Willis Towers Watson (NASDAQ: WLTW) (the “Company”), a leading
global advisory, broking and solutions company, today announced
financial results for the second quarter ended June 30, 2021.
“We delivered very strong quarterly financial
results, and I am proud of our results for the first half of 2021,”
said John Haley, Willis Towers Watson’s chief executive officer.
“In the second quarter we delivered broad-based revenue growth,
continued margin expansion, and had significant earnings per share
growth. I am encouraged by our growth momentum and the improving
macroeconomic outlook. Our financial results reflect our talented
colleague base, their perseverance, the strength of our client
relationships and our compelling value proposition. We are focused
on moving forward independently, with confidence in our ability to
continue delivering significant value for all of our stakeholders.
We are well-positioned to compete vigorously and independently
across our businesses around the world and will continue to
innovate and adapt to address evolving client needs.”
Second Quarter Company
Highlights
Revenue was $2.29 billion for the second quarter
of 2021, an increase of 8% (4% increase constant currency and 8%
increase organic) as compared to $2.11 billion for the same period
in the prior year.
For the first half of 2021, revenue was $4.88
billion, an increase of 6% (3% increase constant currency and 6%
increase organic) as compared to $4.58 billion for the same period
in the prior year.
Income from operations for the second quarter of
2021 was $260 million, or 11.4% of revenue, an increase of 370
basis points compared to the second quarter of the prior year.
Adjusted operating income was $409 million, or 17.9% of revenue, an
increase of 390 basis points compared to the second quarter of the
prior year. Net income attributable to Willis Towers Watson for the
second quarter of 2021 was $184 million, an increase of 96% from
$94 million for the prior-year second quarter. For the quarter,
diluted earnings per share were $1.41 and adjusted diluted earnings
per share were $2.66. Net income attributable to Willis Towers
Watson and diluted earnings per share for the second quarter of
2021 included pre-tax $51 million of transaction and integration
expenses mostly related to the proposed Aon combination prior to
its termination. The U.S. GAAP tax rate for the quarter was 33.8%,
and the adjusted income tax rate for the quarter used in
calculating adjusted diluted earnings per share was 19.3%.
Income from operations for the first half of
2021 was $712 million, or 14.6% of revenue, an increase of 320
basis points compared to the first half of the prior year. Adjusted
operating income was $988 million, or 20.3% of revenue, an increase
of 240 basis points compared to the first half of the prior year.
Net income attributable to Willis Towers Watson for the first half
of 2021 was $917 million, an increase of 130% from $399 million for
the same period in the prior year. For the first half of 2021,
diluted earnings per share were $7.04 and adjusted diluted earnings
per share were $6.30. Net income attributable to Willis Towers
Watson and diluted earnings per share for the first half of 2021
included pre-tax $75 million of transaction and integration
expenses mostly related to the proposed Aon combination prior to
its termination. For the first half of 2021, the U.S. GAAP tax rate
was 17.2%, and the adjusted income tax rate used in calculating
adjusted diluted earnings per share was 20.0%.
___________________
1 The revenue amounts included in this release
are presented on a U.S. GAAP basis except where stated otherwise.
The segment discussion is on an organic basis.
Net income for the second quarter of 2021 was
$186 million, or 8.1% of revenue, an increase from net income of
$102 million, or 4.8% of revenue for the prior-year second quarter.
Adjusted EBITDA for the second quarter of 2021 was $557 million, or
24.4% of revenue, an increase from Adjusted EBITDA of $441 million,
or 20.9% of revenue.
Net income for the first half of 2021 was $922
million, or 18.9% of revenue, an increase from net income of $415
million, or 9.1% of revenue for the same period in the prior year.
Adjusted EBITDA for the first half of 2021 was $1.29 billion, or
26.4% of revenue, an increase from Adjusted EBITDA of $1.12
billion, or 24.5% of revenue.
Cash flows from operating activities for the six months ended
June 30, 2021 were $366 million, down 47% compared to $685 million
for the prior-year first half. Free cash flow for the six months
ended June 30, 2021 was $287 million, down 48% compared to $550
million for the prior-year first half. The decrease in
year-over-year free cash flow was due to net legal settlement
payments of approximately $185 million for the previously-announced
Stanford and Willis/Towers Watson merger settlements, higher
incentive compensation and benefit-related items of approximately
$249 million. Absent these items, free cash flow on an adjusted
basis would have been $721 million or up 31% versus the prior year.
During the six months ended June 30, 2021, the Company had no share
repurchase activity.
Risks and Uncertainties Related to the COVID-19
Pandemic
The extent to which COVID-19 continues to impact our business
and financial position will depend on future developments, which
are difficult to predict, including the severity and scope of the
COVID-19 pandemic as well as the types of measures imposed by
governmental authorities to contain the virus or address its impact
and the duration of those actions and measures. During 2020 and
through the first half of 2021, the COVID-19 pandemic had a
negative impact on revenue growth, particularly in our businesses
that are discretionary in nature, but otherwise it generally did
not have a material impact on our overall results. We saw an
increased demand for these services, which improved revenue growth,
in the second quarter of 2021. We believe this positive trend could
continue for the remainder of the year but may vary based on
further disruptions to the supply chain, workforce availability,
vaccination rates and further social-distancing orders in
jurisdictions where we do business. In light of the effects on our
own business operations and those of our clients, suppliers and
other third parties with whom we interact, the Company has
regularly considered the impact of COVID-19 on our business, taking
into account our business resilience and continuity plans,
financial modeling and stress testing of liquidity and financial
resources. For additional information on the risks posed by
COVID-19, see additional disclosures in the Company’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2021.
Segment Highlights
Human Capital & Benefits
The Human Capital & Benefits (HCB) segment had revenue of
$836 million, an increase of 9% (4% increase constant currency and
5% increase organic) from $767 million in the prior-year second
quarter. On an organic basis, Talent and Rewards returned to
revenue growth, led by a sharp increase in demand for advisory work
from employers navigating the challenging labor market. Retirement
revenue increased with growth in Great Britain driven by funding
and Guaranteed Minimum Pension (‘GMP’) equalization work while
increased consulting projects drove revenue growth in North
America. Health and Benefits revenue grew primarily from increased
consulting work in North America alongside continued expansion of
our local portfolios and global benefits management appointments
outside of North America. Technology and Administrative
Solutions revenue increased due to new project and client activity
in Great Britain. The HCB segment had an operating margin of 23.0%,
as compared to 20.9% for the prior-year second quarter.
