TIDMMHM
Marsh McLennan (NYSE: MMC), the world's leading professional
services firm in the areas of risk, strategy and people, today
reported financial results for the second quarter ended June 30,
2023.
Commenting on the results, John Doyle, President and CEO, said:
"We delivered another excellent quarter, demonstrating continued
momentum and strength across our business. We generated underlying
revenue growth of 11%, adjusted EPS growth of 16%, and we continued
to expand margins."
"I am proud of our performance in the first half of 2023. Our
results reflect the strength of our position, the value we deliver
to our clients, and terrific execution by our colleagues."
Consolidated Results
Consolidated revenue in the second quarter of 2023 was $5.9
billion, an increase of 9% compared with the second quarter of
2022. On an underlying basis, revenue increased 11%. Operating
income was $1.5 billion, an increase of 7% from a year ago.
Adjusted operating income, which excludes noteworthy items as
presented in the attached supplemental schedules, rose 17% to $1.5
billion. Net income attributable to the Company was $1.0 billion,
or $2.07 per diluted share, compared with $1.91 in the second
quarter of 2022. Adjusted earnings per share rose 16% to $2.20 per
diluted share compared with $1.89 a year ago.
For the six months ended June 30, 2023, consolidated revenue was
$11.8 billion, an increase of 8%, or 10% on an underlying basis
compared to the prior period. Operating income was $3.2 billion, an
increase of 13% from the prior year period. Adjusted operating
income rose 15% to $3.3 billion. Net income attributable to the
Company was $2.3 billion, or $4.55 per diluted share, compared with
$4.01 in the first six months of 2022. Adjusted earnings per share
increased 13% to $4.74 per diluted share compared with $4.19 for
the first six months of 2022.
Risk & Insurance Services
Risk & Insurance Services revenue was $3.7 billion in the
second quarter of 2023, an increase of 12%, or 13% on an underlying
basis. Operating income rose 20% to $1.2 billion, and adjusted
operating income was $1.2 billion, an increase of 18% versus a year
ago. For the six months ended June 30, 2023, revenue was $7.6
billion, an increase of 11%, or 12% on an underlying basis.
Operating income rose 22% to $2.6 billion, and adjusted operating
income was $2.6 billion, an increase of 17% versus a year ago.
Marsh's revenue in the second quarter was $3.0 billion, an
increase of 10% on an underlying basis. In U.S./Canada, underlying
revenue rose 9%. International operations produced underlying
revenue growth of 10%, reflecting 17% growth in Latin America, 11%
growth in EMEA, and 6% growth in Asia Pacific. For the six months
ended June 30, 2023, Marsh's underlying revenue growth was 9%.
Guy Carpenter's revenue in the second quarter was $576 million,
an increase of 11% on an underlying basis. For the six months ended
June 30, 2023, Guy Carpenter's underlying revenue growth was
10%.
Consulting
Consulting revenue was $2.2 billion in the second quarter of
2023, an increase of 4%, or 8% on an underlying basis. Operating
income decreased 18% to $388 million, while adjusted operating
income increased 9% to $403 million. For the first six months ended
June 30, 2023, revenue was $4.2 billion, an increase of 3%, or 6%
on an underlying basis. Operating income of $799 million decreased
8%, while adjusted operating income increased 5% to $809
million.
Mercer's revenue in the second quarter was $1.4 billion, an
increase of 6% on an underlying basis. Health revenue of $518
million increased 10% on an underlying basis. Wealth revenue of
$637 million increased 3% on an underlying basis. Career revenue of
$219 million increased 6% on an underlying basis. For the six
months ended June 30, 2023, Mercer's revenue was $2.7 billion, an
increase of 7% on an underlying basis.
Oliver Wyman's revenue in the second quarter was $798 million,
an increase of 11% on an underlying basis. For the six months ended
June 30, 2023, Oliver Wyman's revenue was $1.5 billion, an increase
of 6% on an underlying basis.
Other Items
The Company repurchased 1.7 million shares of stock for $300
million in the second quarter of 2023. Through six months ended
June 30, 2023, the Company has repurchased 3.5 million shares of
stock for $600 million.
Last week, the Board of Directors increased the quarterly
dividend 20% to $0.710 per share, with the third quarter dividend
payable on August 15, 2023.
Conference Call
A conference call to discuss second quarter 2023 results will be
held today at 8:30 a.m. Eastern time. The live audio webcast may be
accessed at marshmclennan.com. A replay of the webcast will be
available approximately two hours after the event. The webcast is
listen-only. Those interested in participating in the
question-and-answer session may register here to receive the
dial-in numbers and unique PIN to access the call.
