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Willis Towers (WLTW) Beats on Q3 Earnings, Revises View

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Willis Towers Watson Public Limited Company (WLTW - Free Report) delivered third-quarter 2018 adjusted earnings of $1.32 per share, surpassing the Zacks Consensus Estimate of $1.11 by 18.9%.

Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise

The quarter under discussion witnessed organic revenue growth as well as a consistent margin expansion.

Also, the bottom line improved 17.9% from the year-ago quarter’s figure.

Operational Update

Willis Towers Watson posted adjusted consolidated revenues of $1.9 million, flat year over year on a reported basis. However, the metric grew 5% on organic basis. Meanwhile, the top line missed the Zacks Consensus Estimate by 1.3%.

Total cost of providing services slipped 1.9% year over year to $1.8 billion.

Adjusted EBITDA was $313 million, down 2.8% year over year. Adjusted EBITDA margin was 16.8%.

Adjusted operating income declined 11.8% year over year to $194 million in the reported quarter.

Quarterly Segment Update

Human Capital & Benefits: Total revenues of $778 million were up 6%. Operating margin was 25%.

Corporate Risk & Broking: Total revenues of $622 million improved 4% year over year. Operating margin was 11% in the quarter under review.

Investment, Risk & Reinsurance: Total revenues of $317 million slid 1% from the prior-year quarter’s number. Operating margin was 9%.

Benefits Delivery & Administration: Total revenues of $217 million plunged 30% year over year. Operating margin was (26%).

Financial Update

Cash and cash equivalents decreased 9.6% to $931 million from the 2017-end level.

Long-term debt inched up 1.1% from the level at 2017 end to nearly $4.5 billion at the reported quarter-end.

Shareholders’ equity dipped 0.8% from the level on Dec 31, 2017 to $10 billion as of Sep 30, 2018.

For the first nine months ended Sep 30, 2018, cash from operations improved 39% year over year to $716 million. For the same period this year, free cash flow was $507 million, up 60% year over year.

The company bought back shares worth $132 million in the quarter under review.

2018 Guidance

Willis Towers projects adjusted earnings per share between $10.12 and $10.32 in 2018, up from the earlier outlook of $9.88-$10.12. Constant currency revenue growth is estimated at around 3% while a 4% rise is anticipated on organic basis.

The company projects tax rate between 20% and 21% (down from the earlier guided range of 22-23%).

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 insurance brokers having reported third-quarter earnings so far, the bottom line of Aon Plc (AON - Free Report) , Arthur J. Gallagher & Co. (AJG - Free Report) and Brown & Brown, Inc. (BRO - Free Report) beat the respective Zacks Consensus Estimate.

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