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Supplemental Information
4th Quarter 2017 Earnings Call
February 7, 2018
2
Q4 2017 Macro-economic operating environment
Global market overview
2018 Global real estate outlook
Notes: • Source: JLL Research, January 2018 • Leasing, vacancy, rental and capital value projections relate to the office sector
▪ Global markets deliver strong finish to 2017 ▪ Synchronized global growth acceleration and
unemployment rates continue to decline ▪ Central Banks continue to move gradually toward
interest rate normalization
▪ Stable outlook supported by economic growth,significant capital availability and relatively lowinterest rates
▪ Softer investment volumes expected in 2018; lackof product and continued investor discipline
▪ Continued strong leasing demand driven byeconomic growth; continued rental growth
▪ Vacancy remains below long-term average
▪ U.S. growth remains buoyant and ends year on solidfooting
▪ Stimulative monetary policy, solid domestic demandand job creation in EMEA support growth
▪ Asia Pacific remains fastest-growing region despitemixed conditions; growth lead by China and Japan
3
Consolidated financial results
$2.2BFee revenue
$360M Adjusted EBITDA
$4.92 Adjusteddiluted EPS
Notes: • Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures
▪ Double-digit consolidated fee revenue growth▪ Real Estate Services fee revenue growth led by
transaction execution in Capital Markets andLeasing reflecting exceptional Q4
▪ Real Estate Services fee revenue driven by 12%organic growth
▪ LaSalle delivers solid advisory fees and equityearnings
▪ Adjusted EBITDA margin performance reflects ▪ Organic margin expansion▪ Anticipated lower LaSalle incentive fees▪ Continued strategic technology investments
▪ Strong operating cash flow drives substantial leveragereduction to <1x
▪ Operating cash flow up $577 million
Q4 2017 Highlights
2017 Highlights
$6.7BFee revenue
$760M Adjusted EBITDA
$9.16 Adjusteddiluted EPS
2017 Commentary
4
Notes:• Capital Markets & Hotels revenue includes both “gross” and “fee” presentation. The difference between the two amounts represents net non-cash activity associated
with mortgage servicing rights and mortgage banking derivatives, which is also excluded from calculation of adjusted operating income, adjusted EBITDA andadjusted diluted earnings per share
• Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures
Q4 2017 Real Estate Services revenue ($ in millions; % change in local currency over QTD Q4 2016)
Americas EMEA Asia Pacific Total RES
Leasing $ 481.1 ó 23% $ 116.5 ó 10% $ 106.4 ó 18% $ 704.0 ó 20%
Capital Markets & Hotels-Fee
$ 148.7 ó 20% $ 200.9 ó 31% $ 82.4 ó 47% $ 432.0 ó 29%
Gross Revenue $ 153.2 ó 5% $ 200.9 ó 31% $ 82.4 ó 47% $ 436.5 ó 23%
Property & FacilityManagement - Fee
$ 172.4 ó 1% $ 176.8 ò (1)% $ 146.2 ó 9% $ 495.4 ó 3%
Gross Revenue $ 212.5 ò (2)% $ 227.8 ó 5% $ 225.6 ó 21% $ 665.9 ó 7%
Project & DevelopmentServices - Fee
$ 117.3 ó 11% $ 80.4 ó 21% $ 34.4 ó 8% $ 232.1 ó 14%
Gross Revenue $ 123.0 ó 16% $ 218.7 ó 11% $ 72.0 ó 9% $ 413.7 ó 12%
Advisory, Consulting &Other
$ 73.4 ó 23% $ 95.0 ó 9% $ 54.8 ó 16% $ 223.2 ó 15%
Total RES OperatingFee Revenue
$ 992.9 ó 17% $ 669.6 ó 13% $ 424.2 ó 18% $ 2,086.7 ó 16%
Total Gross Revenue $ 1,043.2 ó 13% $ 858.9 ó 13% $ 541.2 ó 21% $ 2,443.3 ó 15%
5
Full Year 2017 Real Estate Services revenue ($ in millions; % change in local currency over Full Year 2016)
Americas EMEA Asia Pacific Total RES
