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8-K
JONES LANG LASALLE INC filed this Form 8-K on 11/06/2017
Entire Document
 
Exhibit
Exhibit 99.1


News Release
 
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=11873347&doc=5
 
 
JLL Reports Strong Third-Quarter 2017 Performance
Revenue increase of 14 percent and diluted EPS increase of 80 percent to $1.89
CHICAGO, November 6, 2017 Jones Lang LaSalle Incorporated (NYSE: JLL) today reported strong operating performance for the third quarter of 2017, resulting in diluted earnings per share of $1.89 and adjusted diluted earnings per share1 of $1.96.
Revenue up 14 percent to $1.9 billion; fee revenue1 up 12 percent to $1.6 billion
Broad-based Real Estate Services and LaSalle revenue growth, primarily organic
Balanced expansion of annuity and transactional businesses
Margin improvement across all segments against solid market fundamentals
Accretive organic and M&A contributions, partially offset by Integral integration
Accelerated LaSalle incentive fees
Operating cash flows continue to strengthen; 20 percent reduction in net debt during the quarter
Semi-annual dividend of $0.37 per share; up 13 percent annually over 2016
CEO Comment:
“Solid organic growth and strong cash flows from operations contributed to our third-quarter performance,” said Christian Ulbrich, JLL CEO. “Continued healthy market fundamentals in the global economy and many real estate markets worldwide provide a good foundation through the end of the year and into 2018.”
Summary Financial Results
 
Three Months Ended
 
Nine Months Ended
September 30,
September 30,
   ($ in millions, except per share data)
 
2017
2016
 
2017
2016
 
 
 
 
 
 
 
Revenue
 
$
1,947.0

$
1,705.2

 
$
5,396.9

$
4,645.6

Fee Revenue1
 
1,624.6

1,444.3

 
4,517.2

3,907.8

Net Income
 
86.6

48.0

 
175.6

152.5

Adjusted Net Income1
 
89.6

64.7

 
193.5

189.8

 
 
 
 
 
 
 
Diluted Earnings per Share
 
$
1.89

$
1.05

 
$
3.84

$
3.35

Adjusted Diluted Earnings per Share1
 
$
1.96

$
1.42

 
$
4.23

$
4.17

 
 
 
 
 
 
 
Adjusted EBITDA1
 
$
168

$
127

 
$
400

$
372

Adjusted EBITDA, Real Estate Services
 
135

113

 
325

276

Adjusted EBITDA, LaSalle
 
33

14

 
75

96

(1) For discussion of non-GAAP financial measures, see Note 1 following the Financial Statements in this news release.

-continued-

JLL Reports Strong Third-Quarter 2017 - Page 2


Consolidated

  ($ in millions, “LC” = local currency)
Three Months Ended September 30,
 
% Change in USD
 
% Change in LC
2017
 
2016
 
 
Leasing
$
468.5

 
$
448.7

 
4
%
 
4
%
Capital Markets & Hotels
276.3

 
240.9

 
15

 
13

Capital Markets & Hotels Fee Revenue1
269.2

 
238.0

 
13

 
12

Property & Facility Management
601.1

 
503.0

 
20

 
19

Property & Facility Management Fee Revenue1
433.3

 
383.6

 
13

 
13

Project & Development Services
333.7

 
294.0

 
14

 
11

Project & Development Services Fee Revenue1
186.2

 
155.4

 
20

 
18

Advisory, Consulting and Other
165.3

 
138.3

 
20

 
18

Real Estate Services (“RES”) revenue
$
1,844.9

 
$
1,624.9

 
14
%
 
13
%
LaSalle
102.1

 
80.3

 
27

 
28

Total revenue
$
1,947.0

 
$
1,705.2

 
14
%
 
13
%
Gross contract costs
(315.3
)
 
(258.0
)
 
22

 
20

Net non-cash MSR and mortgage banking derivative activity
(7.1
)
 
(2.9
)
 
n.m.

 
n.m.

Total fee revenue1
$
1,624.6

 
$
1,444.3

 
12
%
 
12
%
RES fee revenue
$
1,522.5

 
$
1,364.0

 
12
%
 
11
%
Operating income
$
118.1

 
$
71.0

 
66
%
 
65
%
Equity earnings
$
12.6

 
$
5.5

 
n.m.

 
n.m.

Adjusted EBITDA1
$
167.9

 
$
127.3

 
32
%
 
31
%
n.m. - not meaningful as represented by a percentage change of greater than 100%, favorably or unfavorably.
Capital Markets & Hotels revenue includes both “gross” and “fee” presentation, effective in the fourth quarter of 2016, with the difference between the two amounts representing net non-cash activity associated with mortgage servicing rights and mortgage banking derivatives, which is also excluded from the company's non-GAAP performance measures.
Percentage variances in the Consolidated Performance Highlights below are calculated and presented on a local currency basis, unless otherwise noted. See Financial Statement Note (1) following the Financial Statements in this news release.
Consolidated Third-Quarter 2017 Performance Highlights:
Consolidated revenue was $1.9 billion and consolidated fee revenue was $1.6 billion, representing broad-based increases of 13 percent and 12 percent, respectively, against the prior-year quarter. Revenue growth reflects expansion of both transactional and annuity businesses and was geographically led by EMEA and Asia Pacific. Organic expansion accounted for approximately 70 percent of the RES fee revenue increase.
Consolidated operating expenses, excluding restructuring and acquisition charges, were $1.8 billion, an increase of 12 percent compared with $1.6 billion in the prior year, and consolidated fee-based operating expenses, excluding restructuring and acquisition charges, were $1.5 billion, an increase of 11 percent compared with 2016. The increase in expenses was due to revenue growth as well as continued increases to investments in data, technology and people.
LaSalle's performance was driven by incentive fees, up $27.2 million compared with the prior year, earned on opportunistic dispositions of real estate assets on behalf of clients in Asia Pacific. LaSalle's results also reflect notable equity earnings, primarily from net valuation increases across its co-investment portfolio.