Corporate Risk & Broking
The Corporate Risk & Broking (CRB) segment had revenue of
$788 million, an increase of 12% (8% increase constant currency and
8% increase organic) from $701 million in the prior-year second
quarter. North America benefited from gains in connection with
settlements and book-of-business sales in the quarter. On an
organic basis North America led the segment followed by
International, Western Europe and Great Britain with new business
generation and strong renewals across several insurance lines, most
notably, in FINEX and Construction. The CRB segment had an
operating margin of 22.9%, as compared to 19.2% for the prior-year
second quarter.
Investment, Risk & Reinsurance
The Investment, Risk & Reinsurance (IRR) segment had revenue
of $400 million, a decrease of 3% (7% decrease constant currency
and 15% increase organic) from $413 million in the prior-year
second quarter. On an organic basis, most lines of business
contributed to the growth. Reinsurance growth was driven by new
business wins and favorable renewal factors. Advisory-related fees
led the revenue growth in both our Investment business and
Insurance Consulting and Technology business, which was further
aided by increased contingent performance fees. The IRR segment had
an operating margin of 33.3%, as compared to 28.7% for the
prior-year second quarter.
In September 2020, the Company sold its Max Matthiessen
business, and the sale of Miller, its wholesale insurance broking
subsidiary, was completed on March 1, 2021 (see additional
disclosures in the Company’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2021).
Benefits Delivery & Administration
The Benefits Delivery & Administration (BDA)
segment had revenue of $242 million, an increase of 16% (16%
increase constant currency and 14% increase organic) from $209
million in the prior-year second quarter. BDA’s organic revenue
increase was led by Individual Marketplace, primarily by TRANZACT,
which generated revenue of $116 million in the second quarter with
strong growth in Medicare Advantage sales. The BDA segment had an
operating margin of negative 4.3%, as compared to negative 4.2% for
the prior-year second quarter.
Dividend Increase and Quarterly Dividend
The Board of Directors of Willis Towers Watson approved a 13%
increase in its regular quarterly cash dividend from $0.71 per
common share to $0.80 per common share. The company’s next dividend
is payable on or around October 15, 2021 to shareholders of record
at the close of business on September 30, 2021.
Conference Call
The Company will host a live webcast and conference call to
discuss the financial results for the second quarter. It will be
held on Tuesday, August 3, 2021, beginning at 9:00 a.m. Eastern
Time, and can be accessed via the Internet at
www.willistowerswatson.com. The replay of the call will be
available shortly after the live call for a period of three months.
A telephonic replay of the call will also be available for 24 hours
at 404-537-3406, conference ID 1985274.
About Willis Towers Watson
Willis Towers Watson (NASDAQ: WLTW) is a leading global
advisory, broking and solutions company that helps clients around
the world turn risk into a path for growth. With roots dating to
1828, Willis Towers Watson has more than 46,000 employees and
services clients in more than 140 countries. We design and deliver
solutions that manage risk, optimize benefits, cultivate talent,
and expand the power of capital to protect and strengthen
institutions and individuals. Our unique perspective allows us to
see the critical intersections between talent, assets and ideas —
the dynamic formula that drives business performance. Together, we
unlock potential. Learn more at willistowerswatson.com.
Willis Towers Watson Non-GAAP Measures
In order to assist readers of our consolidated
financial statements in understanding the core operating results
that Willis Towers Watson’s management uses to evaluate the
business and for financial planning, we present the following
non-GAAP measures: (1) Constant Currency Change, (2) Organic
Change, (3) Adjusted Operating Income/Margin, (4) Adjusted
EBITDA/Margin, (5) Adjusted Net Income, (6) Adjusted Diluted
Earnings Per Share, (7) Adjusted Income Before Taxes, (8) Adjusted
Income Taxes/Tax Rate and (9) Free Cash Flow.
We believe that these measures are relevant and
provide useful information widely used by analysts, investors and
other interested parties in our industry to provide a baseline for
evaluating and comparing our operating performance, and in the case
of free cash flow, our liquidity results.
Within these measures referred to as ‘adjusted’,
we adjust for significant items which will not be settled in cash,
or which we believe to be items that are not core to our current or
future operations. Some of these items may not be applicable for
the current quarter, however they are expected to be part of our
full-year results. These items include the following:
- Restructuring
costs and transaction and integration expenses – Management
believes it is appropriate to adjust for restructuring costs and
transaction and integration expenses when they relate to a specific
significant program with a defined set of activities and costs that
are not expected to continue beyond a defined period of time, or
significant acquisition-related transaction expenses. We believe
the adjustment is necessary to present how the Company is
performing, both now and in the future when the incurrence of these
costs will have concluded.
- Gains and losses
on disposals of operations – Adjustment to remove the gain or loss
resulting from disposed operations.
- Pension
settlement and curtailment gains and losses – Adjustment to remove
significant pension settlement and curtailment gains and losses to
better present how the Company is performing.
- Abandonment of
long-lived asset – Adjustment to remove the depreciation expense
resulting from internally-developed software that was abandoned
prior to being placed into service.
- Provisions for
significant litigation – We will include provisions for litigation
matters which we believe are not representative of our core
business operations. These amounts are presented net of insurance
recovery receivables.
- Tax effect of
statutory rate changes – Relates to the incremental tax expense or
benefit from significant statutory income tax rate changes enacted
in material jurisdictions in which we operate.
- Tax effect of
the Coronavirus Aid, Relief, and Economic Security (‘CARES’) Act –
Relates to the incremental tax expense impact, primarily from the
Base Erosion and Anti-Abuse Tax (‘BEAT’), generated from electing
certain income tax provisions of the CARES Act.
- Tax effects of
internal reorganization – Relates to the U.S. income tax expense
resulting from the completion of internal reorganizations of the
ownership of certain businesses that reduced the investments held
by our U.S.-controlled subsidiaries.
We evaluate our revenue on an as reported (U.S.
GAAP), constant currency and organic basis. We believe presenting
constant currency and organic information provides valuable
supplemental information regarding our comparable results,
consistent with how we evaluate our performance internally.
We consider Constant Currency Change, Organic
Change, Adjusted Operating Income/Margin, Adjusted EBITDA/Margin,
Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted
Income Before Taxes, Adjusted Income Taxes/Tax Rate and Free Cash
Flow to be important financial measures, which are used to
internally evaluate and assess our core operations and to benchmark
our operating and liquidity results against our competitors. These
non-GAAP measures are important in illustrating what our comparable
operating and liquidity results would have been had we not incurred
transaction-related and non-recurring items. Our non-GAAP measures
and their accompanying definitions are presented as follows:
Constant Currency Change – Represents the
year-over-year change in revenue excluding the impact of foreign
currency fluctuations. To calculate this impact, the prior year
local currency results are first translated using the current year
monthly average exchange rates. The change is calculated by
comparing the prior year revenue, translated at the current year
monthly average exchange rates, to the current year as reported
revenue, for the same period. We believe constant currency measures
provide useful information to investors because they provide
transparency to performance by excluding the effects that foreign
currency exchange rate fluctuations have on period-over-period
comparability given volatility in foreign currency exchange
markets.
