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News Release

Chicago

Jones Lang LaSalle Reports First Quarter 2009 Results

Adjusted EBITDA of $11 million excluding Restructuring and Certain Non-Cash Items


 
CHICAGO, April 28, 2009 – Jones Lang LaSalle Incorporated (NYSE: JLL), 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.
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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
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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 March  31,

Percentage Change

 

 

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.

 
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/Pages/InvestorRelations.aspx.