WTW Reports Second Quarter 2024 Earnings

Rhea-AI Summary

WTW (NASDAQ: WTW) reported strong Q2 2024 results, with revenue increasing 5% to $2.3 billion and organic growth of 6%. The company saw significant improvements in profitability, with diluted EPS up 55% to $1.36 and adjusted diluted EPS up 24% to $2.55. Operating margin expanded by 280 basis points to 9.4%, while adjusted operating margin rose 240 basis points to 17.0%.

Both major segments, Health, Wealth & Career (HWC) and Risk & Broking (R&B), showed strong performance. HWC revenue grew 4% to $1.26 billion, with a 360 basis point increase in operating margin to 21.9%. R&B revenue increased 9% to $979 million, with a 450 basis point jump in operating margin to 20.6%.

Based on strong H1 2024 performance, WTW raised the low end of its full-year 2024 outlook for adjusted operating margin to 23.0%-23.5% and adjusted EPS to $16.00-$17.00.

Positive

• Revenue increased 5% to $2.3 billion with 6% organic growth
• Diluted EPS up 55% to $1.36, Adjusted Diluted EPS up 24% to $2.55
• Operating Margin expanded 280 basis points to 9.4%
• Adjusted Operating Margin increased 240 basis points to 17.0%
• Health, Wealth & Career segment revenue grew 4% to $1.26 billion
• Risk & Broking segment revenue increased 9% to $979 million
• Raised low end of 2024 outlook for Adjusted Operating Margin and Adjusted Diluted EPS
• Increased Annual Cost Savings target for Transformation Program

Negative

• Foreign-Currency Headwind on Adjusted Diluted EPS increased from $0.05 to $0.10
• Transformation Program Costs to Achieve increased from ~$1.125 billion to ~$1.175 billion

Insights

Financial Analyst

WTW's Q2 2024 results demonstrate robust financial performance and operational efficiency. The company reported a 5% increase in revenue to $2.3 billion, with organic growth of 6%. Notably, diluted earnings per share surged by 55% to $1.36, while adjusted diluted EPS rose 24% to $2.55.

The company's operating margin expanded significantly, increasing by 280 basis points to 9.4%. The adjusted operating margin saw an even more substantial improvement, rising 240 basis points to 17.0%. These margin expansions reflect the company's successful execution of its Transformation program and improved operational efficiency.

WTW's segment performance was strong across the board. The Health, Wealth & Career segment saw a 5% organic revenue growth, driven by increased project work and strong client retention. The Risk & Broking segment performed exceptionally well, with a 10% organic revenue growth, primarily due to higher levels of new business activity and strong client retention.

The company's improved outlook for 2024, raising the low end of its target ranges for adjusted operating margin and adjusted EPS, indicates management's confidence in sustained performance. The increased annual cost savings target from $425 million to $450 million further underscores the effectiveness of WTW's Transformation program.

However, investors should note the potential headwind from foreign currency exchange, with the company doubling its estimated impact on adjusted diluted EPS from $0.05 to $0.10. This could slightly temper the overall positive outlook.

Market Research Analyst

WTW's strong Q2 2024 performance reflects broader trends in the advisory and insurance brokerage sector. The company's ability to achieve 6% organic growth in a challenging macroeconomic environment is noteworthy, indicating robust demand for risk management and advisory services.

The Health, Wealth & Career segment's growth, particularly in North America and Europe, suggests increasing corporate focus on employee benefits and retirement planning. This trend is likely driven by tight labor markets and the need to attract and retain talent. The segment's expansion in Global Benefits Management also points to growing multinational interest in coordinated benefits strategies.

In the Risk & Broking segment, the strong performance across all geographies indicates a global uptick in risk awareness and mitigation strategies. This could be attributed to ongoing geopolitical tensions, climate-related risks and evolving cyber threats, all of which are driving demand for sophisticated risk management solutions.

The flat growth in Insurance Consulting and Technology suggests a potential shift in client priorities, possibly towards more immediate risk management needs rather than long-term technology investments. This could be a area to watch for future growth opportunities or potential challenges.

WTW's improved outlook and increased cost savings target demonstrate the company's ability to adapt to market conditions and optimize operations. This positions WTW favorably against competitors and could potentially lead to market share gains in the coming quarters.

• Revenue¹ increased 5% to $2.3 billion for the quarter with organic growth of 6% for the quarter
• Diluted Earnings per Share were $1.36 for the quarter, up 55% over prior year
• Adjusted Diluted Earnings per Share were $2.55 for the quarter, up 24% from prior year
• Operating Margin was 9.4% for the quarter, up 280 basis points from prior year
• Adjusted Operating Margin was 17.0% for the quarter, up 240 basis points from prior year
• Raised low end of target ranges for 2024 Outlook for Adjusted Operating Margin and Adjusted Diluted EPS and increased the Annual Cost Savings target

LONDON, July 25, 2024 (GLOBE NEWSWIRE) -- WTW (NASDAQ: WTW) (the “Company”), a leading global advisory, broking and solutions company, today announced financial results for the second quarter ended June 30, 2024.

“WTW delivered a strong second quarter, generating significant EPS growth and margin expansion through robust organic growth, operating efficiency and the continued execution of our Transformation program,” said Carl Hess, WTW’s Chief Executive Officer. “These results show that our efforts to grow, simplify and transform WTW continue to create sustainable value for shareholders, clients and colleagues. Given our strong performance and ongoing momentum, we are raising the low end of our full year 2024 target ranges for adjusted operating margin and adjusted EPS to 23.0%-23.5% and $16.00-$17.00, respectively.”

