JLL Reports Financial Results for Second-Quarter 2023
- Resilient business line revenues drove performance
- Annual run-rate savings rose $70 million to $210 million in total
- Generated year-over-year improvement in Q2 cash provided by operating activities despite transaction-based revenue headwinds
- Net loss attributable to common shareholders of $6.7 million for the six months ended June 30, 2023
- Adjusted EBITDA margin contraction driven by lower transaction-based revenues
Resilient business line revenues drove performance as pullback in transaction activity continued into Q2
- Second-quarter revenue was
, down$5.1 billion 4% in local currency1, and fee revenue1 was , down$1.8 billion 13% in local currency1 - Market-wide transaction slowdown and extended interest rate uncertainty continued to impact Capital Markets volumes
- Lower Leasing activity across asset classes and most geographies overshadowed Property Management growth within Markets Advisory
- Project Management demand continued in several geographies, more than offsetting lower Portfolio Services revenues in Work Dynamics
- Margin contraction was driven by lower transaction-based revenues, particularly in
United States andEurope , and a non-cash change in equity earnings/losses primarily associated with two JLL Technologies investments - Annual run-rate savings rose
to$70 million in total; recent cost reduction actions mostly offset investments to drive future growth$210 million - Generated year-over-year improvement in Q2 cash provided by operating activities despite transaction-based revenue headwinds
"Our second quarter financial results reflect continued growth in our resilient revenues. While investment sales and leasing volumes remained muted across the industry this quarter, we are beginning to see recovery signs as credit spreads narrow and asset prices adjust to the current rate environment," said Christian Ulbrich, JLL CEO. "We continue to make progress on our long-term plan to improve operating efficiency while also making targeted investments in our brokerage teams that will drive profitable growth as market conditions improve. We are well positioned to provide exceptional service to our clients globally and capitalize on the significant growth opportunities we see in the years ahead."
Summary Financial Results ($ in millions, except per share data, "LC" = local currency) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||
2023 | 2022 | % Change | % Change | 2023 | 2022 | % Change | % Change | ||||
Revenue | $ 5,052.5 | $ 5,278.4 | (4) % | (4) % | $ 9,768.0 | $ 10,079.8 | (3) % | (2) % | |||
Fee revenue1 | 1,847.3 | 2,138.8 | (14) | (13) | 3,431.3 | 4,039.3 | (15) | (14) | |||
Net income (loss) attributable to common shareholders | $ 2.5 | $ 193.9 | (99) % | (99) % | $ (6.7) | $ 339.5 | (102) % | (104) % | |||
Adjusted net income attributable to common shareholders1 | 24.2 | 222.4 | (89) | (89) | 55.5 | 399.3 | (86) | (88) | |||
Diluted earnings (loss) per share | $ 0.05 | $ 3.90 | (99) % | (99) % | $ (0.14) | $ 6.75 | (102) % | (104) % | |||
Adjusted diluted earnings per share1 | 0.50 | 4.48 | (89) | (89) | 1.15 | 7.94 | (86) | (87) | |||
Adjusted EBITDA1 | $ 116.1 | $ 359.0 | (68) % | (68) % | $ 225.1 | $ 632.6 | (64) % | (65) % | |||
Free Cash Flow5 | $ 198.1 | $ 136.7 | 45 % | n/a | $ (567.5) | $ (626.3) | 9 % | n/a | |||
Note: For discussion and reconciliation of non-GAAP financial measures, see the Notes following the Financial Statements in this news release. |
Consolidated Second-Quarter 2023 Performance Highlights: | |||||||||||||||
Consolidated | Three Months Ended June 30, | % Change in USD | % Change in LC | Six Months Ended June 30, | % Change in USD | % Change in LC | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Markets Advisory | $ 1,025.4 | $ 1,118.2 | (8) % | (7) % | $ 1,931.8 | $ 2,117.7 | (9) % | (7) % | |||||||
Capital Markets | 448.0 | 684.5 | (35) | (34) | 805.1 | 1,285.1 | (37) | (36) | |||||||
Work Dynamics | 3,374.6 | 3,310.5 | 2 | 3 | 6,650.8 | 6,344.1 | 5 | 7 | |||||||
JLL Technologies | 60.6 | 50.7 | 20 | 20 | 122.0 | 100.1 | 22 | 22 | |||||||
143.9 | 114.5 | 26 | 26 | 258.3 | 232.8 | 11 | 13 | ||||||||
Total revenue | $ 5,052.5 | $ 5,278.4 | (4) % | (4) % | $ 9,768.0 | $ 10,079.8 | (3) % | (2) % | |||||||
Gross contract costs1 | (3,205.8) | (3,128.4) | 2 | 3 | (6,339.1) | (6,032.9) | 5 | 7 | |||||||
Net non-cash MSR and mortgage banking | 0.6 | (11.2) | (105) | (106) | 2.4 | (7.6) | (132) | (132) | |||||||
Total fee revenue1 | $ 1,847.3 | $ 2,138.8 | (14) % | (13) % | $ 3,431.3 | $ 4,039.3 | (15) % | (14) % | |||||||
Markets Advisory | 741.1 | 855.8 | (13) | (13) | 1,368.4 | 1,597.0 | (14) | (13) | |||||||
Capital Markets | 435.5 | 660.7 | (34) | (34) | 785.1 | 1,252.2 | (37) | (36) | |||||||
Work Dynamics | 477.8 | 467.0 | 2 | 3 | 919.8 | 877.5 | 5 | 7 | |||||||
JLL Technologies | 56.5 | 48.0 | 18 | 18 | 114.3 | 93.3 | 23 | 23 | |||||||
136.4 | 107.3 | 27 | 28 | 243.7 | 219.3 | 11 | 14 | ||||||||
Operating income | $ 149.2 | $ 235.1 | (37) % | (37) % | $ 167.0 | $ 410.8 | (59) % | (61) % | |||||||
Equity (losses) earnings | $ (103.5) | $ 53.6 | (293) % | (293) % | $ (106.1) | $ 72.1 | (247) % | (247) % | |||||||
Adjusted EBITDA1 | $ 116.1 | $ 359.0 | (68) % | (68) % | $ 225.1 | $ 632.6 | (64) % | (65) % | |||||||
Net income (loss) margin attributable to | — % | 3.7 % | (370) bps | n/a | (0.1) % | 3.4 % | (350) bps | n/a | |||||||
Adjusted EBITDA margin (local currency basis) | 6.2 % | 16.8 % | (1,050) bps | (1,060) bps | 6.3 % | 15.7 % | (910) bps | (940) bps | |||||||
Adjusted EBITDA margin (USD basis) | 6.3 % | 6.6 % | |||||||||||||
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 Highlights below are calculated and presented on a local currency basis, unless otherwise noted. |
Revenue
Revenue and fee revenue decreased
Refer to segment performance highlights for additional detail. The following charts reflect the segment proportion of revenue and fee revenue for the current and prior-year quarters.
