JONES LANG LASALLE INC 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements, including the notes thereto, for the three and nine months ended September 30, 2023, and our audited Consolidated Financial Statements, including the notes thereto, for the fiscal year ended December 31, 2022, which are included in our 2022 Annual Report on Form 10-K, filed with the SEC and also available on our website ( www.jll.com ). You should also refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our 2022 Annual Report on Form 10-K. The following discussion and analysis contains certain forward-looking statements generally identified by the words anticipates, believes, estimates, expects, forecasts, plans, intends and other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause JLL's actual results, performance, achievements, plans and objectives to be materially different from any future results, performance, achievements, plans and objectives expressed or implied by such forward-looking statements. See the Cautionary Note Regarding Forward-Looking Statements included within this section for further information. We present our quarterly Management's Discussion and Analysis in the following sections: (1) A summary of our critical accounting policies and estimates; (2) Certain items affecting the comparability of results and certain market and other risks we face; (3) The results of our operations, first on a consolidated basis and then for each of our business segments; and (4) Liquidity and capital resources. SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES An understanding of our accounting policies is necessary for a complete analysis of our results, financial position, liquidity and trends. See Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in our 2022 Annual Report on Form 10-K for a complete summary of our significant accounting policies. The preparation of our financial statements requires management to make certain critical accounting estimates and judgments that impact (1) the stated amount of assets and liabilities, (2) disclosure of contingent assets and liabilities at the date of the financial statements and (3) the reported amount of revenue and expenses during the reporting periods. These accounting estimates are based on management's judgment. We consider them to be critical because of their significance to the financial statements and the possibility that future events may differ from current judgments or that the use of different assumptions could result in materially different estimates. We review these estimates on a periodic basis to ensure reasonableness. Although actual amounts likely differ from such estimated amounts, we believe such differences are not likely to be material. A discussion of our critical accounting policies and estimates used in the preparation of our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q can be found in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to these critical accounting policies and estimates during the nine months ended September 30, 2023. ITEMS AFFECTING COMPARABILITY Macroeconomic Conditions Our results of operations and the variability of these results are significantly influenced by (i) macroeconomic trends, (ii) the geopolitical environment, (iii) the global and regional real estate markets and (iv) the financial and credit markets. These macroeconomic and other conditions have had, and we expect will continue to have, a significant impact on the variability of our results of operations. 27 Table of Contents Acquisitions and Dispositions The timing of acquisitions and dispositions may impact the comparability of our results on a year-over-year basis. Our results include incremental revenues and expenses following the completion date of an acquisition. Relating to dispositions, comparable results will include the revenues and expenses of recent dispositions and results may also include gains (losses) on the disposition. In addition, there is generally an initial adverse impact on net income from an acquisition as a result of pre-acquisition due diligence expenditures, transaction/deal costs and post-acquisition integration costs, such as fees from third-party advisors engaged to assist with onboarding and process alignment, retention and severance expense, early lease termination costs and other integration expenses. For dispositions, we may also incur such incremental costs during the disposition process and these costs could have an adverse impact on net income. Equity Earnings and Incentive Fees Equity earnings may vary substantially from period to period for a variety of reasons, including as a result of (i) valuation increases (decreases) on investments reported at fair value, (ii) gains (losses) on asset dispositions and (iii) impairment charges. The timing of recognition of these items may impact comparability between quarters, in any one year, or compared with a prior year. LaSalle, our investment management business, is in part compensated through incentive fees where performance of underlying funds' investments exceeds agreed-to return hurdles. Depending upon performance, disposition activity and the contractual timing of measurement periods with clients, these fees can be significant and may vary substantially from period to period. The comparability of these items can be seen in Note 4, Business Segments, of the Notes to Condensed Consolidated Financial Statements and is discussed further in Segment Operating Results included herein. Foreign Currency We conduct business using a variety of currencies, but we report our results in U.S. dollars. As a result, the volatility of currencies against the U.S. dollar may positively or negatively impact our results. This volatility can make it more difficult to perform period-to-period comparisons of the reported U.S. dollar results of operations, because such results may indicate a growth or decline rate that might not have been consistent with the real underlying growth or decline rates in the local operations. Consequently, we provide information about the impact of foreign currencies in the period-to-period comparisons of the reported results of operations in our discussion and analysis of financial condition in the Results of Operations section below. Transaction-Based Revenue Transaction-based fees, which are impacted by the size and timing of our clients' transactions, from real estate investment banking, capital markets activities and other services within our segments, increase the variability of the revenue we earn. The timing and the magnitude of these fees can vary significantly from year to year and quarter to quarter, and from region to region. Seasonality Historically, our quarterly revenue and profits have tended to increase from quarter to quarter as the year progresses. This is a result of a general focus in the real estate industry on completing or documenting transactions by calendar year end and the fact that certain expenses are constant through the year. In addition, this seasonality excludes the recognition of