Jones Lang LaSalle Inc.
) second-quarter 2013 adjusted earnings of $1.15 per share
substantially missed the Zacks Consensus Estimate of $1.41 per
share. However, it came 2 cents above the year-ago quarter
earnings of $1.13 per share.
Quarterly results benefited from decent growth in revenues but
higher expenses acted as a dampener. Also, the company
experienced leasing revenue declines in China, India and
Revenues for the reported quarter were $989.4 million, ahead of
the Zacks Consensus Estimate of $959 million and up 7% year over
year. Moreover, adjusted EBITDA (earnings before interest, taxes,
depreciation and amortization) came in at $102 million,
reflecting a year-over-year increase of 7%.
On a GAAP basis, Jones Lang reported net income of $46 million or
$1.03 per share in the reported quarter, up from $37 million or
83 cents per share reported in the year-ago quarter.
Quarter in Detail
By segment, revenues from Jones Lang's Real Estate Services
increased 8% from the prior-year quarter to $928.1 million in the
reported quarter. Revenues from LaSalle Investment Management
segment moved up 5% year over year to $61.3 million. At quarter
end, assets under management were $46.3 billion, compared with
$47.7 billion as of the prior-quarter end. The dip was mainly due
to foreign currency movements.
Geographically, operating revenues from the Americas region came
in at $431.5 million, a year-over-year increase of 7%. Results
were aided by increased transactional revenues, led by Capital
Markets & Hotels, partially dwarfed by lower Latin America
Operating revenues in EMEA (Europe, Middle East, and Africa)
increased 6% from the prior-year quarter to $268.1 million as
Capital Markets & Hotels revenues moved up in the reported
quarter. Geographically, growth was driven by UK and France.
In the Asia-Pacific region, operating revenues during the quarter
increased 15% year over year to $228.5 million. The progress was
driven by both transactional growth in Capital Markets &
Hotels as well as annuity growth in Property & Facility
Management lines. The positives were partly offset by leasing
revenue declines in China, India and Australia.
Total operating expenses were nearly $923.6 million for the
quarter, representing a year-over-year increase of about 7%.
Excluding restructuring and acquisition charges, operating
expenses were $836 million, up 8% year over year. The hike was
mainly due to up-front costs of transitioning substantial new
corporate outsourcing clients and variable compensation from a
raise in Capital Markets revenue.
Balance Sheet Position
Jones Lang lowered its net debt by $37 million during the quarter
to $833 million. The company exited the quarter with cash and
cash equivalents of $121.9 million, down from $152.2 million at
With an investment grade balance sheet and a manageable debt
position, Jones Lang is set to continue with its improving
performance in the coming quarters. It is actively capitalizing
on market consolidations. Leveraging its superior operating
platform and market share expansion, the company achieved
fivefold growth in its adjusted operating income over the last 10
years. The deal with
HSBC Holdings plc.
) also augurs well.
However, with a relative decline in real estate fundamentals, the
demand for Jones Lang's services has fallen compared to the
pre-recession levels, which is a cause of concern.
Jones Lang currently has a Zacks Rank #3 (Hold). A number of
companies that are performing better and are worth a look in the
same industry include
CBRE Group, Inc.
E-House (China) Holdings Limited
), both carrying a Zacks Rank #2 (Buy).
CBRE GROUP INC (CBG): Free Stock Analysis
E-HOUSE CHINA (EJ): Free Stock Analysis
HSBC HOLDINGS (HBC): Free Stock Analysis
JONES LANG LASL (JLL): Free Stock Analysis
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