We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Willis Towers Watson Public Limited Company delivered second-quarter 2020 adjusted earnings of $1.80 per share, which beat the Zacks Consensus Estimate of $1.62 by 11.1%. The bottom line improved 1.1% year over year.
The company witnessed solid constant currency revenue growth, which was offset by soft performance of Human Capital and Benefits (HCB) segment.
Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise
Willis Towers Watson posted adjusted consolidated revenues of $2.1 billion, up 3.2% year over year on a reported basis. Revenues increased 5% on a constant currency basis but remained flat on an organic basis. Moreover, the top line beat the Zacks Consensus Estimate by 3.2%.
Total cost of providing services increased 4.2% year over year to $1.9 billion due to higher salaries and benefits, depreciation, transaction and integration expenses.
Adjusted operating income was $296 million, down 1% year over year. Margin decreased 60 basis points (bps) to 14% due to lower margin at HCB segment.
Adjusted EBITDA was $441 million, up 3.8% year over year. Adjusted EBITDA margin was 20.9%, up 10 basis points (bps).
Quarterly Segment Update
Human Capital & Benefits: Total revenues of $767 million decreased 4% year over year (down 2% in both constant currency and organic basis). On an organic basis, the global impact of COVID-19 negatively impacted demand in the Talent and Rewards business, resulting in the decline of revenues. Operating margin was 20.9%, reflecting a decrease of 20 bps.
Corporate Risk & Broking: Total revenues of $701 million improved 2% year over year (up 4% in both constant currency and organic basis). On an organic basis, North America continued to lead the segment, followed by International and Western Europe, primarily with new business generation along with strong renewals. The revenue increase was partially offset by a decline in Great Britain, which was primarily due to the impact of COVID-19 on certain insurance lines. Operating margin was 19.2% in the quarter under review, up 400 bps.
Investment, Risk & Reinsurance: Total revenues of $413 million increased 1% from the prior-year quarter (up 2% in both constant currency and organic basis). On an organic basis, most lines of business contributed to the growth. Operating margin was 28.7%, up 180 bps.
Benefits Delivery & Administration: Total revenues of $209 million improved 66% (up 66% in constant currency and down 3% in organic basis). The increase was driven by the acquired company, TRANZACT, which generated revenues of $87 million. Operating margin was negative 4.2% compared with negative 20.1% in the year-ago quarter.
Financial Update
Cash and cash equivalents were $1.1 billion at second-quarter end, up 22.5% from the 2019-end level.
Long-term debt decreased 4.4% to nearly $5.1 billion at quarter-end from 2019 end.
Shareholders’ equity increased 0.8% from the level on Dec 31, 2019 to $10.3 billion as of Jun 30, 2020.
Cash flow from operations was $685 million in the first half of 2020, up 126% year over year. Free cash flow in the first half of 2020 was $550 million, reflecting a surge of 201% year over year.
During the six months ended Jun 30, 2020, the company did not engage in share repurchase activity.
2020 Guidance
Due to the uncertainties caused by the COVID-19 pandemic, Willis Towers Watson had previously withdrawn its full-year 2020 guidance.
Of the insurance industry players, which have reported second-quarter results so far, earnings of Cincinnati Financial Corporation (CINF - Free Report) , First American Financial Corporation (FAF - Free Report) and AXIS Capital Holdings Limited (AXS - Free Report) beat the respective Zacks Consensus Estimate.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Willis Towers (WLTW) Q2 Earnings & Revenues Beat Estimates
Willis Towers Watson Public Limited Company delivered second-quarter 2020 adjusted earnings of $1.80 per share, which beat the Zacks Consensus Estimate of $1.62 by 11.1%. The bottom line improved 1.1% year over year.
The company witnessed solid constant currency revenue growth, which was offset by soft performance of Human Capital and Benefits (HCB) segment.
Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise
Willis Towers Watson Public Limited Company price-consensus-eps-surprise-chart | Willis Towers Watson Public Limited Company Quote
Operational Update
Willis Towers Watson posted adjusted consolidated revenues of $2.1 billion, up 3.2% year over year on a reported basis. Revenues increased 5% on a constant currency basis but remained flat on an organic basis. Moreover, the top line beat the Zacks Consensus Estimate by 3.2%.
Total cost of providing services increased 4.2% year over year to $1.9 billion due to higher salaries and benefits, depreciation, transaction and integration expenses.
Adjusted operating income was $296 million, down 1% year over year. Margin decreased 60 basis points (bps) to 14% due to lower margin at HCB segment.
Adjusted EBITDA was $441 million, up 3.8% year over year. Adjusted EBITDA margin was 20.9%, up 10 basis points (bps).
Quarterly Segment Update
Human Capital & Benefits: Total revenues of $767 million decreased 4% year over year (down 2% in both constant currency and organic basis). On an organic basis, the global impact of COVID-19 negatively impacted demand in the Talent and Rewards business, resulting in the decline of revenues. Operating margin was 20.9%, reflecting a decrease of 20 bps.
Corporate Risk & Broking: Total revenues of $701 million improved 2% year over year (up 4% in both constant currency and organic basis). On an organic basis, North America continued to lead the segment, followed by International and Western Europe, primarily with new business generation along with strong renewals. The revenue increase was partially offset by a decline in Great Britain, which was primarily due to the impact of COVID-19 on certain insurance lines. Operating margin was 19.2% in the quarter under review, up 400 bps.
Investment, Risk & Reinsurance: Total revenues of $413 million increased 1% from the prior-year quarter (up 2% in both constant currency and organic basis). On an organic basis, most lines of business contributed to the growth. Operating margin was 28.7%, up 180 bps.
Benefits Delivery & Administration: Total revenues of $209 million improved 66% (up 66% in constant currency and down 3% in organic basis). The increase was driven by the acquired company, TRANZACT, which generated revenues of $87 million. Operating margin was negative 4.2% compared with negative 20.1% in the year-ago quarter.
Financial Update
Cash and cash equivalents were $1.1 billion at second-quarter end, up 22.5% from the 2019-end level.
Long-term debt decreased 4.4% to nearly $5.1 billion at quarter-end from 2019 end.
Shareholders’ equity increased 0.8% from the level on Dec 31, 2019 to $10.3 billion as of Jun 30, 2020.
Cash flow from operations was $685 million in the first half of 2020, up 126% year over year. Free cash flow in the first half of 2020 was $550 million, reflecting a surge of 201% year over year.
During the six months ended Jun 30, 2020, the company did not engage in share repurchase activity.
2020 Guidance
Due to the uncertainties caused by the COVID-19 pandemic, Willis Towers Watson had previously withdrawn its full-year 2020 guidance.
Zacks Rank
Willis Towers currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players, which have reported second-quarter results so far, earnings of Cincinnati Financial Corporation (CINF - Free Report) , First American Financial Corporation (FAF - Free Report) and AXIS Capital Holdings Limited (AXS - Free Report) beat the respective Zacks Consensus Estimate.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>