DUBLIN, April 30, 2021 /PRNewswire/ --
First Quarter Key Metrics
- Total revenue increased 10% to $3.5
billion, including organic revenue growth of 6%
- Operating margin increased 320 basis points to 35.3%, and
operating margin, adjusted for certain items, increased 170 basis
points to 37.4%
- EPS increased 22% to $4.00, and
EPS, adjusted for certain items, increased 16% to $4.28
- For the first three months of 2021, cash flows from operations
increased 66% to $561 million, and
free cash flow increased 91% to $532
million
First Quarter Highlights
- Repurchased 0.2 million Class A Ordinary Shares for
approximately $50 million
- Published our 2020 Aon Impact Report, highlighting ongoing
actions to strengthen our inclusive Aon United culture and
commitment to net-zero greenhouse gas emissions by 2030, using
Science Based Targets
- Announced the future executive committee that will lead the
combined firm upon the completion of the pending combination of Aon
and Willis Towers Watson
- Subsequent to the close of the quarter, announced a new
solution, through broad industry collaboration, that will provide
supply chain protection for global COVID-19 vaccine shipments
- Subsequent to the close of the quarter, announced an 11%
increase to the quarterly cash dividend
Aon plc (NYSE: AON) today reported results for the three months
ended March 31, 2021.
Net income attributable to Aon shareholders was
$913 million, or $4.00 per share, compared to $772 million, or $3.29 per share, in the prior year period. Net
income per share attributable to Aon shareholders, adjusted for
certain items, increased 16% to $4.28, including a favorable impact of
$0.18 per share if the Company were
to translate prior year period results at current period foreign
exchange rates ("foreign currency translation"), compared to
$3.68 in the prior year period.
Certain items that impacted first quarter results and comparisons
with the prior year period are detailed in the "Reconciliation of
Non-GAAP Measures - Operating Income and Diluted Earnings Per
Share" on page 10 of this press release.
"In the first quarter, our colleagues delivered an outstanding
operational performance including 6% organic revenue growth and 170
basis points of margin improvement, building on over a decade of
progress on our key financial metrics, creating momentum for 2021,
and demonstrating the power of Aon United," said Greg Case, Chief Executive Officer. "Today,
clients are justifiably focused on the unprecedented impact of the
COVID-19 pandemic, but they are also increasingly aware of other
challenges like climate change, supply chain disruption, the future
of work, and the growing health-wealth gap. Our strategy is built
to bring the best innovation, insight, and solutions from across
our firm, and our potential to address client need only increases
with our pending combination with Willis
Towers Watson."
FIRST QUARTER 2021 FINANCIAL SUMMARY
Total revenue in the first quarter increased 10%
to $3.5 billion compared to the prior
year period driven by 6% organic revenue growth and a 4% favorable
impact from foreign currency translation.
Total operating expenses in the first quarter increased
4% to $2.3 billion compared to the
prior year period due primarily to a $73
million unfavorable impact from foreign currency
translation, an increase in expense associated with 6% organic
revenue growth, and a $17 million
increase in transaction costs related to the pending combination
with Willis Towers Watson, partially
offset by a $55 million decrease from
accelerated amortization related to certain tradenames that were
fully amortized in the second quarter of 2020 and expense
discipline, including lower travel and entertainment expense.
Foreign currency translation in the first quarter had a
$40 million, or $0.17 per share, favorable impact on U.S. GAAP
net income and a $42 million, or
$0.18 per share, favorable impact on
adjusted net income. If currency were to remain stable at today's
rates, the Company would expect a favorable impact of approximately
$0.04 per share in the second quarter
of 2021, $0.02 per share in the third
quarter of 2021, and $0.01 per share
in the fourth quarter of 2021.
Effective tax rate used in the Company's U.S. GAAP
financial statements in the first quarter was 20.1%, compared to
19.3% in the prior year period. After adjusting to exclude the
applicable tax impact associated with certain non-GAAP adjustments,
the adjusted effective tax rate for the first quarter of 2021
increased to 19.7% compared to 19.4% in the prior year period,
primarily driven by changes in the geographical distribution of
income and a net favorable impact from discrete items. The prior
year period also included a net favorable impact from discrete
items.
Weighted average diluted shares outstanding decreased to
228.1 million in the first quarter compared to 234.5 million in the
prior year period. The Company repurchased 0.2 million Class A
Ordinary Shares for approximately $50
million in the first quarter. As of March 31, 2021, the
Company had $5.2 billion of
remaining authorization under its share repurchase program.
