JLL Reports Financial Results for Fourth-Quarter and Full-Year 2023
- Operating income increased by 14% to $290.4 million in Q4 2023.
- Diluted earnings per share were $3.57 for the quarter.
- Revenue increased by 4% in local currency, reaching $5.9 billion for the quarter.
- Fee revenue decreased by 2% in local currency.
- JLL generated over $375 million incremental cash for the full year.
- None.
Insights
The financial results for Jones Lang LaSalle Incorporated (JLL) reveal several key points of interest for stakeholders. The company's reported operating income for the fourth quarter shows a year-over-year increase from $254.7 million to $290.4 million, which is a positive indicator of financial health and operational efficiency. This growth, despite a challenging macroeconomic environment marked by a pullback in transaction activity and geopolitical uncertainty, suggests that JLL's diversified revenue streams and cost mitigation strategies are effective.
However, a deeper dive into the financials reveals that while operating income has increased, there has been a substantial decrease in net income attributable to common shareholders, dropping by 66% for the full year. This decrease can be attributed to a combination of factors, including lower transaction-based revenues and unrealized investment losses. The decline in net income and adjusted net income is a significant concern as it directly affects shareholder value and could impact the company's stock performance.
Another point of note is the reported free cash flow, which has seen a significant increase for the fourth quarter, suggesting improved liquidity and operational cash management. For investors, this could signal JLL's ability to sustain investments, service debt and potentially return value to shareholders through dividends or share buybacks.
Finally, the report mentions a decrease in fee revenue by 11% in local currency for the full year, which may raise concerns about the company's core revenue-generating activities. However, this is partially mitigated by the growth in 'resilient business lines,' indicating a strategic shift towards more stable revenue sources.
From a market perspective, JLL's performance highlights the resilience of specific segments within the commercial real estate industry. For instance, the Work Dynamics segment reported an 8% growth in fee revenue for the fourth quarter, driven by Workplace Management and Project Management. This suggests a strong demand for services related to the optimization and management of work environments, which may be influenced by evolving workplace trends post-pandemic.
The Property Management sub-segment within Markets Advisory also delivered double-digit growth, which could reflect a trend towards outsourcing property management to cope with complex regulatory environments and the need for operational efficiency. These insights indicate potential growth areas for JLL and opportunities for investors to monitor.
Despite the positive performance in certain segments, the Capital Markets segment experienced a decrease in revenue and fee revenue, attributed to a decline in transaction volumes. This reflects broader market trends and the impact of rising interest rates on investor decision-making. The net leverage ratio has increased year-over-year, which could raise concerns about the company's debt position, especially in a rising interest rate environment.
An economist's perspective on JLL's financial results would likely focus on the macroeconomic factors influencing the company's performance. The report reflects a global pullback in transaction activity, likely due to economic uncertainty and higher interest rates, which have led to a decline in transaction-based businesses such as Investment Sales and Debt/Equity Advisory within the Capital Markets segment.
The resilience of JLL's business lines amidst these conditions suggests a well-diversified business model that can withstand economic fluctuations. The company's focus on operating efficiency and cash generation is a prudent strategy in an uncertain economic climate. The improved business confidence and stability in interest rates, as mentioned by JLL's CEO, could lead to a recovery in transaction activity over the coming year, presenting potential upside for the company.
However, the substantial decrease in net income and adjusted EBITDA margins indicates that while JLL is managing to grow certain revenue streams, it is doing so in a less profitable manner. This could be a point of concern if the trend continues, as it may affect the company's ability to invest in growth opportunities and maintain competitive positioning in the long term.
Resilient business line revenue growth continued as the pace of the market-wide pullback in transaction activity eased
- Fourth-quarter revenue was
$5.9 billion 4% in local currency1, and fee revenue1 was$2.2 billion 2% in local currency1- Work Dynamics achieved broad-based growth across all service lines, highlighted by the ramp up of recent contract wins
- Capital Markets had solid performance against the lowest fourth-quarter investment sales market volumes since 2011
- Property Management, within Markets Advisory, delivered double-digit growth from strong momentum across the globe
- Also within Markets Advisory, the office sector in the
U.S. drove the single-digit decline in Leasing as other asset classes were largely flat
- Fourth-quarter margin reflected lower transaction-based revenues and unrealized investment losses associated with certain JLL Technologies portfolio investments, partially offset by growth in resilient revenue and the impact of recent cost mitigation actions, reducing the expense base
- Nearly
$130 million $375 million
"JLL's fourth-quarter and full-year 2023 operating results reflected strong growth within our resilient business lines in the face of the market-wide pullback in transaction activity and elevated geopolitical uncertainty. With a focus on operating efficiency, we drove improved cash generation while continuing to invest in our platform," said Christian Ulbrich, JLL CEO. "As business confidence globally begins to improve alongside greater stability in interest rates, we expect transaction activity will pick up over the course of the year. Our global platform, industry insights and people uniquely position us to seize significant growth opportunities across the commercial real estate industry in the coming years while continuing to provide exceptional service to our clients."
Summary Financial Results ($ in millions, except per share data, "LC" = local currency) | Three Months Ended December 31, | Year Ended December 31, | |||||||||
2023 | 2022 | % Change | % Change | 2023 | 2022 | % Change | % Change | ||||
Revenue | $ 5,881.4 | $ 5,604.8 | 5 % | 4 % | $ 20,760.8 | $ 20,862.1 | — % | — % | |||
Fee revenue1 | 2,180.4 | 2,214.1 | (2) | (2) | 7,403.1 | 8,302.0 | (11) | (11) | |||
Net income attributable to common shareholders | $ 172.4 | $ 174.8 | (1) % | 1 % | $ 225.4 | $ 654.5 | (66) % | (64) % | |||
