Willis Towers Watson Public Limited Company · NASDAQ:WTW
Willis Towers Watson Public — Willis Group Holdings — Q1 2014 Earnings Presentation
27 slides from Willis Towers Watson Public's earnings presentation, Apr 29, 2014
Slide 1: First Quarter 2014 Results
Exhibit 99.2 Willis Group Holdings FIRST QUARTER 2014 RESULTS April, 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: 2014 financial reporting changes
2014 financial reporting changes Operational changes: Moved Willis UK from International to Global Moved Mexico from North America to International Moved Facultative Reinsurance and Captives Consulting from North America to Global Allocation changes: Amortization of intangibles allocated to the segm
Slide 5: Q1 2014 summary financial results
Q1 2014 summary financial results Q1 2014 Q1 2013 Adjusted operating income $ 326 m $ 327 m Adjusted EPS $1.36 $1.46 Adjusted tax rate 22% 19% Average diluted shares outstanding 182 m 176 m Q1 2014 versus Q1 2013: FX movements : $0.03 per diluted share negative impact Higher tax rate : $0.05 per dil
Slide 6: Commissions and fees growth
Commissions and fees growth 1Q 2014 Reported Organic North America 3.9% 4.7% International 5.7% 7.2% Global 3.5% 2.0% Group 4.2% 4.2% North America – Organic 4.7% Growth well distributed across geographic regions and in most product and industry practices. Construction up low teens and Human Capital
Slide 7: Total operating expenses
Total operating expenses $ millions Q1 2014 Q1 2013 Change Total operating expenses – reported $ 771 $ 770 0.1% Expense reduction initiative - (46) Total operating expenses – adjusted $ 771 $724 6.5% Y-o-Y FX movement (7) Total operating expenses - underlying $ 764 $ 724 5.5% Q1 2014 total operating
Slide 8: Salaries and benefits
Salaries and benefits $ millions Q1 2014 Q1 2013 Change Salaries and benefits – reported $ 570 $568 0.4% Expense reduction initiative - (29) Salaries and benefits – adjusted $ 570 $ 539 5.8% Y-o-Y FX movement (4) - Salaries and benefits – underlying $ 566 $ 539 5.0% Underlying 5.0% S&B growth driven
Slide 9: Other operating expenses
Other operating expenses $ millions Q1 2014 Q1 2013 Change Other operating expenses – reported $ 165 $ 162 1.9% Expense reduction initiative - (12) Other operating expenses – adjusted $ 165 $ 150 10.0% Y-o-Y FX movement (2) - Other operating expenses – underlying $ 163 $ 150 8.7% Underlying 8.7% gro
Slide 10: Operating margins
Operating margins Q1 2014 Q1 2013 Change FX Impact Change (ex FX) North America 25.9% 23.0% 290 bps - 290 bps International 29.9% 29.3% 60bps - 60 bps Global 40.6% 43.7% (310) bps 80 bps (230) bps Group (adjusted) 29.7% 31.1% (140) bps 50 bps (90) bps See important disclosures regarding non-GAAP mea
Slide 11: Balance sheet highlights
Balance sheet highlights $ millions As of Mar 31, 2014 Dec 31, 2013 Cash $734 $796 Total debt $2,322 $2,326 Quarter ended Mar 31, 2014 Mar 31, 2013 Cash flow from operations $5 $39 Modest decrease in cash at end of Q1 2014 in seasonally largest quarter for cash use No drawdown on revolver in Q1 2014
Slide 12: Operational Improvement Program
OPERATIONAL IMPROVEMENT PROGRAM
Slide 13: Operational improvement program – expected savings and charge summary
Operational improvement program – expected savings and charge summary • We will report regularly on realized savings and actual charges $ million (estimated) 2014 2015 2016 2017 2018 + Savings $5 $45 $135 $235 Cumulative Savings $5 $50 $185 $420 (2014-2017) Annualized Savings Role relocation and red
Slide 14: Key levers and target operational outcomes
Key levers and target operational outcomes Key levers Target outcomes over life of program Relocation of roles • Minimum 3,500 support roles moved from higher to lower cost locations • Ratio of total employees in higher / lower cost locations shifted from current 80:20 to 60:40* • Use proven existin
