What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-06 compared with 2024-05-06 · 236 added, 101 removed, 290 unchanged (54% of the section changed)

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 months ended March 31, 2024, and our audited Consolidated Financial Statements, including the notes thereto, for the fiscal year ended December 31, 2023, which are included in our 2023 Annual Report on Form 10-K, filed with the SEC and also available on our website ( www.jll.com ).

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, for the three and six months ended June 30, 2024, and our audited Consolidated Financial Statements, including the notes thereto, for the fiscal year ended December 31, 2023, which are included in our 2023 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.

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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.

A discussion of our critical accounting policies and estimates used in the preparation of our 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, 2023.

There have been no material changes to these critical accounting policies and estimates during the three months ended March 31, 2024.

There have been no material changes to these critical accounting policies and estimates during the six months ended June 30, 2024.

ITEMS AFFECTING COMPARABILITY

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The timing of recognition of these items may impact comparability between quarters, in any one year or compared to a prior year.

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.

The comparability of these items can be seen in Note 4, Business Segments, of the Notes to Consolidated Financial Statements and is discussed further in Segment Operating Results included herein.

Foreign Currency

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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 March 31, 2024 and 2023 are not fully indicative of the results we expect to realize for the full fiscal year.

Consequently, the results for the periods ended June 30, 2024 and 2023 are not fully indicative of the results we expect to realize for the full fiscal year.

RESULTS OF OPERATIONS

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These costs are presented on a gross basis in Operating expenses (with the corresponding fees in Revenue).

• We define "Greater China" as China, Hong Kong, Macau and Taiwan.

Consolidated Operating Results

Three Months Ended March 31, Change in % Change in Local Currency

Three Months Ended June 30, Change in % Change in Local Currency

($ in millions) 2024 2023 U.S.

14 unchanged sentences

Equity losses $ (15.4) (103.5) 88.1 85 % 85 %

Net non-cash MSR and mortgage banking derivative activity $ (11.8) (0.6) (11.2) n.m.

Adjusted EBITDA $ 246.3 225.1 21.2 9 % 11 %

Consolidated Operating Results (continued)

Six Months Ended June 30, Change in % Change in Local Currency

($ in millions) 2024 2023 U.S.

Markets Advisory $ 2,028.9 1,931.8 97.1 5 % 5 %

Capital Markets 835.2 805.1 30.1 4 4

Work Dynamics 7,572.8 6,650.8 922.0 14 14

JLL Technologies 110.3 122.0 (11.7) (10) (10)

LaSalle 206.0 258.3 (52.3) (20) (19)

Revenue $ 10,753.2 9,768.0 985.2 10 % 10 %

Platform compensation and benefits $ 2,509.3 2,512.6 (3.3) — % — %

Platform operating, administrative and other expenses 594.7 584.4 10.3 2 1

Depreciation and amortization 123.3 117.4 5.9 5 5

Total platform operating expenses $ 3,227.3 3,214.4 12.9 — % 1 %

Gross contract costs 7,246.1 6,339.1 907.0 14 15

Restructuring and acquisition charges 13.2 47.5 (34.3) (72) (72)

Total operating expenses $ 10,486.6 9,601.0 885.6 9 % 10 %

Operating income $ 266.6 167.0 99.6 60 % 65 %

Equity losses $ (19.1) (106.1) 87.0 82 % 82 %

Net non-cash MSR and mortgage banking derivative activity $ (20.8) (2.4) (18.4) (767) % (753) %

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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 $1.8 million loss related to the disposition of a business in Markets Advisory.

Interest on employee loans, net of forgiveness reflects interest accrued on employee loans less the amount of accrued interest forgiven.

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Such activity is excluded as the amounts are generally non‑cash in nature and not indicative of core operating performance.

Equity earnings/losses in the remaining segments represent the results of unconsolidated operating ventures (not investments), and therefore, the amounts are included in Adjusted EBITDA on both a segment and consolidated basis.

Reconciliation of Non-GAAP Financial Measures

Below is a reconciliation of Net income attributable to common shareholders to EBITDA and Adjusted EBITDA.

Three Months Ended March 31,

Below is a reconciliation of Net income attributable to common shareholders to Adjusted EBITDA.

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2024 2023 2024 2023

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Depreciation and amortization (1)

EBITDA $ 172.5 71.3

61.4 59.0 121.4 115.5

Restructuring and acquisition charges 11.5 11.8 13.2 47.5

Net loss on disposition — 1.8 — 1.8

Net non-cash MSR and mortgage banking derivative activity 11.8 0.6 20.8 2.4

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The following table reflects the reconciliation to local currency amounts for consolidated (i) Revenue, (ii) Operating income and (iii) Adjusted EBITDA.

