Jones Lang LaSalle Incorporated

Good morning. At this time, I would like to welcome everyone to the Jones Langley Cell Incorporated First Quarter Earnings Conference call. For your information, this 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 followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. Thank you. I would now like to turn the call over to Scott Einberger, investor relations officer. Please go ahead.

Thank you and good morning. Welcome to the first quarter 2022 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 and in our slide presentation, 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 slide 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 for the fiscal year ended December 31, 2021, and in other reports filed with the SEC. The company disclaims any undertaking to publicly update or revise any forward-looking statements. Please note that effective with the first quarter 2022, our financial results are now being reported under five business line segments instead of the geographic-based structure that was utilized in the past. I will now turn the call over to Christian Wilbrich our President and Chief Executive Officer, for opening remarks.

Thank you, Scott. Hello, and thank you all for joining our first quarter earnings call. This morning, JLL reported first quarter financial results under our new business line format. Our results highlight the competitive advantages we have across each of our business lines, led by robust top and bottom line growth in our markets advisory, capital markets, and work dynamics businesses as well as strong peer revenue growth in our JLL technologies and LaSalle businesses. Our one JLL philosophy has allowed us to seamlessly serve clients across business lines and geographies, which has manifested itself in the strong results we just reported. I would like to thank all JLL employees for their dedication to helping our clients navigate the evolving macroeconomic and geopolitical environment. The geopolitical environment in Eastern Europe has forced many companies to evaluate how they conduct business in this part of the world. In early March, JLL made the difficult decision to separate our domestic operations in Russia. Russia's continued attacks on Ukraine and the Ukrainian people are horrendous and have no place in today's world. Our thoughts and sympathies remain with everyone in Ukraine and elsewhere whose livelihoods are being impacted by this ongoing conflict. Our main priorities continue to be supporting our colleagues in Ukraine. We have engaged with the World Economic Forum and other coordinating bodies in contributing to wider humanitarian efforts and thousands of JLL employees have also donated to relief efforts. I would like to extend a special thank you to our people in Poland and Central Europe who have opened their doors to those in need. Though not comparable to the situation of Ukrainians, I also want to note the hardship on our Russian colleagues. Some of them have been with us for more than 20 years. We have opened our doors for them in other JLL countries. From a business perspective, Eastern Europe and Russia combined accounted for approximately 1% of our 2021 fee revenue, and we do not expect the decision to separate our Russian business to have a meaningful impact on our fee revenue for 2022. The effect of the war in Ukraine on our leasing and capital markets businesses was minimal during the first quarter. Conditions in Europe remained fluid, and over the last week, sentiment in the region has started to shift with some transactions being delayed. The extent of the impact is still unknown and will be influenced by the evolution of the war in Ukraine. Turning to the current market environment, capital markets activity remained healthy during the first three months of the year. According to JLL's research team, first quarter activity was the highest on record with global capital markets transactions totaling $292 billion. Investments in office, retail, and hotels are now growing in line with the overall market after these asset classes lagged during the heart of the pandemic. Operating conditions continue to vary significantly by geography with impacts from inflation, rising interest rates, COVID lockdowns, and geopolitical events. Rising interest rates are beginning to create more volatility in the debt markets and investors are undertaking greater price discovery before closing transactions. On the leasing side, corporate occupiers are beginning to return to the office with occupancy rates rising gradually in most city center locations. A hybrid return to office is the most common solution we see with companies providing amenities and collaboration space required to draw employees back into the office. Global office market demand was up 35% versus the first quarter of 2021, with all regions showing a demand increase. Flight to quality remains the defining characteristics of the global office market, with rent and vacancy rates diverging between Class A and Class B and C properties. In the US specifically, Office leasing volumes and the average lease terms both increased for the fifth consecutive quarter. The average US office lease term is now at 8.2 years, just shy of the pre-pandemic five-year average, with effective rents approximately 5% below the pre-pandemic levels for Class A office space. Shifting to other asset classes, leasing activity in industrial and retail remained strong in the first quarter. In the industrial space, all-time low vacancy rates persist despite record levels of new space under construction. It's likely that leasing volumes in the industrial sector will moderate given the lack of supply in the market. Retail activity is recovering rapidly in the large mature markets as many retailers look to open new brick-and-mortar concepts. This activity increase is supporting retail rent growth for higher quality locations. While the macroeconomic factors I mentioned previously shout the future operating environment, current conditions remain favorable. Ample liquidity and the continued allocation of investment dollars to the real estate markets bode well for long-term growth. Let's now shift our attention to JLL's performance for the quarter. First quarter revenue rose 21%, to 4.8 billion US dollars, and fee revenues increased 36% to 1.9 billion US dollars in local currency, nearly all of which was organic. All five business lines contributed to the growth in fee revenue led by our markets advisory and capital markets businesses. Adjusted EBITDA for the quarter was 274 million US dollars, an increase of 47% from the prior year, and our adjusted EBITDA margin was 14.4% in local currency. Adjusted net income totaled 177 million US dollars for the quarter, and adjusted diluted earnings per share were $3.47, an increase of 69% from the prior year. Our adjusted EBITDA margin expanded 110 basis points year over year, speaking to the strength of our core business, diligent cost management, and the growth in higher margin transactional business lines. Disciplined capital allocation remains a focus. Our strategy is to invest in the business to drive future growth, both organically and through select M&A, and return capital to shareholders. Our pipeline has expanded with the recent market turbulence, and we continue to rigorously evaluate all opportunities against our capital allocation framework. In the first quarter, we returned approximately $150 million to shareholders through our ongoing share repurchase program. The strength of our balance sheet and the meaningful amount of cash that our business generates gives us the flexibility to both invest in the business and return cash to shareholders. I will now turn the call over to Karen Brennan, who will provide further detail on our results for the quarter.