-continued-

JLL Reports Strong Third-Quarter 2017 - Page 3


Net income attributable to common shareholders was $86.6 million compared with $48.0 million last year. Adjusted EBITDA was $167.9 million, compared with $127.3 million in 2016. Adjusted EBITDA margin, calculated on a fee-revenue basis, was 10.3 percent in USD and local currency, compared with 8.8 percent last year. The consolidated results reflect increased performance across all segments, with notable contributions from transactional businesses and LaSalle incentive fees, along with management initiatives to contain controllable expenses.
Diluted earnings per share were $1.89, compared with $1.05 last year. Adjusted diluted earnings per share were $1.96, compared with $1.42 in 2016.
Balance Sheet and Net Interest Expense:
Total net debt was $1.0 billion as of September 30, 2017, a decrease of $254.1 million from last quarter, primarily reflecting business performance and continued improvements in working capital management.
Net interest expense for the third quarter was $15.0 million, up from $12.4 million in 2016. The increase was driven by a higher effective interest rate on debt, partially offset by a net period-over-period decrease in average borrowings, attributable to an improvement of over $180 million in operating cash flows compared with the third quarter of 2016.
The company's Board of Directors declared a dividend of $0.37 per share that will be paid on December 15, 2017, to shareholders of record at the close of business on November 16, 2017. Total dividends declared for 2017 were $0.72 per share, an increase of 13 percent over dividends paid in 2016.

-continued-

JLL Reports Strong Third-Quarter 2017 - Page 4


Consolidated

   ($ in millions, “LC” = local currency)
Nine Months Ended September 30,
 
% Change in USD
 
% Change in LC
2017
 
2016
 
 
Leasing
$
1,319.3

 
$
1,183.9

 
11
 %
 
12
 %
Capital Markets & Hotels
702.2

 
630.6

 
11

 
13

Capital Markets & Hotels Fee Revenue1
691.1

 
628.3

 
10

 
12

Property & Facility Management
1,716.0

 
1,299.2

 
32

 
36

Property & Facility Management Fee Revenue1
1,267.1

 
964.8

 
31

 
35

Project & Development Services
935.0

 
843.4

 
11

 
12

Project & Development Services Fee Revenue1
515.3

 
442.3

 
17

 
17

Advisory, Consulting and Other
461.3

 
380.7

 
21

 
23

RES revenue
$
5,133.8

 
$
4,337.8

 
18
 %
 
20
 %
LaSalle
263.1

 
307.8

 
(15
)
 
(13
)
Total revenue
$
5,396.9

 
$
4,645.6

 
16
 %
 
18
 %
Gross contract costs
(868.6
)
 
(735.5
)
 
18

 
21

Net non-cash MSR and mortgage banking derivative activity
(11.1
)
 
(2.3
)
 
n.m.

 
n.m.

Total fee revenue1
$
4,517.2

 
$
3,907.8

 
16
 %
 
17
 %
RES fee revenue
$
4,254.1

 
$
3,600.0

 
18
 %
 
20
 %
Operating income
$
244.7

 
$
214.3

 
14
 %
 
11
 %
Equity earnings
$
32.7

 
$
27.7

 
18
 %
 
18
 %
Adjusted EBITDA1
$
400.0

 
$
372.1

 
7
 %
 
6
 %
n.m. - not meaningful as represented by a percentage change of greater than 100%, favorably or unfavorably.
Capital Markets & Hotels revenue includes both “gross” and “fee” presentation, effective in the fourth quarter of 2016, with the difference between the two amounts representing net non-cash activity associated with mortgage servicing rights and mortgage banking derivatives, which is also excluded from the company's non-GAAP performance measures.
Percentage variances in the Consolidated Performance Highlights below are calculated and presented on a local currency basis, unless otherwise noted. See Financial Statement Note (1) following the Financial Statements in this news release.

-continued-

JLL Reports Strong Third-Quarter 2017 - Page 5


Business Segment Performance Highlights
Americas Real Estate Services

($ in millions, “LC” = local currency)
Three Months Ended September 30,
 
% Change in USD
 
% Change in LC
2017
 
2016
 
 
Leasing
$
345.1

 
$
335.3

 
3
 %
 
3
 %
Capital Markets & Hotels
114.6

 
112.5

 
2

 
2

Capital Markets & Hotels Fee Revenue1
107.5

 
109.6

 
(2
)
 
(2
)
Property & Facility Management
181.3

 
184.1

 
(2
)
 
(2
)
Property & Facility Management Fee Revenue1
144.9

 
142.2

 
2

 
2

Project & Development Services
97.8

 
96.8

 
1

 
1

Project & Development Services Fee Revenue1
93.8

 
86.1

 
9

 
8

Advisory, Consulting and Other
57.9

 
42.4

 
37

 
37

Total revenue
$
796.7

 
$
771.1

 
3
 %
 
3
 %
Gross contract costs
(40.4
)
 
(52.6
)
 
(23
)
 
(23
)
Net non-cash MSR and mortgage banking derivative activity
(7.1
)
 
(2.9
)
 
n.m.

 
n.m.