Consolidated Results

As reported, USD millions, except %

Key Metrics	Q2-24	Q2-23	Y/Y Change
Revenue1	$2,265	$2,159	Reported 5% | CC 6% | Organic 6%
Income from Operations	$212	$142	49%
Operating Margin %	9.4%	6.6%	280 bps
Adjusted Operating Income	$385	$315	22%
Adjusted Operating Margin %	17.0%	14.6%	240 bps
Net Income	$142	$96	48%
Adjusted Net Income	$263	$219	20%
Diluted EPS	$1.36	$0.88	55%
Adjusted Diluted EPS	$2.55	$2.05	24%

1	The revenue amounts included in this release are presented on a U.S. GAAP basis except where stated otherwise. This excludes reinsurance revenue which is reported in discontinued operations. The segment discussion is on an organic basis.

Revenue was $2.27 billion for the second quarter of 2024, an increase of 5% as compared to $2.16 billion for the same period in the prior year. Excluding the impact of foreign currency, revenue increased 6%. On an organic basis, revenue increased 6%. See Supplemental Segment Information for additional detail on book-of-business settlements and interest income included in revenue.

Net Income for the second quarter of 2024 was $142 million, an increase of 48% compared to Net Income of $96 million in the prior-year second quarter. Adjusted EBITDA for the second quarter was $466 million, or 20.6% of revenue, an increase of 13%, compared to Adjusted EBITDA of $411 million, or 19.0% of revenue, in the prior-year second quarter. The U.S. GAAP tax rate for the second quarter was 15.6%, and the adjusted income tax rate for the second quarter used in calculating adjusted diluted earnings per share was 22.6%.

Cash Flow and Capital Allocation

Cash flows from operating activities were $431 million for the quarter ended June 30, 2024, compared to $430 million for the prior year. Free cash flow for the six months ended June 30, 2024 and 2023 was $361 million and $350 million, respectively, an increase of $11 million, primarily driven by operating margin expansion, partially offset by increased cash outflows related to transformation and discretionary compensation payments. During the quarter ended June 30, 2024, the Company repurchased $200 million of WTW outstanding shares.

Second Quarter 2024 Segment Highlights

Health, Wealth & Career ("HWC")

As reported, USD millions, except %

Health, Wealth & Career	Q2-24	Q2-23	Y/Y Change
Total Revenue	$1,260	$1,215	Reported 4% | CC 4% | Organic 5%
Operating Income	$276	$222	24%
Operating Margin %	21.9%	18.3%	360 bps

The HWC segment had revenue of $1.26 billion in the second quarter of 2024, an increase of 4% (4% increase constant currency and 5% organic) from $1.22 billion in the prior year. Organic revenue growth in Health was driven by increased project work in North America and strong client retention, new local appointments and the continued expansion of our Global Benefits Management client portfolio in International and Europe. Our Wealth businesses generated organic revenue growth from higher levels of Retirement work in North America and Europe and an increase in our Investments business due to capital market improvements and growth from our LifeSight solution. Career had organic revenue growth from increased project work and product revenue in Employee Experience and Work & Rewards. Benefits Delivery & Outsourcing was flat for the quarter as a result of growth in Outsourcing offset by moderated growth in Individual Marketplace.

Operating margins in the HWC segment increased 360 basis points from the prior-year second quarter to 21.9%, primarily from operating leverage and Transformation savings.

Risk & Broking ("R&B")

As reported, USD millions, except %

Risk & Broking	Q2-24	Q2-23	Y/Y Change
Total Revenue	$979	$900	Reported 9% | CC 10% | Organic 10%
Operating Income	$202	$145	39%
Operating Margin %	20.6%	16.1%	450 bps

The R&B segment had revenue of $979 million in the second quarter of 2024, an increase of 9% (10% increase constant currency and organic) from $900 million in the prior year. Corporate Risk & Broking (CRB) had organic revenue growth primarily driven by higher levels of new business activity, strong client retention and renewal increases across all geographies. Insurance Consulting and Technology (ICT) had flat organic revenue growth for the quarter primarily due to tempered demand for discretionary services.

Operating margins in the R&B segment increased 450 basis points from the prior-year second quarter to 20.6%, due to operating leverage from strong revenue growth in CRB, Transformation savings and interest income.

2024 Outlook

Based on our performance during the first half of 2024 and both current and anticipated market conditions, the Company's full-year targets for 2024, as compared with those targets that have been previously provided are as follows. Refer to the Supplemental Slides for additional detail.

	Previous Targets		Updated Targets
Revenue	$9.9+ billion		$9.9+ billion*
Adjusted Operating Margin	22.5%-23.5%		23.0%-23.5%
Adjusted Diluted EPS	$15.40-$17.00		$16.00-$17.00
Transformation Program Annual Cost Savings	~$425 million		~$450 million
Transformation Program Costs to Achieve	~$1.125 billion		~$1.175 billion
Non-Cash Pension Income	$88 million		$88 million*
Foreign-Currency Headwind on Adjusted Diluted EPS	$0.05		$0.10

*No update to previous target.

Outlook includes Non-GAAP financial measures. We do not reconcile forward-looking Non-GAAP measures for reasons explained below.

Conference Call

The Company will host a live webcast and conference call to discuss the financial results for the second quarter 2024. It will be held on Thursday, July 25, 2024, beginning at 9:00 a.m. Eastern Time. A live broadcast of the conference call will be available on WTW’s website here. The conference call will include a question-and-answer session. To participate in the question-and-answer session, please register here. An online replay will be available at www.wtwco.com shortly after the call concludes.

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, motivate their workforce and maximize performance. Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you. Learn more at www.wtwco.com.

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 Change, (3) Adjusted Operating Income/Margin, (4) Adjusted EBITDA/Margin, (5) Adjusted Net Income, (6) Adjusted Diluted Earnings Per Share, (7) Adjusted Income Before Taxes, (8) Adjusted Income Taxes/Tax Rate, (9) Free Cash Flow and (10) Free Cash Flow Margin.