Leasing $ 1,484.2 ó 16% $ 300.9 ó 11% $ 238.2 ó 9% $ 2,023.3 ó 15%
Capital Markets & Hotels -Fee
$ 455.7 ó 13% $ 467.4 ó 19% $ 200.0 ó 26% $ 1,123.1 ó 18%
Gross Revenue $ 471.3 ó 10% $ 467.4 ó 19% $ 200.0 ó 26% $ 1,138.7 ó 16%
Property & FacilityManagement - Fee
$ 594.2 ó 4% $ 656.3 ó 69% $ 512.0 ó 11% $ 1,762.5 ó 25%
Gross Revenue $ 748.8 ó —% $ 856.3 ó 73% $ 776.8 ó 20% $ 2,381.9 ó 27%
Project & DevelopmentServices - Fee
$ 386.1 ó 16% $ 236.4 ó 13% $ 124.9 ó 23% $ 747.4 ó 16%
Gross Revenue $ 408.7 ó 17% $ 690.4 ó 3% $ 249.6 ó 33% $ 1,348.7 ó 12%
Advisory, Consulting &Other
$ 241.5 ó 43% $ 271.0 ó 10% $ 172.0 ó 11% $ 684.5 ó 20%
Total RES OperatingFee Revenue
$ 3,161.7 ó 15% $ 1,932.0 ó 29% $ 1,247.1 ó 14% $ 6,340.8 ó 19%
Total Gross Revenue $ 3,354.5 ó 13% $ 2,586.0 ó 25% $ 1,636.6 ó 20% $ 7,577.1 ó 18%
Notes:• Capital Markets & Hotels revenue includes both “gross” and “fee” presentation. The difference between the two amounts represents net non-cash activity associated
with mortgage servicing rights and mortgage banking derivatives, which is also excluded from calculation of adjusted operating income, adjusted EBITDA andadjusted diluted earnings per share
• Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures
6
JLL Capital Markets & Leasing performance vs market
Notes:• Source: JLL Research, January 2018 • Capital Markets market research volumes reflect investment sales excluding multi-family assets. JLL Capital Markets revenue includes investment sales, debt financing and
other advisory services across all asset types• Q4 2017 EMEA Capital Markets excluding UK: JLL up 35%; Market up 20%• Q4 2017 EMEA Leasing excluding UK: JLL up 12%; Market; up 18%
QUARTERLY FULL YEAR FULL YEAR
Q4 2017 2017 2018
Actual Research Actual Research Current Forecast
Capital Markets JLL Revenue Market Volume JLL Revenue Market Volume Market Volume
USD USD USD USD USD
Americas 20% (15)% 13% (12)% (15)%
EMEA 42% 31% 21% 22% (5)%
Asia Pacific 50% 16% 27% 13% 5%
Total 35% ó 10% ó 18% ó 6% ó (5 - 10%) òQUARTERLY FULL YEAR FULL YEAR
Q4 2017 2017 2018
Actual Research Actual Research Current Forecast
Leasing JLL Revenue Gross Absorption JLL Revenue GrossAbsorption Gross Absorption
Local Currency Square Feet Local Currency Square Feet Square Feet
Americas 23% 6% 16% 3% Flat
EMEA 10% 16% 11% 10% (5-10%)
Asia Pacific 18% (26)% 9% (5)% Flat
Total 20% ó 3% ó 15% ó 4% ó Flat to down 5% ò
7
Notes:• LaSalle assumes ~40% margin on Transaction and Incentive Fees and ~90% margin on equity earnings• All margin percentage references are on a fee revenue basis and in USD; basis points (bps are approximated)• FY 2017 foreign exchange impact of +30bps incorporated into consolidated adjusted EBITDA walk above• M&A includes 7 months of Integral acquisition contribution; remaining 5 months reflected in organic service mix• Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures
LaSalle
Anticipated lowerincentive andtransaction fees
Technology
Continued strategicinvestments
Positive organiccontribution
Transactional growthacross regions
M&A
Primarily reflectsIntegral
2017 Consolidated Adjusted EBITDA Margin
Consolidated adjusted EBITDA margin performanceOther
Various discreteitems
8
Balance sheet & cash flowCash Use ($ in millions) 2017 2016
M&A (Including deferred) (1) $70 $538
Co-investment (2) 5 38
Dividends 33 29
Capital Expenditures (3) 151 216
Total $259 $821
