WTW (NASDAQ: WTW) (the “Company”), a leading global advisory,
broking and solutions company, today announced financial results
for the third quarter ended September 30, 2024.
“We had another strong quarter fueled by revenue growth,
operating leverage and the success of our Transformation program.
Our revenue growth of 6% for the quarter is evidence that our value
proposition is continuing to resonate in the market and that our
investments in talent and technology are succeeding. We are also
making ongoing progress on our commitment to improve cash flow.
Given our strong performance and momentum, we are entering the
fourth quarter with confidence in our ability to deliver on our
targets for the year and drive sustainable, profitable growth going
forward.”
Consolidated
Results
As reported, USD millions, except %
Key Metrics |
Q3-24 |
Q3-23 |
Y/Y Change |
Revenue1 |
$2,289 |
$2,166 |
Reported 6% | CC 6% | Organic 6% |
(Loss)/Income from Operations2 |
$(766) |
$159 |
NM |
Operating Margin2 % |
(33.5)% |
7.3% |
NM |
Adjusted Operating Income |
$414 |
$351 |
18% |
Adjusted Operating Margin % |
18.1% |
16.2% |
190 bps |
Net (Loss)/Income2 |
$(1,672) |
$139 |
NM |
Adjusted Net Income |
$299 |
$236 |
27% |
Diluted EPS2 |
$(16.44) |
$1.29 |
NM |
Adjusted Diluted EPS |
$2.93 |
$2.24 |
31% |
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. |
2 |
Loss from Operations, Operating
Margin, Net Loss and Diluted EPS for the third quarter of 2024
include pre-tax non-cash losses and impairment charges of over $1.0
billion each related to the pending sale of TRANZACT. |
NM |
Not meaningful. |
Revenue was $2.29 billion for the third quarter of 2024, an
increase of 6% as compared to $2.17 billion for the same period in
the prior year. Excluding the impact of foreign currency, revenue
increased 6%. On an organic basis, revenue increased 6%. See
Supplemental Segment Information for additional detail on
book-of-business settlements and interest income included in
revenue.
Net Loss for the third quarter of 2024 was $1.67 billion
compared to Net Income of $139 million in the prior-year third
quarter. Loss from Operations, Operating Margin, Net Loss and
Diluted EPS for the third quarter of 2024 include pre-tax non-cash
losses and impairment charges of over $1.0 billion each related to
the pending sale of TRANZACT. Adjusted EBITDA for the third quarter
was $501 million, or 21.9% of revenue, an increase of 15%, compared
to Adjusted EBITDA of $436 million, or 20.1% of revenue, in the
prior-year third quarter. The U.S. GAAP tax rate for the third
quarter was 16.1%, and the adjusted income tax rate for the third
quarter used in calculating adjusted diluted earnings per share was
19.7%.
Cash Flow and Capital
Allocation
Cash flows from operating activities were $913 million for the
nine months ended September 30, 2024, compared to $823 million for
the prior year. Free cash flow for the nine months ended September
30, 2024 and 2023 was $807 million and $707 million, respectively,
an increase of $100 million, primarily driven by operating margin
expansion, partially offset by cash outflows related to
transformation and discretionary compensation payments. During the
quarter ended September 30, 2024, the Company repurchased $205
million of WTW outstanding shares.
Third Quarter 2024 Segment
Highlights
Health, Wealth & Career ("HWC")
As reported, USD millions, except %
Health, Wealth & Career |
Q3-24 |
Q3-23 |
Y/Y Change |
Total Revenue |
$1,328 |
$1,282 |
Reported 4% | CC 3% | Organic 4% |
Operating Income |
$329 |
$305 |
8% |
Operating Margin % |
24.7% |
23.8% |
90 bps |
The HWC segment had revenue of $1.33 billion in the third
quarter of 2024, an increase of 4% (3% increase constant currency
and 4% organic) from $1.28 billion in the prior year. Health had
organic revenue growth driven by strong client retention, new local
appointments and the continued expansion of our Global Benefits
Management client portfolio in International and Europe, along with
increased brokerage income in North America. Wealth generated
organic revenue growth from higher levels of Retirement work in
Europe, an increase in our Investments business due to capital
market improvements and growth from our LifeSight solution. Career
had organic revenue growth from increased compensation survey sales
and advisory services in Work & Rewards and product revenue in
Employee Experience. Benefits Delivery & Outsourcing (BD&O)
had an organic revenue decline for the quarter primarily as a
result of deliberately moderating growth in Individual Marketplace
and a stronger comparable in Outsourcing.
Operating margins in the HWC segment increased 90 basis points
from the prior-year third quarter to 24.7%, primarily from
Transformation savings. Please refer to the Supplemental Slides for
TRANZACT's standalone historical financial results.
Risk & Broking ("R&B")
As reported, USD millions, except %
Risk & Broking |
Q3-24 |
Q3-23 |
Y/Y Change |
Total Revenue |
$940 |
$855 |
Reported 10% | CC 10% | Organic 10% |
Operating Income |
$170 |
$134 |
27% |
Operating Margin % |
18.1% |
15.7% |
240 bps |
The R&B segment had revenue of $940 million in the third
quarter of 2024, an increase of 10% (10% increase constant currency
and organic) from $855 million in the prior year. Corporate Risk
& Broking (CRB) had organic revenue growth driven by higher
levels of new business activity and strong client retention.
Insurance Consulting and Technology (ICT) had organic revenue
growth for the quarter primarily due to strong software sales in
Technology, partially offset by tempered demand for discretionary
services in Consulting.
