First Quarter Key Metrics
- Total revenue increased 5% to $4.1
billion, including organic revenue growth of 5%
- Operating margin decreased 210 basis points to 36.0%, and
operating margin, adjusted for certain items, increased 100 basis
points to 39.7%
- EPS increased 6% to $5.35, and
EPS, adjusted for certain items, increased 9% to $5.66
- For the first three months of 2024, cash flows from operations
was $309 million, and free cash flow
decreased 29% to $261 million
First Quarter Highlights
- On April 25, 2024, subsequent to
the close of the quarter, completed the acquisition of NFP, a
leading middle-market provider of risk, benefits, wealth and
retirement plan advisory solutions, for enterprise value of
$13.0 billion. Accretion and free
cash flow benefit realization now expected a year earlier than
modeled at announcement
- Repurchased 0.8 million class A ordinary shares for
approximately $250 million
- Published our 2023 Impact Report, highlighting progress against
our long-term commitments and solutions for clients
- Subsequent to the close of the quarter, announced a 10%
increase to the quarterly cash dividend
DUBLIN, April 26,
2024 /PRNewswire/ -- April 26, 2024 - Aon
plc (NYSE: AON) today reported results for the three months ended
March 31, 2024.
Net income attributable to Aon shareholders increased 6%
to $5.35 per share on a diluted
basis, compared to $5.07 per share on
a diluted basis, in the prior year period. Net income per share
attributable to Aon shareholders, adjusted for certain items,
increased 9% to $5.66 on a diluted
basis, including a favorable impact of $0.02 per share if prior year period results were
translated at current period foreign exchange rates ("foreign
currency translation"), compared to $5.17 in the prior year period. Certain items
that impacted first quarter results and comparisons with the prior
year period are detailed in the "Reconciliation of Non-GAAP
Measures - Operating Income, Operating Margin and Diluted Earnings
Per Share" on page 10 of this press release.
"Our global team delivered strong operating results in the first
quarter, including 5% organic revenue growth, 100 basis points of
adjusted operating margin improvement, and 9% adjusted EPS growth"
said Greg Case, Chief Executive
Officer. "We're delighted to welcome NFP to Aon and look forward to
working together to help clients address increasing volatility
across risk and people issues, enabled by Aon Business Services.
With this earlier-than-expected close, we're moving even faster to
address client demand, create more opportunities for our 60,000
colleagues, strengthen the long-term free cash flow profile of the
firm, and enhance long-term shareholder value creation."
FIRST QUARTER 2024 FINANCIAL SUMMARY
Total revenue in the first quarter increased 5% to
$4.1 billion compared to the prior
year period, reflecting 5% organic revenue growth, a 1% favorable
impact from fiduciary investment income and a 1% favorable impact
from foreign currency translation, partially offset by a 2%
unfavorable impact from acquisitions, divestitures and other
items.
Total operating expenses in the first quarter increased
9% to $2.6 billion compared to the
prior year period due primarily to Accelerating Aon United
restructuring charges, an increase in expense associated with 5%
organic revenue growth, investments in long-term growth, and a
$22 million unfavorable impact from
foreign currency translation, partially offset by $20 million of restructuring savings realized in
the quarter.
Foreign currency translation in the first quarter had a
$4 million, or $0.02 per share, favorable impact on U.S. GAAP
net income and a $4 million, or
$0.02 per share, favorable impact on
adjusted net income. If currency were to remain stable at today's
rates, the Company would expect an unfavorable impact of
approximately $0.05 per share, or an
approximately $15 million decrease in
adjusted operating income, in the second quarter of 2024, and an
unfavorable impact of approximately $0.03 per share, or an approximately $9 million decrease in adjusted operating income
for full year 2024.
Effective tax rate was 23.2% in the first quarter
compared to 19.6% in the prior year period. After adjusting to
exclude the applicable tax impact associated with certain non-GAAP
adjustments, the adjusted effective tax rate for the first quarter
of 2024 was 22.6% compared to 19.6% in the prior year period. The
primary drivers of the change in the adjusted effective tax rate
were the changes in the geographical distribution of income and a
net unfavorable impact from discrete items.
Weighted average diluted shares outstanding decreased to
200.1 million in the first quarter compared to 207.1 million in the
prior year period. The Company repurchased 0.8 million class A
ordinary shares for approximately $250
million in the first quarter. As of March 31, 2024, the Company had approximately
$3.1 billion of remaining
authorization under its share repurchase program.
YEAR TO DATE 2024 CASH FLOW SUMMARY
Cash flows provided by operations for the first three
months of 2024 decreased $134 million
to $309 million compared to the prior
year period, primarily due to higher receivables, payments related
to E&O, restructuring, higher cash taxes and transaction and
integration costs, partially offset by strong operating income
growth.
