses at the consolidated and segment reporting levels.
"Solid first-quarter performance in our Americas region and annuity businesses globally were offset by the seasonality of our business and the weakest transaction markets in memory," said Colin Dyer, Chief Executive Officer of Jones Lang LaSalle. "In this environment, we continue to reduce costs aggressively, manage our balance sheet responsibly and serve our clients effectively," Dyer added.
Business Line Revenue Comparison (in millions) Three Months Ended Percentage Change March 31, 2009 2008 % in USD % in LC Leasing $133.2 $128.7 4% 11% Capital Markets and Hotels 27.9 57.5 (51%) (42%) Advisory, Consulting and Other 56.9 84.5 (33%) (21%) Total Transaction Services revenue 218.0 270.7 (19%) (8%) Management Services revenue 196.7 194.0 1% 12% Other 13.3 9.7 37% 46% Total IOS revenue $428.0 $474.4 (10%) 0% Advisory fees $60.1 $72.1 (17%) 3% Transaction and Incentive fees 6.1 17.4 (65%) (57%) Total LaSalle Investment Management $66.2 89.5 (26%) (8%) Total Firm Revenue $494.2 $563.9 (12%) (1%) Cost Actions
In the first quarter of 2009, the firm expanded on its 2008 actions to reduce staff and eliminate significant discretionary spending. Excluding Restructuring charges, operating expenses were $505 million for the first quarter, compared with $556 million in 2008. On a local currency basis, operating expenses excluding restructuring charges increased only 3 percent despite the added cost structure from the seven acquisitions completed since the first quarter of 2008, including Staubach and Kemper's. The firm will continue its cost reduction efforts in 2009 and expects annualized base compensation and benefits savings of $100 million as a result of its cumulative actions.
Balance Sheet and Dividend
The firm's outstanding debt on its credit facilities was $496 million at March 31, 2009. The Leverage Ratio was 2.34x, significantly below the maximum allowable ratio of 3.50x. Certain incentive compensation payments historically paid in the first quarter were deferred into the second quarter of 2009 to optimize the working capital position of the firm. The firm expects that its typical improved seasonal operating performance in the remainder of 2009, along with continued focus on balance sheet management, will result in continued compliance with its debt covenants.
The firm announced that its Board of Directors declared a semi-annual dividend of $0.10 per share, a decrease from the $0.25 semi-annual dividend paid in December 2008. The dividend reflects the firm's prudent approach to managing the balance sheet. The dividend payment will be made on June 15, 2009, to holders of record at the close of business on May 15, 2009.
Business Segment First-Quarter Performance Highlights Investor and Occupier Services -- First-quarter revenue in the Americas region was $200 million, an increase of 15 percent over the prior year, primarily a result of the Staubach acquisition. Transaction Services revenue increased 34 percent, to $107 million in the first quarter. The region's total Leasing revenue for the quarter increased 50 percent, to $86 million, up from $57 million in 2008. Management Services revenue for the first quarter of 2009 decreased 5 percent, to $85 million, driven primarily by project and development services as clients continue to reduce capital expenditures. The firm won significant new Corporate outsourcing assignments for real estate services in the quarter as the outsourcing trend continued. Operating expenses were $204 million in the first three months of 2009, an increase of 18 percent over the prior year. The year-over-year increase was due to additional cost structure from the Staubach acquisition, including $7 million of non-cash amortization expense related to purchased intangible assets. The region's EBITDA for the first quarter of 2009 was $11 million, compared with $7 million for the same period last year. -- EMEA's first-quarter 2009 revenue was $121 million compared with $183 million in 2008, a decrease of 34 percent, 19 percent in local currency, driven by continued reductions in transaction volumes across the region. On a U.S. dollar basis, the decreases were driven by Capital Markets and Hotels, down $26 million for the three-month period, or 62 percent, and Leasing revenue, down $16 million, or 35 percent. Capital Markets and Hotels revenue was down 53 percent in local currency while Leasing was down 20 percent in local currency. Management Services revenue, which is primarily annuity revenue, decreased $3 million, or 6 percent for the quarter, to $45 million, but increased 14 percent in local currency. Operating expenses were $142 