Three Months Ended March 31,

($ in millions) 2024 % Change

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 % Change 2024 % Change

At current period exchange rates $ 5,628.7 11 % $ 10,753.2 10 %

Impact of change in exchange rates 5.6 n/a

Impact of change in exchange rates 32.5 n/a 38.1 n/a

At comparative period exchange rates $ 5,661.2 12 % $ 10,791.3 10 %

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At current period exchange rates $ 152.4 2 % $ 266.6 60 %

Impact of change in exchange rates 5.3 n/a

Impact of change in exchange rates 2.7 n/a 8.1 n/a

At comparative period exchange rates $ 155.1 4 % $ 274.7 65 %

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At current period exchange rates $ 246.3 9 % $ 433.4 28 %

Impact of change in exchange rates 5.3 n/a

Impact of change in exchange rates 2.7 n/a 8.0 n/a

At comparative period exchange rates $ 249.0 11 % $ 441.4 31 %

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Businesses with Resilient revenues continued to deliver strong revenue growth, collectively up 16%, highlighted by Workplace Management, within Work Dynamics, up 19%, and Property Management, within Markets Advisory, up 8%.

Transactional revenue businesses were collectively up just over 1% as economic uncertainty and the current interest rate environment continued to weigh on client decision making.

Transaction performance was led by Investment Sales, Debt/Equity Advisory and Other, within Capital Markets, which grew 8%.

The following highlights Revenue by segment, for the current and prior-year quarters ($ in millions).

Transactional-revenue businesses grew modestly, collectively up 5%.

The growth in Transactional revenue was led by Project Management, within Work Dynamics, up 13% and Leasing, within Markets Advisory, up 5%.

In addition, excluding the impact of non-cash MSR and mortgage banking derivative activity, Investment Sales, Debt/Equity Advisory and Other, within Capital Markets, grew 4% for the quarter.

These increases were meaningfully offset by the expected decline in LaSalle incentive fees, as the prior-year quarter had significant fees associated with the disposition of assets on behalf of clients.

For the first half of 2024, consolidated revenue was up 10% compared with 2023.

The year-to-date drivers were consistent with the quarter-to-date drivers noted above.

The following highlights Revenue by segment, for the second quarter and first half of 2024 and 2023 ($ in millions).

Refer to segment operating results for further detail.

Operating Expenses

Consolidated operating expenses were $5.0 billion for the first quarter, up 7% from the same period in 2023.

Consolidated operating expenses were $5.5 billion for the second quarter, up 12% from the same period in 2023.

Gross contract costs were $3.7 billion, up 18% from the prior-year quarter, attributable to growth from businesses with higher client pass-through expenses such as Workplace Management, within Work Dynamics, and Property Management, within Markets Advisory.

Platform operating expenses were $1.5 billion for the first quarter, a 4% reduction from the prior-year quarter largely associated with the benefit of cost mitigation actions in the trailing twelve months, partially offset by higher variable incentive compensation expense attributable to improved year-over-year profitability.

For the first quarter of 2024, Restructuring and acquisition charges decreased compared with the prior-year period, driven by (i) lower severance and other employment-related charges from cost-out actions and (ii) net decreases to the fair value of future acquisition-related payments;

refer to following table for further detail.

Three Months Ended March 31,

Platform operating expenses were $1.7 billion for the second quarter, a 2% increase from the prior-year quarter, primarily due to two discrete items in the second quarter:

(i) $18.0 million of expense, within Capital Markets, associated with the August 2024 repurchase of a loan from Fannie Mae and (ii) a $12.2 million year-over-year increase in carried interest expense, within JLL Technologies, primarily as a result of the $10.0 million reduction in the prior-year quarter associated with investment equity losses.

Outside of these discrete items, revenue-related expense growth was largely offset by the benefit of cost reduction actions largely executed in 2023 coupled with continued cost discipline, and a positive impact associated with the year-over-year timing of incentive compensation accruals.

For the second quarter of 2024, Restructuring and acquisition charges decreased slightly compared with the prior-year period, driven by net decreases to the fair value of future acquisition-related payments.

Refer to the following table for detail on Restructuring and acquisition charges.

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2024 2023 2024 2023

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Restructuring, pre-acquisition and post-acquisition charges 6.4 6.6 14.1 16.6

Fair value adjustments that resulted in a net increase (decrease) to earn-out liabilities from prior-period acquisition activity (10.5) —

Fair value adjustments that resulted in a net decrease to earn-out liabilities from prior-period acquisition activity (2.1) (0.6) (12.6) (0.6)

Restructuring and acquisition charges $ 11.5 11.8 $ 13.2 47.5

While second-quarter Restructuring and acquisition charges were relatively flat compared with the prior-year quarter, there was a notable year-over-year decline for the first six months due to lower severance and other employment-related charges from cost-out actions and net decreases to the fair value of future acquisition-related payments.

Interest Expense

Interest expense, net of interest income, for the three months ended March 31, 2024 was $30.5 million compared with $26.3 million in the prior-year period.

Interest expense, net of interest income, for the three and six months ended June 30, 2024 was $41.7 million and $72.2 million, respectively, compared with $40.5 million and $66.8 million in the prior-year periods.

