SOURCE: Jones Lang LaSalle Inc.

Jones Lang LaSalle Inc.

April 30, 2014 07:30 ET

JLL Reports 13 Percent First-Quarter 2014 Fee Revenue Growth

Fee Revenue of $878 Million; Adjusted EPS of $0.39

CHICAGO, IL--(Marketwired - Apr 30, 2014) - Jones Lang LaSalle Incorporated (NYSE: JLL) today reported adjusted earnings per share ("EPS") of $0.39 for the first quarter of 2014. First-quarter fee revenue totaled $878 million, up 13 percent from the first quarter of 2013. All percentage variances are calculated on a local currency basis.

  • Broad-based revenue growth led by Leasing and Property & Facility Management
  • Global transaction pipelines and client confidence remain strong
  • LaSalle Investment Management raised nearly $1 billion of equity commitments
  • Investments in recruitment, IT and data strengthen platform
  • 5 percent increase in semi-annual dividend, to $0.23 per share, reflects robust cash generation
   
   
Summary Financial Results
 ($ in millions, except per share data)
Three Months Ended
March 31,
  2014   2013
           
Revenue $ 1,037   $ 856
Fee Revenue1 $ 878   $ 781
Adjusted Net Income2 $ 17   $ 16
U.S. GAAP Net Income $ 16   $ 13
Adjusted Earnings per Share2 $ 0.39   $ 0.36
Earnings per Share $ 0.35   $ 0.29
Adjusted EBITDA3 $ 52   $ 48
  Adjusted EBITDA, Real Estate Services $ 35   $ 34
  Adjusted EBITDA, LaSalle Investment Management $ 17   $ 14
See Financial Statement Notes (1), (2) and (3) following the Financial Statements in this news release

"Solid first-quarter revenue and profits produced a good start to 2014 for JLL," said Colin Dyer, the firm's President and CEO. "The broad strength of our business globally and improved client confidence in market conditions point to another year of healthy growth for the firm," Dyer added.

           
           
Consolidated Revenue
 ($ in millions, "LC" = local currency)
Three Months Ended
March 31,
  %
Change
in LC
  2014   2013  
               
Real Estate Services ("RES")              
Leasing $ 270.4   $ 229.2   18%
Capital Markets & Hotels   115.5     120.7   (6)%
Property & Facility Management Fee Revenue1   247.8     212.1   20%
  Property & Facility Management   345.3     251.1   42%
Project & Development Services Fee Revenue1   87.4     77.1   14%
  Project & Development Services   149.5     113.6   31%
Advisory, Consulting and Other   92.9     81.7   12%
  Total RES Fee Revenue1 $ 814.0   $ 720.8   14%
    Total RES Revenue $ 973.6   $ 796.3   23%
               
LaSalle Investment Management              
Advisory Fees $ 55.9   $ 56.4   (2)%
Transaction Fees & Other   4.6     3.1   52%
Incentive Fees   3.3     0.2   n/m
  Total LaSalle Investment Management Revenue $ 63.8   $ 59.7   6%
               
Total Firm Fee Revenue1 $ 877.8   $ 780.5   13%
  Total Firm Revenue $ 1,037.4   $ 856.0   22%
               
n/m - not meaningful
 

Consolidated Performance Highlights:

  • Consolidated fee revenue was $878 million for the quarter, up $97 million or 13 percent, from 2013. Growth was broad-based, led by Leasing, up $41 million or 18 percent, and Property & Facility Management, up $36 million or 20 percent.
  • Consolidated fee-based operating expenses, excluding restructuring and acquisition charges, were $857 million for the quarter, compared with $757 million last year, an increase of 14 percent.
  • LaSalle Investment Management's advisory fees for the quarter remained steady compared with last year while transaction and incentive fee growth contributed to a total revenue increase of 6 percent. Its fundraising success continued in the first quarter with $930 million of equity raised.