Adjusted net income attributable to common shareholders1 | 204.5 | 210.6 | (3) | (1) | 357.5 | 775.1 | (54) | (53) | |||
Diluted earnings per share | $ 3.57 | $ 3.62 | (1) % | 1 % | $ 4.67 | $ 13.27 | (65) % | (63) % | |||
Adjusted diluted earnings per share1 | 4.23 | 4.36 | (3) | (2) | 7.40 | 15.71 | (53) | (52) | |||
Adjusted EBITDA1 | $ 306.4 | $ 338.5 | (9) % | (9) % | $ 736.7 | $ 1,247.3 | (41) % | (40) % | |||
Free Cash Flow5 | $ 680.2 | $ 532.0 | 28 % | n/a | $ 388.9 | $ (5.9) | n.m. | n/a | |||
Note: For discussion and reconciliation of non-GAAP financial measures, see the Notes following the Financial Statements in this news release. |
Consolidated 2023 Performance Highlights:
Consolidated
| Three Months Ended December 31, | % | % | Year Ended December 31, | % | % | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Markets Advisory | $ 1,197.4 | $ 1,186.3 | 1 % | — % | $ 4,121.6 | $ 4,415.5 | (7) % | (6) % | |||||||
Capital Markets | 537.1 | 607.9 | (12) | (13) | 1,778.0 | 2,488.2 | (29) | (29) | |||||||
Work Dynamics | 3,966.1 | 3,634.6 | 9 | 8 | 14,131.1 | 13,268.5 | 7 | 7 | |||||||
JLL Technologies | 65.5 | 57.3 | 14 | 14 | 246.4 | 213.9 | 15 | 15 | |||||||
115.3 | 118.7 | (3) | (4) | 483.7 | 476.0 | 2 | 2 | ||||||||
Total revenue | $ 5,881.4 | $ 5,604.8 | 5 % | 4 % | $ 20,760.8 | $ 20,862.1 | — % | — % | |||||||
Gross contract costs1 | (3,709.7) | (3,392.5) | 9 | 9 | (13,375.9) | (12,549.1) | 7 | 7 | |||||||
Net non-cash MSR and mortgage banking derivative activity | 8.7 | 1.8 | (383) | (381) | 18.2 | (11.0) | (265) | (266) | |||||||
Total fee revenue1 | $ 2,180.4 | $ 2,214.1 | (2) % | (2) % | $ 7,403.1 | $ 8,302.0 | (11) % | (11) % | |||||||
Markets Advisory | 895.6 | 915.3 | (2) | (3) | 2,968.0 | 3,360.2 | (12) | (11) | |||||||
Capital Markets | 532.2 | 598.9 | (11) | (12) | 1,748.7 | 2,430.2 | (28) | (28) | |||||||
Work Dynamics | 582.2 | 534.3 | 9 | 8 | 1,999.7 | 1,864.7 | 7 | 7 | |||||||
JLL Technologies | 62.0 | 54.2 | 14 | 14 | 231.9 | 200.2 | 16 | 16 | |||||||
108.4 | 111.4 | (3) | (4) | 454.8 | 446.7 | 2 | 2 | ||||||||
Operating income | $ 290.4 | $ 254.7 | 14 % | 15 % | $ 576.5 | $ 868.1 | (34) % | (33) % | |||||||
Equity (losses) earnings | $ (76.8) | $ (21.6) | (256) % | (256) % | $ (194.1) | $ 51.0 | (481) % | (480) % | |||||||
Adjusted EBITDA1 | $ 306.4 | $ 338.5 | (9) % | (9) % | $ 736.7 | $ 1,247.3 | (41) % | (40) % | |||||||
Net income margin attributable to common shareholders (USD basis) | 2.9 % | 3.1 % | (20) bps | n/a | 1.1 % | 3.1 % | (200) bps | n/a | |||||||
Adjusted EBITDA margin (local currency basis) | 14.3 % | 15.3 % | (120) bps | (100) bps | 10.0 % | 15.0 % | (500) bps | (500) bps | |||||||
Adjusted EBITDA margin (USD basis) | 14.1 % | 10.0 % | |||||||||||||
Note: For discussion and reconciliation of non-GAAP financial measures, see the Notes following the Financial Statements in this news release. Percentage variances in the Performance | |||||||||||||||
Revenue
Revenue increased
For the full year, revenue was flat and fee revenue decreased
The following charts reflect the segment proportion of Revenue and Fee revenue for the current quarter and full year.
Net income, Adjusted EBITDA and Margin Performance
Net income attributable to common shareholders for the fourth quarter was
Diluted earnings per share for the fourth quarter and full year were
Higher equity losses equated to approximately 250 basis points of the fourth-quarter margin decline. The residual net margin expansion was primarily attributable to growth in resilient revenue businesses, the benefit of cost reduction actions executed in the last year, and an actuarial benefit associated with
The full-year margin contraction was primarily attributable to the
Aggregation of Segment Adjusted EBITDA (in millions)
Cash Flows and Capital Allocation:
Net cash provided by operating activities was
Year to date, net cash provided by operating activities was
In the fourth quarter of 2023, the company repurchased 147,805 shares for
Net Debt, Leverage and Liquidity5:
December 31, 2023 | September 30, 2023 | December 31, 2022 | |||
Total Net Debt (in millions) | $ 1,150.3 | 1,698.6 | 1,244.0 | ||
Net Leverage Ratio | 1.6x | 2.2x | 1.0x | ||
Corporate Liquidity (in billions) | $ 3.1 | 2.1 | 2.6 |
The decrease in Net Debt from September 30, 2023, was primarily due to significant cash provided by operating activities in the fourth quarter. The higher year-over-year leverage ratio was entirely driven by a decline in the trailing twelve month Adjusted EBITDA (which includes the impact of equity losses).
Markets Advisory 2023 Performance Highlights:
Markets Advisory
| Three Months Ended December 31, | % | % | Year Ended December 31, | % | % | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ 1,197.4 | $ 1,186.3 | 1 % | — % | $ 4,121.6 | $ 4,415.5 | (7) % | (6) % | |||||||
Gross contract costs1 | (301.8) | (271.0) | 11 | 11 | (1,153.6) | (1,055.3) | 9 | 11 | |||||||
Fee revenue1 | $ 895.6 | $ 915.3 | (2) % | (3) % | $ 2,968.0 | $ 3,360.2 | (12) % | (11) % | |||||||
Leasing | 709.3 | 739.9 | (4) | (5) | 2,322.3 | 2,736.7 | (15) | (15) | |||||||
Property Management | 155.2 | 136.5 | 14 | 12 | 551.7 | 500.2 | 10 | 11 | |||||||
Advisory, Consulting and Other | 31.1 | 38.9 | (20) | (20) | 94.0 | 123.3 | (24) | (23) | |||||||
Segment operating income | $ 142.9 | $ 127.4 | 12 % | 12 % | $ 351.9 | $ 448.0 | (21) % | (22) % | |||||||
Adjusted EBITDA1 | $ 160.5 | $ 150.2 | 7 % | 6 % | $ 416.6 | $ 527.5 | (21) % | (21) % | |||||||
Adjusted EBITDA margin (local currency basis) | 18.0 % | 16.4 % | 150 bps | 160 bps | 14.1 % | 15.7 % | (170) bps | (160) bps | |||||||
Adjusted EBITDA margin (USD basis) | 17.9 % | 14.0 % | |||||||||||||
Note: For discussion and reconciliation of non-GAAP financial measures, see the Notes following the Financial Statements in this news release. Percentage variances in the Performance | |||||||||||||||
Markets Advisory top-line movements for the quarter and full year were largely driven by Leasing and reflected a decrease in average deal size across nearly all asset types, especially the office sector as a year-to-date driver. For the fourth quarter, transaction volume was up in industrial but down in most other asset classes; year to date, transaction volumes were down for all asset classes. Consistent with recent quarters, continued economic uncertainty has delayed commercial real estate decision making, particularly for large-scale leasing actions where JLL has a greater presence. Property Management's top-line growth for the fourth-quarter and full year was primarily attributable to portfolio expansions, most notably in the
The margin expansion for the fourth quarter was predominantly driven by lower operating expenses associated with cost management actions over the last year as well as incentive compensation accrual timing.
The full-year margin contraction was predominantly driven by the lower Leasing revenue (net of lower commissions) and higher incentive compensation accruals in the current year, overshadowing the revenue growth in Property Management and benefit associated with cost management actions over the past year.
