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Willis Towers (WLTW) Q1 Earnings Top Estimates, Revenues Lag
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Willis Towers Watson Public Limited Company delivered first-quarter 2020 adjusted earnings of $3.34 per share, which beat the Zacks Consensus Estimate by 6.4%. The bottom line improved about 12.1% year over year on the back of higher segmental revenue contributions.
The quarter benefited from strong organic revenue growth, reflecting solid demand for solutions and services across all core businesses.
Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise
Willis Towers Watson posted adjusted consolidated revenues of $2.47 billion, up 7% year over year, on a reported basis. The metric grew 4% on an organic basis. The top line however missed the Zacks Consensus Estimate by 0.2%.
Total cost of providing services increased 7.8% year over year to $2.1 billion.
Adjusted operating income was $525 million, up 6.7% year over year. Margin was flat at 21.3%.
Adjusted EBITDA was $680 million, up 13.1% year over year. Adjusted EBITDA margin was 27.6%, up 160 basis points (bps).
Quarterly Segment Update
Human Capital & Benefits: Total revenues of $850 million were up 4% year over year both on constant currency and organic basis. On an organic basis, revenue growth was driven by increased consulting and brokerage services, growth in specialty products, and continued expansion of the client portfolio for both local and global appointments. Operating margin was 25%, reflecting an increase of 30 bps.
Corporate Risk & Broking: Total revenues of $739 million improved 4% year over year both on a constant basis and organic basis. On an organic basis, revenue growth was driven by new business generation along with strong renewals. Operating margin was 17.2% in the quarter under review, down 20 bps.
Investment, Risk & Reinsurance: Total revenues of $615 million increased 6% from the prior-year quarter on a constant basis and 5% on an organic basis. On an organic basis, all lines of business contributed to the growth. Operating margin was 45.1%, up 240 bps.
Benefits Delivery & Administration: Total revenues of $231 million improved 71% year over year on a constant basis and 1% on organic basis. The organic growth is driven by its expanded client base and increased demand for project work in the mid-market and large-market spaces. Operating margin was negative 4.7% compared with negative 15.3% in the year-ago quarter.
Financial Update
Cash and cash equivalents increased nearly 1.2% from 2019-end level to about $898 million.
Long-term debt decreased 2.3% from 2019 end to nearly $5.2 billion at quarter-end.
Shareholders’ equity increased 0.1% from the level on Dec 31, 2019 to $10.3 billion as of Mar 31, 2020.
Cash flow from operations was $23 million against cash used in operations of $47 million in the year-ago quarter. Free cash outflow was $43 million, narrower than outflow of $104 million in the year-ago quarter.
Among other insurance industry players who have reported first-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) missed the Zacks Consensus Estimate, while that of Globe Life Inc. (GL - Free Report) matched the same.
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Willis Towers (WLTW) Q1 Earnings Top Estimates, Revenues Lag
Willis Towers Watson Public Limited Company delivered first-quarter 2020 adjusted earnings of $3.34 per share, which beat the Zacks Consensus Estimate by 6.4%. The bottom line improved about 12.1% year over year on the back of higher segmental revenue contributions.
The quarter benefited from strong organic revenue growth, reflecting solid demand for solutions and services across all core businesses.
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
Operational Update
Willis Towers Watson posted adjusted consolidated revenues of $2.47 billion, up 7% year over year, on a reported basis. The metric grew 4% on an organic basis. The top line however missed the Zacks Consensus Estimate by 0.2%.
Total cost of providing services increased 7.8% year over year to $2.1 billion.
Adjusted operating income was $525 million, up 6.7% year over year. Margin was flat at 21.3%.
Adjusted EBITDA was $680 million, up 13.1% year over year. Adjusted EBITDA margin was 27.6%, up 160 basis points (bps).
Quarterly Segment Update
Human Capital & Benefits: Total revenues of $850 million were up 4% year over year both on constant currency and organic basis. On an organic basis, revenue growth was driven by increased consulting and brokerage services, growth in specialty products, and continued expansion of the client portfolio for both local and global appointments. Operating margin was 25%, reflecting an increase of 30 bps.
Corporate Risk & Broking: Total revenues of $739 million improved 4% year over year both on a constant basis and organic basis. On an organic basis, revenue growth was driven by new business generation along with strong renewals. Operating margin was 17.2% in the quarter under review, down 20 bps.
Investment, Risk & Reinsurance: Total revenues of $615 million increased 6% from the prior-year quarter on a constant basis and 5% on an organic basis. On an organic basis, all lines of business contributed to the growth. Operating margin was 45.1%, up 240 bps.
Benefits Delivery & Administration: Total revenues of $231 million improved 71% year over year on a constant basis and 1% on organic basis. The organic growth is driven by its expanded client base and increased demand for project work in the mid-market and large-market spaces. Operating margin was negative 4.7% compared with negative 15.3% in the year-ago quarter.
Financial Update
Cash and cash equivalents increased nearly 1.2% from 2019-end level to about $898 million.
Long-term debt decreased 2.3% from 2019 end to nearly $5.2 billion at quarter-end.
Shareholders’ equity increased 0.1% from the level on Dec 31, 2019 to $10.3 billion as of Mar 31, 2020.
Cash flow from operations was $23 million against cash used in operations of $47 million in the year-ago quarter. Free cash outflow was $43 million, narrower than outflow of $104 million in the year-ago quarter.
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
Among other insurance industry players who have reported first-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) missed the Zacks Consensus Estimate, while that of Globe Life Inc. (GL - Free Report) matched the same.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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