Organic Change – Excludes the impact of
fluctuations in foreign currency exchange rates, as described above
and the period-over-period impact of acquisitions and divestitures
on current-year revenue. We believe that excluding
transaction-related items from our U.S. GAAP financial measures
provides useful supplemental information to our investors, and it
is important in illustrating what our core operating results would
have been had we not included these transaction-related items,
since the nature, size and number of these translation-related
items can vary from period to period.
Adjusted Operating Income/Margin – Income from operations
adjusted for amortization, restructuring costs, transaction and
integration expenses and non-recurring items that, in management’s
judgment, significantly affect the period-over-period assessment of
operating results. Adjusted operating income margin is calculated
by dividing adjusted operating income by revenue. We consider
adjusted operating income/margin to be important financial
measures, which are used internally to evaluate and assess our core
operations and to benchmark our operating results against our
competitors.
Adjusted EBITDA/Margin – Net Income adjusted for provision for
income taxes, interest expense, depreciation and amortization,
restructuring costs, transaction and integration expenses, gains
and losses on disposals of operations and non-recurring items that,
in management’s judgment, significantly affect the
period-over-period assessment of operating results. Adjusted EBITDA
Margin is calculated by dividing adjusted EBITDA by revenue. We
consider adjusted EBITDA/margin to be important financial measures,
which are used internally to evaluate and assess our core
operations, to benchmark our operating results against our
competitors and to evaluate and measure our performance-based
compensation plans.
Adjusted Net Income – Net Income Attributable to
Willis Towers Watson adjusted for amortization, restructuring
costs, transaction and integration expenses, gains and losses on
disposals of operations and non-recurring items that, in
management’s judgment, significantly affect the period-over-period
assessment of operating results and the related tax effect of those
adjustments and the tax effects of internal reorganizations. This
measure is used solely for the purpose of calculating adjusted
diluted earnings per share.
Adjusted Diluted Earnings Per Share – Adjusted
Net Income divided by the weighted-average number of shares of
common stock, diluted. Adjusted diluted earnings per share is used
to internally evaluate and assess our core operations and to
benchmark our operating results against our competitors.
Adjusted Income Before Taxes – Income from
operations before income taxes adjusted for amortization,
restructuring costs, transaction and integration expenses, gains
and losses on disposals of operations and non-recurring items that,
in management’s judgment, significantly affect the
period-over-period assessment of operating results. Adjusted income
before taxes is used solely for the purpose of calculating the
adjusted income tax rate.
Adjusted Income Taxes/Tax Rate – Provision for income taxes
adjusted for taxes on certain items of amortization, restructuring
costs, transaction and integration expenses, gains and losses on
disposals of operations, the tax effects of internal
reorganizations, and non-recurring items that, in management’s
judgment, significantly affect the period-over-period assessment of
operating results, divided by adjusted income before taxes.
Adjusted income taxes is used solely for the purpose of calculating
the adjusted income tax rate. Management believes that the adjusted
income tax rate presents a rate that is more closely aligned to the
rate that we would incur if not for the reduction of pre-tax income
for the adjusted items and the tax effects of internal
reorganizations, which are not core to our current and future
operations.
Free Cash Flow – Cash flows from operating
activities less cash used to purchase fixed assets and software for
internal use. Free Cash Flow is a liquidity measure and is not
meant to represent residual cash flow available for discretionary
expenditures. Management believes that free cash flow presents the
core operating performance and cash-generating capabilities of our
business operations.
These non-GAAP measures are not defined in the
same manner by all companies and may not be comparable to other
similarly titled measures of other companies. Non-GAAP measures
should be considered in addition to, and not as a substitute for,
the information contained within our condensed consolidated
financial statements.
Reconciliations of these measures are included
in the accompanying tables with the following exception.
The Company does not reconcile its forward-looking non-GAAP
financial measures to the corresponding U.S. GAAP measures, due to
variability and difficulty in making accurate forecasts and
projections and/or certain information not being ascertainable or
accessible; and because not all of the information, such as foreign
currency impacts necessary for a quantitative reconciliation of
these forward-looking non-GAAP financial measures to the most
directly comparable U.S. GAAP financial measure, is available to
the Company without unreasonable efforts. For the same reasons, the
Company is unable to address the probable significance of the
unavailable information. The Company provides non-GAAP financial
measures that it believes will be achieved, however it cannot
accurately predict all of the components of the adjusted
calculations and the U.S. GAAP measures may be materially different
than the non-GAAP measures.
Willis Towers Watson Forward-Looking
Statements
This document contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.
You can identify these statements and other forward-looking
statements in this document by words such as “may”, “will”,
“would”, “expect”, “anticipate”, “believe”, “estimate”, “plan”,
“intend”, “continue”, or similar words, expressions or the negative
of such terms or other comparable terminology. These statements
include, but are not limited to, such things as our outlook, the
impact of the COVID-19 pandemic on our business, impact of the
termination of the business combination with Aon plc and the
divestitures contemplated in connection therewith, future capital
expenditures, ongoing working capital efforts, future share
repurchases, financial results (including our revenue), the impact
of changes to tax laws on our financial results, existing and
evolving business strategies and acquisitions and dispositions,
demand for our services and competitive strengths, goals, the
benefits of new initiatives, growth of our business and operations,
our ability to successfully manage ongoing organizational and
technology changes, including investments in improving systems and
processes, and plans and references to future successes, including
our future financial and operating results, plans, objectives,
expectations and intentions and other statements that are not
historical facts. Such statements are based upon the current
beliefs and expectations of Willis Towers Watson’s management and
are subject to significant risks and uncertainties. Actual results
may differ from those set forth in the forward-looking statements.
All forward-looking disclosure is speculative by its nature.
