UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM
_________________
CURRENT REPORT
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On July 28, 2022, Willis Towers Watson Public Limited Company (“WTW”) issued a press release announcing its financial results for the period ended June 30, 2022.
A copy of WTW’s press release is attached hereto as an exhibit to this Current Report on Form 8-K and is incorporated by reference herein. A reconciliation between certain non-GAAP financial measures and reported financial results is provided as an attachment to the press release.
WTW also posted a slide presentation to its website, which it may refer to during its conference call to discuss the results. The slide presentation is attached hereto as Exhibit 99.2 and incorporated herein by reference.
The information contained in Item 2.02 and Item 7.01 of this Current Report on Form 8-K (including Exhibits 99.1 and 99.2) is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. Such information shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
(d) Exhibits
| Exhibit No. | Description | |||
| 99.1 | Press release, dated July 28, 2022, announcing the financial results for the period ended June 30, 2022, for WTW. | |||
| 99.2 | Slide Presentation, supplementing the above press release. | |||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WILLIS TOWERS WATSON PLC | ||
| (Registrant) | ||
| Date: July 28, 2022 | By: | /s/ Andrew Krasner |
| Name: | Andrew Krasner | |
| Title: | Chief Financial Officer | |
EXHIBIT 99.1
WTW Reports Second Quarter 2022 Earnings
- Total revenue1 decreased 3% to $2.0 billion with organic growth of 3%
- Diluted Earnings per Share were $0.97 for the quarter, down 31% over prior year
- Adjusted Diluted Earnings per Share were $2.32 for the quarter, up 9% over prior year
- Income from Operations was $137 million or 6.7% of revenue, with margin down 140 basis points over prior year
- Adjusted Operating Income was $314 million or 15.5% of revenue, with margin up 30 basis points over prior year
ARLINGTON, Va. and LONDON, July 28, 2022 (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, 2022.
"We continued to build momentum and execute on our strategic priorities in the second quarter, delivering results that were in line with our expectations,” said Carl Hess, WTW’s chief executive officer. “We are tackling our transformation with urgency and are raising our target for run-rate savings from $30 million to over $80 million in 2022 and expect to achieve in excess of $300 million by the end of 2024. We also continued to return capital to shareholders, repurchasing $471 million of WTW shares this quarter. Looking forward, the progress we have made investing in new solutions and talent positions us well to accelerate our growth in the second half of 2022, and we expect our business to remain resilient in this unsettled economic environment. We remain focused on delivering on our long-term goals.”
Consolidated Results
As reported, USD millions, except %
| Key Metrics | Q2-22 | Q2-21 | Y/Y Change |
| Total Revenue | $2,031 | $2,091 | Reported (3)% | CC 1% | Organic 3% |
| Income from Operations | $137 | $170 | (19)% |
| Operating Margin % | 6.7% | 8.1% | (140) bps |
| Adjusted Operating Income | $314 | $318 | (1)% |
| Adjusted Operating Margin | 15.5% | 15.2% | 30 bps |
| Net Income | $114 | $186 | (39)% |
| Adjusted Net Income | $260 | $277 | (6)% |
| Diluted EPS | $0.97 | $1.41 | (31)% |
| Adjusted Diluted EPS | $2.32 | $2.12 | 9% |
Revenue was $2.03 billion for the second quarter of 2022, a decrease of 3% as compared to $2.09 billion for the same period in the prior year. Excluding a 4% foreign currency headwind, revenue increased 1%. On an organic basis, revenue increased 3%.
_______________________________________
| 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. |
Adjusted EBITDA for the second quarter of 2022 was $450 million, or 22.2% of revenue, down 3% compared to Adjusted EBITDA of $466 million, or 22.3% of revenue, in the prior-year second quarter. The U.S. GAAP tax rate for the quarter was 10.5%, and the adjusted income tax rate for the quarter used in calculating adjusted diluted earnings per share was 20.5%.
Cash Flow and Capital Allocation
Cash flows from operating activities were $258 million for the six months ended June 30, 2022, compared to $366 million for the prior year-to-date period. Free cash flow for the six months ended June 30, 2022 and 2021 was $198 million and $287 million, respectively. During the quarter and six months ended June 30, 2022, the Company repurchased approximately $471 million and $2.7 billion of WTW stock, respectively.
Quarterly Business Highlights
- Continued to expand our talent base in the second quarter, having maintained the accelerated hiring rate set in the first quarter and having reached attrition levels that are consistent with macro trends.
- Expanded our client solutions: launched specialist cyber coverage CyNav for the marine sector in Risk & Broking, and acquired Butterwire, a FinTech provider of data analytics, artificial intelligence, and machine learning platforms, in Health, Wealth, & Career.
- Achieved $71 million in cumulative run-rate cost savings from transformation initiatives in 2022, well ahead of the initially planned $30 million. The transformation program generated an incremental $35 million in total run-rate savings in the quarter while incurring $82 million in restructuring and transformation charges and $5 million in capital expenditures.
- Repurchased 2.1 million shares for $471 million during the quarter and 12.0 million shares for $2.7 billion for the six months ended June 30, 2022.
Second Quarter 2022 Segment Highlights
Effective January 1, 2022, the Company realigned to provide its comprehensive offering of services and solutions to clients across two business segments: Health, Wealth & Career ("HWC") and Risk & Broking ("R&B") and three geographies: Europe, International and North America. Prior to January 1, 2022, WTW operated across four segments: Human Capital and Benefits; Corporate Risk and Broking; Investment, Risk and Reinsurance; and Benefits Delivery and Administration. Following the realignment, the two new segments consist of the following businesses:
- The HWC segment, which includes businesses previously aligned under the Human Capital and Benefits segment, the Benefits Delivery and Administration segment, and the Investment business, which was previously under the Investment, Risk and Reinsurance segment.
- The R&B segment, which includes businesses previously aligned under the Corporate Risk and Broking segment, as well as the Insurance Consulting and Technology business, which was previously under the Investment, Risk and Reinsurance segment.
Prior-year reconciliations for these new segments are available in an 8-K filed by the Company on March 14, 2022.
Health, Wealth & Career
As reported, USD millions, except %
| Health, Wealth & Career | Q2-22 | Q2-21 | Y/Y Change |
| Total Revenue | $1,159 | $1,179 | Reported (2)% | CC 2% | Organic 2% |
| Operating Income | $217 | $218 | 0% |
| Operating Margin % | 18.7% | 18.6% | 10 bps |
The HWC segment had revenue of $1.16 billion, a decrease of 2% (2% increase constant currency and organic) from $1.18 billion in the prior-year second quarter. Organic growth was led by the Health business, primarily due to gains recorded in connection with book-of-business settlements. Excluding these settlements, Health’s revenue increased from additional consulting work in North America as well as continued expansion of our local portfolios and global benefits management appointments outside of North America. Benefits Delivery & Outsourcing revenue also increased, led by Individual Marketplace with growth in Medicare Advantage sales. Career also contributed strong growth, driven by increased project activity. Organic growth was partially offset by a decline in Wealth revenue, principally due to headwinds from performance fees received in the prior year.
Operating margins in the HWC segment increased 10 basis points from the prior-year second quarter to 18.7%, primarily reflecting improved operating leverage.
Risk & Broking
As reported, USD millions, except %
| Risk & Broking | Q2-22 | Q2-21 | Y/Y Change |
| Total Revenue | $852 | $885 | Reported (4)% | CC 1% | Organic 3% |
| Operating Income | $168 | $204 | (18)% |
| Operating Margin % | 19.7% | 23.1% | (340) bps |
The R&B segment had revenue of $852 million, a decrease of 4% (1% increase constant currency and 3% increase organic) from $885 million in the prior-year second quarter. On an organic basis, Insurance Consulting and Technology grew primarily as a result of new software sales as well as increased advisory work. Corporate Risk & Broking generated revenue growth across all regions, primarily driven by our global lines of business, principally from new business, most notably in Aerospace, Natural Resources and FINEX. Book-of-business settlement activity was largely in line with prior year and did not meaningfully affect Corporate Risk and Broking's organic growth rate.