(1) Includes payments made at close plus guaranteed deferred payments and earn-outs paid during the period for transactions closed in prior periods(2) Capital contributions are offset by distributions, and include amounts contributed to consolidated less than wholly-owned investments(3) Excludes capital leases and tenant improvement reimbursements that are required to be included under U.S. GAAP(4) Principal balances shown exclude debt issuance costs of $20M and $22M for Q4 2017 and Q4 2016, respectively(5) Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures
Balance Sheet ($ in millions) Q4 2017 Q4 2016
Cash and Cash Equivalents $268 $259
Short Term Borrowings 77 90
Credit Facility (4) — 925
(Net Cash Position) Net Bank Debt $(191) $756
Long Term Senior Notes (4) 695 275
Deferred Business AcquisitionObligations
82 102
Total Net Debt $586 $1,133
Net Debt /Adjusted TTM EBITDA (5) 0.8x 1.7x
▪ $547M net debt reductiondriven by working capitalimprovement
▪ Strong operating cashimprovement
▪ Cash use reflects plannedreduction in M&A and CapEx
▪ Adequate liquidity to supportcontinued long-term growthaligned with investment gradebalance sheet
2017 Highlights
$2.75B CreditFacilityCredit facility capacity& maturity in June2021
Issued € 350M 10& 12 year debt
1.96% and 2.21%,respectively, fixedinterest rates
InvestmentGrade RatingsMoody’s: Baa1 (Stable) S&P: BBB (Stable)
9
2018 JLL priorities
2018 Operating framework
▪ Leverage Corporate Solutions platform to drive profitable growth
▪ Broaden Capital Markets capabilities across capital stack
▪ Drive differentiation through technology
▪ Focus capital allocation strategy on transformational growth
▪ Continue working capital focus to generate cash flow
▪ Platform transformation accelerates as part of planned multi-year implementation
▪ Deliver Adjusted EBITDA margin range of 10 - 12%
Notes:▪ Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures ▪ Equity earnings expected to be driven primarily by fair value adjustments to investments in real estate ventures
10
U.S. Tax reform
▪ $141.3M GAAP expense recorded in Q4 2017 for estimated transition tax resulting fromU.S. Tax Cuts and Jobs Act
▪ To be paid over the eight-year statutory period
▪ Negligible expense for the revaluation of deferred balances
▪ Does not impact 2017 adjusted EPS
▪ During 2018, expect no material impact to global effective tax rate
Notes:▪ Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures ▪ Equity earnings expected to be driven primarily by fair value adjustments to investments in real estate ventures
Summary
© 2018 Jones Lang LaSalle IP, Inc. All rights reserved.
Segment Details
12
Americas financial summary
Notes: • Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures
▪ Double-digit organic revenue growth with notableperformance in Leasing and Capital Markets
▪ Capital Markets performance driven byIndustrial and Hotels investment sales and debtorigination
▪ Leasing strength in the Northwest, Midwest,New York and Atlanta markets
▪ Advisory, Consulting and Other reflectscontribution from Technology Solutions andrecently acquired U.S. valuations platform
▪ Adjusted EBITDA margin reflects:
▪ Continued cost management of controllableexpenses
▪ Increased transaction activity
Q4 2017 Highlights
Year-to-Date 2017 Highlights
$175MAdjustedEBITDA
17.6%AdjustedEBITDAmargin
$993MFeerevenue
$421M AdjustedEBITDA
13.3% AdjustedEBITDAmargin
$3.2B Feerevenue
2017 Commentary
13
EMEA financial summary
▪ Broad-based revenue growth across all servicelines; 40% organic