Net income (loss), Adjusted EBITDA and Margin Performance
Net income attributable to common shareholders for the second quarter was
Diluted earnings per share for the second quarter were
Approximately 740 basis points, or
The six months ended June 30, 2023, had a net loss attributable to common shareholders of
Cash Flows and Capital Allocation:
Net cash provided by operating activities was
In the second quarter of 2023, the company resumed its share repurchase program, buying back 139,295 shares for
Net Debt, Leverage and Liquidity5: | |||||
June 30, 2023 | March 31, 2023 | June 30, 2022 | |||
Total Net Debt (in millions) | $ 1,941.5 | $ 2,099.3 | $ 1,575.9 | ||
Net Leverage Ratio | 2.3x | 1.9x | 1.0x | ||
Corporate Liquidity (in billions) | $ 1.9 | $ 1.7 | $ 1.9 |
The decrease in Net Debt from March 31, 2023, was primarily due to positive cash flow from operating activities in the second quarter. The higher leverage ratio was entirely driven by a decline in the trailing twelve month Adjusted EBITDA (which includes the impact of equity losses this quarter).
Markets Advisory Second-Quarter 2023 Performance Highlights: | |||||||||||||||
Markets Advisory
| Three Months Ended June 30, | % Change in USD | % Change in LC | Six Months Ended June 30, | % Change in USD | % Change in LC | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ 1,025.4 | $ 1,118.2 | (8) % | (7) % | $ 1,931.8 | $ 2,117.7 | (9) % | (7) % | |||||||
Gross contract costs1 | (284.3) | (262.4) | 8 | 10 | (563.4) | (520.7) | 8 | 11 | |||||||
Fee revenue1 | $ 741.1 | $ 855.8 | (13) % | (13) % | $ 1,368.4 | $ 1,597.0 | (14) % | (13) % | |||||||
Leasing | 588.0 | 703.5 | (16) | (16) | 1,070.5 | 1,300.4 | (18) | (17) | |||||||
Property Management | 131.0 | 122.2 | 7 | 9 | 258.1 | 240.8 | 7 | 10 | |||||||
Advisory, Consulting and Other | 22.1 | 30.1 | (27) | (25) | 39.8 | 55.8 | (29) | (26) | |||||||
Segment operating income | $ 84.0 | $ 116.2 | (28) % | (28) % | $ 139.6 | $ 207.6 | (33) % | (33) % | |||||||
Adjusted EBITDA1 | $ 99.4 | $ 134.0 | (26) % | (26) % | $ 171.0 | $ 245.2 | (30) % | (31) % | |||||||
Adjusted EBITDA margin (local currency basis) | 13.2 % | 15.7 % | (230) bps | (250) bps | 12.3 % | 15.4 % | (290) bps | (310) bps | |||||||
Adjusted EBITDA margin (USD basis) | 13.4 % | 12.5 % | |||||||||||||
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 Highlights below are calculated and presented on a local currency basis, unless otherwise noted. |
The declines in Markets Advisory revenue and fee revenue, compared with the prior-year quarter, were predominantly driven by Leasing, which continues to reflect (i) lower transaction volume across asset types, particularly in the office and industrial sectors, and (ii) a decrease in average deal size across most asset types, most notably in
The adjusted EBITDA margin contraction was predominantly attributable to the lower Leasing fee revenue described above.
Capital Markets Second-Quarter 2023 Performance Highlights: | |||||||||||||||
Capital Markets
| Three Months Ended June 30, | % Change in USD | % Change in LC | Six Months Ended June 30, | % Change in USD | % Change in LC | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ 448.0 | $ 684.5 | (35) % | (34) % | $ 805.1 | $ 1,285.1 | (37) % | (36) % | |||||||
Gross contract costs1 | (13.1) | (12.6) | 4 | 6 | (22.4) | (25.3) | (11) | (9) | |||||||
Net non-cash MSR and mortgage banking derivative activity | 0.6 | (11.2) | (105) | (106) | 2.4 | (7.6) | (132) | (132) | |||||||
Fee revenue1 | $ 435.5 | $ 660.7 | (34) % | (34) % | $ 785.1 | $ 1,252.2 | (37) % | (36) % | |||||||
Investment Sales, Debt/Equity Advisory and Other | 309.9 | 528.0 | (41) | (41) | 545.1 | 996.5 | (45) | (45) | |||||||
Valuation Advisory | 86.6 | 92.3 | (6) | (5) | 163.6 | 175.4 | (7) | (4) | |||||||
Loan Servicing | 39.0 | 40.4 | (3) | (3) | 76.4 | 80.3 | (5) | (5) | |||||||
Segment operating income | $ 14.1 | $ 121.8 | (88) % | (89) % | $ 6.0 | $ 220.0 | (97) % | (98) % | |||||||
Equity earnings | $ 4.8 | $ 0.6 | 700 % | 761 % | $ 5.4 | $ 1.4 | 286 % | 285 % | |||||||
Adjusted EBITDA1 | $ 36.0 | $ 126.7 | (72) % | (72) % | $ 46.7 | $ 244.9 | (81) % | (81) % | |||||||
Adjusted EBITDA margin (local currency basis) | 8.2 % | 19.2 % | (1,090) bps | (1,100) bps | 5.8 % | 19.6 % | (1,370) bps | (1,380) bps | |||||||
Adjusted EBITDA margin (USD basis) | 8.3 % | 5.9 % | |||||||||||||
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 Highlights below are calculated and presented on a local currency basis, unless otherwise noted. |
The lower Capital Markets revenue and fee revenue continued to reflect muted transaction volume compared with 2022. This impact was most acute in Investment Sales and Debt/Equity Advisory, which experienced declines across all asset classes and most geographies compared with the prior-year quarter. This outperformed broader market trends as Q2 global market volumes for investment sales were down
The adjusted EBITDA margin contraction for the quarter was predominantly driven by the decline in fee revenue described above and a
Work Dynamics Second-Quarter 2023 Performance Highlights: | |||||||||||||||
Work Dynamics
| Three Months Ended June 30, | % Change in USD | % Change in LC | Six Months Ended June 30, | % Change in USD | % Change in LC | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ 3,374.6 | $ 3,310.5 | 2 % | 3 % | $ 6,650.8 | $ 6,344.1 | 5 % | 7 % | |||||||
