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Willis Towers (WLTW) Earnings Beat, Revenues Miss in Q3

MMC AON BRO WLTW

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Willis Towers Watson plc (WLTW - Free Report) 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.

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