Capital Markets 2023 Performance Highlights:
Capital Markets
| Three Months Ended December 31, | % | % | Year Ended December 31, | % | % | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ 537.1 | $ 607.9 | (12) % | (13) % | $ 1,778.0 | $ 2,488.2 | (29) % | (29) % | |||||||
Gross contract costs1 | (13.6) | (10.8) | 26 | 23 | (47.5) | (47.0) | 1 | 1 | |||||||
Net non-cash MSR and mortgage banking derivative activity | 8.7 | 1.8 | (383) | (381) | 18.2 | (11.0) | (265) | (266) | |||||||
Fee revenue1 | $ 532.2 | $ 598.9 | (11) % | (12) % | $ 1,748.7 | $ 2,430.2 | (28) % | (28) % | |||||||
Investment Sales, Debt/Equity Advisory and Other | 391.0 | 458.1 | (15) | (16) | 1,245.0 | 1,906.7 | (35) | (35) | |||||||
Value and Risk Advisory | 103.1 | 103.7 | (1) | (2) | 351.1 | 365.6 | (4) | (3) | |||||||
Loan Servicing | 38.1 | 37.1 | 3 | 3 | 152.6 | 157.9 | (3) | (3) | |||||||
Segment operating income | $ 49.3 | $ 96.8 | (49) % | (49) % | $ 81.1 | $ 389.3 | (79) % | (79) % | |||||||
Equity earnings | $ 0.6 | $ 1.0 | (40) % | (42) % | $ 6.7 | $ 3.1 | 116 % | 114 % | |||||||
Adjusted EBITDA1 | $ 76.1 | $ 115.9 | (34) % | (34) % | $ 173.1 | $ 444.0 | (61) % | (61) % | |||||||
Adjusted EBITDA margin (local currency basis) | 14.5 % | 19.4 % | (510) bps | (490) bps | 9.9 % | 18.3 % | (840) bps | (840) bps | |||||||
Adjusted EBITDA margin (USD basis) | 14.3 % | 9.9 % | |||||||||||||
Note: For discussion and reconciliation of non-GAAP financial measures, see the Notes following the Financial Statements in this news release. Percentage variances in the Performance | |||||||||||||||
Note: "Valuation Advisory" was changed to "Value and Risk Advisory" in the third quarter of 2023. | |||||||||||||||
Lower Capital Markets revenue and fee revenue for the quarter and full year reflected the meaningful drop in transaction volumes compared with 2022. The rapid rise in interest rates and elevated uncertainty this year prolonged investor decision making and drove wide bid-ask spreads. This impact was most pronounced in Investment Sales and Debt/Equity Advisory, which experienced declines across most asset classes and geographies, on both a fourth-quarter and full-year basis. This outperformed broader market trends as Q4 global market volumes for investment sales were down
The margin contraction for the fourth quarter and full year were predominantly driven by a decline in Investment Sales and Debt/Equity Advisory revenues, net of lower commissions expense, as well as incentive compensation accruals.
Work Dynamics 2023 Performance Highlights:
Work Dynamics
| Three Months Ended December 31, | % | % | Year Ended December 31, | % | % | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ 3,966.1 | $ 3,634.6 | 9 % | 8 % | $ 14,131.1 | $ 13,268.5 | 7 % | 7 % | |||||||
Gross contract costs1 | (3,383.9) | (3,100.3) | 9 | 8 | (12,131.4) | (11,403.8) | 6 | 7 | |||||||
Fee revenue1 | $ 582.2 | $ 534.3 | 9 % | 8 % | $ 1,999.7 | $ 1,864.7 | 7 % | 7 % | |||||||
Workplace Management | 239.9 | 202.3 | 19 | 17 | 806.4 | 752.8 | 7 | 7 | |||||||
Project Management | 258.2 | 250.1 | 3 | 2 | 928.4 | 850.7 | 9 | 9 | |||||||
Portfolio Services and Other | 84.1 | 81.9 | 3 | 1 | 264.9 | 261.2 | 1 | 1 | |||||||
Segment operating income | $ 100.1 | $ 64.6 | 55 % | 55 % | $ 183.8 | $ 158.4 | 16 % | 15 % | |||||||
Adjusted EBITDA1 | $ 120.5 | $ 83.9 | 44 % | 44 % | $ 264.0 | $ 230.1 | 15 % | 14 % | |||||||
Adjusted EBITDA margin (local currency basis) | 21.0 % | 15.7 % | 500 bps | 530 bps | 13.1 % | 12.3 % | 90 bps | 80 bps | |||||||
Adjusted EBITDA margin (USD basis) | 20.7 % | 13.2 % | |||||||||||||
Note: For discussion and reconciliation of non-GAAP financial measures, see the Notes following the Financial Statements in this news release. Percentage variances in the Performance | |||||||||||||||
For both the fourth quarter and full year, Work Dynamics revenue and fee revenue growth was broad-based across service lines and geographies, led by strong performance in Workplace Management as recent wins and mandate expansions ramped up in the second half of the year. Momentum from increased project demand drove Project Management growth for the fourth quarter and full year, though the growth decelerated in the current quarter.
Adjusted EBITDA margin expansion for the fourth quarter was attributable to the top-line performance described above, most notably Workplace Management, and the reduction of certain expenses associated with cost management actions over the last year.
Full-year adjusted EBITDA margin expansion was primarily driven by Workplace Management and Project Management revenue growth as well as cost management actions discussed above.
JLL Technologies 2023 Performance Highlights:
JLL Technologies
| Three Months Ended December 31, | % | % | Year Ended December 31, | % | % | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ 65.5 | $ 57.3 | 14 % | 14 % | $ 246.4 | $ 213.9 | 15 % | 15 % | |||||||
Gross contract costs1 | (3.5) | (3.1) | 13 | 13 | (14.5) | (13.7) | 6 | 6 | |||||||
Fee revenue1 | $ 62.0 | $ 54.2 | 14 % | 14 % | $ 231.9 | $ 200.2 | 16 % | 16 % | |||||||
Segment operating income (loss)(a) | $ 2.1 | $ (22.4) | 109 % | 110 % | $ (35.0) | $ (112.9) | 69 % | 68 % | |||||||
Equity (losses) earnings | $ (75.0) | $ (17.9) | (319) % | (317) % | $ (177.0) | $ 46.6 | (480) % | (480) % | |||||||
Adjusted EBITDA1 | $ (68.9) | $ (36.2) | (90) % | (90) % | $ (196.1) | $ (50.9) | (285) % | (286) % | |||||||
Adjusted EBITDA margin (local currency basis) | (111.3) % | (66.8) % | (4,430) bps | (4,450) bps | (84.9) % | (25.4) % | (5,920) bps | (5,950) bps | |||||||
Adjusted EBITDA margin (USD basis) | (111.1) % | (84.6) % | |||||||||||||
Note: For discussion and reconciliation of non-GAAP financial measures, see the Notes following the Financial Statements in this news release. Percentage variances in the Performance | |||||||||||||||
(a) Included in Segment operating income (loss) for JLL Technologies is a reduction in carried interest expense of | |||||||||||||||
The fourth-quarter and full-year increases in JLL Technologies revenue and fee revenue were primarily due to growth in solutions and service offerings, largely from existing enterprise clients. The fourth quarter increase was also partially attributable to higher subscriptions revenue.
Equity losses for the fourth quarter resulted from valuation declines in certain JLL Technologies' portfolio investments. The 2023 equity losses were largely driven by fair value declines recognized in the second and fourth quarters of 2023 and reflected the particularly challenging economic environment for venture capital companies.
The margin decline for the quarter was entirely driven by the equity losses described above, partially offset by (i) fee revenue growth, (ii) the reduction in carried interest expense (associated with equity losses), (iii) the reduction of certain expenses associated with cost management actions and improved operating efficiency over the last year and (iv) the timing of certain operating expenses.
