Willis Towers Watson (NASDAQ: WLTW) (the “Company”), a leading global advisory, broking and solutions company, today announced financial results for the second quarter ended June 30, 2020.
“I am pleased with our second quarter results. Our strong execution and our focus during this challenging environment helped us deliver another quarter of solid financial performance,” said John Haley, Willis Towers Watson’s chief executive officer. “We demonstrated the resilience of our overall business and diversified portfolio of offerings through continued revenue and earnings growth, robust free cash flow enhancement and a strengthened balance sheet. I would like to thank all the Willis Towers Watson colleagues for the outstanding commitment they have shown in the most difficult of circumstances. We are confident the actions we are taking in this challenging environment will enhance our agility and allow us to generate long-term value for all of our stakeholders.”
Second Quarter Company Highlights
Revenue was $2.11 billion for the second quarter of 2020, an increase of 3% (5% increase constant currency and flat organic) as compared to $2.05 billion for the same period in the prior year.
For the first half of 2020, revenue was $4.58 billion, an increase of 5% (7% increase constant currency and 2% increase organic) as compared to $4.36 billion for the same period in the prior year.
Income from operations for the second quarter of 2020 was $163 million, or 7.7% of revenue, a decrease of 90 basis points compared to the second quarter of the prior year. Adjusted operating income was $296 million, or 14.0% of revenue, a decrease of 60 basis points compared to the second quarter of the prior year. Net income attributable to Willis Towers Watson for the second quarter of 2020 was $94 million, a decrease of 32% from $138 million for the prior-year second quarter. For the quarter, diluted earnings per share were $0.72 and adjusted diluted earnings per share were $1.80. Net income attributable to Willis Towers Watson and diluted earnings per share for the second quarter of 2020 included pre-tax $14 million of transaction and integration expenses mostly related to the pending business combination with Aon plc. The U.S. GAAP tax rate for the quarter was 42.2%, and the adjusted income tax rate for the quarter used in calculating adjusted diluted earnings per share was 22.2%.
Income from operations for the first half of 2020 was $523 million, or 11.4% of revenue, a decrease of 90 basis points compared to the first half of the prior year. Adjusted operating income was $821 million, or 17.9% of revenue, a decrease of 20 basis points compared to the first half of the prior year. Net income attributable to Willis Towers Watson for the first half of 2020 was $399 million, a decrease of 6% from $425 million for the same period in prior year. For the first half of 2020, diluted earnings per share were $3.07 and adjusted diluted earnings per share were $5.14. Net income attributable to Willis Towers Watson and diluted earnings per share for the first half of 2020 included pre-tax $23 million of transaction and integration expenses mostly related to the pending business combination with Aon plc. For the first half of 2020, the U.S. GAAP tax rate was 26.9%, and the adjusted income tax rate used in calculating adjusted diluted earnings per share was 21.1%.
________________________________
1 The revenue amounts included in this release are presented on a U.S. GAAP basis except where stated otherwise. The segment discussion is on an organic basis.
Net income for the second quarter of 2020 was $102 million, or 4.8% of revenue, a decrease from net income of $149 million, or 7.3% of revenue for the prior-year second quarter. Adjusted EBITDA for the second quarter of 2020 was $441 million, or 20.9% of revenue, an increase from Adjusted EBITDA of $425 million, or 20.8% of revenue.
Net income for the first half of 2020 was $415 million, or 9.1% of revenue, a decrease from net income of $442 million, or 10.1% of revenue for the same period in the prior year. Adjusted EBITDA for the first half of 2020 was $1.1 billion, or 24.5% of revenue, an increase from Adjusted EBITDA of $1.0 billion, or 23.5% of revenue.
Cash flows from operating activities for the six months ended June 30, 2020 were $685 million, up 126% compared to $303 million for the prior-year first half. Free cash flow for the six months ended June 30, 2020 were $550 million, up 201% compared to $183 million for the prior-year first half. The increase in cash flows from operations as compared to the prior year was primarily due to positive cash flows from our improved working capital for the six months ended June 30, 2020 as compared to June 30, 2019. During the six months ended June 30, 2020, the Company had no share repurchase activity.
To view full results, click here.
Scan here to download the app