What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-06 compared with 2024-08-06 · 141 added, 142 removed, 384 unchanged (42% 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 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 ).

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, for the three and nine months ended September 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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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 six months ended June 30, 2024.

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

ITEMS AFFECTING COMPARABILITY

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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 June 30, 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 September 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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Consolidated Operating Results

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

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

($ in millions) 2024 2023 U.S.

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Equity losses $ (0.9) (11.2) 10.3 92 % 92 %

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

Net non-cash MSR and mortgage banking derivative activity $ (5.1) (7.1) 2.0 28 % 29 %

Adjusted EBITDA $ 298.1 217.3 80.8 37 % 37 %

Consolidated Operating Results (continued)

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

Nine Months Ended September 30, Change in % Change in Local Currency

($ in millions) 2024 2023 U.S.

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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.

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.

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

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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.

Credit losses on convertible note investments reflects credit impairments associated with pre-equity convertible note investments in early-stage proptech enterprises.

Such losses are similar to the equity investment-related losses included in equity earnings/losses for JLL Technologies' investments and are therefore consistently excluded from adjusted measures.

Reconciliation of Non-GAAP Financial Measures

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

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

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2024 2023 2024 2023

Net income (loss) attributable to common shareholders $ 84.4 2.5 $ 150.5 (6.7)

Net income attributable to common shareholders $ 155.1 59.7 $ 305.6 53.0

Interest expense, net of interest income 38.1 37.1 110.3 103.9

Income tax provision (benefit) 20.5 0.8 36.4 (1.5)

Income tax provision 37.4 14.5 73.8 13.0

Depreciation and amortization (1)

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Restructuring and acquisition charges (8.8) 31.6 4.4 79.1

Net loss on disposition — 1.8 — 1.8

Net (gain) loss on disposition — (1.3) — 0.5

Net non-cash MSR and mortgage banking derivative activity 5.1 7.1 25.9 9.5

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Equity losses - JLL Technologies and LaSalle 2.2 12.1 23.4 125.0

Credit losses on convertible note investments 6.3 — 6.3 —

Adjusted EBITDA $ 298.1 217.3 $ 731.5 555.3

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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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 % Change 2024 % Change

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Revenue increased 15% compared with the prior-year quarter.

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 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).

The collective 11% increase in Transactional revenue was led by Leasing, within Markets Advisory, up 21%, and Investment Sales, Debt/Equity Advisory and Other, within Capital Markets, up 19%.

Several businesses with Resilient revenues continued to deliver strong revenue growth, collectively up 16%, highlighted by Workplace Management, within Work Dynamics, up 20%, and Property Management, within Markets Advisory, up 8%.

Growth in these businesses outpaced declines in LaSalle Advisory Fees, down 10%, and JLL Technologies, down 4%.

For the first nine months of 2024, consolidated revenue was up 12% compared with 2023.

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

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

Refer to segment operating results for further detail.

Operating Expenses

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

Consolidated operating expenses were $5.6 billion for the third quarter, up 13% from the same period in 2023.

Gross contract costs were $3.9 billion, up 16% 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 $1.7 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.

Platform operating expenses were $1.8 billion for the third quarter, a 9% increase from the prior-year quarter, largely due to revenue-related expense growth as well as a couple discrete items, including:

(i) nearly $10 million of expense associated with the timing of accruals related to gross receipts taxes in a handful of U.S.

states, associated with Work Dynamics, and (ii) $6.3 million of non-cash credit losses from convertible notes associated with JLL Technologies investments (which are excluded from Adjusted EBITDA consistent with equity earnings/losses from investments).

Expense growth was largely offset by the benefit of continued cost discipline and enhanced leverage of our platform.

For the third quarter of 2024, Restructuring and acquisition charges reflected (i) an expense credit in the current quarter associated with a lower expected earn-out payout related to a 2021 U.S.

property management joint venture as well as (ii) lower employment-related costs given the significant cost-out actions in 2023.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2024 2023 2024 2023

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Restructuring, pre-acquisition and post-acquisition charges 6.0 15.1 20.1 31.7

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)

Fair value adjustments that resulted in a net (decrease) increase to earn-out liabilities from prior-period acquisition activity (20.9) 0.1 (33.5) (0.5)

Restructuring and acquisition charges $ (8.8) 31.6 $ 4.4 79.1

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.