The full-year margin contraction was also entirely driven by the equity losses described above, partially offset by (i) fee revenue growth, (ii) the reduction in carried interest expense (associated with equity losses) and (iii) the reduction of certain expenses associated with cost management actions and improved operating efficiency over the last year.
| Three Months Ended December 31, | % | % | Year Ended December 31, | % | % | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ 115.3 | $ 118.7 | (3) % | (4) % | $ 483.7 | $ 476.0 | 2 % | 2 % | |||||||
Gross contract costs1 | (6.9) | (7.3) | (5) | (6) | (28.9) | (29.3) | (1) | (2) | |||||||
Fee revenue1 | $ 108.4 | $ 111.4 | (3) % | (4) % | $ 454.8 | $ 446.7 | 2 % | 2 % | |||||||
Advisory fees | 92.8 | 96.0 | (3) | (4) | 377.2 | 380.3 | (1) | — | |||||||
Transaction fees and other | 7.4 | 5.9 | 25 | 22 | 30.1 | 39.8 | (24) | (22) | |||||||
Incentive fees | 8.2 | 9.5 | (14) | (14) | 47.5 | 26.6 | 79 | 79 | |||||||
Segment operating income | $ 17.6 | $ 26.7 | (34) % | (31) % | $ 95.4 | $ 90.1 | 6 % | 7 % | |||||||
Equity (losses) earnings | $ (1.7) | $ (3.6) | 53 % | 50 % | $ (24.7) | $ 0.4 | n.m. | n.m. | |||||||
Adjusted EBITDA1 | $ 18.2 | $ 24.7 | (26) % | (23) % | $ 79.1 | $ 96.6 | (18) % | (17) % | |||||||
Adjusted EBITDA margin (local currency basis) | 17.7 % | 22.2 % | (540) bps | (450) bps | 17.5 % | 21.6 % | (420) bps | (410) bps | |||||||
Adjusted EBITDA margin (USD basis) | 16.8 % | 17.4 % | |||||||||||||
Note: For discussion and reconciliation of non-GAAP financial measures, see the Notes following the Financial Statements in this news release. Percentage variances in the Performance | |||||||||||||||
The current-quarter and full-year equity losses were primarily attributable to valuation declines in the co-investment portfolio. In the fourth quarter, equity losses were largely offset by share price appreciation related to the co-investment in a
Adjusted EBITDA margin contraction for the quarter was attributable to lower revenue as well as the timing of other personnel costs and annual incentive compensation accruals.
For the full year, margin contraction was primarily driven by equity losses in the current year (over 500 basis point negative impact to margin), partially offset by higher incentive fees.
About JLL
For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of
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Supplemental information regarding the fourth quarter 2023 earnings call has been posted to the Investor Relations section of JLL's website: ir.jll.com. | If you have any questions, please contact Scott Einberger, Investor Relations Officer. | ||
Phone: | +1 312 252 8943 | ||
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Cautionary Note Regarding Forward-Looking Statements
Statements in this news release regarding, among other things, future financial results and performance, achievements, plans, objectives and shares repurchases 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, the occurrence of which are outside JLL's control which may cause JLL's actual results, performance, achievements, plans, and objectives 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 JLL's business in general, please refer to those factors discussed under "Risk Factors," "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 soon-to-be filed Annual Report on Form 10-K for the year ended December 31, 2023 and other reports filed with the Securities and Exchange Commission. Any forward-looking statements speak only as of the date of this release, and except to the extent required by applicable securities laws, JLL 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.
JONES LANG LASALLE INCORPORATED | |||||||
Consolidated Statements of Operations (Unaudited) | |||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||
(in millions, except share and per share data) | 2023 | 2022 | 2023 | 2022 | |||
Revenue | $ 5,881.4 | $ 5,604.8 | $ 20,760.8 | $ 20,862.1 | |||
Operating expenses: | |||||||
Compensation and benefits | $ 2,666.1 | $ 2,549.4 | $ 9,770.7 | $ 10,010.8 | |||
Operating, administrative and other | 2,841.4 | 2,699.7 | 10,074.5 | 9,650.3 | |||
Depreciation and amortization | 61.9 | 62.6 | 238.4 | 228.1 | |||
Restructuring and acquisition charges2 | 21.6 | 38.4 | 100.7 | 104.8 | |||
Total operating expenses | $ 5,591.0 | $ 5,350.1 | $ 20,184.3 | $ 19,994.0 | |||
Operating income | $ 290.4 | $ 254.7 | $ 576.5 | $ 868.1 | |||
Interest expense, net of interest income | 31.5 | 26.1 | 135.4 | 75.2 | |||
Equity (losses) earnings | (76.8) | (21.6) | (194.1) | 51.0 | |||
Other income | 3.0 | 14.3 | 4.9 | 150.3 | |||
Income before income taxes and noncontrolling interest | 185.1 | 221.3 | 251.9 | 994.2 | |||
Income tax provision | 12.7 | 45.4 | 25.7 | 200.8 | |||
Net income | 172.4 | 175.9 | 226.2 | 793.4 | |||
Net income attributable to noncontrolling interest(a) | — | 1.1 | 0.8 | 138.9 | |||
Net income attributable to common shareholders | $ 172.4 | $ 174.8 | $ 225.4 | $ 654.5 | |||
Basic earnings per common share | $ 3.63 | $ 3.68 | $ 4.73 | $ 13.51 | |||
Basic weighted average shares outstanding (in 000's) | 47,548 | 47,480 | 47,628 | 48,453 | |||
Diluted earnings per common share | $ 3.57 | $ 3.62 | $ 4.67 | $ 13.27 | |||
Diluted weighted average shares outstanding (in 000's) | 48,324 | 48,263 | 48,288 | 49,341 | |||
Please reference accompanying financial statement notes. | |||||||
(a) During the second quarter of 2022, Other income included a | |||||||
JONES LANG LASALLE INCORPORATED | |||||||
Selected Segment Financial Data (Unaudited) | |||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | |||
MARKETS ADVISORY | |||||||
Revenue | $ 1,197.4 | $ 1,186.3 | $ 4,121.6 | $ 4,415.5 | |||
Gross contract costs1 | (301.8) | (271.0) | (1,153.6) | (1,055.3) | |||
Fee revenue1 | $ 895.6 | $ 915.3 | $ 2,968.0 | $ 3,360.2 | |||
Compensation and benefits, excluding gross contract costs | $ 639.6 | $ 654.0 | $ 2,178.2 | $ 2,433.7 | |||
Operating, administrative and other, excluding gross contract costs | 94.9 | 112.4 | 368.3 | 405.0 | |||
Depreciation and amortization | 18.2 | 21.5 | 69.6 | 73.5 | |||
Segment fee-based operating expenses | 752.7 | 787.9 | 2,616.1 | 2,912.2 | |||
Gross contract costs1 | 301.8 | 271.0 | 1,153.6 | 1,055.3 | |||
Segment operating expenses | $ 1,054.5 | $ 1,058.9 | $ 3,769.7 | $ 3,967.5 | |||
Segment operating income | $ 142.9 | $ 127.4 | $ 351.9 | $ 448.0 | |||
Add: | |||||||
Equity losses | (0.8) | (1.0) | (0.5) | (0.3) | |||
Depreciation and amortization(a) | 17.1 | 20.6 | 65.6 | 70.6 | |||
Other income | 2.0 | 10.0 | 2.5 | 142.9 | |||
Net income attributable to noncontrolling interest | — | (0.8) | (0.8) | (138.2) | |||
Adjustments: | |||||||
Net loss on disposition | — | — | 0.9 | 10.5 | |||
Interest on employee loans, net of forgiveness | (0.7) | (6.0) | (3.0) | (6.0) | |||
Adjusted EBITDA1 | $ 160.5 | $ 150.2 | $ 416.6 | $ 527.5 | |||
CAPITAL MARKETS | |||||||