Gross contract costs1 | (2,896.8) | (2,843.5) | 2 | 3 | (5,731.0) | (5,466.6) | 5 | 7 | |||||||
Fee revenue1 | $ 477.8 | $ 467.0 | 2 % | 3 % | $ 919.8 | $ 877.5 | 5 % | 7 % | |||||||
Workplace Management | 188.2 | 184.9 | 2 | 2 | 371.4 | 366.9 | 1 | 3 | |||||||
Project Management | 229.7 | 214.9 | 7 | 8 | 440.6 | 390.6 | 13 | 15 | |||||||
Portfolio Services and Other | 59.9 | 67.2 | (11) | (11) | 107.8 | 120.0 | (10) | (9) | |||||||
Segment operating income | $ 35.7 | $ 39.7 | (10) % | (12) % | $ 41.9 | $ 58.1 | (28) % | (34) % | |||||||
Adjusted EBITDA1 | $ 56.2 | $ 57.6 | (2) % | (3) % | $ 81.9 | $ 92.8 | (12) % | (15) % | |||||||
Adjusted EBITDA margin (local currency basis) | 11.6 % | 12.4 % | (60) bps | (80) bps | 8.5 % | 10.6 % | (170) bps | (210) bps | |||||||
Adjusted EBITDA margin (USD basis) | 11.8 % | 8.9 % | |||||||||||||
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 Highlights below are calculated and presented on a local currency basis, unless otherwise noted. |
Work Dynamics revenue and fee revenue increases compared with the prior-year quarter were driven by strength in Project Management and modest growth in Workplace Management, partially offset by lower Portfolio Services and Other. Project Management growth reflected continued demand in certain geographies, most notably
The net margin contraction was attributable to the decline in higher-margin Portfolio Services revenue and continued investments in technology and headcount to support future growth. In addition, and partially offsetting these dilutive impacts, the prior-year margin reflected
JLL Technologies Second-Quarter 2023 Performance Highlights: | |||||||||||||||
JLL Technologies
| Three Months Ended June 30, | % Change in USD | % Change in LC | Six Months Ended June 30, | % Change in USD | % Change in LC | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ 60.6 | $ 50.7 | 20 % | 20 % | $ 122.0 | $ 100.1 | 22 % | 22 % | |||||||
Gross contract costs1 | (4.1) | (2.7) | 52 | 53 | (7.7) | (6.8) | 13 | 13 | |||||||
Fee revenue1 | $ 56.5 | $ 48.0 | 18 % | 18 % | $ 114.3 | $ 93.3 | 23 % | 23 % | |||||||
Segment operating loss(a) | $ (5.4) | $ (35.6) | 85 % | 84 % | $ (27.5) | $ (70.5) | 61 % | 60 % | |||||||
Equity (losses) earnings | $ (103.9) | $ 44.7 | (332) % | (332) % | $ (99.0) | $ 63.5 | (256) % | (256) % | |||||||
Adjusted EBITDA1 | $ (105.2) | $ 12.9 | (916) % | (914) % | $ (118.5) | $ 0.6 | n.m. | n.m. | |||||||
Adjusted EBITDA margin (local currency basis) | (186.9) % | 27.0 % | n.m. | n.m. | (104.1) % | 0.6 % | n.m. | n.m. | |||||||
Adjusted EBITDA margin (USD basis) | (186.2) % | (103.7) % | |||||||||||||
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 Highlights below are calculated and presented on a local currency basis, unless otherwise noted. | |||||||||||||||
(a) Included in Segment operating loss for JLL Technologies is a reduction in carried interest expense of |
The increases in JLL Technologies revenue and fee revenue over the prior-year quarter were primarily driven by growth in solutions and service offerings, largely from existing enterprise clients.
The current-quarter equity loss resulted from valuation declines in JLL Technologies' investments due to subsequent financing rounds at decreased per-share values. The equity losses this quarter were predominantly driven by two investments for which we previously recognized significant equity earnings.
A notable driver of the change in Segment operating loss is a
The margin decline was entirely driven by the year-over-year change in equity earnings/losses, net of carried interest, as fee revenue growth and recent cost reductions drove improvement in segment operating loss.
LaSalle Second-Quarter 2023 Performance Highlights: | |||||||||||||||
| Three Months Ended June 30, | % Change in USD | % Change in LC | Six Months Ended June 30, | % Change in USD | % Change in LC | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ 143.9 | $ 114.5 | 26 % | 26 % | $ 258.3 | $ 232.8 | 11 % | 13 % | |||||||
Gross contract costs1 | (7.5) | (7.2) | 4 | 4 | (14.6) | (13.5) | 8 | 8 | |||||||
Fee revenue1 | $ 136.4 | $ 107.3 | 27 % | 28 % | $ 243.7 | $ 219.3 | 11 % | 14 % | |||||||
Advisory fees | 94.4 | 98.2 | (4) | (3) | 189.1 | 188.9 | — | 2 | |||||||
Transaction fees and other | 6.2 | 8.1 | (23) | (19) | 15.3 | 25.2 | (39) | (36) | |||||||
Incentive fees | 35.8 | 1.0 | n.m. | n.m. | 39.3 | 5.2 | 656 | 671 | |||||||
Segment operating income | $ 32.6 | $ 18.9 | 72 % | 72 % | $ 54.5 | $ 41.0 | 33 % | 34 % | |||||||
Equity (losses) earnings | $ (5.1) | $ 7.0 | (173) % | (172) % | $ (13.9) | $ 5.1 | (373) % | (372) % | |||||||
Adjusted EBITDA1 | $ 29.7 | $ 27.8 | 7 % | 7 % | $ 44.0 | $ 49.1 | (10) % | (9) % | |||||||
Adjusted EBITDA margin (local currency basis) | 21.7 % | 26.0 % | (420) bps | (430) bps | 17.9 % | 22.4 % | (430) bps | (450) bps | |||||||
Adjusted EBITDA margin (USD basis) | 21.8 % | 18.1 % | |||||||||||||
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 Highlights below are calculated and presented on a local currency basis, unless otherwise noted. |
The current quarter's equity losses were primarily attributable to valuation declines in the co-investment portfolio, compared with valuation increases in the prior year.