Specific to severance and restructuring charges, the current quarter and first nine months of 2024 reflect the impact of lower cost-out actions compared to 2023.

Interest Expense

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.

Interest expense, net of interest income, for the three and nine months ended September 30, 2024 was $38.1 million and $110.3 million, respectively, compared with $37.1 million and $103.9 million in the prior-year periods.

Equity (Losses) Earnings

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.

In the prior year, 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2024 2023 2024 2023

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Equity losses $ (0.9) (11.2) $ (20.0) (117.3)

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 half of 2024 and is not presently expected to have a material impact for the full year 2024.

The Income tax provision was $37.4 million and $73.8 million for the three and nine months ended September 30, 2024, respectively, representing an effective tax rate ("ETR") of 19.5% for both periods.

For the three and nine months ended September 30, 2023, the income tax provision was $14.5 million and $13.0 million, representing an ETR of 19.6% and 19.3%, respectively.

A number of countries in which we have a taxable presence have enacted legislation effective in 2024 correlated to 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 September 30, 2024 did not have a material impact on our effective tax rate for the first nine months 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 $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.

Net income attributable to common shareholders was $155.1 million for the three months ended September 30, 2024, compared with $59.7 million in the prior-year quarter.

For the first nine months of 2024, net income attributable to common shareholders was $305.6 million, compared with $53.0 million in 2023.

Adjusted EBITDA was $298.1 million and $731.5 million for the third quarter and first nine months of 2024, compared with $217.3 million and $555.3 million in the respective prior-year periods.

The growth in consolidated profit was primarily attributable to (i) higher revenues, both Transactional and certain Resilient revenues, including Workplace Management within Work Dynamics, and (ii) cost discipline and enhanced leverage of the company's platform.

These drivers notably outpaced outsized the timing of revenue-related expense accruals in Work Dynamics this quarter and lower contributions from LaSalle.

The following charts reflects the aggregation of segment Adjusted EBITDA for the third quarter and first nine months of 2024 and 2023.

Segment Operating Results

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Markets Advisory

Three Months Ended June 30, Change in in Local

Three Months Ended September 30, Change in in Local

($ in millions) 2024 2023 U.S.

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Segment operating expenses $ 1,008.4 923.0 85.4 9 % 9 %

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

Equity earnings $ 0.1 0.1 — — % (6) %

Adjusted EBITDA $ 151.9 85.1 66.8 78 % 77 %

Markets Advisory (continued)

Six Months Ended June 30, Change in in Local

Nine Months Ended September 30, Change in in Local

($ in millions) 2024 2023 U.S.

12 unchanged sentences

Adjusted EBITDA $ 376.8 256.1 120.7 47 % 46 %

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.

For the third quarter and first nine months of 2024, the broad-based increase in Markets Advisory revenue was primarily driven by Leasing and was led by the office sector.

Most geographies achieved double-digit growth for the quarter and first nine months of 2024, notably the U.S., India, UK, Australia and Greater China.

Globally, industrial was flat to the prior-year quarter (versus down double-digits on a year-to-date basis), ending a multi-quarter trend of declines in the sector as deal size rebounded.

In addition, the number of larger-scale Leasing deals, where JLL has historically had a greater presence, increased over the prior-year quarter in nearly all asset classes.

Property Management revenue growth was led by expansion in the U.S.

and several countries in Asia Pacific, including incremental revenue in the U.S.

associated with pass-through expenses.

The net increases in segment platform operating expenses for the quarter and first nine months of the year were due to an increase in revenue-related variable compensation expense, offset by continued cost discipline.

Higher gross contract costs over the prior-year periods was largely due to Property Management.

The Adjusted EBITDA increases for the third quarter and first nine months of the year were predominantly driven by revenue growth and cost discipline described above.