There are important risks, uncertainties, events and factors
that could cause our actual results or performance to differ
materially from those in the forward-looking statements contained
herein, including the following: our ability to successfully
establish, execute and achieve our global business strategy as it
evolves; changes in demand for our services, including any decline
in consulting services, defined benefit pension plans or the
purchasing of insurance; the risks related to changes in general
economic, business and political conditions, including changes in
the financial markets and inflation; the risks relating to the
adverse impact of the ongoing COVID-19 pandemic on the demand for
our products and services, our cash flows and our business
operations, including increased demand on our information
technology resources and systems and related risks of cybersecurity
breaches or incidents; the risks relating to or arising from the
termination of the business combination with Aon plc announced in
March 2020 and the divestitures contemplated in connection
therewith, including, among others, risks relating to the impact of
such terminations on relationships, including with suppliers,
customers, employees and regulators, risks relating to litigation
in connection with the business combination and the impact of the
costs of the business combination that will be borne by us, despite
the business combination being terminated and the payment of the
termination fee; significant competition that we face and the
potential for loss of market share and/or profitability; the impact
of seasonality and differences in timing of renewals; the failure
to protect client data or breaches of information systems or
insufficient safeguards against cybersecurity breaches or
incidents; the risk of increased liability or new legal claims
arising from our new and existing products and services, and
expectations, intentions and outcomes relating to outstanding
litigation; the risk of substantial negative outcomes on existing
litigation or investigation matters; changes in the regulatory
environment in which we operate, including, among other risks, the
impacts of pending competition law and regulatory investigations;
various claims, government inquiries or investigations or the
potential for regulatory action; our ability to make divestitures
or acquisitions and our ability to integrate or manage such
acquired businesses; our ability to successfully hedge against
fluctuations in foreign currency rates; our ability to integrate
direct-to-consumer sales and marketing solutions with our existing
offerings and solutions; our ability to comply with complex and
evolving regulations related to data privacy and cyber security;
our ability to successfully manage ongoing organizational changes,
including investments in improving systems and processes; disasters
or business continuity problems; the impact of Brexit; our ability
to successfully enhance our billing, collection and other working
capital efforts, and thereby increase our free cash flow; the
potential impact of the anticipated replacement of the London
Interbank Offered Rate (‘LIBOR’); our ability to properly identify
and manage conflicts of interest; reputational damage, including
from association with third parties; reliance on third-party
services; the loss of key employees or a large number of employees;
doing business internationally, including the impact of exchange
rates; compliance with extensive government regulation; the risk of
sanctions imposed by governments, or changes to associated sanction
regulations; our ability to effectively apply technology, data and
analytics changes for internal operations, maintaining industry
standards and meeting client preferences; changes and developments
in the insurance industry or the U.S. healthcare system, including
those related to Medicare and any policy changes from the new
Presidential administration and legislative actions from the
current U.S. Congress; the inability to protect the Company’s
intellectual property rights, or the potential infringement upon
the intellectual property rights of others; fluctuations in our
pension assets and liabilities; our capital structure, including
indebtedness amounts, the limitations imposed by the covenants in
the documents governing such indebtedness and the maintenance of
the financial and disclosure controls and procedures of each; our
ability to obtain financing on favorable terms or at all; adverse
changes in our credit ratings; the impact of recent or potential
changes to U.S. or foreign tax laws, including on our effective tax
rate, and the enactment of additional, or the revision of existing,
state, federal, and/or foreign regulatory and tax laws and
regulations and any policy changes from the new Presidential
administration and legislative actions from the current U.S.
Congress; U.S. federal income tax consequences to U.S. persons
owning at least 10% of our shares; changes in accounting
principles, estimates or assumptions; fluctuation in revenue
against our relatively fixed or higher than expected expenses; the
laws of Ireland being different from the laws of the U.S. and
potentially affording less protections to the holders of our
securities; and our holding company structure potentially
preventing us from being able to receive dividends or other
distributions in needed amounts from our subsidiaries. The
foregoing list of factors is not exhaustive and new factors may
emerge from time to time that could also affect actual performance
and results. For more information, please see Part I, Item 1A in
our Annual Report on Form 10-K, and our subsequent filings with the
SEC. Copies are available online at http://www.sec.gov or
www.willistowerswatson.com.
Although we believe that the assumptions underlying our
forward-looking statements are reasonable, any of these
assumptions, and therefore also the forward-looking statements
based on these assumptions, could themselves prove to be
inaccurate. Given the significant uncertainties inherent in the
forward-looking statements included in this document, our inclusion
of this information is not a representation or guarantee by us that