Operating margins in the R&B segment decreased 340 basis points from the prior-year second quarter to 19.7%, primarily due to ongoing investments in talent.
2022 Outlook
Based on current and anticipated market conditions, the Company is maintaining its 2022 full-year targets for organic revenue growth, adjusted operating margin expansion, and non-cash pension income and raising its 2022 full-year targets for run-rate cost savings and foreign currency headwind to adjusted earnings per share as follows:
- Expect to deliver mid-single digit organic revenue growth
- Expect to deliver adjusted operating margin expansion for the full year 2022
- Expect to deliver in excess of $80 million in cumulative run-rate savings from the Transformation Program by the end of FY2022, up from $30 million previously
- Expect approximately $20 million year-over-year decline in non-cash pension income
- Expect a foreign currency headwind on adjusted earnings per share of approximately $0.20-$0.25 at today’s rates, up from $0.15-$0.20 previously
Conference Call
The Company will host a live webcast and conference call to discuss the financial results for the second quarter. It will be held on Thursday, July 28, 2022, 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 and (9) Free Cash Flow.
We believe that these measures are relevant and provide useful 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 these 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 are expected to be part of our full-year results. These items include the following:
- Income from discontinued operations, net of tax – Adjustment to remove the after-tax income from discontinued operations and the after-tax gain attributable to the divestiture of our Willis Re business.
- Restructuring costs and transaction and transformation, net – Management believes it is appropriate to adjust for restructuring costs and transaction and transformation, net 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.
- Impairment – Adjustment to remove the impairment related to the net assets of our Russian business that are held outside of our Russian entities.
- 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.
- Pension settlement and curtailment gains and losses – Adjustment to remove significant pension settlement and curtailment gains and losses to better present how the Company is performing.
- Provisions for significant litigation – We will include provisions for litigation matters which we believe are not representative of our core business operations. These amounts are presented net of insurance and other recovery receivables.
- Tax effect of statutory rate changes – Relates to the incremental tax expense or benefit from significant statutory income tax rate changes enacted in material jurisdictions in which we operate.
- Tax effect of the Coronavirus Aid, Relief, and Economic Security (‘CARES’) Act – Relates to the incremental tax expense impact, primarily from the Base Erosion and Anti-Abuse Tax (‘BEAT’), generated from electing certain income tax provisions of the CARES Act.
- Tax effects of internal reorganization – Relates to the U.S. income tax expense resulting from the completion of internal reorganizations of the ownership of certain businesses that reduced the investments held by our U.S.-controlled subsidiaries.
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. 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 translation-related items can vary from period to period.
Adjusted Operating Income/Margin – Income from operations adjusted for amortization, restructuring costs, transaction and transformation, net 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 loss/(income) from discontinued operations, net of tax, provision for income taxes, interest expense, depreciation and amortization, restructuring costs, transaction and transformation, net, 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 loss/(income) from discontinued operations, net of tax, amortization, restructuring costs, transaction and transformation, net, 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 shares of common stock, 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, net, 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, net, 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.
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.
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.
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, the impact of the global pandemic on our business, future capital expenditures, ongoing working capital efforts, future share repurchases, financial results (including our revenue, costs or margins), the impact of changes to tax laws on our financial results, existing and evolving business strategies and acquisitions and dispositions, including the sale of Willis Re to Arthur J. Gallagher & Co. (‘Gallagher’), demand for our services and competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, our ability to successfully manage ongoing leadership, organizational and technology changes, including investments in improving systems and processes, our ability to implement and realize anticipated benefits of any cost-savings initiatives including the multi-year operational Transformation program, and plans and references to future successes, including our future financial and operating results, plans, objectives, expectations and intentions are forward-looking statements. Also, when we use words such as ‘may,’ ‘will,’ ‘would,’ ‘anticipate,’ ‘believe,’ ‘estimate,’ ‘expect,’ ‘intend,’ ‘plan,’ ‘continues,’ ‘seek,’ ‘target,’ ‘focus,’ ‘probably,’ or similar expressions, we are making forward-looking statements. Such statements are based upon the current beliefs and expectations of the Company’s 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; our ability to successfully deploy cost-mitigation measures and achieve longer-term offsets; the risks related to changes in general economic (including a possible recession), business and political conditions, including changes in the financial markets and inflation; the risks to our business, financial condition and results of operations that may be materially adversely affected by any negative impact on the global economy and capital markets resulting from inflation, the conflict in Ukraine or any other geopolitical tensions and the intended withdrawal from our businesses in Russia; the risks relating to the adverse impacts of the ongoing COVID-19 pandemic, including supply chain, workforce availability, vaccination rates, new or emerging variants and further social-distancing orders in jurisdictions where we do business, on the demand for our products and services, our cash flows and our business operations, including increased demand on our information technology resources and systems and related risks of cybersecurity breaches or incidents; the risks relating to the sale of Willis Re to Gallagher, including incremental business, operational and regulatory risks created by transitional arrangements and pending transactions; 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 failure to protect client data or 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 make divestitures or acquisitions and our ability to integrate or manage such acquired businesses; our ability to successfully hedge against fluctuations in foreign currency rates; our ability to integrate direct-to-consumer sales and marketing solutions with our existing offerings and solutions; our ability to comply with complex and evolving regulations related to data privacy and cyber security; our ability to successfully manage ongoing organizational changes, including investments in improving systems and processes; disasters or business continuity problems; the impact of Brexit; our ability to successfully enhance our billing, collection and other working capital efforts, and thereby increase our free cash flow; the impact of the anticipated replacement of the London Interbank Offered Rate (‘LIBOR’); our ability to properly identify and manage conflicts of interest; reputational damage, including from association with third parties; reliance on third-party services; risks relating to changes in our management structures and in senior leadership; the loss of key employees or a large number of employees and rehiring rates; doing business internationally, including the impact of 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 and any legislative actions from the current U.S. Congress; the inability to protect the Company’s intellectual property rights, or the potential infringement upon the intellectual property rights of others; fluctuations in our pension assets and liabilities; 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 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; risks relating to or arising from environmental, social and governance (‘ESG’) practices; fluctuation in revenue against our relatively fixed or higher than expected expenses; 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 http://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 June 30, | As Reported | Currency | Constant Currency | Acquisitions/ | Organic | |||||||||||||
| 2022 | 2021 | % Change | Impact | Change | Divestitures | Change | ||||||||||||
| Health, Wealth & Career | $ | 1,159 | $ | 1,179 | (2)% | (4)% | 2% | 0% | 2% | |||||||||
| Risk & Broking | 852 | 885 | (4)% | (5)% | 1% | (3)% | 3% | |||||||||||
| Segment Revenue | 2,011 | 2,064 | (3)% | (4)% | 2% | (1)% | 2% | |||||||||||
| Divested businesses and other | 20 | 27 | ||||||||||||||||
| Revenue | $ | 2,031 | $ | 2,091 | (3)% | (4)% | 1% | (1)% | 3% | |||||||||
| Components of Revenue Change(i) | ||||||||||||||||||
| Less: | Less: | |||||||||||||||||
| Six Months Ended June 30, | As Reported | Currency | Constant Currency | Acquisitions/ | Organic | |||||||||||||
| 2022 | 2021 | % Change | Impact | Change | Divestitures | Change | ||||||||||||
| Health, Wealth & Career | $ | 2,403 | $ | 2,412 | 0% | (3)% | 2% | 0% | 2% | |||||||||
| Risk & Broking | 1,743 | 1,809 | (4)% | (4)% | 0% | (1)% | 2% | |||||||||||
| Segment Revenue | 4,146 | 4,221 | (2)% | (3)% | 2% | 0% | 2% | |||||||||||
| Divested businesses and other | 45 | 98 | ||||||||||||||||
| Revenue | $ | 4,191 | $ | 4,319 | (3)% | (3)% | 0% | (2)% | 2% | |||||||||
(i) Components of revenue change may not add due to rounding.
