Willis Towers Watson Public Limited Company · NASDAQ:WTW
Willis Towers Watson Public — Willis Group Holdings — Q4 2014 Earnings Presentation
26 slides from Willis Towers Watson Public's earnings presentation, Feb 10, 2015
Slide 1: Fourth Quarter 2014 Results
Exhibit 99.2 Willis Group Holdings FOURTH QUARTER 2014 RESULTS February, 2015
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: 4Q 2014 EPS growth
4Q 2014 EPS growth Reported EPS grew 13.5%; Underlying EPS grew 17.9% Business performance = $0.10 - Commissions and fees = $0.27 Adjusting items: - Investment & other income = $0.05 ($0.22) Operational Improvement Program = $0.06 $0.32 Gain on Disposal = $(0.02) $0.46 $0.42 $0.37 $0.39 ($0.03) $0.0
Slide 5: 4Q 2014 Commissions and fees growth
4Q 2014 Commissions and fees growth % Growth Q4 2014 versus 4Q 2013 Reported Underlying Organic Commentary 7.2% • Reported impacted by FX movements and net M&A 3.1% 3.6% activity Group • Underlying reflects impact of M&A activity • Organic growth driven by International and Willis Re • Reported and
Slide 6: 4Q 2014 Total operating expenses
4Q 2014 Total operating expenses Organic total expense growth of 2.7%; underlying expense growth of 7.1% heavily impacted by M&A $ millions 7.1% $819 $803 $16 $4 ($1) Acquisitions and Disposals Acquisitions and Disposals $774 $40 $50 ($24) $750 $7 2.7% $763 $743 Organic growth 4Q 2013 Foreign 4Q 201
Slide 7: 4Q 2014 Salaries and benefits
4Q 2014 Salaries and benefits Underlying salaries and benefits growth impacted by net acquisitions and disposals $ millions 9.1% Acquisitions and Disposals $600 $600 Acquisitions and Disposals $25 $569 $50 ($19) $550 $5 5.5% $575 Organic growth $545 4Q 2013 Foreign Currency 4Q 2013 Salaries and Bene
Slide 8: 4Q 2014 Salaries and benefits
4Q 2014 Salaries and benefits Organic S&B relatively flat from 1Q14 through 4Q14 $ millions $600 Underlying $550 $570 $575 $569 $3 $2 $3 $25 Acquisitions and Disposals $5 Organic $545 $567 $573 $566 $575 4Q13 1Q14 2Q14 3Q14 4Q14 Organic 17,800 17,900 LTM Net M&A 200 500 Total FTEs 18,000 18,400 Unde
Slide 9: Operational Improvement Program and metrics
Operational Improvement Program and metrics Cumulative Annualized $ millions 2014A 2015E 2016E 2017E 2014-2017E 2018+E Spend $36 $130 $240 $410 Savings $11 $60 $135 $235 $420 $300 Key metrics : 3/31/14 12/31/14 • Ratio of full time employees (FTEs) in higher cost vs. lower cost 80:20 78:22(1) near-s
Slide 10: 4Q and FY 2014 underlying EBITDA
4Q and FY 2014 underlying EBITDA Full year underlying EBITDA up modestly; 4Q14 up 11.6% $ millions 1.2% $819 $829 11.6% Q4 $173 $193 Q3 $96 $87 Q2 $191 $187 Q1 $359 $362 2013 2014 Full year underlying EBITDA driven by: Revenue growth Solid organic revenue growth and growth from acquisitions includin
Slide 11: Corporate uses of cash and cash balance
Corporate uses of cash and cash balance $ millions Corporate Uses of Cash Acquisitions $777 Dividends • Significantly higher level of M&A in 2014 Capex $241 Share buyback • Announced share buyback program for 2014 completed in October $210 $335 $30 • 2014 dividend payout increased 9% from prior year
Slide 12: 2013 Investor Conference Key Metrics / Goals
2013 Investor Conference Key Metrics / Goals 70 bps + spread of Mid-single digit organic Improving cash flows Capital Management organic C&F over organic revenue growth expense growth 2014 Progress 2014 2014 2014 Invest in the business Organic Growth organic spread: Underlying EBITDA: for growth 3.8
Slide 13: Appendices
APPENDICES
Slide 14: 4Q 2014 Other operating expenses
4Q 2014 Other operating expenses Ongoing expense management reflected in 3.1% organic decline $ millions 2.5% Acquisitions and Disposals $166 Acquisitions and Disposals $165 $165 ($5) $161 $4 $1 $10 (3.1)% $160 Organic decline $155 4Q 2013 Foreign Currency 4Q 2013 Other Operating 4Q 2014 4Q 2014 Rep
Slide 15: 4Q 2014 Non-operating segment items and Corporate & other
