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Willis Towers (WLTW) Q2 Earnings & Revenues Beat, Up Y/Y

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Willis Towers Watson Public Limited Company (WLTW - Free Report) reported second-quarter 2018 adjusted earnings of $1.70 per share, surpassing the Zacks Consensus Estimate of $1.67 by 1.8%.

Also, the bottom line improved 17.2% from the year-ago quarter’s figure.

Operational Update

Willis Towers Watson posted adjusted consolidated revenues of $1.9 million, up 1.9% year over year. Moreover, the top line beat the Zacks Consensus Estimate by 1.4%.

Excluding the Revenue Standard, revenues were $2 billion with 4% increase (2% rise on constant currency basis and 3% owing to organic growth).

Total cost of providing services inched up nearly 1.8% year over year to $1.9 billion.

Adjusted EBITDA was $392 million, up 1.3% year over year. Adjusted EBITDA margin was 19.7%.

Adjusted operating income declined 14% year over year to $258 million in the reported quarter.

Quarterly Segment Update

Human Capital & Benefits: Total revenues of $780 million were up 7.4%. Operating margin was 19%.

Corporate Risk & Broking: Total revenues of $674 million improved 4.7% year over year. Operating margin was 14% in the quarter under review.

Investment, Risk & Reinsurance: Total revenues of $385 million grew 2.9% from the prior-year quarter’s number. Operating margin was 23%.

Benefits Delivery & Administration: Total revenues of $119 million plunged 33.1% year over year. Operating margin was (26%).

Financial Update

Cash and cash equivalents decreased 11.6% to $911 million from the 2017-end level.

Long-term debt rose 3.1% from the level at 2017 end to nearly $4.6 billion at the quarter-end.

Shareholders’ equity nudged up 1% from the level on Dec 31, 2017 to $10.2 billion as of Jun 30, 2018.

For the first six months ended Jun 30, 2018, cash from operations improved to $395 million compared with $319 million for the same period in 2017. For the first half of 2018, free cash flow was $254 million.

Business Update

As of Jan 1, 2018, the Company adopted Accounting Standards Codification 606, Revenue From Contracts With Customers (“ASC 606”).

Also, at the outset of the year, the company made certain changes affecting its segmental results. These changes include the realignment of certain businesses within the segments as well as changes to certain allocation methodologies to better reflect the ongoing nature of businesses.

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% while a 4% rise is anticipated on organic basis.

The company estimates free cash flow between $1.1 billion and $1.3 billion for 2018.

The company projects tax rate between 22% and 23% (from the earlier guided range of 23-24%).

Zacks Rank

Willis Towers 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

Among other players from the insurance industry having reported second-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.

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