SEGMENT OPERATING INCOME (i)
| Three Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Health, Wealth & Career | $ | 217 | $ | 218 | ||||
| Risk & Broking | 168 | 204 | ||||||
| Segment Operating Income | $ | 385 | $ | 422 | ||||
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Health, Wealth & Career | $ | 474 | $ | 460 | ||||
| Risk & Broking | 360 | 407 | ||||||
| Segment Operating Income | $ | 834 | $ | 867 | ||||
(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, | ||||
| 2022 | 2021 | |||
| Health, Wealth & Career | 18.7% | 18.6% | ||
| Risk & Broking | 19.7% | 23.1% | ||
| Six Months Ended June 30, | ||||
| 2022 | 2021 | |||
| Health, Wealth & Career | 19.7% | 19.1% | ||
| Risk & Broking | 20.7% | 22.5% | ||
RECONCILIATIONS OF SEGMENT OPERATING INCOME TO INCOME FROM OPERATIONS BEFORE INCOME TAXES
| Three Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Segment Operating Income | $ | 385 | $ | 422 | ||||
| Divested businesses | — | (19 | ) | |||||
| Amortization | (83 | ) | (97 | ) | ||||
| Restructuring costs | (56 | ) | — | |||||
| Transaction and transformation, net (ii) | (38 | ) | (51 | ) | ||||
| Unallocated, net (iii) | (71 | ) | (85 | ) | ||||
| Income from Operations | 137 | 170 | ||||||
| Interest expense | (51 | ) | (52 | ) | ||||
| Other income, net | 93 | 74 | ||||||
| Income from continuing operations before income taxes | $ | 179 | $ | 192 | ||||
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Segment Operating Income | $ | 834 | $ | 867 | ||||
| Divested businesses | — | (29 | ) | |||||
| Impairment (i) | (81 | ) | — | |||||
| Amortization | (168 | ) | (200 | ) | ||||
| Restructuring costs | (62 | ) | — | |||||
| Transaction and transformation, net (ii) | (58 | ) | (75 | ) | ||||
| Unallocated, net (iii) | (149 | ) | (182 | ) | ||||
| Income from Operations | 316 | 381 | ||||||
| Interest expense | (100 | ) | (111 | ) | ||||
| Other income, net | 120 | 512 | ||||||
| Income from continuing operations before income taxes | $ | 336 | $ | 782 | ||||
(i) Represents the impairment related to the net assets of our Russian business that are held outside of our Russian entities.
(ii) In 2022, in addition to legal fees and other transaction costs, includes primarily consulting fees related to the Transformation program. In 2021, includes fees related to our then-proposed Aon combination.
(iii) 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, | ||||||||
| 2022 | 2021 | |||||||
| Net Income attributable to WTW | $ | 109 | $ | 184 | ||||
| Adjusted for certain items: | ||||||||
| Loss/(income) from discontinued operations, net of tax | 46 | (69 | ) | |||||
| Amortization | 83 | 97 | ||||||
| Restructuring costs | 56 | — | ||||||
| Transaction and transformation, net | 38 | 51 | ||||||
| (Gain)/loss on disposal of operations | (22 | ) | 2 | |||||
| Tax effect on certain items listed above(i) | (50 | ) | (28 | ) | ||||
| Tax effect on statutory rate change | — | 40 | ||||||
| Adjusted Net Income | $ | 260 | $ | 277 | ||||
| Weighted-average shares of common stock, diluted | 112 | 130 | ||||||
| Diluted Earnings Per Share | $ | 0.97 | $ | 1.41 | ||||
| Adjusted for certain items:(ii) | ||||||||
| Loss/(income) from discontinued operations, net of tax | 0.41 | (0.53 | ) | |||||
| Amortization | 0.74 | 0.74 | ||||||
| Restructuring costs | 0.50 | — | ||||||
| Transaction and transformation, net | 0.34 | 0.39 | ||||||
| (Gain)/loss on disposal of operations | (0.20 | ) | 0.02 | |||||
| Tax effect on certain items listed above(i) | (0.45 | ) | (0.21 | ) | ||||
| Tax effect on statutory rate change | — | 0.31 | ||||||
| Adjusted Diluted Earnings Per Share(ii) | $ | 2.32 | $ | 2.12 | ||||
(i) The tax effect was calculated using an effective tax rate for each item.
(ii) Per share values and totals may differ due to rounding.
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Net Income attributable to WTW | $ | 231 | $ | 917 | ||||
| Adjusted for certain items: | ||||||||
| Loss/(income) from discontinued operations, net of tax | 35 | (259 | ) | |||||
| Impairment | 81 | — | ||||||
| Amortization | 168 | 200 | ||||||
| Restructuring costs | 62 | — | ||||||
| Transaction and transformation, net | 58 | 75 | ||||||
| Loss/(gain) on disposal of operations | 32 | (357 | ) | |||||
| Tax effect on certain items listed above(i) | (92 | ) | (55 | ) | ||||
| Tax effect on statutory rate change | — | 40 | ||||||
| Adjusted Net Income | $ | 575 | $ | 561 | ||||
| Weighted-average shares of common stock, diluted | 115 | 130 | ||||||
| Diluted Earnings Per Share | $ | 2.01 | $ | 7.04 | ||||
| Adjusted for certain items:(ii) | ||||||||
| Loss/(income) from discontinued operations, net of tax | 0.30 | (1.99 | ) | |||||
| Impairment | 0.70 | — | ||||||
| Amortization | 1.46 | 1.53 | ||||||
| Restructuring costs | 0.54 | — | ||||||
| Transaction and transformation, net | 0.50 | 0.58 | ||||||
| Loss/(gain) on disposal of operations | 0.28 | (2.74 | ) | |||||
| Tax effect on certain items listed above(i) | (0.80 | ) | (0.42 | ) | ||||
| Tax effect on statutory rate change | — | 0.31 | ||||||
| Adjusted Diluted Earnings Per Share(ii) | $ | 4.99 | $ | 4.31 | ||||
(i) The tax effect was calculated using an effective tax rate for each item.
(ii) Per share values and totals may differ due to rounding.