In addition, the timing of incentive compensation accruals positively impacted profit performance for the third quarter.

Capital Markets

Three Months Ended June 30, Change in in Local

Three Months Ended September 30, Change in in Local

($ in millions) 2024 2023 U.S.

dollars Currency

Investment Sales, Equity & Debt Advisory $ 320.3 319.5 0.8 — % 1 %

Valuation Advisory & Other 95.8 89.5 6.3 7 8

Investment Sales, Debt/Equity Advisory and Other $ 371.8 310.2 61.6 20 % 19 %

Value and Risk Advisory 86.0 87.5 (1.5) (2) (3)

Loan Servicing 41.0 38.1 2.9 8 8

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Equity earnings $ 0.2 0.7 (0.5) (71) % (67) %

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

Net non-cash MSR and mortgage banking derivative activity $ (5.1) (7.1) 2.0 28 % 29 %

Adjusted EBITDA $ 65.7 50.3 15.4 31 % 30 %

Capital Markets (continued)

Six Months Ended June 30, Change in in Local

Nine Months Ended September 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

Investment Sales, Debt/Equity Advisory and Other $ 950.8 870.3 80.5 9 % 9 %

Value and Risk Advisory 262.0 256.1 5.9 2 2

Loan Servicing 121.2 114.5 6.7 6 6

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Adjusted EBITDA $ 124.5 97.0 27.5 28 % 29 %

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.

For the third quarter and first nine months of the year, Capital Markets revenue growth was led by Investment Sales, Debt/Equity Advisory and Other, as investor sentiment strengthened.

This revenue growth was geographically broad-based, most notably in the United States and Europe, and was across nearly all asset classes, with hotels, office and industrial leading the way.

Investment sales in the U.S.

grew approximately 30% over the prior-year quarter, outperforming the broader market for investment sales, which grew 23% according to JLL Research.

On a year-to-date basis, revenue growth, driven by Investment Sales, overcame a headwind of $16.4 million related to the impact of net non-cash MSR and mortgage banking derivative activity.

The current-quarter and year-to-date increases in operating expenses were largely driven by higher variable compensation expense compared with the prior-year periods, as segment profit grew.

The increase in variable compensation overshadowed the impact of continued cost discipline.

Further, segment platform operating expenses for the first nine months of 2024 reflected a $17.8 million impact associated with the August 2024 repurchase of a loan originated and sold to Fannie Mae, for which the associated expenses were predominantly recognized in the second quarter of 2024.

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

The Adjusted EBITDA improvement was largely attributable to the transactional revenue growth described above and continued cost discipline.

These drivers overcame the headwind attributable to the expenses associated with the finalization of the loan repurchase described above.

Work Dynamics

Three Months Ended June 30, Change in in Local

Three Months Ended September 30, Change in in Local

($ in millions) 2024 2023 U.S.

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Segment operating expenses $ 4,019.6 3,472.4 547.2 16 % 16 %

Equity earnings $ 0.4 0.8 (0.4) (50 %) (51) %

Equity earnings $ 1.0 0.1 0.9 900 % n.m.

Adjusted EBITDA $ 74.3 61.6 12.7 21 % 20 %

Six Months Ended June 30, Change in in Local

Work Dynamics (continued)

Nine Months Ended September 30, Change in in Local

($ in millions) 2024 2023 U.S.

12 unchanged sentences

Adjusted EBITDA $ 196.3 143.5 52.8 37 % 37 %

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.

For the third quarter, Work Dynamics revenue growth was led by continued strong performance in Workplace Management, largely from U.S.

mandate expansions.

In addition, Workplace Management also drove year-to-date growth from the onboarding of new contracts won in 2023 as well as the mandate expansions driving current quarter revenue performance.

Project Management revenue performance varied across geographies given shifts in business mix as lower pass-through costs partially offset management fees increases in the mid-single digits.

Greater activity in Portfolio Services and Other was largely offset by the absence of fees associated with a large transaction on behalf of a U.S.

client in the third quarter of 2023.