The increase in our effective interest rate was largely offset by lower average outstanding borrowings.

Equity (Losses) Earnings

The following details Equity losses by relevant segment.

The following details Equity (losses) earnings by relevant segment.

In the prior-year quarter, the significant equity losses were largely attributable to valuation declines in two JLL Technologies investments.

Refer to the segment discussions for additional details.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2024 2023 2024 2023

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Equity losses $ (15.4) (103.5) $ (19.1) (106.1)

The Income tax provision was $15.9 million for the three months ended March 31, 2024, representing an effective tax rate ("ETR") of 19.5%.

For the three months ended March 31, 2023, the income tax benefit was $2.3 million, representing an ETR of 21.0%.

The Income tax provision was $20.5 million and $36.4 million for the three and six months ended June 30, 2024, respectively, representing an effective tax rate ("ETR") of 19.5% for both periods.

For the three months ended June 30, 2023, the income tax provision was $0.8 million, while the income tax benefit was $1.5 million for six months ended June 30, 2023, representing an ETR of 21.0%.

A number of countries in which we have a taxable presence have enacted legislation effective in 2024 inspired by the Organization for Economic Co-operation and Development (OECD) guidance for a global minimum tax rate of 15%, referred to as “Pillar Two” taxation.

Such legislation enacted through March 31, 2024 did not have a material impact on our effective tax rate for the first quarter of 2024 and is not presently expected to have a material impact for the full year 2024.

Such legislation enacted through March 31, 2024 did not have a material impact on our effective tax rate for the first half of 2024 and is not presently expected to have a material impact for the full year 2024.

Net Income and Adjusted EBITDA

Net income attributable to common shareholders was $66.1 million for the three months ended March 31, 2024, compared with a loss of $9.2 million in the prior-year quarter.

Adjusted EBITDA was $187.1 million for the first quarter of 2024, compared with $112.9 million in the prior-year period.

Growth in profit was primarily attributable to (i) higher revenues, particularly Resilient revenues as well as certain Transactional revenue streams like investment sales within Capital Markets, and (ii) the benefit of cost reduction actions executed in the last twelve months coupled with continued cost discipline.

In addition to these drivers, the increase in Net income attributable to common shareholders was partially due to lower Restructuring and acquisition charges as noted above.

The following chart reflects the aggregation of segment Adjusted EBITDA for the first quarter of 2024 and 2023.

Aggregation of Segment Adjusted EBITDA (in millions)

Net income attributable to common shareholders was $84.4 million for the three months ended June 30, 2024, compared with $2.5 million in the prior-year quarter.

For the first half of 2024, net income attributable to common shareholders was $150.5 million, compared with a net loss of $6.7 million in 2023.

Adjusted EBITDA was $246.3 million and $433.4 million for the second quarter and first half of 2024, compared with $225.1 million and $338.0 million in the respective prior-year periods.

The growth in consolidated profit for the second quarter and first half of 2024 was primarily attributable to (i) higher revenues, particularly Resilient revenues as well as certain Transactional revenue streams like Leasing, within Markets Advisory, (ii) the benefit of cost reduction actions largely executed in 2023 coupled with continued cost discipline and (iii) a positive impact associated with the year-over-year timing of incentive compensation accruals.

These positive profit drivers were partially offset by (i) $18.0 million of expense, within Capital Markets, associated with the August 2024 repurchase of a loan, (ii) a $12.2 million year-over-year increase in carried interest expense, within JLL Technologies, primarily as a result of the prior-year quarter's reduction in carried interest expense associated with investment equity losses and (iii) LaSalle segment performance, primarily due to expected lower incentive fees.

In addition to the drivers described above, the increase in Net income attributable to common shareholders was the result of lower current-quarter equity losses related to JLL Technologies.

The following charts reflects the aggregation of segment Adjusted EBITDA for the second quarter and first half of 2024 and 2023.

Segment Operating Results

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Markets Advisory

Three Months Ended March 31, Change in in Local

Three Months Ended June 30, Change in in Local

($ in millions) 2024 2023 U.S.

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Segment operating expenses $ 965.6 941.4 24.2 3 % 3 %

Equity losses $ — (0.1) 0.1 100 % 493 %

Adjusted EBITDA $ 129.6 99.4 30.2 30 % 30 %

Markets Advisory (continued)

Six Months Ended June 30, Change in in Local

($ in millions) 2024 2023 U.S.

dollars Currency

Leasing $ 1,116.4 1,078.4 38.0 4 % 4 %

Property Management 866.3 810.1 56.2 7 8

Advisory, Consulting and Other 46.2 43.3 2.9 7 7

Revenue $ 2,028.9 1,931.8 97.1 5 % 5 %

Platform compensation and benefits $ 1,005.9 1,007.4 (1.5) — % — %

Platform operating, administrative and other 179.0 186.9 (7.9) (4) (4)

Depreciation and amortization 34.8 34.5 0.3 1 2

Segment platform operating expenses 1,219.7 1,228.8 (9.1) (1) —

Gross contract costs 617.6 563.4 54.2 10 11

Segment operating expenses $ 1,837.3 1,792.2 45.1 3 % 3 %

Equity earnings $ 0.4 0.2 0.2 100 % 131 %

Adjusted EBITDA $ 224.9 171.0 53.9 32 % 31 %

Markets Advisory revenue growth was largely driven by Property Management and a mid-single digit increase in U.S.

