Willis Towers Watson (NYSE: WTW) released 3Q22 results which surpassed consensus projections for earnings but fell short on revenue. Total revenue decreased 1% year-over-year (YoY) to $2 billion with organic growth of 6% YoY. Adjusted diluted Earnings Per Share (EPS) came in at $2.20 for the quarter, a 27% increase over the prior year. Here are five things you should know about this earnings report:
- Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), for Q3 was $408 million, or 20.9% of revenue, a 2% decrease from the prior year third quarter’s $415 million. Total revenue was affected by a foreign currency headwind. Excluding the 5% headwind, revenue increased 4%. Net income dropped 79% YoY to $192 million, compared to $907 million in 3Q21.
- A continued investment in talent has increased costs but is paying off as improvements and momentum in the client pipeline are already present and are expected to increase going forward. Additionally, the Transformation Program that was previously implemented has incurred $29 million in realized savings, bringing the total to $100 million in cumulative savings since the program’s inception.
- WTW has focused extensively on expanding client solutions by upgrading the Global Peril Diagnostic Tool. This tracks hurricane intensity and resiliency, increasing their analytics in predictive modeling. WTW also launched a new client solution, Risk IQ, which provides specialists with autonomous access to a wide range of WTW’s proprietary risk and analytics solutions.
- WTW cited a positive outlook with Carl Hess, CEO, stating “Our organic revenue growth accelerated to 6% as the investments we’ve made in talent, technology, and transformation began to yield results. In addition, we have expanded our adjusted operating margins, with 110 basis points of improvement over prior year. Looking ahead, our strategic momentum, continued strong demand for our services amidst macroeconomic volatility, and the resilience and flexibility of our business give us confidence in our ability to drive growth, expand margins and create value for our shareholders over the long-term.”
- The outlook for the remainder of 2022 remains constant based on current market conditions. This includes mid-single digit organic revenue growth and adjusted operating margin expansion for the full year 2022. After completing the total transfers of ownership of all Russian subsidiaries, WTW has readjusted their 2024 financial targets: The target revenue decreased to $9.9+ billion from the former $10+ billion; and projected adjusted diluted EPS is now $17.50-$20.50, down from the prior $18.00-$21.00. WTW remains committed to delivering mid-single digit organic revenue growth and 400-500 basis points of adjusted operating margin expansion.
To learn more, visit News Release – Willis Towers Watson Q3 2022 Results
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