our objectives and plans will be achieved.
Our forward-looking statements speak only as of the date made,
and we will not update these forward-looking statements unless the
securities laws require us to do so. With regard to these risks,
uncertainties and assumptions, the forward-looking events discussed
in this document may not occur, and we caution you against unduly
relying on these forward-looking statements.
Contact
INVESTORSClaudia De La Hoz |
Claudia.Delahoz@willistowerswatson.com
WILLIS TOWERS
WATSONSupplemental Segment Information(In
millions of U.S. dollars)(Unaudited)
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
Components of Revenue Change(i) |
|
|
|
Three Months Ended June 30, |
|
|
As Reported |
|
|
Currency |
|
|
Constant Currency |
|
|
Acquisitions/ |
|
|
Organic |
|
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
|
Impact |
|
|
Change |
|
|
Divestitures |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Human Capital &
Benefits |
|
$ |
836 |
|
|
$ |
767 |
|
|
9 |
% |
|
|
5 |
% |
|
|
4 |
% |
|
|
0 |
% |
|
|
5 |
% |
|
Corporate Risk &
Broking |
|
|
788 |
|
|
|
701 |
|
|
12 |
% |
|
|
4 |
% |
|
|
8 |
% |
|
|
0 |
% |
|
|
8 |
% |
|
Investment, Risk &
Reinsurance |
|
|
400 |
|
|
|
413 |
|
|
(3 |
)% |
|
|
4 |
% |
|
|
(7 |
)% |
|
|
(23 |
)% |
|
|
15 |
% |
|
Benefits Delivery &
Administration |
|
|
242 |
|
|
|
209 |
|
|
16 |
% |
|
|
0 |
% |
|
|
16 |
% |
|
|
2 |
% |
|
|
14 |
% |
|
Segment
Revenue |
|
|
2,266 |
|
|
|
2,090 |
|
|
8 |
% |
|
|
4 |
% |
|
|
4 |
% |
|
|
(4 |
)% |
|
|
9 |
% |
|
Reimbursable expenses and
other |
|
|
20 |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
2,286 |
|
|
$ |
2,113 |
|
|
8 |
% |
|
|
4 |
% |
|
|
4 |
% |
|
|
(4 |
)% |
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
Components of Revenue Change(i) |
|
|
|
Six Months Ended June 30, |
|
|
As Reported |
|
|
Currency |
|
|
Constant Currency |
|
|
Acquisitions/ |
|
|
Organic |
|
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
|
Impact |
|
|
Change |
|
|
Divestitures |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Human Capital &
Benefits |
|
$ |
1,711 |
|
|
$ |
1,617 |
|
|
6 |
% |
|
|
4 |
% |
|
|
2 |
% |
|
|
0 |
% |
|
|
2 |
% |
|
Corporate Risk &
Broking |
|
|
1,598 |
|
|
|
1,440 |
|
|
11 |
% |
|
|
4 |
% |
|
|
7 |
% |
|
|
0 |
% |
|
|
6 |
% |
|
Investment, Risk &
Reinsurance |
|
|
1,005 |
|
|
|
1,028 |
|
|
(2 |
)% |
|
|
4 |
% |
|
|
(6 |
)% |
|
|
(14 |
)% |
|
|
8 |
% |
|
Benefits Delivery &
Administration |
|
|
529 |
|
|
|
440 |
|
|
20 |
% |
|
|
0 |
% |
|
|
20 |
% |
|
|
2 |
% |
|
|
19 |
% |
|
Segment
Revenue |
|
|
4,843 |
|
|
|
4,525 |
|
|
7 |
% |
|
|
4 |
% |
|
|
3 |
% |
|
|
(3 |
)% |
|
|
6 |
% |
|
Reimbursable expenses and
other |
|
|
33 |
|
|
|
54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
4,876 |
|
|
$ |
4,579 |
|
|
6 |
% |
|
|
4 |
% |
|
|
3 |
% |
|
|
(3 |
)% |
|
|
6 |
% |
|
(i) Components of revenue change may not add due to rounding
SEGMENT OPERATING INCOME/(LOSS)
(i)
|
|
Three Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Human Capital &
Benefits |
|
$ |
192 |
|
|
$ |
160 |
|
Corporate Risk &
Broking |
|
|
181 |
|
|
|
135 |
|
Investment, Risk &
Reinsurance |
|
|
133 |
|
|
|
119 |
|
Benefits Delivery &
Administration |
|
|
(10 |
) |
|
|
(9 |
) |
Segment Operating
Income |
|
$ |
496 |
|
|
$ |
405 |
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Human Capital &
Benefits |
|
$ |
412 |
|
|
$ |
373 |
|
Corporate Risk &
Broking |
|
|
343 |
|
|
|
262 |
|
Investment, Risk &
Reinsurance |
|
|
423 |
|
|
|
396 |
|
Benefits Delivery &
Administration |
|
|
(3 |
) |
|
|
(20 |
) |
Segment Operating
Income |
|
$ |
1,175 |
|
|
$ |
1,011 |
|
(i) Segment operating income/(loss) excludes certain costs,
including amortization of intangibles, restructuring costs,
transaction and integration expenses, certain litigation
provisions, and to the extent that the actual expense based upon
which allocations are made differs from the forecast/budget amount,
a reconciling item will be created between internally-allocated
expenses and the actual expenses reported for U.S. GAAP
purposes.
SEGMENT OPERATING MARGINS
|
|
Three Months Ended June 30, |
|
|
|
2021 |
|
|
|
2020 |
|
|
Human Capital &
Benefits |
|
23.0 |
% |
|
|
20.9 |
% |
|
Corporate Risk &
Broking |
|
22.9 |
% |
|
|
19.2 |
% |
|
Investment, Risk &
Reinsurance |
|
33.3 |
% |
|
|
28.7 |
% |
|
Benefits Delivery &
Administration |
|
(4.3 |
)% |
|
|
(4.2 |
)% |
|
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
|
2020 |
|
|
Human Capital &
Benefits |
|
24.1 |
% |
|
|
23.1 |
% |
|
Corporate Risk &
Broking |
|
21.5 |
% |
|
|
18.2 |
% |
|
Investment, Risk &
Reinsurance |
|
42.1 |
% |
|
|
38.5 |
% |
|
Benefits Delivery &
Administration |
|
(0.6 |
)% |
|
|
(4.4 |
)% |
|
RECONCILIATIONS OF SEGMENT OPERATING INCOME TO INCOME
FROM OPERATIONS BEFORE INCOME TAXES
|
|
Three Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Segment Operating Income |
|
$ |
496 |
|
|
$ |
405 |
|
Amortization |
|
|
(98 |
) |
|
|
(119 |
) |
Transaction and integration
expenses(i) |
|
|
(51 |
) |
|
|
(14 |
) |
Unallocated, net(ii) |
|
|
(87 |
) |
|
|
(109 |
) |
Income from Operations |
|
|
260 |
|
|
|
163 |
|
Interest expense |
|
|
(52 |
) |
|
|
(62 |
) |
Other income, net |
|
|
74 |
|
|
|
76 |
|
Income from operations before
income taxes |
|
$ |
282 |
|
|
$ |
177 |
|
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Segment Operating Income |
|
$ |
1,175 |
|
|
$ |
1,011 |
|
Amortization |
|
|
(201 |
) |
|
|
(240 |
) |
Transaction and integration
expenses(i) |
|
|
(75 |
) |
|
|
(23 |
) |
Unallocated, net(ii) |
|
|
(187 |
) |
|
|
(225 |
) |
Income from Operations |
|
|
712 |
|
|
|
523 |
|
Interest expense |
|
|
(111 |
) |
|
|
(123 |
) |
Other income, net |
|
|
513 |
|
|
|
168 |
|
Income from operations before
income taxes |
|
$ |
1,114 |
|
|
$ |
568 |
|
(i) Includes mainly transaction costs related to the
proposed Aon combination prior to its
termination.(ii) Includes certain costs, primarily
related to corporate functions which are not directly related to
the segments, and certain differences between budgeted expenses
determined at the beginning of the year and actual expenses that we
report for U.S. GAAP purposes.