Leasing revenue.

Higher Property Management revenue was primarily attributable to portfolio expansions in the U.S., UK and Canada, including incremental revenue associated with pass-through expenses.

Leasing growth, which follows a softer prior-year quarter, was led by the office sector, which saw increased deal size and transaction volumes.

The growth in U.S.

office was partially offset by industrial, globally, where deal size decreased.

Consistent with the trend from recent quarters, economic uncertainty has delayed commercial real estate decision making, particularly for large-scale leasing actions where JLL has a greater presence.

The net decreases in segment platform operating expenses for the quarter, compared with the prior-year quarter, were due to the continued impact of cost management actions taken in the last twelve months, notably in (i) lower fixed compensation and benefits attributable to reduced headcount, largely offset by higher variable revenue-related compensation expense, and (ii) lower T&E.

Gross contract costs increased over the prior-year quarter consistent with revenue growth, predominantly associated with Property Management.

The Adjusted EBITDA increase was predominantly driven by revenue growth and the continued impact of cost management actions described above.

The quarter-to-date increase in Markets Advisory revenue was primarily driven by Leasing, which achieved growth in most geographies, most notably in the U.S., Greater China, India and Germany.

The number of larger-scale deals, where JLL has historically had a greater presence, increased over the prior-year quarter and contributed to the quarter-to-date and year-to-date revenue growth.

Second-quarter Leasing growth was led by the office sector, which saw increased deal size and transaction volumes, partially offset by industrial which had a decline in both deal size and volume.

Year-to-date revenue growth was propelled by Property Management expansion in the Americas and Asia Pacific, including incremental revenue associated with pass-through expenses.

The net decreases in segment platform operating expenses for the quarter and first half of the year were due to the continued impact of cost management actions largely executed in 2023, offset by an increase in revenue-related variable compensation expense.

Higher gross contract costs over the prior-year periods correlated with revenue growth, predominantly associated with Property Management.

The Adjusted EBITDA increases for the second quarter and first half of the year were predominantly driven by revenue growth and the benefit of cost management actions largely executed in 2023.

In addition, the timing of incentive compensation accruals in the second quarter positively impacted year-over-year profit performance.

Capital Markets

Three Months Ended March 31, Change in in Local

Three Months Ended June 30, Change in in Local

($ in millions) 2024 2023 U.S.

2 unchanged sentences

Valuation Advisory & Other 95.8 89.5 6.3 7 8

CM Loan Servicing 38.7 37.4 1.3 3 3

Loan Servicing 41.5 39.0 2.5 6 6

Revenue $ 457.6 448.0 9.6 2 % 3 %

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Equity earnings $ 0.5 4.8 (4.3) (90) % (90) %

Net non-cash MSR and mortgage banking derivative activity $ (11.8) (0.6) (11.2) n.m.

Adjusted EBITDA $ 33.8 36.0 (2.2) (6) % (8) %

Capital Markets (continued)

Six Months Ended June 30, Change in in Local

($ in millions) 2024 2023 U.S.

dollars Currency

Investment Sales, Equity & Debt Advisory $ 579.0 560.1 18.9 3 % 4 %

Valuation Advisory & Other 176.0 168.6 7.4 4 5

Loan Servicing 80.2 76.4 3.8 5 5

Revenue $ 835.2 805.1 30.1 4 % 4 %

Platform compensation and benefits $ 628.7 619.3 9.4 2 % 2 %

Platform operating, administrative and other 144.1 125.3 18.8 15 15

Depreciation and amortization 33.7 32.1 1.6 5 5

Segment platform operating expenses 806.5 776.7 29.8 4 4

Gross contract costs 25.4 22.4 3.0 13 15

Segment operating expenses $ 831.9 799.1 32.8 4 % 5 %

Equity earnings $ 0.6 5.4 (4.8) (89) % (89) %

Net non-cash MSR and mortgage banking derivative activity $ (20.8) (2.4) (18.4) (767) % (753) %

Adjusted EBITDA $ 58.8 46.7 12.1 26 % 27 %

Capital Markets revenue increased across all business lines though market uncertainty persisted, especially around the future of interest rates.

Investment Sales and Debt/Equity Advisory revenue increased compared to the prior-year quarter across most asset classes, with strength in Japan and Germany, most notably office.

Investment Sales and Debt/Equity Advisory growth in the U.S.

was low single digits but outperformed the broader market for investment sales, which declined 12% according to JLL Research.

