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Jones Lang LaSalle (JLL) Q1 Earnings & Revenues Top Estimates

Jones Lang LaSalle Inc. JLL — popularly known as JLL — reported first-quarter 2021 adjusted earnings of $2.10 per share, handily beating the Zacks Consensus Estimate of 60 cents. Revenues for the quarter came in at $4.04 billion, surpassing the Zacks Consensus Estimate of $3.75 billion.

Continued strength of Americas Corporate Solutions helped drive Property & Facility Management growth, while transaction-based service lines reflect improving economic conditions, highlighted by solid recovery in Asia Pacific. Moreover, the company’s overall margin expansion included valuation increases to JLL Technologies' strategic proptech investments, Year-over-year changes in loan loss credit reserves and the fair value of LaSalle's co-investment portfolio as well as cost-mitigation benefits.

According to Christian Ulbrich, JLL CEO, "Our strong first-quarter results demonstrated JLL's commitment to delivering value to stakeholders across our global, scaled platform and reflected our investments in technology growth initiatives while prudently managing expenses."

On a year-over-year basis, first-quarter adjusted earnings per share were well above the 49 cents reported in the prior-year quarter.

However, revenues edged down 1% year on year, while fee revenues slipped 4% year over year to $1.4 billion. Apart from this, adjusted EBITDA margin, calculated on a fee-revenue basis, was 13.2% compared with the prior-year quarter’s 6.4%.

Shares of JLL declined 1.61% during Wednesday’s regular session.

Behind the Headline Numbers

During the March-end quarter, JLL’s Real Estate Services (RES) revenues dropped 1% year over year to $3.95 billion. Results reflect the continued impact of the pandemic. Particularly, decent growth in Asia Pacific was more than offset by declines in Americas and EMEA. In addition, Corporate Solutions continued to deliver stable fee revenue performance as strength in facilities management offset the decline in Project & Development Services.

In the Americas, revenues and fee revenues came in at $2.4 billion and $832.7 million, respectively, reflecting a 3% and 9% year-over-year decline. While the Americas transaction-based service lines continued to be affected by the pandemic, the decline in U.S. leasing was particularly less significant than the recent quarters. Also, soft investment sales and debt placement activity hurt Capital Market revenues, while the multi-family business continued to deliver a stable revenue performance. Also, new client wins and expansions of existing Corporate Solutions client relationships helped the Property & Facility Management segment register stellar revenue and fee revenue growth.

Revenues and fee revenues of the EMEA segment came in at $716.2 million and $311.5 million, down 5% and 0.3%, respectively, from the year-ago period, reflecting the adverse impact of the pandemic. This region reported largely stable transaction-based revenues as substantial growth in some geographies, highlighted by Switzerland, was offset by geographies that witnessed more restrictive lock-down measures. Decline in Project & Development Services reflect lower activity in the fit-out business and substantial prior-year project activity in MENA that did not repeat this quarter. Apart from this, Property & Facility Management was affected by a decrease in fee revenues from the U.K. mobile engineering business.

For the Asia-Pacific segment, revenues and fee revenues came in at $785.8 million and $213.2 million, respectively, marking a year-over-year increase of 10% and 20%. Rebound in transaction-based revenues, along with continued stability in Corporate Solutions, aided double-digit fee revenue growth. Revenue expansion in Capital Markets were driven by an increase in large-deal transactions, mainly in Singapore and Australia. A pick-up in office volumes, principally in Greater China drove leasing. Solid expansion in Valuations Advisory, particularly in Greater China and Australia, steered Advisory, Consulting and Other performance.

Revenues in the LaSalle segment slid 13% year over year to $91.2 million, while fee revenues declined 13% to $85.3 million. Pandemic-driven valuation declines in assets under management over the trailing 12 months largely attributed to this decline in LaSalle advisory fees. Moreover, transaction and incentive fees underlined decreased acquisition/transaction activity in 2021.

At the end of first-quarter 2021, assets under management were $70.9 billion, up 3% from the last quarter end, reflecting acquisitions, foreign-currency increases and net valuation increases, partially offset dispositions andwithdrawals.

Liquidity

JLL exited first-quarter 2021 with cash and cash equivalents of $456.6 million, down from $574.3 million as of Dec 31, 2020. Additionally, as of Mar 31, 2021, the company’s net debt amounted to $670.3 million, marking an increase of $478.2 million from the end of December, reflecting typical seasonality, driven by annual incentive compensation payments made in the first quarter. However, it declined $843.2 million from Mar 31, 2020 due to substantial cash collections in 2020 as well as lower incentive compensation payments this year compared with the prior-year period.

JLL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of another Real Estate Operations Company

CBRE Group Inc. CBRE reported first-quarter 2021 adjusted earnings per share of 86 cents, handily beating the Zacks Consensus Estimate of 70 cents. Moreover, the figure climbed 14.7% from the 75 cents reported in the year-ago period. The company generated revenues of $5.94 billion, outpacing the Zacks Consensus Estimate of $5.75 billion. The revenue figure also compared favorably with the year-ago quarter’s $5.89 billion. Despite the pandemic’s adverse impact on property leasing and sales, quarterly results reflect- the benefits from diversifying and expanding its resilient business in recent years.

We, now, look forward to the earnings releases of other companies in the real estate sector like Brookfield Asset Management Inc. BAM and Exp World Holdings, Inc. EXPI. While Exp World Holdings is scheduled to report results today, Brookfield Asset Management is slated to announce its quarterly results on May 13.

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Jones Lang LaSalle Incorporated (JLL): Free Stock Analysis Report
 
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