The adjusted EBITDA margin contraction was primarily attributable to the net equity losses, partially offset by higher incentive fees in the current-year quarter.
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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Live Webcast | Conference Call | ||
Management will offer a live webcast for shareholders, analysts and investment professionals on Thursday, August 3, 2023, at 9:00 a.m. Eastern. Following the live broadcast, an audio replay will be available. The link to the live webcast and audio replay can be accessed at the Investor Relations website: ir.jll.com. | The conference call can be accessed live over the phone by dialing (888) 660-6392; the conference ID number is 5398158. Listeners are asked to please dial in 10 minutes prior to the call start time and provide the conference ID number to be connected. | ||
Supplemental Information | Contact | ||
Supplemental information regarding the second 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 | ||
Email: | JLLInvestorRelations@am.jll.com
|
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 filed Annual Report on Form 10-K for the year ended December 31, 2022, soon to be filed Quarterly Report on Form 10-Q for the quarter ended June 30, 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 June 30, | Six Months Ended June 30, | ||||||
(in millions, except share and per share data) | 2023 | 2022 | 2023 | 2022 | |||
Revenue | $ 5,052.5 | $ 5,278.4 | $ 9,768.0 | $ 10,079.8 | |||
Operating expenses: | |||||||
Compensation and benefits | $ 2,417.0 | $ 2,554.4 | $ 4,670.0 | $ 4,965.2 | |||
Operating, administrative and other | 2,414.6 | 2,407.6 | 4,766.1 | 4,548.6 | |||
Depreciation and amortization | 59.9 | 55.4 | 117.4 | 109.8 | |||
Restructuring and acquisition charges2 | 11.8 | 25.9 | 47.5 | 45.4 | |||
Total operating expenses | $ 4,903.3 | $ 5,043.3 | $ 9,601.0 | $ 9,669.0 | |||
Operating income | $ 149.2 | $ 235.1 | $ 167.0 | $ 410.8 | |||
Interest expense, net of interest income | 40.5 | 15.7 | 66.8 | 25.9 | |||
Equity (losses) earnings | (103.5) | 53.6 | (106.1) | 72.1 | |||
Other (expense) income | (1.2) | 135.3 | (1.1) | 135.5 | |||
Income (loss) before income taxes and noncontrolling interest | 4.0 | 408.3 | (7.0) | 592.5 | |||
Income tax provision (benefit) | 0.8 | 72.8 | (1.5) | 113.1 | |||
Net income (loss) | 3.2 | 335.5 | (5.5) | 479.4 | |||
Net income attributable to noncontrolling interest(a) | 0.7 | 141.6 | 1.2 | 139.9 | |||
Net income (loss) attributable to common shareholders | $ 2.5 | $ 193.9 | $ (6.7) | $ 339.5 | |||
Basic earnings (loss) per common share | $ 0.05 | $ 3.98 | $ (0.14) | $ 6.89 | |||
Basic weighted average shares outstanding (in 000's) | 47,748 | 48,718 | 47,652 | 49,247 | |||
Diluted earnings (loss) per common share | $ 0.05 | $ 3.90 | $ (0.14) | $ 6.75 | |||
Diluted weighted average shares outstanding (in 000's) | 48,334 | 49,651 | 47,652 | 50,292 | |||
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 June 30, | Six Months Ended June 30, | ||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | |||
MARKETS ADVISORY | |||||||
Revenue | $ 1,025.4 | $ 1,118.2 | $ 1,931.8 | $ 2,117.7 | |||
Gross contract costs1 | (284.3) | (262.4) | (563.4) | (520.7) | |||
Fee revenue1 | $ 741.1 | $ 855.8 | $ 1,368.4 | $ 1,597.0 | |||
Compensation and benefits, excluding gross contract costs | $ 546.4 | $ 618.5 | $ 1,007.4 | $ 1,159.3 | |||
Operating, administrative and other, excluding gross contract costs | 93.3 | 103.8 | 186.9 | 195.7 | |||
Depreciation and amortization | 17.4 | 17.3 | 34.5 | 34.4 | |||
Segment fee-based operating expenses | 657.1 | 739.6 | 1,228.8 | 1,389.4 | |||
Gross contract costs1 | 284.3 | 262.4 | 563.4 | 520.7 | |||
Segment operating expenses | $ 941.4 | $ 1,002.0 | $ 1,792.2 | $ 1,910.1 | |||
Segment operating income | $ 84.0 | $ 116.2 | $ 139.6 | $ 207.6 | |||
Add: | |||||||
Equity (losses) earnings | (0.1) | 0.4 | 0.2 | 0.9 | |||
Depreciation and amortization(a) | 16.5 | 16.3 | 32.6 | 33.4 | |||
Other (expense) income | (1.6) | 132.3 | (1.3) | 132.5 | |||
Net income attributable to noncontrolling interest | (0.4) | (141.7) | (0.6) | (139.7) | |||
Adjustments: | |||||||
Loss on disposition | 1.8 | 10.5 | 1.8 | 10.5 | |||
Interest on employee loans, net of forgiveness | (0.8) | — | (1.3) | — | |||
Adjusted EBITDA1 | $ 99.4 | $ 134.0 | $ 171.0 | $ 245.2 | |||
CAPITAL MARKETS | |||||||
Revenue | $ 448.0 | $ 684.5 | $ 805.1 | $ 1,285.1 | |||
Gross contract costs1 | (13.1) | (12.6) | (22.4) | (25.3) | |||
Net non-cash MSR and mortgage banking derivative activity | 0.6 | (11.2) | 2.4 | (7.6) | |||
Fee revenue1 | $ 435.5 | $ 660.7 | $ 785.1 | $ 1,252.2 | |||
Compensation and benefits, excluding gross contract costs | $ 335.4 | $ 469.9 | $ 619.3 | $ 888.1 | |||
Operating, administrative and other, excluding gross contract costs | 69.2 | 64.8 | 125.3 | 120.7 | |||
Depreciation and amortization | 16.2 | 15.4 | 32.1 | 31.0 | |||
Segment fee-based operating expenses | 420.8 | 550.1 | 776.7 | 1,039.8 | |||
Gross contract costs1 | 13.1 | 12.6 | 22.4 | 25.3 | |||
Segment operating expenses | $ 433.9 | $ 562.7 | $ 799.1 | $ 1,065.1 | |||