RECONCILIATIONS OF NET INCOME TO ADJUSTED EBITDA
| Three Months Ended June 30, | ||||||||||||
| 2022 | 2021 | |||||||||||
| Net Income | $ | 114 | 5.6 | % | $ | 186 | 8.9 | % | ||||
| Loss/(income) from discontinued operations, net of tax | 46 | (69 | ) | |||||||||
| Provision for income taxes | 19 | 75 | ||||||||||
| Interest expense | 51 | 52 | ||||||||||
| Depreciation | 65 | 72 | ||||||||||
| Amortization | 83 | 97 | ||||||||||
| Restructuring costs | 56 | — | ||||||||||
| Transaction and transformation, net | 38 | 51 | ||||||||||
| (Gain)/loss on disposal of operations | (22 | ) | 2 | |||||||||
| Adjusted EBITDA and Adjusted EBITDA Margin | $ | 450 | 22.2 | % | $ | 466 | 22.3 | % | ||||
| Six Months Ended June 30, | ||||||||||||
| 2022 | 2021 | |||||||||||
| Net Income | $ | 239 | 5.7 | % | $ | 922 | 21.3 | % | ||||
| Loss/(income) from discontinued operations, net of tax | 35 | (259 | ) | |||||||||
| Provision for income taxes | 62 | 119 | ||||||||||
| Interest expense | 100 | 111 | ||||||||||
| Impairment | 81 | — | ||||||||||
| Depreciation | 131 | 143 | ||||||||||
| Amortization | 168 | 200 | ||||||||||
| Restructuring costs | 62 | — | ||||||||||
| Transaction and transformation, net | 58 | 75 | ||||||||||
| Loss/(gain) on disposal of operations | 32 | (357 | ) | |||||||||
| Adjusted EBITDA and Adjusted EBITDA Margin | $ | 968 | 23.1 | % | $ | 954 | 22.1 | % | ||||
RECONCILIATIONS OF INCOME FROM OPERATIONS TO ADJUSTED OPERATING INCOME
| Three Months Ended June 30, | ||||||||||||
| 2022 | 2021 | |||||||||||
| Income from operations | $ | 137 | 6.7 | % | $ | 170 | 8.1 | % | ||||
| Adjusted for certain items: | ||||||||||||
| Amortization | 83 | 97 | ||||||||||
| Restructuring costs | 56 | — | ||||||||||
| Transaction and transformation, net | 38 | 51 | ||||||||||
| Adjusted operating income | $ | 314 | 15.5 | % | $ | 318 | 15.2 | % | ||||
| Six Months Ended June 30, | ||||||||||||
| 2022 | 2021 | |||||||||||
| Income from operations | $ | 316 | 7.5 | % | $ | 381 | 8.8 | % | ||||
| Adjusted for certain items: | ||||||||||||
| Impairment | 81 | — | ||||||||||
| Amortization | 168 | 200 | ||||||||||
| Restructuring costs | 62 | — | ||||||||||
| Transaction and transformation, net | 58 | 75 | ||||||||||
| Adjusted operating income | $ | 685 | 16.3 | % | $ | 656 | 15.2 | % | ||||
RECONCILIATIONS OF GAAP INCOME TAXES/TAX RATE TO ADJUSTED INCOME TAXES/TAX RATE
| Three Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Income from continuing operations before income taxes | $ | 179 | $ | 192 | ||||
| Adjusted for certain items: | ||||||||
| Amortization | 83 | 97 | ||||||
| Restructuring costs | 56 | — | ||||||
| Transaction and transformation, net | 38 | 51 | ||||||
| (Gain)/loss on disposal of operations | (22 | ) | 2 | |||||
| Adjusted income before taxes | $ | 334 | $ | 342 | ||||
| Provision for income taxes | $ | 19 | $ | 75 | ||||
| Tax effect on certain items listed above(i) | 50 | 28 | ||||||
| Tax effect of statutory rate change | — | (40 | ) | |||||
| Adjusted income taxes | $ | 69 | $ | 63 | ||||
| U.S. GAAP tax rate | 10.5 | % | 38.9 | % | ||||
| Adjusted income tax rate | 20.5 | % | 18.3 | % | ||||
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Income from operations before income taxes | $ | 336 | $ | 782 | ||||
| Adjusted for certain items: | ||||||||
| Impairment | 81 | — | ||||||
| Amortization | 168 | 200 | ||||||
| Restructuring costs | 62 | — | ||||||
| Transaction and transformation, net | 58 | 75 | ||||||
| Loss/(gain) on disposal of operations | 32 | (357 | ) | |||||
| Adjusted income before taxes | $ | 737 | $ | 700 | ||||
| Provision for income taxes | $ | 62 | $ | 119 | ||||
| Tax effect on certain items listed above(i) | 92 | 55 | ||||||
| Tax effect of statutory rate change | — | (40 | ) | |||||
| Adjusted income taxes | $ | 154 | $ | 134 | ||||
| GAAP tax rate | 18.4 | % | 15.2 | % | ||||
| Adjusted tax rate | 20.8 | % | 19.0 | % | ||||
(i) 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, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities | $ | 258 | $ | 366 | ||||
| Less: Additions to fixed assets and software for internal use | (60 | ) | (79 | ) | ||||
| Free Cash Flow | $ | 198 | $ | 287 | ||||
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 June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | $ | 2,031 | $ | 2,091 | $ | 4,191 | $ | 4,319 | ||||||||
| Costs of providing services | ||||||||||||||||
| Salaries and benefits | 1,259 | 1,317 | 2,577 | 2,736 | ||||||||||||
| Other operating expenses | 393 | 384 | 879 | 784 | ||||||||||||
| Depreciation | 65 | 72 | 131 | 143 | ||||||||||||
| Amortization | 83 | 97 | 168 | 200 | ||||||||||||
| Restructuring costs | 56 | — | 62 | — | ||||||||||||
| Transaction and transformation, net | 38 | 51 | 58 | 75 | ||||||||||||
| Total costs of providing services | 1,894 | 1,921 | 3,875 | 3,938 | ||||||||||||
| Income from operations | 137 | 170 | 316 | 381 | ||||||||||||
| Interest expense | (51 | ) | (52 | ) | (100 | ) | (111 | ) | ||||||||
| Other income, net | 93 | 74 | 120 | 512 | ||||||||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 179 | 192 | 336 | 782 | ||||||||||||
| Provision for income taxes | (19 | ) | (75 | ) | (62 | ) | (119 | ) | ||||||||
| INCOME FROM CONTINUING OPERATIONS | 160 | 117 | 274 | 663 | ||||||||||||
| (LOSS)/INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX | (46 | ) | 69 | (35 | ) | 259 | ||||||||||
| NET INCOME | 114 | 186 | 239 | 922 | ||||||||||||
| Income attributable to non-controlling interests | (5 | ) | (2 | ) | (8 | ) | (5 | ) | ||||||||
| NET INCOME ATTRIBUTABLE TO WTW | $ | 109 | $ | 184 | $ | 231 | $ | 917 | ||||||||
| EARNINGS PER SHARE | ||||||||||||||||
| Basic earnings per share | ||||||||||||||||
| Income from continuing operations per share | $ | 1.38 | $ | 0.89 | $ | 2.31 | $ | 5.07 | ||||||||
| (Loss)/income from discontinued operations per share | (0.41 | ) | 0.53 | (0.30 | ) | 1.99 | ||||||||||
| Basic earnings per share | $ | 0.97 | $ | 1.42 | $ | 2.01 | $ | 7.06 | ||||||||
| Diluted earnings per share | ||||||||||||||||
| Income from continuing operations per share | $ | 1.38 | $ | 0.88 | $ | 2.31 | $ | 5.05 | ||||||||
| (Loss)/income from discontinued operations per share | (0.41 | ) | 0.53 | (0.30 | ) | 1.99 | ||||||||||
| Diluted earnings per share | $ | 0.97 | $ | 1.41 | $ | 2.01 | $ | 7.04 | ||||||||
| Weighted-average shares of common stock, basic | 112 | 130 | 115 | 130 | ||||||||||||
| Weighted-average shares of common stock, diluted | 112 | 130 | 115 | 130 | ||||||||||||
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars, except share data)
(Unaudited)
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 1,920 | $ | 4,486 | ||||
| Fiduciary assets | 11,988 | 11,014 | ||||||
| Accounts receivable, net | 2,025 | 2,370 | ||||||
| Prepaid and other current assets | 432 | 612 | ||||||
| Current assets held for sale | 5 | 6 | ||||||
| Total current assets | 16,370 | 18,488 | ||||||
| Fixed assets, net | 744 | 851 | ||||||
| Goodwill | 10,158 | 10,183 | ||||||
| Other intangible assets, net | 2,408 | 2,555 | ||||||
| Right-of-use assets | 621 | 720 | ||||||
| Pension benefits assets | 1,002 | 971 | ||||||