About Marsh McLennan
Marsh McLennan (NYSE: MMC) is the world's leading professional
services firm in the areas of risk, strategy and people. The
Company's more than 85,000 colleagues advise clients in 130
countries. With annual revenue of over $20 billion, Marsh McLennan
helps clients navigate an increasingly dynamic and complex
environment through four market-leading businesses. Marsh provides
data-driven risk advisory services and insurance solutions to
commercial and consumer clients. Guy Carpenter develops advanced
risk, reinsurance and capital strategies that help clients grow
profitably and pursue emerging opportunities. Mercer delivers
advice and technology-driven solutions that help organizations
redefine the world of work, reshape retirement and investment
outcomes, and unlock health and well being for a changing
workforce. Oliver Wyman serves as a critical strategic, economic
and brand advisor to private sector and governmental clients. For
more information, visit marshmclennan.com or follow us on LinkedIn
and Twitter.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements," as
defined in the Private Securities Litigation Reform Act of 1995.
These statements, which express management's current views
concerning future events or results, use words like "anticipate,"
"assume," "believe," "continue," "estimate," "expect," "intend,"
"plan," "project" and similar terms, and future or conditional
tense verbs like "could," "may," "might," "should, " "will" and
"would".
Forward-looking statements are subject to inherent risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied in our forward-looking statements.
Factors that could materially affect our future results include,
among other things:
-- the impact of geopolitical or macroeconomic conditions on us, our
clients and the countries and industries in which we operate, including
from conflicts such as the war in Ukraine, slower GDP growth or recession,
capital markets volatility, instability in the banking sector and
inflation;
-- the increasing prevalence of ransomware, supply chain and other forms
of cyber attacks, and their potential to disrupt our operations, or the
operations of our third party vendors, and result in the disclosure of
confidential client or company information;
-- the impact from lawsuits or investigations arising from errors and
omissions, breaches of fiduciary duty or other claims against us in our
capacity as a broker or investment advisor, including claims related to
our investment business' ability to execute timely trades;
-- the financial and operational impact of complying with laws and
regulations, including domestic and international sanctions regimes,
anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, U.K.
Anti Bribery Act and cybersecurity and data privacy regulations;
-- our ability to attract, retain and develop industry leading talent;
-- our ability to compete effectively and adapt to competitive pressures
in each of our businesses, including from disintermediation as well as
technological change, digital disruption and other types of innovation;
-- our ability to manage potential conflicts of interest, including where
our services to a client conflict, or are perceived to conflict, with the
interests of another client or our own interests;
-- the impact of changes in tax laws, guidance and interpretations, such
as the implementation of the Organization for Economic Cooperation and
Development international tax framework, or disagreements with tax
authorities; and
-- the regulatory, contractual and reputational risks that arise based on
insurance placement activities and insurer revenue streams.
The factors identified above are not exhaustive. Marsh McLennan
and its subsidiaries (collectively, the "Company") operate in a
dynamic business environment in which new risks emerge frequently.
Accordingly, we caution readers not to place undue reliance on any
forward-looking statements, which are based only on information
currently available to us and speak only as of the dates on which
they are made. The Company undertakes no obligation to update or
revise any forward-looking statement to reflect events or
circumstances arising after the date on which it is made.
Further information concerning the Company, including
information about factors that could materially affect our results
of operations and financial condition, is contained in the
Company's filings with the Securities and Exchange Commission,
including the "Risk Factors" section and the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" section of our most recently filed Annual Report on
Form 10-K.
Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share data)
(Unaudited)
Three Months Six Months Ended
Ended June 30, June 30,
2023 2022 2023 2022
Revenue $5,876 $5,379 $11,800 $10,928
Expense:
Compensation and
benefits 3,337 3,010 6,544 6,110
Other operating
expenses 1,082 1,005 2,073 2,009
Operating
expenses 4,419 4,015 8,617 8,119
Operating income 1,457 1,364 3,183 2,809
Other net benefit
credits 60 59 118 121
Interest income 10 1 24 2
Interest expense (146 ) (114 ) (282 ) (224 )
Investment income 3 2 5 28
Income before
income taxes 1,384 1,312 3,048 2,736
Income tax
expense 337 334 749 672
Net income before
non-controlling
interests 1,047 978 2,299 2,064
Less: Net income
attributable to
non-controlling
interests 12 11 29 26
Net income
attributable to
the Company $1,035 $967 $2,270 $2,038
Net income per
share
attributable to
the Company:
- Basic $2.09 $1.93 $4.59 $4.06
- Diluted $2.07 $1.91 $4.55 $4.01
Average number
of shares
outstanding:
- Basic 495 501 495 502
- Diluted 499 506 499 508
Shares
outstanding at
June 30 494 499 494 499
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended June 30
(Millions) (Unaudited)
The Company conducts business in 130 countries. As a result,
foreign exchange rate movements may impact period-to-period
comparisons of revenue. Similarly, certain other items such as
acquisitions and dispositions, including transfers among
businesses, may impact period over period comparisons of revenue.