Balance Sheet and Dividend:

  • The firm's total net debt was $731 million at quarter end, a decrease of $139 million from the first quarter last year as the firm's strong cash generation continues. Total net debt at March 31, 2014, increased from $437 million at year end 2013, driven by incentive compensation payments in the first quarter of the year and consistent with seasonal borrowing patterns. 
  • Net interest expense for the first quarter was $6.6 million, compared with $7.9 million in 2013. The reduction was driven both by lower debt levels and improved pricing on the firm's long-term credit facility, which was renewed in October 2013.
  • Reflecting confidence in the firm's cash generation, the Board of Directors announced a semi-annual dividend of $0.23 per share, a 5 percent increase from the $0.22 per share payment made in December 2013. The dividend payment will be made on June 13, 2014, to shareholders of record at the close of business on May 15, 2014.

Business Segment Performance Highlights
Americas Real Estate Services

           
           
       
Americas Revenue
 ($ in millions, "LC" = local currency)
Three Months Ended
March 31,
  %
Change
in LC
  2014   2013  
               
Leasing $ 188.6   $ 152.3   24%
Capital Markets & Hotels   40.2     38.7   4%
Property & Facility Management Fee Revenue1   106.3     89.4   21%
  Property & Facility Management   146.2     108.5   39%
Project & Development Services Fee Revenue1   44.6     37.7   20%
  Project & Development Services   45.5     37.9   22%
Advisory, Consulting and Other   26.6     24.1   11%
  Operating Revenue $ 406.3   $ 342.2   20%
               
Equity Earnings   0.2     0.2   0%
Total Segment Fee Revenue1 $ 406.5   $ 342.4   20%
  Total Segment Revenue $ 447.3   $ 361.7   25%
               

Americas Performance Highlights:

  • Fee revenue for the quarter was $407 million, an increase of 20 percent from 2013. Double-digit growth was achieved in Leasing, up $36 million or 24 percent, as well as Property & Facility Management and Project & Development Services.
  • Fee-based operating expenses, excluding restructuring and acquisition charges, were $390 million for the quarter, up 20 percent from last year.
  • Operating income was $17 million for the quarter, compared with $15 million in 2013.
  • Adjusted EBITDA was $30 million for the quarter, compared with $25 million last year. Adjusted EBITDA margin calculated on a fee revenue basis was 7.5 percent, compared with 7.3 percent in 2013.

EMEA Real Estate Services

           
EMEA Revenue
 ($ in millions, "LC" = local currency)
Three Months Ended
March 31,
  %
Change
in LC
  2014   2013  
               
Leasing $ 54.0   $ 48.9   6%
Capital Markets & Hotels   54.4     58.2   (11)%
Property & Facility Management Fee Revenue1   52.1     40.4   24%
  Property & Facility Management   76.5     42.7   73%
Project & Development Services Fee Revenue1   28.7     24.1   13%
  Project & Development Services   82.1     56.0   40%
Advisory, Consulting and Other   44.8     39.1   9%
  Operating Revenue $ 234.0   $ 210.7   6%
               
Equity Earnings   0.0     0.0   0%
Total Segment Fee Revenue1 $ 234.0   $ 210.7   6%
  Total Segment Revenue $ 311.8   $ 244.9   22%
               

EMEA Performance Highlights:

  • Fee revenue for the quarter was $234 million, an increase of 6 percent from 2013, driven by fee revenue increases of 24 percent in Property & Facility Management and 13 percent in Project & Development Services. Leasing revenue also increased 6 percent in the quarter. Capital Markets & Hotels revenue of $54 million compared against a 2013 result that was up 50 percent against the prior year and included significant contributions from Russia.
  • Fee-based operating expenses, excluding restructuring and acquisition charges, were $239 million for the quarter, up 8 percent from last year.
  • Adjusted operating income, which excludes King Sturge amortization, was a loss of $4 million for the quarter, compared with a $1 million loss in 2013.
  • Adjusted EBITDA was $1 million for the quarter, compared with $3 million last year. Adjusted EBITDA margin calculated on a fee revenue basis was 0.2 percent, down from 1.6 percent last year.

