Jones Lang LaSalle Incorporated

Good morning. At this time, I would like to welcome everyone to the Jones Langley South Incorporated Fourth Quarter Earnings Conference Call. For your information, this conference call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the conference over to Chris Stent, Executive Managing Director of Investor Relations. Please go ahead.

Thank you, and good morning. Welcome to our fourth 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 and presentation. 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, 2020, and in other reports filed with the SEC. The company disclaims any undertaking to publicly update or revise any forward-looking statements. I will now turn the call over to Christian Ulbrich, our President and Chief Executive Officer, for opening remarks.

Thank you, Chris. Welcome to our fourth quarter call. Overall, I'm extremely pleased with how our team across the world performed in 2020, providing exceptional services to our clients while successfully navigating the pandemic-related challenges and delivering solid results for all our stakeholders. Our fiscal year was capped off by a better-than-expected performance in the fourth quarter, which is a testament to the growing strengths of our platforms. While we remain cautious about the first half of 2021, given the extent of uncertainty related to the pandemic, we are proud of JLL's execution for a unique year in 2020. Before turning to the market environment and our financial performance, I wanted to briefly explain how some of the strategic investments made prior to 2020 supported us to successfully navigate this past year. Our technology investment in finance and HR ERP systems and the migration of all geographies and business lines into one accounting system provided management much better visibility into our working capital position, where we were able to significantly improve our receivables collections and enhance cash generation. I cannot emphasize enough how vital this was to effectively manage our overall liquidity, repaying debt ahead of our schedule, and continuing to invest to drive future growth. Secondly, the investment in our capital markets CRM platform, where we also integrated our colleagues from HFF, allowed us to share client information seamlessly and promote cross-selling throughout the organization. This has been a strong contributor to our success in 2020, also evidenced by our fourth quarter performance in America's capital markets relative to the overall market. We will continue to invest in superior technology tools and leveraging our data to further enhance our value proposition for customers, differentiate us from the competition, and ultimately create value for shareholders. In 2020, we also accelerated the organizational transformation initiated in January 2019 through the appointment of new global and regional leadership roles, further enhancing the global integration of our services and expertise. It's also important to note that we are focused on helping our clients plan their transition to a post-pandemic environment, leveraging our thought leadership to advise on the future of work, the changing role of the office, and the evolution of cities. Turning to the market environment. The development and administration of vaccines in the fourth quarter marked the first steps in a long march toward a post-pandemic environment. While the second half of 2020 saw the beginning signs of recovery, many countries are witnessing record-breaking levels of new cases. Significant uncertainty will continue to weigh on the overall recovery as the world waits for widespread immunization to an extent that will bring the pandemic under control and further bolster the economic development. Relative to the global office leasing market, JLI Research reported that activity in the first quarter was down 43% from a year earlier. The United States saw a much sharper decline compared to the other regions, with activity down 53%. EMEA and Asia-Pacific recorded decreases in activity of 39% and 25%, respectively, relative to last year. Vacancy rates increased across all regions in the fourth quarter, with a global vacancy rate now at 12.9%, the highest level since 2014. Global capital markets continue to recover from the sharp contraction recorded earlier in the year, as declines in investment sales decelerated in the fourth quarter, led by a robust rebound in activity in the Americas and large European markets. Despite the challenges throughout the year, the decisive actions undertaken by our team, as well as the overall resilience of our platform, enabled JLL to deliver solid results for the year. Consolidated revenue fell 8% to $16.6 billion, and fee revenue declined 14% to $6.1 billion in local currency. We recorded adjusted EBITDA of $860 million, a decline of 24% from the prior year, and adjusted diluted earnings per share of $9.46, which represented a decline of 34% from the prior year. It is worth noting that despite the challenges of 2020, we were able to achieve a full year 14% adjusted EBITDA margin, which is within our long-term target range of 14% to 16%. We also generated a record $1.1 billion in operating cash flow, testament to the strength of our business model and ability to navigate a downturn. Turning our attention to our fourth quarter performance. Consolidated revenue fell 12% to $4.8 billion and T-revenue declined 19% to $2 billion in local currency. Adjusted EBITDA of $470 million represented a decline of 18% from the prior year, although adjusted EBITDA margin increased 50 basis points to 21.3%, as reported, driven by cost mitigation initiatives and some government COVID programs. Adjusted net income totaled $276 million for the quarter, and adjusted diluted earnings per share totaled $5.29. As I alluded to on the third quarter earnings call, capital markets transaction volumes, especially in the Americas, came back faster than leasing as investors began to adapt to the current environment and put capital to work. Logistics and multifamily housing continue to demonstrate resiliency. However, though our transactional pipelines are building, the market remains uncertain in the near term and activity has not yet normalized. Throughout 2020, a key priority of management has been a review and corresponding refinement of our capital allocation strategy. Our strategy is underpinned by a framework that considers allocation across three main pillars. Maintaining an investment grade balance sheet, driving future growth through organic and inorganic investments in the business, and returning cash to shareholders. Our commitment to an investment-grade balance sheet enables access to the capital markets throughout cycles. We repaid the debt associated with the HFF transaction one quarter earlier than expected, which speaks to our diligent cash management and operational focus. Our current approach is to operate within a reported net leverage range of 0.5 to 1.25 times. recognizing that there may be periods outside of this range due to seasonality and other short-term factors. The strengths of our balance sheet and ability to generate meaningful cash flows enable us to reinvest significantly into our business. Funding initiatives that will drive profitable organic growth and attractive returns on capital and that are aligned with our Beyond 2025 goals remains the main priority for JLL. This includes technology investments, which we believe is a significant differentiator for JLL. M&A will continue to be an avenue of growth for JLL in a consolidating industry. We will strategically evaluate opportunities as they arise. There are no gaps in our portfolio, so our bar is high. Any opportunity must meet our already rigorous standards. Specifically, they must be value-accretive acquisitions that are appropriately priced, have a strong cultural and strategic fit, and generate a return on invested capital of at least 12%. Over the long term, we are committed to returning approximately 20% of our free cash flow to shareholders. The percentage will vary year to year depending on the investment opportunities we identify. Before 2020, our primary method of returning cash has been through a dividend. During 2020, we made the decision to shift our primary distribution method to share repurchases. due to the increased flexibility and attractive market conditions. We evaluate share repurchases the same way we evaluate an acquisition or investment, by analyzing capital invested and expected returns. If we expect to earn a higher return repurchasing JLL shares, then we will allocate capital accordingly. Our 2020 repurchase activity was reflective of this approach. We repurchased 100 million worth of shares at an average price of $111. For perspective, this is slightly more than twice the amount we returned to shareholders via dividends in 2019. We have $100 million remaining on our existing repurchase authorization, and the Board of Directors recently authorized an incremental $500 million share repurchase program for a total of $600 million. I will now turn the call over to Karen, who will provide further detail on the results for the fourth quarter and full year.