Non-GAAP underlying revenue measures the change in revenue from one
period to the next by isolating these impacts.
Components of Revenue Change*
% Change Acquisitions/ Non-GAAP
Three Months GAAP Currency Dispositions/ Underlying
Ended June 30, Revenue* Impact Other Impact** Revenue
2023 2022
Risk and
Insurance
Services
Marsh $3,038 $2,778 9 % (1)% 1 % 10 %
Guy Carpenter 576 522 10 % (1)% -- 11 %
Subtotal 3,614 3,300 9 % (1)% 1 % 10 %
Fiduciary
interest
income 108 13
Total Risk and
Insurance
Services 3,722 3,313 12 % (1)% 1 % 13 %
Consulting
Mercer 1,374 1,389 (1 )% (1)% (6 )% 6 %
Oliver Wyman
Group 798 695 15 % -- 4 % 11 %
Total
Consulting 2,172 2,084 4 % -- (3 )% 8 %
Corporate
Eliminations (18 ) (18 )
Total Revenue $5,876 $5,379 9 % (1)% (1 )% 11 %
Revenue Details
The following table provides more detailed revenue information
for certain of the components presented above:
Components of Revenue Change*
% Change Acquisitions/ Non-GAAP
Three Months GAAP Currency Dispositions/ Underlying
Ended June 30, Revenue* Impact Other Impact** Revenue
2023 2022
Marsh:
EMEA (a) $858 $780 10 % (1)% -- 11 %
Asia Pacific
(a) 357 347 3 % (4)% 1 % 6 %
Latin America 137 118 15 % (1)% -- 17 %
Total
International 1,352 1,245 9 % (2)% -- 10 %
U.S./Canada 1,686 1,533 10 % -- 1 % 9 %
Total Marsh $3,038 $2,778 9 % (1)% 1 % 10 %
Mercer:
Wealth $637 $597 7 % (1)% 4 % 3 %
Health 518 587 (12 )% -- (19 )% 10 %
Career 219 205 6 % (1)% 1 % 6 %
Total Mercer $1,374 $1,389 (1 )% (1)% (6 )% 6 %
(a) In the first quarter of 2023, the Company began reporting the Marsh
India operations in EMEA. Prior year results for India have been
reclassified from Asia Pacific to EMEA for comparative purposes.
* Rounded to whole percentages. Components of revenue may not add due to
rounding.
** Acquisitions, dispositions, and other includes the impact of current
and prior year items excluded from the calculation of non-GAAP
underlying revenue for comparability purposes. Details on these items
are provided in the reconciliation of non-GAAP revenue to GAAP revenue
tables included in this release.
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Six Months Ended June 30
(Millions) (Unaudited)
The Company conducts business in 130 countries. As a result,
foreign exchange rate movements may impact period-to-period
comparisons of revenue. Similarly, certain other items such as
acquisitions and dispositions, including transfers among
businesses, may impact period over period comparisons of revenue.
Non-GAAP underlying revenue measures the change in revenue from one
period to the next by isolating these impacts.
Components of Revenue Change*
% Change Acquisitions/ Non-GAAP
Six Months Ended GAAP Currency Dispositions/ Underlying
June 30, Revenue* Impact Other Impact** Revenue
2023 2022
Risk and
Insurance
Services
Marsh $5,782 $5,324 9 % (2)% 1 % 9 %
Guy Carpenter 1,647 1,521 8 % (1)% -- 10 %
Subtotal 7,429 6,845 9 % (2)% 1 % 9 %
Fiduciary
interest
income 199 17
Total Risk and
Insurance
Services 7,628 6,862 11 % (2)% 1 % 12 %
Consulting
Mercer 2,718 2,732 (1 )% (2)% (5 )% 7 %
Oliver Wyman
Group 1,485 1,362 9 % (1)% 4 % 6 %
Total
Consulting 4,203 4,094 3 % (2)% (2 )% 6 %
Corporate
Eliminations (31 ) (28 )
Total Revenue $11,800 $10,928 8 % (2)% -- 10 %
Revenue Details
The following table provides more detailed revenue information
for certain of the components presented above:
Components of Revenue Change*
% Change Acquisitions/ Non-GAAP
Six Months GAAP Currency Dispositions/ Underlying
Ended June 30, Revenue* Impact Other Impact** Revenue
2023 2022
Marsh:
EMEA (a) $1,790 $1,649 9 % (3)% 1 % 10 %
Asia Pacific
(a) 669 641 4 % (5)% 1 % 8 %
Latin America 252 222 13 % -- -- 14 %
Total
International 2,711 2,512 8 % (3)% 1 % 10 %
U.S./Canada 3,071 2,812 9 % -- 1 % 8 %
Total Marsh $5,782 $5,324 9 % (2)% 1 % 9 %
Mercer:
Wealth $1,218 $1,214 -- (3)% -- 3 %
Health 1,063 1,111 (4 )% (1)% (12 )% 11 %
Career 437 407 7 % (3)% 1 % 9 %
Total Mercer $2,718 $2,732 (1 )% (2)% (5 )% 7 %
(a) In the first quarter of 2023, the Company began reporting the Marsh
India operations in EMEA. Prior year results for India have been
reclassified from Asia Pacific to EMEA for comparative purposes.