4Q 2014 Non-operating segment items and Corporate & other $18 • $11 million increase due to higher WNA gains on Other disposals income/expense $7 • No significant year over year change in foreign exchange gain/loss on revaluation 4Q 2013 4Q 2014 • Improved performance from Associates in 4Q14, primar
Slide 16: 2014 EPS growth
2014 EPS growth Reported EPS down 2.0%; Underlying EPS down 4.9% - Commissions and fees - Operational Improvement = $0.73 - Salaries & benefits = $0.59 Program = $(0.15) - Investment & other - Other operating expenses = $0.15 - Deferred tax valuation allowance income = $0.06 $0.79 ($0.75) = $(0.12)
Slide 17: 2014 Commissions and fees growth
2014 Commissions and fees growth % Growth 2014 versus 2013 Reported Underlying Organic Commentary • Mid-single digit organic growth despite challenging 4.6% market conditions in reinsurance and moderating rates 3.7% 3.8% Group across markets • Underlying reflects net impact of acquisitions and dispo
Slide 18: 2014 Total operating expenses
2014 Total operating expenses Total organic operating expense growth of 4.6%; underlying growth of 5.7% driven by M&A activity $ millions 5.7% Acquisitions and Disposals $3,155 $3,119 $36 $1 $34 $53 Acquisitions and Disposals $2,992 $133 $6 ($47) $2,951 $19 4.6% $3,066 $2,932 2013 Foreign Other 2013
Slide 19: 2014 Salaries and benefits
2014 Salaries and benefits Organic S&B of 5.2%; underlying growth of 6.1% $ millions 6.1% Acquisitions and Disposals $2,314 $2,314 $33 Acquisitions and Disposals $133 $2,207 $2,181 ($29) $3 $13 $2,281 5.2% Organic growth $2,168 2013 Expense Foreign Currency 2013 Salaries and Benefits 2014 2014 Repor
Slide 20: New Segment Structure
New Segment Structure New Segment structure from January 1, 2015 Report 1Q15 on new basis; expect to file restated financial information in March 2015 Willis Capital, Wholesale Willis North America Willis International Willis Great Britain and Reinsurance Willis Re Focused on serving Focused on serv
Slide 21: Important disclosures regarding non-GAAP measures
Important disclosures regarding non-GAAP measures Commissions and fees analysis Organic Foreign Acquisitions commissions currency and and fees 2014 2013 Change translation disposals growth ($ millions) % % % % Three months ended December 31, 2014 North America $328 $345 (4.9) - (2.8) (2.1) Internati
Slide 22: Important disclosures regarding non-GAAP measures
Important disclosures regarding non-GAAP measures Operating income to underlying and organic operating income 2013 2014 (In millions) 1Q 2Q 3Q 4Q FY 1Q 2Q 3Q 4Q FY Total revenue $1,051 $890 $795 $919 $3,655 $1,097 $935 $812 $958 $3,802 excluding: Foreign currency movements 3 5 (3) (35) (30) - - - -
Slide 23: Important disclosures regarding non-GAAP measures
Important disclosures regarding non-GAAP measures Net income (loss) to underlying net income 2013 2014 (In millions, except per share data) 1Q 2Q 3Q 4Q YTD 1Q 2Q 3Q 4Q FY Net income (loss) $219 $105 ($27) $68 $365 $246 $47 ($7) $76 $362 Excluding the following, net of tax: Operational improvement pr
Slide 24: Important disclosures regarding non-GAAP measures
Important disclosures regarding non-GAAP measures Net income (loss) to underlying and organic EBITDA 2013 2014 1Q 2Q 3Q 4Q FY 1Q 2Q 3Q 4Q FY Net income (loss) attributable to $219 $105 ($27) $68 $365 $246 $47 ($7) $76 $362 Willis Group Holdings Excluding: Net (loss) income attributable to 4 2 - 6 12
Slide 25: Important disclosures regarding non-GAAP measures
Important disclosures regarding non-GAAP measures Reported total expenses and salaries and benefits to underlying and organic total expenses and salaries and benefits 2013 2014 (In millions) 1Q 2Q 3Q 4Q FY 1Q 2Q 3Q 4Q FY Reported total expenses $770 $723 $725 $774 $2,992 $771 $787 $778 $819 $3,155 E
Slide 26: IR Contacts Media Contact
IR Contacts Media Contact Peter Poillon Juliet Massey Tel: +1 212 915-8084 Tel: +44 7984 156 739 Email: peter.poillon@willis.com Email: juliet.massey@willis.com Mark Jones Tel: +1 212 915-8796 Email: mark.p.jones@willis.com 25
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