We believe that those measures are relevant and provide pertinent information widely used by analysts, investors and other interested parties in our industry to provide a baseline for evaluating and comparing our operating performance, and in the case of free cash flow, our liquidity results.

Within the measures referred to as ‘adjusted’, we adjust for significant items which will not be settled in cash, or which we believe to be items that are not core to our current or future operations. Some of these items may not be applicable for the current quarter, however they may be part of our full-year results. Additionally, we have historically adjusted for certain items which are not described below, but for which we may adjust in a future period when applicable. Items applicable to the quarter or full year results, or the comparable periods, include the following:

• Restructuring costs and transaction and transformation – Management believes it is appropriate to adjust for restructuring costs and transaction and transformation when they relate to a specific significant program with a defined set of activities and costs that are not expected to continue beyond a defined period of time, or significant acquisition-related transaction expenses. We believe the adjustment is necessary to present how the Company is performing, both now and in the future when the incurrence of these costs will have concluded.
• Provisions for specified litigation matters – We will include provisions for litigation matters which we believe are not representative of our core business operations. Among other things, we determine this by reference to the amount of the loss (net of insurance and other recovery receivables) and by reference to whether the matter relates to an unusual and complex scenario that is not expected to be repeated as part of our ongoing, ordinary business. These amounts are presented net of insurance and other recovery receivables. See the footnotes to the respective reconciliation tables below for more specificity on the litigation matter excluded from adjusted results.
• Gains and losses on disposals of operations – Adjustment to remove the gains or losses resulting from disposed operations that have not been classified as discontinued operations.
• Tax effect of significant adjustments – Relates to the incremental tax expense or benefit resulting from significant or unusual events including significant statutory tax rate changes enacted in material jurisdictions in which we operate, internal reorganizations of ownership of certain businesses that reduced the investment held by our U.S.-controlled subsidiaries and the recovery of certain refunds or payment of taxes related to businesses in which we no longer participate.

We evaluate our revenue on an as reported (U.S. GAAP), constant currency and organic basis. We believe presenting constant currency and organic information provides valuable supplemental information regarding our comparable results, consistent with how we evaluate our performance internally.

We consider Constant Currency Change, Organic Change, Adjusted Operating Income/Margin, Adjusted EBITDA/Margin, Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Income Before Taxes, Adjusted Income Taxes/Tax Rate and Free Cash Flow to be important financial measures, which are used to internally evaluate and assess our core operations and to benchmark our operating and liquidity results against our competitors. These non-GAAP measures are important in illustrating what our comparable operating and liquidity results would have been had we not incurred transaction-related and non-recurring items. Reconciliations of these measures are included in the accompanying tables with the following exception: The Company does not reconcile its forward-looking non-GAAP financial measures to the corresponding U.S. GAAP measures, due to variability and difficulty in making accurate forecasts and projections and/or certain information not being ascertainable or accessible; and because not all of the information, such as foreign currency impacts necessary for a quantitative reconciliation of these forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure, is available to the Company without unreasonable efforts. For the same reasons, the Company is unable to address the probable significance of the unavailable information. The Company provides non-GAAP financial measures that it believes will be achieved, however it cannot accurately predict all of the components of the adjusted calculations and the U.S. GAAP measures may be materially different than the non-GAAP measures.

Our non-GAAP measures and their accompanying definitions are presented as follows:

Constant Currency Change – Represents the year-over-year change in revenue excluding the impact of foreign currency fluctuations. To calculate this impact, the prior year local currency results are first translated using the current year monthly average exchange rates. The change is calculated by comparing the prior year revenue, translated at the current year monthly average exchange rates, to the current year as reported revenue, for the same period. We believe constant currency measures provide useful information to investors because they provide transparency to performance by excluding the effects that foreign currency exchange rate fluctuations have on period-over-period comparability given volatility in foreign currency exchange markets.

Organic Change – Excludes the impact of fluctuations in foreign currency exchange rates, as described above and the period-over-period impact of acquisitions and divestitures on current-year revenue. We believe that excluding transaction-related items from our U.S. GAAP financial measures provides useful supplemental information to our investors, and it is important in illustrating what our core operating results would have been had we not included these transaction-related items, since the nature, size and number of these transaction-related items can vary from period to period.

Adjusted Operating Income/Margin – Income from operations adjusted for amortization, restructuring costs, transaction and transformation and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted operating income margin is calculated by dividing adjusted operating income by revenue. We consider adjusted operating income/margin to be important financial measures, which are used internally to evaluate and assess our core operations and to benchmark our operating results against our competitors.

Adjusted EBITDA/Margin – Net Income adjusted for provision for income taxes, interest expense, depreciation and amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted EBITDA Margin is calculated by dividing adjusted EBITDA by revenue. We consider adjusted EBITDA/margin to be important financial measures, which are used internally to evaluate and assess our core operations, to benchmark our operating results against our competitors and to evaluate and measure our performance-based compensation plans.

Adjusted Net Income – Net Income Attributable to WTW adjusted for amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results and the related tax effect of those adjustments and the tax effects of internal reorganizations. This measure is used solely for the purpose of calculating adjusted diluted earnings per share.

Adjusted Diluted Earnings Per Share – Adjusted Net Income divided by the weighted-average number of ordinary shares, diluted. Adjusted diluted earnings per share is used to internally evaluate and assess our core operations and to benchmark our operating results against our competitors.

Adjusted Income Before Taxes – Income from operations before income taxes adjusted for amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted income before taxes is used solely for the purpose of calculating the adjusted income tax rate.

Adjusted Income Taxes/Tax Rate – Provision for income taxes adjusted for taxes on certain items of amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations, the tax effects of internal reorganizations, and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results, divided by adjusted income before taxes. Adjusted income taxes is used solely for the purpose of calculating the adjusted income tax rate. Management believes that the adjusted income tax rate presents a rate that is more closely aligned to the rate that we would incur if not for the reduction of pre-tax income for the adjusted items and the tax effects of internal reorganizations, which are not core to our current and future operations.

