WTW (NASDAQ: WTW) (the “Company”), a leading global advisory,
broking and solutions company, today announced financial results
for the first quarter ended March 31, 2024.
“We started 2024 with solid first quarter results that, together
with our robust pipeline and continued progress transforming our
businesses, position us well to achieve our goals for the year,”
said Carl Hess, WTW’s Chief Executive Officer. “Our successful
strategic execution and strong demand for our industry-leading
solutions drove healthy organic growth, with solid margins and
earnings per share. We also maintained our disciplined approach to
capital allocation, with $101 million of share repurchases during
the quarter. Looking ahead, we are confident in our ability to
deliver on our commitments, backed by our focus on strategic growth
initiatives and operating efficiency.”
Consolidated
Results
As reported, USD millions, except %
Key Metrics |
Q1-24 |
Q1-23 |
Y/Y Change |
Revenue1 |
$2,341 |
$2,244 |
Reported 4% | CC 4% | Organic 5% |
Income from Operations |
$280 |
$285 |
(2)% |
Operating Margin % |
12.0% |
12.7% |
(70) bps |
Adjusted Operating Income |
$483 |
$418 |
16% |
Adjusted Operating Margin % |
20.6% |
18.6% |
200 bps |
Net Income |
$194 |
$206 |
(6)% |
Adjusted Net Income |
$341 |
$306 |
11% |
Diluted EPS |
$1.83 |
$1.88 |
(3)% |
Adjusted Diluted EPS |
$3.29 |
$2.84 |
16% |
1 |
The revenue amounts included in this release are presented on a
U.S. GAAP basis except where stated otherwise. This excludes
reinsurance revenue which is reported in discontinued operations.
The segment discussion is on an organic basis. |
Revenue was $2.34 billion for the first quarter of 2024, an
increase of 4% as compared to $2.24 billion for the same period in
the prior year. Foreign currency did not meaningfully impact the
revenue increase for the quarter. On an organic basis, revenue
increased 5%. See Supplemental Segment Information on page 8 for
additional detail on book-of-business settlements and interest
income included in revenue.
Net Income for the first quarter of 2024 was $194 million, a
decrease of 6% compared to Net Income of $206 million in the
prior-year first quarter. Adjusted EBITDA for the first quarter was
$568 million, or 24.3% of revenue, an increase of 13%, compared to
Adjusted EBITDA of $503 million, or 22.4% of revenue, in the
prior-year first quarter. The U.S. GAAP tax rate for the first
quarter was 19.9%, and the adjusted income tax rate for the first
quarter used in calculating adjusted diluted earnings per share was
22.4%.
Cash Flow and Capital
Allocation
Cash flows from operating activities were $24
million for the quarter ended March 31, 2024, compared to $134
million for the prior year. Free cash flow for the quarters ended
March 31, 2024 and 2023 was $(9) million and $92 million,
respectively, a decrease of $101 million, primarily driven by
increased cash outflows related to transformation and discretionary
compensation payments, partially offset by higher inflows from
collections. During the quarter ended March 31, 2024, the Company
repurchased $101 million of WTW outstanding shares.
First Quarter 2024 Segment
Highlights
Health, Wealth & Career ("HWC")
As reported, USD millions, except %
Health, Wealth & Career |
Q1-24 |
Q1-23 |
Y/Y Change |
Total Revenue |
$1,336 |
$1,287 |
Reported 4% | CC 3% | Organic 4% |
Operating Income |
$336 |
$309 |
9% |
Operating Margin % |
25.1% |
24.0% |
110 bps |
The HWC segment had revenue of $1.34 billion in the first
quarter of 2024, an increase of 4% (an increase of 3% constant
currency and 4% organic) from $1.29 billion in the prior year.
Organic revenue growth in Health was driven by the continued
expansion of our Global Benefits Management client portfolio in
International and Europe. Our Wealth businesses generated organic
revenue growth from higher levels of Retirement work in North
America and Europe. Career had organic revenue growth from
increased project work in Employee Experience and Work &
Rewards. Organic growth in Benefits Delivery & Outsourcing was
driven by higher volumes and placements of Medicare Advantage and
life policies in Individual Marketplace.
Operating margins in the HWC segment increased 110 basis points
from the prior-year first quarter to 25.1%, primarily from
Transformation savings.
Risk & Broking ("R&B")
As reported, USD millions, except %
Risk & Broking |
Q1-24 |
Q1-23 |
Y/Y Change |
Total Revenue |
$978 |
$904 |
Reported 8% | CC 8% | Organic 8% |
Operating Income |
$203 |
$180 |
13% |
Operating Margin % |
20.8% |
19.9% |
90 bps |
The R&B segment had revenue of $978 million in the first
quarter of 2024, an increase of 8% (8% increase constant currency
and organic) from $904 million in the prior year. Corporate Risk
& Broking (CRB) had organic revenue growth primarily driven by
strong client retention across all geographies and higher levels of
new business activity. Insurance Consulting and Technology (ICT)
had flat organic revenue growth for the quarter primarily due to
the timing of consulting and technology revenue between
quarters.
Operating margins in the R&B segment increased 90 basis
points from the prior-year first quarter to 20.8%, due to interest
income, Transformation savings and revenue growth in CRB, partially
offset by the impact of book-of-business activity, foreign exchange
and ICT's flat revenue growth.
Outlook
Based on current and anticipated market conditions, the
Company's full-year targets for 2024, consistent with those targets
that have been previously provided, are as follows. Refer to the
Supplemental Slides for additional detail.