YEAR TO DATE 2021 CASH FLOW SUMMARY
Cash flows
provided by operations for the first three months of 2021
increased $223 million, or 66%, to
$561 million compared to the prior
year period, primarily due to strong operational improvement and a
$45 million decrease in restructuring
cash outlays.
Free cash flow, defined as cash flows from operations
less capital expenditures, increased 91%, to $532 million for the first three months of 2021
compared to the prior year period, reflecting an increase in cash
flows from operations and a $30
million decrease in capital expenditures.
FIRST QUARTER 2021 REVENUE REVIEW
The first quarter
revenue reviews provided below include supplemental information
related to organic revenue growth (decline), which is a non-GAAP
measure that is described in detail in "Reconciliation of Non-GAAP
Measures - Organic Revenue Growth (Decline) and Free Cash Flow" on
page 9 of this press release.
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
|
(millions)
|
|
2021
|
|
2020
|
|
%
Change
|
|
Less:
Currency
Impact
|
|
Less:
Fiduciary
Investment
Income
|
|
Less:
Acquisitions,
Divestitures &
Other
|
|
Organic
Revenue
Growth
(Decline)
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Risk
Solutions
|
|
$
|
1,289
|
|
$
|
1,146
|
|
12%
|
|
5%
|
|
(1)%
|
|
(1)%
|
|
9%
|
Reinsurance
Solutions
|
|
922
|
|
848
|
|
9
|
|
3
|
|
(1)
|
|
1
|
|
6
|
Retirement
Solutions
|
|
434
|
|
397
|
|
9
|
|
4
|
|
—
|
|
—
|
|
5
|
Health
Solutions
|
|
536
|
|
502
|
|
7
|
|
3
|
|
—
|
|
—
|
|
4
|
Data & Analytic
Services
|
|
351
|
|
331
|
|
6
|
|
4
|
|
—
|
|
4
|
|
(2)
|
Elimination
|
|
(7)
|
|
(5)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Total
revenue
|
|
$
|
3,525
|
|
$
|
3,219
|
|
10%
|
|
4%
|
|
—%
|
|
—%
|
|
6%
|
Total revenue increased $306
million, or 10%, to $3,525
million compared to the prior year period, including organic
revenue growth of 6% primarily driven by ongoing strong retention
and net new business generation, as well as growth overall in the
more discretionary portions of the business.
Commercial Risk Solutions organic revenue growth of 9%
was driven by growth across every major geography, reflecting
strong retention and management of the renewal book portfolio,
highlighted by double-digit growth in the U.S., Asia, and Latin
America. Results in the U.S. reflect strong new business
generation, including continued strength in core P&C. Results
also reflect growth in the more discretionary portions of the
business, including double-digit growth in transaction liability
and increased project-related work. On average globally, pricing
was modestly positive, while exposures were flat, resulting in a
modestly positive market impact.
Reinsurance Solutions organic revenue growth of 6% was
driven by growth in treaty, reflecting continued net new business
generation globally, and double-digit growth in facultative
placements. Market impact was modestly positive on results in the
first quarter.
Retirement Solutions organic revenue growth of 5% was
driven by growth across every major business, highlighted by
double-digit growth in Human Capital, primarily for rewards
solutions, and solid growth in the core Retirement business driven
by an increase in project-related work resulting from new
legislation. Results in Human Capital and core Retirement were
positively impacted by a rebound from 2020 and higher utilization
rates. Growth in Investments primarily includes growth in our
delegated investment management business.
Health Solutions organic revenue growth of 4% was driven
by growth globally in core health and benefits brokerage,
reflecting strong retention and management of the renewal book
portfolio. Results also include a modest decline in the more
discretionary portions of the business, primarily due to a decline
in project-related work, partially offset by strong growth in
voluntary benefits.
Data & Analytic Services organic revenue decline of
2% was driven by a decrease in the travel and events practice
globally. Results also include double-digit revenue growth
generated through our CoverWallet digital platform, which has
processed total premium volume of $300
million over the last twelve months.