Asia Pacific Real Estate Services 

           
Asia Pacific Revenue
 ($ in millions, "LC" = local currency)
Three Months Ended
March 31,
  %
Change
in LC
  2014   2013  
               
Leasing $ 27.8   $ 28.0   5%
Capital Markets & Hotels   20.9     23.8   (7)%
Property & Facility Management Fee Revenue1   89.4     82.3   17%
  Property & Facility Management   122.6     99.9   32%
Project & Development Services Fee Revenue1   14.1     15.3   0%
  Project & Development Services   21.9     19.7   22%
Advisory, Consulting and Other   21.5     18.5   22%
  Operating Revenue $ 173.7   $ 167.9   11%
               
Equity Earnings   (0.1)     0.1   n/m
Total Segment Fee Revenue1 $ 173.6   $ 168.0   11%
  Total Segment Revenue $ 214.6   $ 190.0   21%
               
n/m - not meaningful
 

Asia Pacific Performance Highlights:

  • Fee revenue for the quarter was $174 million, an increase of 11 percent from 2013. Property & Facility Management fee revenue was up 17 percent, bolstered by the ongoing success of the region's corporate outsourcing business.
  • Fee-based operating expenses, excluding restructuring and acquisition charges, were $173 million for the quarter, up 11 percent from last year.
  • Operating income was $1 million for the quarter, compared with $2 million in 2013.
  • Adjusted EBITDA was $4 million for the quarter, compared with $6 million last year. Adjusted EBITDA margin calculated on a fee revenue basis was 2.5 percent, down from 3.3 percent last year.

LaSalle Investment Management

           
LaSalle Investment
Management Revenue
 ($ in millions, "LC" = local currency)
Three Months Ended
March 31,
  %
Change
in LC
  2014   2013  
               
Advisory Fees $ 55.9   $ 56.4   (2)%
Transaction Fees & Other   4.6     3.1   52%
Incentive Fees   3.3     0.2   n/m
  Operating Revenue $ 63.8   $ 59.7   6%
               
Equity Earnings   8.8     5.2   65%
Total Segment Revenue $ 72.6   $ 64.9   11%
               
n/m - not meaningful
 

LaSalle Investment Management Performance Highlights:

  • Advisory fees were $56 million for the quarter, consistent with the first quarter of 2013. Total segment revenue, including transaction fees, incentive fees and equity earnings, was $73 million for the quarter, compared with $65 million last year.
  • Operating expenses were $56 million for the quarter, compared with $52 million last year.
  • Operating income was $16 million for the quarter, compared with $13 million in 2013. Operating income margin was 22.6 percent, up from 20.4 percent last year.
  • LaSalle Investment Management raised $930 million of equity commitments during the quarter.
  • Assets under management were $48.0 billion as of March 31, 2014, compared with $47.6 billion at December 31, 2013. The net increase in assets under management resulted from $2.1 billion of acquisitions and takeovers, $2.7 billion of dispositions and withdrawals, $0.9 billion of net value increase and $0.1 billion of net increase due to foreign currency movements.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4 billion, JLL has more than 200 corporate offices and operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $48.0 billion of real estate assets under management. For further information, visit www.jll.com.

200 East Randolph Drive Chicago Illinois 60601 / 30 Warwick Street London W1B 5NH / 9 Raffles Place #39-00 Republic Plaza Singapore 048619

Statements in this press 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 actual results, performance, achievements, plans and objectives and dividend payments of JLL 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 JLL's Annual Report on Form 10-K for the year ended December 31, 2013, 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. JLL expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in JLL's expectations or results, or any change in events.

Conference Call

The firm will conduct a conference call for shareholders, analysts and investment professionals on Wednesday, April 30 at 9:00 a.m. EDT.

To participate in the conference call, please dial into one of the following phone numbers five to ten minutes before the start time:

  • U.S. callers: +1 877 800 0896

  • International callers: +1 706 679 7364

  • Pass code: 29011776

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.visualwebcaster.com/event.asp?id=98921 and follow instructions

3. Download free Windows Media Player software: (link located under registration form)

4. If you experience problems listening, please call the Webcast Hotline +1 877 863 2113 and provide your Event ID (98921).

Supplemental Information

Supplemental information regarding the first-quarter 2014 earnings call has been posted to the Investor Relations section of the company's website: www.jll.com.

