Jones Lang LaSalle(JLL) - 2024 Q2 - Quarterly Results

JLL Q2 2024 Financial Results Q2 2024 Performance Highlights The company reported strong Q2 2024 results with 12% local currency revenue growth to $5.6 billion and significantly improved profitability Q2 & H1 2024 Summary Financial Results | Summary Financial Results ($ in millions, except per share data) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | % Change in USD | % Change in LC | | :--- | :--- | :--- | :--- | :--- | | Revenue | $5,628.7 | $5,052.5 | 11% | 12% | | Net income attributable to common shareholders | $84.4 | $2.5 | n.m. | n.m. | | Adjusted net income attributable to common shareholders | $123.2 | $102.2 | 21% | 23% | | Diluted earnings per share | $1.75 | $0.05 | n.m. | n.m. | | Adjusted diluted earnings per share | $2.55 | $2.12 | 20% | 23% | | Adjusted EBITDA | $246.3 | $225.1 | 9% | 11% | | Cash flows from operating activities | $273.9 | $237.0 | 16% | n/a | - Revenue growth was driven by a 16% increase in Resilient revenues and a 5% increase in Transactional revenues, both in local currency[1] - Profitability improvement was attributed to revenue growth and the benefits of recent and ongoing cost mitigation actions[1] - Higher cash flow from operations contributed to a nearly $150 million decrease in net debt for the quarter and an improved leverage ratio[1] Consolidated Performance Analysis The company's consolidated performance showed robust growth with a 12% local currency revenue increase, substantial profit growth, and an improved financial position Revenue Analysis Q2 revenue grew 12% in local currency to $5.6 billion, propelled by strong growth in Resilient and Transactional revenues - Resilient revenues grew 16% in local currency, with Workplace Management up 19% and Property Management up 8%[6] - Transactional revenues grew 5% in local currency, led by Project Management (up 13%) and Leasing (up 5%)[6] Q2 2024 Revenue by Segment (vs. Q2 2023) | Segment | Q2 2024 Revenue ($M) | Q2 2023 Revenue ($M) | % Change in LC | | :--- | :--- | :--- | :--- | | Markets Advisory | $1,078.8 | $1,025.4 | 6% | | Capital Markets | $457.6 | $448.0 | 3% | | Work Dynamics | $3,933.3 | $3,374.6 | 17% | | JLL Technologies | $56.4 | $60.6 | (7)% | | LaSalle | $102.6 | $143.9 | (27)% | | Total Revenue | $5,628.7 | $5,052.5 | 12% | Profitability Analysis Net income surged to $84.4 million and Adjusted EBITDA grew 11% in local currency, driven by higher revenues and cost reductions Q2 2024 Profitability Metrics (vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Income Attributable to Common Shareholders | $84.4M | $2.5M | | Adjusted EBITDA | $246.3M | $225.1M | | Diluted EPS | $1.75 | $0.05 | | Adjusted Diluted EPS | $2.55 | $2.12 | - Profit growth was driven by higher revenues (especially Resilient), benefits from 2023 cost reduction actions, and positive timing of incentive compensation accruals[7] - Profit growth was partially offset by an $18.0 million expense for a loan repurchase, a $12.2 million year-over-year increase in carried interest expense, and lower LaSalle incentive fees[7] Cash Flow, Capital Allocation, and Liquidity The company generated strong operating cash flow, reduced net debt to $1.75 billion, and improved its net leverage ratio to 1.7x - Net cash provided by operating activities was $273.9 million, and Free Cash Flow was an inflow of $235.7 million in Q2 2024[10] - The company repurchased 103,701 shares for $20.1 million during the quarter[10] - JLL acquired SKAE Power Solutions, a provider of data center technical and project management services[10] Net Debt, Leverage, and Liquidity | Metric | June 30, 2024 | March 31, 2024 | June 30, 2023 | | :--- | :--- | :--- | :--- | | Total Net Debt (in millions) | $1,752.0 | $1,900.8 | $1,941.5 | | Net Leverage Ratio | 1.7x | 1.9x | 2.0x | | Corporate Liquidity (in millions) | $2,449.4 | $2,301.7 | $1,902.5 | Segment Performance Highlights Performance was led by strong revenue growth in Work Dynamics and Markets Advisory, while LaSalle's results declined on lower incentive fees Markets Advisory Markets Advisory revenue grew 6% in local currency to $1.1 billion, with Adjusted EBITDA surging 30% on strong Leasing and Property Management performance Markets Advisory Q2 2024 Financials (vs. Q2 2023) | Metric | Q2 2024 ($M) | Q2 2023 ($M) | % Change in LC | | :--- | :--- | :--- | :--- | | Revenue | $1,078.8 | $1,025.4 | 6% | | - Leasing | $619.1 | $591.4 | 5% | | - Property Management | $436.6 | $409.9 | 8% | | Adjusted EBITDA | $129.6 | $99.4 | 30% | - Leasing growth was led by the office sector, which saw increased deal size and transaction volumes, while Property Management growth was led by expansion in the Americas and Asia Pacific[13] Capital Markets Capital Markets revenue grew 3% in local currency, but Adjusted EBITDA declined 8% due to an $18.0 million loan repurchase expense Capital Markets Q2 2024 Financials (vs. Q2 2023) | Metric | Q2 2024 ($M) | Q2 2023 ($M) | % Change