* Rounded to whole percentages. Components of revenue may not add due to
rounding.
** Acquisitions, dispositions, and other includes the impact of current
and prior year items excluded from the calculation of non-GAAP
underlying revenue for comparability purposes. Details on these items
are provided in the reconciliation of non-GAAP revenue to GAAP revenue
tables included in this release.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended June 30
(Millions) (Unaudited)
Overview
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States
(referred to in this release as in accordance with "GAAP" or
"reported" results). The Company also refers to and presents
certain additional non-GAAP financial measures, within the meaning
of Regulation G and item 10(e) Regulation S-K in accordance with
the Securities Exchange Act of 1934. These measures are: non-GAAP
revenue, adjusted operating income (loss), adjusted operating
margin, adjusted income, net of tax and adjusted earnings per share
(EPS). The Company has included reconciliations of these non-GAAP
financial measures to the most directly comparable financial
measure calculated in accordance with GAAP in the following
tables.
The Company believes these non-GAAP financial measures provide
useful supplemental information that enables investors to better
compare the Company's performance across periods. Management also
uses these measures internally to assess the operating performance
of its businesses and to decide how to allocate resources. However,
investors should not consider these non-GAAP measures in isolation
from, or as a substitute for, the financial information that the
Company reports in accordance with GAAP. The Company's non-GAAP
measures include adjustments that reflect how management views its
businesses, and may differ from similarly titled non-GAAP measures
presented by other companies.
Adjusted Operating Income (Loss) and Adjusted Operating
Margin
Adjusted operating income (loss) is calculated by excluding the
impact of certain noteworthy items from the Company's GAAP
operating income (loss). The following tables identify these
noteworthy items and reconcile adjusted operating income (loss) to
GAAP operating income (loss), on a consolidated and reportable
segment basis, for the three and six months ended June 30, 2023 and
2022. The following tables also present adjusted operating margin.
For the three and six months ended June 30, 2023 and 2022, adjusted
operating margin is calculated by dividing the sum of adjusted
operating income and identified intangible asset amortization by
consolidated or segment adjusted revenue. The Company's adjusted
revenue used in the determination of adjusted operating margin is
calculated by excluding the impact of certain noteworthy items from
the Company's GAAP revenue.
Risk &
Insurance Corporate/
Services Consulting Eliminations Total
Three Months Ended
June 30, 2023
Operating income
(loss) $1,157 $ 388 $ (88 ) $1,457
Operating margin 31.1 % 17.9 % N/A 24.8 %
Add (deduct) impact
of noteworthy
items:
Restructuring,
excluding JLT (a) 28 7 27 62
Changes in contingent
consideration (b) 10 -- -- 10
JLT integration and
restructuring costs
(c) 3 -- -- 3
Acquisition related
costs (d) -- 10 -- 10
Disposal of business -- (2 ) -- (2 )
Operating income
adjustments 41 15 27 83
Adjusted operating
income (loss) $1,198 $ 403 $ (61 ) $1,540
Total identified
intangible
amortization
expense $73 $ 14 $ -- $87
Adjusted operating
margin 34.2 % 19.2 % N/A 27.7 %
Three Months Ended
June 30, 2022
Operating income
(loss) $967 $ 475 $ (78 ) $1,364
Operating margin 29.2 % 22.8 % N/A 25.4 %
Add (deduct) impact
of noteworthy
items:
Restructuring,
excluding JLT (a) 11 4 13 28
Changes in contingent
consideration (b) 12 5 -- 17
JLT
acquisition-related
costs (e) 11 -- 3 14
JLT legacy legal
charges (f) 11 (1 ) -- 10
Disposal of business
(g) -- (112 ) -- (112 )
Deconsolidation of
Russian businesses
and other related
charges 2 (2 ) -- --
Operating income
adjustments 47 (106 ) 16 (43 )
Adjusted operating
income (loss) $1,014 $ 369 $ (62 ) $1,321
Total identified
intangible
amortization
expense $71 $ 12 $ -- $83
Adjusted operating
margin 32.8 % 19.3 % N/A 26.7 %
(a) In 2023, costs primarily include severance and lease exit charges for
activities focused on workforce actions, rationalization of technology
and functional resources, and reductions in real estate.
(b) Change in fair value of contingent consideration related to
acquisitions and dispositions measured each quarter.
(c) Reflects adjustments to restructuring liabilities for future rent under
non-cancelable leases for a legacy JLT U.K. location.