Free cash flow, defined as cash flows from operations
less capital expenditures, decreased 29%, to $261 million for the first three months of 2024
compared to the prior year period, reflecting a decrease in cash
flows provided by operations and a $28
million decrease in capital expenditures compared to the
prior year period, which was elevated due to the timing of projects
and investments within the year.
FIRST QUARTER 2024 REVENUE REVIEW
The first quarter revenue reviews provided below include
supplemental information related to organic revenue growth, which
is a non-GAAP measure that is described in detail in
"Reconciliation of Non-GAAP Measures - Organic Revenue Growth and
Free Cash Flow" on page 9 of this press release.
|
|
Three Months
Ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
|
Less:
Currency
Impact
|
|
Less:
Fiduciary
Investment
Income
|
|
Less:
Acquisitions,
Divestitures
& Other
Items
|
|
Organic
Revenue
Growth
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Risk
Solutions
|
|
$
1,808
|
|
$
1,778
|
|
2 %
|
|
1 %
|
|
1 %
|
|
(3) %
|
|
3 %
|
Reinsurance
Solutions
|
|
1,167
|
|
1,077
|
|
8
|
|
—
|
|
1
|
|
—
|
|
7
|
Health
Solutions
|
|
733
|
|
671
|
|
9
|
|
1
|
|
—
|
|
2
|
|
6
|
Wealth
Solutions
|
|
370
|
|
350
|
|
6
|
|
2
|
|
—
|
|
—
|
|
4
|
Eliminations
|
|
(8)
|
|
(5)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Total
revenue
|
|
$
4,070
|
|
$
3,871
|
|
5 %
|
|
1 %
|
|
1 %
|
|
(2) %
|
|
5 %
|
Total revenue increased $199
million, or 5%, to $4.1
billion, compared to the prior year period, with organic
revenue growth of 5%, driven by ongoing strong retention, net new
business generation and management of the renewal book, a 1%
favorable impact from fiduciary investment income and a 1%
favorable impact from foreign currency translation partially offset
by a 2% unfavorable impact from acquisitions, divestitures and
other items.
Commercial Risk Solutions organic revenue growth of 3%
reflects growth across most major geographies driven by strong
retention, management of the renewal book, and net new business
generation. Growth in retail brokerage was highlighted by solid
growth in EMEA and Asia and the
Pacific, driven by continued strength in core P&C. Results in
the U.S. were pressured, reflecting lower net new business and the
ongoing impacts from external capital markets activity. Results
also reflect growth in Affinity globally across both consumer and
benefits solutions. On average globally, exposures and pricing were
positive, resulting in modestly positive market impact.
Reinsurance Solutions organic revenue growth of 7%
reflects strong growth in treaty, driven by strong retention and
new business generation, as well as double-digit growth in the
Strategy and Technology Group. Market impact was modestly positive
on results in the quarter. The majority of revenue in our treaty
portfolio is recurring in nature and is recorded in connection with
the major renewal periods that take place throughout the first half
of the year, while the second half of the year is typically driven
by facultative placements, capital markets activity and advisory
work that is more transactional in nature.
Health Solutions organic revenue growth of 6% reflects
strong growth globally in core health and benefits brokerage driven
by new business generation and management of the renewal book.
Strength in the core was highlighted by solid growth in all major
geographies. Results also reflect strong growth in Consumer Benefit
Solutions, partially offset by a decline in Talent driven by lower
project-related revenue in advisory solutions.
Wealth Solutions organic revenue growth of 4% reflects
strong growth in Retirement, driven by advisory demand and
project-related work related to pension de-risking and ongoing
impact of regulatory changes. Investments declined modestly as
strong advisory demand in North
America was more than offset by a decline in project-related
work in the U.K.
FIRST QUARTER 2024 EXPENSE REVIEW
|
|
Three Months Ended
March 31,
|
|
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
$
Change
|
|
%
Change
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
$
1,883
|
|
$
1,792
|
|
$
91
|
|
5 %
|
Information
technology
|
|
124
|
|
139
|
|
(15)
|
|
(11)
|
Premises
|
|
71
|
|
75
|
|
(4)
|
|
(5)
|
Depreciation of fixed
assets
|
|
44
|
|
38
|
|
6
|
|
16
|
Amortization and
impairment of intangible assets
|
|
16
|
|
25
|
|
(9)
|
|
(36)
|
Other general
expense
|
|
348
|
|
329
|
|
19
|
|
6
|
Accelerating Aon
United Program expenses
|
|
119
|
|
—
|
|
119
|
|
100
|
Total operating
expenses
|
|
$
2,605
|
|
$
2,398
|
|
$
207
|
|
9 %
|
Compensation and benefits expense increased $91 million, or 5%, compared to the prior year
period due primarily to an increase in expense associated with 5%
organic revenue growth, and an $18
million unfavorable impact from foreign currency
translation, partially offset by savings from Accelerating Aon
United restructuring actions.