| Other non-current assets | 1,206 | 1,202 | ||||||
| Total non-current assets | 16,139 | 16,482 | ||||||
| TOTAL ASSETS | $ | 32,509 | $ | 34,970 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Fiduciary liabilities | $ | 11,988 | $ | 11,014 | ||||
| Deferred revenue and accrued expenses | 1,534 | 1,926 | ||||||
| Current debt | — | 613 | ||||||
| Current lease liabilities | 137 | 150 | ||||||
| Other current liabilities | 969 | 1,015 | ||||||
| Current liabilities held for sale | 64 | 6 | ||||||
| Total current liabilities | 14,692 | 14,724 | ||||||
| Long-term debt | 4,720 | 3,974 | ||||||
| Liability for pension benefits | 638 | 757 | ||||||
| Deferred tax liabilities | 804 | 845 | ||||||
| Provision for liabilities | 378 | 375 | ||||||
| Long-term lease liabilities | 645 | 734 | ||||||
| Other non-current liabilities | 215 | 253 | ||||||
| Total non-current liabilities | 7,400 | 6,938 | ||||||
| TOTAL LIABILITIES | 22,092 | 21,662 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY(i) | ||||||||
| Additional paid-in capital | 10,855 | 10,804 | ||||||
| Retained earnings | 1,971 | 4,645 | ||||||
| Accumulated other comprehensive loss, net of tax | (2,486 | ) | (2,186 | ) | ||||
| Treasury shares, at cost, 128,391 shares in 2022 and 17,519 shares in 2021 | (3 | ) | (3 | ) | ||||
| Total WTW shareholders' equity | 10,337 | 13,260 | ||||||
| Non-controlling interests | 80 | 48 | ||||||
| Total Equity | 10,417 | 13,308 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 32,509 | $ | 34,970 | ||||
________
(i) Equity includes (a) Ordinary shares $0.000304635 nominal value; Authorized 1,510,003,775; Issued 110,207,079 (2022) and 122,055,815 (2021); Outstanding 110,096,207 (2022) and 122,055,815 (2021) and (b) Preference shares, $0.000115 nominal value; Authorized 1,000,000,000 and Issued none in 2022 and 2021.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
Condensed Consolidated Statements of Cash Flows
(In millions of U.S. dollars)
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| NET INCOME | $ | 239 | $ | 922 | ||||
| Adjustments to reconcile net income to total net cash from operating activities: | ||||||||
| Depreciation | 131 | 143 | ||||||
| Amortization | 168 | 201 | ||||||
| Impairment | 81 | — | ||||||
| Non-cash restructuring charges | 49 | — | ||||||
| Non-cash lease expense | 64 | 73 | ||||||
| Net periodic benefit of defined benefit pension plans | (80 | ) | (81 | ) | ||||
| Provision for doubtful receivables from clients | 12 | 8 | ||||||
| (Benefit from)/provision for deferred income taxes | (45 | ) | 56 | |||||
| Share-based compensation | 47 | 52 | ||||||
| Net loss/(gain) on disposal of operations | 96 | (357 | ) | |||||
| Non-cash foreign exchange gain | (1 | ) | (4 | ) | ||||
| Other, net | (12 | ) | (12 | ) | ||||
| Changes in operating assets and liabilities, net of effects from purchase of subsidiaries: | ||||||||
| Accounts receivable | 180 | (39 | ) | |||||
| Other assets | (111 | ) | (91 | ) | ||||
| Other liabilities | (573 | ) | (506 | ) | ||||
| Provisions | 13 | 1 | ||||||
| Net cash from operating activities | 258 | 366 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Additions to fixed assets and software for internal use | (60 | ) | (79 | ) | ||||
| Capitalized software costs | (33 | ) | (27 | ) | ||||
| Acquisitions of operations, net of cash acquired | (76 | ) | — | |||||
| Proceeds from sale of operations | — | 696 | ||||||
| Cash and fiduciary funds transferred in sale of operations | (12 | ) | (216 | ) | ||||
| Sale of investments | 200 | — | ||||||
| Net cash from investing activities | 19 | 374 | ||||||
| CASH FLOWS USED IN FINANCING ACTIVITIES | ||||||||
| Senior notes issued | 750 | — | ||||||
| Debt issuance costs | (5 | ) | — | |||||
| Repayments of debt | (583 | ) | (515 | ) | ||||
| Repurchase of shares | (2,721 | ) | — | |||||
| Proceeds from issuance of shares | 1 | 2 | ||||||
| Net proceeds/(payments) from fiduciary funds held for clients | 85 | (246 | ) | |||||
| Payments of deferred and contingent consideration related to acquisitions | (20 | ) | (17 | ) | ||||
| Cash paid for employee taxes on withholding shares | (5 | ) | (1 | ) | ||||
| Dividends paid | (189 | ) | (269 | ) | ||||
| Acquisitions of and dividends paid to non-controlling interests | (3 | ) | (21 | ) | ||||
| Net cash used in financing activities | (2,690 | ) | (1,067 | ) | ||||
| DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (2,413 | ) | (327 | ) | ||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (170 | ) | (50 | ) | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD (i) | 7,691 | 6,301 | ||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (i) | $ | 5,108 | $ | 5,924 | ||||
___________
(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, | ||||||||
| 2022 | 2021 | |||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash and cash equivalents | $ | 1,920 | $ | 2,217 | ||||
| Fiduciary funds (included in fiduciary assets) | 3,183 | 3,703 | ||||||
| Cash and cash equivalents and fiduciary funds (included in current assets held for sale) | 5 | — | ||||||
| Other restricted cash (included in prepaids and other current assets) | — | 4 | ||||||
| Total cash, cash equivalents and restricted cash | $ | 5,108 | $ | 5,924 | ||||
| (Decrease)/increase in cash, cash equivalents and other restricted cash | $ | (2,515 | ) | $ | 135 | |||
| Increase/(decrease) in fiduciary funds | 102 | (462 | ) | |||||
| Total | $ | (2,413 | ) | $ | (327 | ) | ||
Revision of previously issued financial statements - During the six months ended June 30, 2022, to reflect the guidance on restricted cash presentation in FASB ASC 230, Statement of Cash Flows, WTW corrected the classification of its fiduciary funds balances, in the amounts shown in the table above, on our condensed consolidated statements of cash flows, by including these amounts in the total cash, cash equivalents and restricted cash amounts held at each balance sheet date. As a result, cash, cash equivalents and restricted cash balances of $2.2 billion and $2.1 billion at June 30, 2021 and December 31, 2020, respectively, have been revised to $5.9 billion and $6.3 billion, respectively. Additionally, the effect of exchange rate changes on cash, cash equivalents and restricted cash has been updated to include the effect of exchange rate changes on the fiduciary funds balances.
Prior to this correction, the changes in fiduciary funds were presented in fiduciary assets and liabilities on a gross basis in the cash flows from operating activities, where the amounts fully offset each period. In the current presentation, an additional line item, net (payments)/proceeds from fiduciary funds held for clients, has been included within cash flows from financing activities to represent the change in fiduciary funds balances during the periods. The remaining fiduciary assets and fiduciary liabilities, in equal and offsetting amounts, are no longer presented in the cash flows from operating activities. There was no impact to the total cash flows from operating activities as a result of these changes.
Exhibit 99.2
wtwco.com WTW Earnings Release Supplemental Materials July 28, 2022 Second Quarter Financial Results © 2022 WTW. All rights reserved.