Operating margins in the R&B segment increased 240 basis
points from the prior-year third quarter to 18.1%, primarily due to
operating leverage driven by organic revenue growth and disciplined
expense management, as well as Transformation savings.
2024 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 23.0% - 23.5%
for the full year 2024
- Expect to deliver adjusted diluted earnings per share of $16.00
- $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 $0.06 for the full year 2024 at today’s
rates, down from $0.10 previously
- Expect to deliver approximately $450 million of cumulative
run-rate savings from the Transformation program by the end of 2024
with total program costs of $1.175 billion.
Outlook includes Non-GAAP financial measures. We do not
reconcile forward-looking Non-GAAP measures for reasons explained
below.
In addition, WTW will host an Investor Day on Tuesday, December
3, 2024 beginning at approximately 9:00 a.m. Eastern Time. A live
webcast presentation will be available at www.wtwco.com and a
replay of the webcast will be available on the Company’s website
following the event.
Conference Call
The Company will host a live webcast and conference call to
discuss the financial results for the third quarter 2024. It will
be held on Thursday, October 31, 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.
- Impairment – Adjustment to remove the non-cash goodwill
impairment associated with our Benefits, Delivery and
Administration reporting unit related to the pending divestiture of
our TRANZACT business.
- Provisions for specified litigation matters – We will include
provisions for litigation matters which we believe are not
representative of our core business operations. Among other things,
we determine this by reference to the amount of the loss (net of
insurance and other recovery receivables) and by reference to
whether the matter relates to an unusual and complex scenario that
is not expected to be repeated as part of our ongoing, ordinary
business. These amounts are presented net of insurance and other
recovery receivables. See the footnotes to the respective
reconciliation tables below for more specificity on the litigation
matter excluded from adjusted results.
- 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 significant adjustments – Relates to the
incremental tax expense or benefit resulting from significant or
unusual events including significant statutory tax rate changes
enacted in material jurisdictions in which we operate, internal
reorganizations of ownership of certain businesses that reduced the
investment held by our U.S.-controlled subsidiaries and the
recovery of certain refunds or payment of taxes related to
businesses in which we no longer participate.
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 – (Loss)/Income from operations
adjusted for impairment, 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 (Loss)/Income adjusted for
provision for income taxes, interest expense, impairment,
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 (Loss)/Income Attributable to WTW
adjusted for impairment, 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 – (Loss)/Income from operations
before income taxes adjusted for impairment, 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 – Benefit from/(provision for)
income taxes adjusted for taxes on certain items of impairment,
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, plans and
references to future performance, including our future financial
and operating results (including our revenue, costs, or margins),
short-term and long-term financial goals, plans, objectives,
expectations and intentions, including with respect to organic
revenue growth, free cash flow generation, adjusted net revenue,
adjusted operating margin and adjusted earnings per share; future
share repurchases; demand for our services and competitive
strengths; strategic goals; existing and evolving business
strategies including those related to acquisition and disposition
activity; the benefits of new initiatives; the 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; our ability to implement and
realize anticipated benefits of any cost-savings initiatives
including our multi-year operational transformation program; the
potential impact of natural or man-made disasters like health
pandemics and other world health crises; future capital
expenditures; ongoing working capital efforts; the impact of
changes to tax laws on our financial results; and our recognition
of future impairment charges or write-off of receivables, are
forward-looking statements. 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 our 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 the
anticipated benefits of our growth strategy, including inorganic
growth through acquisitions; our ability to make divestitures,
including the pending sale of our TRANZACT business (inclusive of
all the legal entities that comprise such business), or
acquisitions, including our ability to integrate or manage acquired
businesses or de-integrate businesses to be disposed, as well as
our ability to identify and successfully execute on opportunities
for strategic collaboration; our ability to consummate the pending
sale of TRANZACT, and related incremental risks associated
therewith including our ability to obtain approval (or for
applicable waiting periods to expire) under the U.S.