The increase in segment platform operating expenses was largely driven by higher variable compensation expense compared with the prior-year quarter, as segment profit grew.

The increase in variable compensation more than offset the impact of headcount reductions over the trailing twelve months.

Operating and administrative costs generally decreased, also due to continued cost discipline, largely overcoming $5.7 million of headwind attributable to the year-over-year non-cash change in loan loss credit reserves, as the slight increase to the reserve this quarter followed a decrease to the reserve last year.

The Adjusted EBITDA improvement was attributable to revenue growth and the benefit associated with cost management actions taken over the trailing twelve months as described above.

Capital Markets achieved broad-based revenue growth across all business lines despite residual macroeconomic headwinds, including interest rate uncertainty.

Notably, for the quarter, Investment Sales, Debt/Equity Advisory and Other, excluding Net non-cash MSR, increased in the office, industrial and hotels sectors, and was geographically led by the UK, Australia and the U.S.

For the first half of 2024, Japan contributed meaningfully to the growth.

Investment Sales growth was up over 20%, notably outperforming the broader market for investment sales, which fell 3% according to JLL Research.

Revenue growth in Investment Sales was largely offset by (i) the impact of net non-cash MSR and mortgage banking derivative activity, which was a headwind of $11.2 million for the second quarter ($18.4 million for the first half of the year), as well as (ii) a decline in Equity Advisory.

The increase in segment platform operating expenses for the second quarter and first half of 2024 was largely due to an $18.0 million impact associated with the August 2024 repurchase of a loan which JLL originated and then sold to Fannie Mae.

This impact includes the amount of the repurchase price in excess of unpaid principal balance, for items such as unpaid interest, as well as current estimated losses associated with the repurchased loan, reflecting the current underlying value of the collateral.

The net increase in operating expenses was also partially driven by higher variable compensation expense compared with the prior-year periods, as segment profit grew.

The increase in variable compensation more than offset the impact of cost management actions largely executed in 2023.

The slight decline in second-quarter Adjusted EBITDA was attributable to the aforementioned negative impact associated with the repurchased loan, which overshadowed the revenue growth and the benefit associated with cost management actions described above.

In addition, the lower equity earnings reflected a $4.6 million benefit in the prior-year quarter which, as expected, did not recur this year.

On a year-to-date basis, revenue growth and continued cost discipline overcame the negative impact of the repurchased loan, with the segment achieving double-digit Adjusted EBITDA expansion.

Work Dynamics

Three Months Ended March 31, Change in in Local

Three Months Ended June 30, Change in in Local

($ in millions) 2024 2023 U.S.

12 unchanged sentences

Adjusted EBITDA $ 71.1 56.2 14.9 27 % 26 %

Work Dynamics revenue growth was led by continued strong performance in Workplace Management, as 2023 contract wins and mandate expansions in the Americas further ramped up this quarter.

This was partially offset by Project Management, where lower pass-through costs drove the decrease in revenue while management fees were flat.

In addition, the quantum of new project contracts reflected softer leasing activity in 2023.

The net increase in segment platform operating expenses was primarily due to higher incentive compensation accruals, reflecting segment growth and operating results, largely offset by continued cost discipline and the absence of $9 million of Tetris contract losses recognized in 2023.

Gross contract costs increased over the prior-year quarter consistent with the revenue growth in Workplace Management.

The increase in Adjusted EBITDA was primarily attributable to the top-line performance described above, most notably from Workplace Management, coupled with nearly flat platform operating costs.

Six Months Ended June 30, Change in in Local

($ in millions) 2024 2023 U.S.

dollars Currency

Workplace Management $ 5,892.8 5,050.6 842.2 17 % 17 %

Project Management 1,444.5 1,379.5 65.0 5 5

Portfolio Services and Other 235.5 220.7 14.8 7 6

Revenue $ 7,572.8 6,650.8 922.0 14 % 14 %

Platform compensation and benefits $ 653.6 626.0 27.6 4 % 5 %

Platform operating, administrative and other 215.3 212.7 2.6 1 1

Depreciation and amortization 41.5 39.2 2.3 6 6

Segment platform operating expenses 910.4 877.9 32.5 4 4

Gross contract costs 6,583.3 5,731.0 852.3 15 15

Segment operating expenses $ 7,493.7 6,608.9 884.8 13 % 14 %

Equity earnings $ 1.1 1.2 (0.1) (8 %) (8) %

Adjusted EBITDA $ 122.0 81.9 40.1 49 % 50 %

For the second quarter and first half of the year, Work Dynamics revenue growth was led by continued strong performance in Workplace Management, as Americas contract wins and mandate expansions from 2023 onboarded.

Project Management revenue grew over the prior-year periods, primarily in the Americas and Asia Pacific, where higher pass-through costs drove the increase in revenue.

The increases in segment operating expenses for the second quarter and first half of the year, compared with the prior-year periods, were primarily due to revenue-related expense growth, including gross contract costs, partially tempered by continued cost discipline and the timing of incentive compensation accruals.