▪ Property and Facilities Management driven byIntegral contribution
▪ Transactional revenue bounce back from prioryear post-Brexit; strong Capital Marketsperformance in UK, Germany and France
▪ Adjusted EBITDA margin reflects:
▪ Transactional performance recovery post-Brexitand organic expansion
▪ Dilutive Integral impact due to service mix andcontract losses
Q4 2017 Highlights
Year-to-Date 2017 Highlights
$84MAdjustedEBITDA
12.6%AdjustedEBITDAmargin
$670M Feerevenue
$99M AdjustedEBITDA
5.1% AdjustedEBITDAmargin
$1.9B Feerevenue
Notes: • Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures
2017 Commentary
14
Asia Pacific financial summary
▪ Double-digit revenue growth across all businesslines driven organically
▪ Exceptional Capital Markets performance;significant transactions in Japan and Singaporedrive quarterly performance
▪ Continued Corporate Solutions revenueexpansion
▪ Adjusted EBITDA margin reflects:
▪ Robust transactional performance▪ Disciplined cost management
Q4 2017 Highlights
Year-to-Date 2017 Highlights
$76M AdjustedEBITDA
17.8% AdjustedEBITDAmargin
$424M Feerevenue
$140M AdjustedEBITDA
11.2%AdjustedEBITDAmargin
$1.2B Feerevenue
Notes: • Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures
2017 Commentary
15
Continental Europe
$4.3
UK$15.7
2017 AUM highlights
Assets Under Management By geography & type
($ in billions)
Notes: • AUM data reported on a one-quarter lag • Pie chart breakout based on real estate investment location• Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures
$101M AdjustedEBITDA
28.3% AdjustedEBITDAmargin
$355M Revenue
2017 Financial highlights
$58.1BAUM
$4.8BCapitalraised
$9.2BDrypowder
26% Fund management
57% Separate accounts
17% Public securities
LaSalle Investment Management results
▪ Full year revenue decline driven by anticipated lowerincentive and transaction fees
▪ Equity earnings of $41M resulting from net valuationincreases in Europe and Asia
▪ Adjusted EBITDA margin reflects:▪ Incentive fee performance▪ Equity earnings growth▪ Annuity revenue margin expansion
▪ AUM down by 3% with disposition & withdrawals offsetpartially by acquisitions and valuation increases
PublicSecurities
$10.0
UK$16.8
ContinentalEurope
$6.2
NorthAmerica
$17.8
Asia Pacific$7.3
2017 Commentary
© 2018 Jones Lang LaSalle IP, Inc. All rights reserved.
Appendix
17
▪ British pound weakened significantly post-Brexit; steadily appreciated during 2017
▪ Euro has steadily appreciated during 2017, largely driving Q4 impact
▪ Australian dollar stable to strengthening with commodity price improvement
▪ Japanese yen slightly weakened as a result of macro conditions late 2016; appreciated and stabilized in 2017
Currency overview 2017 Macro currency review
Notes:• Average rates calculated based on daily weighted activity in the quarter
2017 Currency EPS impact Currency exchange rate summary
Q4 2017 Spot2017 2016 % Change 1/31/18
GBP £ 1.35 1.23 9% 1.42EUR € 1.20 1.05 13% 1.24AUD $ 0.78 0.72 8% 0.81JPY ¥ 113 117 (4)% 109
Positive ImpactQ1 $0.06Q2 $0.03Q3 $0.02Q4 $0.18
2017 $0.29
18
Note: Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures n.m. – not meaningful as represented by a percentage change of greater than 100%, favorably or unfavorably
Q4 2017 Real Estate Services revenue ($ in millions; % change in USD over QTD Q4 2016)
Americas EMEA Asia Pacific Total RES
Leasing $ 481.1 ó 23% $ 116.5 ó 20% $ 106.4 ó 22% $ 704.0 ó 22%
Capital Markets & Hotels- Fee
$ 148.7 ó 20% $ 200.9 ó 42% $ 82.4 ó 50% $ 432.0 ó 35%