FIRST QUARTER 2021 EXPENSE REVIEW
|
|
Three Months Ended
March 31,
|
|
|
|
|
(millions)
|
|
2021
|
|
2020
|
|
$
Change
|
|
%
Change
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
$
|
1,719
|
|
|
$
|
1,522
|
|
|
$
|
197
|
|
|
13%
|
Information
technology
|
|
114
|
|
|
111
|
|
|
3
|
|
|
3
|
Premises
|
|
77
|
|
|
73
|
|
|
4
|
|
|
5
|
Depreciation of fixed
assets
|
|
41
|
|
|
41
|
|
|
—
|
|
|
—
|
Amortization of
intangible assets
|
|
40
|
|
|
97
|
|
|
(57)
|
|
|
(59)
|
Other general
expense
|
|
289
|
|
|
342
|
|
|
(53)
|
|
|
(15)
|
Total
operating expenses
|
|
$
|
2,280
|
|
|
$
|
2,186
|
|
|
$
|
94
|
|
|
4%
|
Compensation and benefits expense increased $197 million, or 13%, compared to the prior year
period due primarily to an increase in expense associated with 6%
organic growth and a $56 million
unfavorable impact from foreign currency translation.
Information technology expense increased $3 million, or 3%, compared to the prior year
period due primarily to a $2 million
unfavorable impact from foreign currency translation.
Premises expense increased $4
million, or 5%, compared to the prior year period due
primarily to a $3 million unfavorable
impact from foreign currency translation, partially offset by a
decrease related to reduced office occupancy.
Depreciation of fixed assets was flat compared to the
prior year period.
Amortization and impairment of intangible assets
decreased $57 million, or 59%,
compared to the prior year period due primarily to a $55 million decrease from accelerated
amortization related to certain tradenames that were fully
amortized in the second quarter of 2020.
Other general expenses decreased $53 million, or 15%, compared to the prior year
period due primarily to a temporary reduction of certain expenses,
primarily travel and entertainment, partially offset by a
$17 million increase in transaction
costs related to the pending combination with Willis Towers Watson and a $10 million unfavorable impact from foreign
currency translation.
FIRST QUARTER 2021 INCOME SUMMARY
Certain noteworthy
items impacted adjusted operating income and adjusted operating
margins in the first quarters of 2021 and 2020, which are also
described in detail in "Reconciliation of Non-GAAP Measures -
Operating Income and Diluted Earnings Per Share" on page 10 of this
press release.
|
|
Three Months Ended
March 31,
|
|
(millions)
|
|
2021
|
|
2020
|
|
%
Change
|
Revenue
|
|
$
|
3,525
|
|
$
|
3,219
|
|
10%
|
Expenses
|
|
2,280
|
|
2,186
|
|
4
|
Operating
income
|
|
$
|
1,245
|
|
$
|
1,033
|
|
21
|
Operating
margin
|
|
35.3%
|
|
32.1%
|
|
|
Operating income -
as adjusted
|
|
$
|
1,320
|
|
$
|
1,148
|
|
15%
|
Operating margin -
as adjusted
|
|
37.4%
|
|
35.7%
|
|
|
Operating income increased to $1,245 million compared to the prior year period.
Operating income, adjusted for certain items increased $172 million, or 15%, and operating margin,
adjusted for certain items, increased 170 basis points to 37.4%,
each compared to the prior year period. Adjusted operating income
and adjusted operating margin primarily reflect strong organic
revenue growth and expense discipline, partially offset by a
$13 million decrease in fiduciary
investment income. Results also reflect the absorption of
investments to support long-term growth initiatives.
Interest income increased $1
million compared to the prior year period. Interest
expense decreased $4 million to
$79 million compared to the prior
year period reflecting lower outstanding term debt. Other
pension income increased $2
million to $6 million compared
to the prior year period. Other expense of $8 million primarily reflects $4 million of losses on certain Company-owned
life insurance plans and $3 million
of net losses due to the unfavorable impact of exchange rates on
the remeasurement of assets and liabilities in non-functional
currencies.
Conference Call, Presentation Slides and Webcast
Details
The Company will host a conference call on Friday, April 30, 2021 at 7:30 a.m., central time. Interested parties can
listen to the conference call via a live audio webcast and view the
presentation slides at www.aon.com.
About Aon
Aon plc (NYSE: AON) Aon is a leading global professional
services firm providing a broad range of risk, retirement and
health solutions. Our 50,000 colleagues in 120 countries
empower results for clients by using proprietary data and analytics
to deliver insights that reduce volatility and improve
performance.