Conference Call Replay

Available: 12:00 p.m. EDT Wednesday, April 30 through 11:30 p.m. EDT Friday, May 30 at the following numbers:

  • U.S. callers: + 1 855 859 2056 or + 1 800 585 8367

  • International callers: + 1 404 537 3406

  • Pass code: 29011776

Web Audio Replay

Audio replay will be available for download or stream. This information and link is also available on the company's website: www.jll.com.

If you have any questions, email JLL's Investor Relations department at JLLInvestorRelations@am.jll.com.

           
JONES LANG LASALLE INCORPORATED  
Consolidated Statements of Operations  
For the Three Months Ended March 31, 2014 and 2013  
(in thousands, except share data)  
(Unaudited)  
           
  Three Months Ended  
  March 31,  
  2014     2013  
               
Revenue $ 1,037,442     $ 855,988  
               
Operating expenses:              
  Compensation and benefits   637,340       563,720  
  Operating, administrative and other   356,999       249,921  
  Depreciation and amortization   22,411       19,079  
  Restructuring and acquisition charges4   35,958       3,168  
               
    Total operating expenses   1,052,708       835,888  
               
    Operating income (loss)1   (15,266 )     20,100  
               
Interest expense, net of interest income   (6,637 )     (7,923 )
Equity earnings from real estate ventures   8,903       5,482  
               
Income (loss) before income taxes and noncontrolling interest4   (13,000 )     17,659  
Provision for (benefit from) income taxes4   (29,145 )     4,397  
Net income4   16,145       13,262  
               
Net income attributable to noncontrolling interest   243       106  
Net income attributable to the Company $ 15,902     $ 13,156  
               
               
Basic earnings per common share $ 0.36     $ 0.30  
               
Basic weighted average shares outstanding   44,513,813       44,080,767  
               
               
Diluted earnings per common share2 $ 0.35     $ 0.29  
               
Diluted weighted average shares outstanding   45,201,708       45,055,399  
               
               
EBITDA3 $ 16,048     $ 44,662  
               
               
Please reference attached financial statement notes.          
           
           
           
JONES LANG LASALLE INCORPORATED  
Segment Operating Results  
For the Three Months Ended March 31, 2014 and 2013  
(in thousands)  
(Unaudited)  
           
  Three Months Ended  
  March 31,  
  2014     2013  
               
REAL ESTATE SERVICES              
               
  AMERICAS              
    Revenue:              
      Operating revenue $ 447,082     $ 361,467  
      Equity earnings   235       217  
      Total segment revenue   447,317       361,684  
      Gross contract costs1   (40,783 )     (19,278 )
      Total segment fee revenue   406,534       342,406  
               
    Operating expenses:              
      Compensation, operating and administrative expenses   417,009       336,559  
      Depreciation and amortization   13,311       10,453  
      Total segment operating expenses   430,320       347,012  
      Gross contract costs1   (40,783 )     (19,278 )
      Total fee-based segment operating expenses   389,537       327,734  
               
      Operating income $ 16,997     $ 14,672  
               
      Adjusted EBITDA $ 30,308     $ 25,125  
               
  EMEA              
    Revenue:              
      Operating revenue $ 311,882     $ 244,905  
      Equity earnings   -       -  
      Total segment revenue   311,882       244,905  
      Gross contract costs1   (77,853 )     (34,207 )
      Total segment fee revenue   234,029       210,698  
               
    Operating expenses:              
      Compensation, operating and administrative expenses   311,346       241,525  
      Depreciation and amortization   5,444       4,983  
      Total segment operating expenses   316,790       246,508  
      Gross contract costs1   (77,853 )     (34,207 )
      Total fee-based segment operating expenses   238,937       212,301  
               
      Operating loss $ (4,908 )   $ (1,603 )
               
      Adjusted EBITDA $ 536     $ 3,380  
               
               
  Three Months Ended  
  March 31,  
  2014     2013  
               
  ASIA PACIFIC              
    Revenue:              
      Operating revenue $ 214,705     $ 189,901  
      Equity earnings (losses)   (82 )     114  
      Total segment revenue   214,623       190,015  
      Gross contract costs1   (40,967 )     (21,997 )
      Total segment fee revenue   173,656       168,018  
               
