New Delhi, Delhi, India
Jones Lang LaSalle Incorporated (NYSE: JLL), the leading global real estate services and money management firm, today reported net income of $24.7 million, or $0.73 per diluted share of common stock, for the quarter ended September 30, 2006, and net income of $95.5 million, or $2.85 per share, for year-to-date 2006. In 2005, net income for the third quarter was $20.6 million, or $0.61 per share, with year-to-date net income of $36.8 million, or $1.10 per share. Operating income for the third quarter of 2006 increased 40 percent to $37.3 million from $26.6 million a year ago and on a year-to-date basis nearly tripled to $130.3 million from $46.3 million. The third-quarter results included strong year-over-year operating income increases by both EMEA1 and the Americas. The year-to-date results included the single, large incentive fee recorded by LaSalle Investment Management in the second quarter.
All operating segments achieved robust increases in revenue for both the third quarter and year-to-date 2006 compared with the same periods of the prior year. Revenue for the third quarter of 2006 was $462 million, an increase of 42 percent, while year-to-date revenue increased to $1.3 billion, an increase of 47 percent over the prior year. Together, the acquisition of Spaulding & Slye and the significant incentive fee contributed 40 percent of the firm's year-to-date increase over the prior year. Revenue for the third quarter of 2006 in the EMEA and Americas regions increased by 53 and 46 percent, respectively, compared with the same period of the prior year.
Third Quarter 2006 Highlights:
-- Total revenue increased 42 percent led by EMEA and Americas
-- Operating income increased 40 percent
-- Semi-annual dividend declared - an increase of 40 percent to $0.35 per share
1. Europe, Middle East, Africa - EMEA; previously referred to as Europe.
"The acquisitions and investments which we made in 2005 and 2006 are contributing to our strong, top-line growth across all of our businesses and geographies, and we're particularly pleased with our progress in EMEA," said Colin Dyer, Chief Executive Officer of Jones Lang LaSalle. "Everyone in the company is firmly focused on delivering outstanding results for our clients and completing another successful year in 2006," Dyer added.
Operating expenses were $425 million for the third quarter of 2006 compared with $300 million for the same period in 2005, an increase of 42 percent, and on a year-to-date basis an increase of 39 percent to $1.2 billion. The increase in operating expenses was due to increased investments made across the regions and the firm's acquisition activity, which during the third quarter included the RSP Group in Dubai and, earlier this year, the acquisitions of Spaulding & Slye, Rogers Chapman and The Littman Partnership. Also contributing to the increase were higher incentive compensation related to the firm's strong performance, the costs associated with revenue-generating activities, and the geographic expansion both of offices and the global business platform.
Interest expense of $4.1 million for the third quarter of 2006 was higher than the $1.3 million incurred for the same period in 2005 due to a higher debt balance and higher interest rates compared with a year ago. The higher debt balance was principally related to acquisition activities, share repurchases and increased co-investment funding in line with the growth in the firm's investment management business.
Declaration of Semi-Annual Dividend
The firm also has announced that its Board of Directors has declared a semi-annual dividend of $0.35 per share of its common stock. The dividend payment will be made on Friday, December 15, 2006, to holders of record at the close of business on Wednesday, November 15, 2006. This amount represents an increase of $0.10 per share, or 40 percent, over the amount of the semi-annual dividend that was paid in June 2006. A dividend-equivalent in the same amount also will be paid simultaneously on outstanding but unvested shares of restricted stock units granted under the Company's Stock Award and Incentive Plan.
Business Segment Third Quarter Performance Highlights
Investor and Occupier Services
-- In the Americas, revenue for the third quarter of 2006 was $150 million, an increase of 46 percent over the prior year, while year-to-date revenue increased to $399 million, an increase of 47 percent over the same period in 2005. Transaction revenue was up over 65 percent for both the quarter and year to date compared with 2005 due to an increased number of large transactions that closed in 2006. Management Services revenue was up approximately 30 percent for the quarter and year to date over 2005.