million in the first quarter, a decrease of 25 percent from the prior year, 7 percent in local currency, driven by aggressive cost-saving actions taken across the region. The cost reductions were achieved despite the additional cost structure from three acquisitions completed since the first quarter of 2008. The region's EBITDA for the first quarter of 2009 was a $16 million loss, compared with a $1 million loss for the same period last year. -- Revenue for the Asia Pacific region was $105 million for the first quarter of 2009, compared with $117 million for the same period in 2008. Excluding the impact of foreign currency exchange, revenue was up 1 percent. Management Services revenue in the region increased to $67 million, a 17 percent increase from the first quarter of 2008 and 30 percent in local currency. The significant year-over-year increase demonstrates the firm's continued strength in corporate outsourcing, facility management and property management. Transaction Services revenue was $38 million for the quarter, a 36 percent decrease from 2008, 25 percent in local currency. Within Transaction Services revenue, Capital Markets and Hotels revenue was down 34 percent but only 15 percent in local currency, and Leasing revenue was down 33 percent, 24 percent in local currency, for the first three months of 2009. Operating expenses for the region were $108 million for the quarter. With an aggressive focus on costs, operating expenses decreased 13 percent year over year, 2 percent in local currency, despite incremental costs related to serving more corporate outsourcing clients and higher occupancy costs compared with the first quarter of 2008. The region's EBITDA for the first quarter of 2009 was a $1 million loss, compared with a $5 million loss for the same period last year. LaSalle Investment Management
LaSalle Investment Management's first-quarter revenue was $37 million, compared with $87 million in the prior year. Equity losses of $29 million, primarily from non-cash charges related to co-investments, were included in first-quarter 2009 revenue. Advisory fees were $60 million in the quarter, down $12 million from the first quarter of 2008 with valuations in Public Securities contributing significantly to the decline. First-quarter 2009 Advisory fees compared favorably with Advisory fees of $62 million in the fourth quarter of 2008 despite the challenging operating environment.
The business recognized $5 million of Incentive fees in the first quarter of 2009 after reaching specified performance objectives against established benchmarks. Asset sales, a key driver of Incentive and Transaction fees, continued to be limited by the availability of financing.
LaSalle Investment Management raised $485 million of equity from clients during the first three months of 2009. Investments made on behalf of clients totalled $300 million. Assets under management declined to $41 billion, an 11 percent decrease, due to the impact of the current economic environment on asset valuations.
Summary
The firm has adapted its service offerings to the changing needs of clients, strengthened its Corporate Solutions business for an expanding client base and gained market share from competitors. It has taken significant actions to reduce its expense base through aggressive staffing and discretionary spending reductions. The firm's responsible approach to the balance sheet has positioned the company well despite the weak trading conditions around the globe. The firm remains prepared to capitalize on new opportunities to serve clients in the challenging environment that lies ahead.
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, 2008 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 2008 global revenue of $2.7 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.4 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 over $41 billion of assets under management. For further information, please visit our Web site, http://www.joneslanglasalle.com/.
200 East Randolph Drive Chicago Illinois 60601 | 22 Hanover Square London W1A 2BN | 9 Raffles Place #39-00 Republic Plaza Singapore 048619
Conference Call
The firm will conduct a conference call for shareholders, analysts and investment professionals on Wednesday, April 29 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: 95493838 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=57913 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 prnwebcast@multivu.com Supplemental Information
Supplemental information regarding the first quarter 2009 earnings call has been posted to the Investor Relations section of the company's Web site: http://www.joneslanglasalle.com/.
