WTW Q3 2024 Earnings Report

Overview

Willis Towers Watson (NASDAQ: WTW) announced strong third-quarter results for 2024 featuring a 6% increase in organic revenue growth. CEO Carl Hess highlighted that this growth resulted from a 10% rise in Risk & Broking and a 4% increase in Health, Wealth & Career (HWC) segments. Adjusted operating margin saw a 190 basis point improvement to 18.1%, with adjusted diluted earnings per share (EPS) rising to $2.93, a 31% year-over-year increase. WTW also raised its share repurchase guidance by $150 million, anticipating substantial cash inflows from recent divestitures.

Key Takeaways

• WTW reported 6% organic revenue growth in Q3 2024.
• Adjusted operating margin reached 18.1%, with adjusted diluted EPS at $2.93.
• Free cash flow for the nine months ending September 30 was $807 million, a 14% increase.
• Increased the lower end of EPS target for the year and boosted share repurchase target to $900 million.
• Announced strategic partnerships and divestitures including the sale of TRANZACT and investment in Atomos.
• Optimistic about achieving 2024 financial goals due to strong business performance and strategic capital allocation.

Company Outlook

• Expectation for continued strong performance and confidence in meeting 2024 targets.
• Positive growth trajectory driven by strategic talent investments and specialization.
• Focus on maintaining resilience through adjustments in strategy.

Highlights

Bearish

• Benefits, Delivery & Outsourcing (BD&O) experienced a 1% decline attributed to strong prior year comparables and client insourcing effects.
• Sluggish consulting demand impacted insurance consulting and technology segments.

Bullish

• Risk & Broking division saw an impressive 10% organic revenue increase, particularly in Great Britain and Western Europe.
• Wealth revenue had a 3% rise mainly from the retirement sector in Europe.
• Career growth hit 7%, driven by compensation benchmarking and survey sales.
• Robust performance in technology services within ICT segment.

Misses

• $14 million business sale from the previous year created a comparison headwind.

Q&A Highlights

• Potential uptick in M&A activity, particularly in Europe.
• Current interest rates are enhancing demand for pension derisking strategies.
• Regulatory changes may affect healthcare consulting and boost demand for consulting services.
• An update will be available during the Investor Day in December.

The Q3 earnings emphasize WTW's effective navigation of market challenges and strategic opportunities to enhance growth. Their concentration on specialization, talent investments, and balanced capital allocation prepares them well for future success. Investors await additional insights in December's Investor Day.