Hart-Scott-Rodino Antitrust Improvements Act of 1976; our ability
to successfully manage ongoing organizational changes, including as
part of our multi-year operational transformation program,
investments in improving systems and processes, and in connection
with our acquisition and divestiture activities, including the
pending sale of TRANZACT, and related to changes in leadership in
any of our businesses; risks relating to changes in our management
structures and in senior leadership; 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, 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,
war, such as the Russia-Ukraine and Middle East conflicts, 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 such as 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
previously-completed sale of Willis Re to Arthur J. Gallagher &
Co.; 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 integrate direct-to-consumer sales and marketing
solutions with our existing offerings and solutions; 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; 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; 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 judicial claims, rulings and appeals related thereto,
and any other changes and developments in legal, regulatory,
economic, business or operational conditions that could impact 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 their 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 may impose additional excise taxes or 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
non-cash pre-tax losses and related impairment charges in
connection with our pending sale of TRANZACT and other future
impairment charges or write-offs of receivables; 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 expected savings under our
multi-year operational transformation program; 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
INVESTORS
Claudia De La Hoz |
Claudia.Delahoz@wtwco.com
WTWSupplemental Segment Information(In millions of
U.S. dollars)(Unaudited) |
REVENUE |
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|
Components of Revenue Change(i) |
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|
|
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|
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|
|
|
Less: |
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|
|
Less: |
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|
|
|
Three Months Ended September 30, |
|
|
As Reported |
|
Currency |
|
Constant Currency |
|
Acquisitions/ |
|
Organic |
|
|
2024 |
|
|
2023 |
|
|
% Change |
|
Impact |
|
Change |
|
Divestitures |
|
Change |
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|
|
|
|
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|
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|
Health, Wealth &
Career |
|
|
|
|
|
|
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|
|
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|
|
Revenue excluding interest income |
|
$ |
1,320 |
|
|
$ |
1,275 |
|
|
4 |
% |
|
0 |
% |
|
3 |
% |
|
0 |
% |
|
4 |
% |
Interest income |
|
|
8 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,328 |
|
|
|
1,282 |
|
|
4 |
% |
|
0 |
% |
|
3 |
% |
|
0 |
% |
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk &
Broking |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue excluding interest
income |
|
$ |
911 |
|
|
$ |
830 |
|
|
10 |
% |
|
0 |
% |
|
10 |
% |
|
0 |
% |
|
10 |
% |
Interest income |
|
|
29 |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
940 |
|
|
|
855 |
|
|
10 |
% |
|
0 |
% |
|
10 |
% |
|
0 |
% |
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Revenue |
|
$ |
2,268 |
|
|
$ |
2,137 |
|
|
6 |
% |
|
0 |
% |
|
6 |
% |
|
0 |
% |
|
6 |
% |
Reimbursable expenses and
other |
|
|
15 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
6 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
2,289 |
|
|
$ |
2,166 |
|
|
6 |
% |
|
0 |
% |
|
6 |
% |
|
0 |
% |
|
6%(ii) |
|
|
|
|
|
|
|
|
Components of Revenue Change(i) |
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
Less: |
|
|
|
|
Nine Months Ended September 30, |
|
|
As Reported |
|
Currency |
|
Constant Currency |
|
Acquisitions/ |
|
Organic |
|
|
2024 |
|
|
2023 |
|
|
% Change |
|
Impact |
|
Change |
|
Divestitures |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health, Wealth &
Career |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue excluding interest income |
|
$ |
3,898 |
|
|
$ |
3,766 |
|
|
4 |
% |
|
0 |
% |
|
4 |
% |
|
0 |
% |
|
4 |
% |
Interest income |
|
|
26 |
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
3,924 |
|
|
|
3,784 |
|
|
4 |
% |
|
0 |
% |
|
4 |
% |
|
0 |
% |
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk &
Broking |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue excluding interest
income |
|
$ |
2,811 |
|
|
$ |
2,607 |
|
|
8 |
% |
|
0 |
% |
|
8 |
% |
|
0 |
% |
|
8 |
% |
Interest income |
|
|
86 |
|
|
|
52 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,897 |
|
|
|
2,659 |
|
|
9 |
% |
|
0 |
% |
|
9 |
% |
|
0 |
% |
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Revenue |
|
$ |
6,821 |
|
|
$ |
6,443 |
|
|
6 |
% |
|
0 |
% |
|
6 |
% |
|
0 |
% |
|
6 |
% |
Reimbursable expenses and
other |
|
|
56 |
|
|
|
90 |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
18 |
|
|
|
36 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
6,895 |
|
|
$ |
6,569 |
|
|
5 |
% |
|
0 |
% |
|
5 |
% |
|
0 |
% |
|
5%(ii) |
|
(i) Components of revenue change may not add due to
rounding.(ii) Interest income did not contribute to organic
change for the three and nine months ended September 30, 2024.
BOOK-OF-BUSINESS SETTLEMENTS AND INTEREST
INCOME
|
|
Three Months Ended September 30, |
|
|
|
HWC |
|
|
R&B |
|
|
Corporate |
|
|
Total |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Book-of-business settlements |
|
$ |
3 |
|
|
$ |
— |
|
|
$ |
4 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
7 |
|
|
$ |
1 |
|
Interest income |
|
|
8 |
|
|
|
7 |
|
|
|
29 |
|
|
|
25 |
|
|
|
6 |
|
|
|
7 |
|
|
|
43 |
|
|
|
39 |
|
Total |
|
$ |
11 |
|
|
$ |
7 |
|
|
$ |
33 |
|
|
$ |
26 |
|
|
$ |
6 |
|
|
$ |
7 |
|
|
$ |
50 |
|
|
$ |
40 |
|
|
|
Nine Months Ended September 30, |
|
|
|
HWC |
|
|
R&B |
|
|
Corporate |
|
|
