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Willis Towers (WLTW) Q3 Earnings Lag Estimates, Revenues Top
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Willis Towers Watson Public Limited Company reported third-quarter 2017 adjusted net income of $1.12 per share that missed the Zacks Consensus Estimate of $1.13 by 0.9%. However, the bottom line improved 7.7% year over year.
Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise
Increase in revenues as well as a solid segmental performance were responsible for this upside.
The company remains focused toward building momentum across its portfolio of businesses while work continues on the integration efforts.
Including amortization, restructuring costs as well as integration and transaction expenses, net loss came in at 40 cents per share, wider than the year-ago loss of 23 cents per share.
Operational Updates
Adjusted revenues improved 4.2% (up 4% on a constant-currency basis as well as organic basis) year over year to $1.9 billion. The top line beat the Zacks Consensus Estimate of $1.8 billion.
Commissions and fees were $1.8 billion, up 4% year over year.
Total costs of providing services nudged up 1.9% year over year to $1.8 billion.
Adjusted EBITDA of $322 million increased 17.1% year over year. Adjusted EBITDA margin expanded 190 basis points to 19.8%.
Adjusted operating income improved 18.1% year over year to $287 million in the quarter.
Quarterly Segment Update
Human Capital & Benefits: Commissions and fees of $736 million were up 2.2% year over year (2% higher on constant-currency basis and 3% higher on organic basis). Total revenues of $736 million were up about 2.2%. Operating margin was 19%.
Corporate Risk & Broking: Commissions and fees of $581 million rose 5.1% (4% higher on constant-currency basis as well as organic basis) year over year. Total revenues of $586 million improved 4.5% year over year. Operating margin was 8% in the quarter.
Investment, Risk & Reinsurance: Commissions and fees of $320 million were up 2.6% (2% higher on constant-currency basis as well as organic basis). Total revenue of $334 million increased 4.7% from the prior-year quarter. Operating margin was 12%.
Benefits Delivery & Administration (formerly known as Exchange Solutions): Commission and fees of $179 million improved 11.2% (11% higher on constant-currency basis as well as organic basis). Total revenue of $179 million climbed 11.2% year over year. Operating margin was 20%.
Financial Update
Cash and cash equivalents increased 4.8% to $912 million from the 2016-end level.
Long-term debt surged 33.8% from the 2016-end level to nearly $4.5 billion at the quarter-end.
Shareholders’ equity slipped 1.4% from the end of 2016 to $9.9 billion as of Sep 30, 2017.
For the first nine months of 2017, cash from operations declined 17.1% to $515 million compared with $621 million in the same period, last year. Free cash flow was $317 million for the first nine months of 2017, down 32.6% compared with $470 million during the same period of 2016.
2017 Guidance Reiterated
Willis Towers has retained its adjusted earnings per share at $8.36 and $8.51 in 2017. Constant-currency revenue growth is estimated to be around 3%.
Among other firms from the insurance industry that have reported third-quarter earnings so far, the bottom line at The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate.
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Willis Towers (WLTW) Q3 Earnings Lag Estimates, Revenues Top
Willis Towers Watson Public Limited Company reported third-quarter 2017 adjusted net income of $1.12 per share that missed the Zacks Consensus Estimate of $1.13 by 0.9%. However, the bottom line improved 7.7% year over year.
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
Increase in revenues as well as a solid segmental performance were responsible for this upside.
The company remains focused toward building momentum across its portfolio of businesses while work continues on the integration efforts.
Including amortization, restructuring costs as well as integration and transaction expenses, net loss came in at 40 cents per share, wider than the year-ago loss of 23 cents per share.
Operational Updates
Adjusted revenues improved 4.2% (up 4% on a constant-currency basis as well as organic basis) year over year to $1.9 billion. The top line beat the Zacks Consensus Estimate of $1.8 billion.
Commissions and fees were $1.8 billion, up 4% year over year.
Total costs of providing services nudged up 1.9% year over year to $1.8 billion.
Adjusted EBITDA of $322 million increased 17.1% year over year. Adjusted EBITDA margin expanded 190 basis points to 19.8%.
Adjusted operating income improved 18.1% year over year to $287 million in the quarter.
Quarterly Segment Update
Human Capital & Benefits: Commissions and fees of $736 million were up 2.2% year over year (2% higher on constant-currency basis and 3% higher on organic basis). Total revenues of $736 million were up about 2.2%. Operating margin was 19%.
Corporate Risk & Broking: Commissions and fees of $581 million rose 5.1% (4% higher on constant-currency basis as well as organic basis) year over year. Total revenues of $586 million improved 4.5% year over year. Operating margin was 8% in the quarter.
Investment, Risk & Reinsurance: Commissions and fees of $320 million were up 2.6% (2% higher on constant-currency basis as well as organic basis). Total revenue of $334 million increased 4.7% from the prior-year quarter. Operating margin was 12%.
Benefits Delivery & Administration (formerly known as Exchange Solutions): Commission and fees of $179 million improved 11.2% (11% higher on constant-currency basis as well as organic basis). Total revenue of $179 million climbed 11.2% year over year. Operating margin was 20%.
Financial Update
Cash and cash equivalents increased 4.8% to $912 million from the 2016-end level.
Long-term debt surged 33.8% from the 2016-end level to nearly $4.5 billion at the quarter-end.
Shareholders’ equity slipped 1.4% from the end of 2016 to $9.9 billion as of Sep 30, 2017.
For the first nine months of 2017, cash from operations declined 17.1% to $515 million compared with $621 million in the same period, last year. Free cash flow was $317 million for the first nine months of 2017, down 32.6% compared with $470 million during the same period of 2016.
2017 Guidance Reiterated
Willis Towers has retained its adjusted earnings per share at $8.36 and $8.51 in 2017. Constant-currency revenue growth is estimated to be around 3%.
Zacks Rank
Willis Towers presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other firms from the insurance industry that have reported third-quarter earnings so far, the bottom line at The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>