Information technology expense decreased $15 million, or 11%, compared to the prior year
period due primarily to elevated technology costs and investments
in the prior year period, noting that spend may vary between
quarters given timing of projects and investments within the
year.
Premises expense decreased $4
million, or 5%, compared to the prior year period,
reflecting a reduction to our real estate footprint.
Depreciation of fixed assets increased $6 million, or 16%, compared to the prior year
period due primarily to ongoing investments in Aon Business
Services-enabled technology platforms to drive long-term
growth.
Amortization and impairment of intangible assets
decreased $9 million, or 36%,
compared to the prior year period due primarily to ongoing
portfolio management and a decrease associated with assets fully
amortized in the prior year period.
Other general expense increased $19 million, or 6%, compared to the prior year
period primarily due to $15 million
of transaction and integration costs associated with the
acquisition of NFP.
Accelerating Aon United Program expenses were
$119 million, relating to workforce
optimization, asset impairments, and technology and other
costs.
FIRST QUARTER 2024 INCOME SUMMARY
Certain noteworthy items impacted adjusted operating income and
adjusted operating margin in the first quarters of 2024 and 2023,
which are also described in detail in "Reconciliation of Non-GAAP
Measures - Operating Income, Operating Margin and Diluted Earnings
Per Share" on page 10 of this press release.
|
|
Three Months Ended
March 31,
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
Revenue
|
|
$
4,070
|
|
$
3,871
|
|
5 %
|
Expenses
|
|
2,605
|
|
2,398
|
|
9 %
|
Operating
income
|
|
$
1,465
|
|
$
1,473
|
|
(1) %
|
Operating
margin
|
|
36.0 %
|
|
38.1 %
|
|
|
Operating income -
as adjusted
|
|
$
1,615
|
|
$
1,498
|
|
8 %
|
Operating margin -
as adjusted
|
|
39.7 %
|
|
38.7 %
|
|
|
Operating income decreased $8
million, or 1%, and operating margin decreased 210 basis
points to 36.0%, each compared to the prior year period. Operating
income, adjusted for certain items detailed on page 10 of this
press release, increased $117
million, or 8%, and operating margin, adjusted for certain
items, increased 100 basis points to 39.7%, each compared to the
prior year period. The increase in adjusted operating income
reflects organic revenue growth, increased fiduciary investment
income, and $20 million of
restructuring savings realized in the quarter, partially offset by
increased expenses and investments in long-term growth.
Interest income increased $23
million to $28 million
compared to the prior year period primarily reflecting interest
earned on the investment of $5
billion of term debt proceeds which were used to fund the
purchase of NFP. Interest expense increased
$33 million to $144 million compared to the prior year period,
reflecting an overall increase in total debt, primarily due to the
issuance of $5 billion of term debt
to fund the purchase of NFP, and higher interest rates. Other
income was $75 million compared
to Other expense of $25
million in the prior year period primarily related to
deferred consideration from the 2017 sale of our outsourcing
business. Other expense - as adjusted decreased $18 million compared to the prior year period
primarily due to the favorable impact of exchange rates on the
remeasurement of assets and liabilities in non-functional
currencies and a decrease in non-cash net periodic pension
cost.
Net income attributable to Aon shareholders increased 2%
to $1.1 billion compared to the prior
year period. Net income attributable to Aon shareholders, adjusted
for certain items, increased 6% to $1.1
billion compared to the prior year period.
Conference Call, Presentation Slides, and Webcast
Details
The Company will host a conference call on Friday,
April 26, 2024 at 7:30 a.m., central
time. Interested parties can listen to the conference call
via a live audio webcast and view the presentation slides at
www.aon.com.
About Aon
Aon plc (NYSE: AON) exists to shape
decisions for the better — to protect and enrich the lives of
people around the world. Through actionable analytic insight,
globally integrated Risk Capital and Human Capital expertise, and
locally relevant solutions, our colleagues provide clients in over
120 countries and sovereignties with the clarity and confidence to
make better risk and people decisions that help protect and grow
their businesses.
Follow Aon on LinkedIn, X, Facebook, and Instagram.
Stay up-to-date by visiting the Aon Newsroom and sign up for News
Alerts.
