Willis Towers Watson Public Limited Company · NASDAQ:WTW
Willis Towers Watson Public — Q1 2023 Earnings Presentation
28 slides from Willis Towers Watson Public's earnings presentation, Apr 27, 2023
Slide 1: Earnings Release Supplemental Materials: 2023 First Quarter Financial Results
WTW Earnings Release Supplemental Materials 2023 First Quarter Financial Results April 27, 2023 wtwco.com © 2023 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: Strategy and Operating Performance
Strategy and Operating Performance wtwco.com © 2023 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. 4
Slide 5: Key Takeaways
Key Takeaways Delivered strong organic growth1 of 8% in Q1-23 and Adjusted EPS1 growth of 7% for Q1-23 Continued to make significant progress on strategic priorities Realized $75M of incremental annualized savings in Q1-23, bringing the total to $224M since Transformation Program inception Continued
Slide 6: Q1 2023 GAAP Financial Results
Q1 2023 GAAP Financial Results Key figures $USD million, except EPS and % Three months ended March 31, 2023 2022 Change Revenue $2,244 $2,160 4% Income from operations $285 $179 59% Operating margin % 12.7% 8.3% 440 bps Net income $206 $125 65% Diluted earnings per share $1.88 $1.03 83% Net cash fro
Slide 7: Q1 2023 Key Figures, Including Non-GAAP Financial Results
Q1 2023 Key Figures, Including Non-GAAP Financial Results Solid operating performance Q1 2023 Results Total Revenue $2.2B +8% +2% Q1 2023 Q1 2023 Q1 2022 Organic Organic Adjusted Diluted EPS1 $2.84 Q1 2023 +7% Q1 2023 $2.66 Q1 2022 Adjusted Operating Margin1 18.6% +140bps 17.2% Q1 2023 Q1 2023 Q1 20
Slide 8: Our Strategic Priorities: Grow, Simplify, Transform
Our Strategic Priorities: Grow, Simplify, Transform Focus on the execution on our strategy and the generation of outstanding value creation for all shareholders • Grow: Invest to grow at or above market in chosen areas • Simplify: Increase agility; do the basics well • Transform: Enhance client and
Slide 9: Recent Progress Against Strategic Priorities
Recent Progress Against Strategic Priorities ✓ Re-segmentation and corporate rebrand improving sales and retention outcomes Grow Transform ✓ Focused on growth opportunities in core ✓ Realized $75M of incremental annualized and high-growth markets Simplify savings in Q1-23 and $224M since inception ✓
Slide 10: We Have a Portfolio of Leading Businesses in Attractive Markets
We have: We Have a Portfolio of A distinctive mix of complementary businesses • Accomplished and aspiring talent Leading Businesses in • Collaborative client-first culture • Sophisticated data and analytics Attractive Markets • Powerful tools A strong balance sheet and significant financial flexibil
Slide 11: Segment Overview: Health, Wealth, & Career
Segment Overview: Health, Wealth, & Career1 Health, Wealth & Career: World-class portfolio of leading businesses 2022 Revenue providing advisory and consulting services within human capital, employee benefits and retirement verticals Health Health provides Wealth provides Career provides Benefits De
Slide 12: Segment Overview: Risk & Broking
Segment Overview: Risk & Broking1 Risk & Broking: Risk advisory and solutions business delivering 2022 Revenue innovative, integrated solutions tailored to client needs and underpinned by cutting edge data and analytics, technology and experienced risk ICT thinkers 11% Corporate Risk & Broking provi
Slide 13: Value Creation Framework
Value Creation Framework 1. Seek profitable growth through innovation in attractive markets 2. Target superior shareholder returns through buybacks and prudent investments 3. Defensive business model with historically lower volatility than other financial services subsectors 4. Accelerate operationa
Slide 14: Financial Review
Financial Review wtwco.com © 2023 WTW. All rights reserved. See “WTW Forward-Looking Statements“ above for information about forward-looking statements and cautionary language, including how actual results may differ materially from those in the slide presentation. 14
