CHICAGO, Feb. 12, 2019 /PRNewswire/ -- Jones Lang LaSalle Incorporated (NYSE: JLL) today reported strong operating performance for the full year and fourth quarter of 2018.

• Consolidated revenue and fee revenue1 both up 13 percent to $4.9 billion and $2.1 billion, respectively, for the quarter
• Diversified double-digit organic Real Estate Services revenue growth led by Leasing and Corporate Solutions demonstrates platform strength
• Outstanding Americas performance and LaSalle incentive fees coupled with EMEA improvement drive margin expansion
• LaSalle private equity capital raise brings assets under management to record $60.5 billion
• Continued progress on digital strategy and platform transformation
• Strong 2018 operating cash flow generation

"2018 was an exceptionally successful year for JLL. We made great progress in executing our Beyond strategy while achieving outstanding financial results," said Christian Ulbrich, JLL CEO. "We entered 2019 with strong business momentum that positions JLL for continued top-line and earnings growth in our Real Estate Services business."

Consolidated 2018 Performance Highlights:

The company achieved double-digit consolidated revenue and fee revenue growth for the fourth quarter and full year, compared with 2017. The growth was predominantly organic and occurred across all four segments.

• Leasing led consolidated fee revenue growth in the RES service lines (nearly 75 percent of the fourth-quarter growth and over half of the year-to-date growth), with notable full-year contributions from Property & Facility Management and Project & Development Services. The decline in consolidated Capital Markets was driven by Asia Pacific and EMEA. Geographically across the service lines, RES fee revenue growth for the fourth quarter was largely from Americas, contributing 83 percent on a local currency basis, followed by EMEA (12 percent) and APAC.
• LaSalle's significant revenue growth reflects record 2018 incentive fees earned on the disposition of real estate assets on behalf of clients, along with increased advisory fees for the full year.

Consolidated operating expenses excluding reimbursed expenses were $2.5 billion for the fourth quarter and $8.4 billion for the year, increases of 15 percent and 12 percent compared with the respective prior-year periods. Consolidated fee-based operating expenses1 were $1.8 billion for the quarter and $5.8 billion for the year, up 15 percent and 11 percent, respectively, over 2017. Notwithstanding increased investments in various transformation initiatives, revenue growth outpaced the increase in consolidated expenses.

For the fourth quarter, net income attributable to common shareholders was $201.1 million, compared with $76.2 million in the prior-year quarter, and adjusted EBITDA was $418.0 million, compared with $330.8 million in 2017. Diluted earnings per share were $4.37, up from $1.66 in 2017; adjusted diluted earnings per share were $5.99, up from $4.53 last year. Adjusted EBITDA margin, calculated on a fee-revenue basis, was 19.7 percent in USD for the quarter (19.9 percent in local currency), compared with 17.7 percent in 2017. Consolidated fourth-quarter performance reflects approximately:

• 280 basis points of margin increase from RES businesses, led by EMEA and Americas;
• 120 basis points of incremental investments in platform and transformation initiatives; and
• 60 basis points of incremental margin associated with the adoption of ASC Topic 606. Refer to Note 6 of this news release for additional information.

For the year, net income attributable to common shareholders was $484.1 million, up over 80 percent from 2017. Adjusted EBITDA was $953.2 million, an increase of 25 percent compared with $770.7 million in the prior year. Adjusted EBITDA margin, calculated on a fee-revenue basis, was 14.7 percent in USD for the year (14.9 percent in local currency), compared with 13.4 percent last year.

Net income for the fourth quarter and full-year 2017 reflected additional income tax expense of $125.9 million, representing the company's provisional estimate of the effect of U.S. tax legislation passed in December 2017. The impact on diluted earnings per share was $2.75, with no impact to adjusted diluted earnings per share. In the fourth quarter of 2018, $47.0 million of additional expense was recorded to true-up the provisional estimate; the 2018 impact to diluted earnings per share was $1.02, with no impact to adjusted diluted earnings per share.

Balance Sheet and Net Interest Expense:

Total net debt was $289.3 million as of December 31, 2018, representing decreases of $453.5 million and $296.9 million from September 30, 2018 and December 31, 2017, respectively. The decreases reflected continued strong cash generation by the company.

Net interest expense was $10.7 million for the fourth quarter of 2018 and $51.1 million for the year, both decreases from $13.7 million and $56.2 million in the respective prior-year periods. A decline in the outstanding average borrowings, partially offset by a higher effective interest rate on the Credit Facility, primarily drove the decrease in annual net interest expense.