wtwco.com 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, the impact of the global pandemic on our busines s, future capital expenditures, ongoing working capital efforts, future share repurchases, financial results (including our revenue, costs or margins), the impact of changes to tax laws on our financial results, existing and evolving business strate gie s and acquisitions and dispositions, including the sale of Willis Re to Arthur J. Gallagher & Co. (‘Gallagher’), demand for our services and competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, ou r a bility to successfully manage ongoing leadership, organizational and technology changes, including investments in improving systems and processes, our ability to implement and realize anticipated benefits of any cost - savings initiatives inclu ding the multi - year operational Transformation program, and plans and references to future successes, including our future financial and operating results, plans, objectives, expectations and intentions are forward - looking statements. Also, whe n we use words such as ‘may,’ ‘will,’ ‘would,’ ‘anticipate,’ ‘believe,’ ‘estimate,’ ‘expect,’ ‘intend,’ ‘plan,’ ‘continues,’ ‘seek,’ ‘target,’ ‘focus,’ ‘probably,’ or similar expressions, we are making forward - looking statements. Such statements are bas ed upon the current beliefs and expectations of the Company’s 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 mat eri ally 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; our ability to successfully deploy cost - mitigation measures and achieve lon ger - term offsets; the risks related to changes in general economic (including a possible recession), business and political conditions , i ncluding changes in the financial markets and inflation; the risks to our business, financial condition and results of operations that may be materially adversely affected by any negative impact on the global economy and capital markets resulting from inflation, the conflict in Ukraine o r a ny other geopolitical tensions and the intended withdrawal from our businesses in Russia; the risks relating to the adverse impacts of the ongoing COVID - 19 pandemic, including supply chain, workfo rce availability, vaccination rates, new or emerging variants and further social - distancing orders in jurisdictions where we do business, on the demand for our products and services, our cash flows and our business operations, including incr eas ed demand on our information technology resources and systems and related risks of cybersecurity breaches or incidents; the risks relating to the sale of Willis Re to Gallagher, including incremental business, operational and regulato ry risks created by transitional arrangements and pending transactions; 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 failure to protect client data or breaches of information systems or insufficient safeguards against cybersecurity breaches or incidents; the risk of increased liability o r n ew 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 ; c hanges 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 act ion ; our ability to make divestitures or acquisitions and our ability to integrate or manage such acquired businesses; our ability to successfully hedge against fluctuations in foreign currency rates; our ability to integrate direct - to - consumer sales and marketing solutions with our existing offerings and solutions; our ability to comply with complex and evolving regulations related to data privacy and cyber security; our ability to successfully manage ongoing organizational changes, in clu ding investments in improving systems and processes; disasters or business continuity problems; the impact of Brexit; our ability to successfully enhance our billing, collection and other working capital efforts, and thereby increase our free cas h flow; the impact of the anticipated replacement of the London Interbank Offered Rate (‘LIBOR’); our ability to properly identify and manage conflicts of interest; reputational damage, including from association with third parties; reliance on th ird - party services; risks relating to changes in our management structures and in senior leadership; the loss of key employees or a large number of employees and rehiring rates; doing business internationally, including the impact of exchange ra tes; 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 effective ly 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 and any legislative actions from the current U.S. Congress; the inability to protect the Company’s intellectual property rights, or the potential infringement upon the intellectual property rights of others; fluctuations in our pension assets and liabilities; 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 proce dur es 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, sta te, 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 our effective tax rate; U.S. federal income tax consequences to U.S . p ersons owning at least 10% of our shares; changes in accounting principles, estimates or assumptions; risks relating to or arising from environmental, social and governance (‘ESG’) practices; fluctuation in revenue against our relatively fixe d o r higher than expected expenses; 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 abl e t o 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 infor mat ion, 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 http://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 inclus ion 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 th e 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 stat ements. © 2022 WTW. All rights reserved. 2
wtwco.com © 2022 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. WTW Non - GAAP Measures In order to assist readers of our consolidated financial statements in understanding the core operating results that WTW’s ma nag ement 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 and (9) Free Cash Flow. The Company believes that these measures are relevant and provide useful information widely used by analysts, investors and o the r 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. Reconciliations of these measures are included in the accompanying appendix of these earning release supplemental materials. The Company does not reconcile its forward - looking non - GAAP financial measures to the corresponding U.S. GAAP measures, due to v ariability 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 quantit ati ve 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 a ddr ess 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 calcul ati ons and the U.S. GAAP measures may be materially different than the non - GAAP measures. 3
wtwco.com Strategy and Operating Performance © 2022 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
wtwco.com Remain focused on delivering on our 2022 financial targets Continued to return capital, with $471M in Q2 - 22 share repurchases Organic growth of 3% in the quarter and 9% Adj. EPS growth over the prior year Significant progress on strategic priorities, with hiring on pace with Q1 rate © 2022 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. Key Takeaways Transformation program underway with $ 35M of incremental run - rate savings in Q2 - 22 and $71M of cumulative run - rate savings 5
wtwco.com Key figures © 2022 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. Q2 2022 GAAP Financial Results $USD million, except EPS and % Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Revenue % change $2,031 (3)% $2,091 $4,191 (3)% $4,319 Income from Operations % change $137 (19)% $170 $316 (17)% $381 Operating Margin % change, basis points 6.7% (140) bps 8.1% 7.5% (130) bps 8.8% Net Income % change $114 (39)% $186 $239 (74)% $922 Diluted EPS % change $0.97 (31)% $1.41 $2.01 (71)% $7.04 Net Cash From Operating Activities % change $258 (30)% $366 6
wtwco.com © 2022 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. Solid Operating Performance Q2 2022 Key Figures, Including Non - GAAP Financial Results Total Revenue +3% Q2 2022 Organic +8 % Q2 2021 Organic Adjusted Diluted EPS 1 Q2 - 2022 Results Adjusted Operating Margin 1 Transformation Program $71M of run rate savings since inception Free Cash Flow 1 $2.0 B Q2 2022 $ 2.32 Q2 2022 $2.12 Q2 2021 $198M Q2 2022 +9 % Q2 2022 15.5% Q2 2022 +30 bps Q2 2022 +15.2 % Q2 2021 - $89M Q2 ’22 v. Q2 ‘21 $287M Q2 2021 1 Signifies Non - GAAP financial measures. See appendix for Non - GAAP reconciliations 7
wtwco.com © 2022 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. Focus on the execution on our strategy aiming to generate outstanding value creation for all shareholders Our Strategic Priorities: Grow, Simplify, Transform FY 2024 Financial Targets Adjusted Operating Margin Adjusted EPS $10B+ Revenue 3 - Year FCF 24 - 25% $5 - 6B $18 - 21 • Grow: Invest to grow at or above market in chosen areas • Simplify: Increase agility; do the basics well • Transform: Enhance client and colleague experience through operational excellence 8
