Jones Lang's Superb Fiscal Result - Analyst Blog

Jones Lang LaSalle Incorporated (JLL), a leading real estate investment trust (REIT), reported fourth quarter 2010 net income of $84 million or $1.91 per share compared to $52 million or $1.19 in the year-earlier quarter.

Excluding non-recurring items, earnings were $86 million or $1.94 per share during the quarter versus $63 million or $1.44 in the year-ago quarter. Recurring earnings for the reported quarter were well above the Zacks Consensus Estimate of $1.66.

Revenues for the reported quarter came in at $956 million compared to $815 million recorded in the year-ago quarter. Total revenues during the quarter exceeded the Zacks Consensus Estimate of $936 million. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) were $143 million for fourth quarter 2010 compared with $112 million for the same period in 2009.

For full year 2010, Jones Lang reported net income of $154 million or $3.48 per share compared to net loss of $4 million or $0.11 in 2009. Excluding non-recurring items, earnings for fiscal 2010 were $166 million or $3.77 per share versus $70 million or $1.75 in the year-ago period. Recurring earnings for the reported fiscal were well above the Zacks Consensus Estimate of $3.44.

Jones Lang reported record revenues for fiscal 2010 at $2.9 billion compared to $2.5 billion in 2009. The healthy year-over-year increase in revenues was primarily due to strong performances across all business segments and geographic regions.

Management further expected to retain the growth momentum in fiscal 2011 as well see improvement in market fundamentals. Total revenues for full year 2010 were in line with the Zacks Consensus Estimate. Adjusted EBITDA for fiscal 2010 was $337 million compared with $239 million for fiscal 2009.

By segment, revenues from the Americas region came in at $428 million in fourth quarter 2010, reflecting a year-over-year increase of 24%, while that in EMEA (Europe, Middle East, and Africa) increased 11% to $237 million. In the Asia-Pacific region, revenue swelled 18% during the quarter to $223 million.

A year-over-year increase in revenue across all the segments was largely due to strong income from capital markets and robust leasing activities during the quarter, which improved 50% and 25% respectively on a local currency basis.

Advisory fees from LaSalle Investment Management segment were $61 million during the quarter. The segment raised net capital of $5.0 billion during the year, which was the second-best tally in the history of the company. Investments during 2010 totaled $3.2 billion. At year-end 2010, assets under management were $41.3 billion.

Total operating expenses (excluding restructuring charges) were $832 million for the quarter compared to $722 million in the year-ago period. Adjusted operating income margin improved to 13.0% during the quarter from 11.4% in the same period in 2009. For full-year 2010, adjusted operating income margin was 9.1%, up from 6.6% in 2009.

At year-end 2010, Jones Lang had an outstanding debt of $273 million. During the year, the company reduced its net debt position by $250 million driven by strong cash flows generated from operations and modest cash outflows due to disciplined capital expenditures, effective tax management and low cash-interest expense associated with reduced borrowing levels.

The strategic moves were aimed at strengthening the balance sheet, increasing the liquidity to meet the current commitments and capitalizing on potential opportunities.

Jones Lang is one of the best-positioned commercial real estate services companies, maintaining steady margins in line with stable revenue growth. We believe that the company is well on course to continue its strong performance in the coming quarters as well.

We maintain our Neutral rating on Jones Lang, which presently has a Zacks #3 Rank translating into a short-term Hold recommendation. We also have a Neutral recommendation and a Zacks #3 Rank for Grubb & Ellis Company (GBE), a competitor of Jones Lang.

 
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