WILLIS TOWERS
WATSONReconciliations of Non-GAAP
Measures (In millions of U.S. dollars, except per share
data)(Unaudited)RECONCILIATIONS OF NET INCOME ATTRIBUTABLE
TO WILLIS TOWERS WATSON TO ADJUSTED DILUTED EARNINGS PER
SHARE
|
|
Three Months Ended June 30, |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Net Income
attributable to Willis Towers Watson |
|
$ |
184 |
|
|
$ |
94 |
|
Adjusted for certain
items: |
|
|
|
|
|
|
|
|
Amortization |
|
|
98 |
|
|
|
119 |
|
Transaction and integration expenses |
|
|
51 |
|
|
|
14 |
|
Loss on disposal of operations |
|
|
2 |
|
|
|
2 |
|
Tax effect on certain items listed above(i) |
|
|
(28 |
) |
|
|
(30 |
) |
Tax effect of statutory rate change |
|
|
40 |
|
|
|
— |
|
Tax effect of the CARES Act |
|
|
— |
|
|
|
35 |
|
Adjusted Net
Income |
|
$ |
347 |
|
|
$ |
234 |
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of
common stock, diluted |
|
|
130 |
|
|
|
130 |
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Share |
|
$ |
1.41 |
|
|
$ |
0.72 |
|
Adjusted for certain
items:(ii) |
|
|
|
|
|
|
|
|
Amortization |
|
|
0.75 |
|
|
|
0.91 |
|
Transaction and integration expenses |
|
|
0.39 |
|
|
|
0.11 |
|
Loss on disposal of operations |
|
|
0.02 |
|
|
|
0.02 |
|
Tax effect on certain items listed above(i) |
|
|
(0.21 |
) |
|
|
(0.23 |
) |
Tax effect of statutory rate change |
|
|
0.31 |
|
|
|
— |
|
Tax effect of the CARES Act |
|
|
— |
|
|
|
0.27 |
|
Adjusted Diluted
Earnings Per Share |
|
$ |
2.66 |
|
|
$ |
1.80 |
|
|
|
Six Months Ended June 30, |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Net Income
attributable to Willis Towers Watson |
|
$ |
917 |
|
|
$ |
399 |
|
Adjusted for certain
items: |
|
|
|
|
|
|
|
|
Abandonment of long-lived asset |
|
|
— |
|
|
|
35 |
|
Amortization |
|
|
201 |
|
|
|
240 |
|
Transaction and integration expenses |
|
|
75 |
|
|
|
23 |
|
Gain/(loss) on disposal of operations |
|
|
(357 |
) |
|
|
2 |
|
Tax effect on certain items listed above(i) |
|
|
(55 |
) |
|
|
(65 |
) |
Tax effect of statutory rate change |
|
|
40 |
|
|
|
— |
|
Tax effect of the CARES Act |
|
|
— |
|
|
|
35 |
|
Adjusted Net
Income |
|
$ |
821 |
|
|
$ |
669 |
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of
common stock, diluted |
|
|
130 |
|
|
|
130 |
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Share |
|
$ |
7.04 |
|
|
$ |
3.07 |
|
Adjusted for certain
items:(ii) |
|
|
|
|
|
|
|
|
Abandonment of long-lived asset |
|
|
— |
|
|
|
0.27 |
|
Amortization |
|
|
1.54 |
|
|
|
1.84 |
|
Transaction and integration expenses |
|
|
0.58 |
|
|
|
0.18 |
|
Gain/(loss) on disposal of operations |
|
|
(2.74 |
) |
|
|
0.02 |
|
Tax effect on certain items listed above(i) |
|
|
(0.42 |
) |
|
|
(0.50 |
) |
Tax effect of statutory rate change |
|
|
0.31 |
|
|
|
— |
|
Tax effect of the CARES Act |
|
|
— |
|
|
|
0.27 |
|
Adjusted Diluted
Earnings Per Share |
|
$ |
6.30 |
|
|
$ |
5.14 |
|
(i) The tax effect was calculated using an effective tax rate
for each item.(ii) Per share values and totals may differ due to
rounding.
RECONCILIATIONS OF NET INCOME TO ADJUSTED
EBITDA
|
|
Three Months Ended June 30, |
|
|
|
|
2021 |
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
|
$ |
186 |
|
|
8.1 |
% |
$ |
102 |
|
|
|
4.8 |
% |
Provision for income taxes |
|
|
96 |
|
|
|
|
|
75 |
|
|
|
|
|
Interest expense |
|
|
52 |
|
|
|
|
|
62 |
|
|
|
|
|
Depreciation |
|
|
72 |
|
|
|
|
|
67 |
|
|
|
|
|
Amortization |
|
|
98 |
|
|
|
|
|
119 |
|
|
|
|
|
Transaction and integration expenses |
|
|
51 |
|
|
|
|
|
14 |
|
|
|
|
|
Loss on disposal of operations |
|
|
2 |
|
|
|
|
|
2 |
|
|
|
|
|
Adjusted EBITDA and
Adjusted EBITDA Margin |
|
$ |
557 |
|
|
24.4 |
% |
$ |
441 |
|
|
|
20.9 |
% |
|
|
Six Months Ended June 30, |
|
|
|
|
2021 |
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
|
$ |
922 |
|
|
18.9 |
% |
$ |
415 |
|
|
|
9.1 |
% |
Provision for income taxes |
|
|
192 |
|
|
|
|
|
153 |
|
|
|
|
|
Interest expense |
|
|
111 |
|
|
|
|
|
123 |
|
|
|
|
|
Depreciation(i) |
|
|
143 |
|
|
|
|
|
165 |
|
|
|
|
|
Amortization |
|
|
201 |
|
|
|
|
|
240 |
|
|
|
|
|
Transaction and integration expenses |
|
|
75 |
|
|
|
|
|
23 |
|
|
|
|
|
Gain/(loss) on disposal of operations |
|
|
(357 |
) |
|
|
|
|
2 |
|
|
|
|
|
Adjusted EBITDA and
Adjusted EBITDA Margin |
|
$ |
1,287 |
|
|
26.4 |
% |
$ |
1,121 |
|
|
|
24.5 |
% |
(i) Includes abandonment of long-lived asset of $35 million for
the six months ended June 30, 2020.
