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Jones Lang LaSalle (JLL) Q3 Earnings Top Estimates, Stock Up

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  • JLL

Shares of Jones Lang LaSalle Inc. JLL — popularly known as JLL — appreciated 2.5% during Wednesday’s regular trading session on the NYSE after the real estate services company reported stellar results for third-quarter 2021 on a strong rebound in its transaction-based businesses.

JLL reported third-quarter adjusted earnings of $4.56 per share, beating the Zacks Consensus Estimate of $3.50. The reported figure is also significantly ahead of the prior-year quarter figure of $2.99.

Revenues for the quarter came in at $4.9 billion, surpassing the Zacks Consensus Estimate of $4.6 billion and 22.9% higher than the year-ago quarter tally.

Results reflect continuation of growth momentum in all segments and service lines, led by the Americas.The third quarter saw a rebound in transaction-based revenues, highlighted by Capital Markets and Leasing.

According to Christian Ulbrich, JLL CEO, “The robust growth in revenue and profits was fueled by the ongoing recovery across the commercial real estate industry and the high demand for services and products from our clients."

Apart from this, the quarterly adjusted EBITDA margin, calculated on a fee-revenue basis, was 17% (17.1% in local currency) compared with the prior year’s 17.2%. The 20-basis point net reduction in the margin reflects the expected reduction of certain non-permanent cost savings from 2020 and incremental investments in people and technology. These were, nonetheless, significantly offset by increase in revenues, mainly from the higher margin transaction-based service lines.

Behind the Headline Numbers

During the September-end quarter, JLL’s Real Estate Services (RES) revenues climbed 23% (22% in local currency) year over year to $4.8 billion, highlighting broad-based growth across all service lines, primarily aided by Leasing and Capital Markets, as well as improvements across all geographic segments.

In the Americas, revenues and fee revenues came in at $3.08 billion and $1.3 billion, respectively, reflecting a 30% and 68% year-over-year jump. This displays continued growth in transaction-based service lines, with fee revenues markedly surpassing the third-quarter 2019 number. Growth in Leasing was fueled by both higher transaction volumes and an increase in deal size in the United States, while Capital Markets increase reflected higher deal activities across investment sales, debt advisory and equity advisory, as well as rise in servicing revenues from the multifamily business.

Revenues and fee revenues in the EMEA segment came in at $830 million and $385.2 million, up 12% and 19%, respectively, from the year-ago period. This was driven by the transaction-based revenues, reflecting the continued recovery in several geographies. Growth in Capital Markets reflected higher deal volumes, mainly in the industrial, residential and office sectors, while increase in Leasing revenues was driven by transaction volume growth, primarily in office and industrial.

In the Asia-Pacific segment, revenues and fee revenues came in at $846.2 million and $262.1 million, respectively, marking a year-over-year increase of 14% and 23%. This was driven by the rebound in transaction-based revenues. Also, business growth in Valuation Advisory, particularly in Australia, resulted in the fee revenue increase in Advisory, Consulting and Other.

Revenues and fee revenues in the LaSalle segment increased 18% and 17% year over year to $129.8 million and $123.4, respectively.This was driven by higher incentive and advisory fees, partially offset by lower transaction fees.

At the end of third-quarter 2021, assets under management were $74.7 billion, up 2% from the last quarter end, reflecting net valuation increases, acquisitions and foreign-currency increases, partially offset by dispositions and withdrawals.

Liquidity

JLL exited third-quarter 2021 with cash and cash equivalents of $535.9 million, down from $574.3 million as of Dec 31, 2020. Additionally, as of Sep 30, 2021, the company’s net debt amounted to $487.3 million, marking a decrease of $161.3 million from the prior-quarter end and a decline of $264.6 million from the year-ago quarter end.

In third-quarter 2021, the company repurchased 658,900 shares for $149.9 million.

JLL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Another Real Estate Operations Company

CBRE Group Inc. CBRE reported third-quarter 2021 adjusted earnings per share of $1.39, beating the Zacks Consensus Estimate of $1.20 and up from the year-ago quarter’s 73 cents. The quarterly results reflected the benefits of diversifying across asset types, business lines, client types and geographies, as well as expanding its resilient business in recent years.

We, now, look forward to the earnings releases of other companies in the real estate sector like Cushman & Wakefield plc CWK and Brookfield Asset Management Inc. BAM. While Cushman & Wakefield is scheduled to report results today, Brookfield Asset Management will release quarterly figures on Nov 11.


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