(d) Integration costs for the Westpac superannuation fund transaction in
Australia, which closed on April 1, 2023.
(e) Retention costs related to the acquisition of JLT.
(f) Charges and recoveries related to legacy JLT legal matters.
(g) Reflects a gain of $112 million on the sale of the Mercer U.S. affinity
business in the second quarter of 2022. This amount is included in
revenue in the consolidated statements of income and excluded from
non-GAAP revenue and adjusted revenue used in the calculation of
adjusted operating margin.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Six Months Ended June 30
(Millions) (Unaudited)
Risk &
Insurance Corporate/
Services Consulting Eliminations Total
Six Months Ended
June 30, 2023
Operating income
(loss) $2,552 $ 799 $ (168 ) $3,183
Operating margin 33.5 % 19.0 % N/A 27.0 %
Add (deduct) impact
of noteworthy
items:
Restructuring,
excluding JLT (a) 47 16 39 102
Changes in contingent
consideration (b) 16 1 -- 17
JLT integration and
restructuring costs
(c) 16 -- -- 16
JLT legacy legal
charges (d) -- (51 ) -- (51 )
Disposal of business
(e) -- 17 -- 17
Acquisition related
costs (f) -- 27 -- 27
Operating income
adjustments 79 10 39 128
Adjusted operating
income (loss) $2,631 $ 809 $ (129 ) $3,311
Total identified
intangible
amortization
expense $147 $ 25 $ -- $172
Adjusted operating
margin 36.4 % 19.8 % N/A 29.5 %
Six Months Ended
June 30, 2022
Operating income
(loss) $2,088 $ 867 $ (146 ) $2,809
Operating margin 30.4 % 21.2 % N/A 25.7 %
Add (deduct) impact
of noteworthy
items:
Restructuring,
excluding JLT (a) 20 6 20 46
Changes in contingent
consideration (b) 22 5 -- 27
JLT integration and
restructuring costs
(c) 6 5 1 12
JLT legacy legal
charges (d) 14 (11 ) -- 3
Disposal of business
(e) -- (112 ) -- (112 )
JLT
acquisition-related
costs (g) 20 1 3 24
Legal claims (h) 30 -- -- 30
Deconsolidation of
Russian businesses
and other related
charges (i) 42 10 -- 52
Operating income
adjustments 154 (96 ) 24 82
Adjusted operating
income (loss) $2,242 $ 771 $ (122 ) $2,891
Total identified
intangible
amortization
expense $149 $ 25 $ -- $174
Adjusted operating
margin 34.7 % 19.9 % N/A 28.2 %
(a) In 2023, costs primarily include severance and lease exit charges for
activities focused on workforce actions, rationalization of technology
and functional resources, and reductions in real estate. Costs also
reflect charges for Marsh's operational excellence program.
(b) Change in fair value of contingent consideration related to
acquisitions and dispositions measured each quarter.
(c) Reflects adjustments to restructuring liabilities for future rent under
non-cancelable leases for a legacy JLT U.K. location.
(d) Reflects insurance and indemnity recoveries for a legacy JLT E&O matter
relating to suitability of advice provided to individuals for defined
benefit pension transfers in the U.K.
(e) Loss on sale of an individual financial advisory business in Canada.
The second quarter of 2022 reflects a gain of $112 million on the sale
of the Mercer U.S. affinity business. These amounts are included in
revenue in the consolidated statements of income and excluded from
non-GAAP revenue and adjusted revenue used in the calculation of
adjusted operating margin.
(f) Integration costs for the Westpac superannuation fund transaction in
Australia, which closed on April 1, 2023.
(g) Retention costs related to the acquisition of JLT.
(h) Settlement charges and legal costs related to strategic recruiting.
(i) Loss on deconsolidation of Russian businesses and other related
charges. The loss on deconsolidation of $39 million is included in
revenue in the consolidated statements of income and excluded from
non-GAAP revenue and adjusted revenue used in the calculation of
adjusted operating margin. The remaining expense charges of $13 million
are included in other operating expenses in the consolidated statements
of income.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three and Six Months Ended June 30
(In millions, except per share data)
(Unaudited)
Adjusted income, net of tax is calculated as the Company's GAAP
income from continuing operations, adjusted to reflect the after
tax impact of the operating income adjustments in the preceding
tables and the additional items listed below. Adjusted EPS is
calculated by dividing the Company's adjusted income, net of tax,
by the average number of shares outstanding-diluted for the
relevant period. The following tables reconcile adjusted income,
net of tax to GAAP income from continuing operations and adjusted
EPS to GAAP EPS for the three and six months ended June 30, 2023
and 2022.