Segment operating income | $ 14.1 | $ 121.8 | $ 6.0 | $ 220.0 | |||
Add: | |||||||
Equity earnings | 4.8 | 0.6 | 5.4 | 1.4 | |||
Depreciation and amortization | 16.2 | 15.4 | 32.1 | 31.0 | |||
Other income | 0.4 | 0.1 | 0.2 | 0.1 | |||
Adjustments: | |||||||
Net non-cash MSR and mortgage banking derivative activity | 0.6 | (11.2) | 2.4 | (7.6) | |||
Interest on employee loans, net of forgiveness | (0.1) | — | 0.6 | — | |||
Adjusted EBITDA1 | $ 36.0 | $ 126.7 | $ 46.7 | $ 244.9 | |||
(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 June 30, | Six Months Ended June 30, | |||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | ||||
WORK DYNAMICS | ||||||||
Revenue | $ 3,374.6 | $ 3,310.5 | $ 6,650.8 | $ 6,344.1 | ||||
Gross contract costs1 | (2,896.8) | (2,843.5) | (5,731.0) | (5,466.6) | ||||
Fee revenue1 | $ 477.8 | $ 467.0 | $ 919.8 | $ 877.5 | ||||
Compensation and benefits, excluding gross contract costs | $ 321.0 | $ 304.0 | $ 626.0 | $ 585.8 | ||||
Operating, administrative and other, excluding gross contract costs | 101.2 | 106.3 | 212.7 | 200.1 | ||||
Depreciation and amortization | 19.9 | 17.0 | 39.2 | 33.5 | ||||
Segment fee-based operating expenses | 442.1 | 427.3 | 877.9 | 819.4 | ||||
Gross contract costs1 | 2,896.8 | 2,843.5 | 5,731.0 | 5,466.6 | ||||
Segment operating expenses | $ 3,338.9 | $ 3,270.8 | $ 6,608.9 | $ 6,286.0 | ||||
Segment operating income | $ 35.7 | $ 39.7 | $ 41.9 | $ 58.1 | ||||
Add: | ||||||||
Equity earnings | 0.8 | 0.9 | 1.2 | 1.2 | ||||
Depreciation and amortization | 19.9 | 17.0 | 39.2 | 33.5 | ||||
Net income attributable to noncontrolling interest | (0.2) | — | (0.4) | — | ||||
Adjusted EBITDA1 | $ 56.2 | $ 57.6 | $ 81.9 | $ 92.8 | ||||
JLL TECHNOLOGIES | ||||||||
Revenue | $ 60.6 | $ 50.7 | $ 122.0 | $ 100.1 | ||||
Gross contract costs1 | (4.1) | (2.7) | (7.7) | (6.8) | ||||
Fee revenue1 | $ 56.5 | $ 48.0 | $ 114.3 | $ 93.3 | ||||
Compensation and benefits, excluding gross contract costs(a) | $ 45.3 | $ 65.8 | $ 106.6 | $ 128.0 | ||||
Operating, administrative and other, excluding gross contract costs | 12.5 | 13.9 | 27.2 | 28.1 | ||||
Depreciation and amortization | 4.1 | 3.9 | 8.0 | 7.7 | ||||
Segment fee-based operating expenses | 61.9 | 83.6 | 141.8 | 163.8 | ||||
Gross contract costs1 | 4.1 | 2.7 | 7.7 | 6.8 | ||||
Segment operating expenses | $ 66.0 | $ 86.3 | $ 149.5 | $ 170.6 | ||||
Segment operating loss | $ (5.4) | $ (35.6) | $ (27.5) | $ (70.5) | ||||
Add: | ||||||||
Equity (losses) earnings | (103.9) | 44.7 | (99.0) | 63.5 | ||||
Depreciation and amortization | 4.1 | 3.9 | 8.0 | 7.7 | ||||
Other income | — | 2.9 | — | 2.9 | ||||
Adjustments: | ||||||||
Gain on disposition | — | (3.0) | — | (3.0) | ||||
Adjusted EBITDA1 | $ (105.2) | $ 12.9 | $ (118.5) | $ 0.6 | ||||
(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 June 30, | Six Months Ended June 30, | |||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | ||||
Revenue | $ 143.9 | $ 114.5 | $ 258.3 | $ 232.8 | ||||
Gross contract costs1 | (7.5) | (7.2) | (14.6) | (13.5) | ||||
Fee revenue1 | $ 136.4 | $ 107.3 | $ 243.7 | $ 219.3 | ||||
Compensation and benefits, excluding gross contract costs | $ 84.4 | $ 72.2 | $ 153.3 | $ 147.0 | ||||
Operating, administrative and other, excluding gross contract costs | 17.1 | 14.4 | 32.3 | 28.1 | ||||
Depreciation and amortization | 2.3 | 1.8 | 3.6 | 3.2 | ||||
Segment fee-based operating expenses | 103.8 | 88.4 | 189.2 | 178.3 | ||||
Gross contract costs1 | 7.5 | 7.2 | 14.6 | 13.5 | ||||
Segment operating expenses | $ 111.3 | $ 95.6 | $ 203.8 | $ 191.8 | ||||
Segment operating income | $ 32.6 | $ 18.9 | $ 54.5 | $ 41.0 | ||||
Add: | ||||||||
Equity (losses) earnings | (5.1) | 7.0 | (13.9) | 5.1 | ||||
Depreciation and amortization | 2.3 | 1.8 | 3.6 | 3.2 | ||||
Net (income) loss attributable to noncontrolling interest | (0.1) | 0.1 | (0.2) | (0.2) | ||||
Adjusted EBITDA1 | $ 29.7 | $ 27.8 | $ 44.0 | $ 49.1 |
JONES LANG LASALLE INCORPORATED | ||||||||
Consolidated Statement of Cash Flows (Unaudited) | ||||||||
Six Months Ended | Six Months Ended | |||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | ||||
Cash flows from operating activities: | Cash flows from investing activities: | |||||||
Net (loss) income | $ (5.5) | $ 479.4 | Net capital additions – property and equipment | $ (88.2) | $ (86.9) | |||
Reconciliation of net (loss) income to net cash used in operating activities: | Net investment asset activity (less than wholly-owned) | — | 137.0 | |||||
Depreciation and amortization | 117.4 | 109.8 | Business acquisitions, net of cash acquired | (13.6) | (2.0) | |||
Equity losses (earnings) | 106.1 | (72.1) | Capital contributions to investments | (66.2) | (121.4) | |||
Net loss (gain) on dispositions | 1.8 | (134.8) | Distributions of capital from investments | 12.7 | 13.1 | |||
Distributions of earnings from investments | 6.0 | 9.9 | Other, net | (5.4) | (2.9) | |||
Provision for loss on receivables and other assets | 19.0 | 11.8 | Net cash used in investing activities | (160.7) | (63.1) | |||
Amortization of stock-based compensation | 53.0 | 44.4 | Cash flows from financing activities: | |||||
