TIDMMHM
Marsh McLennan (NYSE: MMC), the world's leading professional
services firm in the areas of risk, strategy and people, today
reported financial results for the first quarter ended March 31,
2022.
Dan Glaser, President and CEO, said: "Marsh McLennan started
2022 with an excellent first quarter. We generated underlying
revenue growth of 10%, adjusted operating income growth of 12%, and
adjusted EPS growth of 16%. We are well-positioned for another
solid year."
"The current war in Ukraine has reminded us that risk and
uncertainty are constants, and I am proud of the work our
colleagues are doing to help one another and our clients navigate
the widespread challenges created by this horrific situation."
Consolidated Results
Consolidated revenue in the first quarter of 2022 was $5.5
billion, an increase of 9% compared with the first quarter of 2021.
On an underlying basis, revenue increased 10%. Operating income was
$1.4 billion, an increase of 6% from the prior year. Adjusted
operating income, which excludes noteworthy items as presented in
the attached supplemental schedules, rose 12% to $1.6 billion.
Net income attributable to the Company was $1.1 billion, or
$2.10 per diluted share, compared with $1.91 in the first quarter
of 2021. Adjusted earnings per share rose 16% to $2.30 per diluted
share compared with $1.99 a year ago.
Risk & Insurance Services
Risk & Insurance Services revenue was $3.5 billion in the
first quarter of 2022, an increase of 10%, or 11% on an underlying
basis. Operating income rose 6% to $1.1 billion, and adjusted
operating income was $1.2 billion, an increase of 12% versus a year
ago.
Marsh's revenue in the first quarter was $2.5 billion, an
increase of 11% on an underlying basis. In U.S./Canada, underlying
revenue rose 10%. International operations produced underlying
revenue growth of 11%, reflecting 17% growth in Asia Pacific, 16%
growth in Latin America, and 9% growth in EMEA.
Guy Carpenter's revenue in the first quarter was $999 million,
an increase of 11% on an underlying basis.
Consulting
Consulting revenue was $2.0 billion in the first quarter of
2022, an increase of 7%, or 10% on an underlying basis. Operating
income increased 8% to $392 million, and adjusted operating income
increased 9% to $402 million.
Mercer's revenue in the first quarter was $1.3 billion, an
increase of 6% on an underlying basis. Career revenue of $202
million was up 16% on an underlying basis. Health revenue of $524
million increased 9% on an underlying basis, and Wealth revenue of
$617 million increased 2% on an underlying basis.
Oliver Wyman's revenue in the first quarter was $667 million, an
increase of 17% on an underlying basis.
Other Items
The Company repurchased 3.2 million shares of stock for $500
million in the first quarter.
In March, Marsh McLennan announced it would exit all of its
businesses in Russia and transfer ownership of its Russian business
to local management who will operate independently in the Russian
market.
Conference Call
A conference call to discuss first quarter 2022 results will be
held today at 8:30 a.m. Eastern time. To participate in the
teleconference, please dial +1 866 437 7574. Callers from outside
the United States should dial +1 409 220 9376. The access code for
both numbers is 3058039. The live audio webcast may be accessed at
marshmclennan.com. A replay of the webcast will be available
approximately two hours after the event.
About Marsh McLennan
Marsh McLennan (NYSE: MMC) is the world's leading professional
services firm in the areas of risk, strategy and people. The
Company's 83,000 colleagues advise clients in 130 countries. With
annual revenue of approximately $20 billion, Marsh McLennan helps
clients navigate an increasingly dynamic and complex environment
through four market-leading businesses. Marsh provides data-driven
risk advisory services and insurance solutions to commercial and
consumer clients. Guy Carpenter develops advanced risk, reinsurance
and capital strategies that help clients grow profitably and pursue
emerging opportunities. Mercer delivers advice and
technology-driven solutions that help organizations redefine the
world of work, reshape retirement and investment outcomes, and
unlock health and well being for a changing workforce. Oliver Wyman
serves as a critical strategic, economic and brand advisor to
private sector and governmental clients. For more information,
visit marshmclennan.com, follow us on LinkedIn and Twitter or
subscribe to BRINK.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements," as
defined in the Private Securities Litigation Reform Act of 1995.
