Willis Towers (WTW) Q1 Earnings Beat Estimates, Increase Y/Y
Willis Towers Watson Public Limited Company WTW delivered first-quarter 2022 adjusted earnings of $2.66 per share, which beat the Zacks Consensus Estimate by 5.9%. The bottom line improved 22% year over year.
WTW witnessed lower expenses and solid performance of the Health, Wealth & Career (HWC) segment, offset by softness in Risk & Broking (R&B).
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 $2.2 billion, down 3% year over year on a reported basis. Revenues increased 2% on an organic basis. The top line missed the Zacks Consensus Estimate by 4.6%.
The total costs of providing services decreased 1.8% year over year to $1.9 billion due to lower salaries and benefits, transaction and transformation, depreciation and amortization.
Adjusted operating income was $371 million, up 9.7% year over year. Margin expanded 200 basis points (bps) to 17.2%.
Adjusted EBITDA was $518 million, up 6% year over year. Adjusted EBITDA margin was 24%, up 210 bps.
Quarterly Segment Update
Health, Wealth & Career: Total revenues of $1.24 billion increased 1% year over year (3% increase on a constant currency basis and 2% increase organically). Organic growth was led by the Health business. Career contributed to solid growth, driven by market demand for reward-based advisory services and compensation benchmarking products as new work models become increasingly prevalent. Wealth revenues increased with growth in the Investment business from its expanded client base. The operating margin was 20.7%, which increased 110 basis points year over year, reflecting improved operating leverage.
Risk & Broking: Total revenues of $891 million decreased 4% year over year (unchanged on a constant currency and organic basis). On an organic basis, Insurance Consulting and Technology grew on both increased advisory work and software sales. The growth was largely offset by a decline in revenues in Corporate Risk & Broking due to headwinds from book-of-business sales recorded in the prior year. The operating margin was 21.6%, which decreased 30 basis points year over year, reflecting a headwind from book-of-business sales recorded in the comparable period.
Financial Update
As of Mar 31, 2022, cash and cash equivalents was $2.2 billion, up 12.1% year over year.
Long-term debt increased 0.02% to $3.9 billion at quarter-end from 2021 end.
Shareholders’ equity decreased 17% from the level on Dec 31, 2021 to $11 billion as of Mar 31, 2022.
Cash flow from operations was $21 million in the first quarter of 2022 compared to cash flow used in operating activities of $128 million for the prior-year first quarter.
Free cash flow was ($10) million for the quarter ended Mar 31, 2022.
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.
2022 Guidance
Willis Towers expects to deliver mid-single-digit organic revenue growth.
The insurer projects to deliver adjusted operating margin expansion in 2022.
Willis Towers expects to deliver $30 million in run-rate savings from the FY2022 Transformation Program.
Willis Towers expects a $20 million year-over-year decline in non-cash pension income, excluding items that could be favorable or unfavorable in any given period.
Performance of Other Insurers
Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies TRV and RLI Corporation RLI beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation PGR missed the mark.
Travelers reported first-quarter 2022 core income of $4.22 per share, which beat the Zacks Consensus Estimate by 14% and increased 54.6% year over year.
Total revenues increased 6.8% from the year-ago quarter to $8.8 billion, primarily due to higher premiums and fee income but missed the consensus estimate. Travelers’ combined ratio deteriorated 530 bps year over year to 91.3.
RLI’s first-quarter 2022 operating earnings of $1.43 per share beat the Zacks Consensus Estimate by 40.2% and improved 64.4% from the prior-year quarter. Operating revenues were $287 million, up 17.1% year over year and beat the Zacks Consensus Estimate by 0.8%.
RLI’s gross premiums written increased 22% year over year to $359.2 million. The combined ratio improved 900 bps year over year to 77.9.
Progressive’s first-quarter 2022 earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.24 and declined 34.9% from the year-ago quarter.
Net premiums written were $13.2 billion in the quarter, up 12% from $11.7 billion a year ago. Progressive’s combined ratio deteriorated 520 bps from the prior-year quarter to 94.7.
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