Revenue | $ 537.1 | $ 607.9 | $ 1,778.0 | $ 2,488.2 | |||
Gross contract costs1 | (13.6) | (10.8) | (47.5) | (47.0) | |||
Net non-cash MSR and mortgage banking derivative activity | 8.7 | 1.8 | 18.2 | (11.0) | |||
Fee revenue1 | $ 532.2 | $ 598.9 | $ 1,748.7 | $ 2,430.2 | |||
Compensation and benefits, excluding gross contract costs | $ 394.6 | $ 408.4 | $ 1,337.7 | $ 1,727.1 | |||
Operating, administrative and other, excluding gross contract costs | 62.5 | 76.5 | 246.1 | 263.2 | |||
Depreciation and amortization | 17.1 | 15.4 | 65.6 | 61.6 | |||
Segment fee-based operating expenses | 474.2 | 500.3 | 1,649.4 | 2,051.9 | |||
Gross contract costs1 | 13.6 | 10.8 | 47.5 | 47.0 | |||
Segment operating expenses | $ 487.8 | $ 511.1 | $ 1,696.9 | $ 2,098.9 | |||
Segment operating income | $ 49.3 | $ 96.8 | $ 81.1 | $ 389.3 | |||
Add: | |||||||
Equity earnings | 0.6 | 1.0 | 6.7 | 3.1 | |||
Depreciation and amortization | 17.1 | 15.4 | 65.6 | 61.6 | |||
Other income | 1.0 | 4.6 | 2.5 | 4.7 | |||
Adjustments: | |||||||
Net non-cash MSR and mortgage banking derivative activity | 8.7 | 1.8 | 18.2 | (11.0) | |||
Interest on employee loans, net of forgiveness | (0.6) | (3.7) | (0.6) | (3.7) | |||
Gain on disposition | — | — | (0.4) | — | |||
Adjusted EBITDA1 | $ 76.1 | $ 115.9 | $ 173.1 | $ 444.0 | |||
(a) This adjustment excludes the noncontrolling interest portion of amortization of acquisition-related intangibles which is not attributable to common shareholders. | |||||||
JONES LANG LASALLE INCORPORATED | ||||||||
Selected Segment Financial Data (Unaudited) Continued | ||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | ||||
WORK DYNAMICS | ||||||||
Revenue | $ 3,966.1 | $ 3,634.6 | $ 14,131.1 | $ 13,268.5 | ||||
Gross contract costs1 | (3,383.9) | (3,100.3) | (12,131.4) | (11,403.8) | ||||
Fee revenue1 | $ 582.2 | $ 534.3 | $ 1,999.7 | $ 1,864.7 | ||||
Compensation and benefits, excluding gross contract costs | $ 346.2 | $ 331.5 | $ 1,305.1 | $ 1,202.3 | ||||
Operating, administrative and other, excluding gross contract costs | 115.6 | 118.2 | 431.6 | 432.9 | ||||
Depreciation and amortization | 20.3 | 20.0 | 79.2 | 71.1 | ||||
Segment fee-based operating expenses | 482.1 | 469.7 | 1,815.9 | 1,706.3 | ||||
Gross contract costs1 | 3,383.9 | 3,100.3 | 12,131.4 | 11,403.8 | ||||
Segment operating expenses | $ 3,866.0 | $ 3,570.0 | $ 13,947.3 | $ 13,110.1 | ||||
Segment operating income | $ 100.1 | $ 64.6 | $ 183.8 | $ 158.4 | ||||
Add: | ||||||||
Equity earnings (losses) | 0.1 | (0.1) | 1.4 | 1.2 | ||||
Depreciation and amortization | 20.3 | 20.0 | 79.2 | 71.1 | ||||
Other expense | — | (0.3) | — | (0.2) | ||||
Net income attributable to noncontrolling interest | — | (0.3) | (0.4) | (0.4) | ||||
Adjusted EBITDA1 | $ 120.5 | $ 83.9 | $ 264.0 | $ 230.1 | ||||
JLL TECHNOLOGIES | ||||||||
Revenue | $ 65.5 | $ 57.3 | $ 246.4 | $ 213.9 | ||||
Gross contract costs1 | (3.5) | (3.1) | (14.5) | (13.7) | ||||
Fee revenue1 | $ 62.0 | $ 54.2 | $ 231.9 | $ 200.2 | ||||
Compensation and benefits, excluding gross contract costs(a) | $ 45.4 | $ 54.6 | $ 200.7 | $ 240.3 | ||||
Operating, administrative and other, excluding gross contract costs | 10.5 | 18.0 | 50.3 | 57.4 | ||||
Depreciation and amortization | 4.0 | 4.0 | 15.9 | 15.4 | ||||
Segment fee-based operating expenses | 59.9 | 76.6 | 266.9 | 313.1 | ||||
Gross contract costs1 | 3.5 | 3.1 | 14.5 | 13.7 | ||||
Segment operating expenses | $ 63.4 | $ 79.7 | $ 281.4 | $ 326.8 | ||||
Segment operating income (loss) | $ 2.1 | $ (22.4) | $ (35.0) | $ (112.9) | ||||
Add: | ||||||||
Equity (losses) earnings | (75.0) | (17.9) | (177.0) | 46.6 | ||||
Depreciation and amortization | 4.0 | 4.0 | 15.9 | 15.4 | ||||
Other income | — | 0.1 | — | 3.0 | ||||
Adjustments: | ||||||||
Gain on disposition | — | — | — | (3.0) | ||||
Adjusted EBITDA1 | $ (68.9) | $ (36.2) | $ (196.1) | $ (50.9) | ||||
(a) Included in Compensation and benefits expense for JLL Technologies is carried interest benefit of | ||||||||
JONES LANG LASALLE INCORPORATED | ||||||||
Selected Segment Financial Data (Unaudited) Continued | ||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | ||||
Revenue | $ 115.3 | $ 118.7 | $ 483.7 | $ 476.0 | ||||
Gross contract costs1 | (6.9) | (7.3) | (28.9) | (29.3) | ||||
Fee revenue1 | $ 108.4 | $ 111.4 | $ 454.8 | $ 446.7 | ||||
Compensation and benefits, excluding gross contract costs | $ 72.2 | $ 64.7 | $ 288.7 | $ 290.4 | ||||
Operating, administrative and other, excluding gross contract costs | 16.3 | 18.3 | 62.6 | 59.7 | ||||
Depreciation and amortization | 2.3 | 1.7 | 8.1 | 6.5 | ||||
Segment fee-based operating expenses | 90.8 | 84.7 | 359.4 | 356.6 | ||||
Gross contract costs1 | 6.9 | 7.3 | 28.9 | 29.3 | ||||
Segment operating expenses | $ 97.7 | $ 92.0 | $ 388.3 | $ 385.9 | ||||
Segment operating income | $ 17.6 | $ 26.7 | $ 95.4 | $ 90.1 | ||||
Add: | ||||||||
Equity (losses) earnings | (1.7) | (3.6) | (24.7) | 0.4 | ||||
Depreciation and amortization | 2.3 | 1.7 | 8.1 | 6.5 | ||||
Other expense | — | (0.1) | (0.1) | (0.1) | ||||
Net loss (income) attributable to noncontrolling interest | — | — | 0.4 | (0.3) | ||||
Adjusted EBITDA1 | $ 18.2 | $ 24.7 | $ 79.1 | $ 96.6 | ||||
JONES LANG LASALLE INCORPORATED | ||||||||
Consolidated Statement of Cash Flows (Unaudited) | ||||||||
Year Ended | Year Ended | |||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | ||||
Cash flows from operating activities: | Cash flows from investing activities: | |||||||
Net income | $ 226.2 | $ 793.4 | Net capital additions – property and equipment | $ (186.9) | $ (205.8) | |||
Reconciliation of net income to net cash used in operating activities: | Net investment asset activity (less than wholly-owned) | — | 134.8 | |||||
Depreciation and amortization | 238.4 | 228.1 | Business acquisitions, net of cash acquired | (13.6) | (5.7) | |||
Equity losses (earnings) | 194.1 | (51.0) | Capital contributions to investments | (109.4) | (167.3) | |||
Net loss (gain) on dispositions | 0.5 | (133.9) | Distributions of capital from investments | 23.7 | 24.4 | |||
Distributions of earnings from investments | 12.4 | 21.2 | Other, net | (4.2) | (23.5) | |||
Provision for loss on receivables and other assets | 20.3 | 27.0 | Net cash used in investing activities | (290.4) | (243.1) | |||
Amortization of stock-based compensation | 78.3 | 85.8 | Cash flows from financing activities: | |||||
Net non-cash mortgage servicing rights and mortgage banking derivative activity | 18.2 | (11.0) | Proceeds from borrowings under credit facility | 7,684.0 | 7,560.0 | |||
Accretion of interest and amortization of debt issuance costs | 4.3 | 4.8 | Repayments of borrowings under credit facility | (8,284.0) | (6,485.0) | |||
Other, net | 17.5 | 5.9 | Proceeds from senior notes | 400.0 | — | |||
Change in: | Repayments of senior notes | — | (275.0) | |||||
Receivables | 11.1 | (291.3) | Net (repayments of) proceeds from short-term borrowings | (24.8) | 20.1 | |||
