Aon Plc · NYSE:AON
Aon — Q4 2014 Earnings Presentation
20 slides from Aon's earnings presentation, Feb 6, 2015
Slide 1: Fourth Quarter and Full Year 2014 Results
Aon plc Fourth Quarter and Full Year 2014 Results February 6, 2015
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. These
Slide 4: Key Metrics – Strong Finish to a Solid Year
Key Metrics* – Strong Finish to a Solid Year Q4 2014 Q4 Organic Revenue Organic revenue growth of +3% in Risk Solutions and +10% in HR Solutions 1. Organic Revenue1 +6% +3% Delivered strong organic revenue growth of +15% in HR Outsourcing and +7% in the Americas in Retail Brokerage Prior Year +4
Slide 5: Organic Revenue – Continued Growth in Both Segments
Organic Revenue¹ – Continued Growth in Both Segments Q4 2014 Q4 Risk Solutions Americas: Growth across all regions, including record new business generation in US Retail and Latin Americas 7% 4% America, and an anticipated $8 million favorable impact from timing of certain revenue. Excluding the t
Slide 6: Investment in the Business – Positioned for Long-Term Growth
Investment in the Business – Positioned for Long-Term Growth “Aon has a truly impressive track record of developing innovative solutions to help solve problems and create differentiated value in response to specific client needs. Solid long-term operating performance, combined with expense disciplin
Slide 7: EPS – Delivering Double-Digit Earnings Growth
EPS* – Delivering Double-Digit Earnings Growth “We delivered twenty-three percent earnings growth in the fourth quarter driven by organic revenue growth and strong operating margin improvement in both segments, a lower effective tax rate and effective capital management. Results reflect a strong fin
Slide 8: Operating Margins – Progress Towards Long-Term Targets
Operating Margins* – Progress Towards Long-Term Targets ($ millions) Q4 2014 Risk Solutions Q4 Positive Impact Organic revenue growth of +3% Operating Income1 $507 $1,792 Return on investments Y-o-Y change +5% +2% Restructuring savings of ~$4 million and expense discipline Operating Margin1 24
Slide 9: Long-Term Operating Margin Targets
Long-Term Operating Margin Targets 26% Risk Solutions* 1. Expense discipline and optimization of global cost 22.9% structure, including IT / Real Estate costs 22.5% 22.4% 21.6% 21.6% 21.7% 2. Continued rollout of Revenue Engine internationally 3. Return on investments in data and analytics, 18.2% 18
Slide 10: Unallocated Expenses & Non-Operating Segment Information
Unallocated Expenses & Non-Operating Segment Information Quarterly ($ millions) Q4’13 Q4’14 Guidance Unallocated expenses decreased driven by expense discipline in the current quarter and higher Unallocated Expenses1 ($54) ($44) ($45) than normal expenses in the prior year quarter Interest expen
Slide 11: Solid Balance Sheet and Free Cash Flow Generation
Solid Balance Sheet and Free Cash Flow Generation Balance Sheet Cash Flow from Operations Free Cash Flow 1 ($ mil) ($ mil) ($ mil) Sept 30, Dec 31, 2014 2014 Cash $382 $374 $1,642 $1,633 $1,404 $1,386 Short-term $217 $394 Investments 2013 2014 2013 2014 Cash Flow Commentary: Total Debt $5,500 $5,582
Slide 12: Significantly Increasing Free Cash Flow
Significantly Increasing Free Cash Flow* Aon expects to double free cash flow from $1.15 billion in 2012 Uses of Free Cash Flow ($ millions) to more than $2.3 billion annually by the end of 2017 driven by $2,250 three key areas: 1. Operational improvement as the firm makes progress towards $1,125 $1
Slide 13: Summary – Continued Long-Term Value Creation
Summary – Continued Long-Term Value Creation Positioned for sustainable long-term growth in both Risk Solutions and HR Solutions Significant leverage to an improving global economy, interest rates and insurance pricing Investing in colleagues and capabilities around the globe to better serve c
Slide 14: Appendix
Appendix AION 13
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 Dec. 31, Dec. 31, Percent Currency Divestitures Revenue (millions) 2014 2013 Change Impact (1) & Other (2) Commissions, Fees and Other
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 December 31, 2014 Twelve Months Ended December 31, 2014 Unallocated Unallocated Risk HR Income & Risk HR Income & (millions) Solutions Solutions Expense Total Solutions Solutions Expe
Slide 17: Appendix C: Reconciliation of Non-GAAP Measures 2006-2009
Appendix C: Reconciliation of Non-GAAP Measures 2006-2009 Full Year Full Year ended December 31, 2006 Full Year ended December 31, 2007 Full Year ended December 31, 2008 Full Year ended December 31, 2009 ended Risk HR Risk HR Risk HR Risk HR (millions) Solutions Solutions Unallocated Continuing Solu
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 2018 Risk Solutions $93 $114 $129 $126 $115 $109 $113 $103 $93 $80 HR Solutions - $40 $233 $297 $280 $243 $209 $175 $139 $92 Total $93 $154 $362 $423 $395 $
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