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Willis Towers (WLTW) Q4 Earnings and Revenues Beat Estimates

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Willis Towers Watson Public Limited Company (WLTW - Free Report) reported fourth-quarter 2017 adjusted earnings of $2.21 per share, surpassing the Zacks Consensus Estimate of $2.11 by 4.7%. Also, the bottom line improved 17.6% year over year.


Increase in revenues as well as a solid segmental performance were responsible for this upside.

The company remains focused on building momentum across its portfolio of businesses while work continues on the integration efforts.

Net earnings came in at $1.84 per share, soaring 78.6% from the year-ago quarter.

Full-Year Highlights

For 2017, Willis Towers’ adjusted earnings per share of $8.51 outpaced the Zacks Consensus Estimate by 1.2% and improved 6.9% year over year.

Total adjusted revenues of $8.2 billion grew 3.2% year over year.

Operational Updates

Adjusted revenues improved 7.8% (up 5% on a constant-currency basis and 6% higher on organic basis) year over year to $2.1 billion. The top line beat the Zacks Consensus Estimate of $1.9 billion.

Commissions and fees were $2.1 billion, up 7.7% year over year.

Total costs of providing services increased 7% year over year to $1.9 million.

Adjusted EBITDA of $484 million increased 15.5% year over year. Adjusted EBITDA margin expanded 160 basis points to 23.3%.

Adjusted operating income jumped 16.6% year over year to $436 million in the reported quarter.

Quarterly Segment Update

Human Capital & Benefits: Commissions and fees of $758 million were up 4.8% year over year (2% higher on constant-currency basis and 4% higher on organic basis). Total revenues of $772 million were up about 5.6%. Operating margin was 22%.

Corporate Risk & Broking: Commissions and fees of $770 million rose 10.3% (7% higher on both constant-currency basis and organic basis) year over year. Total revenues of $777 million improved 10.1% year over year. Operating margin was 28% in the quarter under review.

Investment, Risk & Reinsurance: Commissions and fees of $300 million were up 5.3% (2% higher at constant-currency basis and 4% higher on organic basis). Total revenues of $305 million increased 5.5% from the prior-year quarter. Operating margin was 2%.

Benefits Delivery & Administration (formerly known as Exchange Solutions): Commission and fees of $193 million improved 10.9% (11% higher on constant-currency basis as well as organic basis). Total revenues of $193 million climbed 10.3% year over year. Operating margin was 22%.

Financial Update

Cash and cash equivalents increased 18.4% to $1 billion from the 2016-end level.

Long-term debt surged 32.6% from the level at 2016-end to nearly $4.5 billion at the quarter-end.

Shareholders’ equity inched up 0.6% from the end of 2016 to $10.1 billion as of Dec 31, 2017.

For the 12 months ended Dec 31, 2017, cash from operations declined 7.6% to $862 million compared with $933 million in the same period, last year. Free cash flow for the year ended Dec 31, 2017 was $562 million, which plunged 21.3% compared with the same period in 2016.

2018 Guidance

Willis Towers projects adjusted earnings per share between $9.88 and $10.12 in 2018. Constant currency revenue growth is estimated at around 3% and 4% on an organic basis.

Zacks Rank

Willis Towers carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry having reported fourth-quarter earnings, the bottom line of Brown & Brown, Inc. (BRO - Free Report) , MGIC Investment Corporation (MTG - Free Report) and The Progressive Corporation (PGR - Free Report) beat the respective Zacks Consensus Estimate.

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