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Jones Lang LaSalle (JLL) Q4 Earnings & Revenues Top Estimates

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Jones Lang LaSalle Inc. (JLL - Free Report) — popularly known as JLL — reported fourth-quarter 2020 adjusted earnings of $5.29 per share, beating the Zacks Consensus Estimate of $3.70. Revenues for the quarter came in at $4.85 billion, surpassing the Zacks Consensus Estimate of $4.58 billion.

The results reflect sustained resilience of Property & Facility Management, highlighting strength of the company’s global platform. However, the pandemic continued to impact transaction-based service lines, while LaSalle’s results reflect expected lower incentive fees subsequent to a remarkable 2019. Nevertheless, cost-mitigation efforts boosted margin performance.

On a year-over-year basis, fourth-quarter adjusted earnings per share were down 17% from the prior-year quarter tally of $6.35. Revenues declined 10% year on year, while fee revenues slipped 17% year over year to $1.96 billion.

Apart from this, adjusted EBITDA margin, calculated on a fee-revenue basis, was 21.3% compared with the prior-year quarter’s 20.8%. The 50-basis point (bps) expansion in net margin was mainly driven by management’s cost-mitigation moves. This was partly offset by net dilution from Real Estate Services (RES), marking the decline in fee revenues, and lower incentive fees in LaSalle.

Shares of JLL edged down 0.57% during Tuesday’s regular session.

Behind the Headline Numbers

During the December-end quarter, JLL’s Real Estate Services (RES) revenues dropped 9% year over year to $4.74 billion. Notably, RES revenues declined across the geographic segments and most service lines. Lower capital markets and leasing fee revenues highlight the year-over-year plunge in global market volumes. However, the company witnessed modest growth in the Property & Facility Management segment, chiefly on strength in the United States.

In the Americas, revenues and fee revenues came in at $2.87 billion and $1.08 million, respectively, reflecting a 10% and 16% year-over-year decline. The Americas transaction-based service lines continued to be affected by the pandemic. While leasing revenues underline decrease in office volumes, the industrial category continued to see significant growth. Also, soft investment sales and debt placement activity hurt Capital Markets revenues, partly mitigated by notable growth in multi-family origination and servicing fees as well as equity advisory. Nonetheless, new property management and Corporate Solutions clients, along with expansions of existing Corporate Solutions client relationships, helped the Property & Facility Management segment register stellar revenue and fee revenue growth.

Revenues and fee revenues of the EMEA segment came in at $966.9 million and $476.4 million, down 9% and 15%, respectively, from the year-ago period, reflecting the adverse impact of the pandemic. Decline in Capital Markets revenues was the most noticeable in Germany, France and Spain. Though low office-market volumes hurt leasing revenues, mainly in the U.K. and Poland, this was partly offset by robust performance in the industrial category.

For the Asia-Pacific segment, revenues and fee revenues came in at $899.5 million and $307.5 million, respectively, marking a year-over-year fall of 7% and 13%. Transaction-based revenues bore the brunt. Shift in deal activity away from large transactions and a decline in market volumes affected Capital Markets revenues. The decline was the most significant in Singapore and Japan. Though market volumes declined from the prior year, leasing fee revenues continued to gain momentum as office leasing activity increased from the prior quarter. The Property & Facility Management business reflects resiliency, with property management and Corporate Solutions staffs teaming up with clients for executing improved facilities management in the complex environment due to the coronavirus mayhem.

Revenues in the LaSalle segment plunged 43% year over year to $106.7 million, while fee revenues declined 44% to $101.3 million. Decline in incentive fees primarily resulted in lower fee revenues.

At the end of 2020, assets under management were $68.9 billion, up 5% from the last quarter end, reflecting acquisitions, foreign-currency increases and net valuation growth.

Liquidity

JLL exited 2020 with cash and cash equivalents of $574.3 million, up from $451.9 million as of Dec 31, 2019. Moreover, as of Dec 31, 2020, the company’s net debt amounted to $192 million, marking a decline of $560 million from the end of September and nearly $670 million from the end of December 2019, reflecting operating cash-flow drivers.

During the reported quarter, approximately 451,000 shares were repurchased for $50 million.

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

We, now, look forward to the earnings releases of other companies in the real estate sector like Brookfield Asset Management Inc. (BAM - Free Report) , Colliers International Group Inc. (CIGI - Free Report) and CBRE Group Inc. (CBRE - Free Report) . While Brookfield Asset Management and Colliers International are slated to release their quarterly results on Feb 11, CBRE Group will report on Feb 23.

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