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Willis Towers (WLTW) Earnings Beat, Revenues Miss in Q3
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Willis Towers Watson plc reported third-quarter 2016 adjusted net income of $1.04 per share that beat the Zacks Consensus Estimate by a penny. Earnings also surged 85.7% year over year.
Including amortization, restructuring costs, as well as integration and transaction expenses, net loss came in at 23 cents per share. The company had reported earnings of $1.70 per share in the year-ago quarter.
Operational Updates
Adjusted revenues improved 2% (15% constant currency growth, 2% organic growth), year over year to $1.78 billion. Revenues missed the Zacks Consensus Estimate of $1.82 billion.
On a year-over-year basis, commissions and fees increased 3% to $1.7 billion
Income from operations plunged to $1 million from $104 million in the year-ago quarter.
Adjusted EBITDA was $275 million or 15.5% of adjusted revenues. The reported figure was higher than $307 million, or 17.6% of revenues, in the year-earlier quarter.
Quarterly Segment Update
Human Capital & Benefits: Commissions and fees of $747 million were up 2% year over year (5% higher on constant currency basis and 2% higher on organic basis). Total revenues of $747 million inched up 0.8%. Operating margin was 16%.
Corporate Risk & Broking: Commissions and fees of $546 million improved 5% (9% constant currency growth but flat on organic basis) year over year. Total revenues of $554 million climbed 5.9% year over year. Operating margin was 11% in the quarter.
Investment, Risk & Reinsurance: Commissions and fees of $292 million declined 9% (down 5% on both constant currency and organic basis). Total revenues of $1.2 billion inched up 0.9% from the prior-year quarter. Operating margin was 8%.
Exchange Solutions: Commission and fees of $161 million improved 25% (up 25% on constant currency basis and up 25% on organic basis). Total revenues of $161 million jumped 25.9% year over year. Operating margin was 12%.
Share Repurchase
Willis Towers Watson has bought back $233 million worth of shares year to date and intends to make repurchases worth $300 million in 2016.
2016 Guidance
Willis Towers Watson reiterated adjusted earnings per share between $7.60 and $7.80. Reported earnings per share are expected between $2.30 and $2.50 as against the previous estimation of $2.48 to $2.68.
Constant currency revenue growth is expected to be in the range of 9–10%, while reported revenue growth is estimated at 6%.
The bottom line of Marsh & McLennan Companies, Inc. (MMC - Free Report) met the Zacks Consensus Estimate, while earnings of Brown & Brown Inc. (BRO - Free Report) and Aon plc (AON - Free Report) beat the same in the third quarter.
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Willis Towers (WLTW) Earnings Beat, Revenues Miss in Q3
Willis Towers Watson plc reported third-quarter 2016 adjusted net income of $1.04 per share that beat the Zacks Consensus Estimate by a penny. Earnings also surged 85.7% year over year.
Including amortization, restructuring costs, as well as integration and transaction expenses, net loss came in at 23 cents per share. The company had reported earnings of $1.70 per share in the year-ago quarter.
Operational Updates
Adjusted revenues improved 2% (15% constant currency growth, 2% organic growth), year over year to $1.78 billion. Revenues missed the Zacks Consensus Estimate of $1.82 billion.
On a year-over-year basis, commissions and fees increased 3% to $1.7 billion
Income from operations plunged to $1 million from $104 million in the year-ago quarter.
Adjusted EBITDA was $275 million or 15.5% of adjusted revenues. The reported figure was higher than $307 million, or 17.6% of revenues, in the year-earlier quarter.
Quarterly Segment Update
Human Capital & Benefits: Commissions and fees of $747 million were up 2% year over year (5% higher on constant currency basis and 2% higher on organic basis). Total revenues of $747 million inched up 0.8%. Operating margin was 16%.
Corporate Risk & Broking: Commissions and fees of $546 million improved 5% (9% constant currency growth but flat on organic basis) year over year. Total revenues of $554 million climbed 5.9% year over year. Operating margin was 11% in the quarter.
Investment, Risk & Reinsurance: Commissions and fees of $292 million declined 9% (down 5% on both constant currency and organic basis). Total revenues of $1.2 billion inched up 0.9% from the prior-year quarter. Operating margin was 8%.
Exchange Solutions: Commission and fees of $161 million improved 25% (up 25% on constant currency basis and up 25% on organic basis). Total revenues of $161 million jumped 25.9% year over year. Operating margin was 12%.
Share Repurchase
Willis Towers Watson has bought back $233 million worth of shares year to date and intends to make repurchases worth $300 million in 2016.
2016 Guidance
Willis Towers Watson reiterated adjusted earnings per share between $7.60 and $7.80. Reported earnings per share are expected between $2.30 and $2.50 as against the previous estimation of $2.48 to $2.68.
Constant currency revenue growth is expected to be in the range of 9–10%, while reported revenue growth is estimated at 6%.
Zacks Rank
Willis Towers presently carries a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
WILLIS TWRS WAT Price, Consensus and EPS Surprise
WILLIS TWRS WAT Price, Consensus and EPS Surprise | WILLIS TWRS WAT Quote
Performance of Other Insurance Brokers
The bottom line of Marsh & McLennan Companies, Inc. (MMC - Free Report) met the Zacks Consensus Estimate, while earnings of Brown & Brown Inc. (BRO - Free Report) and Aon plc (AON - Free Report) beat the same in the third quarter.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>