    Operating expenses:              
      Compensation, operating and administrative expenses   210,305       184,449  
      Depreciation and amortization   3,168       3,128  
      Total segment operating expenses   213,473       187,577  
      Gross contract costs1   (40,967 )     (21,997 )
      Total fee-based segment operating expenses   172,506       165,580  
               
      Operating income $ 1,150     $ 2,438  
               
      Adjusted EBITDA $ 4,318     $ 5,566  
               
LASALLE INVESTMENT MANAGEMENT              
  Revenue:              
      Operating revenue $ 63,773     $ 59,715  
      Equity earnings   8,750       5,151  
      Total segment revenue   72,523       64,866  
               
    Operating expenses:              
      Compensation, operating and administrative expenses   55,679       51,107  
      Depreciation and amortization   488       516  
      Total segment operating expenses   56,167       51,623  
               
      Operating income $ 16,356     $ 13,243  
               
      Adjusted EBITDA $ 16,844     $ 13,759  
               
               
               
               
SEGMENT RECONCILING ITEMS:              
  Total segment revenue $ 1,046,345     $ 861,470  
  Reclassification of equity earnings   8,903       5,482  
  Total revenue $ 1,037,442     $ 855,988  
               
  Total operating expenses before restructuring and acquisition charges   1,016,750       832,720  
  Operating income before restructuring and acquisition charges $ 20,692     $ 23,268  
               
  Restructuring and acquisition charges   35,958       3,168  
  Operating income (loss) after restructuring and acquisition charges $ (15,266 )   $ 20,100  
               
  Total adjusted EBITDA $ 52,006     $ 47,830  
  Restructuring and acquisition charges   35,958       3,168  
  Total EBITDA $ 16,048     $ 44,662  
               
Please reference attached financial statement notes.          
                 
                 
                 
JONES LANG LASALLE INCORPORATED  
Consolidated Balance Sheets  
March 31, 2014, December 31, 2013 and March 31, 2013  
(in thousands)  
                 
                 
  (Unaudited)           (Unaudited)  
  March 31,     December 31,     March 31,  
  2014     2013     2013  
                       
ASSETS                      
Current assets:                      
  Cash and cash equivalents $ 140,148     $ 152,726     $ 133,470  
  Trade receivables, net of allowances   1,129,020       1,237,514       913,615  
  Notes and other receivables   175,869       94,519       104,767  
  Warehouse receivables   7,702       -       137,445  
  Prepaid expenses   73,082       56,491       56,646  
  Deferred tax assets, net   125,045       130,822       52,050  
  Other   14,211       52,156       21,568  
    Total current assets   1,665,077       1,724,228       1,419,561  
                       
Property and equipment, net of accumulated depreciation   316,765       295,547       260,961  
Goodwill, with indefinite useful lives   1,903,409       1,900,080       1,836,933  
Identified intangibles, net of accumulated amortization   43,614       45,579       43,556  
Investments in real estate ventures   291,779       287,200       272,161  
Long-term receivables   60,959       65,353       64,698  
Deferred tax assets, net   88,747       104,654       189,176  
Other   185,292       174,712       148,201  
    Total assets $ 4,555,642     $ 4,597,353     $ 4,235,247  
                       
LIABILITIES AND EQUITY                      
Current liabilities:                      
  Accounts payable and accrued liabilities $ 491,129     $ 528,505     $ 399,832  
  Accrued compensation   504,164       810,425       413,705  
  Short-term borrowings   16,819       24,522       37,798  
  Deferred tax liabilities, net   11,274       11,274       10,113  
  Deferred income   98,324       104,410       59,396  
  Deferred business acquisition obligations   35,649       36,040       119,302  
  Warehouse facility   7,702       -       137,445  
  Other   116,011       143,248       101,637  
    Total current liabilities   1,281,072       1,658,424       1,279,228  
                       
Noncurrent liabilities:                      
  Credit facility   443,000       155,000       470,000  
  Long-term senior notes   275,000       275,000       275,000  
  Deferred tax liabilities, net   18,029       18,029       3,106  
  Deferred compensation   107,484       103,199       82,936  
  Deferred business acquisition obligations   100,384       99,196       100,847  
  Minority shareholder redemption liability   10,456       20,667       19,707  
  Other   95,904       77,029       73,913  
    Total liabilities   2,331,329       2,406,544       2,304,737  
                       