Safe Harbor Statement
This communication contains certain statements related to future
results, or states Aon's intentions, beliefs and expectations or
predictions for the future which are forward-looking statements as
that term is defined in the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to
differ materially from either historical or anticipated results
depending on a variety of factors. These forward-looking statements
include information about possible or assumed future results of
Aon's operations, the uncertainty surrounding the COVID-19
pandemic, and Aon's pending combination with Willis Towers Watson
Public Limited Company (the "Combination"). All statements other
than statements of historical facts that address activities, events
or developments that Aon expects or anticipates may occur in the
future, including such things as its outlook, future capital
expenditures, growth in commissions and fees, changes to the
composition or level of its revenues, cash flow and liquidity,
expected tax rates, business strategies, competitive strengths,
goals, the benefits of new initiatives, growth of its business and
operations, plans, references to future successes, and expectations
with respect to the timing, closing and benefits of the
Combination, are forward-looking statements. Also, when Aon uses
the words such as "anticipate", "believe", "estimate", "expect",
"intend", "plan", "probably", "potential", "looking forward", or
similar expressions, it is making forward-looking statements.
The following factors, among others, could cause actual results
to differ from those set forth in or anticipated by the
forward-looking statements: general economic and political
conditions in different countries in which Aon does business around
the world, including the U.K.'s withdrawal from the European Union;
changes in the competitive environment or damage to Aon's
reputation; fluctuations in exchange and interest rates that could
influence revenue and expenses; changes in global equity and fixed
income markets that could affect the return on invested assets;
changes in the funding status of Aon's various defined benefit
pension plans and the impact of any increased pension funding
resulting from those changes; the level of Aon's debt limiting
financial flexibility or increasing borrowing costs; rating agency
actions that could affect Aon's ability to borrow funds; volatility
in Aon's tax rate due to a variety of different factors, including
U.S. tax reform; changes in estimates or assumptions on Aon's
financial statements; limits on Aon's subsidiaries to make dividend
and other payments to Aon; the impact of lawsuits and other
contingent liabilities and loss contingencies arising from errors
and omissions and other claims against Aon; the impact of, and
potential challenges in complying with, legislation and regulation
in the jurisdictions in which Aon operates, particularly given the
global scope of Aon's businesses and the possibility of conflicting
regulatory requirements across jurisdictions in which Aon does
business; the impact of any investigations brought by regulatory
authorities in the U.S., Ireland,
the U.K. and other countries; the impact of any inquiries relating
to compliance with the U.S. Foreign Corrupt Practices Act and
non-U.S. anti-corruption laws and with U.S. and non-U.S. trade
sanctions regimes; failure to protect intellectual property rights
or allegations that Aon infringes on the intellectual property
rights of others; the effects of Irish law on Aon's operating
flexibility and the enforcement of judgments against Aon; the
failure to retain and attract qualified personnel, whether as a
result of the Combination or otherwise; international risks
associated with Aon's global operations; the effects of natural or
man-made disasters, including the effects of COVID-19 and other
health pandemics; the potential of a system or network breach or
disruption resulting in operational interruption or improper
disclosure of personal data; Aon's ability to develop and implement
new technology; the damage to Aon's reputation among clients,
markets or third parties; the actions taken by third parties that
perform aspects of Aon's business operations and client services;
the extent to which Aon manages certain risks created in connection
with the services, including fiduciary and investments, consulting,
and other advisory services, among others, that Aon currently
provides, or will provide in the future, to clients; Aon's ability
to continue, and the costs and the costs and risks associated with,
growing, developing and integrating companies that it acquires or
new lines of business; changes in commercial property and casualty
markets, commercial premium rates or methods of compensation;
changes in the health care system or Aon's relationships with
insurance carriers; Aon's ability to implement initiatives intended
to yield, and the ability to achieve, cost savings; Aon's ability
to realize the expected benefits from its restructuring plan; the
possibility that the Combination will not be consummated in the
expected timeframe, or at all; failure to obtain necessary
regulatory approvals, to comply with the requirements related to
such approvals, or to satisfy any of the other conditions to the
Combination; adverse effects on the market price of Aon's
securities and/or operating results for any reason, including,
without limitation, because of a failure to consummate the
Combination; the failure to realize the expected benefits of the
Combination (including anticipated revenue and growth synergies) in
the expected timeframe, or at all; the failure to effectively
integrate the combined businesses following the Combination;
significant transaction and integration costs or difficulties in
connection with the Combination and or unknown or inestimable
liabilities; litigation associated with the Combination; the
potential impact of the consummation of the Combination on
relationships, including with suppliers, customers, employees and
regulators; and general economic, business and political conditions
(including any epidemic, pandemic or disease outbreak, including
COVID-19) that affect the combined company following the
consummation of the Combination.
Any or all of Aon's forward-looking statements may turn out to
be inaccurate, and there are no guarantees about Aon's performance.
