Jones Lang LaSalle Incorporated — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; unaudited, compared with Q1 2021. JLL reorganized its reporting segments effective January 1, 2022, and recast the comparative period to the new structure.
Financial performance
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Revenue | $4,801.4 million | $4,037.1 million | +19% reported; +21% local currency |
| Fee revenue (non-GAAP) | $1,900.5 million | $1,424.5 million | +33% reported; +36% local currency |
| Operating income | $175.7 million | $80.7 million | +118% |
| Net income attributable to common shareholders | $145.6 million | $103.0 million | +41% |
| Diluted EPS | $2.86 | $1.97 | +45% |
| Adjusted EBITDA (non-GAAP) | $273.6 million | $190.1 million | +44% |
| Net income margin | 3.0% | 2.6% | +0.4 percentage points |
| Adjusted EBITDA margin on fee revenue | 14.4% | 13.3% | +1.1 percentage points |
Revenue includes $2,904.5 million of gross contract costs that are reimbursed by clients; fee revenue excludes these costs and certain non-cash mortgage servicing activity. The GAAP effective tax rate was 21.9%, versus 21.6% in Q1 2021. Net interest expense was $10.2 million.
Segments
- Markets Advisory: Revenue of $999.5 million (+26%); Adjusted EBITDA of $111.2 million, up from $66.0 million. Leasing growth led results.
- Capital Markets: Revenue of $600.6 million (+46%); Adjusted EBITDA of $118.2 million, up from $59.1 million. Investment sales and debt/equity advisory activity strengthened.
- Work Dynamics: Revenue of $3,033.6 million (+12%); Adjusted EBITDA of $35.2 million, up from $24.9 million. Workplace Management revenue grew 19%.
- JLL Technologies: Revenue of $49.4 million (+14%); Adjusted EBITDA was a loss of $12.3 million, versus income of $14.0 million. Higher expenses and lower equity earnings weighed on results.
- LaSalle: Revenue of $118.3 million (+30%); Adjusted EBITDA of $21.3 million, down from $26.1 million. Equity losses included a $10.6 million loss on a Japanese publicly traded REIT co-investment. AUM was $77.8 billion, up 2% from year-end 2021.
Cash flow, debt and liquidity
- Operating activities used $716.4 million of cash, compared with $461.8 million used in Q1 2021. Management attributed the higher outflow primarily to greater incentive compensation payments tied to 2021 performance.
- Investing activities used $94.0 million; financing activities provided $806.5 million. Cash, cash equivalents and restricted cash totaled $831.0 million at quarter-end, including $575.8 million of cash and cash equivalents.
- Total debt was $1,894.4 million, compared with $956.4 million at December 31, 2021. Credit-facility borrowings rose to $1,113.7 million from $138.2 million. The $2.75 billion revolving facility matures April 2026; JLL reported covenant compliance.
- JLL repurchased 615,331 shares for $150.0 million. The board authorized an additional $1.5 billion of repurchases in February; $1,606.8 million remained authorized at quarter-end.
- Investments totaled $785.3 million. Potential unfunded investment commitments were $360.8 million, including $60.3 million for which JLL did not expect a call.
Changes, outlook and risks
Growth was broad-based, with transaction-oriented Markets Advisory and Capital Markets leading fee revenue gains. Management cited sustained transaction momentum and stable annuity-based revenue, while noting expenses rose with hiring, wage inflation, travel and entertainment, and investment in growth. Adjusted EBITDA margin benefited in part from the timing of incentive compensation accruals; management cautioned that first-quarter results are not necessarily indicative of full-year results because of seasonality and variable transaction activity.
The filing provides no specific earnings or revenue guidance. Management identified macroeconomic, geopolitical, real estate and credit-market conditions, foreign exchange movements, transaction timing, and variable LaSalle incentive fees as sources of results volatility. The company disclosed ordinary-course litigation; management did not expect its resolution to materially adversely affect financial position, results or liquidity. No material change to previously disclosed risk factors was reported. Goodwill testing following the segment reorganization found no impairment.
Important facts for investors to verify
- Whether strong transaction-based fee revenue persists and how much of the reported growth reflects comparison with pandemic-affected Q1 2021.
- Whether operating cash outflows and increased credit-facility borrowing normalize after seasonal incentive compensation payments.
- How margin performance develops as hiring, wage inflation and growth investments continue, and whether Q1 incentive accrual timing affects comparability.
- JLL Technologies’ path to profitability and the volatility of investment-related equity earnings; LaSalle co-investment results and AUM trends.
- Exposure from investment commitments, DUS loan-loss sharing, acquisition earn-outs and litigation; the filing reports no Q1 DUS loan losses and $24.8 million of loss-sharing guarantee obligations.