Gross Revenue $ 153.2 ó 6% $ 200.9 ó 42% $ 82.4 ó 50% $ 436.5 ó 28%
Property & FacilityManagement - Fee
$ 172.4 ó 1% $ 176.8 ó 6% $ 146.2 ó 11% $ 495.4 ó 6%
Gross Revenue $ 212.5 ò (2)% $ 227.8 ó 12% $ 225.6 ó 23% $ 665.9 ó 10%
Project & DevelopmentServices - Fee
$ 117.3 ó 11% $ 80.4 ó 31% $ 34.4 ó 11% $ 232.1 ó 17%
Gross Revenue $ 123.0 ó 16% $ 218.7 ó 21% $ 72.0 ó 12% $ 413.7 ó 18%
Advisory, Consulting &Other
$ 73.4 ó 23% $ 95.0 ó 18% $ 54.8 ó 19% $ 223.2 ó 20%
Total RES OperatingFee Revenue
$ 992.9 ó 17% $ 669.6 ó 22% $ 424.2 ó 21% $ 2,086.7 ó 19%
Total Gross Revenue $ 1,043.2 ó 14% $ 858.9 ó 22% $ 541.2 ó 24% $ 2,443.3 ó 19%
19
Note: Refer to pages 22-25 for definitions and reconciliations of non-GAAP financial measures
Full Year 2017 Real Estate Services revenue ($ in millions; % change in USD over Full Year 2016 )
Americas EMEA Asia Pacific Total RES
Leasing $ 1,484.2 ó 16% $ 300.9 ó 12% $ 238.2 ó 10% $ 2,023.3 ó 15%
Capital Markets & Hotels- Fee
$ 455.7 ó 13% $ 467.4 ó 21% $ 200.0 ó 27% $ 1,123.1 ó 18%
Gross Revenue $ 471.3 ó 10% $ 467.4 ó 21% $ 200.0 ó 27% $ 1,138.7 ó 17%
Property & FacilityManagement - Fee
$ 594.2 ó 4% $ 656.3 ó 62% $ 512.0 ó 12% $ 1,762.5 ó 23%
Gross Revenue $ 748.8 ó —% $ 856.3 ó 65% $ 776.8 ó 22% $ 2,381.9 ó 25%
Project & DevelopmentServices - Fee
$ 386.1 ó 16% $ 236.4 ó 14% $ 124.9 ó 24% $ 747.4 ó 17%
Gross Revenue $ 408.7 ó 17% $ 690.4 ó 5% $ 249.6 ó 34% $ 1,348.7 ó 13%
Advisory, Consulting &Other
$ 241.5 ó 43% $ 271.0 ó 10% $ 172.0 ó 12% $ 684.5 ó 21%
Total RES OperatingFee Revenue
$ 3,161.7 ó 15% $ 1,932.0 ó 28% $1,247.1 ó 15% $ 6,340.8 ó 19%
Total Gross Revenue $ 3,354.5 ó 13% $ 2,586.0 ó 24% $ 1,636.6 ó 21% $ 7,577.1 ó 18%
20
Prime Offices Capital Value Clock, Q4 2016 v Q4 2017
The JLL Property ClocksSM
Notes:• Based on notional capital values for Grade A space in CBD or equivalent • Source: JLL Research, January 2018. The JLL Property Clocks SM
21
Prime Offices Rental Clock, Q4 2016 v Q4 2017
Notes:• Based on notional capital values for Grade A space in CBD or equivalent • Source: JLL Research, January 2018. The JLL Property Clocks SM
The JLL Property ClocksSM
22
Q4 2017 selected business winsCorporate Solutions Capital Markets Leasing & Management
Americas
IBM The Dime Savings Bank, NewYork
Transcontinental Gas PipelineCompany, Houston
Methodist Health System The Curtis, Philadelphia DataBank, Dallas-Fort Worth
Emerus Hospitals Broadstone Portfolio, LasVegas INAP, Atlanta
EMEA
AXA, Finland D. Carnegie, Sweden Bank of America, Paris
The Cloud, Czech Republic Richmond Gate Hotel, London HM Revenue and Customs,London
Orientir Group, Moscow Vda, Lisbon
Asia Pacific
Wellington College, Hangzhou Amway, Japan WeWork, Shanghai
Ocwen, India TrustCapital Advisors Portfolio,Australia CITIC Bank, Shenzhen
H&M Philippines Amber Gardens, Singapore Wells Fargo, Bangalore
23
▪ Reimbursable vendor, subcontractor and out-of-pocket costs reported as revenue and expense in JLL financial statementshave been increasing steadily
▪ Gross accounting requirements increase revenue and costs without corresponding increase to profit▪ Business managed on a fee revenue basis to focus on margin expansion in the base business
Fee revenue / fee-based operating expenses reconciliation
Note: Restructuring and acquisition charges, Mortgage servicing rights (MSRs) - net non-cash activity, and Amortization of acquisition-related intangibles are excluded from adjusted operating incomemargin.
