Aon Plc · NYSE:AON
Aon — Q1 2014 Earnings Presentation
20 slides from Aon's earnings presentation, Apr 25, 2014
Slide 1: Aon plc First Quarter 2014 Results
Aon plc First Quarter 2014 Results April 25, 2014
Slide 2: Presenters: Greg Case and Christa Davies
Greg Case Chief Executive Officer Christa Davies Chief Financial Officer 1
Slide 3: Safe Harbor Statement
Safe Harbor Statement This communication contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which are forward- looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Thes
Slide 4: Key Metrics – Delivered Progress in Q1 for a Solid Start to 2014
Key Metrics* – Delivered Progress in Q1 for a Solid Start to 2014 Q1’13 Q1’14 Organic Revenue 1. Organic Revenue1 +2% +2% Growth across both Risk and HR Solutions Delivered solid growth of +3% in both Retail Brokerage and Reinsurance Operating Margin Risk Solutions increased +110 bps driven by
Slide 5: Organic Revenue – Growth Across All Businesses
Organic Revenue¹ – Growth Across All Businesses Q1’13 Q1’14 Q1 Risk Solutions Americas: Growth across all regions driven by new Americas 6% 4% business generation in US Retail and strong management of the renewal book portfolio across International 3% 3% Latin America and Canada Retail 4% 3% Int
Slide 6: Investment in the Business – Positioned for Long-Term Growth
Investment in the Business – Positioned for Long-Term Growth “Aon has a truly impressive track record of developing innovative solutions to help solve problems and create differentiated value in response to specific client needs. Solid long-term operating performance, combined with expense disciplin
Slide 7: EPS – Delivering Double-Digit Earnings Growth
EPS* – Delivering Double-Digit Earnings Growth “Our first quarter results reflect a solid start to the year with double-digit earnings growth. We are returning a record amount of capital to shareholders, highlighted by the repurchase of $600 million of ordinary shares in the quarter, while continuin
Slide 8: Operating Margins – Strong Performance in Risk Solutions
Operating Margins* – Strong Performance in Risk Solutions ($ millions) Q1’13 Q1’14 Risk Solutions Q1 Operating Income1 $443 $470 Positive Impact Y-o-Y change +6% Organic revenue growth of +3% Restructuring savings of ~$11 million Operating Margin1 22.5% 23.6% Expense discipline Y-o-Y change +1
Slide 9: Long-Term Operating Margin Targets
Long-Term Operating Margin Targets 26% Risk Solutions* 1. Deliver $19 million of remaining restructuring savings by the end of 2014 22.5% 22.4% 2. Continued rollout of Revenue Engine 21.6% 21.6% 21.7% internationally 3. Aon Broking and GRIP related initiatives 18.2% 18.7% 4. Increases in short-term
Slide 10: Unallocated Expenses & Non-Operating Segment Information
Unallocated Expenses & Non-Operating Segment Information ($ millions) Quarterly Unallocated expenses reflects an increase in Q1’13 Q1’14 Guidance certain long-term employee incentive compensation programs Unallocated Expenses1 ($41) ($43) ($45) Interest expense increased due to an increase in th
Slide 11: Solid Balance Sheet and Free Cash Flow Generation
Solid Balance Sheet and Free Cash Flow Generation Balance Sheet Cash Flow from Operations Free Cash Flow 1 ($ mil) ($ mil) ($ mil) $(6) Dec 31, Mar 31, 2013 2014 Q1'13 Q1'14 $54 Cash $477 $338 $(66) $(11) Q1'13 Q1'14 Short-Term Investments $523 $340 Cash Flow Commentary: Total Debt $4,389 $4,746 S
Slide 12: Significantly Increasing Free Cash Flow
Significantly Increasing Free Cash Flow* Aon expects to double free cash flow to more than $2.3 billion annually ($1.15 billion in 2012) over the next three to five years driven by three key areas: 1. Operational improvement as the firm makes progress towards its long-term operating margin targets 2
Slide 13: Summary – Continued Long-Term Value Creation
Summary – Continued Long-Term Value Creation Positioned for sustainable long-term growth Significant leverage to an improving global economy and insurance pricing Investing in colleagues and capabilities around the globe to better serve clients Opportunity for long-term operating margin impr
Slide 14: Appendix
Appendix » AON
Slide 15: Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue and Free Cash Flow
Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue and Free Cash Flow Organic Revenue (Unaudited) Three Months Ended Less: Less: Acquisitions, Organic Mar. 31, Mar. 31, Percent Currency Divestitures & Revenue (millions) 2014 2013 Change Impact (1) Other Growth (2) Commissions, Fees an
Slide 16: Appendix B: Reconciliation of Non-GAAP Measures – Operating Margin and Diluted EPS
Appendix B: Reconciliation of Non-GAAP Measures – Operating Margin and Diluted Earnings per Share Three Months Ended March 31, 2014 Unallocated Risk HR Income & (millions) Solutions Solutions Expense Total Revenue $ 1,994 $ 965 $ (12) $ 2,947 Operating income (loss) - as reported $ 445 $ 67 $ (43) $
Slide 17: Appendix C: Reconciliation of Non-GAAP Measures 2006-2009
Appendix C: Reconciliation of Non-GAAP Measures 2006-2009 Full Year ended December 31, 2006 Full Year ended December 31, 2007 Full Year ended December 31, 2008 Full Year ended December 31, 2009 Risk HR Risk HR Risk HR Risk HR (millions) Solutions Solutions Unallocated Continuing Solutions Solutions
Slide 18: Appendix C: Reconciliation of Non-GAAP Measures 2010-2013
Appendix C: Reconciliation of Non-GAAP Measures 2010-2013 Full Year ended December 31, 2010 Full Year ended December 31, 2011 Full Year ended December 31, 2012 Full Year ended December 31, 2013 Risk HR Risk HR Risk HR Risk HR (millions) Solutions Solutions Unallocated Continuing Solutions Solutions
Slide 19: Appendix D: Intangible Asset Amortization Schedule
Appendix D: Intangible Asset Amortization Schedule Intangible Amortization by Segment ($ millions) 2009 2010 2011 2012 2013 2014 2015 2016 2017 Risk Solutions $93 $114 $129 $126 $115 $102 $83 $70 $59 HR Solutions - $40 $233 $297 $280 $244 $212 $177 $141 Total $93 $154 $362 $423 $395 $346 $295 $247 $
Slide 20: Investor Relations
Investor Relations Scott Malchow scott.malchow@aon.com Office: +44 (0) 20 7086 0100 Erika Shouldice erika.shouldice@aon.com Office: 312-381-5957 Steven Krall steven.krall@aon.com Office: 312-381-3353