These statements, which express management's current views
concerning future events or results, use words like "anticipate,"
"assume," "believe," "continue," "estimate," "expect," "intend,"
"plan," "project" and similar terms, and future or conditional
tense verbs like "could," "may," "might," "should, " "will" and
"would".
Forward-looking statements are subject to inherent risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied in our forward-looking statements.
Factors that could materially affect our future results include,
among other things:
-- the impact of geopolitical or macroeconomic conditions on us, our clients
and the countries and industries in which we operate, including from
conflicts such as the war in Ukraine, capital markets volatility and
inflation;
-- the increasing prevalence of ransomware, supply chain and other forms of
cyber attacks, and their potential to disrupt our operations and result
in the disclosure of confidential client or company information;
-- the impact from lawsuits or investigations arising from errors and
omissions, breaches of fiduciary duty or other claims against us in our
capacity as a broker or investment advisor, including claims related to
our investment business' ability to execute timely trades in light of
increased trading volume;
-- the financial and operational impact of complying with laws and
regulations, including domestic and international sanctions regimes,
anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, U.K.
Anti Bribery Act and cybersecurity and data privacy regulations;
-- our ability to attract, retain and develop industry leading talent;
-- our ability to compete effectively and adapt to competitive pressures in
each of our businesses, including from disintermediation as well as
technological change, digital disruption and other types of innovation;
-- our ability to manage potential conflicts of interest that may arise
across our businesses given our expanding client base, the broad scope of
our work and the significant volume of our engagements;
-- the impact of changes in tax laws, guidance and interpretations, or
disagreements with tax authorities; and
-- the regulatory, contractual and reputational risks that arise based on
insurance placement activities and insurer revenue streams.
The factors identified above are not exhaustive. Marsh McLennan
and its subsidiaries (collectively, the "Company") operate in a
dynamic business environment in which new risks emerge frequently.
Accordingly, we caution readers not to place undue reliance on any
forward-looking statements, which are based only on information
currently available to us and speak only as of the dates on which
they are made. The Company undertakes no obligation to update or
revise any forward-looking statement to reflect events or
circumstances arising after the date on which it is made.
Further information concerning Marsh McLennan and its
businesses, including information about factors that could
materially affect our results of operations and financial
condition, is contained in the Company's filings with the
Securities and Exchange Commission, including the "Risk Factors"
section and the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" section of our most recently
filed Annual Report on Form 10-K.
Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share data)
(Unaudited)
Three Months Ended
March 31,
2022 2021
Revenue $ 5,549 $5,083
Expense:
Compensation and benefits 3,100 2,807
Other operating expenses 1,004 918
Operating expenses 4,104 3,725
Operating income 1,445 1,358
Other net benefit credits 62 71
Interest income 1 --
Interest expense (110 ) (118 )
Investment income 26 11
Income before income taxes 1,424 1,322
Income tax expense 338 324
Net income before non-controlling
interests 1,086 998
Less: Net income attributable to
non-controlling interests 15 15
Net income attributable to the Company $ 1,071 $983
Net income per share attributable to the
Company:
- Basic $ 2.13 $1.93
- Diluted $ 2.10 $1.91
Average number of shares outstanding:
- Basic 503 509
- Diluted 509 514
Shares outstanding at March 31 502 509
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended March 31
(Millions) (Unaudited)
The Company conducts business in 130 countries. As a result,
foreign exchange rate movements may impact period-to-period
comparisons of revenue. Similarly, certain other items such as
acquisitions and dispositions, including transfers among
businesses, may impact period-to-period comparisons of revenue.
Underlying revenue measures the change in revenue from one period
to the next by isolating these impacts.