Safe Harbor Statement
This communication
contains certain statements related to future results, or states
Aon's intentions, beliefs and expectations or predictions for the
future, all of which are forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from either historical or anticipated results depending on a
variety of factors. These forward-looking statements include
information about possible or assumed future results of Aon's
operations. All statements, other than statements of historical
facts, that address activities, events or developments that Aon
expects or anticipates may occur in the future, including such
things as its outlook, market and industry conditions, including
competitive and pricing trends, the development and performance of
our services and products, our cost structure and the outcome of
cost-saving or restructuring initiatives, including the
impacts of the Accelerating Aon United Program, the integration of
NFP, actual or anticipated legal settlement expenses, future
capital expenditures, growth in commissions and fees, changes to
the composition or level of its revenues, cash flow and liquidity,
expected tax rates, expected foreign currency translation impacts,
business strategies, competitive strengths, goals, the benefits of
new initiatives, growth of its business and operations, plans,
references to future successes, and expectations with respect to
the benefits of the acquisition of NFP are forward-looking
statements. Also, when Aon uses words such as "anticipate",
"believe", "continue", "could", "estimate", "expect", "forecast",
"intend", "looking forward", "may", "might", "plan", "potential",
"opportunity", "commit", "probably", "project", "should", "will",
"would" or similar expressions, it is making forward-looking
statements.
The following factors, among others, could cause actual results
to differ from those set forth in or anticipated by the forward
looking statements: changes in the competitive environment, due to
macroeconomic conditions (including impacts from instability in the
banking or commercial real estate sectors) or otherwise, or damage
to Aon's reputation; fluctuations in currency exchange, interest,
or inflation rates that could impact our financial condition or
results; changes in global equity and fixed income markets that
could affect the return on invested assets; changes in the funded
status of Aon's various defined benefit pension plans and the
impact of any increased pension funding resulting from those
changes; the level of Aon's debt and the terms thereof reducing
Aon's flexibility or increasing borrowing costs; rating agency
actions that could limit Aon's access to capital and our
competitive position; volatility in Aon's global tax rate due to
being subject to a variety of different factors, including the
adoption and implementation in the European Union, the United States, the United Kingdom, or other countries of the
Organization for Economic Co-operation and Development tax
proposals or other pending proposals in those and other countries,
which could create volatility in that tax rate; changes
in Aon's accounting estimates or assumptions on Aon's
financial statements; limits on Aon's subsidiaries' ability to pay
dividends or otherwise make payments to Aon; the impact of legal
proceedings and other contingencies, including those arising from
acquisition or disposition transactions, errors and omissions and
other claims against Aon (including proceeding and contingencies
relating to transactions for which capital was arranged by Vesttoo
Ltd.); the impact of, and potential challenges in complying with,
laws and regulations in the jurisdictions in which Aon operates,
particularly given the global nature of Aon's operations and the
possibility of differing or conflicting laws and regulations, or
the application or interpretation thereof, across jurisdictions in
which Aon does business; the impact of any regulatory
investigations brought in Ireland,
the U.K., the U.S. and other countries; failure to protect
intellectual property rights or allegations that Aon infringes on
the intellectual property rights of others; general economic and
political conditions in different countries in which Aon does
business around the world; the failure to retain, attract and
develop experienced and qualified personnel; international risks
associated with Aon's global operations, including impacts from
military conflicts or political instability, such as the ongoing
Russian war in Ukraine and the
Israel-Hamas conflict; the effects of natural or man-made
disasters, including the effects of the COVID-19 and other health
pandemics and the impacts of climate related events; any system or
network disruption or breach resulting in operational interruption
or improper disclosure of confidential, personal, or proprietary
data, and resulting liabilities or damage to our reputation; Aon's
ability to develop, implement, update and enhance new systems; the
actions taken by third parties that perform aspects of Aon's
business operations and client services; the extent to which Aon is
exposed to certain risks, including lawsuits, related to actions
Aon may take in being responsible for making decisions on behalf of
clients in Aon's investment businesses or in other advisory
services that Aon currently provides, or may provide in the future;
Aon's ability to continue, and the costs and risks associated with,
growing, developing and integrating acquired business, and entering
into new lines of business or products; Aon's ability to secure
regulatory approval and complete transactions, and the costs and
risks associated with the failure to consummate proposed
transactions; changes in commercial property and casualty markets,
commercial premium rates or methods of compensation; Aon's ability
to develop and implement innovative growth strategies and
initiatives intended to yield cost savings (including the
Accelerating Aon United Program), and the ability to achieve such
growth or cost savings; the effects of Irish law on Aon's operating
flexibility and the enforcement of judgments against Aon; adverse
effects on the market price of Aon's securities and/or operating
results for any reason, including, without limitation, because of a
failure to realize the expected benefits of the acquisition of NFP
(including anticipated revenue and growth synergies) in the
expected timeframe, or at all; significant transaction and
integration costs or difficulties in connection with the
acquisition of NFP or unknown or inestimable liabilities; and
potential impact of the acquisition of NFP on relationships,
including with suppliers, customers, employees and regulators.