investment-generated performance fees as well as realized and unrealized co-investment equity earnings and losses (the timing of each of these can fluctuate based on a variety of factors). Generally, we recognize incentive fees when assets are sold, the timing of which is geared toward the benefit of our clients. In addition, co-investment equity gains and losses are primarily dependent on valuations of underlying investments, the direction and magnitude of changes to such valuations fluctuate based on a variety of factors. Non-variable operating expenses, which we treat as expenses when incurred during the year, are relatively constant on a quarterly basis. A significant portion of our Compensation and benefits expense is from incentive compensation plans, which we generally accrue throughout the year based on progress toward annual performance targets. This quarterly estimation can result in significant fluctuations in quarterly Compensation and benefits expense from period to period. Consequently, the results for the periods ended September 30, 2023 and 2022 are not fully indicative of the results we expect to realize for the full fiscal year. 28 Table of Contents RESULTS OF OPERATIONS Definitions • Assets under management data for LaSalle is reported on a one-quarter lag. • MENA: Middle East & North Africa • n.m.: not meaningful, represented by a percentage change of greater than 1,000% or a change in margin of greater than 10,000 basis points ("bps"), favorable or unfavorable. Consolidated Operating Results Three Months Ended September 30, Change in % Change in Local Currency ($ in millions) 2023 2022 U.S. dollars Markets Advisory $ 992.4 1,111.5 (119.1) (11) % (11) % Capital Markets 435.8 595.2 (159.4) (27) (28) Work Dynamics 3,514.2 3,289.8 224.4 7 6 JLL Technologies 58.9 56.5 2.4 4 4 LaSalle 110.1 124.5 (14.4) (12) (13) Revenue $ 5,111.4 5,177.5 (66.1) (1) % (2) % Gross contract costs (3,327.1) (3,123.7) (203.4) 7 6 Net non-cash MSR and mortgage banking derivative activity 7.1 (5.2) 12.3 (237) (236) Fee revenue $ 1,791.4 2,048.6 (257.2) (13) % (13) % Markets Advisory 704.0 847.9 (143.9) (17) (17) Capital Markets 431.4 579.1 (147.7) (26) (27) Work Dynamics 497.7 452.9 44.8 10 9 JLL Technologies 55.6 52.7 2.9 6 5 LaSalle 102.7 116.0 (13.3) (11) (13) Compensation and benefits, excluding gross contract costs $ 1,299.8 1,472.4 (172.6) (12) % (13) % Operating, administrative and other expenses, excluding gross contract costs 274.7 302.1 (27.4) (9) (12) Depreciation and amortization 59.1 55.7 3.4 6 5 Restructuring and acquisition charges 31.6 21.0 10.6 50 46 Total fee-based operating expenses 1,665.2 1,851.2 (186.0) (10) (11) Gross contract costs 3,327.1 3,123.7 203.4 7 6 Total operating expenses $ 4,992.3 4,974.9 17.4 — % (1) % Operating income $ 119.1 202.6 (83.5) (41) % (39) % Equity (losses) earnings $ (11.2) 0.5 (11.7) n.m. n.m. Adjusted EBITDA $ 205.2 276.2 (71.0) (26) % (23) % Net income margin attributable to common shareholders (USD basis) 1.2 % 2.7 % (150) bps n/a Adjusted EBITDA margin (local currency basis) 12.0 % 13.5 % (200) bps (150) bps Adjusted EBITDA margin (USD basis) 11.5 % 29 Table of Contents Consolidated Operating Results (continued) Nine Months Ended September 30, Change in % Change in Local Currency ($ in millions) 2023 2022 U.S. dollars Markets Advisory $ 2,924.2 3,229.2 (305.0) (9) % (9) % Capital Markets 1,240.9 1,880.3 (639.4) (34) (34) Work Dynamics 10,165.0 9,633.9 531.1 6 6 JLL Technologies 180.9 156.6 24.3 16 16 LaSalle 368.4 357.3 11.1 3 4 Revenue $ 14,879.4 15,257.3 (377.9) (2) % (2) % Gross contract costs (9,666.2) (9,156.6) (509.6) 6 7 Net non-cash MSR and mortgage banking derivative activity 9.5 (12.8) 22.3 (174) (174) Fee revenue $ 5,222.7 6,087.9 (865.2) (14) % (14) % Markets Advisory 2,072.4 2,444.9 (372.5) (15) (15) Capital Markets 1,216.5 1,831.3 (614.8) (34) (33) Work Dynamics 1,417.5 1,330.4 87.1 7 7 JLL Technologies 169.9 146.0 23.9 16 16 LaSalle 346.4 335.3 11.1 3 4 Compensation and benefits, excluding gross contract costs $ 3,812.4 4,380.6 (568.2) (13) % (12) % Operating, administrative and other expenses, excluding gross contract costs 859.1 874.8 (15.7) (2) (2) Depreciation and amortization 176.5 165.5 11.0 7 8 Restructuring and acquisition charges 79.1 66.4 12.7 19 18 Total fee-based operating expenses 4,927.1 5,487.3 (560.2) (10) (10) Gross contract costs 9,666.2 9,156.6 509.6 6 7 Total operating expenses $ 14,593.3 14,643.9 (50.6) — % — % Operating income $ 286.1 613.4 (327.3) (53) % (53) % Equity (losses) earnings $ (117.3) 72.6 (189.9) (262) % (262) % Adjusted EBITDA $ 430.3 908.8 (478.5) (53) % (52) % Net income margin attributable to common shareholders (USD basis) 0.4 % 3.1 % (270) bps n/a Adjusted EBITDA margin (local currency basis) 8.3 % 14.9 % (670) bps (660) bps Adjusted EBITDA margin (USD basis) 8.2 % 30 Table of Contents Non-GAAP Financial Measures Management uses certain non-GAAP financial measures to develop budgets and forecasts, measure and reward performance against those budgets and forecasts, and enhance comparability to prior periods. These measures are believed to be useful to investors and other external stakeholders as supplemental measures of core operating performance and include the following: • Fee revenue and Fee-based operating expenses; • Adjusted EBITDA attributable to common shareholders ("Adjusted EBITDA") and Adjusted EBITDA margin (measured on fee revenue); and • Percentage changes against prior periods, presented on a local currency basis. However, non-GAAP financial measures should not be considered alternatives to measures determined in accordance with U.S. GAAP. Any measure that eliminates components of a company’s capital structure, cost of operations or investments, or other results has limitations as a performance measure. In light of these limitations, management also considers U.S. GAAP financial measures and does not rely solely on non-GAAP financial measures. Because our non-GAAP financial measures are not calculated in accordance with U.S. GAAP, they may not be comparable to similarly titled measures used by other companies. Adjustments to U.S. GAAP Financial Measures Used to Calculate non-GAAP Financial Measures Gross contract costs represent certain costs associated with client-dedicated employees and third-party vendors and subcontractors and are directly or indirectly reimbursed through the fees we receive. These costs are presented on a gross basis in Operating expenses with the equal amount of corresponding fees in Revenue. Excluding gross contract costs from both Fee revenue and Fee-based operating expenses more accurately reflects how we manage our expense base and operating margins and also enables a more consistent performance assessment across a portfolio of contracts with varying payment terms and structures. Net non-cash MSR and mortgage banking derivative activity consists of the balances presented within Revenue composed of (i) derivative gains/losses resulting from mortgage banking loan commitment and warehousing activity and (ii) gains recognized from the retention of