wtwco.com Recent Progress Against Strategic Priorities © 2022 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. Grow Simplify Transform • Continued to expand our talent base in the second quarter, having maintained the accelerated hiring rate set in the first quarter and having reached attrition levels that are consistent with macro trends • Expanded our client solutions: launched specialist cyber coverage CyNav for the marine sector in Risk & Broking, and acquired Butterwire , a FinTech provider of data analytics, artificial intelligence, and machine learning platforms, in Health, Wealth, & Career • Completed realignment and re - segmentation to 2 segments and 3 geographies • Implemented corporate rebrand from Willis Towers Watson to WTW to reflect a unified future • Realized $35 million of incremental annualized savings in the second quarter from planned transformation initiatives while incurring $82 million in restructuring/transformation charges and $5 million in capital expenditures • Repurchased 2.1 million shares for $471 million in the second quarter 9
wtwco.com Delivering superior advice, broking and solutions in the areas of people, risk and capital We Have a Portfolio of Leading Businesses in Attractive Markets We have: A distinctive mix of complementary businesses • Accomplished and aspiring talent • Collaborative client - first culture • Sophisticated data and analytics • Powerful tools A strong balance sheet and significant financial flexibility © 2022 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. ~30 M individuals use our platforms to access benefits and insurance 10
wtwco.com $4,586 $4,895 $5,268 2019 2020 2021 $1,149 $1,236 $1,346 2019 2020 2021 25.0% 25.2% 25.6% 2019 2020 2021 Segment Overview: Health, Wealth, & Career © 2022 WTW. All rights reserved. See “WTW Forward - Looking Statements“ above for information about forward - looking statements and cautionary language, including how actual results may differ materially from those in the slide presentation. Revenue ($M) Operating Income ($M) Operating Margin % Health, Wealth & Career: World - class portfolio of leading businesses providing advisory and consulting services within human capital, employee benefits and retirement verticals Benefits Delivery & Outsourcing provides medical exchange and outsourcing services to active employees and retirees across the group and individual markets as well as pension outsourcing Health provides advice, broking, solutions and software for employee benefit plans, HR organizations and management teams of our clients Wealth provides advice and management for retirement and investment asset owners using a sophisticated framework for managing risk Meaningful set of attractive market opportunities with various points of intersection to accelerate growth Market leader and strong client retention in each key business Driven by New work models Emerging risks & opportunities Evolving regulations Career provides compensation advisory services, employee experience software and platforms, and other career - related consulting services to our clients 11
wtwco.com $3,282 $3,316 $3,564 2019 2020 2021 $650 $714 $835 2019 2020 2021 19.8% 21.6% 23.4% 2019 2020 2021 Segment Overview: Risk & Broking © 2022 WTW. All rights reserved. See “WTW Forward - Looking Statements“ above for information about forward - looking statements and cautionary language, including how actual results may differ materially from those in the slide presentation. Risk & Broking: Risk advisory and solutions business delivering innovative, integrated solutions tailored to client needs and underpinned by cutting edge data and analytics, technology and experienced risk thinkers Insurance Consulting and Technology provides advice and technology solutions to the insurance industry to help clients measure and manage risk and capita and improve performance Corporate Risk & Broking provides a broad range of risk advice insurance brokerage and consulting services to clients worldwide ranging from small businesses to multinational corporations Strongly positioned in a large, attractive and growing market … Top 3 Property & casualty broking ~$ 32 B Driven by Ongoing hard market Rebounding exposures Changing nature of risk broking revenue globally Revenue ($M) Operating Income ($M) Operating Margin % 12
wtwco.com 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. Expected acceleration of operational transformation; aiming to result in meaningful margin improvements 5. Experienced, diverse management and global leadership team focused on achieving targets © 2022 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. 13
wtwco.com Financial Review © 2022 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
wtwco.com Segment Highlights • For the quarter, Health, Wealth & Career grew 2% organically and was led by Health and Benefits Delivery & Outsourcing. – Health grew due to gains recorded in connection with book - of - business settlements and new client work. Excluding book - of - business settlements, Health’s revenue increased from additional consulting work in North America as well as continued expansion of our local portfolios and global benefits management appointments outside of North America. – Benefits Delivery & Outsourcing revenue increased, led by Individual Marketplace with growth in Medicare Advantage sales. – Career grew primarily due to increased project activity. – Wealth decreased primarily due to headwinds from performance fees received in the prior year. • Operating income was $217M in the quarter, flat with prior year, while operating margins increased 10 bps from the prior - year second quarter to 18.7% primarily due to improved operating leverage. Segment Performance: Health, Wealth & Career © 2022 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. $ 1,179 Q2 - 22 Q2 - 21 $ 1,159 Revenue ($M) Operating Margin Organic Revenue Growth Q2 - 22 Q2 - 21 Health 1 8% 1% Wealth 2 (7)% 10% Career 3 5% 22% Benefits Delivery & Outsourcing 4 7% 12% Health, Wealth & Career 2% 9% Q2 - 22 18.7% Q2 - 21 18.6% 1 Includes our Health & Benefits broking and consulting business 2 Includes our Retirement and Investment businesses 3 Includes our Work & Rewards and Employee Experience businesses 4 Includes our Benefits Delivery & Administration and Technology and Administrative Solutions businesses 15
wtwco.com Segment Highlights • For the quarter, Risk & Broking grew 3% organically and was led by strong growth in Insurance Consulting & Technology and improvement within Corporate Risk & Broking. – Insurance Consulting & Technology grew organically as a result of new software sales and increased advisory work. – Corporate Risk & Broking generated revenue growth across all regions, primarily driven by our global lines of business, principally from new business, most notably in Aerospace, Natural Resources and FINEX. Book - of - business settlement activity declined nominally from the prior year and did not meaningfully affect Corporate Risk and Broking's organic growth rate. – Operating income of $168M in the quarter declined by 18%, while operating margins contracted by 340 bps primarily reflecting ongoing investments in talent. Segment Performance: Risk & Broking © 2022 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. Q2 - 22 Q2 - 21 $ 852 $ 885 Revenue ($M) Operating Margin Organic Revenue Growth Q2 - 22 Q2 - 21 Corporate Risk & Broking 3% 8% Insurance Consulting & Technology 9% 13% Risk & Broking 3% 9% 19.7% Q2 - 22 Q2 - 21 23.1% 16
wtwco.com © 2022 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. Transformation Program On track to generate $300M+ of annualized savings through 2024 Costs to Achieve ($ millions) Q2 - 22 YTD Cumulative From Inception Total Transformation Real Estate Rationalization $49 $68 Technology Modernization $18 $23 Process Optimization $21 $21 Other $5 $7 Total Restructuring / Transformation Costs $93 $119 ~$490 Total Capital Expenditures $8 $8 ~$260 Total Costs to Achieve $101 $127 ~$750 Annualized Run - Rate Savings $51 $71 $300+ Delivering on our financial commitments Delivering $300M+ run - rate savings to contribute 300bps of margin improvement, while investing for growth • Realized $35M of incremental annualized savings in Q2 - 22 and $71M of annualized savings since program inception • In Q2 - 22, we incurred $82M of restructuring / transformation related charges , primarily related to real estate transaction costs and technology modernization related costs • $5M of capital expenditures for the quarter • The cumulative total investment ( OpEx + CapEx ) is $127M representing 17% of expected total one - time program costs 17
wtwco.com Maintaining a Flexible Balance Sheet © 2022 WTW. All rights reserved. See “WTW Forward - Looking Statements“ above for information about forward - looking statements and cautionary language, including how actual results may differ materially from those in the slide presentation. 1 Total Debt equals sum of current debt and long - term debt as shown on the Consolidated Balance Sheets. 2 Signifies Non - GAAP financial measure. See appendix for Non - GAAP reconciliations. Reinforcing our business fundamentals; safeguarding WTW’s financial strengths ($ millions) Dec 31, 2021 June 30, 2022 Cash and Cash Equivalents 4,486 1,920 Total Debt 1 4,587 4,720 Total Equity 13,308 10,417 Debt to Adj. EBITDA 2 Trailing 12 - month 1.9x 2.0x Disciplined capital management strategy Provides WTW with the financial flexibility to reinvest in our businesses, capitalize on market growth opportunities and support significant value creation for shareholders • Our capital structure provides a solid foundation of business strength and reinforces our ability to capture long - term growth • History of effectively managing our leverage with a commitment to maintaining our investment grade credit rating • Committed to a disciplined approach to managing outstanding debt and successfully reduced our leverage profile 18