Free Cash Flow – Cash flows from operating activities less cash used to purchase fixed assets and software for internal use. Free Cash Flow is a liquidity measure and is not meant to represent residual cash flow available for discretionary expenditures. Management believes that free cash flow presents the core operating performance and cash-generating capabilities of our business operations.

Free Cash Flow Margin – Free Cash Flow as a percentage of revenue, which represents how much of revenue would be realized on a cash basis. We consider this measure to be a meaningful metric for tracking cash conversion on a year-over-year basis due to the non-cash nature of our pension income, which is included in our GAAP and Non-GAAP earnings metrics presented herein.

These non-GAAP measures are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-GAAP measures should be considered in addition to, and not as a substitute for, the information contained within our condensed consolidated financial 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-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, that address activities, events, or developments that we expect or anticipate may occur in the future, including such things as our outlook, plans and references to future performance, including our future financial and operating results (including our revenue, costs, or margins), short-term and long-term financial goals, plans, objectives, expectations and intentions, including with respect to organic revenue growth, free cash flow generation, adjusted net revenue, adjusted operating margin and adjusted earnings per share; future share repurchases; demand for our services and competitive strengths; existing and evolving business strategies including those related to acquisition and disposition activity; the benefits of new initiatives; the growth of our business and operations; the sustained health of our product, service, transaction, client, and talent assessment and management pipelines; our ability to successfully manage ongoing leadership, organizational, and technology changes, including investments in improving systems and processes, and in connection with our acquisition and divestiture activities; our ability to implement and realize anticipated benefits of any cost-savings initiatives including the multi-year operational Transformation program; the potential impact of natural or man-made disasters like health pandemics and other world crises; future capital expenditures; ongoing working capital efforts; the impact of changes to tax laws on our financial results; and our recognition of future impairment charges or write-off of receivables, are forward-looking statements. Also, when we use words such as ‘may’, ‘will’, ‘would’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘intend’, ‘plan’, ‘continues’, ‘seek’, ‘target’, ‘goal’, ‘focus’, ‘probably’, or similar expressions, we are making forward-looking statements. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. All forward-looking disclosure is speculative by its nature.

There are important risks, uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this document, including the following: our ability to successfully establish, execute and achieve our global business strategy as it evolves; our ability to fully realize anticipated benefits of our growth strategy, including inorganic growth through acquisitions; our ability to make divestitures or acquisitions, including our ability to integrate or manage acquired businesses or de-integrate businesses to be disposed, as well as our ability to identify and successfully execute on opportunities for strategic collaboration; our ability to successfully manage ongoing organizational changes, including as part of our multi-year operational transformation program, investments in improving systems and processes, and in connection with our acquisition and divestiture activities and related to changes in leadership in any of our businesses; risks relating to changes in our management structures and in senior leadership; our ability to achieve our short-term and long-term financial goals, such as with respect to our cash flow generation, and the timing with respect to such achievement; the risks related to changes in general economic conditions, business and political conditions, changes in the financial markets, inflation, credit availability, increased interest rates and changes in trade policies; the risks to our short-term and long-term financial goals from any of the risks or uncertainties set forth herein; the risks relating to the adverse impacts of macroeconomic trends, including inflation, changes in interest rates and trade policies, as well as political events, war, such as the Russia-Ukraine and Israel-Hamas wars, and other international disputes, terrorism, natural disasters, public health issues and other business interruptions on the global economy and capital markets, which could have a material adverse effect on our business, financial condition, results of operations, and long-term goals; our ability to successfully hedge against fluctuations in foreign currency rates; the risks relating to the adverse impacts of natural or man-made disasters like health pandemics and other world health crises on the demand for our products and services, our cash flows and our business operations; material interruptions to or loss of our information processing capabilities, or failure to effectively maintain and upgrade our information technology resources and systems and related risks of cybersecurity breaches or incidents; our ability to comply with complex and evolving regulations related to data privacy, cybersecurity, and artificial intelligence; the risks relating to the transitional arrangements in effect subsequent to our previously-completed sale of Willis Re to Arthur J. Gallagher & Co.; significant competition that we face and the potential for loss of market share and/or profitability; the impact of seasonality and differences in timing of renewals and non-recurring revenue increases from disposals and book-of-business sales; the insufficiency of client data protection, potential breaches of information systems or insufficient safeguards against cybersecurity breaches or incidents; the risk of increased liability or new legal claims arising from our new and existing products and services, and expectations, intentions and outcomes relating to outstanding litigation; the risk of substantial negative outcomes on existing litigation or investigation matters; changes in the regulatory environment in which we operate, including, among other risks, the impacts of pending competition law and regulatory investigations; various claims, government inquiries or investigations or the potential for regulatory action; our ability to integrate direct-to-consumer sales and marketing solutions with our existing offerings and solutions; disasters or business continuity problems; our ability to successfully enhance our billing, collection and other working capital efforts, and thereby increase our free cash flow; our ability to properly identify and manage conflicts of interest; reputational damage, including from association with third parties; reliance on third-party service providers and suppliers; the loss of key employees or a large number of employees and rehiring rates; our ability to maintain our corporate culture; doing business internationally, including the impact of foreign currency exchange rates; compliance with extensive government regulation; the risk of sanctions imposed by governments, or changes to associated sanction regulations (such as sanctions imposed on Russia) and related counter-sanctions; our ability to effectively apply technology, data and analytics changes for internal operations, maintaining industry standards and meeting client preferences; changes and developments in the insurance industry or the U.S. healthcare system, including those related to Medicare, any legislative actions from the current U.S. Congress, the recent Final Rule from the Centers for Medicare & Medicaid Services for contract year 2025 and any judicial claims, rulings and appeals related thereto, and any other changes and developments in legal, regulatory, economic, business or operational conditions impacting our Medicare benefits businesses such as TRANZACT; the inability to protect our intellectual property rights, or the potential infringement upon the intellectual property rights of others; fluctuations in our pension assets and liabilities and related changes in pension income, including as a result of, related to, or derived from movements in the interest rate environment, investment returns, inflation, or changes in other assumptions that are used to estimate our benefit obligations and its effect on adjusted earnings per share; our capital structure, including indebtedness amounts, the limitations imposed by the covenants in the documents governing such indebtedness and the maintenance of the financial and disclosure controls and procedures of each; our ability to obtain financing on favorable terms or at all; adverse changes in our credit ratings; the impact of recent or potential changes to U.S. or foreign laws, and the enactment of additional, or the revision of existing, state, federal, and/or foreign laws and regulations, recent judicial decisions and development of case law, other regulations and any policy changes and legislative actions, including those that impact our effective tax rate; U.S. federal income tax consequences to U.S. persons owning at least 10% of our shares; changes in accounting principles, estimates or assumptions; our recognition of future impairment charges or write-off of receivables; risks relating to or arising from environmental, social and governance practices; fluctuation in revenue against our relatively fixed or higher than expected expenses; the risk that investment levels, including cash spending, to achieve additional transformation savings increase; the laws of Ireland being different from the laws of the U.S. and potentially affording less protections to the holders of our securities; and our holding company structure potentially preventing us from being able to receive dividends or other distributions in needed amounts from our subsidiaries.

