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SEC Filings

10-Q
JONES LANG LASALLE INC filed this Form 10-Q on 11/06/2017
Entire Document
 

LaSalle
 
Three Months Ended September 30,
Change in
% Change in
($ in millions)
2017
2016
U.S. dollars
Local Currency
Advisory fees
$
63.3

66.4

(3.1
)
(5
)%
(5
)%
Transaction fees & other
5.6

7.9

(2.3
)
(29
)
(29
)
Incentive fees
33.2

6.0

27.2

n.m.

n.m.

Total revenue
$
102.1

80.3

21.8

27
 %
28
 %
Compensation, operating and administrative expenses
79.6

71.1

8.5

12

12

Depreciation and amortization
0.8

0.8




Total operating expenses
$
80.4

71.9

8.5

12
 %
12
 %
Operating income
$
21.7

8.4

13.3

n.m.

n.m.

Equity earnings
$
11.6

4.9

6.7

n.m.

n.m.

Adjusted EBITDA
$
33.3

14.1

19.2

n.m.

n.m.

 
Nine Months Ended September 30,
Change in
% Change in
($ in millions)
2017
2016
U.S. dollars
Local Currency
Advisory fees
$
190.3

195.0

(4.7
)
(2
)%
 %
Transaction fees & other
24.3

40.8

(16.5
)
(40
)
(40
)
Incentive fees
48.5

72.0

(23.5
)
(33
)
(31
)
Total revenue
$
263.1

307.8

(44.7
)
(15
)%
(13
)%
Compensation, operating and administrative expenses
216.6

236.8

(20.2
)
(9
)
(7
)
Depreciation and amortization
2.2

2.1

0.1

5

10

Total operating expenses
$
218.8

238.9

(20.1
)
(8
)%
(7
)%
Operating income
$
44.3

68.9

(24.6
)
(36
)%
(33
)%
Equity earnings
$
29.9

26.5

3.4

13
 %
12
 %
Adjusted EBITDA
$
75.5

96.6

(21.1
)
(22
)%
(20
)%
LaSalle's third quarter revenue increased from the prior-year quarter due to incentive fees earned on opportunistic dispositions of real estate assets on behalf of clients in Asia. For the first nine months of 2017, the decline in revenue as compared with 2016 reflected (i) substantial incentive fees generated in the second quarter of 2016 from asset sales within maturing funds that did not recur to the same extent during 2017 and (ii) one-time transaction fees in the first quarter of 2016 earned from the successful launch of the LaSalle Logiport REIT in Japan.
Variable compensation expense driven by the recognition of transaction and incentive fees was the primary driver of the change in operating expenses for both the three and nine months ended September 30, 2017 as compared with the same periods in 2016. Higher transaction and incentive fees result in greater variable compensation expense in the same period the associated revenue is recognized. The increase was partially offset by management initiatives to contain controllable expenses.
For the three and nine months ended September 30, equity earnings in both 2017 and 2016 were primarily driven by net valuation increases related to investments in Europe and Asia.
Adjusted EBITDA margin was 32.6% in USD (32.9% in local currency) for the third quarter of 2017, compared with 17.6% in 2016. This improvement was driven by the increase in incentive fees net of variable compensation expense for the quarter, noted above.
Assets under management were $59.0 billion as of September 30, 2017, an increase of 2% in USD (1% in local currency) from $57.6 billion as of June 30, 2017. The net increase in assets under management during the third quarter resulted from $1.4 billion of acquisitions, $0.9 billion of net valuation increases and $0.9 billion of foreign currency increases, partially offset by $1.8 billion of dispositions and withdrawals.

44


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