Willis Towers Watson Public Limited Company · NASDAQ:WTW
Willis Towers Watson Public — Willis Group Holdings — Q3 2014 Earnings Presentation
23 slides from Willis Towers Watson Public's earnings presentation, Oct 28, 2014
Slide 1: Third Quarter 2014 Results
Exhibit 99.2 Willis Group Holdings THIRD QUARTER 2014 RESULTS October, 2014
Slide 2: Important disclosures regarding forward-looking statements
Important disclosures regarding forward-looking statements This presentation contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors cre
Slide 3: Important disclosures regarding non-GAAP measures
Important disclosures regarding non-GAAP measures This presentation contains references to "non-GAAP financial measures" as defined in Regulation G of SEC rules. We present these measures because we believe they are of interest to the investment community and they provide additional meaningful metho
Slide 4: 3Q 2014 Underlying EPS growth
3Q 2014 Underlying EPS growth Underlying EPS down $0.05 cents year over year $0.09 $(0.13) $0.19 $0.01 $0.00 $0.14 $0.34 Underlying business $(0.02) $(0.10) performance = $(0.04) $(0.08) - Increased tax rate= $(0.01) - Associates = $0.01 $(0.04) - Noncontrolling interests = $0.01 $(0.15) Q3 2013 Los
Slide 5: YTD 2014 underlying EBITDA and cash generation
YTD 2014 underlying EBITDA and cash generation $ millions Underlying EBITDA Underlying EBITDA down 1.5% reflecting: Underlying revenue growth $646 $636 International driven by emerging markets and Charles Monat $96 $87 acquisition in Asia $191 $187 North America growth in regions moderated by divest
Slide 6: 3Q 2014 Commissions and fees growth
3Q 2014 Commissions and fees growth % Growth 3Q 2014 vs. 3Q 2013 Reported Organic • Growth led by International with solid Group results in North America and 2.1% 2.5% Reinsurance • Growth in geographic regions led by 1 2 Midwest and Atlantic North • Human Capital up mid-single digits America 3.4% •
Slide 7: 3Q 2014 Total operating expenses
3Q 2014 Total operating expenses Total underlying operating expense growth of 4.1% $ millions Underlying expense growth over past 4 quarters: Q314: 4.1% Q214: 6.1% Q114: 5.5% Q413: 7.1% (1) (1) Represents expense growth on an “apples to apples basis”, as if company had been accruing bonuses througho
Slide 8: 3Q 2014 Salaries and benefits
3Q 2014 Salaries and benefits $ millions Q3 2013 Q3 2014 Change • Growth in underlying S&B of 4.0% in 3Q14 compared to prior year quarter Reported S&B $541 $ 569 • Increase driven by headcount growth and salary reviews Y-o-Y FX movement (1) 6 - Underlying S&B $ 547 $ 569 4.0% • Group headcount: • Up
Slide 9: 3Q 2014 Non-operating segment items and Corporate & other
3Q 2014 Non-operating segment items and Corporate & other • Increase in expense in the quarter represents $14 million of Other foreign exchange loss on revaluation of non-functional currency income/expense assets and liabilities • Taxes for 3Q14 impacted by a $4 million expense recorded to bring the
Slide 10: Balance sheet highlights
Balance sheet highlights $ millions Cash as of $796 $623 $656 • Cash on hand up $33 million compared to 3Q13 • Cash on hand down $140 million from year end 2013, primarily due to the share buyback program and increased cash dividends, offset by non-recurrence of $65 million debt tender premium paid
Slide 11: Operational Improvement Program and metrics
Operational Improvement Program and metrics Cumulative Annualized $ millions 2014 2015 2016 2017 2014-2017 2018+ As of April, 2014 announcement Expected Charge $410 Expected Savings $5 $45 $135 $235 $420 $300 As of October, 2014 update Expected Spend $40 $130 $240 $410 Expected Savings $8 $60 $135 $
Slide 12: Summary