wtwco.com © 2022 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. Executing Against a Balanced Capital Allocation Strategy CASH RETURNED TO SHAREHOLDERS $ 8.2 B FY2016 to Q2 - 22 MEANINGFUL DIVIDEND GROWTH + 9 % Cash dividend growth 6 years CAGR 2017 2016 $ 346 $ 396 $ 277 2018 $ 199 $ 150 $ 709 $ 602 $ 306 2020 $ 329 2019 $ 1,627 $ 374 2021 $189 Q2 - 2022 YTD $2,910 $ 595 $ 986 $ 908 $ 479 $ 346 $ 2,001 $2,721 Share repurchases Dividends 2020 2016 2017 $ 0.48 2018 2021 2019 $ 0.53 $ 0.60 $ 0.65 $ 0.71 $ 0.80 Quarterly cash dividend per share +9% Capital Allocation Priorities • Reinvest in capabilities, businesses, and processes • Invest in innovation, technology, and new business • Return excess cash to shareholders through share repurchases and dividends • Strengthen balance sheet and liquidity • Sustain dividends and payout ratio • Business portfolio management • Pursue opportunistic tuck - in and bolt - on M&A to strengthen capabilities Q2 - 22 Highlights • Repurchased $471 million of shares during the quarter • Increased share repurchase authorization by $1 billion to $6.5 billion, of which approximately $2.1 billion remains • Paid quarterly cash dividend of $0.82 per common share • Completed an offering of $750 million of 4.65% senior notes due 2027 19 $0.82 2022
wtwco.com © 2022 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. On Track to Achieve 2022 Financial Targets 1 Expect to deliver adjusted operating margin expansion for full year 2022 FY2022 Adjusted Margin Improvement Expect approximately $0.20 - $0.25 headwind on Adj. EPS at today’s rates Compared to $0.15 - $0.20 previously FY2022 Foreign Currency Impact on Adjusted EPS Expect ~$20 million year - over - year decline in non - cash pension income FY2022 Other Income Expect to deliver in excess of $ 80 M of run - rate savings Compared to $30M previously FY2022 Transformation Program Expect to deliver mid - single digit organic revenue growth FY2022 Revenue Growth 1 Reflects the Company’s current beliefs and expectations as of July 28, 2022 and are subject to significant risks and uncert ain ties. 20
wtwco.com Appendix: Reconciliation of Non - GAAP Measures © 2022 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
wtwco.com Appendix 1: Constant Currency and Organic Revenue Change © 2022 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. Components of Revenue Change ( i ) Less: Less: Three Months Ended June 30, As Reported Currency Constant Currency Acquisitions/ Organic 2022 2021 % Change Impact Change Divestitures Change Health, Wealth & Career $ 1,159 $ 1,179 (2)% (4)% 2% 0% 2% Risk & Broking 852 885 (4)% (5)% 1% (3)% 3% Segment Revenue 2,011 2,064 (3)% (4)% 2% (1)% 2% Divested businesses and other 20 27 Revenue $ 2,031 $ 2,091 (3)% (4)% 1% (1)% 3% As reported, USD millions except % ( i ) Components of revenue change may not add due to rounding 22 Components of Revenue Change ( i ) Less: Less: Six Months Ended June 30, As Reported Currency Constant Currency Acquisitions/ Organic 2022 2021 % Change Impact Change Divestitures Change Health, Wealth & Career $ 2,403 $ 2,412 0% (3)% 2% 0% 2% Risk & Broking 1,743 1,809 (4)% (4)% 0% (1)% 2% Segment Revenue 4,146 4,221 (2)% (3)% 2% 0% 2% Divested businesses and other 45 98 Revenue $ 4,191 $ 4,319 (3)% (3)% 0% (2)% 2%
wtwco.com © 2022 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. Appendix 2: Adjusted Op Income and Margin, Adj. EBITDA and Margin As reported, USD millions except % 23 Three Months Ended June 30, 2022 2021 Income from operations $ 137 6.7 % $ 170 8.1 % Adjusted for certain items: Amortization 83 97 Restructuring costs 56 — Transaction and transformation, net 38 51 Adjusted operating income $ 314 15.5 % $ 318 15.2 % Three Months Ended June 30, 2022 2021 Net Income $ 114 5.6% $ 186 8.9 % Loss/(income) from discontinued operations, net of tax 46 (69) Provision for income taxes 19 75 Interest expense 51 52 Depreciation 65 72 Amortization 83 97 Restructuring costs 56 — Transaction and transformation, net 38 51 (Gain)/loss on disposal of operations (22) 2 Adjusted EBITDA and Adjusted EBITDA Margin $ 450 22.2 % $ 466 22.3 % Six Months Ended June 30, 2022 2021 Income from operations $ 316 7.5% $ 381 8.8 % Adjusted for certain items: Impairment 81 — Amortization 168 200 Restructuring costs 62 — Transaction and transformation, net 58 75 Adjusted operating income $ 685 16.3% $ 656 15.2 % Six Months Ended June 30, 2022 2021 Net Income $ 239 5.7% $ 922 21.3 % Loss/(income) from discontinued operations, net of tax 35 (259) Provision for income taxes 62 119 Interest expense 100 111 Impairment 81 — Depreciation 131 143 Amortization 168 200 Restructuring costs 62 — Transaction and transformation, net 58 75 Loss/(gain) on disposal of operations 32 (357) Adjusted EBITDA and Adjusted EBITDA Margin $ 968 23.1% $ 954 22.1 %
wtwco.com Appendix 3: Adjusted Net Income and Adjusted Diluted EPS © 2022 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. As reported, USD millions except % ( i ) The tax effect was calculated using an effective tax rate for each item. (ii) Per share values and totals may differ due to rounding. 24 Three Months Ended June 30, 2022 2021 Net Income attributable to WTW $ 109 $ 184 Adjusted for certain items: Loss/(income) from discontinued operations, net of tax 46 (69) Amortization 83 97 Restructuring costs 56 — Transaction and transformation, net 38 51 (Gain)/loss on disposal of operations (22) 2 Tax effect on certain items listed above ( i ) (50) (28) Tax effect on statutory rate change — 40 Adjusted Net Income $ 260 $ 277 Weighted - average shares of common stock, diluted 112 130 Diluted Earnings Per Share $ 0.97 $ 1.41 Adjusted for certain items: (ii) Loss/(income) from discontinued operations, net of tax 0.41 (0.53) Amortization 0.74 0.74 Restructuring costs 0.50 — Transaction and transformation, net 0.34 0.39 (Gain)/loss on disposal of operations (0.20) 0.02 Tax effect on certain items listed above ( i ) (0.45) (0.21) Tax effect on statutory rate change — 0.31 Adjusted Diluted Earnings Per Share (ii) $ 2.32 $ 2.12 Six Months Ended June 30, 2022 2021 Net Income attributable to WTW $ 231 $ 917 Adjusted for certain items: Loss/(income) from discontinued operations, net of tax 35 (259) Impairment 81 — Amortization 168 200 Restructuring costs 62 — Transaction and transformation, net 58 75 Loss/(gain) on disposal of operations 32 (357) Tax effect on certain items listed above ( i ) (92) (55) Tax effect on statutory rate change — 40 Adjusted Net Income $ 575 $ 561 Weighted - average shares of common stock, diluted 115 130 Diluted Earnings Per Share $ 2.01 $ 7.04 Adjusted for certain items: (ii) Loss/(income) from discontinued operations, net of tax 0.30 (1.99) Impairment 0.70 — Amortization 1.46 1.53 Restructuring costs 0.54 — Transaction and transformation, net 0.50 0.58 Loss/(gain) on disposal of operations 0.28 (2.74) Tax effect on certain items listed above ( i ) (0.80) (0.42) Tax effect on statutory rate change — 0.31 Adjusted Diluted Earnings Per Share (ii) $ 4.99 $ 4.31
wtwco.com Appendix 4: Adjusted Income Before Taxes, Adjusted Income Tax Rate and Free Cash Flow As reported, USD millions except % © 2022 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. ( i ) The tax effect was calculated using an effective tax rate for each item. 25 Three Months Ended June 30, 2022 2021 Income from continuing operations before income taxes $ 179 $ 192 Adjusted for certain items: Amortization 83 97 Restructuring costs 56 — Transaction and transformation, net 38 51 (Gain)/loss on disposal of operations (22) 2 Adjusted income before taxes $ 334 $ 342 Provision for income taxes $ 19 $ 75 Tax effect on certain items listed above ( i ) 50 28 Tax effect on statutory rate change — (40) Adjusted income taxes $ 69 $ 63 U.S. GAAP tax rate 10.5% 38.9% Adjusted income tax rate 20.5% 18.3% Six Months Ended June 30, 2022 2021 Income from continuing operations before income taxes $ 336 $ 782 Adjusted for certain items: Impairment 81 — Amortization 168 200 Restructuring costs 62 — Transaction and transformation, net 58 75 Loss/(gain) on disposal of operations 32 (357) Adjusted income before taxes $ 737 $ 700 Provision for income taxes $ 62 $ 119 Tax effect on certain items listed above (i) 92 55 Tax effect on statutory rate change — (40) Adjusted income taxes $ 154 $ 134 U.S. GAAP tax rate 18.4% 15.2% Adjusted income tax rate 20.8% 19.0% Six Months Ended June 30, 2022 2021 Cash flows from/(used in) operating activities $ 258 $ 366 Less: Additions to fixed assets and software for internal use (60) (79) Free Cash Flow $ 198 $ 287
wtwco.com © 2022 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. 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 . 26