Total fee revenue1
$
749.2

 
$
715.6

 
5
 %
 
5
 %
Operating income
$
73.4

 
$
63.8

 
15
 %
 
15
 %
Equity earnings
$
0.1

 
$
0.1

 
 %
 
100
 %
Adjusted EBITDA1
$
90.5

 
$
82.2

 
10
 %
 
10
 %
n.m. - not meaningful as represented by a percentage change of greater than 100%, favorably or unfavorably.
Capital Markets & Hotels revenue includes both “gross” and “fee” presentation, effective in the fourth quarter of 2016, with the difference between the two amounts representing net non-cash activity associated with mortgage servicing rights and mortgage banking derivatives, which is also excluded from the company's non-GAAP performance measures.
Percentage variances in the Americas Performance Highlights below are calculated and presented on a local currency basis, unless otherwise noted. See Financial Statement Note (1) following the Financial Statements in this news release.
Americas Third-Quarter 2017 Performance Highlights:
Total revenue was $796.7 million and fee revenue was $749.2 million, representing increases of 3 percent and 5 percent, respectively, compared with 2016. The growth was led by Advisory, Consulting and Other, with contributions from Technology Solutions and the recently acquired U.S. valuations platform. Leasing continued its strong year-to-date performance in favorable market conditions, specifically in the U.S. Northwest, New York and New England markets.
Operating expenses were $723.3 million, up 2 percent from $707.3 million in 2016, and fee-based operating expenses, excluding restructuring and acquisition charges, were $682.9 million, up 4 percent from $654.7 million in 2016, both correlating with the increase in revenue.
Operating income was $73.4 million, up 15 percent from $63.8 million last year. Adjusted EBITDA was $90.5 million, compared with $82.2 million in 2016. Adjusted EBITDA margin, calculated on a fee-revenue basis, was 12.1 percent in USD and local currency, compared with 11.5 percent last year. The increase in Adjusted EBITDA margin was driven by changes in service mix augmented by management initiatives to contain controllable expenses.

-continued-

JLL Reports Strong Third-Quarter 2017 - Page 6


Americas Real Estate Services

($ in millions, “LC” = local currency)
Nine Months Ended September 30,
 
% Change in USD
 
% Change in LC
2017
 
2016
 
 
Leasing
$
1,003.1

 
$
884.3

 
13
 %
 
13
 %
Capital Markets & Hotels
318.1

 
282.3

 
13

 
13

Capital Markets & Hotels Fee Revenue1
307.0

 
280.0

 
10

 
10

Property & Facility Management
536.3

 
528.8

 
1

 
2

Property & Facility Management Fee Revenue1
421.8

 
400.9

 
5

 
5

Project & Development Services
285.7

 
243.0

 
18

 
17

Project & Development Services Fee Revenue1
268.8

 
226.1

 
19

 
19

Advisory, Consulting and Other
168.1

 
109.1

 
54

 
54

Total revenue
$
2,311.3

 
$
2,047.5

 
13
 %
 
13
 %
Gross contract costs
(131.4
)
 
(144.8
)
 
(9
)
 
(8
)
Net non-cash MSR and mortgage banking derivative activity
(11.1
)
 
(2.3
)
 
n.m.

 
n.m.

Total fee revenue1
$
2,168.8

 
$
1,900.4

 
14
 %
 
14
 %
Operating income
$
185.9

 
$
146.9

 
27
 %
 
27
 %
Equity earnings
$
0.5

 
$
0.8

 
(38
)%
 
(38
)%
Adjusted EBITDA1 
$
245.9

 
$
203.0

 
21
 %
 
21
 %
n.m. - not meaningful as represented by a percentage change of greater than 100%, favorably or unfavorably.
Capital Markets & Hotels revenue includes both “gross” and “fee” presentation, effective in the fourth quarter of 2016, with the difference between the two amounts representing net non-cash activity associated with mortgage servicing rights and mortgage banking derivatives, which is also excluded from the company's non-GAAP performance measures.
Percentage variances in the Americas Performance Highlights below are calculated and presented on a local currency basis, unless otherwise noted. See Financial Statement Note (1) following the Financial Statements in this news release.

-continued-

JLL Reports Strong Third-Quarter 2017 - Page 7


EMEA Real Estate Services

($ in millions, “LC” = local currency)
Three Months Ended September 30,
 
% Change in USD
 
% Change in LC
2017
 
2016
 
 
Leasing
$
70.4

 
$
63.2

 
11
%
 
9
%
Capital Markets & Hotels
107.3

 
87.4

 
23

 
19

Property & Facility Management
222.2

 
161.7

 
37

 
37

Property & Facility Management Fee Revenue1
161.0

 
127.0

 
27

 
27

Project & Development Services
170.1

 
154.1

 
10

 
6

Project & Development Services Fee Revenue1
59.7

 
42.6

 
40

 
36

Advisory, Consulting and Other
65.2

 
56.3

 
16

 
13

Total revenue
$
635.2

 
$
522.7

 
22
%
 
19
%
Gross contract costs
(171.6
)
 
(146.2
)
 
17

 
14

Total fee revenue1
$
463.6

 
$
376.5

 
23
%
 
21
%
Operating income (loss)
$
2.2

 
$
(0.8
)
 
n.m.

 
n.m.

Equity earnings
$

 
$

 
%
 
%
Adjusted EBITDA1
$
13.9

 
$
8.5

 
64
%
 
47
%
n.m. - not meaningful as represented by a percentage change of greater than 100%, favorably or unfavorably.
Percentage variances in the EMEA Performance Highlights below are calculated and presented on a local currency basis, unless otherwise noted. See Financial Statement Note (1) following the Financial Statements in this news release.
EMEA Third-Quarter 2017 Performance Highlights:
EMEA revenue was $635.2 million and fee revenue was $463.6 million, reflecting increases of 19 percent and 21 percent, respectively, from last year, with growth across all service lines. The largest source of revenue expansion was in Property & Facility Management, reflecting incremental fee revenue from the August 2016 acquisition of Integral UK Ltd. (“Integral”). Strong growth in Capital Markets & Hotels reflects notable contributions from investment sales in Finland, the UK and Germany. Project & Development Services fee revenue growth was most prominent in MENA and France.
Operating expenses were $633.0 million, up 19 percent from $523.5 million in 2016. Fee-based operating expenses, excluding restructuring and acquisition charges, were $461.4 million, up 21 percent from $377.4 million last year, due to incremental fee-based operating expenses relating to Integral along with continued increases to investments in data, technology and people.
Operating income was $2.2 million, compared with an operating loss of $0.8 million in the prior year. Adjusted EBITDA was $13.9 million, an increase from $8.5 million last year. Adjusted EBITDA margin, calculated on a fee-revenue basis, was 3.0 percent in USD (2.7 percent in local currency), compared with 2.3 percent last year. The increase in profitability reflects revenue performance for the quarter and management initiatives to contain expenses, partially offset by continued integration of Integral.