The increase in Adjusted EBITDA for the second quarter and first half of 2024 was primarily attributable to the top-line performance described above, largely driven by Workplace Management, and continued cost discipline.

In addition, the timing of incentive compensation accruals positively impacted year-over-year profit performance.

JLL Technologies

Three Months Ended March 31, Change in in Local

Three Months Ended June 30, Change in in Local

($ in millions) 2024 2023 U.S.

10 unchanged sentences

$ (10.9) (1.3) (9.6) (738) % (704) %

Equity (losses) earnings $ (1.0) 4.9 (5.9) (120) % (121) %

(1) Included in Platform compensation and benefits expense is a reduction in carried interest expense of $0.1 million for the first quarter of 2024 and carried interest expense of $0.7 million for the first quarter of 2023 related to Equity (losses) earnings of the segment.

(2) Adjusted EBITDA excludes Equity (losses) earnings for JLL Technologies.

The decline in JLL Technologies revenue was partially due to 2023 cost-out activities in the business's go-to-market approach aimed at improving profitability and resulted in lower contract signings in the second half of 2023.

In addition, the lower revenue reflected delayed decisions on technology spend from existing solutions clients, which included certain contract renewals.

The decrease in current-quarter segment operating expenses was driven by the reduction of certain expenses associated with cost management actions and improved operating efficiency over the trailing twelve months.

The year-over-year improvement in Adjusted EBITDA was driven by the reduction of operating expenses associated with cost management actions described above, which outpaced the impact of lower revenue.

Three Months Ended March 31, Change in in Local

Equity losses $ (9.0) (103.9) 94.9 91 % 91 %

JLL Technologies (continued)

Six Months Ended June 30, Change in in Local

($ in millions) 2024 2023 U.S.

dollars Currency

Revenue $ 110.3 122.0 (11.7) (10) % (10) %

Platform compensation and benefits (1)

$ 100.8 106.6 (5.8) (5) % (6) %

Platform operating, administrative and other 22.9 27.2 (4.3) (16) (16)

Depreciation and amortization 9.3 8.0 1.3 16 16

Segment platform operating expenses 133.0 141.8 (8.8) (6) (6)

Gross contract costs 2.6 7.7 (5.1) (66) (66)

Segment operating expenses $ 135.6 149.5 (13.9) (9) % (9) %

Adjusted EBITDA (2)

$ (16.0) (19.5) 3.5 18 % 19 %

Equity losses $ (10.0) (99.0) 89.0 90 % 90 %

(1) Included in Platform compensation and benefits expense is carried interest expense of $2.2 million and $2.1 million for the three and six months ended June 30, 2024, and a reduction in carried interest expense of $10.0 million and $9.3 million for the three and six months ended June 30, 2023, related to Equity losses of the segment.

(2) Adjusted EBITDA excludes Equity losses for JLL Technologies.

The decline in JLL Technologies current-quarter and year-to-date revenue was partially due to lower contract signings over the last few quarters and delayed decisions on technology spend from existing solutions clients, which included certain contract renewals.

Segment operating expenses includes carried interest, which was a $10.0 million reduction to expense in the prior-year quarter ($9.3 million reduction to expense for the first half of 2023), versus incremental expense of $2.2 million this quarter (incremental expense of $2.1 million for the first half of 2024).

Carried interest expense is associated with equity earnings/losses on certain investments within the JLL Technologies Spark Venture Funds and the reduction to expense in the prior year reflected notable equity losses on certain investments in 2023.

The increase in current-quarter platform operating expenses was driven by the impact of carried interest (an adverse swing of $12.2 million) described above;

this increase was tempered by the reduction of certain expenses associated with cost management actions and improved operating efficiency over the trailing twelve months.

For the first half of 2024, the aforementioned cost management actions over the trailing twelve months, coupled with ongoing cost discipline, more than offset the impact of carried interest (adverse change of $11.4 million).

Second-quarter Adjusted EBITDA contraction reflects lower revenue and the change in carried interest expense, as described above, which overshadowed cost management actions and improved operating efficiency over the trailing twelve months.

For the first half of 2024, those cost management actions and improved operating efficiency drove margin improvement, as ongoing cost discipline outpaced the impact of carried interest and lower revenue.

Equity losses for the quarter and first half of the year resulted from current-quarter valuation declines in JLL Technologies' investments.

The higher equity losses in 2023 were due to subsequent financing rounds at decreased per-share values and were predominantly driven by two investments for which we previously recognized significant equity earnings.