The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. For more information, please see Part I, Item 1A in our Annual Report on Form 10-K, and our subsequent filings with the SEC. Copies are available online at www.sec.gov or www.wtwco.com.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included in this document, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved.

Our forward-looking statements speak only as of the date made, and we will not update these forward-looking statements unless the securities laws require us to do so. With regard to these risks, uncertainties and assumptions, the forward-looking events discussed in this document may not occur, and we caution you against unduly relying on these forward-looking statements.

Contact

INVESTORS
Claudia De La Hoz | Claudia.Delahoz@wtwco.com

WTW Supplemental Segment Information (In millions of U.S. dollars) (Unaudited)
REVENUE
												Components of Revenue Change(i)
												Less:				Less:
		Three Months Ended June30,								As Reported		Currency		Constant Currency		Acquisitions/		Organic
		2024				2023				% Change		Impact		Change		Divestitures		Change
Health, Wealth & Career
Revenue excluding interest income		$	1,251			$	1,209			3%		(1)%		4%		0%		5%
Interest income			9				6
Total			1,260				1,215			4%		(1)%		4%		0%		5%
Risk & Broking
Revenue excluding interest income		$	950			$	885			7%		(1)%		8%		0%		8%
Interest income			29				15
Total			979				900			9%		(1)%		10%		0%		10%
Segment Revenue		$	2,239			$	2,115			6%		(1)%		7%		0%		7%
Reimbursable expenses and other			20				30
Interest income			6				14
Revenue		$	2,265			$	2,159			5%		(1)%		6%		0%		6%(ii)

												Components of Revenue Change(i)
												Less:				Less:
		Six Months Ended June30,								As Reported		Currency		Constant Currency		Acquisitions/		Organic
		2024				2023				% Change		Impact		Change		Divestitures		Change
Health, Wealth & Career
Revenue excluding interest income		$	2,578			$	2,491			3%		0%		4%		0%		4%
Interest income			18				11
Total			2,596				2,502			4%		0%		4%		0%		4%
Risk & Broking
Revenue excluding interest income		$	1,900			$	1,777			7%		0%		7%		0%		7%
Interest income			57				27
Total			1,957				1,804			8%		0%		9%		0%		9%
Segment Revenue		$	4,553			$	4,306			6%		0%		6%		0%		6%
Reimbursable expenses and other			41				68
Interest income			12				29
Revenue		$	4,606			$	4,403			5%		0%		5%		0%		5%(ii)

⁽ⁱ⁾ Components of revenue change may not add due to rounding.
⁽ⁱⁱ⁾ Interest income contributed 1% to organic change for total revenue for the three months ended June 30, 2024. Organic change for total revenue excluding this contribution was 5% for the three months ended June 30, 2024. Interest income did not contribute to organic change for the six months ended June 30, 2024.

BOOK-OF-BUSINESS SETTLEMENTS AND INTEREST INCOME

		Three Months Ended June 30,
		HWC								R&B								Corporate								Total
		2024				2023				2024				2023				2024				2023				2024				2023
Book-of-business settlements		$	—			$	—			$	2			$	3			$	—			$	—			$	2			$	3
Interest income			9				6				29				15				6				14				44				35
Total		$	9			$	6			$	31			$	18			$	6			$	14			$	46			$	38

		Six Months Ended June 30,
		HWC								R&B								Corporate								Total
		2024				2023				2024				2023				2024				2023				2024				2023
Book-of-business settlements		$	—			$	—			$	4			$	10			$	—			$	—			$	4			$	10
Interest income			18				11				57				27				12				29				87				67
Total		$	18			$	11			$	61			$	37			$	12			$	29			$	91			$	77

SEGMENT OPERATING INCOME ⁽ⁱ⁾

		Three Months Ended June 30,
		2024				2023
Health, Wealth & Career		$	276			$	222
Risk & Broking			202				145
Segment Operating Income		$	478			$	367

		Six Months Ended June 30,
		2024				2023
Health, Wealth & Career		$	612			$	531
Risk & Broking			405				325
Segment Operating Income		$	1,017			$	856

⁽ⁱ⁾ Segment operating income excludes certain costs, including amortization of intangibles, restructuring costs, transaction and transformation expenses, certain litigation provisions, and to the extent that the actual expense based upon which allocations are made differs from the forecast/budget amount, a reconciling item will be created between internally-allocated expenses and the actual expenses reported for U.S. GAAP purposes.

