Willis Towers (WLTW) Beats Q1 Earnings And Revenue Estimates

Willis Towers Watson plc (NASDAQ:WLTW) reported first-quarter 2017 adjusted net income of $3.71 per share that beat the Zacks Consensus Estimate of $3.33. Earnings also increased 9% year over year.

Increase in revenues as well as lower expenses supported the upside.

Including amortization, restructuring costs as well as integration and transaction expenses, net income came in at $2.50 per share, up 43% year over year.

Operational Updates

Adjusted revenues improved 2% (up 5% on a constant currency basis as well as organic basis) year over year to $2.319 billion. Revenues narrowly beat the Zacks Consensus Estimate of $2.283 billion.

Commissions and fees were $2.3 billion, up 3.8% year over year.

Total costs of providing services decreased 2.7% year over year to $1.9 million.

Adjusted EBITDA of $708 million increased 5.5% year over year. Adjusted EBITDA margin expanded 90 basis points to 30.5%.

Adjusted operating income increased 5.4% year over year to $681 million in the quarter.

Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise

Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise | Willis Towers Watson Public Limited Company Quote

Quarterly Segment Update

Human Capital & Benefits: Commissions and fees of $951 million were up 3% year over year (5% higher on constant currency basis as well as organic basis). Total revenue of $955 million was up 2.7%. Operating margin was 37%.

Corporate Risk & Broking: Commissions and fees of $650 million inched up 1% (3% higher on constant currency basis as well as organic basis) year over year. Total revenue of $655 million climbed 1.2% year over year. Operating margin was 19% in the quarter.

Investment, Risk & Reinsurance: Commissions and fees of $502 million were up 1% (5% higher on constant currency basis as well as organic basis). Total revenue of $507 million increased 1% from the prior-year quarter. Operating margin was 44%.

Exchange Solutions: Commission and fees of $179 million improved 10% (10% higher on constant currency basis as well as organic basis). Total revenue of $179 million jumped 10% year over year. Operating margin was 21%.

Financial Update

Cash and cash equivalents improved 3.6% to $901 million from the 2016-end level.

Long-term debt increased 18% from the 2016-end level to nearly $4 billion at the quarter end.

Shareholders equity increased 2.1% from the end of 2016 to $10.3 billion as of Mar 31, 2017.

Cash from operations declined 20% year over year to $95 million. Free cash flow was $33 million, down 54% year over year.

2017 Guidance

Willis Towers expects adjusted earnings per share between $8.40 and $8.55 in 2017. Constant currency revenue growth is estimated in the range of 2–3%.

Zacks Rank

Willis Towers presently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among the other players that have reported first-quarter earnings so far, Chubb Limited (NYSE:CB) beat the Zacks Consensus Estimate but RLI Corp. (NYSE:RLI) and The Progressive Corporation (NYSE:PGR) missed expectations.

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