                       
  (Unaudited)           (Unaudited)  
  March 31,     December 31,     March 31,  
  2014     2013     2013  
                       
Company shareholders' equity:                      
  Common stock, $.01 par value per share, 100,000,000 shares authorized; 44,541,623, 44,447,958 and 44,084,721 shares issued and outstanding as of March 31, 2014, December 31, 2013 and March 31, 2013, respectively   445       444       441  
  Additional paid-in capital   949,718       945,512       939,058  
  Retained earnings   1,282,869       1,266,967       1,030,284  
  Shares held in trust   (8,060 )     (8,052 )     (7,558 )
  Accumulated other comprehensive loss   (11,384 )     (25,202 )     (39,679 )
    Total Company shareholders' equity   2,213,588       2,179,669       1,922,546  
                       
  Noncontrolling interest   10,725       11,140       7,964  
    Total equity   2,224,313       2,190,809       1,930,510  
                       
    Total liabilities and equity $ 4,555,642     $ 4,597,353     $ 4,235,247  
                       
                       
Please reference attached financial statement notes.          
   
   
   
JONES LANG LASALLE INCORPORATED  
Summarized Consolidated Statements of Cash Flows  
For the Three Months Ended March 31, 2014 and 2013  
(in thousands)  
   
   
  Three Months Ended  
   March 31,  
  2014     2013  
               
Cash used in operating activities $ (263,428 )   $ (301,456 )
               
Cash used in investing activities   (39,297 )     (20,777 )
               
Cash provided by financing activities   290,147       303,544  
               
  Net decrease in cash and cash equivalents $ (12,578 )   $ (18,689 )
               
Cash and cash equivalents, beginning of period   152,726       152,159  
               
Cash and cash equivalents, end of period $ 140,148     $ 133,470  
               
               
Please reference attached financial statement notes.            
 
 
 
JONES LANG LASALLE INCORPORATED
Financial Statement Notes

1. Consistent with U.S. GAAP ("GAAP"), gross contract vendor and subcontractor costs ("gross contract costs") which are managed on certain client assignments in the Property & Facility Management and Project & Development Services business lines are presented on a gross basis in both revenue and operating expenses. Gross contract costs are excluded from revenue and operating expenses in determining "fee revenue" and "fee-based operating expenses", respectively. Excluding these costs from revenue and operating expenses more accurately reflects how the firm manages its expense base and its operating margins.

Adjusted operating income excludes the impact of restructuring and acquisition charges and intangible amortization related to the King Sturge acquisition. "Adjusted operating income margin" is calculated by dividing adjusted operating income by fee revenue. Below are reconciliations of revenue and operating expenses to fee revenue and fee-based operating expenses, as well as adjusted operating income margin calculations, for the three months ended March 31, 2014, and 2013.

     
  Three Months Ended  
  March 31,  
($ in millions) 2014     2013  
               
Revenue $ 1,037.4     $ 856.0  
Gross contract costs   (159.6 )     (75.5 )
Fee revenue $ 877.8     $ 780.5  
               
Operating expenses $ 1,052.7     $ 835.9  
Gross contract costs   (159.6 )     (75.5 )
Fee-based operating expenses $ 893.1     $ 760.4  
               
Operating income (loss) $ (15.3 )   $ 20.1  
               
Add:              
Restructuring and acquisition charges*   36.0       3.2  
King Sturge intangible amortization   0.6       0.6  
Adjusted operating income $ 21.3     $ 23.9  
               
Adjusted operating income margin   2.4 %     3.1 %
               
*See note 4 for more information on restructuring and acquisition charges
 

2. Charges excluded from GAAP net income attributable to common shareholders to arrive at adjusted net income for the three months ended March 31, 2014, and 2013 are (a) net restructuring and acquisition charges and (b) net intangible amortization related to the 2011 King Sturge acquisition. Below are reconciliations of GAAP net income attributable to common shareholders to adjusted net income and calculations of earnings per share ("EPS") for each net income total:

     
    Three Months Ended
    March 31,
($ in millions, except per share data)   2014   2013
             