Reimbursable receivables and reimbursable payables | (93.3) | (52.2) | Payments of deferred business acquisition obligations and earn-outs | (26.6) | (12.6) | |||
Prepaid expenses and other assets | (24.0) | 39.9 | Shares repurchased for payment of employee taxes on stock awards | (30.6) | (87.2) | |||
Income taxes receivable, payable and deferred | (138.8) | (105.1) | Repurchase of common stock | (61.6) | (601.2) | |||
Accounts payable, accrued liabilities and other liabilities | 78.5 | (78.4) | Deconsolidation of variable interest entity | — | (20.4) | |||
Accrued compensation (including net deferred compensation) | (67.9) | (283.3) | Noncontrolling interest distributions, net | (6.5) | (142.7) | |||
Net cash provided by operating activities | $ 575.8 | $ 199.9 | Other, net | (24.2) | 30.9 | |||
Net cash used in financing activities | (374.3) | (13.1) | ||||||
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash | 6.3 | (39.3) | ||||||
Net change in cash, cash equivalents and restricted cash | $ (82.6) | $ (95.6) | ||||||
Cash, cash equivalents and restricted cash, beginning of the period | 746.0 | 841.6 | ||||||
Cash, cash equivalents and restricted cash, end of the period | $ 663.4 | $ 746.0 | ||||||
Please reference accompanying financial statement notes. | ||||||||
JONES LANG LASALLE INCORPORATED | ||||||||||||
Consolidated Balance Sheets | ||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||
(in millions, except share and per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||
ASSETS | LIABILITIES AND EQUITY | |||||||||||
Current assets: | Current liabilities: | |||||||||||
Cash and cash equivalents | $ 410.0 | $ 519.3 | Accounts payable and accrued liabilities | $ 1,406.7 | $ 1,236.8 | |||||||
Trade receivables, net of allowance | 2,095.8 | 2,148.8 | Reimbursable payables | 1,796.9 | 1,579.5 | |||||||
Notes and other receivables | 446.4 | 469.5 | Accrued compensation and benefits | 1,698.3 | 1,749.8 | |||||||
Reimbursable receivables | 2,321.7 | 2,005.7 | Short-term borrowings | 147.9 | 164.2 | |||||||
Warehouse receivables | 677.4 | 463.2 | Short-term contract liability and deferred income | 226.4 | 216.5 | |||||||
Short-term contract assets, net of allowance | 338.3 | 359.7 | Short-term acquisition-related obligations | 19.6 | 23.1 | |||||||
Prepaid and other | 567.4 | 603.5 | Warehouse facilities | 662.7 | 455.3 | |||||||
Total current assets | 6,857.0 | 6,569.7 | Short-term operating lease liability | 161.9 | 156.4 | |||||||
Property and equipment, net of accumulated depreciation | 613.9 | 582.9 | Other | 325.7 | 330.5 | |||||||
Operating lease right-of-use asset | 730.9 | 776.3 | Total current liabilities | 6,446.1 | 5,912.1 | |||||||
Goodwill | 4,587.4 | 4,528.0 | Noncurrent liabilities: | |||||||||
Identified intangibles, net of accumulated amortization | 785.0 | 858.5 | Credit facility, net of debt issuance costs | 610.6 | 1,213.8 | |||||||
Investments | 816.6 | 873.8 | Long-term debt, net of debt issuance costs | 779.3 | 372.8 | |||||||
Long-term receivables | 363.8 | 331.1 | Long-term deferred tax liabilities, net | 44.8 | 194.0 | |||||||
Deferred tax assets, net | 497.4 | 379.6 | Deferred compensation | 580.0 | 492.4 | |||||||
Deferred compensation plans | 604.3 | 517.9 | Long-term acquisition-related obligations | 51.1 | 76.3 | |||||||
Other | 208.5 | 175.9 | Long-term operating lease liability | 754.5 | 775.8 | |||||||
Total assets | $ 16,064.8 | $ 15,593.7 | Other | 388.5 | 407.0 | |||||||
Total liabilities | $ 9,654.9 | $ 9,444.2 | ||||||||||
Redeemable noncontrolling interest | $ — | $ 7.0 | ||||||||||
Company shareholders' equity | ||||||||||||
Common stock | 0.5 | 0.5 | ||||||||||
Additional paid-in capital | 2,019.7 | 2,022.6 | ||||||||||
Retained earnings | 5,795.6 | 5,590.4 | ||||||||||
Treasury stock | (920.1) | (934.6) | ||||||||||
Shares held in trust | (10.4) | (9.8) | ||||||||||
Accumulated other comprehensive loss | (591.5) | (648.2) | ||||||||||
Total company shareholders' equity | 6,293.8 | 6,020.9 | ||||||||||
Noncontrolling interest | 116.1 | 121.6 | ||||||||||
Total equity | 6,409.9 | 6,142.5 | ||||||||||
Total liabilities and equity | $ 16,064.8 | $ 15,593.7 | ||||||||||
Please reference accompanying financial statement notes. | ||||||||||||
JONES LANG LASALLE INCORPORATED
Financial Statement Notes
1. On February 15, 2024, management received a letter from the SEC Staff informing the Company of the Staff's objection to the Company's "Fee revenue" and "Fee-based operating expenses" non-GAAP measures, citing questions 100.04 and 100.01 of the SEC Staff's non-GAAP Compliance & Disclosure Interpretations as it relates to the historical non-GAAP adjustment of Gross contract costs. As such, effective with the first-quarter 2024 reporting cycle, the Company will remove all references to both measures. Management is currently reviewing options for revised presentation of non-GAAP disclosures.
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 EBITDA attributable to common shareholders ("Adjusted EBITDA") and Adjusted EBITDA margin,
(iii) Adjusted net income (loss) attributable to common shareholders and Adjusted diluted earnings (loss) per share,
(iv) Percentage changes against prior periods, presented on a local currency basis, and
(v) Free Cash Flow.
However, non-GAAP financial measures should not be considered alternatives to measures determined in accordance with
Adjustments to GAAP Financial Measures Used to Calculate non-GAAP Financial Measures
Gross Contract Costs represent certain costs associated with client-dedicated employees and third-party vendors and subcontractors and are directly or indirectly reimbursed through the fees we receive. These costs are presented on a gross basis in Operating expenses with the equal amount of corresponding fees in Revenue. Excluding gross contract costs from both Fee revenue and Fee-based operating expenses more accurately reflects how the company manages its expense base and operating margins and also enables a more consistent performance assessment across a portfolio of contracts with varying payment terms and structures.
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 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.
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, transaction and integration-related charges, including fair value adjustments, which are generally non-cash in the periods such adjustments are made, 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. Restructuring and acquisition charges are excluded from segment operating results and therefore are not line items in the segments' reconciliation to Adjusted EBITDA.
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 relationships, and trade name, is more notable following the company's increase in acquisition activity in recent years. Such non-cash activity is excluded as the change in period-over-period activity is generally the result of longer-term strategic decisions and therefore not necessarily indicative of core operating results.