- Expect to deliver revenue of $9.9 billion or greater and
mid-single digit organic revenue growth for the full year 2024
- Expect to deliver adjusted operating margin of 22.5% - 23.5%
for the full year 2024
- Expect to deliver adjusted diluted earnings per share of $15.40
- $17.00 for the full year 2024
- Expect approximately $88 million in non-cash pension income for
the full year 2024
- Expect a foreign currency headwind on adjusted earnings per
share of approximately $0.05 for the full year 2024 at today’s
rates
- Expect to deliver approximately $425 million of cumulative
run-rate savings from the Transformation program by the end of 2024
with total program costs of $1.125 billion.
Outlook includes Non-GAAP financial measures. We do not
reconcile forward-looking Non-GAAP measures for reasons explained
below.
Conference Call
The Company will host a live webcast and conference call to
discuss the financial results for the first quarter 2024. It will
be held on Thursday, April 25, 2024, beginning at 9:00 a.m. Eastern
Time. A live broadcast of the conference call will be available on
WTW’s website here. The conference call will include a
question-and-answer session. To participate in the
question-and-answer session, please register here. An online replay
will be available at www.wtwco.com shortly after the call
concludes.
About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led
solutions in the areas of people, risk and capital. Leveraging the
global view and local expertise of our colleagues serving 140
countries and markets, we help organizations sharpen their
strategy, enhance organizational resilience, motivate their
workforce and maximize performance. Working shoulder to shoulder
with our clients, we uncover opportunities for sustainable
success—and provide perspective that moves you. Learn more at
www.wtwco.com.
WTW Non-GAAP Measures
In order to assist readers of our consolidated financial
statements in understanding the core operating results that WTW’s
management uses to evaluate the business and for financial
planning, we present the following non-GAAP measures: (1) Constant
Currency Change, (2) Organic Change, (3) Adjusted Operating
Income/Margin, (4) Adjusted EBITDA/Margin, (5) Adjusted Net Income,
(6) Adjusted Diluted Earnings Per Share, (7) Adjusted Income Before
Taxes, (8) Adjusted Income Taxes/Tax Rate, (9) Free Cash Flow and
(10) Free Cash Flow Margin.
We believe that those measures are relevant and provide
pertinent information widely used by analysts, investors and other
interested parties in our industry to provide a baseline for
evaluating and comparing our operating performance, and in the case
of free cash flow, our liquidity results.
Within the measures referred to as ‘adjusted’, we adjust for
significant items which will not be settled in cash, or which we
believe to be items that are not core to our current or future
operations. Some of these items may not be applicable for the
current quarter, however they may be part of our full-year results.
Additionally, we have historically adjusted for certain items which
are not described below, but for which we may adjust in a future
period when applicable. Items applicable to the quarter or full
year results, or the comparable periods, include the following:
- Restructuring costs and transaction and transformation –
Management believes it is appropriate to adjust for restructuring
costs and transaction and transformation when they relate to a
specific significant program with a defined set of activities and
costs that are not expected to continue beyond a defined period of
time, or significant acquisition-related transaction expenses. We
believe the adjustment is necessary to present how the Company is
performing, both now and in the future when the incurrence of these
costs will have concluded.
- Gains and losses on disposals of operations – Adjustment to
remove the gains or losses resulting from disposed operations that
have not been classified as discontinued operations.
- Tax effect of internal reorganizations – Relates to the U.S.
income tax expense resulting from the completion of internal
reorganizations of the ownership of certain businesses that reduced
the investments held by our U.S.-controlled subsidiaries.
We evaluate our revenue on an as reported (U.S. GAAP), constant
currency and organic basis. We believe presenting constant currency
and organic information provides valuable supplemental information
regarding our comparable results, consistent with how we evaluate
our performance internally.
We consider Constant Currency Change, Organic Change, Adjusted
Operating Income/Margin, Adjusted EBITDA/Margin, Adjusted Net
Income, Adjusted Diluted Earnings Per Share, Adjusted Income Before
Taxes, Adjusted Income Taxes/Tax Rate and Free Cash Flow to be
important financial measures, which are used to internally evaluate
and assess our core operations and to benchmark our operating and
liquidity results against our competitors. These non-GAAP measures
are important in illustrating what our comparable operating and
liquidity results would have been had we not incurred
transaction-related and non-recurring items. Reconciliations of
these measures are included in the accompanying tables with the
following exception: The Company does not reconcile its
forward-looking non-GAAP financial measures to the corresponding
U.S. GAAP measures, due to variability and difficulty in making
accurate forecasts and projections and/or certain information not
being ascertainable or accessible; and because not all of the
information, such as foreign currency impacts necessary for a
quantitative reconciliation of these forward-looking non-GAAP
financial measures to the most directly comparable U.S. GAAP
financial measure, is available to the Company without unreasonable
efforts. For the same reasons, the Company is unable to address the
probable significance of the unavailable information. The Company
provides non-GAAP financial measures that it believes will be
achieved, however it cannot accurately predict all of the
components of the adjusted calculations and the U.S. GAAP measures
may be materially different than the non-GAAP measures.
Our non-GAAP measures and their accompanying definitions are
presented as follows:
Constant Currency Change – Represents the year-over-year change
in revenue excluding the impact of foreign currency fluctuations.
To calculate this impact, the prior year local currency results are
first translated using the current year monthly average exchange
rates. The change is calculated by comparing the prior year
revenue, translated at the current year monthly average exchange
rates, to the current year as reported revenue, for the same
period. We believe constant currency measures provide useful
information to investors because they provide transparency to
performance by excluding the effects that foreign currency exchange
rate fluctuations have on period-over-period comparability given
volatility in foreign currency exchange markets.