Summary • Global presence • Connecting Willis Organic C&F • Innovation growth • Delivering better solutions for clients and driving new business Earnings • High quality, specialized firms with leading positions growth • Recent examples include: Focused • Charles Monat Margin M&A • Max Mattheissen ex
Slide 13: Appendices
APPENDICES
Slide 14: YTD 2014 Underlying EPS growth
YTD 2014 Underlying EPS growth Underlying EPS down $0.20 YTD 2014 vs. YTD 2013, negatively impacted by higher tax rate and increased share count - Deferred tax valuation allowance $2.22 $0.04 = $(0.12) - Venezuela devaluation = $(0.07) $0.21 $0.45 $2.02 - Loss on disposal = $(0.01) $(0.50) $0.34 $(0
Slide 15: YTD 2014 Commissions and fees growth
YTD 2014 Commissions and fees growth % Growth YTD 2014 vs. YTD 2013 Reported Organic • Good growth despite challenging market conditions in Reinsurance and moderating Group rates across almost all markets 3.9% 3.8% • Good growth driven by solid performances North by most regions and bolstered by gro
Slide 16: YTD 2014 Total operating expenses
YTD 2014 Total operating expenses 5.2% underlying total operating expense growth driven by S&B and other operating expenses $ millions $2,336 $2 $2,316 $20 $30 $83 $2,218 $30 $(46) $1 $2,201 YTD 2013 Foreign Expense Debt YTD 2013 Salaries and Other Operating Depreciation & YTD 2014 Operational YTD 2
Slide 17: YTD 2014 Salaries and benefits
YTD 2014 Salaries and benefits $ millions YTD2013 YTD2014 Change • Growth in underlying S&B of 5.1% YTD in 2014 compared to prior year Reported S&B $1,638 $ 1,714 • Increase driven by increased headcount and Expense Reduction Initiative (29) - salary reviews • Group headcount: Y-o-Y FX movement (1)
Slide 18: Commissions and fees analysis
Important disclosures regarding non-GAAP measures Commissions and fees analysis Organic Foreign Acquisitions commissions currency and and fees 2014 2013 Change translation disposals growth ($ millions) % % % % Three months ended September 30, 2014 North America $328 $322 1.9 - (1.5) 3.4 Internationa
Slide 19: Operating income to underlying operating income
Important disclosures regarding non-GAAP measures Operating income to underlying operating income 2013 2014 ($ millions) 1Q 2Q 3Q YTD 1Q 2Q 3Q YTD Total revenue $1,051 $890 $795 $2,736 $1,097 $935 $812 $2,844 excluding: Foreign currency movements 3 5 (3) 5 - - - - Underlying revenue $1,054 $895 $792
Slide 20: Net income (loss) to underlying net income
Important disclosures regarding non-GAAP measures Net income (loss) to underlying net income 2013 2014 ($ millions, except per share data) 1Q 2Q 3Q YTD 1Q 2Q 3Q YTD Net income (loss) $219 $105 ($27) $297 $246 $47 ($7) $286 Excluding the following, net of tax: Operational improvement program - - - -
Slide 21: Net income (loss) to underlying EBITDA
Important disclosures regarding non-GAAP measures Net income (loss) to underlying EBITDA 2013 2014 ($ millions) 1Q 2Q 3Q YTD 1Q 2Q 3Q YTD Net income (loss) $219 $105 ($27) $297 $246 $47 ($7) $286 Add back: Net income (loss) attributable to 4 2 - 6 4 1 (1) 4 noncontrolling interests Interest in earni
Slide 22: Reported to underlying total expenses and salaries and benefits
Important disclosures regarding non-GAAP measures Reported total expenses to underlying total expenses, and Reported salaries and benefits to underlying salaries and benefits 2013 2014 (In millions) 1Q 2Q 3Q YTD 1Q 2Q 3Q YTD Reported total expenses $770 $723 $725 $2,218 $771 $787 $778 $2,336 Excludi
Slide 23: IR Contacts
IR Contacts Peter Poillon Tel: +1 212 915-8084 Email: peter.poillon@willis.com Mark Jones Tel: +1 212 915-8796 Email: mark.p.jones@willis.com 22
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