The factors identified above are not exhaustive. Aon and its
subsidiaries operate in a dynamic business environment in which new
risks may emerge frequently. Accordingly, you should not place
undue reliance on forward-looking statements, which speak only as
of the dates on which they are made. In addition, results for the
year ended December 31, 2020 are not
necessarily indicative of results that may be expected for any
future period, particularly in light of the continuing effects of
the COVID-19 pandemic. Further information concerning Aon and its
businesses, including factors that potentially could materially
affect Aon's financial results, is contained in Aon's filings with
the Securities and Exchange Commission (the "SEC"). See Aon's Annual Report on Form 10-K for the
year ended December 31, 2020 and its
Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 for a further discussion of these
and other risks and uncertainties applicable to Aon and its
businesses. These factors may be revised or supplemented in
subsequent reports filed with the SEC. Aon is not under, and
expressly disclaims, any obligation to update or alter any
forward-looking statement that it may make from time to time,
whether as a result of new information, future events or
otherwise.
Explanation of Non-GAAP Measures
This communication includes supplemental information not
calculated in accordance with generally accepted accounting
principles in the United State ("U.S. GAAP") related to organic
revenue growth (decline), free cash flow, adjusted operating
income, adjusted operating margin, and adjusted earnings per share
that exclude the effects of intangible asset amortization,
restructuring, capital expenditures, and certain other noteworthy
items that affected results for the comparable periods. Organic
revenue growth (decline) includes the impact of intercompany
activity and excludes foreign exchange rate changes, acquisitions,
divestitures, transfers between revenue lines, fiduciary investment
income, and gains or losses on derivatives accounted for as hedges.
Currency impact is determined by translating last year's revenue,
expense, or net income at this year's foreign exchange rates.
Reconciliations to the closest U.S. GAAP measure for each non-GAAP
measure presented in this communication are provided in the
attached appendices. Supplemental organic revenue growth (decline)
information and additional measures that exclude the effects of
certain items noted above do not affect net income or any other
U.S. GAAP reported amounts. Free cash flow is cash flows from
operating activity less capital expenditures. The adjusted
effective tax rate excludes the applicable tax impact associated
with expenses for estimated intangible asset amortization,
restructuring, and certain other noteworthy items. Management
believes that these measures are important to make meaningful
period-to-period comparisons and that this supplemental information
is helpful to investors. Non-GAAP measures should be viewed in
addition to, not in lieu of, Aon's Condensed Consolidated Financial
Statements. Industry peers provide similar supplemental information
regarding their performance, although they may not make identical
adjustments.
Investor
Contact:
|
|
Media
Contact:
|
Leslie
Follmer
|
|
Nadine
Youssef
|
+1
312-381-3310
|
|
+1
312-381-3024
|
investor.relations@aon.com
|
|
mediainquiries@aon.com
|
Aon
plc
|
Condensed
Consolidated Statements of Income (Unaudited)
|
|
|
Three Months
Ended
March 31,
|
|
|
(millions, except per
share data)
|
2021
|
|
2020
|
|
%
Change
|
Revenue
|
|
|
|
|
|
Total
revenue
|
$
|
3,525
|
|
|
$
|
3,219
|
|
|
10%
|
Expenses
|
|
|
|
|
|
Compensation and
benefits
|
1,719
|
|
|
1,522
|
|
|
13%
|
Information
technology
|
114
|
|
|
111
|
|
|
3%
|
Premises
|
77
|
|
|
73
|
|
|
5%
|
Depreciation of fixed
assets
|
41
|
|
|
41
|
|
|
—%
|
Amortization of
intangible assets
|
40
|
|
|
97
|
|
|
(59)%
|
Other general
expense
|
289
|
|
|
342
|
|
|
(15)%
|
Total
operating expenses
|
2,280
|
|
|
2,186
|
|
|
4%
|
Operating
income
|
1,245
|
|
|
1,033
|
|
|
21%
|
Interest
income
|
3
|
|
|
2
|
|
|
50%
|
Interest
expense
|
(79)
|
|
|
(83)
|
|
|
(5)%
|
Other income (expense)
(1)
|
(2)
|
|
|
28
|
|
|
(107)%
|
Income before
income taxes
|
1,167
|
|
|
980
|
|
|
19%
|
Income tax expense
(2)
|
234
|
|
|
189
|
|
|
24%
|
Net
income
|
933
|
|
|
791
|
|
|
18%
|
Less: Net income
attributable to noncontrolling interests
|
20
|
|
|
19
|
|
|
5%
|
Net income
attributable to Aon shareholders
|
$
|
913
|
|
|
$
|
772
|
|
|
18%
|
|
|
|
|
|
|
Basic net income
per share attributable to Aon shareholders
|
$
|
4.02
|
|
|
$
|
3.31
|
|
|
21%
|
Diluted net income
per share attributable to Aon shareholders
|
$
|
4.00
|
|
|
$
|
3.29
|
|
|
22%
|
Weighted average
ordinary shares outstanding - basic
|
227.1
|
|
|
233.2
|
|
|
(3)%
|
Weighted average
ordinary shares outstanding - diluted
|
228.1
|
|
|
234.5
|
|
|
(3)%
|
|
|
(1)
|
Included in Other
income (expense) for the three months ended March 31, 2020 is $1
million of expense that was previously classified as Net loss
from discontinued operations.