Components of Revenue Change*
%
Change Acquisitions/
Three Months GAAP Currency Dispositions/ Underlying
Ended March 31, Revenue Impact Other Impact Revenue
2022 2021
Risk and
Insurance
Services
Marsh $2,546 $2,325 10 % (2 ) % 1 % 11 %
Guy Carpenter 999 895 12 % (1 ) % 2 % 11 %
Subtotal 3,545 3,220 10 % (2 ) % 1 % 11 %
Fiduciary
interest
income 4 5
Total Risk and
Insurance
Services 3,549 3,225 10 % (2 ) % 1 % 11 %
Consulting
Mercer 1,343 1,288 4 % (2 ) % -- 6 %
Oliver Wyman
Group 667 585 14 % (2 ) % (1 ) % 17 %
Total
Consulting 2,010 1,873 7 % (2 ) % -- 10 %
Corporate
Eliminations (10 ) (15 )
Total Revenue $5,549 $5,083 9 % (2 ) % 1 % 10 %
Revenue Details
The following table provides more detailed revenue information
for certain of the components presented above:
Components of Revenue Change*
%
Three Months Change Acquisitions/
Ended March GAAP Currency Dispositions/ Underlying
31, Revenue Impact Other Impact Revenue
2022 2021
Marsh:
EMEA $842 $837 1 % (4 ) % (4 ) % 9 %
Asia Pacific 321 274 17 % (4 ) % 5 % 17 %
Latin America 104 90 15 % (1 ) % -- 16 %
Total
International 1,267 1,201 6 % (4 ) % (2 ) % 11 %
U.S./Canada 1,279 1,124 14 % -- 4 % 10 %
Total Marsh $2,546 $2,325 10 % (2 ) % 1 % 11 %
Mercer:
Wealth $617 $623 (1 ) % (3 ) % -- 2 %
Health 524 487 8 % (2 ) % 1 % 9 %
Career 202 178 13 % (3 ) % -- 16 %
Total Mercer $1,343 $1,288 4 % (2 ) % -- 6 %
* Components of revenue change may not add due to rounding.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended March 31
(Millions) (Unaudited)
Overview
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States
(referred to in this release as in accordance with "GAAP" or
"reported" results). The Company also refers to and presents
certain additional non-GAAP financial measures, within the meaning
of Regulation G in accordance with the Securities Exchange Act of
1934. These measures are: adjusted operating income (loss),
adjusted operating margin, adjusted income, net of tax and adjusted
earnings per share (EPS). The Company has included reconciliations
of these non-GAAP financial measures to the most directly
comparable financial measure calculated in accordance with GAAP in
the following tables.
The Company believes these non-GAAP financial measures provide
useful supplemental information that enables investors to better
compare the Company's performance across periods. Management also
uses these measures internally to assess the operating performance
of its businesses, to assess performance for employee compensation,
and to decide how to allocate resources. However, investors should
not consider these non-GAAP measures in isolation from, or as a
substitute for, the financial information that the Company reports
in accordance with GAAP. The Company's non-GAAP measures include
adjustments that reflect how management views its businesses, and
may differ from similarly titled non-GAAP measures presented by
other companies.
Adjusted Operating Income (Loss) and Adjusted Operating
Margin
Adjusted operating income (loss) is calculated by excluding the
impact of certain noteworthy items from the Company's GAAP
operating income (loss). The following tables identify these
noteworthy items and reconcile adjusted operating income (loss) to
GAAP operating income (loss), on a consolidated and reportable
segment basis, for the three months ended March 31, 2022 and 2021.
The following tables also present adjusted operating margin. For
the three months ended March 31, 2022 and 2021, adjusted operating
margin is calculated by dividing the sum of adjusted operating
income and identified intangible asset amortization by consolidated
or segment adjusted revenue.