RECONCILIATIONS OF INCOME FROM OPERATIONS TO ADJUSTED
OPERATING INCOME
|
|
Three Months Ended June 30, |
|
|
|
|
2021 |
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
$ |
260 |
|
|
11.4 |
% |
$ |
163 |
|
|
|
7.7 |
% |
Adjusted for certain
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
|
98 |
|
|
|
|
|
119 |
|
|
|
|
|
Transaction and integration expenses |
|
|
51 |
|
|
|
|
|
14 |
|
|
|
|
|
Adjusted operating
income |
|
$ |
409 |
|
|
17.9 |
% |
$ |
296 |
|
|
|
14.0 |
% |
|
|
Six Months Ended June 30, |
|
|
|
|
2021 |
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
$ |
712 |
|
|
14.6 |
% |
$ |
523 |
|
|
|
11.4 |
% |
Adjusted for certain
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Abandonment of long-lived asset |
|
|
— |
|
|
|
|
|
35 |
|
|
|
|
|
Amortization |
|
|
201 |
|
|
|
|
|
240 |
|
|
|
|
|
Transaction and integration expenses |
|
|
75 |
|
|
|
|
|
23 |
|
|
|
|
|
Adjusted operating
income |
|
$ |
988 |
|
|
20.3 |
% |
$ |
821 |
|
|
|
17.9 |
% |
RECONCILIATIONS OF GAAP INCOME TAXES/TAX RATE TO
ADJUSTED INCOME TAXES/TAX RATE
|
|
Three Months Ended June 30, |
|
|
|
|
2021 |
|
|
|
2020 |
|
Income from operations
before income taxes |
|
$ |
282 |
|
|
$ |
177 |
|
|
|
|
|
|
|
|
|
|
Adjusted for certain
items: |
|
|
|
|
|
|
|
|
Amortization |
|
|
98 |
|
|
|
119 |
|
Transaction and integration expenses |
|
|
51 |
|
|
|
14 |
|
Loss on disposal of operations |
|
|
2 |
|
|
|
2 |
|
Adjusted income before
taxes |
|
$ |
433 |
|
|
$ |
312 |
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
$ |
96 |
|
|
$ |
75 |
|
Tax effect on certain items listed above(i) |
|
|
28 |
|
|
|
30 |
|
Tax effect of statutory rate change |
|
|
(40 |
) |
|
|
— |
|
Tax effect of the CARES Act |
|
|
— |
|
|
|
(35 |
) |
Adjusted income
taxes |
|
$ |
84 |
|
|
$ |
70 |
|
|
|
|
|
|
|
|
|
|
U.S. GAAP tax
rate |
|
|
33.8 |
% |
|
|
42.2 |
% |
Adjusted income tax
rate |
|
|
19.3 |
% |
|
|
22.2 |
% |
|
|
Six Months Ended June 30, |
|
|
|
|
2021 |
|
|
|
2020 |
|
Income from operations
before income taxes |
|
$ |
1,114 |
|
|
$ |
568 |
|
|
|
|
|
|
|
|
|
|
Adjusted for certain
items: |
|
|
|
|
|
|
|
|
Abandonment of long-lived asset |
|
|
— |
|
|
|
35 |
|
Amortization |
|
|
201 |
|
|
|
240 |
|
Transaction and integration expenses |
|
|
75 |
|
|
|
23 |
|
Gain/(loss) on disposal of operations |
|
|
(357 |
) |
|
|
2 |
|
Adjusted income before
taxes |
|
$ |
1,033 |
|
|
$ |
868 |
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
$ |
192 |
|
|
$ |
153 |
|
Tax effect on certain items listed above(i) |
|
|
55 |
|
|
|
65 |
|
Tax effect of statutory rate change |
|
|
(40 |
) |
|
|
— |
|
Tax effect of the CARES Act |
|
|
— |
|
|
|
(35 |
) |
Adjusted income
taxes |
|
$ |
207 |
|
|
$ |
183 |
|
|
|
|
|
|
|
|
|
|
U.S. GAAP tax
rate |
|
|
17.2 |
% |
|
|
26.9 |
% |
Adjusted income tax
rate |
|
|
20.0 |
% |
|
|
21.1 |
% |
(i) The tax effect was calculated using an effective tax rate
for each item.
RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
TO FREE CASH FLOW
|
|
Six Months Ended June 30, |
|
|
|
|
2021 |
|
|
|
2020 |
|
Cash flows from
operating activities |
|
$ |
366 |
|
|
$ |
685 |
|
Less: Additions to fixed
assets and software for internal use |
|
|
(79 |
) |
|
|
(135 |
) |
Free Cash
Flow |
|
$ |
287 |
|
|
$ |
550 |
|
WILLIS TOWERS
WATSONCondensed Consolidated Statements of
Income(In millions of U.S. dollars, except per share
data)(Unaudited)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Revenue |
|
$ |
2,286 |
|
|
$ |
2,113 |
|
|
$ |
4,876 |
|
|
$ |
4,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of providing
services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits |
|
|
1,407 |
|
|
|
1,363 |
|
|
|
2,930 |
|
|
|
2,757 |
|
Other operating expenses |
|
|
398 |
|
|
|
387 |
|
|
|
815 |
|
|
|
871 |
|
Depreciation |
|
|
72 |
|
|
|
67 |
|
|
|
143 |
|
|
|
165 |
|
Amortization |
|
|
98 |
|
|
|
119 |
|
|
|
201 |
|
|
|
240 |
|
Transaction and integration expenses |
|
|
51 |
|
|
|
14 |
|
|
|
75 |
|
|
|
23 |
|
Total costs of providing
services |
|
|
2,026 |
|
|
|
1,950 |
|
|
|
4,164 |
|
|
|
4,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
260 |
|
|
|
163 |
|
|
|
712 |
|
|
|
523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(52 |
) |
|
|
(62 |
) |
|
|
(111 |
) |
|
|
(123 |
) |
Other income, net |
|
|
74 |
|
|
|
76 |
|
|
|
513 |
|
|
|
168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS BEFORE INCOME TAXES |
|
282 |
|
|
|
177 |
|
|
|
1,114 |
|
|
|
568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
|
(96 |
) |
|
|
(75 |
) |
|
|
(192 |
) |
|
|
(153 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
186 |
|
|
|
102 |
|
|
|
922 |
|
|
|
415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income attributable to
non-controlling interests |
|
|
(2 |
) |
|
|
(8 |
) |
|
|
(5 |
) |
|
|
(16 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO
WILLIS TOWERS WATSON |
|
$ |
184 |
|
|
$ |
94 |
|
|
$ |
917 |
|
|
$ |
399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
1.42 |
|
|
$ |
0.73 |
|
|
$ |
7.06 |
|
|
$ |
3.08 |
|
Diluted earnings per share |
|
$ |
1.41 |
|
|
$ |
0.72 |
|
|
$ |
7.04 |
|
|
$ |
3.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of
common stock, basic |
|
|
130 |
|
|
|
129 |
|
|
|
130 |
|
|
|
130 |
|
Weighted-average shares of
common stock, diluted |
|
|
130 |
|
|
|
130 |
|
|
|
130 |
|
|
|
130 |
|
WILLIS TOWERS
WATSONCondensed Consolidated Balance
Sheets(In millions of U.S. dollars, except share
data)(Unaudited)
|
|
June 30, |
|
|
December 31, |
|
|
|
2021 |
|
|
2020 |
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,217 |
|
|
$ |
2,089 |
|
Fiduciary assets |
|
|
15,379 |
|
|
|
15,160 |
|
Accounts receivable, net |
|
|
2,507 |
|
|
|
2,555 |
|