-continued-

JLL Reports Strong Third-Quarter 2017 - Page 8


EMEA Real Estate Services

($ in millions, “LC” = local currency)
Nine Months Ended September 30,
 
% Change in USD
 
% Change in LC
2017
 
2016
 
 
Leasing
$
184.4

 
$
171.3

 
8
 %
 
11
 %
Capital Markets & Hotels
266.5

 
245.4

 
9

 
13

Property & Facility Management
628.5

 
314.0

 
100

 
n.m.

Property & Facility Management Fee Revenue1
479.5

 
238.5

 
n.m.

 
n.m.

Project & Development Services
471.7

 
478.0

 
(1
)
 
1

Project & Development Services Fee Revenue1
156.0

 
146.2

 
7

 
9

Advisory, Consulting and Other
176.0

 
164.7

 
7

 
11

Total revenue
$
1,727.1

 
$
1,373.4

 
26
 %
 
32
 %
Gross contract costs
(464.7
)
 
(407.3
)
 
14

 
18

Total fee revenue1
$
1,262.4

 
$
966.1

 
31
 %
 
37
 %
Operating loss
$
(18.2
)
 
$
(1.1
)
 
n.m.

 
n.m.

Equity losses
$

 
$
(0.1
)
 
100
 %
 
100
 %
Adjusted EBITDA1
$
14.8

 
$
24.1

 
(39
)%
 
(61
)%
n.m. - not meaningful as represented by a percentage change of greater than 100%, favorably or unfavorably.
Percentage variances in the EMEA Performance Highlights below are calculated and presented on a local currency basis, unless otherwise noted. See Financial Statement Note (1) following the Financial Statements in this news release.

-continued-

JLL Reports Strong Third-Quarter 2017 - Page 9


Asia Pacific Real Estate Services

($ in millions, “LC” = local currency)
Three Months Ended September 30,
 
% Change in USD
 
% Change in LC
2017
 
2016
 
 
Leasing
$
53.0

 
$
50.2

 
6
%
 
5
%
Capital Markets & Hotels
54.4

 
41.0

 
33

 
33

Property & Facility Management
197.6

 
157.2

 
26

 
25

Property & Facility Management Fee Revenue1
127.4

 
114.4

 
11

 
11

Project & Development Services
65.8

 
43.1

 
53

 
52

Project & Development Services Fee Revenue1
32.7

 
26.7

 
22

 
22

Advisory, Consulting and Other
42.2

 
39.6

 
7

 
6

Total revenue
$
413.0

 
$
331.1

 
25
%
 
24
%
Gross contract costs
(103.3
)
 
(59.2
)
 
74

 
73

Total fee revenue1
$
309.7

 
$
271.9

 
14
%
 
13
%
Operating income
$
24.2

 
$
17.6

 
38
%
 
36
%
Equity earnings
$
0.9

 
$
0.5

 
80
%
 
80
%
Adjusted EBITDA1
$
30.3

 
$
22.3

 
36
%
 
35
%
Percentage variances in the Asia Pacific Performance Highlights below are calculated and presented on a local currency basis, unless otherwise noted. See Financial Statement Note (1) following the Financial Statements in this news release.
Asia Pacific Third-Quarter 2017 Performance Highlights:
Asia Pacific revenue was $413.0 million, an increase of 24 percent from 2016; fee revenue was $309.7 million, an increase of 13 percent from last year. Fee revenue growth reflects strong performance in Capital Markets & Hotels and Property & Facility Management and was geographically led by Australia, Greater China and Japan.
Operating expenses were $388.8 million, up 23 percent from $313.5 million last year. Fee-based operating expenses, excluding restructuring and acquisition charges, were $285.5 million, up 12 percent from $254.3 million last year. The increase in expenses correlated with the revenue growth.
Operating income was $24.2 million, compared with $17.6 million in 2016. Adjusted EBITDA was $30.3 million, an increase from $22.3 million in 2016. Adjusted EBITDA margin, calculated on a fee-revenue basis, was 9.8 percent in USD and local currency, compared with 8.2 percent last year, reflecting strong organic growth and higher margin transactional businesses during the quarter coupled with ongoing cost containment initiatives.

-continued-

JLL Reports Strong Third-Quarter 2017 - Page 10


Asia Pacific Real Estate Services

($ in millions, “LC” = local currency)
Nine Months Ended September 30,
 
% Change in USD
 
% Change in LC
2017
 
2016
 
 
Leasing
$
131.8

 
$
128.3

 
3
%
 
3
%
Capital Markets & Hotels
117.6

 
102.9

 
14

 
15

Property & Facility Management
551.2

 
456.4

 
21

 
20

Property & Facility Management Fee Revenue1
365.8

 
325.4

 
12

 
12

Project & Development Services
177.6

 
122.4

 
45

 
45

Project & Development Services Fee Revenue1
90.5

 
70.0

 
29

 
29

Advisory, Consulting and Other
117.2

 
106.9

 
10

 
9

Total revenue
$
1,095.4

 
$
916.9

 
19
%
 
19
%
Gross contract costs
(272.5
)
 
(183.4
)
 
49

 
48

Total fee revenue1
$
822.9

 
$
733.5

 
12
%
 
12
%
Operating income
$
46.0

 
$
35.5

 
30
%
 
26
%
Equity earnings
$
2.3

 
$
0.5

 
n.m.

 
n.m.