Any or all of Aon's forward-looking statements may turn out to
be inaccurate, and there are no guarantees about Aon's performance.
The factors identified above are not exhaustive. Aon and its
subsidiaries operate in a dynamic business environment in which new
risks may emerge frequently. Accordingly, you should not place
undue reliance on forward-looking statements, which speak only as
of the dates on which they are made. In addition, results for prior
periods are not necessarily indicative of results that may be
expected for any future period. Further information concerning Aon
and its businesses, including factors that potentially could
materially affect Aon's financial results, is contained in Aon's
filings with the SEC. See Aon's
Annual Report on Form 10-K for the year ended December 31, 2023 for a further discussion of
these and other risks and uncertainties applicable to Aon and its
businesses. These factors may be revised or supplemented in
subsequent reports filed with the SEC. Aon is not under, and
expressly disclaims, any obligation to update or alter any
forward-looking statement that it may make from time to time,
whether as a result of new information, future events or
otherwise.
Explanation of Non-GAAP Measures
This communication includes supplemental information not
calculated in accordance with generally accepted accounting
principles in the United States
("U.S. GAAP"), including organic revenue growth, free cash flow,
adjusted operating income, adjusted operating margin, adjusted
earnings per share, adjusted net income attributable to Aon
shareholders, adjusted diluted net income per share, adjusted
effective tax rate, adjusted other income (expense), and adjusted
income before income taxes that exclude the effects of intangible
asset amortization and impairment, Accelerating Aon United Program
expenses, NFP transaction and integration costs, certain legal
settlements, capital expenditures, and certain other noteworthy
items that affected results for the comparable periods. Organic
revenue growth includes the impact of intercompany activity and
excludes foreign exchange rate changes, acquisitions, divestitures
(including held for sale businesses), transfers between revenue
lines, fiduciary investment income, and gains or losses on
derivatives accounted for as hedges. Currency impact represents the
effect on prior year period results if they were translated at
current period foreign exchange rates. Reconciliations to the
closest U.S. GAAP measure for each non-GAAP measure presented in
this communication are provided in the attached appendices.
Supplemental organic revenue growth information and additional
measures that exclude the effects of certain items noted above do
not affect net income or any other U.S. GAAP reported amounts. Free
cash flow is cash flows from operating activity less capital
expenditures. The adjusted effective tax rate excludes the
applicable tax impact associated with expenses for estimated
intangible asset amortization and impairment, and certain other
noteworthy items. Management believes that these measures are
important to make meaningful period-to-period comparisons and that
this supplemental information is helpful to investors. Management
also uses these measures to assess operating performance and
performance for compensation. Non-GAAP measures should be viewed in
addition to, not in lieu of, Aon's Consolidated Financial
Statements. Industry peers provide similar supplemental information
regarding their performance, although they may not make identical
adjustments.
Investor
Contact:
|
|
Media
Contact:
|
Leslie
Follmer
|
|
Will Dunn
|
+1
847-442-0622
|
|
+1
312-381-3024
|
investor.relations@aon.com
|
|
mediainquiries@aon.com
|
Aon
plc
Condensed Consolidated
Statements of Income (Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
|
(millions, except per
share data)
|
|
2024
|
|
2023
|
|
%
Change
|
Revenue
|
|
|
|
|
|
|
Total
revenue
|
|
$
4,070
|
|
$
3,871
|
|
5 %
|
Expenses
|
|
|
|
|
|
|
Compensation and
benefits
|
|
1,883
|
|
1,792
|
|
5 %
|
Information
technology
|
|
124
|
|
139
|
|
(11) %
|
Premises
|
|
71
|
|
75
|
|
(5) %
|
Depreciation of fixed
assets
|
|
44
|
|
38
|
|
16 %
|
Amortization and
impairment of intangible assets
|
|
16
|
|
25
|
|
(36) %
|
Other general
expense
|
|
348
|
|
329
|
|
6 %
|
Accelerating Aon
United Program expenses
|
|
119
|
|
—
|
|
100 %
|
Total operating
expenses
|
|
2,605
|
|
2,398
|
|
9 %
|
Operating
income
|
|
1,465
|
|
1,473
|
|
(1) %
|
Interest
income
|
|
28
|
|
5
|
|
460 %
|
Interest
expense
|
|
(144)
|
|
(111)
|
|
30 %
|
Other income
(expense)
|
|
75
|
|
(25)
|
|
400 %
|
Income before income
taxes
|
|
1,424
|
|
1,342
|
|
6 %
|
Income tax expense
(1)
|
|
331
|
|
263
|
|
26 %
|
Net
income
|
|
1,093
|
|
1,079
|
|
1 %
|
Less: Net income
attributable to noncontrolling interests
|
|
22
|
|
29
|
|
(24) %
|
Net income
attributable to Aon shareholders
|
|
$
1,071
|
|
$
1,050
|
|
2 %
|
|
|
|
|
|
|
|
Basic net income per
share attributable to Aon shareholders
|
|
$ 5.38
|
|
$ 5.09
|
|
6 %
|
Diluted net income per
share attributable to Aon shareholders
|
|
$ 5.35
|
|
$ 5.07
|
|
6 %
|
Weighted average
ordinary shares outstanding - basic
|
|
199.1
|
|
206.1
|
|
(3) %
|
Weighted average
ordinary shares outstanding - diluted
|
|
200.1
|
|
207.1
|
|
(3) %
|
(1) The effective
tax rate was 23.2% and 19.6% for the three months ended March 31,
2024 and 2023, respectively.