|
(2)
|
The effective tax
rate was 20.1% and 19.3% for the three months ended March 31,
2021 and 2020, respectively.
|
Aon plc
Reconciliation of Non-GAAP Measures - Organic Revenue Growth
(Decline) and Free Cash Flow (Unaudited)
Organic Revenue Growth (Decline) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
2021
|
|
2020
|
|
%
Change
|
|
Less:
Currency
Impact (1)
|
|
Less:
Fiduciary
Investment
Income (2)
|
|
Less:
Acquisitions,
Divestitures &
Other
|
|
Organic
Revenue
Growth
(Decline) (3)
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Risk
Solutions
|
|
$
|
1,289
|
|
|
$
|
1,146
|
|
12%
|
|
5%
|
|
(1)%
|
|
(1)%
|
|
9%
|
Reinsurance
Solutions
|
|
922
|
|
|
848
|
|
9
|
|
3
|
|
(1)
|
|
1
|
|
6
|
Retirement
Solutions
|
|
434
|
|
|
397
|
|
9
|
|
4
|
|
—
|
|
—
|
|
5
|
Health
Solutions
|
|
536
|
|
|
502
|
|
7
|
|
3
|
|
—
|
|
—
|
|
4
|
Data & Analytic
Services
|
|
351
|
|
|
331
|
|
6
|
|
4
|
|
—
|
|
4
|
|
(2)
|
Elimination
|
|
(7)
|
|
|
(5)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Total
revenue
|
|
$
|
3,525
|
|
|
$
|
3,219
|
|
10%
|
|
4%
|
|
—%
|
|
—%
|
|
6%
|
|
|
(1)
|
Currency impact is
determined by translating last year's revenue at this year's
foreign exchange rates.
|
(2)
|
Fiduciary investment
income for the three months ended March 31, 2021 and 2020 was
$2 million and $15 million, respectively.
|
(3)
|
Organic revenue
growth (decline) includes the impact of intercompany activity and
excludes the impact of changes in foreign
exchange rates, fiduciary investment income, acquisitions,
divestitures, transfers between revenue lines, and gains or losses
on derivatives accounted for as hedges.
|
Free Cash Flows
from Operations (Unaudited)
|
|
|
|
|
Three Months
Ended
March 31,
|
|
|
(millions)
|
|
2021
|
|
2020
|
|
%
Change
|
Cash Provided by
Operating Activities
|
|
$
|
561
|
|
|
$
|
338
|
|
|
66%
|
Capital Expenditures
Used for Operations
|
|
(29)
|
|
|
(59)
|
|
|
(51)%
|
Free
Cash Flows Provided by Operations (1)
|
|
$
|
532
|
|
|
$
|
279
|
|
|
91%
|
|
|
(1)
|
Free cash flow is
defined as cash flows from operations less capital expenditures.
This non-GAAP measure does
not imply or represent a precise calculation of residual cash flow
available for discretionary expenditures.