SEGMENT OPERATING MARGINS

		Three Months Ended June 30,
		2024		2023
Health, Wealth & Career		21.9%		18.3%
Risk & Broking		20.6%		16.1%

		Six Months Ended June 30,
		2024		2023
Health, Wealth & Career		23.6%		21.2%
Risk & Broking		20.7%		18.0%

RECONCILIATIONS OF SEGMENT OPERATING INCOME TO INCOME FROM OPERATIONS BEFORE INCOME TAXES

		Three Months Ended June 30,
		2024				2023
Segment Operating Income		$	478			$	367
Amortization			(60	)			(70	)
Restructuring costs			(3	)			(10	)
Transaction and transformation(i)			(97	)			(93	)
Unallocated, net(ii)			(106	)			(52	)
Income from Operations			212				142
Interest expense			(68	)			(57	)
Other income, net			24				35
Income from operations before income taxes		$	168			$	120

		Six Months Ended June 30,
		2024				2023
Segment Operating Income		$	1,017			$	856
Amortization			(120	)			(141	)
Restructuring costs			(21	)			(13	)
Transaction and transformation(i)			(222	)			(152	)
Unallocated, net(ii)			(162	)			(123	)
Income from Operations			492				427
Interest expense			(132	)			(111	)
Other income, net			50				60
Income from operations before income taxes		$	410			$	376

⁽ⁱ⁾ In 2024 and 2023, in addition to legal fees and other transaction costs, includes primarily consulting fees and compensation costs related to the Transformation program.
⁽ⁱⁱ⁾ Includes certain costs, primarily related to corporate functions which are not directly related to the segments, and certain differences between budgeted expenses determined at the beginning of the year and actual expenses that we report for U.S. GAAP purposes.

WTW Reconciliations of Non-GAAP Measures (In millions of U.S. dollars, except per share data) (Unaudited)

RECONCILIATIONS OF NET INCOME ATTRIBUTABLE TO WTW TO ADJUSTED DILUTED EARNINGS PER SHARE

		Three Months Ended June 30,
		2024				2023
Net Income attributable to WTW		$	141			$	94
Adjusted for certain items:
Amortization			60				70
Restructuring costs			3				10
Transaction and transformation			97				93
Provision for specified litigation matter(i)			13				—
Gain on disposal of operations			—				(3	)
Tax effect on certain items listed above(ii)			(44	)			(43	)
Tax effect of significant adjustments			(7	)			(2	)
Adjusted Net Income		$	263			$	219
Weighted-average ordinary shares, diluted			103				107
Diluted Earnings Per Share		$	1.36			$	0.88
Adjusted for certain items:(iii)
Amortization			0.58				0.65
Restructuring costs			0.03				0.09
Transaction and transformation			0.94				0.87
Provision for specified litigation matter(i)			0.13				—
Gain on disposal of operations			—				(0.03	)
Tax effect on certain items listed above(ii)			(0.43	)			(0.40	)
Tax effect of significant adjustments			(0.07	)			(0.02	)
Adjusted Diluted Earnings Per Share(iii)		$	2.55			$	2.05

		Six Months Ended June 30,
		2024				2023
Net Income attributable to WTW		$	331			$	297
Adjusted for certain items:
Amortization			120				141
Restructuring costs			21				13
Transaction and transformation			222				152
Provision for specified litigation matter(i)			13				—
Gain on disposal of operations			—				(3	)
Tax effect on certain items listed above(ii)			(96	)			(77	)
Tax effect of significant adjustments			(7	)			2
Adjusted Net Income		$	604			$	525
Weighted-average ordinary shares, diluted			104				107
Diluted Earnings Per Share		$	3.20			$	2.77
Adjusted for certain items:(iii)
Amortization			1.16				1.31
Restructuring costs			0.20				0.12
Transaction and transformation			2.14				1.42
Provision for specified litigation matter(i)			0.13				—
Gain on disposal of operations			—				(0.03	)
Tax effect on certain items listed above(ii)			(0.93	)			(0.72	)
Tax effect of significant adjustments			(0.07	)			0.02
Adjusted Diluted Earnings Per Share(iii)		$	5.84			$	4.89

⁽ⁱ⁾ Represents a provision related to potential litigation arising out of a structured insurance program originally placed for a client over 15 years ago. The program is of a type and complexity that was highly bespoke to the client and for that reason is unlikely to be exactly replicated elsewhere. Because of this, while we do not believe the potential litigation is material, we believe excluding this matter from adjusted results makes results more comparable from period to period and more representative of our core business operations.
⁽ⁱⁱ⁾ The tax effect was calculated using an effective tax rate for each item.
⁽ⁱⁱⁱ⁾ Per share values and totals may differ due to rounding.

RECONCILIATIONS OF NET INCOME TO ADJUSTED EBITDA

		Three Months Ended June 30,
		2024					2023
Net Income		$	142		6.3%		$	96		4.4%
Provision for income taxes			26					24
Interest expense			68					57
Depreciation			57					64
Amortization			60					70
Restructuring costs			3					10
Transaction and transformation			97					93
Provision for specified litigation matter(i)			13					—
Gain on disposal of operations			—					(3	)
Adjusted EBITDA and Adjusted EBITDA Margin		$	466		20.6%		$	411		19.0%

		Six Months Ended June 30,
		2024					2023
Net Income		$	336		7.3%		$	302		6.9%
Provision for income taxes			74					74
Interest expense			132					111
Depreciation			116					124
Amortization			120					141
Restructuring costs			21					13
Transaction and transformation			222					152
Provision for specified litigation matter(i)			13					—
Gain on disposal of operations			—					(3	)
Adjusted EBITDA and Adjusted EBITDA Margin		$	1,034		22.4%		$	914		20.8%

⁽ⁱ⁾ Represents a provision related to potential litigation arising out of a structured insurance program originally placed for a client over 15 years ago. The program is of a type and complexity that was highly bespoke to the client and for that reason is unlikely to be exactly replicated elsewhere. Because of this, while we do not believe the potential litigation is material, we believe excluding this matter from adjusted results makes results more comparable from period to period and more representative of our core business operations.