Total |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Book-of-business settlements |
|
$ |
3 |
|
|
$ |
— |
|
|
$ |
8 |
|
|
$ |
11 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
11 |
|
|
$ |
11 |
|
Interest income |
|
|
26 |
|
|
|
18 |
|
|
|
86 |
|
|
|
52 |
|
|
|
18 |
|
|
|
36 |
|
|
|
130 |
|
|
|
106 |
|
Total |
|
$ |
29 |
|
|
$ |
18 |
|
|
$ |
94 |
|
|
$ |
63 |
|
|
$ |
18 |
|
|
$ |
36 |
|
|
$ |
141 |
|
|
$ |
117 |
|
SEGMENT OPERATING INCOME (i)
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health, Wealth & Career |
|
$ |
329 |
|
|
$ |
305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk & Broking |
|
|
170 |
|
|
|
134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Income |
|
$ |
499 |
|
|
$ |
439 |
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Health, Wealth & Career |
|
$ |
941 |
|
|
$ |
836 |
|
Risk & Broking |
|
|
575 |
|
|
|
459 |
|
Segment Operating
Income |
|
$ |
1,516 |
|
|
$ |
1,295 |
|
(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 September 30, |
|
|
2024 |
|
2023 |
Health, Wealth & Career |
|
24.7% |
|
23.8% |
Risk & Broking |
|
18.1% |
|
15.7% |
|
|
Nine Months Ended September 30, |
|
|
2024 |
|
2023 |
Health, Wealth &
Career |
|
24.0% |
|
22.1% |
Risk & Broking |
|
19.8% |
|
17.3% |
RECONCILIATIONS OF SEGMENT OPERATING INCOME TO
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES
|
|
Three Months Ended September 30, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Segment Operating Income |
|
$ |
499 |
|
|
$ |
439 |
|
Impairment(i) |
|
|
(1,042 |
) |
|
|
— |
|
Amortization |
|
|
(56 |
) |
|
|
(62 |
) |
Restructuring costs |
|
|
(8 |
) |
|
|
(17 |
) |
Transaction and
transformation(ii) |
|
|
(74 |
) |
|
|
(113 |
) |
Unallocated, net(iii) |
|
|
(85 |
) |
|
|
(88 |
) |
(Loss)/Income from Operations |
|
|
(766 |
) |
|
|
159 |
|
Interest expense |
|
|
(65 |
) |
|
|
(61 |
) |
Other (loss)/income, net |
|
|
(1,163 |
) |
|
|
66 |
|
(Loss)/income from operations
before income taxes |
|
$ |
(1,994 |
) |
|
$ |
164 |
|
|
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Segment Operating Income |
|
$ |
1,516 |
|
|
$ |
1,295 |
|
Impairment(i) |
|
|
(1,042 |
) |
|
|
— |
|
Amortization |
|
|
(176 |
) |
|
|
(203 |
) |
Restructuring costs |
|
|
(29 |
) |
|
|
(30 |
) |
Transaction and
transformation(ii) |
|
|
(296 |
) |
|
|
(265 |
) |
Unallocated, net(iii) |
|
|
(247 |
) |
|
|
(211 |
) |
(Loss)/Income from
Operations |
|
|
(274 |
) |
|
|
586 |
|
Interest expense |
|
|
(197 |
) |
|
|
(172 |
) |
Other (loss)/income, net |
|
|
(1,113 |
) |
|
|
126 |
|
(Loss)/income from operations
before income taxes |
|
$ |
(1,584 |
) |
|
$ |
540 |
|
(i) Represents the non-cash goodwill impairment associated
with our BDA reporting unit related to the pending divestiture of
our TRANZACT business. (ii) 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. (iii) 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)
RECONCILIATIONS OF NET (LOSS)/INCOME ATTRIBUTABLE TO WTW
TO ADJUSTED DILUTED EARNINGS PER SHARE
|
|
Three Months Ended September 30, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Net (loss)/income attributable to WTW |
|
$ |
(1,675 |
) |
|
$ |
136 |
|
Adjusted for certain
items: |
|
|
|
|
|
|
Impairment |
|
|
1,042 |
|
|
|
— |
|
Amortization |
|
|
56 |
|
|
|
62 |
|
Restructuring costs |
|
|
8 |
|
|
|
17 |
|
Transaction and transformation |
|
|
74 |
|
|
|
113 |
|
Loss/(gain) on disposal of operations |
|
|
1,190 |
|
|
|
(41 |
) |
Tax effect on certain items listed above(ii) |
|
|
(396 |
) |
|
|
(51 |
) |
Adjusted Net
Income |
|
$ |
299 |
|
|
$ |
236 |
|
|
|
|
|
|
|
|
Weighted-average ordinary
shares, diluted |
|
|
102 |
|
|
|
105 |
|
|
|
|
|
|
|
|
Diluted
(Loss)/Earnings Per Share |
|
$ |
(16.44 |
) |
|
$ |
1.29 |
|
Adjusted for certain
items:(iii) |
|
|
|
|
|
|
Impairment |
|
|
10.23 |
|
|
|
— |
|
Amortization |
|
|
0.55 |
|
|
|
0.59 |
|
Restructuring costs |
|
|
0.08 |
|
|
|
0.16 |
|
Transaction and transformation |
|
|
0.73 |
|
|
|
1.07 |
|
Loss/(gain) on disposal of operations |
|
|
11.68 |
|
|
|
(0.39 |
) |
Tax effect on certain items listed above(ii) |
|
|
(3.89 |
) |
|
|
(0.48 |
) |
Adjusted Diluted
Earnings Per Share(iii) |
|
$ |
2.93 |
|
|
$ |
2.24 |
|
|
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Net (loss)/income attributable to WTW |
|
$ |
(1,344 |
) |
|
$ |
433 |
|
Adjusted for certain
items: |
|
|
|
|
|
|
Impairment |
|
|
1,042 |
|
|
|
— |
|
Amortization |
|
|
176 |
|
|
|
203 |
|
Restructuring costs |
|
|
29 |
|
|
|
30 |
|
Transaction and transformation |
|
|
296 |
|
|
|
265 |
|
Provision for specified litigation matter(i) |
|
|
13 |
|
|
|
— |
|
Loss/(gain) on disposal of operations |
|
|
1,190 |
|
|
|
(44 |
) |
Tax effect on certain items listed above(ii) |
|
|
(492 |
) |
|
|
(128 |
) |
Tax effect of significant adjustments |
|
|
(7 |
) |
|
|
2 |
|
Adjusted Net
Income |
|
$ |
903 |
|
|
$ |
761 |
|
|
|
|
|
|
|
|
Weighted-average ordinary
shares, diluted |
|
|
103 |
|
|
|
107 |
|
|
|
|
|
|
|
|
Diluted
(Loss)/Earnings Per Share |
|
$ |
(13.11 |
) |
|
$ |
4.06 |
|
Adjusted for certain
items:(iii) |
|
|
|
|
|
|
Impairment |
|
|
10.17 |
|
|
|
— |
|
Amortization |
|
|
1.72 |
|
|
|
1.90 |
|
Restructuring costs |
|
|
0.28 |
|
|
|
0.28 |
|
Transaction and transformation |
|
|
2.89 |
|
|
|
2.48 |
|
Provision for specified litigation matter(i) |
|
|
0.13 |
|
|
|
— |
|
Loss/(gain) on disposal of operations |
|
|
11.61 |
|
|
|
(0.41 |
) |
Tax effect on certain items listed above(ii) |
|
|
(4.80 |
) |
|
|
(1.20 |
) |
Tax effect of significant adjustments |
|
|
(0.07 |
) |
|
|
0.02 |
|
Adjusted Diluted
Earnings Per Share(iii) |
|
$ |
8.81 |
|
|
$ |
7.13 |
|
(i) Represents a provision related to potential litigation
arising out of a structured insurance program originally placed for
a client over 15 years ago. The program is of a type and complexity
that was highly bespoke to the client and for that reason is
unlikely to be exactly replicated elsewhere. Because of this,
while we do not believe the potential litigation is material, we
believe excluding this matter from adjusted results makes results
more comparable from period to period and more representative of
our core business operations.(ii) The tax effect was calculated
using an effective tax rate for each item.(iii) Per share values
and totals may differ due to rounding.