|
Aon
plc
Reconciliation of
Non-GAAP Measures - Organic Revenue Growth and Free Cash Flow
(Unaudited)
Organic Revenue
Growth (Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
|
Less:
Currency
Impact (1)
|
|
Less:
Fiduciary
Investment
Income (2)
|
|
Less:
Acquisitions,
Divestitures
& Other
Items
|
|
Organic
Revenue
Growth (3)
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Risk
Solutions
|
|
$
1,808
|
|
$
1,778
|
|
2 %
|
|
1 %
|
|
1 %
|
|
(3) %
|
|
3 %
|
Reinsurance
Solutions
|
|
1,167
|
|
1,077
|
|
8
|
|
—
|
|
1
|
|
—
|
|
7
|
Health
Solutions
|
|
733
|
|
671
|
|
9
|
|
1
|
|
—
|
|
2
|
|
6
|
Wealth
Solutions
|
|
370
|
|
350
|
|
6
|
|
2
|
|
—
|
|
—
|
|
4
|
Elimination
|
|
(8)
|
|
(5)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Total
revenue
|
|
$
4,070
|
|
$
3,871
|
|
5 %
|
|
1 %
|
|
1 %
|
|
(2) %
|
|
5 %
|
(1)
|
Currency impact
represents the effect on prior year period results if they were
translated at current period foreign exchange rates.
|
(2)
|
Fiduciary investment
income for the three months ended March 31, 2024 and 2023 was $79
million and $52 million, respectively.
|
(3)
|
Organic revenue growth
includes the impact of certain intercompany activity and excludes
the impact of changes in foreign exchange rates, fiduciary
investment income, acquisitions, divestitures (including held for
sale businesses), transfers between revenue lines, and gains or
losses on derivatives accounted for as hedges.
|
Free Cash Flows
(Unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
Cash Provided by
Operating Activities
|
|
$
309
|
|
$
443
|
|
(30) %
|
Capital
Expenditures
|
|
(48)
|
|
(76)
|
|
(37) %
|
Free Cash Flows
(1)
|
|
$
261
|
|
$
367
|
|
(29) %
|
(1)
|
Free cash flow is
defined as cash flows from operations less capital expenditures.
This non-GAAP measure does not imply or represent a precise
calculation of residual cash flow available for discretionary
expenditures.
|
Aon
plc
Reconciliation of
Non-GAAP Measures - Operating Income, Operating Margin, and Diluted
Earnings Per Share (Unaudited) (1)
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
(millions, except
percentages)
|
|
2024
|
|
2023
|
|
%
Change
|
Revenue
|
|
$
4,070
|
|
$
3,871
|
|
5 %
|
|
|
|
|
|
|
|
Operating
income
|
|
$
1,465
|
|
$
1,473
|
|
(1) %
|
Amortization and
impairment of intangible assets
|
|
16
|
|
25
|
|
|
Accelerating Aon
United Program expenses (2)
|
|
119
|
|
—
|
|
|
Transaction and
integration costs (3)
|
|
15
|
|
—
|
|
|
Operating income -
as adjusted
|
|
$
1,615
|
|
$
1,498
|
|
8 %
|
Operating
margin
|
|
36.0 %
|
|
38.1 %
|
|
|
Operating margin -
as adjusted
|
|
39.7 %
|
|
38.7 %
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
(millions, except
percentages)
|
|
2024
|
|
2023
|
|
%
Change
|
Operating income -
as adjusted
|
|
$
1,615
|
|
$
1,498
|
|
8 %
|
Interest
income
|
|
28
|
|
5
|
|
460 %
|
Interest
expense
|
|
(144)
|
|
(111)
|
|
30 %
|
Other income
(expense):
|
|
|
|
|
|
|
Other income (expense)
- pensions
|
|
(10)
|
|
(17)
|
|
(41) %
|
Other income (expense)
- other - as adjusted (4)
|
|
3
|
|
(8)
|
|
138 %
|
Other income (expense)
- as adjusted
|
|
(7)
|
|
(25)
|
|
(72) %
|
Income before income
taxes - as adjusted
|
|
1,492
|
|
1,367
|
|
9 %
|
Income tax expense
(5)
|
|
337
|
|
268
|
|
26 %
|
Net income - as
adjusted
|
|
1,155
|
|
1,099
|
|
5 %
|
Less: Net income
attributable to noncontrolling interests
|
|
22
|
|
29
|
|
(24) %
|
Net income
attributable to Aon shareholders - as adjusted
|
|
$
1,133
|
|
$
1,070
|
|
6 %
|
Diluted net income per
share attributable to Aon shareholders - as adjusted
|
|
$ 5.66
|
|
$ 5.17
|
|
9 %
|
Weighted average
ordinary shares outstanding - diluted
|
|
200.1
|
|
207.1
|
|
(3) %
|
Effective Tax Rates
(5)
|
|
|
|
|
|
|
U.S. GAAP
|
|
23.2 %
|
|
19.6 %
|
|
|
Non-GAAP
|
|
22.6 %
|
|
19.6 %
|
|
|
(1)
|
Certain noteworthy
items impacting operating income in the three months ended March
31, 2024 and 2023 are described in this schedule. The items shown