Three Months Ended December 31, Year Ended December 31,
($ in millions) 2017 2016 2017 2016Revenue $ 2,535.5 $ 2,158.2 $ 7,932.4 $ 6,803.8Gross contract costs (352.0) (288.0) (1,220.6) (1,023.5)Net non-cash MSR and mortgage bankingderivative activity
(4.6) (21.2) (15.7) (23.5)
Fee revenue $ 2,178.9 $ 1,849.0 $ 6,696.1 $ 5,756.8
Operating expenses $ 2,243.3 $ 1,931.9 $ 7,395.5 $ 6,363.2Gross contract costs (352.0) (288.0) (1,220.6) (1,023.5)Fee-based operating expenses $ 1,891.3 $ 1,643.9 $ 6,174.9 $ 5,339.7
Operating income $ 292.2 $ 226.3 $ 536.9 $ 440.6Restructuring and acquisition charges 17.4 32.6 30.7 68.5Net non-cash MSR and mortgage bankingderivative activity
(4.6) (21.2) (15.7) (23.5)
Amortization of acquisition-related intangibles 7.8 8.1 31.1 24.1Adjusted operating income $ 312.8 $ 245.8 $ 583.0 $ 509.7
24
Reconciliation of GAAP Net Income to Adjusted Net Income and Diluted Earnings Per Share
Three Months Ended December 31, Year Ended December 31,
($ in millions except per share data) 2017 2016 2017 2016GAAP net income attributable to common shareholders $ 78.2 $ 165.3 $ 253.8 $ 317.8
Shares (in 000s) 45,877 45,642 45,758 45,528
GAAP diluted earnings per share $ 1.71 $ 3.62 $ 5.55 $ 6.98
GAAP net income attributable to common shareholders $ 78.2 $ 165.3 $ 253.8 $ 317.8
Restructuring and acquisition charges 17.4 32.6 30.7 68.5
Net non-cash MSR and mortgage banking derivativeactivity
(4.6) (21.2) (15.7) (23.5)
Amortization of acquisition-related intangibles, net 7.8 8.1 31.1 24.1
Repatriation tax impact 141.3 — 141.3 —
Tax impact of adjusted items (14.5) (4.6) (22.1) (16.9)
Adjusted net income $ 225.6 $ 180.2 $ 419.1 $ 370.0
Shares (in 000s) 45,877 45,642 45,758 45,528
Adjusted diluted earnings per share(1) $ 4.92 $ 3.95 $ 9.16 $ 8.13
(1) Calculated on a local currency basis, the results for the three and twelve months ended 2017 include a $0.18 and $0.29 favorable impact, due to foreign exchange rate fluctuations
25
Reconciliation of GAAP Net Income attributable tocommon shareholders to Adjusted EBITDA
Three Months EndedDecember 31, Year Ended December 31,
($ in millions) 2017 2016 2017 2016GAAP net income attributable to common shareholders $ 78.2 $ 165.3 $ 253.8 $ 317.8
Interest expense, net of interest income 13.6 13.1 56.2 45.3
Provision for income taxes 210.5 52.7 267.8 108.0
Depreciation and amortization 44.9 43.3 167.2 141.8
EBITDA $ 347.2 $ 274.4 $ 745.0 $ 612.9
Restructuring and acquisition charges 17.4 32.6 30.7 68.5
Net non-cash MSR and mortgage banking derivativeactivity
$ (4.6) $ (21.2) $ (15.7) $ (23.5)
Adjusted EBITDA $ 360.0 $ 285.8 $ 760.0 $ 657.9
Net income margin attributable to commonshareholders
3.1% 7.7% 3.2% 4.7%
Adjusted EBITDA margin (presented on a localcurrency basis)
16.5% 15.5% 11.1% 11.1%
Adjusted EBITDA attributable to common shareholders ("Adjusted EBITDA") represents EBITDA attributable to common shareholders (“EBITDA”) further adjusted for certain items we do notconsider directly indicative of our ongoing performance in the context of certain performance measurements
26
Non-GAAP MeasuresManagement uses certain non-GAAP financial measures to develop budgets and forecasts, measure and reward performance against those budgets and forecasts, and enhance comparability to priorperiods. These measures are believed to be useful to investors and other external stakeholders as supplemental measures of core operating performance and include the following:
(i) Fee revenue and Fee-based operating expenses,(ii) Adjusted operating income,(iii) Adjusted EBITDA and Adjusted EBITDA margin,(iv) Adjusted net income and Adjusted diluted earnings per share, and(v) Percentage changes against prior periods, presented on a local currency basis.
However, non-GAAP financial measures should not be considered alternatives to measures determined in accordance with U.S. generally accepted accounting principles (“GAAP”). Any measure thateliminates components of a company’s capital structure, cost of operations or investment, or other results has limitations as a performance measure. In light of these limitations, management alsoconsiders GAAP financial measures and does not rely solely on non-GAAP financial measures. Because the company’s non-GAAP financial measures are not calculated in accordance with GAAP,they may not be comparable to similarly titled measures used by other companies.