Slide 15: Quarterly Segment Performance: Health, Wealth & Career
Quarterly Segment Performance: Health, Wealth & Career Segment Highlights Revenue ($M) Adjusted Operating • For the quarter, HWC grew 6% organically, with Health leading the Margin segment. $1,287 $1,244 24.0% 20.7% – Health organic revenue growth was driven by increased project activity in North Am
Slide 16: Segment Performance: Risk & Broking
Segment Performance: Risk & Broking Segment Highlights Revenue ($M) Adjusted Operating • For the quarter, R&B grew 10% organically. Margin $904 $891 21.6% – CRB generated excellent organic revenue growth across all 19.9% geographies, primarily driven by new business and increased retention in our gl
Slide 17: Continued Progress on Transformation Program
Continued Progress on Transformation Program On track to generate $360M+ of annualized savings through 2024 Cumulative Delivering on our financial commitments Q1 Total Costs to Achieve From 2023 Transformation • Delivering $360M+ run-rate savings to ($ millions) Inception contribute 360 bps of margi
Slide 18: 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, 2022 Mar 31, 2023 Provides WTW with the financial flexibility to ($ millions) reinvest in our businesses, capitalize on market growth opp
Slide 19: Executing Against a Balanced Capital Allocation Strategy
Executing Against a Balanced Capital Allocation Strategy Capital Allocation Priorities CASH RETURNED TO SHAREHOLDERS • Reinvest in capabilities, businesses, and processes • Invest in innovation, technology, and new business $9.4 B $3,899 FY2016 to $2,001 • Return excess cash to shareholders through
Slide 20: 2023 Financial Targets
2023 Financial Targets1 FY2023 Revenue Growth Expect to deliver mid-single digit organic revenue growth FY2023 Adjusted Margin Improvement Expect to deliver adjusted operating margin expansion for full year 2023 FY2023 Foreign Currency Expect approximately $0.05 headwind on Adj. EPS at today’s rates
Slide 21: Appendix 1: Reconciliation of Non-GAAP Measures
Appendix 1: Reconciliation of Non-GAAP Measures wtwco.com © 2023 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. 21
Slide 22: 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 March 31, As Reported Currency Constant Currency Acquisitions/ Organic 2023 2022 % Change Impact Change Divestitures Change Health, Wealth & Career $ 1,287 $
Slide 23: Adjusted Op Income and Margin, Adj. EBITDA and Margin
Adjusted Op Income and Margin, Adj. EBITDA and Margin As reported, USD millions except % Three Months Ended March 31, 2023 2022 Income from operations $ 285 12.7% $ 179 8.3% Adjusted for certain items: Impairment — 81 Amortization 71 85 Restructuring costs 3 6 Transaction and transformation 59 20 Ad
Slide 24: Adjusted Net Income and Adjusted Diluted EPS
Adjusted Net Income and Adjusted Diluted EPS As reported, USD millions except % Three Months Ended March 31, 2023 2022 Net Income attributable to WTW $ 203 $ 122 Adjusted for certain items: Income from discontinued operations, net of tax — (11) Impairment — 81 Amortization 71 85 Restructuring costs
Slide 25: 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 March 31, Three Months Ended March 31, 2023 2022 2023 2022 Income from continuing operations before income taxes $ 256 $ 157 Cash flows from operating activities $ 134 $ 21
Slide 26: Appendix 2: Updated Free Cash Flow Outlook
Appendix 2: Updated Free Cash Flow Outlook wtwco.com © 2023 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. 26
Slide 27: Updated Free Cash Flow Outlook
Updated Free Cash Flow Outlook As part of our strategic plan, we set a target for three-year cumulative Free Cash Flow (“FCF”). This target reflected our goal to substantially improve FCF generation. We recognized that there were – and still are – substantial FCF improvement opportunities for WTW ac
Slide 28: 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,
Willis Towers Watson Public Limited Company — Q1 2023 Earnings Presentation on 6ix