Adjusted EBITDA1
$
64.0

 
$
48.5

 
32
%
 
30
%
n.m. - not meaningful as represented by a percentage change of greater than 100%, favorably or unfavorably.
Percentage variances in the Asia Pacific Performance Highlights below are calculated and presented on a local currency basis, unless otherwise noted. See Financial Statement Note (1) following the Financial Statements in this news release.

-continued-

JLL Reports Strong Third-Quarter 2017 - Page 11


LaSalle

($ in millions, “LC” = local currency)
Three Months Ended September 30,
 
% Change in USD
 
% Change in LC
2017
 
2016
 
 
Advisory Fees
$
63.3

 
$
66.4

 
(5
)%
 
(5
)%
Transaction Fees & Other
5.6

 
7.9

 
(29
)
 
(29
)
Incentive Fees
33.2

 
6.0

 
n.m.

 
n.m.

Total revenue
$
102.1

 
$
80.3

 
27
 %
 
28
 %
Operating income
$
21.7

 
$
8.4

 
n.m.

 
n.m.

Equity earnings
$
11.6

 
$
4.9

 
n.m.

 
n.m.

Adjusted EBITDA1
$
33.3

 
$
14.1

 
n.m.

 
n.m.

n.m. - not meaningful as represented by a percentage change of greater than 100%, favorably or unfavorably.
LaSalle

   ($ in millions, “LC” = local currency)
Nine Months Ended September 30,
 
% Change in USD
 
% Change in LC
2017
 
2016
 
 
Advisory Fees
$
190.3

 
$
195.0

 
(2
)%
 
 %
Transaction Fees & Other
24.3

 
40.8

 
(40
)
 
(40
)
Incentive Fees
48.5

 
72.0

 
(33
)
 
(31
)
Total revenue
$
263.1

 
$
307.8

 
(15
)%
 
(13
)%
Operating income
$
44.3

 
$
68.9

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

 
$
26.5

 
13
 %
 
12
 %
Adjusted EBITDA1
$
75.5

 
$
96.6

 
(22
)%
 
(20
)%
Percentage variances in the LaSalle Performance Highlights below are calculated and presented on a local currency basis, unless otherwise noted. See Financial Statement Note (1) following the Financial Statements in this news release.
LaSalle Third-Quarter 2017 Performance Highlights:
Total revenue of $102.1 million increased 28 percent from 2016 due to incentive fees earned on opportunistic dispositions of real estate assets on behalf of clients in Asia Pacific.
Equity earnings were $11.6 million, compared with $4.9 million in 2016. Both periods were driven by net valuation increases to investments in Europe and Asia.
Operating expenses were $80.4 million, up 12 percent from $71.9 million last year, reflecting the increase in variable compensation expense associated with the noted increase in incentive fees, offset by management initiatives to contain controllable expenses.
Operating income was $21.7 million, an increase from $8.4 million in the prior year. Adjusted EBITDA was $33.3 million, compared with $14.1 million last year. Adjusted EBITDA margin was 32.6 percent in USD (32.9 percent in local currency), compared with 17.6 percent in the prior-year period.
Assets under management were $59.0 billion as of September 30, 2017, an increase of 2 percent in USD (1 percent 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.

-continued-

JLL Reports Strong Third-Quarter 2017 - Page 12


About JLL
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $145 billion. At the end of the third quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of over 80,000. As of September 30, 2017, LaSalle Investment Management had $59.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit ir.jll.com.
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Live Webcast
 
Conference Call
Management will offer a live webcast for shareholders, analysts, and investment professionals on Monday, November 6, 2017, at 9:00 a.m. Eastern. Please use the following webcast link:
 
Management will also conduct a conference call. If you are unable to join the live webcast and would like to participate in the teleconference, please dial into one of the following phone numbers five to ten minutes before the start time (the passcode will be required):
https://engage.vevent.com/rt/joneslanglasalleincorporated~110617
 
 ■ United States callers:
 ■ International callers:
 ■ Passcode:
+1 844 231 9804
+1 402 858 7998
99488866
 
 
 
 
 
Supplemental Information
 
Audio Replay
Supplemental information regarding the third quarter 2017 earnings call has been posted to the Investor Relations section of JLL's website: ir.jll.com.
 
An audio replay will be available for download or stream. Information and the link can be found on JLL's website: ir.jll.com.
If you have any questions, please contact JLL Investor Relations: JLLInvestorRelations@am.jll.com.
Cautionary Note Regarding Forward-Looking Statements
Statements in this news release regarding, among other things, future financial results and performance, achievements, plans and objectives, and dividend payments 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 the company's actual results, performance, achievements, plans and objectives, and dividend payments to be materially different from those expressed or implied by such forward-looking statements. For additional information concerning risks, uncertainties, and other factors that could cause actual results to differ materially from those anticipated in forward-looking statements, and risks to the company's business in general, please refer to those factors 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 the company's Annual Report on Form 10-K for the year ended December 31, 2016, Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017, and June 30, 2017, and other reports filed with the Securities and Exchange Commission (the “SEC”). 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. Any forward-looking statements speak only as of the date of this release, and except to the extent required by applicable securities laws, management expressly disclaims any obligation or undertaking to publicly update or revise any forward-looking statements contained herein to reflect any change in expectations or results, or any change in events.

