Jones Lang LaSalle(JLL) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fourth quarter consolidated revenue rose 23% to $5.9 billion, and fee revenue increased 42% to $2.8 billion in local currency [15][17] - Adjusted EBITDA of $622 million represented an increase of 50% from the prior year, with adjusted EBITDA margin expanding from 21.3% to 22.4% in local currency [16] - Full year consolidated revenue rose 15% to €19.4 billion, and fee revenue increased 31% to €8.1 billion in local currency [17][18] Business Line Data and Key Metrics Changes - Leasing and capital markets businesses recorded growth of 68% and 62% respectively [15] - Real estate services fee revenue increased 42%, driven by strength in the Americas and transaction-based revenues globally [23] - Americas capital markets fee revenue grew 75% over the prior year quarter, and leasing fee revenue growth was 74% [27][29] Market Data and Key Metrics Changes - All three global regions registered positive net absorption in the office market for the first time since the onset of the pandemic [10] - Asia-Pacific office leasing volumes have recovered to 2019 levels, while Europe and the U.S. remain slightly below 2019 levels [10] - In the U.S., fourth quarter office leasing volumes were down 23% compared to pre-pandemic levels, but improved from a 44% decline two quarters ago [11] Company Strategy and Development Direction - The company announced a new reporting structure that will align external reporting with internal management, transitioning to five key business line segments [8][48] - The focus remains on investing in technology and attracting top talent to drive market share gains [59] - The company is committed to returning capital to shareholders while investing in business growth [19][42] Management's Comments on Operating Environment and Future Outlook - The global economic trends and positive investor sentiment provide a favorable market backdrop for continued growth [52] - Labor markets are tight, and inflation is expected to remain high in 2022, impacting compensation costs [53][54] - The company remains optimistic about achieving sustained growth and creating shareholder value in the coming years [55] Other Important Information - The company generated nearly $800 million of free cash flow in 2021, reflecting a cash conversion ratio of approximately 80% [22] - The Board has authorized a new $1.5 billion share repurchase program [19] Q&A Session Summary Question: Market share trends relative to the industry - The company has gained additional market share, particularly in leasing, and continues to invest in technology and talent to drive further gains [59] Question: Details on the Building Engines acquisition - The acquisition aims to integrate various applications for building management, enhancing operational efficiency for clients [61] Question: Expectations around 2022 equity earnings in LaSalle incentive fees - Equity earnings for LaSalle are expected to be lower than 2021 levels, with historical averages providing context for future expectations [66][70] Question: Free cash flow generation in 2021 - Free cash flow was impacted by changes in working capital, but overall cash flow generation was strong compared to 2020 [75] Question: Capital markets and leasing fee revenue growth expectations for 2022 - The company expects strong growth momentum, particularly in the U.S., but refrains from specific forecasts due to recent geopolitical events [78] Question: Share buyback activity in the fourth quarter - The company repurchased over $150 million in shares in the fourth quarter and plans to continue share repurchases in 2022 [81] Question: Changes in financial reporting and implications - The changes reflect the evolution of the business and will not alter the definitions of adjusted EBITDA or adjusted EPS [83]