Jones Lang LaSalle Incorporated

Ladies and gentlemen, thank you for standing by and welcome to the JLL Q1 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone keypad. If you require any further assistance, please press star 0. Thank you. I would now like to turn the call over to your speaker today, Chris Stentz. Executive Managing Director, Corporate Finance and Investor Relations of JLL. Please go ahead, sir.

Thank you, and good morning. Welcome to our first quarter 2020 conference call for Jones Lang LaSalle Incorporated. Earlier this morning, we issued our earnings release, which is available on the investor relations section of our website, along with the slide presentation intended to supplement our prepared remarks. please visit ir.jll.com. During the call, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures to GAAP in our earnings release in supplemental slides. As a reminder, today's call is being webcast live and recorded. A transcript of this conference call will also be posted on our website. Any statements made about future results and performance, plans, expectations, and objectives are forward-looking statements. Actual results and performance may differ from those forward-looking statements as a result of factors discussed in the annual report on Form 10-K of the fiscal year ended December 31, 2019 and in other reports filed with the SEC. The company disclaims any undertaking to publicly update or revise any forward-looking statements. And with that, I would like to turn the call over to Christian Ulbrich, our President and Chief Executive Officer, for opening remarks.

Thank you, Chris. Good morning and welcome to all of you joining us today for this review of our first quarter results in these unprecedented times. Before we delve into our financial performance for the quarter, I would like to take a moment to offer our sympathy and support to all of those who have been touched by the pandemic. Further, on behalf of everyone at JLL, I would like to extend our tremendous gratitude to the healthcare workers, first responders, and everyone on the front lines of this crisis. While the COVID-19 pandemic moves around the world, we at JLL continue to focus on what matters most, and that is keeping our employees safe and productive, supporting our communities, and serving our clients. In responding to the pandemic, we are partnering with clients and communities in many ways, from local efforts to support healthcare operations, including rapid deployment of temporary facilities to participation in global collaborative projects. Among the global projects being coordinated by the World Economic Forum, we are participating alongside many other global businesses in WEF's COVID action platform. The impact of the pandemic has truly been profound with government responses required across the globe and a general cessation of activity through all aspects of business. The effects of the pandemic on our company were initially concentrated in parts of China in January, and in later weeks, spreading across a multitude of service lines and regions throughout the world. It is likely that this crisis will have significant repercussions on the global economy and on our industry, which will go well beyond this year. We acted early as the pandemic developed and progressed across the world. JLL teams around the world are helping our clients prepare, respond, recover, and reimagine the future. For instance, we rapidly deployed practical measures to support health and safety in the wide range of essential facilities continuing to operate through lockdown phases. In addition, we have partnered with clients in developing tailored strategies and plans for reopening and gearing up operations once lockdown phases are eased. As an illustration of this, our global corporate solutions business has to date launched 22 new products designed to help clients navigate the pandemic crisis. One of the most critical essential factors, of course, is healthcare. We have continued to perform facilities management services for biotech clients that are working to develop a COVID-19 vaccine helping them run at peak safety and performance as they anticipate moving to 24-7 operations. We have been involved in various capacities in creating temporary hospital facilities. Furthermore, we have been instrumental in ensuring many mission critical deals are executed, such as facilitating warehouse space for storing medical supplies and equipment as part of the COVID-19 response. Turning to our people, we are following government and World Health Organization advice and guidelines in order to protect employees and prevent the spread of the COVID-19 infection. We are grateful for the investments we have made in our technology platform over the past several years, which enabled over 90% of our office staff to work safely from their homes by the end of March with limited impact in productivity. With regard to macroeconomic and real estate fundamentals for the first quarter, global economic growth came to an abrupt halt in the first quarter, making the first quarter of contraction in the global economy in 11 years. Office leasing activities across all the regions softened as deals were delayed, and in some cases canceled with a market down 22% for the quarter. Investment sales activity saw a noticeable drop as well, particularly in March, with the market down 5% for the quarter. Areas hit by the pandemic first experienced greater declines than those impacted later. Despite the uncertainty of the depth and duration of the crisis, we remain optimistic about the long-term prospects of the commercial real estate industry. Though the crisis will force an inevitably rethinking of many aspects of our world, The core function of commercial real estate will still be necessary, and investors will continue to see real estate as an attractive investment for capital. Our global full-service platform and deep expertise positions us particularly well in these uncertain times as a preferred partner as real estate investors and occupiers evaluate and optimize their real estate assets and look to experienced and trusted hands. We expect a negative impact to our top line, bottom line, and free cash flow across all operating segments for the full year as the pandemic unfolds. Our strategic priority for the fiscal year is to focus on liquidity, cash flow, and prudently manage our operating and investment spend to ensure we have the operating flexibility to effectively navigate through this crisis. We acted early and decisively to adjust our cost base. To send the right tone from the top, all colleagues of the Global Executive Board have cut their base salaries from April onwards by 50% for the rest of the year, and many of our senior leaders around the world have also cut or deferred parts of their base compensation. In consideration of the voluntary compensation reduction offered by many of our employees, the significant actions we have taken on our operating costs including our colleagues who have been and will be impacted during this crisis, we have decided to suspend our dividend payment to shareholders until we have better visibility on how the world, our clients, and therefore our business will be impacted. While we are currently in a strong financial position, the economic and societal challenge the world is facing is extraordinary and unprecedented. and all leading companies have to be mindful about the totality of all of their actions. With that backdrop, I will now provide a brief overview of our first quarter financial performance. We are pleased to report a solid start to the year. Consolidated revenue rose 9% to 4.1 billion and fee revenue increased 15% to 1.5 billion in local currency. Brand new gains were led by continued strong performance in our America's capital markets, property and facility management, and project and development services businesses. We achieved record first quarter performance in our real estate services business. The South's assets under management reached 69.5 billion. Adjusted net income totaled 25.8 million for the quarter, and adjusted diluted earnings per share total 49 cents, both impacted by non-cash items that Stephanie will provide further commentary on shortly. Turning to HFS, we continue to successfully integrate the business and specifically the overall Americas and EMEA capital markets business performed well despite the softening conditions in March. We have made excellent progress on realizing cost synergies for the first nine months. Our revenue synergy targets will be certainly impacted in the near term by the pandemic, but we remain very confident in the long-term potential to drive significant incremental revenue across our multitude of service lines. During the first quarter, we executed on our goal of utilizing a portion of the 200 million share repurchase authorization that our board approved in the first quarter 2019, by completing 25 million of share repurchases. Obviously, we are also pausing any further share repurchases in the near term. Now, we will hear from Stephanie for some color and detail on the first quarter financial.