Organic Change – Excludes the impact of fluctuations in foreign
currency exchange rates, as described above and the
period-over-period impact of acquisitions and divestitures on
current-year revenue. We believe that excluding transaction-related
items from our U.S. GAAP financial measures provides useful
supplemental information to our investors, and it is important in
illustrating what our core operating results would have been had we
not included these transaction-related items, since the nature,
size and number of these transaction-related items can vary from
period to period.
Adjusted Operating Income/Margin – Income from operations
adjusted for amortization, restructuring costs, transaction and
transformation and non-recurring items that, in management’s
judgment, significantly affect the period-over-period assessment of
operating results. Adjusted operating income margin is calculated
by dividing adjusted operating income by revenue. We consider
adjusted operating income/margin to be important financial
measures, which are used internally to evaluate and assess our core
operations and to benchmark our operating results against our
competitors.
Adjusted EBITDA/Margin – Net Income adjusted for provision for
income taxes, interest expense, depreciation and amortization,
restructuring costs, transaction and transformation, gains and
losses on disposals of operations and non-recurring items that, in
management’s judgment, significantly affect the period-over-period
assessment of operating results. Adjusted EBITDA Margin is
calculated by dividing adjusted EBITDA by revenue. We consider
adjusted EBITDA/margin to be important financial measures, which
are used internally to evaluate and assess our core operations, to
benchmark our operating results against our competitors and to
evaluate and measure our performance-based compensation plans.
Adjusted Net Income – Net Income Attributable to WTW adjusted
for amortization, restructuring costs, transaction and
transformation, gains and losses on disposals of operations and
non-recurring items that, in management’s judgment, significantly
affect the period-over-period assessment of operating results and
the related tax effect of those adjustments and the tax effects of
internal reorganizations. This measure is used solely for the
purpose of calculating adjusted diluted earnings per share.
Adjusted Diluted Earnings Per Share – Adjusted Net Income
divided by the weighted-average number of ordinary shares, diluted.
Adjusted diluted earnings per share is used to internally evaluate
and assess our core operations and to benchmark our operating
results against our competitors.
Adjusted Income Before Taxes – Income from operations before
income taxes adjusted for amortization, restructuring costs,
transaction and transformation, gains and losses on disposals of
operations and non-recurring items that, in management’s judgment,
significantly affect the period-over-period assessment of operating
results. Adjusted income before taxes is used solely for the
purpose of calculating the adjusted income tax rate.
Adjusted Income Taxes/Tax Rate – Provision for income taxes
adjusted for taxes on certain items of amortization, restructuring
costs, transaction and transformation, gains and losses on
disposals of operations, the tax effects of internal
reorganizations, and non-recurring items that, in management’s
judgment, significantly affect the period-over-period assessment of
operating results, divided by adjusted income before taxes.
Adjusted income taxes is used solely for the purpose of calculating
the adjusted income tax rate. Management believes that the adjusted
income tax rate presents a rate that is more closely aligned to the
rate that we would incur if not for the reduction of pre-tax income
for the adjusted items and the tax effects of internal
reorganizations, which are not core to our current and future
operations.
Free Cash Flow – Cash flows from operating activities less cash
used to purchase fixed assets and software for internal use. Free
Cash Flow is a liquidity measure and is not meant to represent
residual cash flow available for discretionary expenditures.
Management believes that free cash flow presents the core operating
performance and cash-generating capabilities of our business
operations.
Free Cash Flow Margin – Free Cash Flow as a percentage of
revenue, which represents how much of revenue would be realized on
a cash basis. We consider this measure to be a meaningful metric
for tracking cash conversion on a year-over-year basis due to the
non-cash nature of our pension income, which is included in our
GAAP and Non-GAAP earnings metrics presented herein.
These non-GAAP measures are not defined in the same manner by
all companies and may not be comparable to other similarly titled
measures of other companies. Non-GAAP measures should be considered
in addition to, and not as a substitute for, the information
contained within our condensed consolidated financial
statements.
WTW Forward-Looking Statements
This document contains ‘forward-looking statements’ within the
meaning of Section 27A of the Securities Act of 1933, and Section
21E of the Securities Exchange Act of 1934, which are intended to
be covered by the safe harbors created by those laws. These
forward-looking statements include information about possible or
assumed future results of our operations. All statements, other
than statements of historical facts, that address activities,
events, or developments that we expect or anticipate may occur in
the future, including such things as our outlook, the potential
impact of natural or man-made disasters like health pandemics and
other world health crises; future capital expenditures; ongoing
working capital efforts; future share repurchases; financial
results (including our revenue, costs, or margins) and the impact
of changes to tax laws on our financial results; existing and
evolving business strategies and acquisitions and dispositions,
including our completed sale of Willis Re to Arthur J. Gallagher
& Co. (‘Gallagher’) and transitional arrangements related
thereto; demand for our services and competitive strengths;
strategic goals; the benefits of new initiatives; growth of our
business and operations; the sustained health of our product,
service, transaction, client, and talent assessment and management
pipelines; our ability to successfully manage ongoing leadership,
organizational and technology changes, including investments in
improving systems and processes, and in connection with our
acquisition and divestiture activities; our ability to implement
and realize anticipated benefits of any cost-savings initiatives
including the multi-year operational Transformation program;our
recognition of future impairment charges;and plans and references
to future successes, including our future financial and operating
results, short-term and long-term financial goals, plans,
objectives, expectations and intentions are forward-looking
statements including with respect to free cash flow generation,
adjusted net revenue, adjusted operating margin, and adjusted
earnings per share. Also, when we use words such as ‘may’, ‘will’,
‘would’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘intend’,
‘plan’, ‘continues’, ‘seek’, ‘target’, ‘goal’, ‘focus’, ‘probably’,
or similar expressions, we are making forward-looking statements.
