Jones Lang LaSalle Incorporated (JLL), a leading full-service real estate firm that provides corporate, financial, and investment management services, reported third quarter 2010 net income of $37 million or 84 cents per share compared to $20 million or 46 cents in the year-earlier quarter. Excluding non-recurring items, earnings were $38 million or 86 cents per share during the quarter versus $27 million or 61 cents in the year-ago quarter. Recurring earnings for the reported quarter were below the Zacks Consensus Estimate of 95 cents.
Revenues for the reported quarter came in at $708 million compared to $595 million recorded in the year-ago quarter. Total revenues during the quarter were well above the Zacks Consensus Estimate of $687 million. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) were $79 million for third quarter 2010 compared with $66 million for the same period in 2009.
By segment, revenues from the Americas region came in at $309 million reflecting an increase of 29%, while that in EMEA (Europe, Middle East, and Africa) increased 10% to $169 million. In the Asia-Pacific region, revenue growth was 21% to $165 million. Year-over-year increase in revenue across all the segments was largely due to strong leasing activities during the quarter, which increased 36% on a local currency basis.
Advisory fees from the LaSalle Investment Management segment were $62 million, up 1% year-over-year. During the quarter, the segment raised net capital of $1.0 billion, bringing the year-to-date tally to $5.3 billion. Investments during the quarter totaled $1.7 billion. At quarter-end, assets under management were $40.2 billion.
Total operating expenses (excluding restructuring charges) were $646 million for the quarter compared to $546 million in the year-ago period. The year-over-year increase in operating expenses was largely due to a rise in hiring and transition costs. Adjusted operating income margin improved to 8.8% during the quarter from 8.2% in the same period in 2009.
At quarter-end, Jones Lang had an outstanding debt of $253 million under its long-term credit facility, compared with $292 million at September 30, 2009. During the quarter, the company made the first deferred payment related to its Staubach acquisition. Jones Lang also renewed its existing bank credit facility, increasing the borrowing capacity to $1.1 billion from $840 million and extending the maturity to September 2015 from June 2012. The strategic moves were aimed at strengthening the balance sheet, increasing the liquidity to meet the current commitments and capitalizing on potential opportunities.
Jones Lang is one of the best-positioned commercial real estate services companies, maintaining steady margin improvements in line with stable revenue growth. Recent acquisitions should incrementally add to earnings and overall expenses should continue to reduce as operating synergies are realized. We maintain our long-term Neutral rating for the stock, which presently has a Zacks #3 Rank that translates into a short-term “Hold” rating.
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