Americas 2018 Performance Highlights:

Americas double-digit revenue and fee revenue increases for the fourth quarter and full year reflect broad-based growth across all service lines. Leasing led segment growth with significant outperformance against U.S. office market gross absorption for the fourth quarter, as reported by JLL Research, driven by large deals and highlighted by momentum in the New York, Midwest and Northwest U.S. markets. Property & Facility Management also contributed notably to segment growth as a result of the ramp-up of recent wins and expansion of existing facilities management relationships with Corporate Solutions clients.

Operating expenses, excluding reimbursed expenses, were $1.1 billion for the fourth quarter and $3.5 billion for the year, up 25 percent and 15 percent, respectively, from 2017. Fee-based operating expenses, excluding restructuring and acquisition charges, were $0.9 billion for the fourth quarter and $2.8 billion for the full year, up 21 percent and 13 percent, respectively, over 2017. Cost management initiatives partially offset revenue-related expense growth and increased investments in platform and technology transformation programs.

Adjusted EBITDA margin, calculated on a fee-revenue basis, was 19.3 percent in USD for the quarter (19.4 percent in local currency), compared with 17.5 percent in 2017. The increase in profitability and margin expansion reflect Leasing revenue growth and yields from cost management initiatives, partially offset by the incremental investments noted above. In addition, margin comparability is impacted by the adoption of ASC 606; refer to Note 6 following the Financial Statements for additional information.

EMEA 2018 Performance Highlights:

EMEA revenue and fee revenue growth for the quarter was led by Property & Facility Management, driven by the stabilization of Integral where 2017 included additional gross contract costs associated with loss-making contracts. Capital Markets fee revenue declines partially offset growth across the other services lines, attributable to an outsized 2017 transaction in Switzerland together with declines in certain larger markets. For the full-year, in addition to Property & Facility Management, Project & Development Services led year-to-date fee revenue growth, with notable contributions from the Tetris fit-out business and MENA. Geographically across service lines, fee revenue expansion for the year was most notable in the UK and France.

Operating expenses, excluding reimbursed expenses, were $774.4 million for the fourth quarter and $2.7 billion for the year, an increase of 1 percent and 4 percent from the respective prior-year periods. Fee-based operating expenses, excluding restructuring and acquisition charges, were $486.8 million for the fourth quarter and $1.6 billion for the year, increases of 2 percent and 5 percent, respectively, compared with 2017. The decrease in fourth-quarter expenses reflects an $11.4 million improvement in the bad debt provision over 2017, driven by Integral stabilization and successful collection efforts this quarter.

In addition to improvements in Operating income and Adjusted EBITDA, the above-discussed revenue and expense factors drove expansion in the adjusted EBITDA margin, calculated on a fee-revenue basis, to 18.2 percent in USD and local currency for the quarter, compared with 14.5 percent last year.

Asia Pacific 2018 Performance Highlights:

Asia Pacific revenue and fee revenue growth for the fourth quarter was led by (i) Property & Facility Management, driven by both organic new business and expansion of client mandates, and (ii) Leasing, primarily from office and industrial sectors in Greater China and Australia. This growth partially offset the decline in Capital Markets, where the prior-year quarter's growth was nearly 50 percent over fourth-quarter 2016 from outsized transactions in Japan and Greater China. Geographically across service lines, fourth-quarter fee revenue expansion was most notable in Australia. Leasing and Project & Development Services led year-to-date segment fee revenue growth, partially offset by Capital Markets. Leasing full-year drivers were consistent with the quarterly drivers; Project & Development services was driven by government projects in Australia.

Operating expenses, excluding reimbursements, were $504.1 million for the fourth quarter and $1.8 billion for the full year, increases of 10 percent and 16 percent, respectively, over 2017. Fee-based operating expenses, excluding restructuring and acquisition charges, were $282.9 million and $936.6 million, increases of 1 percent and 6 percent, respectively, over 2017. The increases in fee-based operating expenses correspond with revenue-related expense growth. In the fourth quarter, this growth was partially offset by reduced compensation expense as a result of certain management initiatives.

Adjusted EBITDA margin, calculated on a fee-revenue basis, was 21.3 percent in USD for the quarter (21.8 percent in local currency), compared with 20.6 percent in 2017. Operating performance improvement and margin expansion reflect the expense commentary noted above.