-continued-


JONES LANG LASALLE INCORPORATED
Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
(in millions, except share and per share data)
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Revenue
$
1,947.0

 
$
1,705.2

 
$
5,396.9

 
$
4,645.6

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Compensation and benefits
1,132.3

 
1,012.0

 
3,146.6

 
2,750.4

Operating, administrative and other
651.4

 
568.3

 
1,870.0

 
1,546.5

Depreciation and amortization
41.8

 
35.9

 
122.3

 
98.5

Restructuring and acquisition charges5
3.4

 
18.0

 
13.3

 
35.9

Total operating expenses
1,828.9

 
1,634.2

 
5,152.2

 
4,431.3

 
 
 
 
 
 
 
 
Operating income
118.1

 
71.0

 
244.7

 
214.3

 
 
 
 
 
 
 
 
Interest expense, net of interest income
15.0

 
12.4

 
42.6

 
32.2

Equity earnings from real estate ventures
12.6

 
5.5

 
32.7

 
27.7

Other income

 

 

 
13.3

 
 
 
 
 
 
 
 
Income before income taxes and noncontrolling interest
115.7

 
64.1

 
234.8

 
223.1

Provision for income taxes
28.2

 
15.9

 
57.3

 
55.3

Net income
87.5

 
48.2

 
177.5

 
167.8

 
 
 
 
 
 
 
 
Net income (loss) attributable to noncontrolling interest
0.9

 
0.2

 
1.7

 
15.1

Net income attributable to the company
$
86.6

 
$
48.0

 
$
175.8

 
$
152.7

 
 
 
 
 
 
 
 
Dividends on unvested common stock, net of tax benefit

 

 
0.2

 
0.2

Net income attributable to common shareholders
$
86.6

 
$
48.0

 
$
175.6

 
$
152.5

 
 
 
 
 
 
 
 
Basic earnings per common share
$
1.91

 
$
1.06

 
$
3.88

 
$
3.38

Basic weighted average shares outstanding (in 000's)
45,349

 
45,188

 
45,299

 
45,135

 
 
 
 
 
 
 
 
Diluted earnings per common share
$
1.89

 
$
1.05

 
$
3.84

 
$
3.35

Diluted weighted average shares outstanding (in 000's)
45,814

 
45,612

 
45,729

 
45,515

 
 
 
 
 
 
 
 
EBITDA attributable to common shareholders1
$
171.6

 
$
112.2

 
$
397.8

 
$
338.5

 
 
 
 
 
 
 
 
Please reference attached financial statement notes.


13


JONES LANG LASALLE INCORPORATED
 Segment Operating Results
(Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
(in millions)
2017
 
2016
 
2017
 
2016
REAL ESTATE SERVICES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AMERICAS
 
 
 
 
 
 
 
Revenue
$
796.7

 
$
771.1

 
$
2,311.3

 
$
2,047.5

Gross contract costs1
(40.4
)
 
(52.6
)
 
(131.4
)
 
(144.8
)
Net non-cash MSR and mortgage banking derivative activity1
(7.1
)
 
(2.9
)
 
(11.1
)
 
(2.3
)
Total fee revenue
749.2

 
715.6

 
2,168.8

 
1,900.4

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Compensation, operating and administrative expenses
699.1

 
686.0

 
2,054.0

 
1,842.2

Depreciation and amortization
24.2

 
21.3

 
71.4

 
58.4

Total segment operating expenses
723.3

 
707.3

 
2,125.4

 
1,900.6

Gross contract costs1
(40.4
)
 
(52.6
)
 
(131.4
)
 
(144.8
)
Total fee-based segment operating expenses
682.9

 
654.7

 
1,994.0

 
1,755.8

 
 
 
 
 
 
 
 
Segment operating income
$
73.4

 
$
63.8

 
$
185.9

 
$
146.9

Equity earnings
0.1

 
0.1

 
0.5

 
0.8

Total segment income
$
73.5

 
$
63.9

 
$
186.4

 
$
147.7

 
 
 
 
 
 
 
 
Adjusted operating income1
$
69.8

 
$
64.4

 
$
185.1

 
$
152.3

 
 
 
 
 
 
 
 
Adjusted EBITDA1
$
90.5

 
$
82.2

 
$
245.9

 
$
203.0

 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
Revenue
$
635.2

 
$
522.7

 
$
1,727.1

 
$
1,373.4

Gross contract costs1
(171.6
)
 
(146.2
)
 
(464.7
)
 
(407.3
)
Total fee revenue
463.6

 
376.5

 
1,262.4

 
966.1

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Compensation, operating and administrative expenses
621.4

 
513.9

 
1,712.3

 
1,348.9

Depreciation and amortization
11.6

 
9.6

 
33.0

 
25.6

Total segment operating expenses
633.0

 
523.5

 
1,745.3

 
1,374.5

Gross contract costs1
(171.6
)
 
(146.2
)
 
(464.7
)
 
(407.3
)
Total fee-based segment operating expenses
461.4

 
377.3

 
1,280.6

 
967.2

 
 
 
 
 
 
 
 
Segment operating income (loss)
$
2.2

 
$
(0.8
)
 
$
(18.2
)
 
$
(1.1
)
Equity losses

 

 

 
(0.1
)
Total segment income (loss)
$
2.2

 
$
(0.8
)
 
$
(18.2
)
 
$
(1.2
)
 
 
 
 
 
 
 
 
Adjusted operating income (loss)1
$
5.8

 
$
2.2

 
$
(7.0
)
 
$
5.9

 
 
 
 
 
 
 
 
Adjusted EBITDA1
$
13.9

 
$
8.5

 
$
14.8

 
$
24.1





14


 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
(in millions)
2017
 
2016
 
2017
 
2016
ASIA PACIFIC
 
 
 
 
 
 
 
Revenue
$
413.0

 
$
331.1

 
$
1,095.4

 
$
916.9

Gross contract costs1
(103.3
)
 
(59.2
)
 
(272.5
)
 
(183.4
)
Total fee revenue
309.7

 
271.9

 
822.9

 
733.5

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Compensation, operating and administrative expenses
383.6

 
309.3

 
1,033.7

 
869.0

Depreciation and amortization
5.2

 
4.2

 
15.7

 
12.4

Total segment operating expenses
388.8

 
313.5

 
1,049.4

 
881.4

Gross contract costs1
(103.3
)
 
(59.2
)
 
(272.5
)
 