Such statements are based upon the current beliefs and expectations
of the Company’s management and are subject to significant risks
and uncertainties. Actual results may differ from those set forth
in the forward-looking statements. All forward-looking disclosure
is speculative by its nature.
There are important risks, uncertainties, events and factors
that could cause our actual results or performance to differ
materially from those in the forward-looking statements contained
in this document, including the following: our ability to
successfully establish, execute and achieve our global business
strategy as it evolves; our ability to fully realize anticipated
benefits of our growth strategy, including inorganic growth through
acquisitions; our ability to achieve our short-term and long-term
financial goals, such as with respect to our cash flow generation,
and the timing with respect to such achievement; the risks related
to changes in general economic conditions, business and political
conditions, including changes in the financial markets, inflation,
credit availability, increased interest rates and changes in trade
policies; the risks to our short-term and long-term financial goals
from any of the risks or uncertainties set forth herein; the risks
relating to the adverse impacts of macroeconomic trends, including
inflation, changes in interest rates and trade policies, as well as
political events, trade and other international disputes, war, such
as the Russia-Ukraine and Israel-Hamas wars, and other
international disputes, terrorism, natural disasters, public health
issues and other business interruptions on the global economy and
capital markets, which could have a material adverse effect on our
business, financial condition, results of operations, and long-term
goals; our ability to successfully hedge against fluctuations in
foreign currency rates; the risks relating to the adverse impacts
of natural or man-made disasters like health pandemics and other
world health crises, on the demand for our products and services,
our cash flows and our business operations; material interruptions
to or loss of our information processing capabilities, or failure
to effectively maintain and upgrade our information technology
resources and systems and related risks of cybersecurity breaches
or incidents; our ability to comply with complex and evolving
regulations related to data privacy, cybersecurity, and artificial
intelligence; the risks relating to the transitional arrangements
in effect subsequent to our now-completed sale of Willis Re to
Gallagher; significant competition that we face and the potential
for loss of market share and/or profitability; the impact of
seasonality and differences in timing of renewals and non-recurring
revenue increases from disposals and book-of-business sales; the
insufficiency of client data protection, potential breaches of
information systems or insufficient safeguards against
cybersecurity breaches or incidents; the risk of increased
liability or new legal claims arising from our new and existing
products and services, and expectations, intentions and outcomes
relating to outstanding litigation; the risk of substantial
negative outcomes on existing litigation or investigation matters;
changes in the regulatory environment in which we operate,
including, among other risks, the impacts of pending competition
law and regulatory investigations; various claims, government
inquiries or investigations or the potential for regulatory action;
our ability to make divestitures or acquisitions, including our
ability to integrate or manage such acquired businesses, as well as
identify and successfully execute on opportunities for strategic
collaboration; our ability to integrate direct-to-consumer sales
and marketing solutions with our existing offerings and solutions;
our ability to successfully manage ongoing organizational changes,
including investments in improving systems and processes, and in
connection with our acquisition and divestiture activities;
disasters or business continuity problems; our ability to
successfully enhance our billing, collection and other working
capital efforts, and thereby increase our free cash flow; the
ongoing impact of Brexit on our business and operations; our
ability to properly identify and manage conflicts of interest;
reputational damage, including from association with third parties;
reliance on third-party service providers and suppliers; risks
relating to changes in our management structures and in senior
leadership; the loss of key employees or a large number of
employees and rehiring rates; our ability to maintain our corporate
culture; doing business internationally, including the impact of
foreign currency exchange rates; compliance with extensive
government regulation; the risk of sanctions imposed by
governments, or changes to associated sanction regulations (such as
sanctions imposed on Russia) and related counter-sanctions; our
ability to effectively apply technology, data and analytics changes
for internal operations, maintaining industry standards and meeting
client preferences; changes and developments in the insurance
industry or the U.S. healthcare system, including those related to
Medicare, any legislative actions from the current U.S. Congress,
the recent Final Rule from the Centers for Medicare & Medicaid
Services for contract year 2025, and any other changes and
developments in legal, regulatory, economic, business or
operational conditions impacting our Medicare benefits businesses
such as TRANZACT; the inability to protect our intellectual
property rights, or the potential infringement upon the
intellectual property rights of others; fluctuations in our pension
assets and liabilities and related changes in pension income,
including as a result of, related to, or derived from movements in
the interest rate environment, investment returns, inflation, or
changes in other assumptions that are used to estimate our benefit
obligations and its effect on adjusted earnings per share; our
capital structure, including indebtedness amounts, the limitations
imposed by the covenants in the documents governing such
indebtedness and the maintenance of the financial and disclosure
controls and procedures of each; our ability to obtain financing on
favorable terms or at all; adverse changes in our credit ratings;
the impact of recent or potential changes to U.S. or foreign laws,
and the enactment of additional, or the revision of existing,
state, federal, and/or foreign laws and regulations, recent
judicial decisions and development of case law, other regulations
and any policy changes and legislative actions, including those
that impact our effective tax rate; U.S. federal income tax
consequences to U.S. persons owning at least 10% of our shares;
changes in accounting principles, estimates or assumptions; our
recognition of future impairment charges; risks relating to or
arising from environmental, social and governance practices;
fluctuation in revenue against our relatively fixed or higher than
expected expenses; the risk that investment levels, including cash
spending, to achieve additional transformation savings increase;
the laws of Ireland being different from the laws of the U.S. and
potentially affording less protections to the holders of our
securities; and our holding company structure potentially
preventing us from being able to receive dividends or other
distributions in needed amounts from our subsidiaries.