Slide 15: Strategic benefits of realized program
Strategic benefits of realized program Key levers Target outcomes over life of program Step-up in operational • Resources rebalanced to optimal locations efficiency • Enhanced operational excellence in systems • Reduce our operational cost base Continued investment for • A majority of savings expect
Slide 16: Appendices
APPENDICES Willis
Slide 17: Commissions and fees analysis
Important disclosures regarding non-GAAP measures Commissions and fees analysis Foreign Acquisitions Organic currency and commissions 2014 2013 Change translation disposals and fees growth ($ millions) % % % % Three months ended March 31, 2014 North America $369 $355 3.9 (0.1) (0.7) 4.7 Internationa
Slide 18: Operating income to adjusted operating income
Important disclosures regarding non-GAAP measures Operating income to adjusted operating income 2013 2014 (In millions) 1Q 2Q 3Q 4Q FY 1Q Operating income $281 $167 $70 $145 $663 $326 Excluding: Tender related fees - - 1 - 1 - Expense reduction initiative 46 - - - 46 - Adjusted operating income $327
Slide 19: Net income to adjusted net income
Important disclosures regarding non-GAAP measures Net income (loss) to adjusted net income 2013 2014 (In millions, except per share data) 1Q 2Q 3Q 4Q FY 1Q Net income (loss) from continuing operations $219 $105 ($27) $68 $365 $246 Excluding the following, net of tax: Debt tender related fees - - 1 -
Slide 20: 2014 financial reporting changes
2014 financial reporting changes Operational changes: Moved Willis UK from International to Global Moved Mexico from North America to International Moved Facultative Reinsurance and Captives Consulting from North America to Global Allocation changes: Amortization of intangibles allocated to the segm
Slide 21: 2014 financial reporting changes
2014 financial reporting changes For the year ended December 31, 2011 For the year ended December 31, 2012 For the year ended December 31, 2013 As As As As As As Reported Reclassification Reclassified Reported Reclassification Reclassified Reported Reclassification Reclassified Revenues (millions) T
Slide 22: 2014 financial reporting changes
2014 financial reporting changes As reported For the year ended December 31, 2013 2011 2012 Q1 Q2 Q3 Q4 FY (millions, except percentages) Commissions and fees Global $1,073 $1,124 $383 $305 $250 $250 $1,188 North America 1,314 1,306 363 333 328 353 1,377 International 1,027 1,028 300 247 213 308 1,0
Slide 23: 2014 financial reporting changes
2014 financial reporting changes Reclassifications For the year ended December 31, 2013 2011 2012 Q1 Q2 Q3 Q4 FY (millions, except percentages) Commissions and fees Global $186 $179 $44 $45 $39 $42 $170 North America (29) (25) (8) (6) (6) (8) (28) International (157) (154) (36) (39) (33) (34) (142)
Slide 24: 2014 financial reporting changes
2014 financial reporting changes As reclassified For the year ended December 31, 2013 2011 2012 Q1 Q2 Q3 Q4 FY (millions, except percentages) Commissions and fees Global $1,259 $1,303 $427 $350 $289 $292 $1,358 North America 1,285 1,281 355 327 322 345 1,349 International 870 874 264 208 180 274 926
Slide 25: 2014 financial reporting changes
2014 financial reporting changes 2011 2012 2013 (millions, except percentages) As reported: Operating income (loss), GAAP basis $566 $(209) $685 Reclassification: Foreign exchange gains and losses and gains and losses from the disposal of operations 5 (16) (22) As reclassified: Operating income (los
Slide 26: 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 25
Slide 27: First Quarter 2014 Results
Willis Group Holdings FIRST QUARTER 2014 RESULTS April, 2014
Willis Group Holdings — Q1 2014 Earnings Presentation on 6ix