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Willis Towers Watson Public Limited Company delivered fourth-quarter 2020 adjusted earnings of $5.23 per share, which beat the Zacks Consensus Estimate of $5.02. The bottom line improved 7% year over year.
The company witnessed solid performance of Human Capital and Benefits, Corporate Risk & Broking and Benefits Delivery & Administration, which was offset by softness in Investment, Risk & Reinsurance.
Operational Update
Willis Towers Watson posted adjusted consolidated revenues of $2.7 billion, up 2.8% year over year on a reported basis. Revenues decreased 2% on an organic basis and 1% on a constant currency basis. The top line beat the Zacks Consensus Estimate by 1.8%.
Total cost of providing services increased 8.7% year over year to $2.2 billion due to higher salaries and benefits, operating expenses, depreciation, amortization, transaction and integration expenses.
Adjusted operating income was $820 million, up 1.4% year over year. Margin decreased 40 basis points (bps) to 29.7%.
Adjusted EBITDA was $967 million, up about 4% year over year. Adjusted EBITDA margin was 35%, up 40 basis points (bps).
Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise
Human Capital & Benefits: Total revenues of $865 million were flat year over year (down 2% in constant currency and 1% organic basis). On an organic basis, the global impact of COVID-19 negatively impacted demand in the Talent and Rewards business. Though Technology and Administrative Solutions revenues increased, Health and Benefits revenues declined nominally while Retirement revenues were materially flat. Operating margin was 31.3%, reflecting a decrease of 120 bps.
Corporate Risk & Broking: Total revenues of $888 million increased 1% year over year (down 1% in both constant currency and organic basis). On an organic basis, North America led the segment with new business generation alongside strong renewals. Revenues decreased in Great Britain, Western Europe and International. Operating margin was 12.5% in the quarter under review, up 200 bps.
Investment, Risk & Reinsurance: Total revenues of $292 million decreased 7% from the prior-year quarter (9% down constant currency and 1% increase organic). On an organic basis, Reinsurance contributed to the growth. Operating margin was 11%, up 190 bps.
Benefits Delivery & Administration: Total revenues of $693 million improved 16% (up 16% constant currency and 16% increase organic). The increase was driven by Individual Marketplace, primarily by TRANZACT. Operating margin was 50.7%, down 170 bps.
Full-Year Highlights
Full-year 2020 adjusted earnings of $11.70 per share beat the Zacks Consensus Estimate of $11.49. The bottom line increased 7% year over year.
Total revenues increased 3% from the year-ago quarter to about $9.4 billion and beat the Zacks Consensus Estimate of $9.3 billion.
Financial Update
Cash and cash equivalents of $2.1 billion at 2020 end more than doubled from the 2019-end level.
Long-term debt decreased 12% to $4.7 billion at quarter-end from 2019 end.
Shareholders’ equity increased 5.4% from the level on Dec 31, 2019 to $10.9 billion as of Dec 31, 2020.
Cash flow from operations was $1.8 billion in 2020, up 64% year over year.
Free cash flow almost doubled to $1.6 billion in 2020.
During 2020, the company did not engage in share repurchase activity.
Fourth-quarter earnings of Brown & Brown (BRO - Free Report) , RLI Corp. (RLI - Free Report) and W.R. Berkley Corporation (WRB - Free Report) beat the respective Zacks Consensus Estimate.
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Willis Towers (WLTW) Q4 Earnings & Revenues Top, Rise Y/Y
Willis Towers Watson Public Limited Company delivered fourth-quarter 2020 adjusted earnings of $5.23 per share, which beat the Zacks Consensus Estimate of $5.02. The bottom line improved 7% year over year.
The company witnessed solid performance of Human Capital and Benefits, Corporate Risk & Broking and Benefits Delivery & Administration, which was offset by softness in Investment, Risk & Reinsurance.
Operational Update
Willis Towers Watson posted adjusted consolidated revenues of $2.7 billion, up 2.8% year over year on a reported basis. Revenues decreased 2% on an organic basis and 1% on a constant currency basis. The top line beat the Zacks Consensus Estimate by 1.8%.
Total cost of providing services increased 8.7% year over year to $2.2 billion due to higher salaries and benefits, operating expenses, depreciation, amortization, transaction and integration expenses.
Adjusted operating income was $820 million, up 1.4% year over year. Margin decreased 40 basis points (bps) to 29.7%.
Adjusted EBITDA was $967 million, up about 4% year over year. Adjusted EBITDA margin was 35%, up 40 basis points (bps).
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
Quarterly Segment Update
Human Capital & Benefits: Total revenues of $865 million were flat year over year (down 2% in constant currency and 1% organic basis). On an organic basis, the global impact of COVID-19 negatively impacted demand in the Talent and Rewards business. Though Technology and Administrative Solutions revenues increased, Health and Benefits revenues declined nominally while Retirement revenues were materially flat. Operating margin was 31.3%, reflecting a decrease of 120 bps.
Corporate Risk & Broking: Total revenues of $888 million increased 1% year over year (down 1% in both constant currency and organic basis). On an organic basis, North America led the segment with new business generation alongside strong renewals. Revenues decreased in Great Britain, Western Europe and International. Operating margin was 12.5% in the quarter under review, up 200 bps.
Investment, Risk & Reinsurance: Total revenues of $292 million decreased 7% from the prior-year quarter (9% down constant currency and 1% increase organic). On an organic basis, Reinsurance contributed to the growth. Operating margin was 11%, up 190 bps.
Benefits Delivery & Administration: Total revenues of $693 million improved 16% (up 16% constant currency and 16% increase organic). The increase was driven by Individual Marketplace, primarily by TRANZACT. Operating margin was 50.7%, down 170 bps.
Full-Year Highlights
Full-year 2020 adjusted earnings of $11.70 per share beat the Zacks Consensus Estimate of $11.49. The bottom line increased 7% year over year.
Total revenues increased 3% from the year-ago quarter to about $9.4 billion and beat the Zacks Consensus Estimate of $9.3 billion.
Financial Update
Cash and cash equivalents of $2.1 billion at 2020 end more than doubled from the 2019-end level.
Long-term debt decreased 12% to $4.7 billion at quarter-end from 2019 end.
Shareholders’ equity increased 5.4% from the level on Dec 31, 2019 to $10.9 billion as of Dec 31, 2020.
Cash flow from operations was $1.8 billion in 2020, up 64% year over year.
Free cash flow almost doubled to $1.6 billion in 2020.
During 2020, the company did not engage in share repurchase activity.
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
Fourth-quarter earnings of Brown & Brown (BRO - Free Report) , RLI Corp. (RLI - Free Report) and W.R. Berkley Corporation (WRB - Free Report) beat the respective Zacks Consensus Estimate.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>