Gain or Loss on Disposition reflects the gain or loss recognized on the sale of businesses. Given the low frequency of business disposals by the company historically, the gain or loss directly associated with such activity is excluded as it is not considered indicative of core operating performance. In 2023, we recorded a
Interest on Employee Loans, Net of Forgiveness reflects interest accrued on employee loans less the amount of accrued interest forgiven. Certain employees (predominantly in our Leasing and Capital Markets businesses) receive cash payments structured as loans, with interest. Employees earn forgiveness of the loan based on performance, generally calculated as a percentage of revenue production. Such forgiven amounts are reflected in Compensation and benefits expense. Given the interest accrued on these employee loans and subsequent forgiveness are non-cash and the amounts perfectly offset over the life of the loan, the activity is not indicative of core operating performance and is excluded from non-GAAP measures.
Reconciliation of Non-GAAP Financial Measures
Below are reconciliations of (i) Revenue to Fee revenue and (ii) Operating expenses to Fee-based operating expenses:
Three Months Ended December 31, | Year Ended December 31, | ||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | |||
Revenue | $ 5,881.4 | $ 5,604.8 | $ 20,760.8 | $ 20,862.1 | |||
Gross contract costs1 | (3,709.7) | (3,392.5) | (13,375.9) | (12,549.1) | |||
Net non-cash MSR and mortgage banking derivative activity | 8.7 | 1.8 | 18.2 | (11.0) | |||
Fee revenue | $ 2,180.4 | $ 2,214.1 | $ 7,403.1 | $ 8,302.0 | |||
Operating expenses | $ 5,591.0 | $ 5,350.1 | $ 20,184.3 | $ 19,994.0 | |||
Gross contract costs1 | (3,709.7) | (3,392.5) | (13,375.9) | (12,549.1) | |||
Fee-based operating expenses | $ 1,881.3 | $ 1,957.6 | $ 6,808.4 | $ 7,444.9 | |||
Below are (i) a reconciliation of Net income attributable to common shareholders to EBITDA and Adjusted EBITDA, (ii) a reconciliation to Adjusted net income and (iii) components of Adjusted diluted earnings per share.
Three Months Ended December 31, | Year Ended December 31, | ||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | |||
Net income attributable to common shareholders | $ 172.4 | $ 174.8 | $ 225.4 | $ 654.5 | |||
Add: | |||||||
Interest expense, net of interest income | 31.5 | 26.1 | 135.4 | 75.2 | |||
Income tax provision | 12.7 | 45.4 | 25.7 | 200.8 | |||
Depreciation and amortization(a) | 60.8 | 61.7 | 234.4 | 225.2 | |||
EBITDA | $ 277.4 | $ 308.0 | $ 620.9 | $ 1,155.7 | |||
Adjustments: | |||||||
Restructuring and acquisition charges2 | 21.6 | 38.4 | 100.7 | 104.8 | |||
Net loss on disposition | — | — | 0.5 | 7.5 | |||
Net non-cash MSR and mortgage banking derivative activity | 8.7 | 1.8 | 18.2 | (11.0) | |||
Interest on employee loans, net of forgiveness | (1.3) | (9.7) | (3.6) | (9.7) | |||
Adjusted EBITDA | $ 306.4 | $ 338.5 | $ 736.7 | $ 1,247.3 | |||
Three Months Ended December 31, | Year Ended December 31, | ||||||
(In millions, except share and per share data) | 2023 | 2022 | 2023 | 2022 | |||
Net income attributable to common shareholders | $ 172.4 | $ 174.8 | $ 225.4 | $ 654.5 | |||
Diluted shares (in thousands) | 48,324 | 48,263 | 48,288 | 49,341 | |||
Diluted earnings per share | $ 3.57 | $ 3.62 | $ 4.67 | $ 13.27 | |||
Net income attributable to common shareholders | $ 172.4 | $ 174.8 | $ 225.4 | $ 654.5 | |||
Adjustments: | |||||||
Restructuring and acquisition charges2 | 21.6 | 38.4 | 100.7 | 104.8 | |||
Net non-cash MSR and mortgage banking derivative activity | 8.7 | 1.8 | 18.2 | (11.0) | |||
Amortization of acquisition-related intangibles(a) | 16.1 | 17.9 | 66.0 | 67.4 | |||
Net loss on disposition | — | — | 0.5 | 7.5 | |||
Interest on employee loans, net of forgiveness | (1.3) | (9.7) | (3.6) | (9.7) | |||
Tax impact of adjusted items(b) | (13.0) | (12.6) | (49.7) | (38.4) | |||
Adjusted net income attributable to common shareholders | $ 204.5 | $ 210.6 | $ 357.5 | $ 775.1 | |||
Diluted shares (in thousands) | 48,324 | 48,263 | 48,288 | 49,341 | |||
Adjusted diluted earnings per share | $ 4.23 | $ 4.36 | $ 7.40 | $ 15.71 | |||
(a) | This adjustment excludes the noncontrolling interest portion of amortization of acquisition-related intangibles which is not attributable to common shareholders. |
(b) | For all quarters of 2023 and second and fourth quarters of 2022, the tax impact of adjusted items was calculated using the applicable statutory rates by tax jurisdiction. For the first and third quarters of 2022, the tax impact of adjusted items was calculated using the consolidated effective tax rate as this was deemed to approximate the tax impact of adjusted items calculated using applicable statutory tax rates. |
Below is a reconciliation of net cash provided by operating activities to Free Cash Flow5.
Year Ended December 31, | |||
(in millions) | 2023 | 2022 | |
Net cash provided by operating activities | $ 575.8 | $ 199.9 | |
Net capital additions - property and equipment | (186.9) | (205.8) | |
Free Cash Flow5 | $ 388.9 | $ (5.9) | |
Operating Results - Local Currency
In discussing operating results, the company reports Adjusted EBITDA margins and refers to percentage changes in local currency, unless otherwise noted. Amounts presented on a local currency basis are calculated by translating the current period results of foreign operations to
The following table reflects the reconciliation to local currency amounts for consolidated (i) Revenue, (ii) Fee revenue, (iii) Operating income and (iv) Adjusted EBITDA.
Three Months Ended December 31, | Year Ended December 31, | ||||||
($ in millions) | 2023 | % Change | 2023 | % Change | |||
Revenue: | |||||||
At current period exchange rates | $ 5,881.4 | 5 % | $ 20,760.8 | — % | |||
Impact of change in exchange rates | (44.3) | n/a | 74.3 | n/a | |||
At comparative period exchange rates | $ 5,837.1 | 4 % | $ 20,835.1 | — % | |||
Fee revenue: | |||||||
At current period exchange rates | $ 2,180.4 | (2) % | $ 7,403.1 | (11) % | |||
Impact of change in exchange rates | (20.4) | n/a | 11.5 | n/a | |||
At comparative period exchange rates | $ 2,160.0 | (2) % | $ 7,414.6 | (11) % | |||
Operating income: | |||||||
At current period exchange rates | $ 290.4 | 14 % | $ 576.5 | (34) % | |||
Impact of change in exchange rates | 2.9 | n/a | 4.5 | n/a | |||
At comparative period exchange rates | $ 293.3 | 15 % | $ 581.0 | (33) % | |||
Adjusted EBITDA: | |||||||
At current period exchange rates | $ 306.4 | (9) % | $ 736.7 | (41) % | |||
Impact of change in exchange rates | 1.5 | n/a | 7.5 | n/a | |||
At comparative period exchange rates | $ 307.9 | (9) % | $ 744.2 | (40) % | |||
2. Restructuring and acquisition charges are excluded from the company's measure of segment operating results, although they are included within consolidated Operating income calculated in accordance with GAAP. For purposes of segment operating results, the allocation of Restructuring and acquisition charges to the segments is not a component of management's assessment of segment performance. The table below shows Restructuring and acquisition charges.