The foregoing list of factors is not exhaustive and new factors
may emerge from time to time that could also affect actual
performance and results. For more information, please see Part I,
Item 1A in our Annual Report on Form 10-K, and our subsequent
filings with the SEC. Copies are available online at www.sec.gov or
www.wtwco.com.
Although we believe that the assumptions underlying our
forward-looking statements are reasonable, any of these
assumptions, and therefore also the forward-looking statements
based on these assumptions, could themselves prove to be
inaccurate. Given the significant uncertainties inherent in the
forward-looking statements included in this document, our inclusion
of this information is not a representation or guarantee by us that
our objectives and plans will be achieved.
Our forward-looking statements speak only as of the date made,
and we will not update these forward-looking statements unless the
securities laws require us to do so. With regard to these risks,
uncertainties and assumptions, the forward-looking events discussed
in this document may not occur, and we caution you against unduly
relying on these forward-looking statements.
Contact
INVESTORSClaudia De La Hoz |
Claudia.Delahoz@wtwco.com
WTWSupplemental Segment
Information(In millions of U.S. dollars)(Unaudited) |
REVENUE |
|
|
|
|
|
|
|
|
|
Components of Revenue Change(i) |
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
Less: |
|
|
|
|
Three Months EndedMarch 31, |
|
|
As Reported |
|
Currency |
|
Constant Currency |
|
Acquisitions/ |
|
Organic |
|
|
2024 |
|
|
2023 |
|
|
% Change |
|
Impact |
|
Change |
|
Divestitures |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health, Wealth &
Career |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue excluding interest income |
|
$ |
1,327 |
|
|
$ |
1,282 |
|
|
4% |
|
0% |
|
3% |
|
(1)% |
|
4% |
Interest income |
|
|
9 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,336 |
|
|
|
1,287 |
|
|
4% |
|
0% |
|
3% |
|
(1)% |
|
4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk &
Broking |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue excluding interest
income |
|
$ |
950 |
|
|
$ |
892 |
|
|
7% |
|
0% |
|
6% |
|
0% |
|
6% |
Interest income |
|
|
28 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
978 |
|
|
|
904 |
|
|
8% |
|
0% |
|
8% |
|
0% |
|
8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Revenue |
|
$ |
2,314 |
|
|
$ |
2,191 |
|
|
6% |
|
0% |
|
5% |
|
0% |
|
5% |
Reimbursable expenses and
other |
|
|
21 |
|
|
|
38 |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
6 |
|
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
2,341 |
|
|
$ |
2,244 |
|
|
4% |
|
0% |
|
4% |
|
(1)% |
|
5%(ii) |
(i) |
Components of revenue change may not add due to rounding. |
(ii) |
Interest income contributed 1% to organic change for total revenue
for the three months ended March 31, 2024. Organic change for total
revenue excluding this contribution was 4% for the three months
ended March 31, 2024. |
BOOK-OF-BUSINESS SETTLEMENTS AND INTEREST
INCOME
|
|
Three Months Ended March 31, |
|
|
|
HWC |
|
|
R&B |
|
|
Corporate |
|
|
Total |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Book-of-business settlements |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
7 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
7 |
|
Interest income |
|
|
9 |
|
|
|
5 |
|
|
|
28 |
|
|
|
12 |
|
|
|
6 |
|
|
|
15 |
|
|
|
43 |
|
|
|
32 |
|
Total |
|
$ |
9 |
|
|
$ |
5 |
|
|
$ |
30 |
|
|
$ |
19 |
|
|
$ |
6 |
|
|
$ |
15 |
|
|
$ |
45 |
|
|
$ |
39 |
|
SEGMENT OPERATING INCOME (i)
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Health, Wealth & Career |
|
$ |
336 |
|
|
$ |
309 |
|
Risk & Broking |
|
|
203 |
|
|
|
180 |
|
Segment Operating
Income |
|
$ |
539 |
|
|
$ |
489 |
|
(i) |
Segment operating income excludes certain costs, including
amortization of intangibles, restructuring costs, transaction and
transformation expenses, certain litigation provisions, and to the
extent that the actual expense based upon which allocations are
made differs from the forecast/budget amount, a reconciling item
will be created between internally-allocated expenses and the
actual expenses reported for U.S. GAAP purposes. |
SEGMENT OPERATING MARGINS
|
|
Three Months Ended March 31, |