RECONCILIATIONS OF NET (LOSS)/INCOME TO ADJUSTED
EBITDA
|
|
Three Months Ended September 30, |
|
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
Net (Loss)/Income |
|
$ |
(1,672 |
) |
(73.0 |
)% |
$ |
139 |
|
6.4 |
% |
Provision for income
taxes |
|
|
(322 |
) |
|
|
25 |
|
|
Interest expense |
|
|
65 |
|
|
|
61 |
|
|
Impairment |
|
|
1,042 |
|
|
|
— |
|
|
Depreciation |
|
|
60 |
|
|
|
60 |
|
|
Amortization |
|
|
56 |
|
|
|
62 |
|
|
Restructuring costs |
|
|
8 |
|
|
|
17 |
|
|
Transaction and
transformation |
|
|
74 |
|
|
|
113 |
|
|
Loss/(gain) on disposal of
operations |
|
|
1,190 |
|
|
|
(41 |
) |
|
Adjusted EBITDA and
Adjusted EBITDA Margin |
|
$ |
501 |
|
21.9 |
% |
$ |
436 |
|
20.1 |
% |
|
|
Nine Months Ended September 30, |
|
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
Net (Loss)/Income |
|
$ |
(1,336 |
) |
(19.4 |
)% |
$ |
441 |
|
6.7 |
% |
Provision for income
taxes |
|
|
(248 |
) |
|
|
99 |
|
|
Interest expense |
|
|
197 |
|
|
|
172 |
|
|
Impairment |
|
|
1,042 |
|
|
|
— |
|
|
Depreciation |
|
|
176 |
|
|
|
184 |
|
|
Amortization |
|
|
176 |
|
|
|
203 |
|
|
Restructuring costs |
|
|
29 |
|
|
|
30 |
|
|
Transaction and
transformation |
|
|
296 |
|
|
|
265 |
|
|
Provision for specified
litigation matter(i) |
|
|
13 |
|
|
|
— |
|
|
Loss/(gain) on disposal of
operations |
|
|
1,190 |
|
|
|
(44 |
) |
|
Adjusted EBITDA and
Adjusted EBITDA Margin |
|
$ |
1,535 |
|
22.3 |
% |
$ |
1,350 |
|
20.6 |
% |
(i) Represents a provision related to potential litigation
arising out of a structured insurance program originally placed for
a client over 15 years ago. The program is of a type and complexity
that was highly bespoke to the client and for that reason is
unlikely to be exactly replicated elsewhere. Because of this,
while we do not believe the potential litigation is material, we
believe excluding this matter from adjusted results makes results
more comparable from period to period and more representative of
our core business operations.
RECONCILIATIONS OF (LOSS)/INCOME FROM OPERATIONS TO
ADJUSTED OPERATING INCOME
|
|
Three Months Ended September 30, |
|
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
(Loss)/Income from operations and Operating
margin |
|
$ |
(766 |
) |
(33.5 |
)% |
$ |
159 |
|
7.3 |
% |
Adjusted for certain
items: |
|
|
|
|
|
|
|
Impairment |
|
|
1,042 |
|
|
|
— |
|
|
Amortization |
|
|
56 |
|
|
|
62 |
|
|
Restructuring costs |
|
|
8 |
|
|
|
17 |
|
|
Transaction and
transformation |
|
|
74 |
|
|
|
113 |
|
|
Adjusted operating
income and Adjusted operating income margin |
|
$ |
414 |
|
18.1 |
% |
$ |
351 |
|
16.2 |
% |
|
|
Nine Months Ended September 30, |
|
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
(Loss)/Income from
operations and Operating margin |
|
$ |
(274 |
) |
(4.0 |
)% |
$ |
586 |
|
8.9 |
% |
Adjusted for certain
items: |
|
|
|
|
|
|
|
Impairment |
|
|
1,042 |
|
|
|
— |
|
|
Amortization |
|
|
176 |
|
|
|
203 |
|
|
Restructuring costs |
|
|
29 |
|
|
|
30 |
|
|
Transaction and
transformation |
|
|
296 |
|
|
|
265 |
|
|
Provision for specified
litigation matter(i) |
|
|
13 |
|
|
|
— |
|
|
Adjusted operating
income and Adjusted operating income margin |
|
$ |
1,282 |
|
18.6 |
% |
$ |
1,084 |
|
16.5 |
% |
(i) Represents a provision related to potential litigation
arising out of a structured insurance program originally placed for
a client over 15 years ago. The program is of a type and complexity
that was highly bespoke to the client and for that reason is
unlikely to be exactly replicated elsewhere. Because of this,
while we do not believe the potential litigation is material, we
believe excluding this matter from adjusted results makes results
more comparable from period to period and more representative of
our core business operations.