(183.4
)
Total fee-based segment operating expenses
285.5

 
254.3

 
776.9

 
698.0

 
 
 
 
 
 
 
 
Segment operating income
$
24.2

 
$
17.6

 
$
46.0

 
$
35.5

Equity earnings
0.9

 
0.5

 
2.3

 
0.5

Total segment income
$
25.1

 
$
18.1

 
$
48.3

 
$
36.0

 
 
 
 
 
 
 
 
Adjusted operating income1
$
24.8

 
$
18.2

 
$
47.8

 
$
36.8

 
 
 
 
 
 
 
 
Adjusted EBITDA1
$
30.3

 
$
22.3

 
$
64.0

 
$
48.5

 
 
 
 
 
 
 
 
LASALLE INVESTMENT MANAGEMENT
 
 
 
 
 
 
 
Revenue
$
102.1

 
$
80.3

 
$
263.1

 
$
307.8

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Compensation, operating and administrative expenses
79.6

 
71.1

 
216.6

 
236.8

Depreciation and amortization
0.8

 
0.8

 
2.2

 
2.1

Total segment operating expenses
80.4

 
71.9

 
218.8

 
238.9

 
 
 
 
 
 
 
 
Segment operating income
$
21.7

 
$
8.4

 
$
44.3

 
$
68.9

Equity earnings
11.6

 
4.9

 
29.9

 
26.5

Total segment income
$
33.3

 
$
13.3

 
$
74.2

 
$
95.4

 
 
 
 
 
 
 
 
Adjusted operating income1
$
21.6

 
$
8.4

 
$
44.3

 
$
68.9

 
 
 
 
 
 
 
 
Adjusted EBITDA1
$
33.3

 
$
14.1

 
$
75.5

 
$
96.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SEGMENT RECONCILING ITEMS
 
 
 
 
 
 
 
Total fee revenue
$
1,624.6

 
$
1,444.3

 
$
4,517.2

 
$
3,907.8

Gross contracts costs1
315.3

 
258.0

 
868.6

 
735.5

Net non-cash MSR and mortgage banking derivative activity1
7.1

 
2.9

 
11.1

 
2.3

Total revenue
$
1,947.0

 
$
1,705.2

 
$
5,396.9

 
$
4,645.6

Total segment operating expenses before restructuring and acquisition charges
1,825.5

 
1,616.2

 
5,138.9

 
4,395.4

Total segment operating income
$
121.5

 
$
89.0

 
$
258.0

 
$
250.2

Restructuring and acquisition charges5
3.4

 
18.0

 
13.3

 
35.9

Operating income
$
118.1

 
$
71.0

 
$
244.7

 
$
214.3

 
 
 
 
 
 
 
 
Please reference attached financial statement notes.

15


JONES LANG LASALLE INCORPORATED
Consolidated Balance Sheets
(Unaudited)
 
 
 
 
September 30,
 
December 31,
(in millions, except share and per share data)
 
2017
 
2016
ASSETS
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
 
$
277.9

 
$
258.5

 
Trade receivables, net of allowances
 
1,779.1

 
1,870.6

 
Notes and other receivables
 
346.4

 
326.7

 
Warehouse receivables
 
337.8

 
600.8

 
Prepaid expenses
 
96.1

 
81.7

 
Other
 
149.0

 
161.4

 
 
Total current assets
 
2,986.3

 
3,299.7

 
 
 
 
 
 
 
Property and equipment, net of accumulated depreciation
 
516.6

 
501.0

Goodwill
 
2,701.3

 
2,579.3

Identified intangibles, net of accumulated amortization
 
307.4

 
295.0

Investments in real estate ventures
 
372.5

 
355.4

Long-term receivables
 
168.6

 
176.4

Deferred tax assets, net
 
190.9

 
180.9

Deferred compensation plans
 
218.5

 
173.0

Other
 
92.2

 
68.7

 
 
Total assets
 
$
7,554.3

 
$
7,629.4

 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued liabilities
 
$
793.6

 
$
846.2

 
Accrued compensation
 
930.8

 
1,064.7

 
Short-term borrowings
 
64.2

 
89.5

 
Deferred income
 
179.3

 
129.8

 
Deferred business acquisition obligations
 
33.5

 
28.6

 
Short-term earn-out liabilities
 
33.2

 
23.8

 
Warehouse facility
 
331.9

 
580.1

 
Other
 
215.9

 
203.6

 
 
Total current liabilities
 
2,582.4

 
2,966.3

 
 
 
 
 
 
 
Noncurrent liabilities:
 
 
 
 
 
Credit facility, net of debt issuance costs
 
433.6

 
905.4

 
Long-term debt, net of debt issuance costs
 
684.2

 
272.7

 
Deferred tax liabilities, net
 
24.4

 
21.5

 
Deferred compensation
 
232.3

 
201.1

 
Deferred business acquisition obligations
 
54.3

 
73.8

 
Long-term earn-out liabilities
 
190.3

 
205.8

 
Other
 
177.5

 
161.3

 
 
Total liabilities
 
$
4,379.0

 
$
4,807.9


16


 
 
 
 
 
 
 
 
 
 
 
September 30,
 
December 31,
(in millions, except share and per share data)
 
2017
 
2016
 
 
 
 
 
Redeemable noncontrolling interest
 
$
3.9

 
$
6.8

 
 
 
 
 
 
 
Company shareholders' equity:
 
 
 
 
 
Common stock, $0.01 par value per share,100,000,000 shares authorized; 45,361,956 and 45,213,832 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
 
0.5

 
0.5

 
Additional paid-in capital
 
1,032.0

 
1,013.3

 
Retained earnings
 
2,491.4

 
2,333.0

 
Shares held in trust
 
(5.8
)
 
(6.0
)
 
Accumulated other comprehensive loss
 
(374.4
)
 
(551.1
)
 
 
Total company shareholders' equity
 
3,143.7

 
2,789.7

 
 