|
|
2024 |
|
2023 |
Health, Wealth &
Career |
|
25.1% |
|
24.0% |
Risk & Broking |
|
20.8% |
|
19.9% |
RECONCILIATION OF SEGMENT OPERATING INCOME TO INCOME
FROM OPERATIONS BEFORE INCOME TAXES
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Segment Operating Income |
|
$ |
539 |
|
|
$ |
489 |
|
Amortization |
|
|
(60 |
) |
|
|
(71 |
) |
Restructuring costs |
|
|
(18 |
) |
|
|
(3 |
) |
Transaction and
transformation(i) |
|
|
(125 |
) |
|
|
(59 |
) |
Unallocated, net(ii) |
|
|
(56 |
) |
|
|
(71 |
) |
Income from Operations |
|
|
280 |
|
|
|
285 |
|
Interest expense |
|
|
(64 |
) |
|
|
(54 |
) |
Other income, net |
|
|
26 |
|
|
|
25 |
|
Income from continuing
operations before income taxes |
|
$ |
242 |
|
|
$ |
256 |
|
(i) |
In 2024 and 2023, in addition to legal fees and other transaction
costs, includes primarily consulting fees and compensation costs
related to the Transformation program. |
(ii) |
Includes certain costs, primarily related to corporate functions
which are not directly related to the segments, and certain
differences between budgeted expenses determined at the beginning
of the year and actual expenses that we report for U.S. GAAP
purposes. |
WTWReconciliations of Non-GAAP
Measures (In millions of U.S. dollars, except per share
data)(Unaudited) |
|
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO WTW TO
ADJUSTED DILUTED EARNINGS PER SHARE |
|
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Net Income attributable to WTW |
|
$ |
190 |
|
|
$ |
203 |
|
Adjusted for certain
items: |
|
|
|
|
|
|
Amortization |
|
|
60 |
|
|
|
71 |
|
Restructuring costs |
|
|
18 |
|
|
|
3 |
|
Transaction and transformation |
|
|
125 |
|
|
|
59 |
|
Tax effect on certain items listed above(i) |
|
|
(52 |
) |
|
|
(34 |
) |
Tax effect of internal reorganizations |
|
|
— |
|
|
|
4 |
|
Adjusted Net
Income |
|
$ |
341 |
|
|
$ |
306 |
|
|
|
|
|
|
|
|
Weighted-average ordinary
shares, diluted |
|
|
104 |
|
|
|
108 |
|
|
|
|
|
|
|
|
Diluted Earnings Per
Share |
|
$ |
1.83 |
|
|
$ |
1.88 |
|
Adjusted for certain
items:(ii) |
|
|
|
|
|
|
Amortization |
|
|
0.58 |
|
|
|
0.66 |
|
Restructuring costs |
|
|
0.17 |
|
|
|
0.03 |
|
Transaction and transformation |
|
|
1.21 |
|
|
|
0.55 |
|
Tax effect on certain items listed above(i) |
|
|
(0.50 |
) |
|
|
(0.32 |
) |
Tax effect of internal reorganizations |
|
|
— |
|
|
|
0.04 |
|
Adjusted Diluted
Earnings Per Share(ii) |
|
$ |
3.29 |
|
|
$ |
2.84 |
|
(i) |
The tax effect was calculated using an effective tax rate for each
item. |
(ii) |
Per share values and totals may differ due to rounding. |
RECONCILIATION OF NET INCOME TO ADJUSTED
EBITDA
|
|
Three Months Ended March 31, |
|
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
194 |
|
8.3% |
$ |
206 |
|
9.2% |
Provision for income taxes |
|
|
48 |
|
|
|
50 |
|
|
Interest expense |
|
|
64 |
|
|
|
54 |
|
|
Depreciation |
|
|
59 |
|
|
|
60 |
|
|
Amortization |
|
|
60 |
|
|
|
71 |
|
|
Restructuring costs |
|
|
18 |
|
|
|
3 |
|
|
Transaction and transformation |
|
|
125 |
|
|
|
59 |
|
|
Adjusted EBITDA and
Adjusted EBITDA Margin |
|
$ |
568 |
|
24.3% |
$ |
503 |
|
22.4% |
RECONCILIATION OF INCOME FROM OPERATIONS TO ADJUSTED
OPERATING INCOME
|
|
Three Months Ended March 31, |
|
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
Income from operations and Operating margin |
|
$ |
280 |
|
12.0% |
$ |
285 |
|
12.7% |
Adjusted for certain
items: |
|
|
|
|
|
|
|
Amortization |
|
|
60 |
|
|
|
71 |
|
|
Restructuring costs |
|
|
18 |
|
|
|
3 |
|
|
Transaction and transformation |
|
|
125 |
|
|
|
59 |
|
|
Adjusted operating
income and Adjusted operating income margin |
|
$ |
483 |
|
20.6% |
$ |
418 |
|
18.6% |
RECONCILIATION OF GAAP INCOME TAXES/TAX RATE TO ADJUSTED
INCOME TAXES/TAX RATE
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Income from operations before income taxes |
|
$ |
242 |
|
|
$ |
256 |
|
|
|
|
|
|
|
|
Adjusted for certain
items: |
|
|
|
|
|
|
Amortization |
|
|
60 |
|
|
|
71 |
|
Restructuring costs |
|
|
18 |
|
|
|
3 |
|
Transaction and transformation |
|
|
125 |
|
|
|
59 |
|
Adjusted income before
taxes |
|
$ |
445 |
|
|
$ |
389 |
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
$ |
48 |
|
|
$ |
50 |
|
Tax effect on certain items listed above(i) |
|
|
52 |
|
|
|
34 |
|
Tax effect of internal reorganizations |