The current year's strong revenue performance has benefited from organizational changes made at the end of 2005. The Americas reoriented part of its operations to focus on "Markets" and "Accounts." The goal of the Markets organization is to maximize the firm's competitive position in its key local markets. The focus of the Accounts organization is on delivering services and strategic advice to large corporate clients. The Spaulding & Slye acquisition and new client wins in late 2005 also impacted the strong performance over the prior year.
Revenue in the Americas Hotels business was up 76 percent on a year-to-date basis compared with 2005. The increase was due to the closing of several significant transactions this year, and to the acquisition of a middle-market hotel broker and advisory firm in the second quarter of 2005.
Total operating expenses for both the quarter and year to date increased 48 and 47 percent, respectively, over the prior year as a result of continued investment activity with the strengthening of local market teams throughout the region. Expense growth also was driven by the Spaulding & Slye acquisition and by higher compensation costs associated with revenue-generating activities.
-- In EMEA, third-quarter revenue increased 53 percent to $170 million over the same quarter in 2005, and on a year-to-date basis grew 30 percent to $409 million. Transaction Services revenue was up 63 percent for the quarter and 38 percent year to date. Third-quarter 2006 revenue was driven by Capital Markets, which was up 87 percent, with revenue in Agency Leasing and Advisory services up 34 and 47 percent, respectively, compared with the prior year. Revenue on a year-to-date basis for Capital Markets increased 72 percent with Agency Leasing and Advisory services up approximately 20 percent each as the leasing markets in the region continue to recover.
Germany and France continued to gain momentum into the third quarter and experience further strong growth driven by improved market conditions and investor interest along with management actions taken in both countries. Germany's revenue was up 90 percent for the third quarter and up 66 percent year to date compared with 2005, with Capital Markets activity contributing the majority of the growth. Both Capital Markets and Agency Leasing drove the growth in France's revenue, which nearly tripled for the third quarter and doubled year to date, compared with 2005. Favorable trends have also continued in other markets, with year-to-date revenue up 16 percent in the United Kingdom and up 54 percent in Central and Eastern Europe, including Russia, over the prior year. Year-to-date revenue of the EMEA Hotels business increased over 60 percent compared to the prior year.
Operating expenses in the third quarter of 2006 increased by 45 percent and by 26 percent on a year-to-date basis. The increase was driven by investments in staff to service clients, and drive growth in market share, as well as incentive compensation associated with improved results. Operating income on a year-to-date basis improved significantly in 2006 to $14.0 million compared with $1.2 million in 2005.
During the quarter, the firm expanded into the Middle East with the acquisition of RSP Group, a leading Dubai-based team of 30 professionals providing strategic real estate investment and advisory services to private and institutional investors and developers.
-- Third-quarter revenue for the Asia Pacific region increased 24 percent to $78 million and, on a year-to-date basis, increased 18 percent to $213 million. Revenue growth in the third quarter was driven primarily by Transaction Services, up 27 percent, and Management Services, up 15 percent. Geographically, the third-quarter and year-to-date increases in revenue over the prior year were led by the growth markets of China, Japan, India and Korea, which as a group had increased revenue of 54 and 27 percent, respectively. Australia continued its steady growth throughout the current year compared with the prior year, as revenue for both the third quarter and year to date increased 20 percent. Following very strong results in 2005, the Hong Kong business has maintained its performance levels and its leading market position.
The increase in operating expenses for both third quarter and year-to-date 2006 was primarily the result of continued investment activity to expand the geographic platform, service capabilities and infrastructure throughout the region. The firm remains committed to future growth by expanding existing offices and adding new offices across the region. During the third quarter, the region incurred approximately $1.6 million of transition expenses to outsource the management of its IT infrastructure, call centers and application development. This will enable faster response to client requests and better support for future regional growth. The 2005 year-to-date operating expenses included a credit of $2.4 million received from a litigation settlement.
LaSalle Investment Management
LaSalle Investment Management's third-quarter 2006 revenue increased by 26 percent to $65 million compared with $52 million in 2005, while year-to-date revenue more than doubled to $299 million from $131 million.