Three Months Ended Three Months Ended
June 30, 2023 June 30, 2022
Adjusted Adjusted
Amount EPS Amount EPS
Net income before
non-controlling
interests, as
reported $1,047 $978
Less:
Non-controlling
interest, net of
tax 12 11
Subtotal $1,035 $ 2.07 $967 $ 1.91
Operating income
adjustments $83 $(43)
Investments
adjustment (1 ) 1
Pension
settlement
adjustment -- 1
Income tax effect
of adjustments
(a) (17) 33
65 0.13 (8 ) (0.02)
Adjusted income,
net of tax $1,100 $ 2.20 $959 $ 1.89
Six Months Ended Six Months Ended
June 30, 2023 June 30, 2022
Adjusted Adjusted
Amount EPS Amount EPS
Net income before
non-controlling
interests, as
reported $2,299 $2,064
Less:
Non-controlling
interest, net of
tax 29 26
Subtotal $2,270 $ 4.55 $2,038 $ 4.01
Operating income
adjustments $128 $82
Investments
adjustment 1 (8 )
Pension
settlement
adjustment -- 1
Income tax effect
of adjustments
(a) (33) 15
96 0.19 90 0.18
Adjusted income,
net of tax $2,366 $ 4.74 $2,128 $ 4.19
(a) For items with an income tax impact, the tax effect was calculated
using an effective tax rate based on the tax jurisdiction for each
item.
Marsh & McLennan Companies, Inc.
Supplemental Information
Three and Six Months Ended June 30
(Millions) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2023 2022 2023 2022
Consolidated
Compensation and
benefits $ 3,337 $3,010 $ 6,544 $6,110
Other operating
expenses 1,082 1,005 2,073 2,009
Total expenses $ 4,419 $4,015 $ 8,617 $8,119
Depreciation and
amortization
expense $ 91 $85 $ 175 $174
Identified
intangible
amortization
expense 87 83 172 174
Total $ 178 $168 $ 347 $348
Risk and Insurance
Services
Compensation and
benefits $ 1,923 $1,750 $ 3,803 $3,551
Other operating
expenses 642 596 1,273 1,223
Total expenses $ 2,565 $2,346 $ 5,076 $4,774
Depreciation and
amortization
expense $ 49 $40 $ 86 $83
Identified
intangible
amortization
expense 73 71 147 149
Total $ 122 $111 $ 233 $232
Consulting
Compensation and
benefits $ 1,271 $1,145 $ 2,439 $2,309
Other operating
expenses 513 464 965 918
Total expenses $ 1,784 $1,609 $ 3,404 $3,227
Depreciation and
amortization
expense $ 27 $27 $ 48 $53
Identified
intangible
amortization
expense 14 12 25 25
Total $ 41 $39 $ 73 $78
Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Millions)
(Unaudited)
June 30, December 31,
2023 2022
ASSETS
Current assets:
Cash and cash equivalents $ 1,171 $ 1,442
Cash and cash equivalents held in a
fiduciary capacity (a) 11,564 10,660
Net receivables 6,986 5,852
Other current assets 1,081 1,005
Total current assets 20,802 18,959
Goodwill and intangible assets 19,129 18,788
Fixed assets, net 870 871
Pension related assets 2,331 2,127
Right of use assets 1,569 1,562
Deferred tax assets 365 358
Other assets 1,500 1,449
TOTAL ASSETS $ 46,566 $ 44,114
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 2,375 $ 268
Accounts payable and accrued liabilities 3,137 3,278
Accrued compensation and employee benefits 2,021 3,095
Current lease liabilities 309 310
Accrued income taxes 407 221
Fiduciary liabilities (a) 11,564 10,660
Total current liabilities 19,813 17,832
Long-term debt 10,247 11,227
Pension, post-retirement and
post-employment benefits 866 921
Long-term lease liabilities 1,699 1,667
Liabilities for errors and omissions 364 355
Other liabilities 1,438 1,363
Total equity 12,139 10,749
TOTAL LIABILITIES AND EQUITY $ 46,566 $ 44,114
(a) In the second quarter of 2023, the Company changed the presentation of
fiduciary assets and liabilities on the consolidated balance sheets.
Cash and cash equivalents held in a fiduciary capacity was reclassified
from an offset to fiduciary liabilities to current assets, with the
corresponding fiduciary liabilities reclassified to current
liabilities. The presentation in the December 31, 2022 consolidated
balance sheet was conformed to the current presentation.
Marsh & McLennan Companies, Inc.