MSR upon origination and sale of mortgage loans, offset by (iii) amortization of MSR intangible assets over the period that net servicing income is projected to be received. Non-cash derivative gains/losses resulting from mortgage banking loan commitment and warehousing activity are calculated as the estimated fair value of loan commitments and subsequent changes thereof, primarily represented by the estimated net cash flows associated with future servicing rights. MSR gains and corresponding MSR intangible assets are calculated as the present value of estimated net cash flows over the estimated mortgage servicing periods. The above activity is reported entirely within Revenue of the Capital Markets segment. Excluding net non-cash MSR and mortgage banking derivative activity reflects how we manage and evaluate performance because the excluded activity is non-cash in nature. Restructuring and acquisition charges primarily consist of (i) severance and employment-related charges, including those related to external service providers, incurred in conjunction with a structural business shift, which can be represented by a notable change in headcount, change in leadership or transformation of business processes; (ii) acquisition, transaction and integration-related charges, including fair value adjustments, which are generally non-cash in the periods such adjustments are made, to assets and liabilities recorded in purchase accounting such as earn-out liabilities and intangible assets; and (iii) other restructuring, including lease exit charges. Such activity is excluded as the amounts are generally either non-cash in nature or the anticipated benefits from the expenditures would not likely be fully realized until future periods. Restructuring and acquisition charges are excluded from segment operating results and therefore not a line item in the segments’ reconciliation to Adjusted EBITDA. Gain/loss on disposition reflects the gain or loss recognized on the sale or disposition of businesses. Given the low frequency of business disposals by the company historically, the gain or loss directly associated with such activity is excluded as it is not considered indicative of core operating performance. In 2023, the $0.5 million net loss included $1.8 million of loss related to the disposition of a business in Markets Advisory, partially offset by a $1.3 million gain related to the disposition of a business in Markets Advisory and Capital Markets. In 2022, the $7.5 million net loss included $10.5 million of loss related to the disposition of the Russia business, partially offset by a $3.0 million gain related to a disposition within JLL Technologies. 31 Table of Contents Interest on Employee Loans, Net of Forgiveness reflects interest accrued on employee loans less the amount of accrued interest forgiven. Certain employees (predominantly in Leasing and Capital Markets) receive cash payments structured as loans, with interest. Employees earn forgiveness of the loan based on performance, generally calculated as a percentage of revenue production. Such forgiven amounts are reflected in Compensation and benefits expense. Given the interest accrued on these employee loans and subsequent forgiveness are non-cash and the amounts perfectly offset over the life of the loan, the activity is not indicative of core operating performance and is excluded from non-GAAP measures. Reconciliation of Non-GAAP Financial Measures Below are reconciliations of (i) Revenue to Fee revenue and (ii) Operating expenses to Fee-based operating expenses. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2023 2022 2023 2022 Revenue $ 5,111.4 5,177.5 $ 14,879.4 15,257.3 Adjustments: Gross contract costs (3,327.1) (3,123.7) (9,666.2) (9,156.6) Net non-cash MSR and mortgage banking derivative activity 7.1 (5.2) 9.5 (12.8) Fee revenue $ 1,791.4 2,048.6 $ 5,222.7 6,087.9 Operating expenses $ 4,992.3 4,974.9 $ 14,593.3 14,643.9 Less: Gross contract costs (3,327.1) (3,123.7) (9,666.2) (9,156.6) Fee-based operating expenses $ 1,665.2 1,851.2 $ 4,927.1 5,487.3 Operating income $ 119.1 202.6 $ 286.1 613.4 Below is a reconciliation of Net income attributable to common shareholders to EBITDA and Adjusted EBITDA. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2023 2022 2023 2022 Net income attributable to common shareholders $ 59.7 140.2 $ 53.0 479.7 Add: Interest expense, net of interest income 37.1 23.2 103.9 49.1 Income tax provision 14.5 42.3 13.0 155.4 Depreciation and amortization (1) 58.1 54.7 173.6 163.5 EBITDA $ 169.4 260.4 $ 343.5 847.7 Adjustments: Restructuring and acquisition charges 31.6 21.0 79.1 66.4 Net (gain) loss on disposition (1.3) — 0.5 7.5 Net non-cash MSR and mortgage banking derivative activity 7.1 (5.2) 9.5 (12.8) Interest on employee loans, net of forgiveness (1.6) — (2.3) — Adjusted EBITDA $ 205.2 276.2 $ 430.3 908.8 (1) This adjustment excludes the noncontrolling interest portion of amortization of acquisition-related intangibles which is not attributable to common shareholders. 32 Table of Contents In discussing our operating results, we report Adjusted EBITDA margins and refer to percentage changes in local currency, unless otherwise noted. Amounts presented on a local currency basis are calculated by translating the current period results of our foreign operations to U.S. dollars using the foreign currency exchange rates from the comparative period. We believe this methodology provides a framework for assessing performance and operations excluding the effect of foreign currency fluctuations. The following table reflects the reconciliation to local currency amounts for consolidated (i) Revenue, (ii) Fee revenue, (iii) Operating income and (iv) Adjusted EBITDA. Three Months Ended September 30, Nine Months Ended September 30, ($ in millions) 2023 % Change 2023 % Change Revenue: At current period exchange rates $ 5,111.4 (1) % $ 14,879.4 (2) % Impact of change in exchange rates (39.6) n/a 118.5 n/a At comparative period exchange rates $ 5,071.8 (2) % $ 14,997.9 (2) % Fee revenue: At current period exchange rates $ 1,791.4 (13) % $ 5,222.7 (14) % Impact of change in exchange rates (18.4) n/a 31.9 n/a At comparative period exchange rates $ 1,773.0 (13) % $ 5,254.6 (14) % Operating income: At current period exchange rates $ 119.1 (41) % $ 286.1 (53) % Impact of change in exchange rates 5.0 n/a 1.6 n/a At comparative period exchange rates $ 124.1 (39) % $ 287.7 (53) % Adjusted EBITDA: At current period exchange rates $ 205.2 (26) % $ 430.3 (53) % Impact of change in exchange rates 6.8 n/a 5.9 n/a At comparative period exchange rates $ 212.0 (23) % $ 436.2 (52) % 33 Table of Contents Revenue For the third quarter, Revenue and fee revenue decreased 2% and 13%, respectively, compared with the prior-year quarter. Businesses with resilient revenues continued to deliver fee revenue growth for the quarter, as Property Management, within Markets Advisory, grew 12%; Workplace Management, within Work Dynamics, grew 5%; and JLL Technologies grew 5%. Consistent with the first half of the year, economic uncertainty