Three Months Ended June 30, Change in in Local

($ in millions) 2024 2023 U.S.

dollars Currency

Advisory fees $ 93.1 103.1 (10.0) (10) % (8) %

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Equity losses $ (7.3) (5.1) (2.2) (43) % (42) %

LaSalle (continued)

Six Months Ended June 30, Change in in Local

($ in millions) 2024 2023 U.S.

dollars Currency

Advisory fees $ 185.4 203.6 (18.2) (9) % (8) %

Transaction fees and other 15.8 15.4 0.4 3 7

Incentive fees 4.8 39.3 (34.5) (88) (87)

Revenue $ 206.0 258.3 (52.3) (20) % (19) %

Platform compensation and benefits $ 120.3 153.3 (33.0) (22) % (21) %

Platform operating, administrative and other 33.4 32.3 1.1 3 4

Depreciation and amortization 4.0 3.6 0.4 11 11

Segment platform operating expenses 157.7 189.2 (31.5) (17) (16)

Gross contract costs 17.2 14.6 2.6 18 18

Segment operating expenses $ 174.9 203.8 (28.9) (14) % (14) %

Adjusted EBITDA (1)

$ 43.7 57.9 (14.2) (25) % (20) %

Equity losses $ (11.2) (13.9) 2.7 19 % 21 %

(1) Adjusted EBITDA excludes Equity losses for LaSalle.

LaSalle’s decrease in revenue was primarily due to lower advisory fees, attributable to (i) valuation declines in assets under management ("AUM"), particularly in North America and (ii) lower fees in Europe as a result of structural changes to a lower-margin business.

Transaction fees and incentive fees reflected the on-going global trend of dampened investment sales transaction volumes.

The net decline in platform operating expenses was driven by the benefit of cost management actions over the last twelve months and lower variable compensation accruals.

The slight decline in Adjusted EBITDA reflected lower revenues, which were nearly offset by the impact of lower expenses as described above.

As of March 31, 2024, LaSalle had $89.7 billion of AUM.

Compared with AUM of $93.5 billion as of March 31, 2023, the AUM as of March 31, 2024 decreased 4% in USD (3% in local currency).

The net decrease in AUM over the trailing twelve months resulted from (i) $4.4 billion of dispositions and withdrawals, (ii) $3.4 billion of net valuation decreases, (iii) $0.7 billion of foreign currency decreases, partially offset by (iv) $4.2 billion of acquisitions and (v) $0.5 billion increase in uncalled committed capital and cash.

For the second quarter and first half of the year, LaSalle’s decrease in revenue was primarily due to the expected decline in incentive fees compared with 2023.

Advisory fees also declined, attributable to lower assets under management ("AUM"), as detailed below, and lower fees in Europe as a result of structural changes to a lower-margin business, as discussed in the first quarter.

The decrease in operating expenses for the second quarter and half year were largely driven by lower variable compensation accruals in 2024 as well as cost management actions largely executed in 2023.

The Adjusted EBITDA contraction over the prior-year quarter and first half of 2023 was driven by lower revenues and a few discrete, individually immaterial items, partially offset by (i) the operating expense reductions described above and (ii) an $8.2 million gain recognized following the purchase of a controlling interest in a LaSalle-managed fund.

As of June 30, 2024, LaSalle had $86.6 billion of AUM.

Compared with AUM of $93.2 billion as of June 30, 2023, the AUM as of June 30, 2024, decreased 7% in USD (5% in local currency).

The net decrease in AUM over the trailing twelve months resulted from (i) $4.3 billion of dispositions and withdrawals, (ii) $4.2 billion of net valuation decreases, (iii) $1.8 billion of foreign currency decreases, and (iv) a $0.2 billion decrease in uncalled committed capital and cash held, partially offset by (v) $3.9 billion of acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

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Cash Flows from Operating Activities

Operating activities used $677.5 million of cash in the first three months of 2024, compared with $716.3 million of cash used in operating activities during the same period in 2023.

The year-over-year improvement was primarily due to an increase in cash provided by earnings driven by improved business performance, partially offset by incremental cash outflows associated with trade payables and other liabilities.

Operating activities used $403.6 million of cash in the first six months of 2024, compared with $479.3 million of cash used in operating activities during the same period in 2023.

The year-over-year higher cash inflow was primarily driven by improved business performance, partially offset by the timing of corporate tax payments.

Cash Flows from Investing Activities

We used $54.3 million of cash for investing activities during the first three months of 2024, compared with $74.0 million used during the same period in 2023.

The decrease of $19.7 million was driven by lower net capital contributions to investments and lower net capital additions.

We used $154.1 million of cash for investing activities during the first six months of 2024, compared with $160.7 million used during the same period in 2023.

The net decrease was driven by lower net capital contributions to investments and lower net capital additions, partially offset by higher cash paid for acquisitions.

We discuss these drivers, along with other investing activities, individually below in further detail.

Cash Flows from Financing Activities

Financing activities provided $703.4 million of cash during the first three months of 2024, compared with $775.3 million provided during the same period in 2023.

The net decrease of $71.9 million in cash inflows from financing activities was substantially driven by a decrease in net borrowings on our Facility, in part due to less cash used from operating activities compared with the prior-year quarter.

Financing activities provided $566.6 million of cash during the first six months of 2024, compared with $503.9 million provided during the same period in 2023.