|
Aon
plc
|
|
|
|
Reconciliation of
Non-GAAP Measures - Operating Income and Diluted Earnings Per Share
(Unaudited) (1)
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
|
(millions,
except percentages)
|
|
2021
|
|
2020
|
|
%
Change
|
Revenue
|
|
$
|
3,525
|
|
$
|
3,219
|
|
10%
|
|
|
|
|
|
|
|
Operating
income
|
|
$
|
1,245
|
|
$
|
1,033
|
|
21%
|
Amortization and
impairment of intangible assets
|
|
40
|
|
97
|
|
|
Transaction costs
(2)
|
|
35
|
|
18
|
|
|
Operating income -
as adjusted
|
|
$
|
1,320
|
|
$
|
1,148
|
|
15%
|
Operating
margin
|
|
35.3%
|
|
32.1%
|
|
|
Operating margin -
as adjusted
|
|
37.4%
|
|
35.7%
|
|
|
|
|
Three Months Ended
March 31,
|
|
(millions,
except percentages)
|
|
2021
|
|
2020
|
|
%
Change
|
Operating income -
as adjusted
|
|
$
|
1,320
|
|
$
|
1,148
|
|
15%
|
Interest
income
|
|
3
|
|
2
|
|
50%
|
Interest
expense
|
|
(79)
|
|
(83)
|
|
(5)%
|
Other income
(expense):
|
|
|
|
|
|
|
Other income (expense)
- pensions - as adjusted
|
|
6
|
|
4
|
|
50%
|
Other income (expense)
- other
|
|
(8)
|
|
24
|
|
(133)%
|
Total
Other income (expense) - as adjusted
|
|
(2)
|
|
28
|
|
(107)%
|
Income before
income taxes - as adjusted
|
|
1,242
|
|
1,095
|
|
13%
|
Income tax expense
(3)
|
|
245
|
|
212
|
|
16%
|
Net income - as
adjusted
|
|
997
|
|
883
|
|
13%
|
Less: Net income
attributable to noncontrolling interests
|
|
20
|
|
19
|
|
5%
|
Net income
attributable to Aon shareholders - as adjusted
|
|
$
|
977
|
|
$
|
864
|
|
13%
|
Diluted net income
per share attributable to Aon shareholders - as
adjusted
|
|
$
|
4.28
|
|
$
|
3.68
|
|
16%
|
Weighted average
ordinary shares outstanding - diluted
|
|
228.1
|
|
234.5
|
|
(3)%
|
Effective Tax
Rates (3)
|
|
|
|
|
|
|
U.S. GAAP
|
|
20.1%
|
|
19.3%
|
|
|
Non-GAAP
|
|
19.7%
|
|
19.4%
|
|
|
|
|
(1)
|
Certain noteworthy
items impacting operating income in the three months ended March
31, 2021 and 2020 are described in this schedule. The items
shown with the caption "as adjusted" are non-GAAP
measures.
|
(2)
|
As part of the
pending combination with Willis Towers Watson, certain transaction
costs will be incurred by the Company prior to the closing date. We
are working towards closing the combination in the first half of
2021, subject to regulatory approval and customary closing
conditions. These costs may include advisory, legal, accounting,
valuation, and other professional or consulting fees required to
complete the combination.
|
(3)
|
Adjusted items are
generally taxed at the estimated annual effective tax rate, except
for the applicable tax impact associated with accelerated
tradename
amortization, impairment charges and certain transaction costs,
which are adjusted at the related jurisdictional rate.
|
Aon
plc
Condensed
Consolidated Statements of Financial Position
(Unaudited)
|
|
|
|
As of
|
(millions)
|
|
March 31,
2021
|
|
December
31,
2020
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
822
|
|
|
$
|
884
|
|
Short-term
investments
|
|
171
|
|
|
308
|
|
Receivables,
net
|
|
3,526
|
|
|
3,070
|
|
Fiduciary assets
(1)
|
|
13,894
|
|
|
13,798
|
|
Other current
assets
|
|
492
|
|
|
624
|
|
Total
current assets
|
|
18,905
|
|
|
18,684
|
|
Goodwill
|
|
8,587
|
|
|
8,666
|
|
Intangible assets,
net
|
|
594
|
|
|
640
|
|
Fixed assets,
net
|
|
584
|
|
|
599
|
|
Operating lease
right-of-use assets
|
|
867
|
|
|
911
|
|
Deferred tax
assets
|
|
721
|
|
|
724
|
|
Prepaid
pension
|
|
1,321
|
|
|
1,280
|
|
Other non-current
assets
|
|
596
|
|
|
610
|
|
Total
assets
|
|
$
|
32,175
|
|
|
$
|
32,114
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
1,628
|
|
|
$
|
2,016
|
|
Short-term debt and
current portion of long-term debt
|
|
—
|
|
|
448
|
|
Fiduciary
liabilities
|
|
13,894
|
|
|
13,798
|
|
Other current
liabilities
|
|
1,301
|
|
|
1,171
|
|
Total
current liabilities
|
|
16,823
|
|
|
17,433
|
|
Long-term
debt
|
|
7,263
|
|
|
7,281
|
|
Non-current operating
lease liabilities
|
|
849
|
|
|
897
|
|
Deferred tax
liabilities
|
|
293
|
|
|
262
|
|
Pension, other
postretirement, and postemployment liabilities
|
|
1,681
|
|
|
1,763
|
|
Other non-current
liabilities
|
|
905
|
|
|
895
|
|
Total
liabilities
|
|
27,814
|
|
|
28,531
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Ordinary shares -
$0.01 nominal value
|
|
2
|
|
|
2
|
|
Additional paid-in
capital
|
|
6,348
|
|
|
6,312
|
|
Retained
earnings
|
|
1,801
|
|
|
1,042
|
|
Accumulated other
comprehensive loss
|
|
(3,891)
|
|
|
(3,861)
|
|
Total Aon
shareholders' equity
|
|
4,260
|
|
|
3,495
|
|
Noncontrolling
interests
|
|
101
|
|
|
88
|
|
Total
equity
|
|
4,361
|
|
|
3,583
|
|
Total liabilities
and equity
|
|
$
|
32,175
|
|
|
$
|
32,114
|
|
|
|
(1)
|
Includes cash and
short-term investments of $5,699 million and $5,681 million for the
periods ended March 31, 2021 and December 31, 2020,
respectively.