RECONCILIATIONS OF GAAP INCOME TAXES/TAX RATE TO
ADJUSTED INCOME TAXES/TAX RATE
|
|
Three Months Ended September 30, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
(Loss)/income from operations before income
taxes |
|
$ |
(1,994 |
) |
|
$ |
164 |
|
|
|
|
|
|
|
|
Adjusted for certain
items: |
|
|
|
|
|
|
Impairment |
|
|
1,042 |
|
|
|
— |
|
Amortization |
|
|
56 |
|
|
|
62 |
|
Restructuring costs |
|
|
8 |
|
|
|
17 |
|
Transaction and
transformation |
|
|
74 |
|
|
|
113 |
|
Loss/(gain) on disposal of
operations |
|
|
1,190 |
|
|
|
(41 |
) |
Adjusted income before
taxes |
|
$ |
376 |
|
|
$ |
315 |
|
|
|
|
|
|
|
|
(Benefit
from)/provision for income taxes |
|
$ |
(322 |
) |
|
$ |
25 |
|
Tax effect on certain items
listed above(ii) |
|
|
396 |
|
|
|
51 |
|
Adjusted income
taxes |
|
$ |
74 |
|
|
$ |
76 |
|
|
|
|
|
|
|
|
U.S. GAAP tax
rate |
|
|
16.1 |
% |
|
|
15.5 |
% |
Adjusted income tax
rate |
|
|
19.7 |
% |
|
|
24.3 |
% |
|
|
Nine Months Ended September 30, |
|
|
2024 |
|
2023 |
|
|
|
|
|
|
|
(Loss)/income from operations before income
taxes |
|
$ |
(1,584 |
) |
|
$ |
540 |
|
|
|
|
|
|
|
|
Adjusted for certain
items: |
|
|
|
|
|
|
Impairment |
|
|
1,042 |
|
|
|
— |
|
Amortization |
|
|
176 |
|
|
|
203 |
|
Restructuring costs |
|
|
29 |
|
|
|
30 |
|
Transaction and
transformation |
|
|
296 |
|
|
|
265 |
|
Provision for specified
litigation matter(i) |
|
|
13 |
|
|
|
— |
|
Loss/(gain) on disposal of
operations |
|
|
1,190 |
|
|
|
(44 |
) |
Adjusted income before
taxes |
|
$ |
1,162 |
|
|
$ |
994 |
|
|
|
|
|
|
|
|
(Benefit
from)/provision for income taxes |
|
$ |
(248 |
) |
|
$ |
99 |
|
Tax effect on certain items
listed above(ii) |
|
|
492 |
|
|
|
128 |
|
Tax effect of significant
adjustments |
|
|
7 |
|
|
|
(2 |
) |
Adjusted income
taxes |
|
$ |
251 |
|
|
$ |
225 |
|
|
|
|
|
|
|
|
U.S. GAAP tax
rate |
|
|
15.6 |
% |
|
|
18.3 |
% |
Adjusted income tax
rate |
|
|
21.6 |
% |
|
|
22.6 |
% |
(i) Represents a provision related to potential litigation
arising out of a structured insurance program originally placed for
a client over 15 years ago. The program is of a type and complexity
that was highly bespoke to the client and for that reason is
unlikely to be exactly replicated elsewhere. Because of this,
while we do not believe the potential litigation is material, we
believe excluding this matter from adjusted results makes results
more comparable from period to period and more representative of
our core business operations.(ii) The tax effect was calculated
using an effective tax rate for each item.
RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
TO FREE CASH FLOW
|
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
2023 |
|
|
|
|
|
|
|
Cash flows from operating activities |
|
$ |
913 |
|
|
$ |
823 |
|
Less: Additions to fixed
assets and software for internal use |
|
|
(106 |
) |
|
|
(116 |
) |
Free Cash
Flow |
|
$ |
807 |
|
|
$ |
707 |
|
WILLIS TOWERS WATSON PUBLIC LIMITED
COMPANYCondensed Consolidated Statements of
Income(In millions of U.S. dollars, except per share
data)(Unaudited) |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Revenue |
|
$ |
2,289 |
|
|
$ |
2,166 |
|
|
$ |
6,895 |
|
|
$ |
6,569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of providing
services |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits |
|
|
1,396 |
|
|
|
1,359 |
|
|
|
4,135 |
|
|
|
4,019 |
|
Other operating expenses |
|
|
419 |
|
|
|
396 |
|
|
|
1,315 |
|
|
|
1,282 |
|
Impairment |
|
|
1,042 |
|
|
|
— |
|
|
|
1,042 |
|
|
|
— |
|
Depreciation |
|
|
60 |
|
|
|
60 |
|
|
|
176 |
|
|
|
184 |
|
Amortization |
|
|
56 |
|
|
|
62 |
|
|
|
176 |
|
|
|
203 |
|
Restructuring costs |
|
|
8 |
|
|
|
17 |
|
|
|
29 |
|
|
|
30 |
|
Transaction and transformation |
|
|
74 |
|
|
|
113 |
|
|
|
296 |
|
|
|
265 |
|
Total costs of providing
services |
|
|
3,055 |
|
|
|
2,007 |
|
|
|
7,169 |
|
|
|
5,983 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/income from
operations |
|
|
(766 |
) |
|
|
159 |
|
|
|
(274 |
) |
|
|
586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(65 |
) |
|
|
(61 |
) |
|
|
(197 |
) |
|
|
(172 |
) |
Other (loss)/income, net |
|
|
(1,163 |
) |
|
|
66 |
|
|
|
(1,113 |
) |
|
|
126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/INCOME FROM
OPERATIONS BEFORE INCOME TAXES |
|
(1,994 |
) |
|
|
164 |
|
|
|
(1,584 |
) |
|
|
540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit from/(provision for)
income taxes |
|
|
322 |
|
|
|
(25 |
) |
|
|
248 |
|
|
|
(99 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
(LOSS)/INCOME |
|
(1,672 |
) |
|
|
139 |
|
|
|
(1,336 |
) |
|
|
441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income attributable to
non-controlling interests |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS)/INCOME ATTRIBUTABLE
TO WTW |
|
$ |
(1,675 |
) |
|
$ |
136 |
|
|
$ |
(1,344 |
) |
|
$ |
433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/EARNINGS PER SHARE |
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss)/earnings per share |
|
$ |
(16.44 |
) |
|
$ |
1.30 |
|
|
$ |
(13.11 |
) |
|
$ |
4.08 |
|
Diluted (loss)/earnings per share |
|
$ |
(16.44 |
) |
|
$ |
1.29 |
|
|
$ |
(13.11 |
) |
|
$ |
4.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average ordinary
shares, basic |
|
|
102 |
|
|
|
105 |
|
|
|
103 |
|
|
|
106 |
|
Weighted-average ordinary
shares, diluted |
|
|
102 |
|
|
|
105 |
|
|
|
103 |
|
|
|
107 |
|
WILLIS TOWERS WATSON PUBLIC LIMITED
COMPANYCondensed Consolidated Balance
Sheets(In millions of U.S. dollars, except share
data)(Unaudited) |
|
|
September 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,372 |
|
|
$ |
1,424 |
|
Fiduciary assets |
|
|
9,176 |
|
|
|
9,073 |
|
Accounts receivable, net |
|
|
2,118 |
|
|
|
2,572 |
|
Prepaid and other current
assets |
|
|
558 |
|
|
|
364 |
|
Current assets held for
sale |
|
|
1,089 |
|
|
|
— |
|
Total current assets |
|
|
14,313 |
|
|
|
13,433 |
|
Fixed assets, net |
|
|
710 |
|
|
|
720 |
|
Goodwill |
|
|
8,882 |
|
|
|
10,195 |
|
Other intangible assets,
net |
|
|
1,360 |
|
|
|
2,016 |
|
Right-of-use assets |
|
|
539 |
|
|
|
565 |
|
Pension benefits assets |
|
|
632 |
|
|
|
588 |
|
Other non-current assets |
|
|
732 |
|
|
|
1,573 |
|
Total non-current assets |
|
|
12,855 |
|
|
|
15,657 |
|
TOTAL
ASSETS |
|
$ |
27,168 |
|
|
$ |
29,090 |
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
Fiduciary liabilities |
|
$ |
9,176 |
|
|
$ |
9,073 |
|
Deferred revenue and accrued
expenses |
|
|
2,027 |
|
|
|
2,104 |
|
Current debt |
|
|
— |
|
|
|
650 |
|
Current lease liabilities |
|
|
122 |
|
|
|
125 |
|
Other current liabilities |
|
|
735 |
|
|
|
678 |
|
Current liabilities held for
sale |
|
|
475 |
|
|
|
— |
|
Total current liabilities |
|
|
12,535 |
|
|
|
12,630 |
|
Long-term debt |
|
|
5,308 |
|
|
|
4,567 |
|
Liability for pension
benefits |
|
|
487 |
|
|
|
563 |
|
Deferred tax liabilities |
|
|
94 |
|
|
|
542 |
|
Provision for liabilities |
|
|
416 |
|
|
|
365 |
|
Long-term lease
liabilities |
|
|
556 |
|
|
|
592 |
|
Other non-current
liabilities |
|
|
202 |
|
|
|
238 |
|
Total non-current liabilities |
|
|
7,063 |
|
|
|
6,867 |
|
TOTAL
LIABILITIES |
|
|
19,598 |
|
|
|