and elevated interest rates along with geopolitical instability in several geographies adversely impacted most of our transaction-based businesses, notably Investment Sales and Debt/Equity Advisory within Capital Markets, and Leasing within Markets Advisory. However, Project Management, within Work Dynamics, was up 8% due to continued project execution in several geographies, and Portfolio Services and Other within Work Dynamics benefited from outsized transaction activity in the current quarter. The decline in LaSalle's revenue was largely due to the absence of incentive fees. For the first nine months of 2023, consolidated Revenue and fee revenue were down 2% and 14%, respectively, compared with 2022. The year-to-date drivers of change between the two years were similar to the quarter-to-date drivers noted above except for Portfolio Services and Other, which had a year-over-year drop in revenue for the first half of 2023 reflecting the general correlation to leasing activity. The following highlights Revenue and fee revenue by segment, for the current and prior-year quarters ($ in millions). Refer to segment operating results for further detail. Our consolidated fee revenue declined 13% in U.S. dollars (“USD”) and 13% in local currency for the third quarter of 2023, compared with 2022. Year-to-date, consolidated fee revenue declined 14% in USD and 14% in local currency compared with last year. The quarter-to-date and year-to-date spreads were relatively consistent given the mix of currencies which strengthened or weakened against the U.S. dollar. 34 Table of Contents Operating Expenses Consolidated operating expenses were $5.0 billion for the third quarter, a slight decrease from the same period in 2022, and $14.6 billion for the first nine months of 2023, which was relatively flat to 2022, while consolidated fee-based operating expenses were $1.7 billion for the third quarter, down 11% from the prior-year quarter, and $4.9 billion for the first nine months of 2023, down 10%. The decrease in fee-based operating expenses was primarily attributable to our Capital Markets and Markets Advisory segments, partially offset by revenue-related expense growth in Work Dynamics. For the third quarter of 2023, Restructuring and acquisition charges increased compared with the prior-year period, driven by (i) higher severance and other employment-related charges from cost-out actions and (ii) expenses associated with rationalizing our real estate footprint in certain geographies; refer to following table for further detail. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2023 2022 2023 2022 Severance and other employment-related charges $ 16.4 9.4 $ 47.9 21.0 Restructuring, pre-acquisition and post-acquisition charges 15.1 11.7 31.7 45.2 Fair value adjustments that resulted in a net increase (decrease) to earn-out liabilities from prior-period acquisition activity 0.1 (0.1) (0.5) 0.2 Restructuring and acquisition charges $ 31.6 21.0 $ 79.1 66.4 Interest Expense Interest expense, net of interest income, for the three and nine months ended September 30, 2023 was $37.1 million and $103.9 million compared with $23.2 million and $49.1 million in the prior-year periods. The increase primarily reflected a higher effective interest rate on our facilities but also an increase in the average outstanding borrowings. Refer to the Liquidity and Capital Resources section for additional details on our debt. Equity (Losses) Earnings The following details Equity (losses) earnings by relevant segment. Refer to the segment discussions for additional details. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2023 2022 2023 2022 JLL Technologies $ (3.0) 1.0 $ (102.0) 64.5 LaSalle (9.1) (1.1) (23.0) 4.0 Other 0.9 0.6 7.7 4.1 Equity (losses) earnings $ (11.2) 0.5 $ (117.3) 72.6 Other Income Other non-operating income was $3.0 million and $1.9 million for the three and nine months ended September 30, 2023, compared with income of $0.5 million and $136.0 million for the comparable periods in 2022. During the second quarter of 2022, Other income included a $142.3 million gain by a consolidated variable interest entity in which we held no equity interest. This gain, therefore, is also included in Net income attributable to noncontrolling interest, and as a result, there is no net impact to Net income attributable to common shareholders (or other measures like Adjusted EBITDA, Adjusted net income and Adjusted diluted earnings per share). Also in the second quarter of 2022, we recognized a $10.5 million loss related to the disposition of our Russia business. Income Taxes The Income tax provision was $14.5 million and $13.0 million for the three and nine months ended September 30, 2023, representing an effective tax rate ("ETR") of 19.6% and 19.3%, respectively. For the three and nine months ended September 30, 2022, the income tax provision was $42.3 million and $155.4 million, representing an ETR of 23.4% and 20.1%, respectively. 35 Table of Contents Net Income and Adjusted EBITDA Net income attributable to common shareholders was $59.7 million for the three months ended September 30, 2023, compared with $140.2 million in the prior-year quarter. For the first nine months of 2023, Net income attributable to common shareholders was $53.0 million, compared with $479.7 million in 2022. Adjusted EBITDA was $205.2 million and $430.3 million for the third quarter and first nine months of 2023, compared with $276.2 million and $908.8 million in the respective prior-year periods. Net income margin attributable to common shareholders for the third quarter was 1.2%, compared with 2.7% in the prior-year quarter. Adjusted EBITDA margin for the third quarter, calculated on a fee-revenue basis, was 11.5% in USD (12.0% in local currency), compared with 13.5% in 2022. Margin was impacted by lower transaction-based revenue and the change in Equity earnings/losses, net of carried interest. Partially offsetting these items were benefits of recent cost reduction actions and lower variable compensation expense. Segment Operating Results We manage and report our operations as five business segments: Markets Advisory, Capital Markets, Work Dynamics, JLL Technologies and LaSalle. Markets Advisory offers a wide range of real estate services, including agency leasing and tenant representation, property management, and advisory and consulting services. Our Capital Markets service offerings include investment sales, debt and equity advisory, value and risk advisory, and loan servicing. Our Work Dynamics business provides a broad suite of integrated services to occupiers of real estate, including facility and project management, as well as portfolio and other services. We consider "Property Management" to be services provided to non-occupying property investors and "Workplace Management" to be services provided to owner-occupiers. Our JLL Technologies segment offers software products, solutions and services, while LaSalle provides investment management services on a global basis to institutional investors and high-net-worth individuals. For segment reporting, (i) gross contract costs and (ii) net non-cash MSR and mortgage banking derivative activity are both excluded from revenue in determining Fee revenue. Gross contract costs are excluded from operating expenses in determining Fee-based operating expenses. In addition, our measure of segment results also excludes Restructuring and acquisition charges. 