 
 
 
 
 
 
Noncontrolling interest
 
27.7

 
25.0

 
 
Total equity
 
3,171.4

 
2,814.7

 
 
 
 
 
 
 
 
 
Total liabilities and equity
 
$
7,554.3

 
$
7,629.4

 
 
 
 
 
 
 
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Summarized Consolidated Statements of Cash Flows
(Unaudited)
 
Nine Months Ended
 
September 30,
(in millions)
2017
 
2016
 
 
 
 
Cash provided (used) in operating activities
$
295.7

 
$
(151.9
)
 
 
 
 
Cash used in investing activities
(119.7
)
 
(617.4
)
 
 
 
 
Cash (used) provided by financing activities
(165.4
)
 
779.3

 
 
 
 
Effect of currency exchange rate changes on cash and cash equivalents
8.8

 
1.8

 
 
 
 
Net change in cash and cash equivalents
$
19.4

 
$
11.8

 
 
 
 
Cash and cash equivalents, beginning of period
258.5

 
216.6

 
 
 
 
Cash and cash equivalents, end of period
$
277.9

 
$
228.4

 
 
 
 
Please reference attached financial statement notes.

17


JONES LANG LASALLE INCORPORATED
Financial Statement Notes
1.
Management uses certain non-GAAP financial measures to develop budgets and forecasts, measure and reward performance against those budgets and forecasts, and enhance comparability to prior periods. These measures are believed to be useful to investors and other external stakeholders as supplemental measures of core operating performance and include the following:
(i)
Fee revenue and Fee-based operating expenses,
(ii)
Adjusted operating income,
(iii)
Adjusted EBITDA and Adjusted EBITDA margin,
(iv)
Adjusted net income and Adjusted diluted earnings per share, and
(v)
Percentage changes against prior periods, presented on a local currency basis.
However, non-GAAP financial measures should not be considered alternatives to measures determined in accordance with U.S. generally accepted accounting principles (“GAAP”). Any measure that eliminates components of a company’s capital structure, cost of operations or investment, or other results has limitations as a performance measure. In light of these limitations, management also considers GAAP financial measures and does not rely solely on non-GAAP financial measures. Because the company's non-GAAP financial measures are not calculated in accordance with GAAP, they may not be comparable to similarly titled measures used by other companies.
Adjustments to GAAP Financial Measures Used to Calculate non-GAAP Financial Measures
Gross Contract Costs
Consistent with GAAP, certain vendor and subcontractor costs (“gross contract costs”) which the company manages on certain client assignments in the Property & Facility Management and Project & Development Services business lines are presented on a gross basis in Revenue and Operating expenses. The company generally earns little to no margin on the reimbursement of gross contract costs, obtaining reimbursement only for costs incurred. Excluding gross contract costs from both Revenue and Operating expenses more accurately reflects how the company manages its expense base and operating margins.
Net Non-Cash MSR and Mortgage Banking Derivative Activity
Net non-cash mortgage servicing rights ("MSR") and mortgage banking derivative activity consists of the balances presented within Revenue composed of (i) derivative gains/losses resulting from mortgage banking loan commitment and warehousing activity and (ii) gains recognized from the retention of MSR upon origination and sale of mortgage loans, offset by (iii) amortization of MSR intangible assets over the period that net servicing income is projected to be received. Non-cash derivative gains/losses resulting from mortgage banking loan commitment and warehousing activity are calculated as the estimated fair value of loan commitments and subsequent changes thereof, primarily represented by the estimated net cash flows associated with future servicing rights. MSR gains and corresponding MSR intangible assets are calculated as the present value of estimated cash flows over the estimated mortgage servicing periods. The above activity is reported entirely within Revenue of the Capital Markets & Hotels business line of the Americas segment. Excluding net non-cash MSR and mortgage banking derivative activity reflects how the company manages and evaluates performance because the excluded activity is non-cash in nature.

18


Restructuring and Acquisition Charges
Restructuring and acquisition charges primarily consist of: (i) severance and employment-related charges, including those related to external service providers, incurred in conjunction with a structural business shift, which can be represented by a notable change in headcount, change in leadership or transformation of business processes; (ii) acquisition and integration-related charges, including non-cash fair value adjustments to assets and liabilities recorded in purchase accounting such as earn-out liabilities and intangible assets; and (iii) lease exit charges. Such activity is excluded as the amounts are generally either non-cash in nature or the anticipated benefits from the expenditures would not likely be fully realized until future periods. As noted within Note 5, Restructuring and acquisition charges are excluded from segment operating results and therefore not a line item in the segments’ reconciliation from operating income to adjusted operating income and Adjusted EBITDA.
Amortization of Acquisition-Related Intangibles
Amortization of acquisition-related intangibles, primarily composed of the estimated fair value ascribed at closing of an acquisition to assets such as acquired management contracts, customer backlog and trade name, is more notable following the company's increase in acquisition activity over the past few years. Such activity is excluded as the change in activity period-over-period is generally the result of longer-term strategic decisions and therefore not necessarily indicative of core operating results. At the segment reporting level, this is the only reconciling difference between operating income and adjusted operating income, except for the Americas segment, where Net non-cash MSR and mortgage banking derivative activity is also excluded.
Reconciliation of Non-GAAP Financial Measures
Below are reconciliations of (i) Revenue to Fee revenue, (ii) Operating expenses to Fee-based operating expenses, and (iii) Operating income to Adjusted operating income:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
($ in millions)
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Revenue
$
1,947.0

 
$
1,705.2

 
$
5,396.9

 
$
4,645.6

Gross contract costs
(315.3
)
 
(258.0
)
 
(868.6
)
 
(735.5
)
Net non-cash MSR and mortgage banking derivative activity
(7.1
)
 
(2.9
)
 
(11.1
)
 
(2.3
)
Fee revenue
1,624.6

 
1,444.3

 
$