Willis Towers Watson PLC (WTW) Q3 2024 Earnings Call Highlights: Strong Organic Growth and ...

GuruFocus News
4 min read

In This Article:

  • Organic Revenue Growth: 6% in Q3 2024.

  • Risk and Broking Organic Growth: 10% in Q3 2024.

  • Health, Wealth, and Career Organic Growth: 4% in Q3 2024.

  • Adjusted Operating Margin: Expanded 190 basis points to 18.1%.

  • Adjusted Diluted Earnings Per Share: $2.93, a 31% increase from Q3 2023.

  • Free Cash Flow: $807 million for the nine months ended September 30, up 14% year over year.

  • Transformation Savings: $52 million in Q3 2024, totaling $446 million since inception.

  • Share Repurchases: $205 million in Q3 2024, with a full-year expectation of $900 million.

  • Dividends Paid: $89 million in Q3 2024.

  • GAAP Tax Rate: 16.1% in Q3 2024.

  • Adjusted Tax Rate: 19.7% in Q3 2024.

  • Pending Sale of TRANZACT: Expected to be accretive to organic growth, adjusted operating margins, and free cash flow margin.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Willis Towers Watson PLC (NASDAQ:WTW) reported a strong quarter with 6% organic revenue growth, driven by 10% growth in risk and broking and 4% in health, wealth, and career (HWC).

  • The company achieved a 190 basis point expansion in adjusted operating margin to 18.1%, attributed to operating leverage, cost discipline, and transformation program success.

  • Adjusted diluted earnings per share increased by 31% to $2.93 compared to the third quarter of 2023.

  • WTW generated $807 million in free cash flow for the nine months ended September 30, marking a 14% year-over-year increase.

  • The company announced strategic partnerships and new solutions, such as a virtual captive for employee benefits and a workforce management proposition, enhancing its market position and client offerings.

Negative Points

  • The GAAP results reflected a loss due to the accounting treatment of the pending sale of the TRANZACT business.

  • There was a 70 basis point headwind on organic growth at the HWC level and 50 basis points at the enterprise level due to TRANZACT.

  • Benefits delivery and outsourcing experienced a 1% decline in revenue compared to the third quarter of last year.

  • The company faces headwinds from a $14 million book of business activity that occurred in Q4 of last year, impacting future comparisons.

  • Foreign exchange was a headwind to adjusted EPS of $0.02 for the quarter, with an expected $0.06 impact for the year.

Q & A Highlights

Q: Can you clarify the impact of the sale of TRANZACT on Q3 organic results and free cash flow? A: Mitch, thanks for your question. In Q3, TRANZACT was a 70 basis point headwind on organic growth at the HWC level and 50 basis points at the enterprise level. For 2025, excluding TRANZACT from our results, we'll have a positive impact on our organic growth, adjusted operating margin, and the free cash flow margin profile. - Andrew Krasner, CFO

Recommended Stories