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Jones Lang LaSalle (JLL) Q2 Earnings Miss, Revenues Fall Y/Y

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Jones Lang LaSalle Incorporated (JLL - Free Report) — popularly known as JLL — reported second-quarter 2023 adjusted earnings per share (EPS) of 50 cents, lagging the Zacks Consensus Estimate of $2.20. The reported figure plunged 88.8% from the prior-year quarter’s $4.48. Shares of JLL were marginally down during the Aug 3 regular trading session on the NYSE.

Lower transaction volume amid the current interest rate environment affected JLL’s transaction-based businesses, specifically the Capital Markets and Leasing under Markets Advisory. Nonetheless, the company benefited from the continued strength in its resilient lines of business.

Revenues of $5.05 billion, although falling 4.3% from the year-ago quarter’s $5.28 billion, surpassed the Zacks Consensus Estimate of $5.03 billion.

The quarterly adjusted EBITDA margin dipped to 6.3% (USD) from 16.8% in the prior-year period. The change in equity earnings/losses, net of carried interest, accounted for around 70% of the decline while the remainder of the fall was mainly attributable to a decrease in transaction-based revenues, specifically Investment Sales, Debt/Equity Advisory and Leasing.

Per Christian Ulbrich, CEO of JLL, “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.”

Segment-Wise Performance

During the second quarter, the Markets Advisory segment’s revenues and fee revenues came in at $1.03 billion and $741.1 million, respectively, reflecting a fall of 8.3% and 13.4% (in USD) year over year. Lower transaction volume across asset types, mainly the office and industrial sectors, and a decrease in average deal size across most asset types, mainly in the U.S. industrial sector, led to a fall in Leasing fee revenues. This was the prime reason for the decline in Markets Advisory revenues and fee revenues.

Revenues and fee revenues for the Capital Markets segment were $448.0 million and $435.5 million, respectively, decreasing 34.6% and 34.1% (in USD) year over year. The fall was mainly due to muted transaction volume compared with 2022, which chiefly affected JLL’s Investment Sales and Debt/Equity Advisory businesses across all asset classes and most geographies.

JLL’s Work Dynamics segment reported revenues and fee revenues of $3.37 billion and $477.8 million, respectively, up 1.9% and 2.3% (in USD) year over year. The uptick in revenues and fee growth was attributable to the continued strength in Project Management, predominantly in Australia, France, MENA and the U.K, and modest growth in Workplace Management, partially offset by lower Portfolio Services and Other.

JLL Technologies segment reported revenues and fee revenues of $60.6 million and $56.5 million, respectively, rising 19.5% and 17.7% (in USD) from the prior-year quarter levels. The growth in solutions and service offerings, largely from existing enterprise clients, supported the increase.

The revenues and fee revenues in the LaSalle segment climbed 25.7% and 27.1% (in USD) year over year to $143.9 million and $136.4 million, respectively. The growth was aided by incentive fees earned on assets managed on behalf of clients, particularly in Japan and the United States, partially offset by marginally lower advisory fees due to recent valuation declines affecting assets under management (AUM).

As of Jun 30, 2023, LaSalle had $78.2 billion of real estate AUM, slightly down from $78.5 billion as of Mar 31, 2023. This resulted from dispositions and withdrawals and decreases in net valuation and foreign currency, partially offset by the rise in acquisitions.

Balance Sheet

JLL exited second-quarter 2023 with cash and cash equivalents of $402.5 million, down from $485.4 million as of Mar 31, 2023.

As of Jun 30, 2023, the net leverage ratio was 2.3, up from 1.9 as of Mar 31, 2023, and 1.0 as of Jun 30, 2022. The corporate liquidity was $1.9 billion as of the second quarter's end.

The company repurchased 139,295 shares during the reported quarter for $20 million. As of Jun 30, 2023, $1,135.6 million remained authorized for repurchase under the share repurchase program.

JLL currently carries a Zacks Rank #5 (Strong Sell).

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

Performance of Other Broader Real Estate Market Stocks

CBRE Group’s (CBRE - Free Report) second-quarter 2023 core EPS of 82 cents surpassed the Zacks Consensus Estimate of 77 cents. The quarterly revenues of $7.72 billion also compared favorably with the Zacks Consensus Estimate of $7.56 billion. CBRE’s results reflected growth in Global Workplace Solutions (“GWS”) and total growth in its resilient lines of business.

However, on a year-over-year basis, the core EPS declined by 55.2%, while revenues fell 0.7%. Despite growth in GWS and other resilient business, severely constrained capital availability affected its sales revenues.

Welltower Inc.’s (WELL - Free Report) second-quarter 2023 normalized funds from operations (FFO) per share of 90 cents surpassed the Zacks Consensus Estimate of 86 cents. The reported figure improved 4.7% from the prior-year quarter’s actual.

Results reflected better-than-anticipated revenues. The total same-store net operating income (SSNOI) increased year over year, driven by SSNOI growth in the seniors housing operating (SHO) portfolio. Welltower also raised its guidance for 2023 normalized FFO per share.

Equinix Inc.’s (EQIX - Free Report) second-quarter 2023 AFFO per share of $8.04 surpassed the Zacks Consensus Estimate of $7.51. The figure improved 6.1% from the prior-year quarter.

EQIX’s results reflect steady growth in colocation and inter-connection revenues on the back of strong demand for digital infrastructure. The company also raised its AFFO per share guidance for 2023.

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