|
|
— |
|
|
|
(4 |
) |
Adjusted income
taxes |
|
$ |
100 |
|
|
$ |
80 |
|
|
|
|
|
|
|
|
U.S. GAAP tax
rate |
|
|
19.9 |
% |
|
|
19.5 |
% |
Adjusted income tax
rate |
|
|
22.4 |
% |
|
|
20.5 |
% |
(i) |
The tax effect was calculated using an effective tax rate for each
item. |
RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
TO FREE CASH FLOW
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
$ |
24 |
|
|
$ |
134 |
|
Less: Additions to fixed
assets and software for internal use |
|
|
(33 |
) |
|
|
(42 |
) |
Free Cash
Flow |
|
$ |
(9 |
) |
|
$ |
92 |
|
WILLIS TOWERS WATSON PUBLIC LIMITED
COMPANYCondensed Consolidated Statements of
Income(In millions of U.S. dollars, except per share
data)(Unaudited) |
|
|
|
Three Months EndedMarch 31, |
|
|
|
2024 |
|
|
2023 |
|
Revenue |
|
$ |
2,341 |
|
|
$ |
2,244 |
|
|
|
|
|
|
|
|
Costs of providing
services |
|
|
|
|
|
|
Salaries and benefits |
|
|
1,342 |
|
|
|
1,313 |
|
Other operating expenses |
|
|
457 |
|
|
|
453 |
|
Depreciation |
|
|
59 |
|
|
|
60 |
|
Amortization |
|
|
60 |
|
|
|
71 |
|
Restructuring costs |
|
|
18 |
|
|
|
3 |
|
Transaction and transformation |
|
|
125 |
|
|
|
59 |
|
Total costs of providing
services |
|
|
2,061 |
|
|
|
1,959 |
|
|
|
|
|
|
|
|
Income from operations |
|
|
280 |
|
|
|
285 |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(64 |
) |
|
|
(54 |
) |
Other income, net |
|
|
26 |
|
|
|
25 |
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS BEFORE INCOME TAXES |
|
242 |
|
|
|
256 |
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
|
(48 |
) |
|
|
(50 |
) |
|
|
|
|
|
|
|
NET INCOME |
|
194 |
|
|
|
206 |
|
|
|
|
|
|
|
|
Income attributable to
non-controlling interests |
|
|
(4 |
) |
|
|
(3 |
) |
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO
WTW |
|
$ |
190 |
|
|
$ |
203 |
|
|
|
|
|
|
|
|
EARNINGS PER SHARE |
|
|
|
|
|
|
CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES |
|
$ |
1.84 |
|
|
$ |
1.89 |
|
Diluted earnings per share |
|
$ |
1.83 |
|
|
$ |
1.88 |
|
|
|
|
|
|
|
|
Weighted-average ordinary
shares, basic |
|
|
103 |
|
|
|
107 |
|
Weighted-average ordinary
shares, diluted |
|
|
104 |
|
|
|
108 |
|
WILLIS TOWERS WATSON PUBLIC LIMITED
COMPANYCondensed Consolidated Balance
Sheets(In millions of U.S. dollars, except share
data)(Unaudited) |
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,893 |
|
|
$ |
1,424 |
|
Fiduciary assets |
|
|
9,940 |
|
|
|
9,073 |
|
Accounts receivable, net |
|
|
2,430 |
|
|
|
2,572 |
|
Prepaid and other current
assets |
|
|
379 |
|
|
|
364 |
|
Total current assets |
|
|
14,642 |
|
|
|
13,433 |
|
Fixed assets, net |
|
|
703 |
|
|
|
720 |
|
Goodwill |
|
|
10,186 |
|
|
|
10,195 |
|
Other intangible assets,
net |
|
|
1,960 |
|
|
|
2,016 |
|
Right-of-use assets |
|
|
542 |
|
|
|
565 |
|
Pension benefits assets |
|
|
598 |
|
|
|
588 |
|
Other non-current assets |
|
|
1,606 |
|
|
|
1,573 |
|
Total non-current assets |
|
|
15,595 |
|
|
|
15,657 |
|
TOTAL
ASSETS |
|
$ |
30,237 |
|
|
$ |
29,090 |
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
Fiduciary liabilities |
|
$ |
9,940 |
|
|
$ |
9,073 |
|
Deferred revenue and accrued
expenses |
|
|
1,638 |
|
|
|
2,104 |
|
Current debt |
|
|
650 |
|
|
|
650 |
|
Current lease liabilities |
|
|
123 |
|
|
|
125 |
|
Other current liabilities |
|
|
767 |
|
|
|
678 |
|
Total current liabilities |
|
|
13,118 |
|
|
|
12,630 |
|
Long-term debt |
|
|
5,307 |
|
|
|
4,567 |
|
Liability for pension
benefits |
|
|
526 |
|
|
|
563 |
|
Deferred tax liabilities |
|
|
550 |
|
|
|
542 |
|
Provision for liabilities |
|
|
377 |
|
|
|
365 |
|
Long-term lease
liabilities |
|
|
570 |
|
|
|
592 |
|
Other non-current
liabilities |
|
|
221 |
|
|
|
238 |
|
Total non-current liabilities |
|
|
7,551 |
|
|
|
6,867 |
|
CASH FLOWS FROM/(USED
IN) FINANCING ACTIVITIES |
|
|
20,669 |
|
|
|
19,497 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
EQUITY(i) |
|
|
|
|
|
|
Additional paid-in
capital |
|
|
10,930 |
|
|
|
10,910 |
|
Retained earnings |
|
|
1,464 |
|
|
|
1,466 |
|
Accumulated other
comprehensive loss, net of tax |
|
|
(2,905 |
) |
|
|
(2,856 |
) |
Total WTW
shareholders' equity |
|
|
9,489 |
|
|
|
9,520 |
|
Non-controlling interests |
|
|
79 |
|
|
|
73 |
|
Total
Equity |
|
|
9,568 |
|
|
|
9,593 |
|
TOTAL LIABILITIES AND
EQUITY |
|
$ |
30,237 |
|
|