Adjustments to GAAP Financial Measures Used to Calculate non-GAAP Financial MeasuresConsistent with GAAP, certain vendor and subcontractor costs (“gross contract costs”) which are managed by the company on certain client assignments in the Property & Facility Management andProject & Development Services business lines are presented on a gross basis in Revenue and Operating expenses. The company generally earns little to no margin on the reimbursement of grosscontract costs, obtaining reimbursement only for costs incurred. Excluding gross contract costs from both Revenue and Operating expenses more accurately reflects how the company manages itsexpense base and its operating margins.
Net non-cash mortgage servicing rights ("MSR") and mortgage banking derivative activity consists of the balances presented within Revenue composed of (i) derivative gains/losses resultingfrom mortgage banking loan commitment activity and (ii) gains recognized from the retention of MSR upon origination and sale of mortgage loans, offset by (iii) amortization of MSR intangible assetsover the period that net servicing income is projected to be received. Non-cash derivative gains/losses resulting from mortgage banking loan commitment activity are calculated as the estimated fairvalue of loan commitments and subsequent changes thereof, primarily represented by the estimated net cash flows associated with future servicing rights. MSR gains and corresponding MSRintangible assets are calculated as the present value of estimated cash flows over the estimated mortgage servicing periods. The above activity is reported entirely within Revenue of the CapitalMarkets & Hotels business line of the Americas segment. Excluding net non-cash MSR and mortgage banking derivative activity reflects how the company manages and evaluates performancebecause the excluded activity is non-cash in nature.
Restructuring and acquisition charges primarily consist of: (i) severance and employment-related charges, including those related to external service providers, incurred in conjunction with astructural business shift, which can be represented by a notable change in headcount, change in leadership or transformation of business processes; (ii) acquisition and integration-related charges,including non-cash fair value adjustments to assets and liabilities recorded in purchase accounting such as earn-out liabilities and intangible assets; and (iii) lease exit charges. Such activity isexcluded as the amounts are generally either non-cash in nature or the anticipated benefits from the expenditures would not likely be fully realized until future periods. As noted within Note 5,Restructuring and acquisition charges are excluded from segment operating results and therefore not a line item in the segments’ reconciliation from operating income to adjusted operating incomeand Adjusted EBITDA.
Amortization of acquisition-related intangibles, primarily composed of the estimated fair value ascribed at closing of an acquisition to assets such as acquired management contracts, customerbacklog and trade name, is more notable following the company's increase in acquisition activity over the past few years. At the segment reporting level, this is the only reconciling difference betweenoperating income and adjusted operating income, except for the Americas segment, where Net non-cash MSR and mortgage banking derivative activity is also excluded.
Percentage Variances –Local CurrencyIn discussing our operating results, we report Adjusted EBITDA margins and refer to percentage changes in local currency, unless otherwise noted. Amounts presented on a local currency basis arecalculated by translating the current period results of our foreign operations to U.S. dollars using the foreign currency exchange rates from the comparative period. We believe this methodologyprovides a framework for assessing performance and operations excluding the effect of foreign currency fluctuations.
27
Cautionary note regarding forward-looking statements
© 2018 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanicallyor otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval systemwithout prior written permission of Jones Lang LaSalle IP, Inc.
Statements in this news release regarding, among other things, future financial results and performance,achievements, plans and objectives, and dividend payments may be considered forward-looking statementswithin the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve knownand unknown risks, uncertainties, and other factors which may cause our actual results, performance,achievements, plans and objectives, and dividend payments to be materially different from those expressed orimplied by such forward-looking statements. For additional information concerning risks, uncertainties, andother factors that could cause actual results to differ materially from those anticipated in forward-lookingstatements, and risks to our business in general, please refer to those factors discussed under “Business,”“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitativeand Qualitative Disclosures about Market Risk,” and elsewhere in our Annual Report on Form 10-K for theyear ended December 31, 2016, our Quarterly Reports on Form 10-Q for the quarters ended March 31,2017, June 30, 2017, and September 2017, and in other reports filed with the Securities and ExchangeCommission (the “SEC”). There can be no assurance that future dividends will be declared since the actualdeclaration of future dividends, and the establishment of record and payment dates, remains subject to finaldetermination by our Board of Directors. Any forward-looking statements speak only as of the date of thisrelease, and except to the extent required by applicable securities laws, we expressly disclaim any obligationor undertaking to publicly update or revise any forward-looking statements contained herein to reflect anychange in our expectations or results, or any change in events.
© 2018 Jones Lang LaSalle IP, Inc. All rights reserved.