Conference Call Replay
Available: 12:00 p.m. EDT Wednesday, April 29 through Midnight EDT May 6 at the following numbers:
- U.S. callers: +1 800 642 1687 - International callers: +1 706 645 9291 - Pass code: 95493838 Web Audio Replay
Audio replay will be available for download or stream within 24 hours of the 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 Operations For the Three Months Ended March 31, 2009 and 2008 (in thousands, except share data) (Unaudited) Three Months Ended March 31, 2009 2008 Revenue $494,211 $563,920 Operating expenses: Compensation and benefits 342,555 378,873 Operating, administrative and other 137,623 160,866 Depreciation and amortization 24,520 16,446 Restructuring charges / (credits) 17,042 (188) Total operating expenses 521,740 555,997 Operating (loss) / income (27,529) 7,923 Interest expense, net of interest income 12,758 1,176 Equity losses from unconsolidated ventures (32,022) (2,213) (Loss) / income before income taxes and noncontrolling interest (72,309) 4,534 (Benefit) / provision for income taxes (10,846) 1,143 Net (loss) / income (61,463) 3,391 Net income attributable to noncontrolling interests 12 552 Net (loss) / income attributable to the Company (61,475) 2,839 Net (loss) / income available to common shareholders $(61,475) $2,839 Basic (loss) / earnings per common share $(1.78) $0.09 Basic weighted average shares outstanding 34,617,894 31,772,825 Diluted (loss) / earnings per common share $(1.78) $0.09 Diluted weighted average shares outstanding 34,617,894 33,229,444 EBITDA $(35,043) $21,604 Please reference attached financial statement notes. JONES LANG LASALLE INCORPORATED Segment Operating Results For the Three Months Ended March 31, 2009 and 2008 (in thousands) (Unaudited) Three Months Ended March 31, 2009 2008 INVESTOR & OCCUPIER SERVICES AMERICAS Revenue: Transaction services $106,609 $79,360 Management services 84,647 88,748 Equity (losses) / earnings (1,445) - Other services 9,779 5,757 199,590 173,865 Operating expenses: Compensation, operating and administrative 188,158 166,569 Depreciation and amortization 15,916 7,048 204,074 173,617 Operating (loss) / income $(4,484) $248 EBITDA $11,432 $7,296 EMEA Revenue: Transaction services $73,730 $132,414 Management services 45,276 48,177 Equity (losses) / earnings (379) 16 Other services 2,132 2,455 120,759 183,062 Operating expenses: Compensation, operating and administrative 136,943 184,060 Depreciation and amortization 5,142 6,021 142,085 190,081 Operating loss $(21,326) $(7,019) EBITDA $(16,184) $(998) ASIA PACIFIC Revenue: Transaction services $37,690 $58,883 Management services 66,741 57,073 Equity losses (971) (62) Other services 1,371 1,504 104,831 117,398 Operating expenses: Compensation, operating and administrative 105,517 122,407 Depreciation and amortization 2,921 2,877 108,438 125,284 Operating loss $(3,607) $(7,886) EBITDA $(686) $(5,009) LASALLE INVESTMENT MANAGEMENT Revenue: Transaction services $1,197 $4,225 Advisory fees 60,073 72,130 Incentive fees 4,966 13,194 Equity losses (29,228) (2,167) 37,008 87,382 Operating expenses: Compensation, operating and administrative 49,560 66,703 Depreciation and amortization 541 500 50,101 67,203 Operating (loss) / income $(13,093) $20,179 EBITDA $(12,552) $20,679 Total segment revenue 462,188 561,707 Reclassification of equity losses (32,023) (2,213) Total revenue $494,211 $563,920 Total operating expenses before restructuring charges / (credits) $504,698 $556,185 Operating (loss) / income before restructuring charges / (credits) $(10,487) $7,735 Please reference attached financial statement notes. JONES LANG LASALLE INCORPORATED Consolidated Balance Sheets March 31, 2009, December 31, 2008 and March 31, 2008 (in thousands) (Unaudited) March 31, March 31, 2009 December 31, 2008 (Unaudited) 2008 (Unaudited) ASSETS Current assets: Cash and cash equivalents $46,019 $45,893 $74,648 Trade receivables, net of allowances 587,359 718,804 749,300 Notes and other receivables 76,758 89,636 68,642 Prepaid expenses 35,624 32,990 28,268 Deferred tax assets 118,285 102,934 64,999 Other assets 10,511 9,511 13,994 Total current assets 874,556 999,768 999,851 Property and equipment, at cost, less accumulated depreciation 214,031 224,845 200,909 Goodwill, with indefinite useful lives 1,434,722 1,448,663 731,501 Identified intangibles, with finite useful lives, at cost, less accumulated amortization 48,545 59,319 44,673 Investments in real estate ventures 145,209 179,875 164,042 Long-term receivables 49,959 51,974 42,733 Deferred tax assets 59,426 58,639 84,914 Other assets 52,589 53,942 47,051 $2,879,037 $3,077,025 $2,315,674 LIABILITIES AND EQUITY Current liabilities: Accounts payable and accrued liabilities $295,673 $352,489 $255,564 Accrued compensation 420,748 487,895 320,784 Short-term borrowings 38,551 24,570 29,698 Deferred tax liabilities 3,503 2,698 13,811 Deferred income 33,904 29,213 22,504 Deferred business acquisition obligations 23,398 13,073 44,542 Other liabilities 85,153 77,947 64,312 Total current liabilities 900,930 987,885 751,215 Long-term liabilities: Credit facilities 496,008 483,942 350,599 Deferred tax liabilities 4,351 4,429 1,910 Deferred compensation 31,291 44,888 41,468 Pension liability 3,938 4,101 1,096 Deferred business acquisition obligations 354,044 371,636 33,102 Minority shareholder redemption liability 43,500 43,313 - Other liabilities 57,091 65,026 50,484 Total liabilities 1,891,153 2,005,220 1,229,874 Equity: Common stock, $.01 par value per share, 100,000,000 shares authorized; 34,734,550, 34,561,648 and 31,816,980 shares issued and outstanding as of March 31, 2009, December 31, 2008 and March 31, 2008, respectively 347 346 318 Additional paid-in capital 616,472 599,742 458,776 Retained earnings 481,843 543,318 487,679 Stock held in trust (3,504) (3,504) (1,930) Accumulated other comprehensive (loss) / income (112,520) (72,220) 132,190 Total shareholders' equity 982,638 1,067,682 1,077,033 Noncontrolling interest 5,246 4,123 8,767 Total equity 987,884 1,071,805 1,085,800 $2,879,037 $3,077,025 $2,315,674 Please reference attached financial statement notes. JONES LANG LASALLE INCORPORATED Summarized Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2009 and 2008 (in thousands) (Unaudited) Three Months Ended March 31, 2009 2008 Cash used in operating activities $ (2,767) $(271,850) Cash used in investing activities (19,862) (69,933) Cash provided by financing activities 22,755 337,851 Net increase (decrease) in cash and cash equivalents 126 (3,932) Cash and cash equivalents, beginning of period 45,893 78,580 Cash and cash equivalents, end of period $ 46,019 $ 74,648 Please reference attached financial statement notes. JONES LANG LASALLE INCORPORATED Financial Statement Notes
1. Charges excluded from GAAP net loss to arrive at adjusted net loss for the first quarter ended March 31, 2009, are amortization expense and integration costs related to the Staubach and Kemper's acquisitions completed in 2008, severance costs and non-cash charges related to co-investments.
Below is a reconciliation of GAAP net loss and diluted earnings (loss) per share ("EPS") to adjusted net loss and adjusted EPS (in millions after tax, except per share):
Three Months Ended March 31, 2009 Net Loss Diluted EPS GAAP net loss and diluted EPS $(61.5) $ (1.78) Add-backs to net loss: Non-cash co-investment charges 24.6 0.71 Restructuring 14.5 0.42 Intangibles amortization 6.1 0.18 Adjusted net loss and diluted EPS $(16.3) $ (0.47)
2. 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 EBITDA is an indicator of 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 (loss) income to EBITDA and adjusted EBITDA (in thousands):
Three Months Ended March 31, 2009 2008 Net (loss) income $(61,475) $2,839 (Deduct) Add: Interest expense, net of interest income 12,758 1,176 (Benefit) Provision for income taxes (10,846) 1,143 Depreciation and amortization 24,520 16,446 EBITDA $(35,043) $21,604 Add: Non-cash co-investment charges 28,932 - Restructuring 17,042 - Adjusted EBITDA $10,931 $21,604
Below is a reconciliation of net cash used in operating activities, the most comparable cash flow measure on the consolidated statements of cash flows, to EBITDA and adjusted EBITDA (in thousands):
Three Months Ended March 31, 2009 2008 Net cash used in operating activities $(2,767) $(271,850) (Deduct) Add: Interest expense, net of interest income 12,758 1,176 Change in working capital and non-cash expenses (34,188) 291,135 (Benefit) Provision for income taxes (10,846) 1,143 EBITDA $(35,043) $ 21,604 Add: Non-cash co-investment charges 28,932 - Restructuring 17,042 - Adjusted EBITDA $10,931 $21,604
3. For purposes of segment operating results, the allocation of restructuring charges to our segments has been determined to not be meaningful to investors, so the performance of segment results has been evaluated without these charges being allocated.
4. 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, 2009, to be filed with the Securities and Exchange Commission shortly.
5. EMEA refers to Europe, Middle East, and Africa.
Jones Lang LaSalle Incorporated
CONTACT: Lauralee Martin, Chief Operating and Financial Officer,
+1-312-228-2073
Web Site: http://www.joneslanglasalle.com/