Consolidated Statements of Cash Flows
(Millions) (Unaudited)
Six Months Ended
June 30,
2023 2022
Operating cash flows:
Net income before non-controlling interests $2,299 $2,064
Adjustments to reconcile net income to cash
provided by operations:
Depreciation and amortization 347 348
Non-cash lease expense 143 152
Deconsolidation of Russian businesses -- 39
Share-based compensation expense 191 194
Net gain on investments, disposition of assets
and other (9 ) (130 )
Changes in assets and liabilities:
Accrued compensation and employee benefits (1,101) (992 )
Provision for taxes, net of payments and
refunds 245 235
Net receivables (1,029) (978 )
Other changes to assets and liabilities (98 ) 40
Contributions to pension and other benefit
plans in excess of current year credit (164 ) (226 )
Operating lease liabilities (159 ) (166 )
Net cash provided by operations 665 580
Financing cash flows:
Purchase of treasury shares (600 ) (1,100)
Borrowings from term-loan and credit
facilities 200 --
Net proceeds from issuance of commercial paper 308 944
Proceeds from issuance of debt 589 --
Repayments of debt (8 ) (8 )
Net issuance of common stock from treasury
shares (21 ) (115 )
Net distributions of non-controlling interests
and deferred/contingent consideration (332 ) (104 )
Dividends paid (591 ) (547 )
Change in fiduciary liabilities 682 1,428
Net cash provided by financing activities 227 498
Investing cash flows:
Capital expenditures (185 ) (239 )
Net purchases of long term investments and
other (23 ) (3 )
Sales of long term investments 16 --
Dispositions (17 ) 135
Acquisitions, net of cash and cash held in a
fiduciary capacity acquired (292 ) (151 )
Net cash used for investing activities (501 ) (258 )
Effect of exchange rate changes on cash, cash
equivalents, and cash and cash equivalents
held in a fiduciary capacity 242 (755 )
Increase in cash, cash equivalents, and cash
and cash equivalents held in a fiduciary
capacity 633 65
Cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity at
beginning of period 12,102 11,374
Cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity at
end of period $12,735 $11,439
Reconciliation of cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity to the Consolidated Balance
Sheets
Balance at June 30, 2023 2022
(In millions)
Cash and cash equivalents $1,171 $909
Cash and cash equivalents held in a fiduciary
capacity 11,564 10,530
Total cash, cash equivalents, and cash and
cash equivalents held in a fiduciary
capacity $12,735 $11,439
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended June 30
(Millions) (Unaudited)
Non-GAAP revenue isolates the impact of foreign exchange rate
movements and certain transaction-related items from the current
period GAAP revenue. The non-GAAP revenue measure is presented on a
constant currency basis, excluding the impact of foreign currency
fluctuations. The Company isolates the impact of foreign exchange
rate movements period over period, by translating the current
period foreign currency GAAP revenue into U.S. Dollars based on the
difference in the current and corresponding prior period exchange
rates. Similarly, certain other items such as acquisitions and
dispositions, including transfers among businesses, may impact
period over period comparisons of revenue and are consistently
excluded from current and prior period GAAP revenues for
comparability purposes. Percentage changes, referred to as non-GAAP
underlying revenue, are calculated by dividing the period over
period change in non-GAAP revenue by the prior period non-GAAP
revenue.
The following table provides the reconciliation of GAAP revenue
to non-GAAP revenue:
2023 2022
Three Months Acquisitions/ Acquisitions/
Ended June GAAP Currency Dispositions/ Non-GAAP GAAP Dispositions/ Non-GAAP
30, Revenue Impact Other Impact Revenue Revenue Other Impact Revenue
Risk and
Insurance
Services
Marsh $3,038 $ 26 $ (24 ) $ 3,040 $2,778 $ (5 ) $ 2,773
Guy Carpenter 576 5 (1 ) 580 522 -- 522
Subtotal 3,614 31 (25 ) 3,620 3,300 (5 ) 3,295
Fiduciary
interest
income 108 -- -- 108 13 -- 13
Total Risk and
Insurance
Services 3,722 31 (25 ) 3,728 3,313 (5 ) 3,308
Consulting
Mercer (a) 1,374 11 (4 ) 1,381 1,389 (86 ) 1,303
Oliver Wyman
Group 798 (2 ) (26 ) 770 695 -- 695
Total
Consulting 2,172 9 (30 ) 2,151 2,084 (86 ) 1,998
Corporate
Eliminations (18 ) -- -- (18 ) (18 ) -- (18 )
Total Revenue $5,876 $ 40 $ (55 ) $ 5,861 $5,379 $ (91 ) $ 5,288
Revenue Details
The following table provides more detailed revenue information
for certain of the components presented above:
2023 2022
Three Months Acquisitions/ Acquisitions/
Ended June GAAP Currency Dispositions/ Non-GAAP GAAP Dispositions/ Non-GAAP
30, Revenue Impact Other Impact Revenue Revenue Other Impact Revenue
Marsh:
EMEA (b) $858 $ 5 $ (1 ) $ 862 $780 $ (5 ) $ 775
Asia Pacific
(b) 357 14 (2 ) 369 347 -- 347
Latin America 137 1 -- 138 118 -- 118
Total
International 1,352 20 (3 ) 1,369 1,245 (5 ) 1,240
U.S./Canada 1,686 6 (21 ) 1,671 1,533 -- 1,533
Total Marsh $3,038 $ 26 $ (24 ) $ 3,040 $2,778 $ (5 ) $ 2,773
Mercer:
Wealth (a) $637 $ 7 $ (1 ) $ 643 $597 $ 26 $ 623
Health (a) 518 2 -- 520 587 (112 ) 475
Career 219 2 (3 ) 218 205 -- 205
Total Mercer $1,374 $ 11 $ (4 ) $ 1,381 $1,389 $ (86 ) $ 1,303
(a) Acquisitions, dispositions, and other in 2022 includes revenue from the
Westpac superannuation fund transaction in Wealth and a gain from the
sale of the Mercer U.S. affinity business of $112 million in Health.