36 Table of Contents Markets Advisory % Change Three Months Ended September 30, Change in in Local ($ in millions) 2023 2022 U.S. dollars Currency Revenue $ 992.4 1,111.5 (119.1) (11) % (11) % Gross contract costs (288.4) (263.6) (24.8) 9 10 Fee revenue $ 704.0 847.9 (143.9) (17) % (17) % Leasing 542.5 696.4 (153.9) (22) (22) Property Management 138.4 122.9 15.5 13 12 Advisory, Consulting and Other 23.1 28.6 (5.5) (19) (19) Compensation and benefits, excluding gross contract costs $ 531.2 620.4 (89.2) (14) % (15) % Operating, administrative and other expenses, excluding gross contract costs 86.5 96.9 (10.4) (11) (11) Depreciation and amortization 16.9 17.6 (0.7) (4) (4) Segment fee-based operating expenses (excluding restructuring and acquisition charges) 634.6 734.9 (100.3) (14) (14) Gross contract costs 288.4 263.6 24.8 9 10 Segment operating expenses $ 923.0 998.5 (75.5) (8) % (8) % Equity earnings (losses) $ 0.1 (0.2) 0.3 150 % 120 % Adjusted EBITDA $ 85.1 132.1 (47.0) (36) % (33) % Adjusted EBITDA margin (local currency basis) 12.6 % 15.6 % (350) bps (300) bps Adjusted EBITDA margin (USD basis) 12.1 % 37 Table of Contents Markets Advisory (continued) % Change Nine Months Ended September 30, Change in in Local ($ in millions) 2023 2022 U.S. dollars Currency Revenue $ 2,924.2 3,229.2 (305.0) (9) % (9) % Gross contract costs (851.8) (784.3) (67.5) 9 11 Fee revenue $ 2,072.4 2,444.9 (372.5) (15) % (15) % Leasing 1,613.0 1,996.8 (383.8) (19) (19) Property Management 396.5 363.7 32.8 9 11 Advisory, Consulting and Other 62.9 84.4 (21.5) (25) (24) Compensation and benefits, excluding gross contract costs $ 1,538.6 1,779.7 (241.1) (14) % (13) % Operating, administrative and other expenses, excluding gross contract costs 273.4 292.6 (19.2) (7) (6) Depreciation and amortization 51.4 52.0 (0.6) (1) — Segment fee-based operating expenses 1,863.4 2,124.3 (260.9) (12) (12) Gross contract costs 851.8 784.3 67.5 9 11 Segment operating expenses $ 2,715.2 2,908.6 (193.4) (7) % (6) % Equity earnings $ 0.3 0.7 (0.4) (57) % (58) % Adjusted EBITDA $ 256.1 377.3 (121.2) (32) % (31) % Adjusted EBITDA margin (local currency basis) 12.4 % 15.4 % (300) bps (300) bps Adjusted EBITDA margin (USD basis) 12.4 % The declines in Markets Advisory revenue and fee revenue were largely driven by Leasing, both on a year-to-date and quarter-to-date basis, and reflected lower transaction volumes and a decline in average deal size across nearly all asset types, particularly in the office sector. Continued economic uncertainty has delayed commercial real estate decision making, particularly for large-scale leasing actions. The decreases in Advisory, Consulting and Other for the quarter and first nine months were substantially driven by the absence of revenues associated with a business exited during the fourth quarter of 2022. Property Management achieved top-line growth for the quarter and year-to-date, primarily attributable to portfolio expansion in the Americas and incremental fees from interest-rate sensitive contract terms in the U.K. The net decreases in segment operating expenses and segment fee-based operating expenses for the third quarter and first nine months of 2023 were primarily due to (i) lower commissions and other revenue-related expenses, (ii) lower incentive compensation expense, reflecting segment performance and (iii) cost containment measures. The margin decrease was predominantly attributable to the lower Leasing fee revenue, net of the lower operating expenses noted above. 38 Table of Contents Capital Markets % Change Three Months Ended September 30, Change in in Local ($ in millions) 2023 2022 U.S. dollars Currency Revenue $ 435.8 595.2 (159.4) (27) % (28) % Gross contract costs (11.5) (10.9) (0.6) 6 1 Net non-cash MSR and mortgage banking derivative activity 7.1 (5.2) 12.3 (237) (236) Fee revenue $ 431.4 579.1 (147.7) (26) % (27) % Investment Sales, Debt/Equity Advisory and Other 308.9 452.1 (143.2) (32) (33) Value and Risk Advisory 84.4 86.5 (2.1) (2) (4) Loan Servicing 38.1 40.5 (2.4) (6) (6) Compensation and benefits, excluding gross contract costs $ 323.8 430.6 (106.8) (25) % (26) % Operating, administrative and other expenses, excluding gross contract costs 58.3 66.0 (7.7) (12) (13) Depreciation and amortization 16.4 15.2 1.2 8 8 Segment fee-based operating expenses (excluding restructuring and acquisition charges) 398.5 511.8 (113.3) (22) (23) Gross contract costs 11.5 10.9 0.6 6 1 Segment operating expenses $ 410.0 522.7 (112.7) (22) % (23 %) Equity earnings $ 0.7 0.7 — 0 % 12 % Adjusted EBITDA $ 50.3 83.2 (32.9) (40) % (40) % Adjusted EBITDA margin (local currency basis) 11.7 % 14.4 % (270) bps (270) bps Adjusted EBITDA margin (USD basis) 11.7 % 39 Table of Contents Capital Markets (continued) % Change Nine Months Ended September 30, Change in in Local ($ in millions) 2023 2022 U.S. dollars Currency Revenue $ 1,240.9 1,880.3 (639.4) (34) % (34) % Gross contract costs (33.9) (36.2) 2.3 (6) (6) Net non-cash MSR and mortgage banking derivative activity 9.5 (12.8) 22.3 (174) (174) Fee revenue $ 1,216.5 1,831.3 (614.8) (34) % (33) % Investment Sales, Debt/Equity Advisory and Other 854.0 1,448.6 (594.6) (41) (41) Value and Risk Advisory 248.0 261.9 (13.9) (5) (4) Loan Servicing 114.5 120.8 (6.3) (5) (5) Compensation and benefits, excluding gross contract costs $ 943.1 1,318.7 (375.6) (28) % (28) % Operating, administrative and other expenses, excluding gross contract costs 183.6 186.7 (3.1) (2) (1) Depreciation and amortization 48.5 46.2 2.3 5 6 Segment fee-based operating expenses 1,175.2 1,551.6 (376.4) (24) (24) Gross contract costs 33.9 36.2 (2.3) (6) (6) Segment operating expenses $ 1,209.1 1,587.8 (378.7) (24) % (23) % Equity earnings $ 6.1 2.1 4.0 190 % 195 % Adjusted EBITDA $ 97.0 328.1 (231.1) (70) % (71) % Adjusted EBITDA margin (local currency basis) 7.9 % 17.9 % (990) bps (1,000) bps Adjusted EBITDA margin (USD basis) 8.0 % The lower Capital Markets revenue and fee revenue continued to reflect the meaningful drop in transaction volumes compared with 2022, both on a year-to-date and quarter-to-date basis, as ample capital continues to remain heavily sidelined with economic and interest rate uncertainty. This impact was most pronounced in Investment Sales and Debt/Equity Advisory, which experienced declines across nearly all asset sectors and geographies compared with the prior year. Our performance outpaced broader market trends for the quarter and first nine months of 2023, as global market volumes for investment sales were down 46% in USD (48% in local currency) on a quarter-to-date basis, and 50% in USD (and local currency) on a year-to-date basis, according to JLL Research. The decline in Loan Servicing was attributable to lower prepayment fees (down $3.8 million for the quarter and $12.0 million for the first nine months of the year), as refinancing activity slowed over the last twelve months, overshadowing continued growth in servicing fees from the portfolio originated under the Fannie Mae DUS program. The net decreases in segment operating expenses and segment fee-based operating expenses for the quarter and first nine months of the year, against the comparative periods, were almost entirely due to lower revenue-related expenses, as well as lower incentive compensation expense, reflecting segment performance. The margin reduction for the quarter was predominantly driven by lower Investment Sales and Debt/Equity Advisory revenue described above. 