In the second quarter of 2023, we notably enhanced efforts to centrally pool available cash from across JLL to pay down our Facility.

While we have continued this effort, subsequent quarters identified less new cash to centralize, as expected, and incremental pay-downs have generally plateaued.

Therefore, the impact on financing cash flows was most impactful in the prior-year quarter.

The resulting increase in year-over-year net borrowings (driven by lower quarter-end repayments) was partially offset by higher share repurchase activity, as detailed below.

Our $3.3 billion Facility matures on November 3, 2028 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) March 31, 2024 December 31, 2023

(in millions) June 30, 2024 December 31, 2023

Outstanding borrowings under the Facility $ 1,275.0 625.0

Short-term borrowings 126.2 147.9

In addition to our Facility, we had the capacity to borrow up to $54.2 million under local overdraft facilities as of March 31, 2024.

In addition to our Facility, we had the capacity to borrow up to $53.8 million under local overdraft facilities as of June 30, 2024.

The following table provides additional information on our Facility and Uncommitted Facility, collectively.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

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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.

On June 27, 2024, we established a commercial paper program (the “Program”) in which we may issue up to $2.5 billion of short-term, unsecured and unsubordinated commercial paper notes at any time, under the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.

Amounts available under the Program may be borrowed, repaid and re-borrowed from time to time.

Payment of the Program notes will be fully and unconditionally guaranteed on an unsecured and unsubordinated basis.

We intend to use net proceeds of the Program for general corporate purposes, including the repayment of outstanding borrowings under the Facility.

Notes issued under the Program will be sold under customary market terms in the U.S.

commercial paper market at par less a discount representing an interest factor or, if interest bearing, at par.

The maturities of the Program notes may vary but may

not exceed 397 days from the date of issuance.

The Program notes and guarantee of payment thereof will rank pari passu with all other unsecured and unsubordinated indebtedness.

As of the end of June 30, 2024, we have not issued any notes under the Program.

Refer to Note 9, Debt, in the Notes to Consolidated Financial Statements for additional information on our debt.

Investment Activity

As of March 31, 2024, we had a carrying value of $816.2 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 three months ended March 31, 2024 and 2023, funding of investments exceeded return of capital by $11.7 million and $23.6 million, respectively.

As of June 30, 2024, we had a carrying value of $819.7 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 six months ended June 30, 2024 and 2023, funding of investments exceeded return of capital by $31.4 million and $53.5 million, respectively.

We expect continued investment activity by both JLL Technologies and LaSalle.

See Note 6, Investments, in the Notes to Condensed Consolidated Financial Statements for additional information on our investment activity.

See Note 6, Investments, in the Notes to Consolidated Financial Statements for additional information on our investment activity.

Capital Expenditures

Net capital additions for the three months ended March 31, 2024 and 2023 were $43.2 million and $49.3 million, respectively.

Net capital additions for the six months ended June 30, 2024 and 2023 were $81.4 million and $88.2 million, respectively.

Our capital expenditures in 2024 were primarily for purchased/developed software and leasehold improvements.

Business Acquisitions

During the three months ended March 31, 2024, we paid $3.1 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.

During the six months ended June 30, 2024, we paid $44.2 million for business acquisitions.

This included $39.3 million of payments relating to acquisitions in 2024 and $4.9 million for deferred business acquisition and earn-out obligations related to acquisitions completed in prior years, which are primarily reflected in cash flow 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 $8.0 million as of March 31, 2024.

Deferred business acquisition obligations totaled $13.9 million as of June 30, 2024.

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 March 31, 2024, we had the potential to make earn-out payments for a maximum of $99.7 million on 12 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.

As of June 30, 2024, we had the potential to make earn-out payments for a maximum of $113.6 million on 13 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 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.

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The number of shares repurchased and cash paid for repurchases is noted in the following table.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

1 unchanged sentence

Total paid for shares repurchased $ 20.1 20.0 $ 40.2 20.0

As of March 31, 2024, $1,073.5 million remained authorized for repurchases under our share repurchase program.

As of June 30, 2024, $1,053.4 million remained authorized for repurchases under our share repurchase program.

Repatriation of Foreign Earnings

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We believe our policy of permanently investing earnings of foreign subsidiaries does not significantly impact our liquidity.

As of March 31, 2024, and December 31, 2023, we had total Cash and cash equivalents of $396.7 million and $410.0 million, respectively, of which approximately $302.3 million and $310.1 million, respectively, was held by foreign subsidiaries.

As of June 30, 2024, and December 31, 2023, we had total Cash and cash equivalents of $424.4 million and $410.0 million, respectively, of which approximately $326.7 million and $310.1 million, respectively, was held by foreign subsidiaries.

Restricted Net Assets

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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 March 31, 2024, and December 31, 2023.

The assets of these countries aggregated to approximately 4% of our total assets as of both June 30, 2024, and December 31, 2023.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis