Willis Towers Watson Public Limited Company · NASDAQ:WTW
Willis Towers Watson Public — Q4 2023 Earnings Presentation
30 slides from Willis Towers Watson Public's earnings presentation, Feb 6, 2024
Slide 1: Earnings Release Supplemental Materials: 2023 Fourth Quarter and Full Year
WTW Earnings Release Supplemental Materials 2023 Fourth Quarter and Full Year Financial Results February 6, 2024 wtwco.com © 2024 WTW. All rights reserved.
Slide 2: WTW Forward-Looking Statements
WTW Forward-Looking Statements This document contains ‘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 created by those laws. These forward-lookin
Slide 3: WTW Non-GAAP Measures
WTW Non-GAAP Measures In order to assist readers of our consolidated financial statements in understanding the core operating results that WTW’s management uses to evaluate the business and for financial planning, we present the following non-GAAP measures: (1) Constant Currency Change, (2) Organic
Slide 4: Key Takeaways
Key Takeaways Organic revenue growth1 of 6% in Q4-23 and 8% for full year 2023, and Adjusted Operating Margin1 expansion of +180 bps in Q4-23 and +110 bps for full year 2023 Continued to make significant progress on strategic priorities Realized $37 million of incremental annualized savings in Q4-23
Slide 5: Fourth Quarter and Full Year 2023 GAAP Financial Results
Fourth Quarter and Full Year 2023 GAAP Financial Results Key figures $USD million, except EPS and % Three months ended Years ended December 31, December 31, 2023 2022 2023 2022 Revenue $2,914 $9,483 $2,722 $8,866 % change 7% 7% Income from Operations $779 $1,365 $708 $1,178 % change 10% 16% Operatin
Slide 6: Q4 2023 Key Figures, Including Non-GAAP Financial Results
Q4 2023 Key Figures, Including Non-GAAP Financial Results Q4 2023 Results Total Revenue $2.9B +6% +5% Q4 2023 Q4 2023 Q4 2022 Organic1 Organic1 Adjusted Diluted EPS1 $7.44 Q4 2023 +18% Q4 2023 $6.33 Q4 2022 Adjusted Operating Margin1 34.2% +180bps +32.4% Q4 2023 Q4 2023 Q4 2022 Transformation Progra
Slide 7: Full Year 2023 Key Figures, Including Non-GAAP Financial Results
Full Year 2023 Key Figures, Including Non-GAAP Financial Results Full Year 2023 Results Total Revenue $9.5B +8% +4% 2023 2023 2022 Organic1 Organic1 Adjusted Diluted EPS1 $14.49 2023 +8% 2023 $13.41 2022 Adjusted Operating Margin1 22.0% +110 bps 20.9% 2023 2023 2022 Free Cash Flow1 $1.2B +$518M $674
Slide 8: Financial Review
Financial Review wtwco.com © 2024 WTW. All rights reserved. See “WTW Forward-Looking Statements“ above for information about forward-looking statements and cautionary language, including how actual results may differ materially from those in the slide presentation. 8
Slide 9: Quarterly Segment Performance: Health, Wealth & Career
Quarterly Segment Performance: Health, Wealth & Career Segment Highlights Revenue ($M) Adjusted Operating • For the quarter, HWC had organic revenue growth1 of 4%. Margin1 – Health had organic revenue growth with the continued expansion of our $1,798 $1,722 40.5% 39.0% Global Benefits Management cli
Slide 10: Quarterly Segment Performance: Risk & Broking
Quarterly Segment Performance: Risk & Broking Segment Highlights Revenue ($M) Adjusted Operating • For the quarter, R&B had organic revenue growth1 of 12%. Book-of-business Margin1 settlement revenue did not meaningfully impact organic revenue growth for $1,076 32.9% the quarter. $952 28.3% – CRB ge
Slide 11: Transformation Program: Savings
Transformation Program: Savings Projected to generate $425 million of annualized savings through 2024 Delivering on our financial Cumulative Full Year commitments From Projected 2023 ($ millions) Inception • Delivering $425 million of run-rate savings to contribute ~425 bps of margin Real Estate Rat
Slide 12: Transformation Program: Costs to Achieve
Transformation Program: Costs to Achieve Cumulative • Incurred $155 million of restructuring Full Year / transformation related charges From Projected 2023 during the fourth quarter ($ millions) Inception Real Estate Rationalization $55 $159 • Incurred $6 million of capital Technology Modernization
Slide 13: Maintaining a Flexible Balance Sheet
Maintaining a Flexible Balance Sheet Reinforcing our business fundamentals; safeguarding WTW’s financial strengths Disciplined capital management strategy Dec 31, 2023 Dec 31, 2022 Provides WTW with the financial flexibility to ($ millions) reinvest in our businesses, capitalize on market growth opp
Slide 14: Executing Against a Balanced Capital Allocation Strategy
Executing Against a Balanced Capital Allocation Strategy Allocating capital to opportunities with the potential for highest return Capital Allocation Priorities CASH RETURNED TO SHAREHOLDERS • Reinvest in capabilities, businesses, and processes • Invest in innovation, technology, and new business $1
Slide 15: Business Overview
Business Overview wtwco.com © 2024 WTW. All rights reserved. See “WTW Forward-Looking Statements“ above for information about forward-looking statements and cautionary language, including how actual results may differ materially from those in the slide presentation. 15
Slide 16: We Have a Portfolio of Leading Businesses in Attractive Markets
We have: We Have a Portfolio of A distinctive mix of complementary businesses • Accomplished and aspiring talent Leading Businesses in • Collaborative client-first culture • Sophisticated data and analytics Attractive Markets • Powerful tools A strong balance sheet and significant financial flexibil
Slide 17: Segment Overview: Health, Wealth & Career
Segment Overview: Health, Wealth & Career1 Health, Wealth & Career: World-class portfolio of leading businesses FY 2023 Revenue and Organic Growth providing advisory and consulting services within human capital, employee benefits and retirement verticals +6% Organic +6% Organic Health Health provide
Slide 18: Segment Overview: Risk & Broking
Segment Overview: Risk & Broking1 Risk & Broking: Risk advisory and solutions business delivering FY 2023 Revenue and Organic Growth innovative, integrated solutions tailored to client needs and underpinned +7% Organic by cutting edge data and analytics, technology and experienced risk ICT thinkers
Slide 19: Value Creation Framework
Value Creation Framework 1. Seek profitable growth through innovation in attractive markets 2. Target superior shareholder returns through buybacks and prudent investments 3. Defensive business model with historically lower volatility than other financial services subsectors 4. Accelerate operationa
Slide 20: Strategy & Outlook
Strategy & Outlook wtwco.com © 2024 WTW. All rights reserved. See “WTW Forward-Looking Statements“ above for information about forward-looking statements and cautionary language, including how actual results may differ materially from those in the slide presentation. 20
Slide 21: 2024 Financial Targets
2024 Financial Targets1 Grow, Simplify, Transform: Focus on the execution on our strategy with a clear path to 2024 Financial Targets Revenue Adjusted Operating Margin Adjusted Diluted EPS $9.9B+ 22.5% - 23.5% $15.40 - $17.00 Mid-single digit (MSD) organic revenue Margin expansion driven by improved
Slide 22: Free Cash Flow Margin Expectations
Free Cash Flow Margin Expectations Free Cash Flow Margin 16%+ 12.6% 2024 and Beyond: • Expect incremental improvement in 2024 7.6% • Adjusted operating margin expansion • Adjusted operating margin • Additional improvement in TRANZACT expansion Free Cash Flow profile; expected to be • Improvement in
Slide 23: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures wtwco.com © 2024 WTW. All rights reserved. See “WTW Forward-Looking Statements“ above for information about forward-looking statements and cautionary language, including how actual results may differ materially from those in the slide presentation. 23
Slide 24: Constant Currency and Organic Revenue Change
Constant Currency and Organic Revenue Change As reported, USD millions except % Components of Revenue Change(i) Less: Less: Three Months Ended December 31, As Reported Currency Constant Currency Acquisitions/ Organic 2023 2022 % Change Impact Change Divestitures Change Health, Wealth & Career $ 1,79
Slide 25: Adjusted Op Income and Margin, Adj. EBITDA and Margin QTD
Adjusted Op Income and Margin, Adj. EBITDA and Margin QTD As reported, USD millions except % Three Months Ended December 31, 2023 2022 Income from operations and Operating margin $ 779 26.7% $ 708 26.0% Adjusted for certain items: Amortization 60 73 Restructuring costs 38 28 Transaction and transfor
Slide 26: Adjusted Op Income and Margin, Adj. EBITDA and Margin Full Year
Adjusted Op Income and Margin, Adj. EBITDA and Margin Full Year As reported, USD millions except % Years Ended December 31, 2023 2022 Income from operations and Operating margin $ 1,365 14.4% $ 1,178 13.3% Adjusted for certain items: Impairment — 81 Amortization 263 312 Restructuring costs 68 99 Tra
Slide 27: Adjusted Net Income and Adjusted Diluted EPS, QTD
Adjusted Net Income and Adjusted Diluted EPS, QTD As reported, USD millions except % Three Months Ended December 31, 2023 2022 Net Income attributable to WTW $ 622 $ 588 Adjusted for certain items: Loss from discontinued operations, net of tax — 13 Amortization 60 73 Restructuring costs 38 28 Transa
Slide 28: Adjusted Net Income and Adjusted Diluted EPS, Full Year
Adjusted Net Income and Adjusted Diluted EPS, Full Year As reported, USD millions except % Years Ended December 31, 2023 2022 Net Income attributable to WTW $ 1,055 $ 1,009 Adjusted for certain items: Loss from discontinued operations, net of tax — 40 Impairment — 81 Amortization 263 312 Restructuri
Slide 29: Adjusted Income Before Taxes, Adjusted Income Tax Rate and Free Cash Flow
Adjusted Income Before Taxes, Adjusted Income Tax Rate and Free Cash Flow As reported, USD millions except % Three Months Ended December 31, Years Ended December 31, 2023 2022 2023 2022 Income from continuing operations before income taxes $ 739 $ 737 Income from continuing operations before income
Slide 30: About WTW
About WTW At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience,
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