40 Table of Contents Work Dynamics % Change Three Months Ended September 30, Change in in Local ($ in millions) 2023 2022 U.S. dollars Currency Revenue $ 3,514.2 3,289.8 224.4 7 % 6 % Gross contract costs (3,016.5) (2,836.9) (179.6) 6 6 Fee revenue $ 497.7 452.9 44.8 10 % 9 % Workplace Management 195.1 183.6 11.5 6 5 Project Management 229.6 210.0 19.6 9 8 Portfolio Services and Other 73.0 59.3 13.7 23 21 Compensation and benefits, excluding gross contract costs $ 332.9 285.0 47.9 17 % 15 % Operating, administrative and other expenses, excluding gross contract costs 103.3 114.6 (11.3) (10) (12) Depreciation and amortization 19.7 17.6 2.1 12 9 Segment fee-based operating expenses (excluding restructuring and acquisition charges) 455.9 417.2 38.7 9 7 Gross contract costs 3,016.5 2,836.9 179.6 6 6 Segment operating expenses $ 3,472.4 3,254.1 218.3 7 % 6 % Equity earnings $ 0.1 0.1 — — % (34) % Adjusted EBITDA $ 61.6 53.4 8.2 15 % 17 % Adjusted EBITDA margin (local currency basis) 12.7 % 11.8 % 60 bps 90 bps Adjusted EBITDA margin (USD basis) 12.4 % 41 Table of Contents Work Dynamics (continued) % Change Nine Months Ended September 30, Change in in Local ($ in millions) 2023 2022 U.S. dollars Currency Revenue $ 10,165.0 9,633.9 531.1 6 % 6 % Gross contract costs (8,747.5) (8,303.5) (444.0) 5 6 Fee revenue $ 1,417.5 1,330.4 87.1 7 % 7 % Workplace Management 566.5 550.5 16.0 3 4 Project Management 670.2 600.6 69.6 12 13 Portfolio Services and Other 180.8 179.3 1.5 1 1 Compensation and benefits, excluding gross contract costs $ 958.9 870.8 88.1 10 % 11 % Operating, administrative and other expenses, excluding gross contract costs 316.0 314.7 1.3 — 2 Depreciation and amortization 58.9 51.1 7.8 15 16 Segment fee-based operating expenses 1,333.8 1,236.6 97.2 8 9 Gross contract costs 8,747.5 8,303.5 444.0 5 6 Segment operating expenses $ 10,081.3 9,540.1 541.2 6 % 7 % Equity earnings $ 1.3 1.3 — — % (3) % Adjusted EBITDA $ 143.5 146.2 (2.7) (2) % (3) % Adjusted EBITDA margin (local currency basis) 9.9 % 11.0 % (90) bps (110) bps Adjusted EBITDA margin (USD basis) 10.1 % Work Dynamics revenue and fee revenue growth was broad-based across service lines and included strong Project Management results from ongoing project execution in certain geographies, most notably the U.K., MENA, Italy and Southeast Asia for the third quarter (the United States, France, the U.K. and MENA for the first nine months of 2023). Portfolio Services outperformed the prior year quarter primarily due to one large transaction on behalf of a client in the United States; the first half of the year was lower given the meaningful correlation with leasing activity. Workplace Management continued to deliver growth, highlighted by the ramp-up of new, global client wins that began in the third quarter. The increases in segment operating expenses and segment fee-based operating expenses for the third quarter and first nine months of 2023, compared with the prior-year periods, were primarily due to revenue-related expense growth over the trailing twelve months. For the first nine months of 2023, contract losses in the first half of the year related to certain Project Management contracts in Europe also contributed to the expense growth. These increases were partially offset with continued management of costs unrelated to revenue. The net margin expansion in the current quarter was primarily attributable to the revenue growth, notably from Portfolio Services, together with continued cost management, both as described above. 42 Table of Contents JLL Technologies % Change Three Months Ended September 30, Change in in Local ($ in millions) 2023 2022 U.S. dollars Currency Revenue $ 58.9 56.5 2.4 4 % 4 % Gross contract costs (3.3) (3.8) 0.5 (13) (12) Fee revenue $ 55.6 52.7 2.9 6 % 5 % Compensation and benefits, excluding gross contract costs (1) $ 48.7 57.7 (9.0) (16) % (16 %) Operating, administrative and other expenses, excluding gross contract costs 12.6 11.3 1.3 12 11 Depreciation and amortization 3.9 3.7 0.2 5 3 Segment fee-based operating expenses (excluding restructuring and acquisition charges) 65.2 72.7 (7.5) (10) (11) Gross contract costs 3.3 3.8 (0.5) (13) (12) Segment operating expenses $ 68.5 76.5 (8.0) (10 %) (11 %) Equity (losses) earnings $ (3.0) 1.0 (4.0) (400) % (394) % Adjusted EBITDA $ (8.7) (15.3) 6.6 43 % 44 % Adjusted EBITDA margin (local currency basis) (15.5) % (29.0) % 1,340 bps 1,350 bps Adjusted EBITDA margin (USD basis) (15.6) % 43 Table of Contents JLL Technologies (continued) % Change Nine Months Ended September 30, Change in in Local ($ in millions) 2023 2022 U.S. dollars Currency Revenue $ 180.9 156.6 24.3 16 % 16 % Gross contract costs (11.0) (10.6) (0.4) 4 4 Fee revenue $ 169.9 146.0 23.9 16 % 16 % Compensation and benefits, excluding gross contract costs (1) $ 155.3 185.7 (30.4) (16) % (16 %) Operating, administrative and other expenses, excluding gross contract costs 39.8 39.4 0.4 1 1 Depreciation and amortization 11.9 11.4 0.5 4 5 Segment fee-based operating expenses 207.0 236.5 (29.5) (12) (12) Gross contract costs 11.0 10.6 0.4 4 4 Segment operating expenses $ 218.0 247.1 (29.1) (12) % (11 %) Equity (losses) earnings $ (102.0) 64.5 (166.5) (258) % (258) % Adjusted EBITDA $ (127.2) (14.7) (112.5) (765) % (773) % Adjusted EBITDA margin (local currency basis) (75.2) % (10.1) % (6,480) bps (6,510) bps Adjusted EBITDA margin (USD basis) (74.9) % (1) Included in Compensation and benefits expense for JLL Technologies is a reduction in carried interest expense of $0.1 million and $9.4 million for the three and nine months ended September 30, 2023, respectively, and a carried interest expense of $0.6 million and $16.6 million for the three and nine months ended September 30, 2022, related to Equity earnings of the segment. For the third quarter and first nine months of 2023, JLL Technologies revenue and fee revenue increased over the prior-year periods led by growth in solutions and service offerings, largely from existing enterprise clients. Equity losses for the quarter and first nine months of 2023 resulted from valuation declines in JLL Technologies' investments due to subsequent financing rounds at decreased per-share values. The most significant equity losses, recognized in the second quarter of 2023, were predominantly driven by two investments for which we previously recognized significant equity earnings. The decrease in current-quarter segment operating expenses and segment fee-based operating expenses included an approximate $5 million reduction to incentive compensation expense, which related to true-ups based on performance achievement, and improved operating efficiencies. Further driving a reduction in expenses for the first nine months of 2023, carried interest expense decreased $9.4 million (only $0.1 million in the third quarter) in response to the equity losses described above. Margin improvement for the quarter was attributable to fee revenue growth and the expense drivers noted above, partially offset by the change in equity earnings/losses. 44 Table of Contents LaSalle % Change Three Months Ended September 30, Change in in Local ($ in millions) 2023 2022 U.S. dollars Currency Revenue $ 110.1 124.5 (14.4) (12) % (13) % Gross contract costs (7.4) (8.5) 1.1 (13) (13) Fee revenue $ 102.7 116.0 (13.3) (11) % (13) % Advisory fees 95.3 95.4 (0.1) — (2) Transaction fees and other 7.4 8.7 (1.3) (15) (14) Incentive fees — 11.9 (11.9) (100) (105) Compensation and benefits, excluding gross contract costs $ 63.2 78.7 (15.5) (20) % (21) % Operating, administrative and other expenses, excluding gross contract costs 14.0 13.3 0.7 5 2 Depreciation and amortization 2.2 1.6 0.6 38 37 Segment fee-based operating expenses (excluding restructuring & acquisition charges) 79.4 93.6 (14.2) (15) (17) Gross contract costs 7.4 8.5 (1.1) (13) (13) Segment operating expenses $ 86.8 102.1 (15.3) (15) % (17) % Equity losses $ (9.1) (1.1) (8.0) (727) % (667) % Adjusted EBITDA $ 16.9 22.8 (5.9) (26) % (28) % Adjusted EBITDA margin (local currency basis) 16.3 % 19.7 % (320) bps (340) bps Adjusted EBITDA margin (USD basis) 16.5 % 45 Table of Contents LaSalle (continued) % Change Nine Months Ended September 30, Change in in Local ($ in millions) 2023 2022 U.S. dollars Currency Revenue $ 368.4 357.3 11.1 3 % 4 % Gross contract costs (22.0) (22.0) — — — Fee revenue $ 346.4 335.3 11.1 3 % 4 % Advisory fees 284.4 284.3 0.1 — 1 Transaction fees and other 22.7 33.9 (11.2) (33) (30) Incentive fees 39.3 17.1 22.2 130 130 Compensation and benefits, excluding gross contract costs $ 216.5 225.7 (9.2) (4) % (3) % Operating, administrative and other expenses, excluding gross contract costs 46.3 41.4 4.9 12 13 Depreciation and amortization 5.8 4.8 1.0 21 21 Segment fee-based operating expenses 268.6 271.9 (3.3) (1) — Gross contract costs 22.0 22.0 — — — Segment operating expenses $ 290.6 293.9 (3.3) (1) % — % Equity (losses) earnings $ (23.0) 4.0 (27.0) (675) % (680) % Adjusted EBITDA $ 60.9 71.9 (11.0) (15) % (15) % Adjusted EBITDA margin (local currency basis) 17.4 % 21.4 % (380) bps (400) bps Adjusted EBITDA margin (USD basis) 17.6 % Subdued transaction volumes in the market contributed to the decrease in LaSalle transaction fees for both the quarter and first nine months as well as incentive fees for the third quarter. For the first nine months of 2023, top-line growth was driven by incentive fees, specifically in Japan and United States. Quarter-to-date and year-to-date, advisory fee performance remained resilient despite declines in real estate valuations over the trailing twelve months, impacting assets under management. The equity losses on both a quarter and year-to-date basis were primarily attributable to net valuation declines in the co-investment portfolio. For the first half of 2023, this decline was partially offset by the co-investment in a LaSalle-managed publicly-traded REIT in Japan, which had a greater negative share price movement in 2022. Current-quarter segment operating expenses and segment fee-based operating expenses were lower than the prior-year quarter due to the absence of expenses associated with the loss of a client mandate in the U.K., as well as lower incentive compensation expense. For the first nine months of 2023, this current-quarter decrease was largely offset by variable compensation expense associated with the higher incentive fees earned in the first half of 2023. The third quarter margin decline was driven by the equity losses and an absence of incentive fees, partially offset by the expense drivers noted above. As of September 30, 2023, LaSalle had $77.7 billion of AUM, a decrease of 1% in USD (with no change in local currency) from $78.2 billion as of June 30, 2023. The AUM change resulted from (i) $0.7 billion of foreign currency decreases, (ii) $0.5 billion of net valuation decreases and (iii) $0.4 billion of dispositions and withdrawals, partially offset by (iv) $1.1 billion of acquisitions. 46 Table of Contents LIQUIDITY AND CAPITAL RESOURCES We finance our operations, co-investment activity, share repurchases, capital expenditures and business acquisitions with internally generated funds, borrowings on our Facility, and through issuance of Long-term debt. Cash Flows from Operating Activities Operating activities used $153.6 million of cash in the first nine months of 2023, compared with $401.9 million of cash used in operating activities during the same period in 2022. The year-over-year decrease in cash used in operating activities was primarily due to (i) incremental cash inflow associated with trade receivables, (ii) lower incentive compensation and commission payments in 2023 and (iii) $157.3 million of lower cash taxes paid compared with last year. This is partially offset by lower cash provided by earnings, largely attributable to the change in business performance for Capital Markets and Markets Advisory. Cash Flows from Investing Activities We used $220.4 million of cash for investing activities during the first nine months of 2023, compared with $147.8 million used during the same period in 2022. The prior year included $132.4 million of net capital proceeds relating to less than wholly-owned subsidiaries that did not recur in 2023. In addition, net capital contributions to investments were lower in the first nine months of 2023 compared with 2022. There was no such activity in the current year. We discuss these drivers, along with other investing activities, individually below in further detail. Cash Flows from Financing Activities Financing activities provided $231.2 million of cash during the first nine months of 2023, compared with $500.5 million provided during the same period in 2022. The net decrease of $269.3 million in cash inflows from financing activities was substantially driven by a decrease in net borrowings on our Facility. This decrease in borrowings against the prior year was a product of less cash used in operating activities as well as lower share repurchases in 2023 (refer to the Share Repurchases section below). Finally, the 2022 cash outflow relating to noncontrolling interest distributions included a $142.3 million gain by a consolidated variable interest entity in which we held no equity interest that was also distributed in the second quarter of 2022 (offsetting the net capital proceeds from less than wholly-owned subsidiaries noted in cash flows from investing activities). Debt