Willis Towers Watson (NYSE: WTW) reported 2Q22 results today with adjusted Earnings Per Share (EPS) of $2.32 on revenue of $2.03 billion, reporting 3% organic revenue growth. This compares to consensus analyst estimates of $2.29 in adjusted EPS and $2.07 billion in revenue. Here are five things you should know about the Willis Towers Watson earnings call:
Willis Towers Watson Earnings Highlights
- The Health, Wealth and Career (HWC) segment grew 2% organically in 2Q22. Within the HWC segment, gains were boosted by 5% organic growth for Career, “driven by strong client demand for advisory work, data products, and software licenses.” Also, within the HWC segment, Health (comprised of Health and Benefits broking and consulting) grew 8%, partially due to gains recorded from book of business settlements related to senior staff departures. Excluding this, organic growth for the Health sector was 3%. Wealth, comprised of the retirement and investment business, decreased 7% (vs. an increase of 1% in 1Q22), due to the difficult comparison of outsized performance fees in 2Q22.
- Risk & Broking segment revenue increased 3% organically year-over-year. Corporate Risk & Broking (CRB) reported a revenue increase of 3%, with “growth across all regions, primarily from new business with notable strength in our M&A, Aerospace, Natural Resources and Phoenix specialty lines…Growth in North America and Europe came from both new business and improved client retention.”
- 2022 guidance: WTW maintained its full year 2022 guidance of mid-single digit organic revenue growth, with operating margin expansion. However, WTW is increasing its cumulative run-rate savings to $80 million (up from the previous $30 million) from the Transformation Program by the end of 2022, resulting from more shared services and workforce centralization and collaboration through real estate portfolio optimization.
- Hiring: The company is focusing on onboarding talent, which is expected to contribute to revenue growth in both the near-and medium term. The pace of hiring in 2Q22 was the same as 1Q22, and WTW’s new hires in sales and client management roles doubled vs. 2Q21.
- Macroeconomic outlook: CEO Carl A. Hess said: “We believe WTW is well positioned to weather macroeconomic uncertainty, including both inflation and potential recession. Our portfolio of businesses is relatively noncyclical, we estimate that about 80% of our revenue base is recurring, often built upon nondiscretionary solutions and services.” WTW sees the business as less sensitive to economic downturns: In 2020, when U.S. GDP declined by 2%, WTW posted organic revenue growth of 2%; In 2008-2009’s recession, WTW’s predecessor posted organic revenue growth of 2% to 4%.
To learn more visit: WTW’s Second Quarter 2022 Earnings Release.
Investment banking services offered through MarshBerry Capital, LLC, Member FINRA and SIPC, and an affiliate of Marsh, Berry & Company, LLC, 28601 Chagrin Blvd, Suite 400, Woodmere, OH 44122 (440) 354-3230
This earnings summary has been prepared by Marsh, Berry & Co., LLC. and is not intended to provide investment recommendations on any company. It is not a research report, as such term is defined by applicable laws and regulations, and it does not contain sufficient information upon which to make an investment decision. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities, financial instruments or to participate in any particular trading strategy. These materials are based solely on information contained in publicly available documents and Marsh, Berry & Co., LLC has not independently attempted to investigate or to verify such information.