Three Months Ended December 31, | Year Ended December 31, | ||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | |||
Severance and other employment-related charges | $ 14.2 | $ 23.5 | $ 62.1 | $ 44.5 | |||
Restructuring, pre-acquisition and post-acquisition charges | 11.3 | 18.4 | 43.0 | 63.6 | |||
Fair value adjustments that resulted in a net decrease to earn-out liabilities from prior-period | (3.9) | (3.5) | (4.4) | (3.3) | |||
Total Restructuring and acquisition charges | $ 21.6 | $ 38.4 | $ 100.7 | $ 104.8 | |||
3. n.m.: "not meaningful", represented by a percentage change of greater than 1,
4. As of December 31, 2023,
Compared with AUM of
Assets under management data for separate accounts and fund management amounts are reported on a one-quarter lag. In addition,
5. "Net Debt" is defined as the sum of the (i) Credit facility, (ii) Long-term debt and (iii) Short-term borrowings liability balances less Cash and cash equivalents.
"Net Leverage Ratio" is defined as Net Debt divided by the trailing-twelve-month Adjusted EBITDA.
"Corporate Liquidity" is defined as the unused portion of the company's Credit Facility plus cash and cash equivalents.
"Free Cash Flow" is defined as cash provided by operating activities less net capital additions - property and equipment.
6. The company defines "Resilient" revenue as (i) Property Management, within Markets Advisory, (ii) Value and Risk Advisory, and Loan Servicing, within Capital Markets, (iii) Workplace Management, within Work Dynamics, (iv) JLL Technologies, and (v) Advisory Fees, within
The company defines "Transactional" revenue as (i) Leasing and Advisory, Consulting and Other, within Markets Advisory, (ii) Investment Sales, Debt/Equity Advisory and Other, within Capital Markets, (iii) Project Management and Portfolio Services and Other, within Work Dynamics, and (iv) Incentive fees and Transaction fees and other, within
Appendix: Revenue and Fee Revenue Segment Detail
Three Months Ended December 31, 2023 | |||||||||||||||||||||||
(in millions) | Markets Advisory | Capital Markets | Work Dynamics | ||||||||||||||||||||
Leasing | Property | Advisory, | Total | Invt Sales, | Value and | Loan | Total | Workplace | Project | Portfolio | Total | JLLT | Total | ||||||||||
Revenue | $ 717.5 | 445.8 | 34.1 | $ 1,197.4 | $ 391.3 | 107.7 | 38.1 | $ 537.1 | $ 3,018.5 | 798.3 | 149.3 | $ 3,966.1 | $ 65.5 | $ 115.3 | $ 5,881.4 | ||||||||
Gross contract costs1 | (8.2) | (290.6) | (3.0) | (301.8) | (9.0) | (4.6) | — | (13.6) | (2,778.6) | (540.1) | (65.2) | (3,383.9) | (3.5) | (6.9) | (3,709.7) | ||||||||
Net non-cash MSR and mortgage banking derivative activity | — | — | — | — | 8.7 | — | — | 8.7 | — | — | — | — | — | — | 8.7 | ||||||||
Fee revenue | $ 709.3 | 155.2 | 31.1 | $ 895.6 | $ 391.0 | 103.1 | 38.1 | $ 532.2 | $ 239.9 | 258.2 | 84.1 | $ 582.2 | $ 62.0 | $ 108.4 | $ 2,180.4 | ||||||||
Three Months Ended December 31, 2022 | |||||||||||||||||||||||
(in millions) | Markets Advisory | Capital Markets | Work Dynamics | ||||||||||||||||||||
Leasing | Property | Advisory, | Total | Invt Sales, | Value and | Loan | Total | Workplace | Project | Portfolio | Total Work | JLLT | Total | ||||||||||
Revenue | $ 746.6 | 398.8 | 40.9 | $ 1,186.3 | $ 464.6 | 106.2 | 37.1 | $ 607.9 | $ 2,635.7 | 856.9 | 142.0 | $ 3,634.6 | $ 57.3 | $ 118.7 | $ 5,604.8 | ||||||||
Gross contract costs1 | (6.7) | (262.3) | (2.0) | (271.0) | (8.3) | (2.5) | — | (10.8) | (2,433.4) | (606.8) | (60.1) | (3,100.3) | (3.1) | (7.3) | (3,392.5) | ||||||||
Net non-cash MSR and mortgage banking derivative activity | — | — | — | — | 1.8 | — | — | 1.8 | — | — | — | — | — | — | 1.8 | ||||||||
Fee revenue | $ 739.9 | 136.5 | 38.9 | $ 915.3 | $ 458.1 | 103.7 | 37.1 | $ 598.9 | $ 202.3 | 250.1 | 81.9 | $ 534.3 | $ 54.2 | $ 111.4 | $ 2,214.1 | ||||||||
Appendix: Revenue and Fee Revenue Segment Detail (continued)
Year Ended December 31, 2023 | |||||||||||||||||||||||
(in millions) | Markets Advisory | Capital Markets | Work Dynamics | ||||||||||||||||||||
Leasing | Property | Advisory, | Total | Invt Sales, | Value and | Loan | Total | Workplace | Project | Portfolio | Total | JLLT | Total | ||||||||||
Revenue | $ 2,343.6 | 1,675.1 | 102.9 | $ 4,121.6 | $ 1,261.6 | 363.8 | 152.6 | $ 1,778.0 | 2,924.8 | 500.1 | $ 246.4 | $ 483.7 | |||||||||||
Gross contract costs1 | (21.3) | (1,123.4) | (8.9) | (1,153.6) | (34.8) | (12.7) | — | (47.5) | (9,899.8) | (1,996.4) | (235.2) | (12,131.4) | (14.5) | (28.9) | (13,375.9) | ||||||||
Net non-cash MSR and mortgage banking derivative activity | — | — | — | — | 18.2 | — | — | 18.2 | — | — | — | — | — | — | 18.2 | ||||||||
Fee revenue | $ 2,322.3 | 551.7 | 94.0 | $ 2,968.0 | $ 1,245.0 | 351.1 | 152.6 | $ 1,748.7 | $ 806.4 | 928.4 | 264.9 | $ 1,999.7 | $ 231.9 | $ 454.8 | $ 7,403.1 | ||||||||
Year Ended December 31, 2022 | |||||||||||||||||||||||
(in millions) | Markets Advisory | Capital Markets | Work Dynamics | ||||||||||||||||||||
Leasing | Property | Advisory, | Total | Invt Sales, | Value and | Loan | Total | Workplace | Project | Portfolio | Total Work | JLLT | Total | ||||||||||
Revenue | $ 2,759.2 | 1,525.3 | 131.0 | $ 4,415.5 | $ 1,955.4 | 374.9 | 157.9 | $ 2,488.2 | $ 9,819.2 | 2,972.3 | 477.0 | $ 213.9 | $ 476.0 | ||||||||||
Gross contract costs1 | (22.5) | (1,025.1) | (7.7) | (1,055.3) | (37.7) | (9.3) | — | (47.0) | (9,066.4) | (2,121.6) | (215.8) | (11,403.8) | (13.7) | (29.3) | (12,549.1) | ||||||||
Net non-cash MSR and mortgage banking derivative activity | — | — | — | — | (11.0) | — | — | (11.0) | — | — | — | — | — | — | (11.0) | ||||||||
Fee revenue | $ 2,736.7 | 500.2 | 123.3 | $ 3,360.2 | $ 1,906.7 | 365.6 | 157.9 | $ 2,430.2 | $ 752.8 | 850.7 | 261.2 | $ 1,864.7 | $ 200.2 | $ 446.7 | $ 8,302.0 | ||||||||
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SOURCE JLL-IR
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