Our $3.35 billion Facility matures on April 14, 2026 and bears a variable interest rate. Outstanding borrowings, including the balance of the Facility and Short-term borrowings (financing lease obligations, overdrawn bank accounts and local overdraft facilities) are presented below. (in millions) September 30, 2023 December 31, 2022 Outstanding borrowings under the Facility $ 1,600.0 $ 1,225.0 Short-term borrowings 117.6 164.2 In addition to our Facility, we had the capacity to borrow up to $52.9 million under local overdraft facilities as of September 30, 2023. The following table provides additional information on our Facility and Uncommitted Facility, collectively. Three Months Ended September 30, Nine Months Ended September 30, ($ in millions) 2023 2022 2023 2022 Average outstanding borrowings $ 2,011.9 1,599.8 $ 2,017.0 1,295.9 Average effective interest rate 6.1 % 3.2 % 5.8 % 2.2 % We will continue to use the Facility for working capital needs (including payment of accrued incentive compensation), co-investment activities, share repurchases, capital expenditures and acquisitions. Refer to Note 9, Debt, in the Notes to Condensed Consolidated Financial Statements for additional information on our debt. 47 Table of Contents Investment Activity As of September 30, 2023, we had a carrying value of $865.2 million in investments, primarily related to investments by JLL Technologies in early to mid-stage proptech companies as well as proptech funds, and LaSalle co-investments. For the first nine months of 2023 and 2022, funding of investments exceeded return of capital by $65.3 million and $123.2 million, respectively. We expect continued investments by JLL Technologies as well as strategic co-investment opportunities with our investment management clients globally as co-investment remains an important foundation to the continued growth of LaSalle's business. See Note 6, Investments, in the Notes to Condensed Consolidated Financial Statements for additional information on our investment activity. Capital Expenditures Net capital additions for the nine months ended September 30, 2023 and 2022 were $137.7 million and $136.0 million, respectively. Our capital expenditures in 2023 were primarily for purchased/developed software and leased office space improvements. Investment Asset Activity of Consolidated Less Than Wholly-Owned Entities Net capital proceeds related to consolidated VIEs in which we held no equity interest for the nine months ended September 30, 2022 were $132.4 million. The distribution of proceeds from the sale of this investment (the initial acquisition of which was largely funded from employee-investors and related third-party debt) also occurred in 2022 and is included within financing activities. Business Acquisitions During the nine months ended September 30, 2023, we paid $36.4 million relating to business acquisitions. This included $13.6 million of payments associated with 2023 acquisitions and $22.8 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years, which are primarily reflected in cash flows from financing activities. Terms for many of our past acquisitions have typically included cash paid at closing with provisions for additional deferred consideration and earn-out payments subject to certain contract requirements, including the passage of time and performance, respectively. Deferred business acquisition obligations totaled $14.3 million as of September 30, 2023. These obligations represent the current discounted values of payments due to sellers of businesses for which our acquisition had been completed as of the balance sheet date and for which the only remaining condition on those payments is the passage of time. As of September 30, 2023, we had the potential to make earn-out payments for a maximum of $103.8 million on 16 completed acquisitions subject to the achievement of certain performance conditions. Refer to Note 5, Business Combinations, Goodwill and Other Intangible Assets, in the Notes to the Condensed Consolidated Financial Statements for further information on Business Acquisitions. We will continue to consider acquisitions that we believe will strengthen our market position, increase our profitability, and supplement our organic growth. Share Repurchase and Dividend Programs In February 2022, our Board of Directors authorized an additional $1.5 billion for the repurchase of our common stock in the open market and privately negotiated transactions. The number of shares repurchased and cash paid for repurchases is noted in the following table. Three Months Ended September 30, Nine Months Ended September 30, ($ in millions) 2023 2022 2023 2022 Total number of shares repurchased (in 000's) 123.2 909.2 262.5 2,922.4 Total paid for shares repurchased $ 20.1 153.5 $ 40.1 601.2 As of September 30, 2023, $1,115.5 million remained authorized for repurchases under our share repurchase program. 48 Table of Contents Repatriation of Foreign Earnings Based on our historical experience and future business plans, we do not expect to repatriate our foreign-sourced earnings to the United States. We believe our policy of permanently investing earnings of foreign subsidiaries does not significantly impact our liquidity. As of September 30, 2023, and December 31, 2022, we had total cash and cash equivalents of $389.5 million and $519.3 million, respectively, of which approximately $301.7 million and $400.8 million, respectively, was held by foreign subsidiaries. Restricted Net Assets We face regulatory restrictions in certain countries that limit or prevent the transfer of funds to other countries or the exchange of the local currency to other currencies. However, we generally face no such restrictions with regard to the use or application of funds for ordinary course business activities within such countries. The assets of these countries aggregated to approximately 4% of our total assets as of both September 30, 2023, and December 31, 2022. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report, including this Management's Discussion and Analysis of Financial Condition and Results of Operations, contains “forward-looking statements” within the meaning of the federal securities laws. All such statements are qualified by this cautionary note, which is provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may also be included in our other public filings, press releases, our website, and oral and written presentations by management. Statements in the future tense, and all statements accompanied by terms such as “believe,” “will,” “may,” “could,” “project,” “expect,” “estimate,” “assume,” “intend,” “anticipate,” “target,” “plan” and variations thereof and similar terms, are intended to be forward-looking statements. Such statements do not relate strictly to historical or current facts as they relate to our intent, belief and current expectations about our strategic direction, prospects and future results, and give our current expectations or forecasts of future events. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. 49 Table of Contents