The increases in segment operating expenses for the third quarter and first nine months 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 current quarter increase was also driven by nearly $10 million of expense associated with the timing of accruals related to gross receipts taxes in a handful of U.S.

The increase in Adjusted EBITDA for the third quarter and first nine months of 2024 was primarily attributable to the top-line performance described above.

JLL Technologies

Three Months Ended June 30, Change in in Local

Three Months Ended September 30, Change in in Local

($ in millions) 2024 2023 U.S.

10 unchanged sentences

$ (7.8) (5.7) (2.1) (37) % (39) %

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

Equity earnings (losses) $ 11.6 (3.0) 14.6 487 % 490 %

JLL Technologies (continued)

Six Months Ended June 30, Change in in Local

Nine Months Ended September 30, Change in in Local

($ in millions) 2024 2023 U.S.

10 unchanged sentences

$ (23.8) (25.2) 1.4 6 % 6 %

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

Equity earnings (losses) $ 1.6 (102.0) 103.6 102 % 102 %

(1) Included in Platform compensation and benefits expense is carried interest expense of $2.2 million and $4.3 million for the three and nine months ended September 30, 2024, and a carried interest benefit of $0.1 million and $9.4 million for the three and nine months ended September 30, 2023, related to Equity earnings (losses) of the segment.

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

The decline in JLL Technologies revenue for the current quarter and first nine months of 2024 was due to lower contract signings over the trailing twelve months in services offerings.

This impact was partially offset in the third quarter by continued growth in software offerings.

Segment operating expenses includes carried interest, which was a $0.1 million reduction to expense in the prior-year quarter ($9.4 million reduction to expense for the first nine months of 2023), versus incremental expense of $2.2 million this quarter (incremental expense of $4.3 million for the first nine months of 2024).

Carried interest expense is associated with equity earnings/losses on certain investments within the JLL Technologies Spark Venture Funds.

The incremental expense in the current quarter and first nine months of 2024 were due to net equity earnings from the investments, while the reduction to expense in the prior year periods reflected equity losses on certain investments in 2023.

The increase in segment operating expenses is primarily driven by 1) $6.3 million of non-cash credit losses from convertible notes associated with JLL Technologies investments, which are excluded from Adjusted EBITDA consistent with equity earnings/losses from investments, 2) an approximate $5 million reduction to incentive compensation in the prior-year quarter for true-ups related to performance against certain targets, and 3) the incremental carried interest expense described above.

These discrete items more than offset the impact of cost management actions over the trailing twelve months and ongoing cost discipline.

Third-quarter Adjusted EBITDA contraction was primarily attributable to lower revenue as well as the bonus and carried interest expenses items described above, which overshadowed the benefits of cost discipline and improved operating efficiency over the trailing twelve months.

Year-to-date, those cost management actions and improved operating efficiency drove margin improvement, as the results of the ongoing cost discipline outpaced the impact of carried interest and lower revenue.

Equity losses for the first nine months of 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 September 30, Change in in Local

($ in millions) 2024 2023 U.S.

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Transaction fees and other 8.6 7.4 1.2 16 17

Incentive fees 2.6 35.8 (33.2) (93) (92)

Incentive fees — — — n.m.

Revenue $ 101.3 110.1 (8.8) (8) % (8) %

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LaSalle (continued)

Six Months Ended June 30, Change in in Local

Nine Months Ended September 30, Change in in Local

($ in millions) 2024 2023 U.S.

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(1) Adjusted EBITDA excludes Equity losses for LaSalle.

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.

For the third quarter and first nine months of 2024, LaSalle’s decrease in revenue was largely attributable to declines in assets under management ("AUM") over the trailing twelve months, most notably in North America and Europe, and lower fees in Europe as a result of structural changes to a lower-margin business, as discussed in previous quarters this year.

Further, on a year-to-date basis, incentive fees decreased considerably, as fees earned in 2023 in Japan and the United States did not reoccur.

Operating expenses were nearly flat for the third quarter of 2024, and declined on a year-to-date basis, due to lower variable compensation accruals in 2024 as well as continued cost discipline.