(b) In the first quarter of 2023, the Company began reporting the Marsh
India operations in EMEA. Prior year results for India have been
reclassified from Asia Pacific to EMEA for comparative purposes.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Six Months Ended June 30
(Millions) (Unaudited)
The following table provides the reconciliation of GAAP revenue
to Non-GAAP revenue:
2023 2022
Six Months Acquisitions/ Acquisitions/
Ended June GAAP Currency Dispositions/ Non-GAAP GAAP Dispositions/ Non-GAAP
30, Revenue Impact Other Impact Revenue Revenue Other Impact Revenue
Risk and
Insurance
Services
Marsh (a) $5,782 $ 97 $ (48 ) $5,831 $5,324 $ 17 $5,341
Guy Carpenter 1,647 23 (15 ) 1,655 1,521 (19 ) 1,502
Subtotal 7,429 120 (63 ) 7,486 6,845 (2 ) 6,843
Fiduciary
interest
income 199 2 -- 201 17 -- 17
Total Risk and
Insurance
Services 7,628 122 (63 ) 7,687 6,862 (2 ) 6,860
Consulting
Mercer (b) 2,718 61 15 2,794 2,732 (113 ) 2,619
Oliver Wyman
Group (a) 1,485 14 (50 ) 1,449 1,362 11 1,373
Total
Consulting 4,203 75 (35 ) 4,243 4,094 (102 ) 3,992
Corporate
Eliminations (31 ) -- -- (31 ) (28 ) -- (28 )
Total Revenue $11,800 $ 197 $ (98 ) $11,899 $10,928 $ (104 ) $10,824
Revenue Details
The following table provides more detailed revenue information
for certain of the components presented above:
2023 2022
Six Months Acquisitions/ Acquisitions/
Ended June GAAP Currency Dispositions/ Non-GAAP GAAP Dispositions/ Non-GAAP
30, Revenue Impact Other Impact Revenue Revenue Other Impact Revenue
Marsh:
EMEA (a) (c) $1,790 $ 55 $ (4 ) $ 1,841 $1,649 $ 17 $ 1,666
Asia Pacific
(c) 669 29 (3 ) 695 641 -- 641
Latin America 252 1 -- 253 222 -- 222
Total
International 2,711 85 (7 ) 2,789 2,512 17 2,529
U.S./Canada 3,071 12 (41 ) 3,042 2,812 -- 2,812
Total Marsh $5,782 $ 97 $ (48 ) $ 5,831 $5,324 $ 17 $ 5,341
Mercer:
Wealth (b) $1,218 $ 35 $ 20 $ 1,273 $1,214 $ 24 $ 1,238
Health (b) 1,063 16 (1 ) 1,078 1,111 (137 ) 974
Career 437 10 (4 ) 443 407 -- 407
Total Mercer $2,718 $ 61 $ 15 $ 2,794 $2,732 $ (113 ) $ 2,619
(a) Acquisitions, dispositions and other in 2022 includes the loss on
deconsolidation of the Company's Russian businesses at Marsh of $27
million and Oliver Wyman Group of $12 million.
(b) Acquisitions, dispositions, and other in 2022 includes revenue from the
Westpac superannuation fund transaction in Wealth and a gain from the
sale of the Mercer U.S. affinity business of $112 million in Health.
Results for 2023 in Wealth include the loss on sale of an individual
financial advisory business in Canada of $17 million.
(c) In the first quarter of 2023, the Company began reporting the Marsh
India operations in EMEA. Prior year results for India have been
reclassified from Asia Pacific to EMEA for comparative purposes.
Media Contact:
Erick R. Gustafson
Marsh McLennan
+1 202 263 7788
erick.gustafson@mmc.com
Investor Contact:
Sarah DeWitt
Marsh McLennan
+1 212 345 6750
sarah.dewitt@mmc.com
View source version on businesswire.com:
https://www.businesswire.com/news/home/20230719263083/en/
CONTACT:
Marsh McLennan
SOURCE: Marsh McLennan
Copyright Business Wire 2023
(END) Dow Jones Newswires
July 20, 2023 07:00 ET (11:00 GMT)
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