in LC | | :--- | :--- | :--- | :--- | | Revenue | $457.6 | $448.0 | 3% | | Adjusted EBITDA | $33.8 | $36.0 | (8)% | - Investment Sales in the U.S. grew over 20%, significantly outperforming the broader market which fell 3%[15] - Adjusted EBITDA was negatively impacted by an $18.0 million expense related to the August 2024 repurchase of a loan originated and sold to Fannie Mae[15] Work Dynamics Work Dynamics delivered strong results with revenue up 17% and Adjusted EBITDA up 26% in local currency, led by Workplace Management Work Dynamics Q2 2024 Financials (vs. Q2 2023) | Metric | Q2 2024 ($M) | Q2 2023 ($M) | % Change in LC | | :--- | :--- | :--- | :--- | | Revenue | $3,933.3 | $3,374.6 | 17% | | - Workplace Management | $3,021.1 | $2,553.4 | 19% | | - Project Management | $788.1 | $703.2 | 13% | | Adjusted EBITDA | $71.1 | $56.2 | 26% | - Workplace Management's strong performance was due to Americas contract wins and mandate expansions from 2023 being onboarded[17] JLL Technologies JLL Technologies revenue declined 7% in local currency, with Adjusted EBITDA falling sharply due to a significant negative change in carried interest expense JLL Technologies Q2 2024 Financials (vs. Q2 2023) | Metric | Q2 2024 ($M) | Q2 2023 ($M) | % Change in LC | | :--- | :--- | :--- | :--- | | Revenue | $56.4 | $60.6 | (7)% | | Adjusted EBITDA | $(10.9) | $(1.3) | (704)% | - The revenue decline was caused by lower contract signings and delayed decisions on technology spend from existing clients[20] - The lower Adjusted EBITDA was entirely attributable to a $12.2 million change in carried interest expense[20] LaSalle LaSalle's revenue and Adjusted EBITDA decreased 27% and 31% respectively in local currency, driven by a sharp drop in incentive fees and lower AUM LaSalle Q2 2024 Financials (vs. Q2 2023) | Metric | Q2 2024 ($M) | Q2 2023 ($M) | % Change in LC | | :--- | :--- | :--- | :--- | | Revenue | $102.6 | $143.9 | (27)% | | - Advisory fees | $93.1 | $103.1 | (8)% | | - Incentive fees | $2.6 | $35.8 | (92)% | | Adjusted EBITDA | $22.7 | $34.8 | (31)% | - Assets under management (AUM) stood at $86.6 billion as of June 30, 2024, a decrease of 7% in USD (5% in local currency) from the prior year[22] - The net decrease in AUM over the trailing twelve months was driven by dispositions, net valuation decreases, and foreign currency impacts[22] Financial Statements and Notes This section provides detailed unaudited financial statements and supplementary notes defining and reconciling non-GAAP measures Consolidated Statements of Operations The statement details financial performance for Q2 2024, showing total revenues of $5.63 billion and net income of $84.4 million Q2 2024 Consolidated Statement of Operations Highlights | (in millions) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Revenue | $5,628.7 | $5,052.5 | | Total operating expenses | $5,476.3 | $4,903.3 | | Operating income | $152.4 | $149.2 | | Net income attributable to common shareholders | $84.4 | $2.5 | Consolidated Balance Sheets The balance sheet presents the company's financial position as of June 30, 2024, with total assets of $15.91 billion and total equity of $6.50 billion Consolidated Balance Sheet Highlights | (in millions) | June 30, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $6,634.0 | $6,857.0 | | Total assets | $15,909.0 | $16,064.8 | | Total current liabilities | $5,514.0 | $6,446.1 | | Total liabilities | $9,410.7 | $9,654.9 | | Total equity | $6,498.3 | $6,409.9 | Consolidated Statement of Cash Flows For the six months ended June 30, 2024, net cash used in operations was $403.6 million, with a net decrease in total cash of $5.8 million Six Months Ended June 30, 2024 Cash Flow Highlights | (in millions) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(403.6) | $(479.3) | | Net cash used in investing activities | $(154.1) | $(160.7) | | Net cash provided by financing activities | $566.6 | $503.9 | | Net change in cash, cash equivalents and restricted cash | $(5.8) | $(132.3) | Notes to Financial Statements These notes provide crucial context, including definitions and reconciliations of non-GAAP measures like Adjusted EBITDA and Free Cash Flow - The company uses non-GAAP financial measures like Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and Net Debt to measure performance[41] Reconciliation of Net Income to Adjusted EBITDA (Q2 2024) | (in millions) | Amount | | :--- | :--- | | Net income attributable to common shareholders | $84.4 | | Add: Interest expense, net | $41.7 | | Add: Income tax provision | $20.5 | | Add: Depreciation and amortization | $61.4 | | Add: Adjustments (Restructuring, MSR, etc.) | $38.3 | | Adjusted EBITDA | $246.3 | Reconciliation of Net Debt and Leverage Ratio | (in millions, except ratio) | June 30, 2024 | | :--- | :--- | | Total debt | $2,176.4 | | Less: Cash and cash equivalents | $424.4 | | Net Debt | $1,752.0 | | Trailing twelve-month Adjusted EBITDA | $1,033.8 | | Net Leverage Ratio | 1.7x |