In addition, the prior-year quarter included a one-time reduction to a legacy incentive compensation accrual upon final determination of performance relative to target.

The Adjusted EBITDA contraction over the prior-year quarter and first nine months of 2023 was driven by lower revenues and the expense activity described above.

On a year-to-date basis, 2024 results included an $8.2 million gain recognized following the purchase of a controlling interest in a LaSalle-managed fund during the second quarter.

As of September 30, 2024, LaSalle had $84.6 billion of AUM.

Compared with AUM of $92.9 billion as of September 30, 2023, the AUM as of September 30, 2024, decreased 9% in USD (7% in local currency).

The net decrease in AUM over the trailing twelve months resulted from (i) $5.4 billion of dispositions and withdrawals, (ii) $3.9 billion of net valuation decreases, (iii) $1.7 billion of foreign currency decreases, and (iv) a $0.8 billion decrease in uncalled committed capital and cash held, partially offset by (v) $3.5 billion of acquisitions and takeovers.

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 $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.

Operating activities used $142.0 million of cash in the first nine months of 2024, compared with $153.6 million of cash used in operating activities during the same period in 2023.

The incremental cash inflows associated with higher cash provided by earnings and lower incentive compensation payments in 2024, compared with 2023, were more than offset by (i) $117.0 million higher cash taxes paid for the first nine months of 2024, (ii) cash paid to repurchase a loan from Fannie Mae (refer to Note 10, Commitments and Contingencies, in the Notes to Consolidated Financial Statements for additional information) and (iii) nearly $50.0 million of headwind from Net reimbursables driven by growth in Workplace Management.

Cash Flows from Investing Activities

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 used $219.0 million of cash for investing activities during the first nine months of 2024, compared with $220.4 million used during the same period in 2023.

Lower net capital contributions to investments and net capital additions were largely 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 $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.

Financing activities provided $349.0 million of cash during the first nine months of 2024, compared with $231.2 million provided during the same period in 2023.

This increase in cash provided by financing activities reflected greater net borrowings.

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.

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) June 30, 2024 December 31, 2023

Outstanding borrowings, including the balance of the Facility, Short-term borrowings (financing lease obligations, overdrawn bank accounts and local overdraft facilities) and the balance outstanding under the Program are presented below.

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

Outstanding borrowings under the Facility $ 345.0 625.0

Short-term borrowings 99.6 147.9

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 June 30, Six Months Ended June 30,

Outstanding commercial paper 800.0 —

In addition to our Facility, we had the capacity to borrow up to $55.5 million under local overdraft facilities as of September 30, 2024.

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

Three Months Ended September 30, Nine Months Ended September 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.

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 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.

As of September 30, 2024, we had a carrying value of $866.5 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 ended September 30, 2024 and 2023, funding of investments exceeded return of capital by $54.9 million and $65.3 million, respectively.

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

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Capital Expenditures

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

Net capital additions for the nine months ended September 30, 2024 and 2023 were $126.3 million and $137.7 million, respectively.

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

Business Acquisitions

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

During the nine months ended September 30, 2024, we paid $45.9 million for business acquisitions.

This included $40.8 million of payments relating to acquisitions in 2024 and $5.1 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 $13.9 million as of June 30, 2024.

Deferred business acquisition obligations totaled $14.1 million as of September 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 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.

As of September 30, 2024, we had the potential to make earn-out payments for a maximum of $108.9 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.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

1 unchanged sentence

Total paid for shares repurchased $ 20.1 20.1 $ 60.3 40.1

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

As of September 30, 2024, $1,033.3 million remained authorized for repurchases under our share repurchase program.

Repatriation of Foreign Earnings

1 unchanged sentence

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

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.

As of September 30, 2024, and December 31, 2023, we had total Cash and cash equivalents of $437.8 million and $410.0 million, respectively, of which approximately $328.2 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 June 30, 2024, and December 31, 2023.

The assets of these countries aggregated to approximately 4% of our total assets as of both September 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