$ |
29,090 |
|
____________________
(i) |
Equity includes (a) Ordinary shares $0.000304635 nominal value;
Authorized 1,510,003,775; Issued 102,213,184 (2024) and 102,538,072
(2023); Outstanding 102,213,184 (2024) and 102,538,072 (2023) and
(b) Preference shares, $0.000115 nominal value; Authorized
1,000,000,000 and Issued none in 2024 and 2023. |
WILLIS TOWERS WATSON PUBLIC LIMITED
COMPANYCondensed Consolidated Statements of Cash
Flows(In millions of U.S. dollars)(Unaudited) |
|
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
|
|
|
NET INCOME |
|
$ |
194 |
|
|
$ |
206 |
|
Adjustments to reconcile net
income to total net cash from operating activities: |
|
|
|
|
|
|
Depreciation |
|
|
59 |
|
|
|
60 |
|
Amortization |
|
|
60 |
|
|
|
71 |
|
Non-cash restructuring
charges |
|
|
11 |
|
|
|
2 |
|
Non-cash lease expense |
|
|
27 |
|
|
|
27 |
|
Net periodic benefit of
defined benefit pension plans |
|
|
(4 |
) |
|
|
(8 |
) |
Provision for doubtful
receivables from clients |
|
|
8 |
|
|
|
7 |
|
Benefit from deferred income
taxes |
|
|
(9 |
) |
|
|
(15 |
) |
Share-based compensation |
|
|
24 |
|
|
|
26 |
|
Non-cash foreign exchange
(gain)/loss |
|
|
(1 |
) |
|
|
11 |
|
Other, net |
|
|
8 |
|
|
|
10 |
|
Changes in operating assets
and liabilities, net of effects from purchase of subsidiaries: |
|
|
|
|
|
|
Accounts receivable |
|
|
113 |
|
|
|
129 |
|
Other assets |
|
|
(53 |
) |
|
|
11 |
|
Other liabilities |
|
|
(426 |
) |
|
|
(411 |
) |
Provisions |
|
|
13 |
|
|
|
8 |
|
Net cash from operating
activities |
|
|
24 |
|
|
|
134 |
|
|
|
|
|
|
|
|
CASH FLOWS USED IN INVESTING
ACTIVITIES |
|
|
|
|
|
|
Additions to fixed assets and
software for internal use |
|
|
(33 |
) |
|
|
(42 |
) |
Capitalized software
costs |
|
|
(27 |
) |
|
|
(19 |
) |
Acquisitions of operations,
net of cash acquired |
|
|
(15 |
) |
|
|
(4 |
) |
Sale of investments |
|
|
1 |
|
|
|
4 |
|
Net cash used in investing
activities |
|
|
(74 |
) |
|
|
(61 |
) |
|
|
|
|
|
|
|
CASH FLOWS FROM/(USED IN)
FINANCING ACTIVITIES |
|
|
|
|
|
|
Senior notes issued |
|
|
746 |
|
|
|
— |
|
Debt issuance costs |
|
|
(7 |
) |
|
|
— |
|
Repayments of debt |
|
|
(1 |
) |
|
|
(1 |
) |
Repurchase of shares |
|
|
(101 |
) |
|
|
(104 |
) |
Net proceeds/(payments) from
fiduciary funds held for clients |
|
|
1,011 |
|
|
|
(250 |
) |
Payments of deferred and
contingent consideration related to acquisitions |
|
|
— |
|
|
|
(6 |
) |
Cash paid for employee taxes
on withholding shares |
|
|
(5 |
) |
|
|
(5 |
) |
Dividends paid |
|
|
(86 |
) |
|
|
(87 |
) |
Acquisitions of and dividends
paid to non-controlling interests |
|
|
(1 |
) |
|
|
— |
|
Net cash from/(used in)
financing activities |
|
|
1,556 |
|
|
|
(453 |
) |
|
|
|
|
|
|
|
INCREASE/(DECREASE) IN CASH,
CASH EQUIVALENTS AND RESTRICTED CASH |
|
|
1,506 |
|
|
|
(380 |
) |
Effect of exchange rate
changes on cash, cash equivalents and restricted cash |
|
|
(47 |
) |
|
|
21 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, BEGINNING OF PERIOD(i) |
|
|
3,792 |
|
|
|
4,721 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, END OF PERIOD(i) |
|
$ |
5,251 |
|
|
$ |
4,362 |
|
____________________
(i) |
The amounts of cash, cash equivalents and restricted cash, their
respective classification on the condensed consolidated balance
sheets, as well as their respective portions of the increase or
decrease in cash, cash equivalents and restricted cash for each of
the periods presented have been included in the Supplemental
Disclosures of Cash Flow Information section. |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Supplemental disclosures of cash
flow information: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,893 |
|
|
$ |
1,135 |
|
Fiduciary funds (included in fiduciary assets) |
|
|
3,358 |
|
|
|
3,227 |
|
Total cash, cash equivalents and restricted cash |
|
$ |
5,251 |
|
|
$ |
4,362 |
|
|
|
|
|
|
|
|
Increase/(decrease) in cash, cash equivalents and other restricted
cash |
|
$ |
487 |
|
|
$ |
(130 |
) |
Increase/(decrease) in fiduciary funds |
|
|
1,019 |
|
|
|
(250 |
) |
Total(i) |
|
$ |
1,506 |
|
|
$ |
(380 |
) |
(i) |
Does not include the effect of exchange rate changes on cash, cash
equivalents and restricted cash. |
Willis Towers Watson Pub... (NASDAQ:WTW)
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