Willis Towers (WLTW) Q1 Earnings & Revenues Beat, Up Y/Y
Willis Towers Watson Public Limited Company WLTW reported first-quarter 2021 adjusted earnings of $3.64 per share, which outpaced the Zacks Consensus Estimate by 11.7%. Moreover, the bottom line improved 9% year over year.
The company’s results reflect higher revenues and solid performance across its Human Capital & Benefits, Corporate Risk & Broking and Benefits Delivery & Administration segments. Notably, renewal periods across certain lines of business makes the first quarter a seasonally strong one for the company. However, the upside was partly offset by weaker performance across Investment, Risk & Reinsurance segment.
Operational Update
Adjusted consolidated revenues of Willis Towers Watson improved 5% year over year to $2.6 billion in the first quarter. Revenues grew 4% on an organic basis and 1% on a constant currency basis. Further, the top line surpassed the Zacks Consensus Estimate by 3.3%.
Total costs of providing services increased 1.5% year over year to $2.1 billion due to rise in salaries and benefits, and transaction and integration expenses.
Adjusted operating income amounted to $579 million, which advanced 10.3% year over year. Margin came in at 22.4%, up 110 basis points (bps) year over year.
Adjusted EBITDA climbed 7.4% year over year to $730 million in the first quarter. Adjusted EBITDA margin was 28.2%, up 60 bps year over year.
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
Quarterly Segment Update
Human Capital & Benefits: Total revenues of $875 million improved 3% year over year (flat in both constant currency and organic basis). On an organic basis, Technology and Administrative Solutions revenues increased driven by new project and client activity across Great Britain. While both Health and Benefits as well as Retirement revenues remained flat, Talent and Rewards revenues witnessed a marginal decline in the quarter. Nevertheless, the segment’s operating margin came in at 25.2%, up 20 bps year over year.
Corporate Risk & Broking: Total revenues of $810 million rose 10% year over year (up 5% in both constant currency and organic basis). On an organic basis, new business generation in International and Great Britain, and robust renewal rates in North America benefited the segment. However, revenues declined in Western Europe. Nevertheless, the segment’s operating margin came in at 20% in the first quarter, up 280 bps year over year.
Investment, Risk & Reinsurance: Total revenues of $605 million dipped 2% year over year (down 5% constant currency but up 4% organic). On an organic basis, challenges across coverage lines dampened Wholesale revenues, partly mitigated by new business wins that aided Reinsurance revenues and strong demand for advisory work, which favored the Investment and, Insurance Consulting and Technology businesses. The segment’s operating margin came in at 47.9%, up 280 bps year over year.
Benefits Delivery & Administration: Total revenues of $287 million climbed 24% year over year (up 24% constant currency and up 23% organic). The increase was driven by Individual Marketplace and robust Medicare Advantage sales. The segment’s operating margin was 2.5%, against a negative figure of 4.7% reported in the prior-year quarter.
Financial Update
As of Mar 31, 2021, the company’s cash and cash equivalents totaled $2 billion, which slumped 6.2% from 2020-end level.
Long-term debt dipped 0.7% from 2020-end to $4.6 billion in the quarter under review.
As of Mar 31, 2021, shareholders’ equity of $11.5 billion rose 6.5% from the level as on Dec 31, 2020.
During the quarter, cash flows used in operating activities came in at $128 million, which compares unfavorably with the prior-year quarter’s cash flows from operating activities of $23 million.
Free cash flow increased to nearly four-fold to $165 million in the quarter.
Share Repurchase Update
During the first quarter, the company did not engage in share repurchase activity.
Business Update
On Mar 1, 2021, Willis Towers Watson completed the sale of its wholesale insurance brokerage unit named Miller.
Zacks Rank
Willis Towers Watson currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported first-quarter results so far, the bottom line of Brown & Brown, Inc. BRO, Marsh & McLennan Companies, Inc. MMC and Chubb Limited CB beat the Zacks Consensus Estimate.
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