Risk &
Insurance Corporate/
Services Consulting Eliminations Total
Three Months Ended
March 31, 2022
Operating income
(loss) $1,121 $ 392 $ (68 ) $1,445
Operating margin 31.6 % 19.5 % N/A 26.0 %
Add (deduct) impact
of noteworthy
items:
Restructuring (a) 15 7 8 30
Changes in contingent
consideration (b) 10 -- -- 10
JLT
acquisition-related
costs and other (c) 12 1 -- 13
JLT legacy E&O
provision (d) -- (10 ) -- (10 )
Legal claims (e) 30 -- -- 30
Deconsolidation of
Russian businesses
and other related
charges (f) 40 12 -- 52
Operating income
adjustments 107 10 8 125
Adjusted operating
income (loss) $1,228 $ 402 $ (60 ) $1,570
Total identified
intangible
amortization
expense $78 $ 13 $ -- $91
Adjusted operating
margin 36.5 % 20.6 % N/A 29.7 %
Three Months Ended
March 31, 2021
Operating income
(loss) $1,060 $ 361 $ (63 ) $1,358
Operating margin 32.9 % 19.3 % N/A 26.7 %
Add (deduct) impact
of noteworthy
items:
Restructuring (a) 17 11 6 34
Changes in contingent
consideration (b) 6 (6 ) -- --
JLT
acquisition-related
costs (c) 11 1 -- 12
Other (2 ) 3 -- 1
Operating income
adjustments 32 9 6 47
Adjusted operating
income (loss) $1,092 $ 370 $ (57 ) $1,405
Total identified
intangible
amortization
expense $86 $ 14 $ -- $100
Adjusted operating
margin 36.6 % 20.5 % N/A 29.6 %
(a) Restructuring activities reflect costs related to the Company's global
information technology and HR functions, JLT integration costs, Marsh
(RIS) operational excellence and adjustments to restructuring
liabilities for future rent under non-cancellable leases.
(b) Primarily includes the change in fair value of contingent consideration
related to acquisitions and dispositions as measured each quarter.
(c) Includes retention costs and legal charges related to the acquisition
of JLT.
(d) Reflects recoveries under indemnities for a legacy JLT E&O matter
relating to suitability of advice provided to individuals for defined
benefit pension transfers in the U.K.
(e) Settlement charges and legal costs related to strategic recruiting.
(f) Loss on deconsolidation of Russian businesses and other related
charges. The loss on deconsolidation is included in revenue and
excluded from underlying revenue calculations and adjusted operating
margin.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended March 31
(In millions, except per share data)
(Unaudited)
Adjusted income, net of tax is calculated as the Company's GAAP
income from continuing operations, adjusted to reflect the after
tax impact of the operating income adjustments in the preceding
tables and the additional items listed below. Adjusted EPS is
calculated by dividing the Company's adjusted income, net of tax,
by average number of shares outstanding-diluted for the relevant
period. The following tables reconcile adjusted income, net of tax
to GAAP income from continuing operations and adjusted EPS to GAAP
EPS for the three month periods ended March 31, 2022 and 2021.
Three Months Ended Three Months Ended
March 31, 2022 March 31, 2021
Adjusted Adjusted
Amount EPS Amount EPS
Net income
before
non-controlling
interests, as
reported $1,086 $998
Less:
Non-controlling
interest, net
of tax 15 15
Subtotal $1,071 $ 2.10 $983 $ 1.91
Operating income
adjustments $125 $47
Investments
adjustment (a) (9 ) --
Income tax
effect of
adjustments
(b) (18) (9)
98 0.20 38 0.08
Adjusted income,
net of tax $1,169 $ 2.30 $1,021 $ 1.99
(a) Represents mark-to-market gains primarily related to the Company's
investment in Alexander Forbes ("AF").
(b) For items with an income tax impact, the tax effect was calculated
using an effective tax rate based on the tax jurisdiction for each
item.
Marsh & McLennan Companies, Inc.