Prepaid and other current
assets |
|
|
465 |
|
|
|
497 |
|
Total current assets |
|
|
20,568 |
|
|
|
20,301 |
|
Fixed assets, net |
|
|
927 |
|
|
|
1,014 |
|
Goodwill |
|
|
10,995 |
|
|
|
11,204 |
|
Other intangible assets,
net |
|
|
2,786 |
|
|
|
3,043 |
|
Right-of-use assets |
|
|
830 |
|
|
|
902 |
|
Pension benefits assets |
|
|
1,026 |
|
|
|
971 |
|
Other non-current assets |
|
|
1,135 |
|
|
|
1,096 |
|
Total non-current assets |
|
|
17,699 |
|
|
|
18,230 |
|
TOTAL
ASSETS |
|
$ |
38,267 |
|
|
$ |
38,531 |
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
|
Fiduciary liabilities |
|
$ |
15,379 |
|
|
$ |
15,160 |
|
Deferred revenue and accrued
expenses |
|
|
1,782 |
|
|
|
2,161 |
|
Current debt |
|
|
1,110 |
|
|
|
971 |
|
Current lease liabilities |
|
|
152 |
|
|
|
152 |
|
Other current liabilities |
|
|
751 |
|
|
|
888 |
|
Total current liabilities |
|
|
19,174 |
|
|
|
19,332 |
|
Long-term debt |
|
|
3,995 |
|
|
|
4,664 |
|
Liability for pension
benefits |
|
|
1,238 |
|
|
|
1,405 |
|
Deferred tax liabilities |
|
|
628 |
|
|
|
561 |
|
Provision for liabilities |
|
|
399 |
|
|
|
407 |
|
Long-term lease
liabilities |
|
|
838 |
|
|
|
918 |
|
Other non-current
liabilities |
|
|
280 |
|
|
|
312 |
|
Total non-current liabilities |
|
|
7,378 |
|
|
|
8,267 |
|
TOTAL
LIABILITIES |
|
|
26,552 |
|
|
|
27,599 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
|
|
EQUITY(i) |
|
|
|
|
|
|
|
|
Additional paid-in
capital |
|
|
10,785 |
|
|
|
10,748 |
|
Retained earnings |
|
|
3,166 |
|
|
|
2,434 |
|
Accumulated other
comprehensive loss, net of tax |
|
|
(2,278 |
) |
|
|
(2,359 |
) |
Treasury shares, at cost,
17,519 shares in 2021 and 2020 |
|
|
(3 |
) |
|
|
(3 |
) |
Total Willis Towers
Watson shareholders' equity |
|
|
11,670 |
|
|
|
10,820 |
|
Non-controlling interests |
|
|
45 |
|
|
|
112 |
|
Total
Equity |
|
|
11,715 |
|
|
|
10,932 |
|
TOTAL LIABILITIES AND
EQUITY |
|
$ |
38,267 |
|
|
$ |
38,531 |
|
____________
(i) Equity includes (a) Ordinary shares $0.000304635
nominal value; Authorized 1,510,003,775; Issued 128,987,616 (2021)
and 128,964,579 (2020); Outstanding 128,987,616 (2021) and
128,964,579 (2020) and (b) Preference shares, $0.000115 nominal
value; Authorized 1,000,000,000 and Issued none in 2021 and
2020.
WILLIS TOWERS
WATSONCondensed Consolidated Statements of Cash
Flows(In millions of U.S. dollars)(Unaudited)
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
922 |
|
|
$ |
415 |
|
Adjustments to reconcile net
income to total net cash from operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
143 |
|
|
|
165 |
|
Amortization |
|
|
201 |
|
|
|
240 |
|
Non-cash lease expense |
|
|
73 |
|
|
|
74 |
|
Net periodic benefit of
defined benefit pension plans |
|
|
(81 |
) |
|
|
(92 |
) |
Provision for doubtful
receivables from clients |
|
|
8 |
|
|
|
28 |
|
Provision for deferred income taxes |
|
|
56 |
|
|
|
40 |
|
Share-based compensation |
|
|
52 |
|
|
|
28 |
|
Net
(gain)/loss on disposal of operations |
|
|
(357 |
) |
|
|
2 |
|
Non-cash foreign exchange
gain |
|
|
(4 |
) |
|
|
(12 |
) |
Other, net |
|
|
(12 |
) |
|
|
1 |
|
Changes in operating assets
and liabilities, net of effects from purchase of subsidiaries: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(39 |
) |
|
|
128 |
|
Fiduciary assets |
|
|
(1,198 |
) |
|
|
(3,200 |
) |
Fiduciary liabilities |
|
|
1,198 |
|
|
|
3,200 |
|
Other assets |
|
|
(91 |
) |
|
|
82 |
|
Other liabilities |
|
|
(506 |
) |
|
|
(417 |
) |
Provisions |
|
|
1 |
|
|
|
3 |
|
Net cash from operating
activities |
|
|
366 |
|
|
|
685 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM/(USED IN)
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Additions to fixed assets and
software for internal use |
|
|
(79 |
) |
|
|
(135 |
) |
Capitalized software
costs |
|
|
(27 |
) |
|
|
(33 |
) |
Acquisitions of operations,
net of cash acquired |
|
|
— |
|
|
|
(66 |
) |
Net proceeds from sale of
operations |
|
|
696 |
|
|
|
2 |
|
Other, net |
|
|
— |
|
|
|
(17 |
) |
Net cash from/(used in)
investing activities |
|
|
590 |
|
|
|
(249 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS USED IN FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
Senior notes issued |
|
|
— |
|
|
|
282 |
|
Debt issuance costs |
|
|
— |
|
|
|
(2 |
) |
Repayments of debt |
|
|
(515 |
) |
|
|
(311 |
) |
Proceeds from issuance of
shares |
|
|
2 |
|
|
|
5 |
|
Payments of deferred and
contingent consideration related to acquisitions |
|
|
(17 |
) |
|
|
— |
|
Cash paid for employee taxes
on withholding shares |
|
|
(1 |
) |
|
|
(1 |
) |
Dividends paid |
|
|
(269 |
) |
|
|
(171 |
) |
Acquisitions of and dividends
paid to non-controlling interests |
|
|
(21 |
) |
|
|
(14 |
) |
Other, net |
|
|
— |
|
|
|
(3 |
) |
Net cash used in financing
activities |
|
|
(821 |
) |
|
|
(215 |
) |
|
|
|
|
|
|
|
|
|
INCREASE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH |
|
|
135 |
|
|
|
221 |
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash |
|
|
(10 |
) |
|
|
(22 |
) |
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, BEGINNING OF PERIOD (i) |
|
|
2,096 |
|
|
|
895 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, END OF PERIOD (i) |
|
$ |
2,221 |
|
|
$ |
1,094 |
|
____________
(i) As a result of the acquired TRANZACT
collateralized facility, cash, cash equivalents and restricted cash
included $4 million and $7 million of restricted cash at June 30,
2021 and December 31, 2020, respectively, which is included within
prepaid and other current assets on our condensed consolidated
balance sheets. There was $7 million and $8 million of restricted
cash held at June 30, 2020 and December 31, 2019, respectively.
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