GAAP net income attributable to common shareholders   $ 15.9   $ 13.2
Shares (in 000s)     45,202     45,055
GAAP diluted earnings per share   $ 0.35   $ 0.29
             
GAAP net income attributable to common shareholders   $ 15.9   $ 13.2
Restructuring and acquisition charges, net*     1.1     2.4
King Sturge intangible amortization, net     0.4     0.4
Adjusted net income   $ 17.4   $ 16.0
Shares (in 000s)     45,202     45,055
Adjusted diluted earnings per share   $ 0.39   $ 0.36
             
 *See note 4 for more information on restructuring and acquisition charges
 

3. Adjusted EBITDA represents earnings before interest expense net of interest income, income taxes, depreciation and amortization, adjusted for restructuring and acquisition charges. Although adjusted EBITDA and EBITDA are non-GAAP financial measures, they are used extensively by management and are useful to investors and lenders as metrics for evaluating operating performance and liquidity. EBITDA is used in the calculations of certain covenants related to the firm's revolving credit facility. However, adjusted EBITDA and EBITDA should not be considered as an alternative to net income determined in accordance with GAAP. Because adjusted EBITDA and EBITDA are not calculated under GAAP, the firm's adjusted EBITDA and EBITDA may not be comparable to similarly titled measures used by other companies.

Below is a reconciliation of net income to EBITDA and adjusted EBITDA:

   
  Three Months Ended
  March 31,
($ in millions) 2014     2013
             
GAAP net income $ 16.1     $ 13.3
Add:            
Interest expense, net of interest income   6.6       7.9
Provision for (benefit from) income taxes   (29.1 )     4.4
Depreciation and amortization   22.4       19.1
EBITDA $ 16.0     $ 44.7
             
Add:            
Restructuring and acquisition charges   36.0       3.2
Adjusted EBITDA $ 52.0     $ 47.9
             

4. Restructuring and acquisition charges are excluded from segment operating results, although they are included for consolidated reporting. For purposes of segment operating results, the allocation of restructuring charges to the segments has been determined not to be meaningful to investors, so the performance of segment results has been evaluated without allocation of these charges.

Restructuring and acquisition charges of $36 million in the quarter ended March 31, 2014 include $35 million related to the write-off of an indemnification asset which arose from prior period acquisition activity. This write-off is offset by the recognition of a tax benefit of an equal amount in the provision for income taxes, and therefore has no impact on net income.

   
  Three Months Ended
  March 31, 2014
($ in millions) GAAP     Adjusting
Item
  Adjusted
                   
Income (loss) before income taxes and noncontrolling interest $ (13.0 )   $ 34.5   $ 21.5
Provision for (benefit from) income taxes   (29.1 )   $ 34.5     5.4
Net income $ 16.1           $ 16.1
                   

Excluding the impact of this item, the adjusted provision for income taxes of $5.4 million reflects a 25 percent effective rate on adjusted income before income taxes of $21.5 million.

5. Intangible amortization from the second-quarter 2011 King Sturge acquisition is included in depreciation and amortization in the firm's consolidated results, as well as in EMEA's segment results, but has been excluded from adjusted operating income and adjusted net income.

6. Each geographic region offers the firm's full range of Real Estate Services businesses consisting primarily of tenant representation and agency leasing; capital markets; property management and facilities management; project and development services; and advisory, consulting and valuations services. The Investment Management segment provides investment management services to institutional investors and high-net-worth individuals.

7. The consolidated statements of cash flows are presented in summarized form. For complete consolidated statements of cash flows, please refer to the firm's Annual Report on Form 10-Q for the quarter ended March 31, 2014, to be filed with the Securities and Exchange Commission shortly.

8. EMEA refers to Europe, Middle East and Africa. MENA refers to Middle East and North Africa. Greater China includes China, Hong Kong, Macau and Taiwan. Southeast Asia refers to Singapore, Indonesia, Philippines, Thailand and Vietnam. The BRIC countries include Brazil, Russia, India and China.

9. Certain prior year amounts have been reclassified to conform to the current presentation.

Contact Information

  • Contact:
    Christie B. Kelly
    Title: Global Chief Financial Officer
    Phone: +1 312 228 2316