Supplemental Information
Three Months Ended March 31
(Millions) (Unaudited)
Three Months Ended
March 31,
2022 2021
Consolidated
Compensation and benefits $ 3,100 $2,807
Other operating expenses 1,004 918
Total expenses $ 4,104 $3,725
Depreciation and amortization expense $ 89 $97
Identified intangible amortization expense 91 100
Total $ 180 $197
Stock option expense $ 5 $21
Risk and Insurance Services
Compensation and benefits $ 1,801 $1,610
Other operating expenses 627 555
Total expenses $ 2,428 $2,165
Depreciation and amortization expense $ 43 $50
Identified intangible amortization expense 78 86
Total $ 121 $136
Consulting
Compensation and benefits $ 1,164 $1,074
Other operating expenses 454 438
Total expenses $ 1,618 $1,512
Depreciation and amortization expense $ 26 $29
Identified intangible amortization expense 13 14
Total $ 39 $43
Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Millions)
(Unaudited)
March 31, December 31,
2022 2021
ASSETS
Current assets:
Cash and cash equivalents $ 772 $ 1,752
Net receivables 5,963 5,586
Other current assets 1,053 926
Total current assets 7,788 8,264
Goodwill and intangible assets 18,974 19,127
Fixed assets, net 865 847
Pension related assets 2,246 2,270
Right of use assets 1,825 1,868
Deferred tax assets 530 551
Other assets 1,460 1,461
TOTAL ASSETS $ 33,688 $ 34,388
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 1,191 $ 17
Accounts payable and accrued
liabilities 3,084 3,165
Accrued compensation and employee
benefits 1,400 2,942
Current lease liabilities 331 332
Accrued income taxes 308 198
Dividends payable 273 --
Total current liabilities 6,587 6,654
Fiduciary liabilities 10,461 9,622
Less - cash and cash equivalents held
in a fiduciary capacity (10,461 ) (9,622 )
-- --
Long-term debt 10,552 10,933
Pension, post-retirement and
post-employment benefits 1,515 1,632
Long-term lease liabilities 1,831 1,880
Liabilities for errors and omissions 352 355
Other liabilities 1,695 1,712
Total equity 11,156 11,222
TOTAL LIABILITIES AND EQUITY $ 33,688 $ 34,388
Marsh & McLennan Companies, Inc.
Consolidated Statements of Cash Flows
(Millions) (Unaudited)
Three Months Ended
March 31,
2022 2021
Operating cash flows:
Net income before non-controlling interests $ 1,086 $998
Adjustments to reconcile net income to cash
used for operations:
Depreciation and amortization 180 197
Non cash lease expense 77 79
Deconsolidation of Russian businesses 39 --
Share-based compensation expense 105 78
Net (gain) loss on investments, disposition
of assets and other (17 ) (9 )
Changes in assets and liabilities:
Accrued compensation and employee benefits (1,528 ) (1,167)
Net receivables (429 ) (404 )
Other changes to assets and liabilities (6 ) 4
Contributions to pension and other benefit
plans in excess of current year credit (125 ) (102 )
Operating lease liabilities (84 ) (82 )
Net cash used for operations (702 ) (408 )
Financing cash flows:
Purchase of treasury shares (500 ) (112 )
Net proceeds from issuance of commercial
paper 825 --
Repayments of debt (4 ) (4 )
Net issuance of common stock from treasury
shares (100 ) (58 )
Net distributions of non-controlling
interests and deferred/contingent
consideration (20 ) (40 )
Dividends paid (272 ) (237 )
Increase in fiduciary liabilities 926 190
Net cash provided by (used for) financing
activities 855 (261 )
Investing cash flows:
Capital expenditures (122 ) (69 )
Net (purchase) sale of long-term investments
and other (9 ) 2
Dispositions (4 ) --
Acquisitions (24 ) --
Net cash used for investing activities (159 ) (67 )
Effect of exchange rate changes on cash,
cash equivalents, and cash and cash
equivalents held in a fiduciary capacity (136 ) (36 )
Decrease in cash, cash equivalents, and cash
and cash equivalents held in a fiduciary
capacity (142 ) (772 )
Cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity at
beginning of period 11,375 10,674
Cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity at
end of period $ 11,233 $9,902
Reconciliation of cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity to the Consolidated Balance
Sheets
Three Months Ended March 31, 2022 2021
(In millions)
Cash and cash equivalents $ 772 $1,120
Cash and cash equivalents held in a
fiduciary capacity 10,461 8,782
Total cash, cash equivalents, and cash and
cash equivalents held in a fiduciary
capacity $ 11,233 $9,902
Media Contact:
Erick R. Gustafson
Marsh McLennan
+1 202 263 7788
erick.gustafson@mmc.com
Investor Contact:
Sarah DeWitt
Marsh McLennan
+1 212 345 6750
sarah.dewitt@mmc.com
View source version on businesswire.com:
https://www.businesswire.com/news/home/20220420006129/en/
CONTACT:
Marsh & McLennan
SOURCE: Marsh & McLennan
Copyright Business Wire 2022
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