with the caption "as adjusted" are non-GAAP measures.
|
(2)
|
Total charges are
expected to include technology-related costs to facilitate
streamlining and simplifying operations, headcount reduction costs,
and costs associated with asset impairments, including real estate
consolidation costs.
|
(3)
|
In the fourth quarter
of 2023, Aon entered into a definitive agreement to acquire NFP,
which closed on April 25, 2024. As part of the acquisition, Aon
incurred $11 million of transaction costs in the three months ended
March 31, 2024 including advisory, legal, accounting, regulatory,
and other professional or consulting fees required to complete the
acquisition. The NFP acquisition also will result in certain
non-recurring integration costs associated with colleague
severance, termination of redundant third-party agreements, costs
associated with legal entity rationalization, and professional or
consulting fees related to alignment of management processes and
controls, as well as costs associated with the assessment of NFP
information technology environment and security protocols. Aon
incurred $4 million of integration costs in the three months ended
March 31, 2024.
|
(4)
|
In the first quarter of
2024, the Company earned $82 million of deferred consideration from
the affiliates of The Blackstone Group L.P. and the other
designated purchasers related to the 2017 sale of the benefits
administration and business process outsourcing
business.
|
(5)
|
Adjusted items are
generally taxed at the estimated annual effective tax rate, except
for the applicable tax impact associated with the anticipated sale
of certain assets and liabilities classified as held for sale,
certain legal settlements, Accelerating Aon United Program
expenses, deferred compensation from a prior year sale of business,
and certain transaction and integration costs related to the
acquisition of NFP, which are adjusted at the related
jurisdictional rate.
|
Aon
plc
Condensed Consolidated
Statements of Financial Position
|
|
|
|
As of
|
|
|
(Unaudited)
|
|
|
(millions)
|
|
March 31,
2024
|
|
December 31,
2023
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
995
|
|
$
778
|
Short-term
investments
|
|
5,413
|
|
369
|
Receivables,
net
|
|
4,035
|
|
3,254
|
Fiduciary assets
(1)
|
|
17,161
|
|
16,307
|
Other current
assets
|
|
1,020
|
|
996
|
Total current
assets
|
|
28,624
|
|
21,704
|
Goodwill
|
|
8,302
|
|
8,414
|
Intangible assets,
net
|
|
217
|
|
234
|
Fixed assets,
net
|
|
590
|
|
638
|
Operating lease
right-of-use assets
|
|
628
|
|
650
|
Deferred tax
assets
|
|
1,254
|
|
1,195
|
Prepaid
pension
|
|
627
|
|
618
|
Other non-current
assets
|
|
525
|
|
506
|
Total
assets
|
|
$
40,767
|
|
$
33,959
|
|
|
|
|
|
Liabilities and
equity (deficit)
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
1,925
|
|
$
2,262
|
Short-term debt and
current portion of long-term debt
|
|
606
|
|
1,204
|
Fiduciary
liabilities
|
|
17,161
|
|
16,307
|
Other current
liabilities
|
|
2,146
|
|
1,878
|
Total current
liabilities
|
|
21,838
|
|
21,651
|
Long-term
debt
|
|
15,916
|
|
9,995
|
Non-current operating
lease liabilities
|
|
611
|
|
641
|
Deferred tax
liabilities
|
|
129
|
|
115
|
Pension, other
postretirement, and postemployment liabilities
|
|
1,198
|
|
1,225
|
Other non-current
liabilities
|
|
1,103
|
|
1,074
|
Total
liabilities
|
|
40,795
|
|
34,701
|
|
|
|
|
|
Equity
(deficit)
|
|
|
|
|
Ordinary shares -
$0.01 nominal value
|
|
2
|
|
2
|
Additional paid-in
capital
|
|
6,969
|
|
6,944
|
Accumulated
deficit
|
|
(2,700)
|
|
(3,399)
|
Accumulated other
comprehensive loss
|
|
(4,404)
|
|
(4,373)
|
Total Aon
shareholders' deficit
|
|
(133)
|
|
(826)
|
Noncontrolling
interests
|
|
105
|
|
84
|
Total
deficit
|
|
(28)
|
|
(742)
|
Total liabilities
and equity (deficit)
|
|
$
40,767
|
|
$
33,959
|
(1)
|
Includes cash and
short-term investments of $7,117 million and $6,901 million as of
March 31, 2024 and December 31, 2023, respectively.