Net non-cash mortgage servicing rights and mortgage banking derivative activity | 2.4 | (7.6) | Proceeds from borrowings under credit facility | 4,478.0 | 4,060.0 | |||
Accretion of interest and amortization of debt issuance costs | 2.1 | 2.5 | Repayments of borrowings under credit facility | (3,853.0) | (2,835.0) | |||
Other, net | 3.6 | 2.6 | Net repayments of short-term borrowings | (55.3) | (12.5) | |||
Change in: | Payments of deferred business acquisition obligations and earn-outs | (21.8) | (9.2) | |||||
Receivables | 137.7 | 64.6 | Repurchase of common stock | (19.5) | (447.7) | |||
Reimbursable receivables and reimbursable payables | (51.0) | (94.2) | Noncontrolling interest distributions, net | — | (134.6) | |||
Prepaid expenses and other assets | (46.5) | (21.3) | Other, net | (24.5) | (19.7) | |||
Deferred tax assets, net | (17.3) | 78.8 | Net cash provided by financing activities | 503.9 | 601.3 | |||
Accounts payable and accrued liabilities | (216.5) | (339.6) | Effect of currency exchange rate changes on cash, cash equivalents and restricted cash | 3.8 | (37.6) | |||
Accrued compensation | (591.6) | (673.6) | Net change in cash, cash equivalents and restricted cash | $ (132.3) | $ (38.8) | |||
Net cash used in operating activities | $ (479.3) | $ (539.4) | Cash, cash equivalents and restricted cash, beginning of the period | 746.0 | 841.6 | |||
Cash, cash equivalents and restricted cash, end of the period | $ 613.7 | $ 802.8 | ||||||
Please reference accompanying financial statement notes. |
JONES LANG LASALLE INCORPORATED | ||||||||||||
Consolidated Balance Sheets | ||||||||||||
June 30, | December 31, | June 30, | December 31, | |||||||||
(in millions, except share and per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||
ASSETS | (Unaudited) | LIABILITIES AND EQUITY | (Unaudited) | |||||||||
Current assets: | Current liabilities: | |||||||||||
Cash and cash equivalents | $ 402.5 | $ 519.3 | Accounts payable and accrued liabilities | $ 1,054.6 | $ 1,236.8 | |||||||
Trade receivables, net of allowance | 1,982.0 | 2,148.8 | Reimbursable payables | 1,430.2 | 1,579.5 | |||||||
Notes and other receivables | 410.9 | 469.5 | Accrued compensation and benefits | 1,141.2 | 1,749.8 | |||||||
Reimbursable receivables | 1,910.9 | 2,005.7 | Short-term borrowings | 112.1 | 164.2 | |||||||
Warehouse receivables | 1,049.0 | 463.2 | Short-term contract liability and deferred income | 213.6 | 216.5 | |||||||
Short-term contract assets, net of allowance | 357.2 | 359.7 | Short-term acquisition-related obligations | 20.5 | 23.1 | |||||||
Prepaid and other | 593.3 | 603.5 | Warehouse facilities | 941.8 | 455.3 | |||||||
Total current assets | 6,705.8 | 6,569.7 | Short-term operating lease liability | 164.3 | 156.4 | |||||||
Property and equipment, net of accumulated depreciation | 585.5 | 582.9 | Other | 412.4 | 330.5 | |||||||
Operating lease right-of-use asset | 761.3 | 776.3 | Total current liabilities | 5,490.7 | 5,912.1 | |||||||
Goodwill | 4,577.7 | 4,528.0 | Noncurrent liabilities: | |||||||||
Identified intangibles, net of accumulated amortization | 821.1 | 858.5 | Credit facility, net of debt issuance costs | 1,840.5 | 1,213.8 | |||||||
Investments | 872.7 | 873.8 | Long-term debt, net of debt issuance costs | 380.7 | 372.8 | |||||||
Long-term receivables | 372.1 | 331.1 | Long-term deferred tax liabilities, net | 191.6 | 194.0 | |||||||
Deferred tax assets, net | 394.6 | 379.6 | Deferred compensation | 518.3 | 492.4 | |||||||
Deferred compensation plans | 559.5 | 517.9 | Long-term acquisition-related obligations | 58.6 | 76.3 | |||||||
Other | 175.2 | 175.9 | Long-term operating lease liability | 766.6 | 775.8 | |||||||
Total assets | $ 15,825.5 | $ 15,593.7 | Other | 386.6 | 407.0 | |||||||
Total liabilities | $ 9,633.6 | $ 9,444.2 | ||||||||||
Redeemable noncontrolling interest | $ 7.1 | $ 7.0 | ||||||||||
Company shareholders' equity | ||||||||||||
Common stock | 0.5 | 0.5 | ||||||||||
Additional paid-in capital | 2,015.3 | 2,022.6 | ||||||||||
Retained earnings | 5,567.6 | 5,590.4 | ||||||||||
Treasury stock | (895.8) | (934.6) | ||||||||||
Shares held in trust | (11.6) | (9.8) | ||||||||||
Accumulated other comprehensive loss | (611.4) | (648.2) | ||||||||||
Total company shareholders' equity | 6,064.6 | 6,020.9 | ||||||||||
Noncontrolling interest | 120.2 | 121.6 | ||||||||||
Total equity | 6,184.8 | 6,142.5 | ||||||||||
Total liabilities and equity | $ 15,825.5 | $ 15,593.7 | ||||||||||
Please reference accompanying financial statement notes. |
JONES LANG LASALLE INCORPORATED
Financial Statement Notes
1. 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, the
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 June 30, | Six Months Ended June 30, | ||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | |||
Revenue | $ 5,052.5 | $ 5,278.4 | $ 9,768.0 | $ 10,079.8 | |||
Gross contract costs1 | (3,205.8) | (3,128.4) | (6,339.1) | (6,032.9) | |||
Net non-cash MSR and mortgage banking derivative activity | 0.6 | (11.2) | 2.4 | (7.6) | |||
Fee revenue | $ 1,847.3 | $ 2,138.8 | $ 3,431.3 | $ 4,039.3 | |||
Operating expenses | $ 4,903.3 | $ 5,043.3 | $ 9,601.0 | $ 9,669.0 | |||