Advisory fees for the third quarter 2006 increased 40 percent to $46 million, compared with $33 million in 2005 and on a year-to-date basis increased 36 percent to $127 million. The growth in this annuity business was principally due to the increase in assets under management. Total investments related to this activity also increased, as the firm's co-investment capital totaled $128 million at the end of the third quarter of 2006, compared with $84 million in the prior year.
Incentive fees remained strong in the third quarter and were comparable to the prior year. The majority of the year-to-date increase in incentive fees is due to the single large incentive fee earned in the second quarter of 2006. LaSalle Investment Management's assets under management grew to almost $40 billion at the end of the third quarter of 2006, compared with $29 billion a year ago.
Summary
Supported by ongoing favorable market conditions, Jones Lang LaSalle continues to focus on its growth initiatives and disciplined investment strategy across its diverse global platform. The firm intends to maintain these efforts in 2007 in order to continue to generate growth in the firm's core operations beyond 2006. In addition to the $180 million that the firm has spent so far in 2006 for acquisitions, strategic investments for the full-year 2006 are anticipated to be $25 million, of which $18 million has been spent year to date.
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE: JLL), the only real estate money management and services firm named to Forbes magazine's Platinum 400, has more than 125 offices worldwide and operates in more than 450 cities in 50 countries. With 2005 revenue of approximately $1.4 billion, the company provides comprehensive integrated real estate and investment management expertise on a local, regional and global level to owner, occupier and investor clients. Jones Lang LaSalle is an industry leader in property and corporate facility management services, with a portfolio of 982 million square feet worldwide. In 2005, the firm completed capital markets sales and acquisitions, debt financings, and equity placements on assets and portfolios valued at $43 billion. LaSalle Investment Management, the company's investment management business, is one of the world's largest and most diverse real estate money management firms, with approximately $40 billion of assets under management. For further information, please visit www.joneslanglasalle.com.
Statements in this press release regarding, among other things, future financial results and performance, achievements, plans and objectives and the payment of dividends, 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 of Jones Lang LaSalle to be materially different from those expressed or implied by such forward-looking statements. 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. 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 Jones Lang LaSalle's Annual Report on Form 10-K for the year ended December 31, 2005 and in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and June 30, 2006 and in other reports filed with the Securities and Exchange Commission. Statements speak only as of the date of this release. Jones Lang LaSalle expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in Jones Lang LaSalle'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, November 1, 2006, at 9:00 a.m. EST.
To participate in the teleconference, please dial into one of the following phone numbers five to 10 minutes before the start time:
-- U.S. callers: +1 877 809 9540
-- International callers: +1 706 679 7364
-- Pass code: 8733626
Replay Information Available: Noon EST Wednesday, November 1 through Midnight November 8 at the following numbers:
-- U.S. callers: +1 800 642 1687
-- International callers: +1 706 645 9291
-- Pass code: 8733626
Live webcast
Follow these steps to listen to the webcast:
-- You must have a minimum 14.4 Kbps Internet connection
-- Log on to http://www.videonewswire.com/event.asp?id=36175 and follow instructions
-- Download free Windows Media Player software: (link located under registration form)
-- If you experience problems listening, send an e-mail to webcastsupport@tfprn.com
This information is also available on the company's Web site at www.joneslanglasalle.com
If you have any questions, call Yvonne Peterson of Jones Lang LaSalle's Investor Relations department at +1 312 228 2919.
To view the complete release with financial results please click on the link given below:
http://www.businesswireindia.com/attachments/JLL_Q3results06.doc
Lauralee E. Martin, Chief Operating and Financial Officer, Jones Lang LaSalle, +1 312 228 2073
Source: Jones Lang LaSalle (Business Wire India)
Press release presented here is sourced from the Source mentioned above and is provided on as-is basis. Please contact the Company / Source directly for any further information in regard to this release. This website will be unable to assist you in regard to the accuracy or correctness of information in this release.