|
Aon
plc
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
(millions)
|
|
2021
|
|
2020
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
|
$
|
933
|
|
|
$
|
791
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
|
(Gain) from sales of
businesses, net
|
|
—
|
|
|
(25)
|
|
Depreciation of fixed
assets
|
|
41
|
|
|
41
|
|
Amortization and
impairment of intangible assets
|
|
40
|
|
|
97
|
|
Share-based
compensation expense
|
|
131
|
|
|
76
|
|
Deferred income
taxes
|
|
19
|
|
|
(6)
|
|
Change in assets and
liabilities:
|
|
|
|
|
Fiduciary
receivables
|
|
(166)
|
|
|
(808)
|
|
Short-term investments
— funds held on behalf of clients
|
|
(28)
|
|
|
(237)
|
|
Fiduciary
liabilities
|
|
194
|
|
|
1,045
|
|
Receivables,
net
|
|
(485)
|
|
|
(543)
|
|
Accounts payable and
accrued liabilities
|
|
(356)
|
|
|
(275)
|
|
Current income
taxes
|
|
142
|
|
|
141
|
|
Pension, other
postretirement and postemployment liabilities
|
|
(59)
|
|
|
(41)
|
|
Other assets and
liabilities (1)
|
|
155
|
|
|
82
|
|
Cash provided by
operating activities
|
|
561
|
|
|
338
|
|
Cash flows from
investing activities
|
|
|
|
|
Proceeds from
investments
|
|
11
|
|
|
6
|
|
Payments for
investments
|
|
(18)
|
|
|
(43)
|
|
Net sales (purchases)
of short-term investments — non-fiduciary
|
|
138
|
|
|
(38)
|
|
Acquisition of
businesses, net of cash acquired
|
|
—
|
|
|
(334)
|
|
Sale of businesses,
net of cash sold
|
|
—
|
|
|
30
|
|
Capital
expenditures
|
|
(29)
|
|
|
(59)
|
|
Cash
provided by (used for) investing activities
|
|
102
|
|
|
(438)
|
|
Cash flows from
financing activities
|
|
|
|
|
Share
repurchase
|
|
(50)
|
|
|
(463)
|
|
Issuance of shares for
employee benefit plans
|
|
(87)
|
|
|
(112)
|
|
Issuance of
debt
|
|
250
|
|
|
2,060
|
|
Repayment of
debt
|
|
(650)
|
|
|
(1,341)
|
|
Cash dividends to
shareholders
|
|
(104)
|
|
|
(102)
|
|
Noncontrolling
interests and other financing activities
|
|
(68)
|
|
|
40
|
|
Cash
provided by (used for) financing activities
|
|
(709)
|
|
|
82
|
|
Effect of exchange
rates on cash and cash equivalents
|
|
(16)
|
|
|
(82)
|
|
Net (decrease) in
cash and cash equivalents
|
|
(62)
|
|
|
(100)
|
|
Cash and cash
equivalents at beginning of period
|
|
884
|
|
|
790
|
|
Cash and cash
equivalents at end of period
|
|
$
|
822
|
|
|
$
|
690
|
|
|
|
(1)
|
Included in Other
assets and liabilities for the three months ended March 31, 2020 is
$1 million previously classified as
Net loss from discontinued operations and a $60 million cash
outflow previously classified as Restructuring reserves.
|
View original
content:http://www.prnewswire.com/news-releases/aon-reports-first-quarter-2021-results-301280747.html
SOURCE Aon plc