|
Aon
plc
Condensed Consolidated
Statements of Cash Flows (Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
(millions)
|
|
2024
|
|
2023
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
|
$
1,093
|
|
$
1,079
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
|
Depreciation of fixed
assets
|
|
44
|
|
38
|
Amortization and
impairment of intangible assets
|
|
16
|
|
25
|
Share-based
compensation expense
|
|
130
|
|
127
|
Deferred income
taxes
|
|
(76)
|
|
(70)
|
Other, net
|
|
(82)
|
|
—
|
Change in assets and
liabilities:
|
|
|
|
|
Receivables,
net
|
|
(826)
|
|
(664)
|
Accounts payable and
accrued liabilities
|
|
(343)
|
|
(443)
|
Accelerating Aon
United Program liabilities
|
|
34
|
|
—
|
Current income
taxes
|
|
163
|
|
126
|
Pension, other
postretirement and postemployment liabilities
|
|
(12)
|
|
(9)
|
Other assets and
liabilities
|
|
168
|
|
234
|
Cash provided by
operating activities
|
|
309
|
|
443
|
Cash flows from
investing activities
|
|
|
|
|
Proceeds from
investments
|
|
118
|
|
13
|
Purchases of
investments
|
|
(56)
|
|
(11)
|
Net sales (purchases)
of short-term investments - non fiduciary
|
|
(5,046)
|
|
280
|
Acquisition of
businesses, net of cash and funds held on behalf of
clients
|
|
(4)
|
|
(2)
|
Sale of businesses,
net of cash and funds held on behalf of clients
|
|
75
|
|
1
|
Capital
expenditures
|
|
(48)
|
|
(76)
|
Cash provided by
(used for) investing activities
|
|
(4,961)
|
|
205
|
Cash flows from
financing activities
|
|
|
|
|
Share
repurchase
|
|
(250)
|
|
(550)
|
Proceeds from issuance
of shares
|
|
25
|
|
25
|
Cash paid for employee
taxes on withholding shares
|
|
(130)
|
|
(157)
|
Commercial paper
issuances, net of repayments
|
|
(591)
|
|
(173)
|
Issuance of
debt
|
|
5,942
|
|
744
|
Increase in fiduciary
liabilities, net of fiduciary receivables
|
|
394
|
|
636
|
Cash dividends to
shareholders
|
|
(123)
|
|
(115)
|
Noncontrolling
interests and other financing activities
|
|
(6)
|
|
(6)
|
Cash provided by
financing activities
|
|
5,261
|
|
404
|
Effect of exchange
rates on cash and cash equivalents and funds held on behalf of
clients
|
|
(146)
|
|
58
|
Net increase in cash
and cash equivalents and funds held on behalf of clients
|
|
463
|
|
1,110
|
Cash, cash equivalents
and funds held on behalf of clients at beginning of
period
|
|
7,722
|
|
7,076
|
Cash, cash
equivalents and funds held on behalf of clients at end of
period
|
|
$
8,185
|
|
$
8,186
|
Reconciliation of cash
and cash equivalents and funds held on behalf of
clients:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
995
|
|
$
1,119
|
Cash and cash
equivalents and funds held on behalf of clients classified as held
for sale
|
|
73
|
|
—
|
Funds held on behalf
of clients
|
|
7,117
|
|
7,067
|
Total cash and cash
equivalents and funds held on behalf of clients
|
|
$
8,185
|
|
$
8,186
|
View original
content:https://www.prnewswire.com/news-releases/aon-reports-first-quarter-2024-results-302128152.html
SOURCE Aon plc