Gross contract costs1 | (3,205.8) | (3,128.4) | (6,339.1) | (6,032.9) | |||
Fee-based operating expenses | $ 1,697.5 | $ 1,914.9 | $ 3,261.9 | $ 3,636.1 |
Below are (i) a reconciliation of Net income (loss) 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 June 30, | Six Months Ended June 30, | ||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | |||
Net income (loss) attributable to common shareholders | $ 2.5 | $ 193.9 | $ (6.7) | $ 339.5 | |||
Add: | |||||||
Interest expense, net of interest income | 40.5 | 15.7 | 66.8 | 25.9 | |||
Income tax provision (benefit) | 0.8 | 72.8 | (1.5) | 113.1 | |||
Depreciation and amortization(a) | 59.0 | 54.4 | 115.5 | 108.8 | |||
EBITDA | $ 102.8 | $ 336.8 | $ 174.1 | $ 587.3 | |||
Adjustments: | |||||||
Restructuring and acquisition charges2 | 11.8 | 25.9 | 47.5 | 45.4 | |||
Net loss on disposition | 1.8 | 7.5 | 1.8 | 7.5 | |||
Net non-cash MSR and mortgage banking derivative activity | 0.6 | (11.2) | 2.4 | (7.6) | |||
Interest on employee loans, net of forgiveness | (0.9) | — | (0.7) | — | |||
Adjusted EBITDA | $ 116.1 | $ 359.0 | $ 225.1 | $ 632.6 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
(In millions, except share and per share data) | 2023 | 2022 | 2023 | 2022 | |||
Net income (loss) attributable to common shareholders | $ 2.5 | $ 193.9 | $ (6.7) | $ 339.5 | |||
Diluted shares (in thousands)(b) | 48,334 | 49,651 | 47,652 | 50,292 | |||
Diluted earnings (loss) per share | $ 0.05 | $ 3.90 | $ (0.14) | $ 6.75 | |||
Net income (loss) attributable to common shareholders | $ 2.5 | $ 193.9 | $ (6.7) | $ 339.5 | |||
Adjustments: | |||||||
Restructuring and acquisition charges2 | 11.8 | 25.9 | 47.5 | 45.4 | |||
Net non-cash MSR and mortgage banking derivative activity | 0.6 | (11.2) | 2.4 | (7.6) | |||
Amortization of acquisition-related intangibles(a) | 17.2 | 15.8 | 33.7 | 32.7 | |||
Net loss on disposition | 1.8 | 7.5 | 1.8 | 7.5 | |||
Interest on employee loans, net of forgiveness | (0.9) | — | (0.7) | — | |||
Tax impact of adjusted items(c) | (8.8) | (9.5) | (22.5) | (18.2) | |||
Adjusted net income attributable to common shareholders | $ 24.2 | $ 222.4 | $ 55.5 | $ 399.3 | |||
Diluted shares (in thousands) | 48,334 | 49,651 | 48,357 | 50,292 | |||
Adjusted diluted earnings per share | $ 0.50 | $ 4.48 | $ 1.15 | $ 7.94 | |||
(a) This adjustment excludes the noncontrolling interest portion of amortization of acquisition-related intangibles which is not attributable to common shareholders. | |||||||
(b) Basic shares outstanding were used in the calculation of dilutive loss per share for the six months ended June 30, 2023, as the impact of unvested stock-based compensation awards would be anti-dilutive. | |||||||
(c) For the first half of 2023 and second quarter of 2022, the tax impact of adjusted items was calculated using the applicable statutory rates by tax jurisdiction. For the first quarter 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.
Six Months Ended June 30, | |||
(in millions) | 2023 | 2022 | |
Net cash used in operating activities | $ (479.3) | $ (539.4) | |
Net capital additions - property and equipment | (88.2) | (86.9) | |
Free Cash Flow5 | $ (567.5) | $ (626.3) |
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 June 30, | Six Months Ended June 30, | ||||||
($ in millions) | 2023 | % Change | 2023 | % Change | |||
Revenue: | |||||||
At current period exchange rates | $ 5,052.5 | (4) % | $ 9,768.0 | (3) % | |||
Impact of change in exchange rates | 37.5 | n/a | 158.1 | n/a | |||
At comparative period exchange rates | $ 5,090.0 | (4) % | $ 9,926.1 | (2) % | |||
Fee revenue: | |||||||
At current period exchange rates | $ 1,847.3 | (14) % | $ 3,431.3 | (15) % | |||
Impact of change in exchange rates | 9.5 | n/a | 50.3 | n/a | |||
At comparative period exchange rates | $ 1,856.8 | (13) % | $ 3,481.6 | (14) % | |||
Operating income: | |||||||
At current period exchange rates | $ 149.2 | (37) % | $ 167.0 | (59) % | |||
Impact of change in exchange rates | (1.5) | n/a | (6.6) | n/a | |||
At comparative period exchange rates | $ 147.7 | (37) % | $ 160.4 | (61) % | |||
Adjusted EBITDA: | |||||||
At current period exchange rates | $ 116.1 | (68) % | $ 225.1 | (64) % | |||
Impact of change in exchange rates | (1.1) | n/a | (4.1) | n/a | |||
At comparative period exchange rates | $ 115.0 | (68) % | $ 221.0 | (65) % |
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 June 30, | Six Months Ended June 30, | ||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | |||
Severance and other employment-related charges | $ 5.8 | $ 8.3 | $ 31.5 | $ 11.6 | |||
Restructuring, pre-acquisition and post-acquisition charges | 6.6 | 16.6 | 16.6 | 33.5 | |||
Fair value adjustments that resulted in a net (decrease) increase to earn-out liabilities from prior-period acquisition activity | (0.6) | 1.0 | (0.6) | 0.3 | |||
Total restructuring and acquisition charges | $ 11.8 | $ 25.9 | $ 47.5 | $ 45.4 |
3. n.m.: "not meaningful", represented by a percentage change of greater than 1,
4. As of June 30, 2023,
AUM changed less than
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.