19,497 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
EQUITY(i) |
|
|
|
|
|
|
Additional paid-in
capital |
|
|
10,957 |
|
|
|
10,910 |
|
(Accumulated deficit)/retained
earnings |
|
|
(650 |
) |
|
|
1,466 |
|
Accumulated other
comprehensive loss, net of tax |
|
|
(2,810 |
) |
|
|
(2,856 |
) |
Treasury shares, at cost,
15,574 shares in 2024 |
|
|
(5 |
) |
|
|
— |
|
Total WTW
shareholders' equity |
|
|
7,492 |
|
|
|
9,520 |
|
Non-controlling interests |
|
|
78 |
|
|
|
73 |
|
Total
Equity |
|
|
7,570 |
|
|
|
9,593 |
|
TOTAL LIABILITIES AND
EQUITY |
|
$ |
27,168 |
|
|
$ |
29,090 |
|
(i) Equity includes (a) Ordinary shares $0.000304635
nominal value; Authorized 1,510,003,775; Issued 100,887,015 (2024)
and 102,538,072 (2023); Outstanding 100,871,441 (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) |
|
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
2023 |
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
|
|
|
NET (LOSS)/INCOME |
|
$ |
(1,336 |
) |
|
$ |
441 |
|
Adjustments to reconcile net
income to total net cash from operating activities: |
|
|
|
|
|
|
Depreciation |
|
|
176 |
|
|
|
184 |
|
Amortization |
|
|
176 |
|
|
|
203 |
|
Impairment |
|
|
1,042 |
|
|
|
— |
|
Non-cash restructuring
charges |
|
|
17 |
|
|
|
19 |
|
Non-cash lease expense |
|
|
76 |
|
|
|
83 |
|
Net periodic benefit of
defined benefit pension plans |
|
|
(15 |
) |
|
|
(20 |
) |
Provision for doubtful
receivables from clients |
|
|
13 |
|
|
|
8 |
|
Benefit from deferred income
taxes |
|
|
(379 |
) |
|
|
(58 |
) |
Share-based compensation |
|
|
85 |
|
|
|
87 |
|
Net loss/(gain) on disposal of
operations |
|
|
1,190 |
|
|
|
(44 |
) |
Non-cash foreign exchange
(gain)/loss |
|
|
(25 |
) |
|
|
1 |
|
Other, net |
|
|
32 |
|
|
|
21 |
|
Changes in operating assets
and liabilities, net of effects from purchase of subsidiaries: |
|
|
|
|
|
|
Accounts receivable |
|
|
271 |
|
|
|
261 |
|
Other assets |
|
|
(299 |
) |
|
|
(175 |
) |
Other liabilities |
|
|
(159 |
) |
|
|
(191 |
) |
Provisions |
|
|
48 |
|
|
|
3 |
|
Net cash from operating
activities |
|
|
913 |
|
|
|
823 |
|
|
|
|
|
|
|
|
CASH FLOWS USED IN INVESTING
ACTIVITIES |
|
|
|
|
|
|
Additions to fixed assets and
software for internal use |
|
|
(106 |
) |
|
|
(116 |
) |
Capitalized software
costs |
|
|
(83 |
) |
|
|
(66 |
) |
Acquisitions of operations,
net of cash acquired |
|
|
(28 |
) |
|
|
(6 |
) |
Proceeds from sale of
operations |
|
|
— |
|
|
|
86 |
|
Cash and fiduciary funds
transferred in sale of operations |
|
|
— |
|
|
|
(922 |
) |
Purchase of investments |
|
|
(13 |
) |
|
|
(6 |
) |
Net cash used in investing
activities |
|
|
(230 |
) |
|
|
(1,030 |
) |
|
|
|
|
|
|
|
CASH FLOWS FROM/(USED IN)
FINANCING ACTIVITIES |
|
|
|
|
|
|
Senior notes issued |
|
|
746 |
|
|
|
748 |
|
Debt issuance costs |
|
|
(9 |
) |
|
|
(7 |
) |
Repayments of debt |
|
|
(653 |
) |
|
|
(253 |
) |
Repurchase of shares |
|
|
(506 |
) |
|
|
(804 |
) |
Net proceeds/(payments) from
fiduciary funds held for clients |
|
|
934 |
|
|
|
(71 |
) |
Payments of deferred and
contingent consideration related to acquisitions |
|
|
(2 |
) |
|
|
(8 |
) |
Cash paid for employee taxes
on withholding shares |
|
|
(30 |
) |
|
|
(21 |
) |
Dividends paid |
|
|
(265 |
) |
|
|
(265 |
) |
Acquisitions of and dividends
paid to non-controlling interests |
|
|
(10 |
) |
|
|
(47 |
) |
Net cash from/(used in)
financing activities |
|
|
205 |
|
|
|
(728 |
) |
|
|
|
|
|
|
|
INCREASE/(DECREASE) IN CASH,
CASH EQUIVALENTS AND RESTRICTED CASH |
|
|
888 |
|
|
|
(935 |
) |
Effect of exchange rate
changes on cash, cash equivalents and restricted cash |
|
|
32 |
|
|
|
(54 |
) |
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, BEGINNING OF PERIOD (i) |
|
|
3,792 |
|
|
|
4,721 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, END OF PERIOD (i) |
|
$ |
4,712 |
|
|
$ |
3,732 |
|
(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
|
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Supplemental disclosures of cash
flow information: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,372 |
|
|
$ |
1,247 |
|
Fiduciary funds (included in fiduciary assets) |
|
|
3,340 |
|
|
|
2,485 |
|
Total cash, cash equivalents and restricted cash |
|
$ |
4,712 |
|
|
$ |
3,732 |
|
|
|
|
|
|
|
|
(Decrease)/increase in cash, cash equivalents and other restricted
cash |
|
$ |
(54 |
) |
|
$ |
5 |
|
Increase/(decrease) in fiduciary funds |
|
|
942 |
|
|
|
(940 |
) |
Total (i) |
|
$ |
888 |
|
|
$ |
(935 |
) |
(i) Does not include the effect of exchange rate changes on
cash, cash equivalents and restricted cash.
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