RECONCILIATIONS OF INCOME FROM OPERATIONS TO ADJUSTED OPERATING INCOME

		Three Months Ended June 30,
		2024					2023
Income from operations and Operating margin		$	212		9.4%		$	142		6.6%
Adjusted for certain items:
Amortization			60					70
Restructuring costs			3					10
Transaction and transformation			97					93
Provision for specified litigation matter(i)			13					—
Adjusted operating income and Adjusted operating income margin		$	385		17.0%		$	315		14.6%

		Six Months Ended June 30,
		2024					2023
Income from operations and Operating margin		$	492		10.7%		$	427		9.7%
Adjusted for certain items:
Amortization			120					141
Restructuring costs			21					13
Transaction and transformation			222					152
Provision for specified litigation matter(i)			13					—
Adjusted operating income and Adjusted operating income margin		$	868		18.8%		$	733		16.6%

⁽ⁱ⁾ Represents a provision related to potential litigation arising out of a structured insurance program originally placed for a client over 15 years ago. The program is of a type and complexity that was highly bespoke to the client and for that reason is unlikely to be exactly replicated elsewhere. Because of this, while we do not believe the potential litigation is material, we believe excluding this matter from adjusted results makes results more comparable from period to period and more representative of our core business operations.

RECONCILIATIONS OF GAAP INCOME TAXES/TAX RATE TO ADJUSTED INCOME TAXES/TAX RATE

		Three Months Ended June 30,
		2024				2023
Income from operations before income taxes		$	168			$	120
Adjusted for certain items:
Amortization			60				70
Restructuring costs			3				10
Transaction and transformation			97				93
Provision for specified litigation matter(i)			13				—
Gain on disposal of operations			—				(3	)
Adjusted income before taxes		$	341			$	290
Provision for income taxes		$	26			$	24
Tax effect on certain items listed above(ii)			44				43
Tax effect of significant adjustments			7				2
Adjusted income taxes		$	77			$	69
U.S. GAAP tax rate			15.6	%			19.8	%
Adjusted income tax rate			22.6	%			23.7	%

		Six Months Ended June 30,
		2024				2023
Income from operations before income taxes		$	410			$	376
Adjusted for certain items:
Amortization			120				141
Restructuring costs			21				13
Transaction and transformation			222				152
Provision for specified litigation matter(i)			13				—
Gain on disposal of operations			—				(3	)
Adjusted income before taxes		$	786			$	679
Provision for income taxes		$	74			$	74
Tax effect on certain items listed above(ii)			96				77
Tax effect of significant adjustments			7				(2	)
Adjusted income taxes		$	177			$	149
U.S. GAAP tax rate			18.1	%			19.6	%
Adjusted income tax rate			22.5	%			22.0	%

⁽ⁱ⁾ Represents a provision related to potential litigation arising out of a structured insurance program originally placed for a client over 15 years ago. The program is of a type and complexity that was highly bespoke to the client and for that reason is unlikely to be exactly replicated elsewhere. Because of this, while we do not believe the potential litigation is material, we believe excluding this matter from adjusted results makes results more comparable from period to period and more representative of our core business operations.
⁽ⁱⁱ⁾ The tax effect was calculated using an effective tax rate for each item.

RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES TO FREE CASH FLOW

		Six Months Ended June 30,
		2024				2023
Cash flows from operating activities		$	431			$	430
Less: Additions to fixed assets and software for internal use			(70	)			(80	)
Free Cash Flow		$	361			$	350

WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY Condensed Consolidated Statements of Income (In millions of U.S. dollars, except per share data) (Unaudited)
		Three Months Ended June30,								Six Months Ended June30,
		2024				2023				2024				2023
Revenue		$	2,265			$	2,159			$	4,606			$	4,403
Costs of providing services
Salaries and benefits			1,397				1,347				2,739				2,660
Other operating expenses			439				433				896				886
Depreciation			57				64				116				124
Amortization			60				70				120				141
Restructuring costs			3				10				21				13
Transaction and transformation			97				93				222				152
Total costs of providing services			2,053				2,017				4,114				3,976
Income from operations			212				142				492				427
Interest expense			(68	)			(57	)			(132	)			(111	)
Other income, net			24				35				50				60
INCOME FROM OPERATIONS BEFORE INCOME TAXES			168				120				410				376
Provision for income taxes			(26	)			(24	)			(74	)			(74	)
NET INCOME			142				96				336				302
Income attributable to non-controlling interests			(1	)			(2	)			(5	)			(5	)
NET INCOME ATTRIBUTABLE TO WTW		$	141			$	94			$	331			$	297
EARNINGS PER SHARE
Basic earnings per share		$	1.37			$	0.88			$	3.22			$	2.78
Diluted earnings per share		$	1.36			$	0.88			$	3.20			$	2.77
Weighted-average ordinary shares, basic			103				107				103				107
Weighted-average ordinary shares, diluted			103				107				104				107

WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY Condensed Consolidated Balance Sheets (In millions of U.S. dollars, except share data) (Unaudited)
		June 30,				December 31,
		2024				2023
ASSETS
Cash and cash equivalents		$	1,247			$	1,424
Fiduciary assets			9,925				9,073
Accounts receivable, net			2,425				2,572
Prepaid and other current assets			432				364
Total current assets			14,029				13,433
Fixed assets, net			709				720
Goodwill			10,184				10,195
Other intangible assets, net			1,898				2,016
Right-of-use assets			536				565
Pension benefits assets			611				588
Other non-current assets			1,655				1,573
Total non-current assets			15,593				15,657
TOTAL ASSETS		$	29,622			$	29,090
LIABILITIES AND EQUITY
Fiduciary liabilities		$	9,925			$	9,073
Deferred revenue and accrued expenses			1,891				2,104
Current debt			—				650
Current lease liabilities			118				125
Other current liabilities			740				678
Total current liabilities			12,674				12,630
Long-term debt			5,307				4,567
Liability for pension benefits			505				563
Deferred tax liabilities			552				542
Provision for liabilities			409				365
Long-term lease liabilities			564				592
Other non-current liabilities			196				238
Total non-current liabilities			7,533				6,867
TOTAL LIABILITIES			20,207				19,497
COMMITMENTS AND CONTINGENCIES
EQUITY(i)
Additional paid-in capital			10,943				10,910
Retained earnings			1,315				1,466
Accumulated other comprehensive loss, net of tax			(2,921	)			(2,856	)
Total WTW shareholders' equity			9,337				9,520
Non-controlling interests			78				73
Total Equity			9,415				9,593
TOTAL LIABILITIES AND EQUITY		$	29,622			$	29,090

(i)  Equity includes (a) Ordinary shares $0.000304635 nominal value; Authorized 1,510,003,775; Issued 101,547,339 (2024) and 102,538,072 (2023); Outstanding 101,547,339 (2024) and 102,538,072 (2023) and (b) Preference shares, $0.000115 nominal value; Authorized 1,000,000,000 and Issued none in 2024 and 2023.

WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY Condensed Consolidated Statements of Cash Flows (In millions of U.S. dollars) (Unaudited)
		Six Months Ended June 30,
		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME		$	336			$	302
Adjustments to reconcile net income to total net cash from operating activities:
Depreciation			116				124
Amortization			120				141
Non-cash restructuring charges			12				8
Non-cash lease expense			49				58
Net periodic benefit of defined benefit pension plans			(11	)			(11	)
Provision for doubtful receivables from clients			10				5
Benefit from deferred income taxes			(25	)			(37	)
Share-based compensation			54				58
Net gain on disposal of operations			—				(3	)
Non-cash foreign exchange (gain)/loss			(12	)			6
Other, net			22				16
Changes in operating assets and liabilities, net of effects from purchase of subsidiaries:
Accounts receivable			118				164
Other assets			(161	)			(81	)
Other liabilities			(242	)			(346	)
Provisions			45				26
Net cash from operating activities			431				430
CASH FLOWS USED IN INVESTING ACTIVITIES
Additions to fixed assets and software for internal use			(70	)			(80	)
Capitalized software costs			(56	)			(41	)
Acquisitions of operations, net of cash acquired			(18	)			(4	)
Proceeds from sale of operations			—				9
Cash and fiduciary funds transferred in sale of operations			—				(916	)
Purchase of investments			(14	)			(3	)
Net cash used in investing activities			(158	)			(1,035	)
CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES
Senior notes issued			746				748
Debt issuance costs			(9	)			(6	)
Repayments of debt			(652	)			(2	)
Repurchase of shares			(301	)			(454	)
Net proceeds/(payments) from fiduciary funds held for clients			783				(194	)
Payments of deferred and contingent consideration related to acquisitions			—				(7	)
Cash paid for employee taxes on withholding shares			(24	)			(17	)
Dividends paid			(176	)			(177	)
Acquisitions of and dividends paid to non-controlling interests			(3	)			(4	)
Net cash from/(used in) financing activities			364				(113	)
INCREASE/(DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			637				(718	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(53	)			1
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD(i)			3,792				4,721
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD(i)		$	4,376			$	4,004

(i)  The amounts of cash, cash equivalents and restricted cash, their respective classification on the condensed consolidated balance sheets, as well as their respective portions of the increase or decrease in cash, cash equivalents and restricted cash for each of the periods presented have been included in the Supplemental Disclosures of Cash Flow Information section.

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

		Six Months Ended June 30,
		2024				2023
Supplemental disclosures of cash flow information:
Cash and cash equivalents		$	1,247			$	1,602
Fiduciary funds (included in fiduciary assets)			3,129				2,402
Total cash, cash equivalents and restricted cash		$	4,376			$	4,004
(Decrease)/increase in cash, cash equivalents and other restricted cash		$	(154	)		$	345
Increase/(decrease) in fiduciary funds			791				(1,063	)
Total(i)		$	637			$	(718	)

⁽ⁱ⁾ Does not include the effect of exchange rate changes on cash, cash equivalents and restricted cash.

FAQ

What was WTW's revenue growth in Q2 2024?

WTW reported a 5% increase in revenue to $2.3 billion for Q2 2024, with organic growth of 6%.

How did WTW's earnings per share (EPS) perform in Q2 2024?

WTW's diluted EPS increased 55% to $1.36, while adjusted diluted EPS rose 24% to $2.55 in Q2 2024.

What was WTW's operating margin in Q2 2024?

WTW's operating margin was 9.4% for Q2 2024, up 280 basis points from the prior year. Adjusted operating margin was 17.0%, up 240 basis points.

How did WTW's Health, Wealth & Career (HWC) segment perform in Q2 2024?

The HWC segment reported revenue of $1.26 billion, a 4% increase, with organic growth of 5%. Operating margin for this segment increased 360 basis points to 21.9%.

What was the performance of WTW's Risk & Broking (R&B) segment in Q2 2024?

The R&B segment had revenue of $979 million, a 9% increase, with 10% organic growth. Operating margin for this segment increased 450 basis points to 20.6%.

Has WTW updated its 2024 financial outlook?

Yes, WTW raised the low end of its 2024 target ranges for adjusted operating margin to 23.0%-23.5% and adjusted EPS to $16.00-$17.00.