"MENA" is defined as
6. The company defines "Resilient" revenue as (i) Property Management, within Markets Advisory, (ii) Valuation Advisory and Loan Servicing, within Capital Markets, (iii) Workplace Management, within Work Dynamics, (iv) JLL Technologies, and (v) Advisory Fees (within
Appendix: Revenue and Fee Revenue Segment Detail | |||||||||||||||||||||||
Three Months Ended June 30, 2023 | |||||||||||||||||||||||
(in millions) | Markets Advisory | Capital Markets | Work Dynamics | ||||||||||||||||||||
Leasing | Property Mgmt | Advisory, Consulting and Other | Total Markets Advisory | Invt Sales, Debt/Equity Advisory and Other | Valuation Advisory | Loan Servicing | Total Capital Markets | Workplace Mgmt | Project Mgmt | Portfolio Services and Other | Total Work Dynamics | JLLT | Total | ||||||||||
Revenue | $ 591.4 | 409.9 | 24.1 | $ 1,025.4 | $ 319.5 | 89.5 | 39.0 | $ 448.0 | $ 2,553.4 | 703.2 | 118.0 | $ 3,374.6 | $ 60.6 | $ 143.9 | $ 5,052.5 | ||||||||
Gross contract costs1 | (3.4) | (278.9) | (2.0) | (284.3) | (10.2) | (2.9) | — | (13.1) | (2,365.2) | (473.5) | (58.1) | (2,896.8) | (4.1) | (7.5) | (3,205.8) | ||||||||
Net non-cash MSR and mortgage banking derivative activity | — | — | — | — | 0.6 | — | — | 0.6 | — | — | — | — | — | — | 0.6 | ||||||||
Fee revenue | $ 588.0 | 131.0 | 22.1 | $ 741.1 | $ 309.9 | 86.6 | 39.0 | $ 435.5 | $ 188.2 | 229.7 | 59.9 | $ 477.8 | $ 56.5 | $ 136.4 | $ 1,847.3 |
Three Months Ended June 30, 2022 | |||||||||||||||||||||||
(in millions) | Markets Advisory | Capital Markets | Work Dynamics | ||||||||||||||||||||
Leasing | Property Mgmt | Advisory, Consulting and Other | Total Markets Advisory | Invt Sales, Debt/Equity Advisory and Other | Valuation Advisory | Loan Servicing | Total Capital Markets | Workplace Mgmt | Project Mgmt | Portfolio Services and Other | Total Work Dynamics | JLLT | Total | ||||||||||
Revenue | $ 708.4 | 378.2 | 31.6 | $ 1,118.2 | $ 549.7 | 94.4 | 40.4 | $ 684.5 | $ 2,434.0 | 754.8 | 121.7 | $ 3,310.5 | $ 50.7 | $ 114.5 | $ 5,278.4 | ||||||||
Gross contract costs1 | (4.9) | (256.0) | (1.5) | (262.4) | (10.5) | (2.1) | — | (12.6) | (2,249.1) | (539.9) | (54.5) | (2,843.5) | (2.7) | (7.2) | (3,128.4) | ||||||||
Net non-cash MSR and mortgage banking derivative activity | — | — | — | — | (11.2) | — | — | (11.2) | — | — | — | — | — | — | (11.2) | ||||||||
Fee revenue | $ 703.5 | 122.2 | 30.1 | $ 855.8 | $ 528.0 | 92.3 | 40.4 | $ 660.7 | $ 184.9 | 214.9 | 67.2 | $ 467.0 | $ 48.0 | $ 107.3 | $ 2,138.8 |
Appendix: Revenue and Fee Revenue Segment Detail (continued) | |||||||||||||||||||||||
Six Months Ended June 30, 2023 | |||||||||||||||||||||||
(in millions) | Markets Advisory | Capital Markets | Work Dynamics | ||||||||||||||||||||
Leasing | Property Mgmt | Advisory, Consulting and Other | Total Markets Advisory | Invt Sales, Debt/Equity Advisory and Other | Valuation Advisory | Loan Servicing | Total Capital Markets | Workplace Mgmt | Project Mgmt | Portfolio Services and Other | Total Work Dynamics | JLLT | Total | ||||||||||
Revenue | $ 1,078.4 | 810.1 | 43.3 | $ 1,931.8 | $ 560.1 | 168.6 | 76.4 | $ 805.1 | $ 5,050.6 | 1,379.5 | 220.7 | $ 6,650.8 | $ 122.0 | $ 258.3 | $ 9,768.0 | ||||||||
Gross contract costs1 | (7.9) | (552.0) | (3.5) | (563.4) | (17.4) | (5.0) | — | (22.4) | (4,679.2) | (938.9) | (112.9) | (5,731.0) | (7.7) | (14.6) | (6,339.1) | ||||||||
Net non-cash MSR and mortgage banking derivative activity | — | — | — | — | 2.4 | — | — | 2.4 | — | — | — | — | — | — | 2.4 | ||||||||
Fee revenue | $ 1,070.5 | 258.1 | 39.8 | $ 1,368.4 | $ 545.1 | 163.6 | 76.4 | $ 785.1 | $ 371.4 | 440.6 | 107.8 | $ 919.8 | $ 114.3 | $ 243.7 | $ 3,431.3 |
Six Months Ended June 30, 2022 | |||||||||||||||||||||||
(in millions) | Markets Advisory | Capital Markets | Work Dynamics | ||||||||||||||||||||
Leasing | Property Mgmt | Advisory, Consulting and Other | Total Markets Advisory | Invt Sales, Debt/Equity Advisory and Other | Valuation Advisory | Loan Servicing | Total Capital Markets | Workplace Mgmt | Project Mgmt | Portfolio Services and Other | Total Work Dynamics | JLLT | Total | ||||||||||
Revenue | $ 1,309.3 | 748.7 | 59.7 | $ 2,117.7 | $ 1,025.8 | 179.0 | 80.3 | $ 1,285.1 | $ 4,754.4 | 1,367.1 | 222.6 | $ 6,344.1 | $ 100.1 | $ 232.8 | |||||||||
Gross contract costs1 | (8.9) | (507.9) | (3.9) | (520.7) | (21.7) | (3.6) | — | (25.3) | (4,387.5) | (976.5) | (102.6) | (5,466.6) | (6.8) | (13.5) | (6,032.9) | ||||||||
Net non-cash MSR and mortgage banking derivative activity | — | — | — | — | (7.6) | — | — | (7.6) | — | — | — | — | — | — | (7.6) | ||||||||
Fee revenue | $ 1,300.4 | 240.8 | 55.8 | $ 1,597.0 | $ 996.5 | 175.4 | 80.3 | $ 1,252.2 | $ 366.9 | 390.6 | 120.0 | $ 877.5 | $ 93.3 | $ 219.3 | $ 4,039.3 |
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SOURCE JLL-IR
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