Willis Towers Watson (WLTW) Q2 2024 earnings summary

Executive summary

• Achieved 6% organic revenue growth and 240 basis points of adjusted operating margin expansion year-over-year, with adjusted diluted EPS up 24% to $2.55 and free cash flow of $361 million for Q2 2024.

• Revenue for Q2 2024 was $2.3 billion, up 5% year-over-year, with net income rising 48% to $142 million and adjusted net income up 20% to $263 million.

• Transformation program delivered $24 million incremental annualized savings in Q2, totaling $394 million since inception, with the cumulative run rate savings target increased to $450 million by year-end.

• Returned $290 million to shareholders in Q2 via $200 million in share repurchases and $90 million in dividends.

• Strategic priorities advanced through specialization, talent acquisition, and operational efficiency.

Financial highlights

• Q2 2024 revenue was $2.3 billion, up 5% year-over-year; adjusted operating margin was 17.0%, up 240 basis points; adjusted EBITDA margin was 20.6%, up from 19.0% in Q2 2023.

• Free cash flow for the first half was $361 million, up from $350 million in the prior year; cash flows from operating activities were $431 million for Q2 2024.

• Net income for Q2 2024 was $142 million, up 48% year-over-year; diluted EPS was $1.36, up 55%.

• Returned $290 million to shareholders in Q2 via share repurchases and dividends; targeting $750 million in repurchases for 2024.

• Foreign exchange was a $0.03 headwind to adjusted EPS for the quarter and is expected to be a $0.10 headwind for the year.

Outlook and guidance

• 2024 adjusted operating margin target range raised to 23.0%-23.5% and adjusted EPS to $16.00-$17.00; revenue target reaffirmed at $9.9 billion+ with mid-single-digit organic growth.

• Transformation program savings target increased to ~$450 million by year-end 2024, with total cost to achieve now estimated at ~$1.175 billion.

• Free cash flow margin target of 16%+ remains a longer-term goal, with incremental improvement expected as transformation spend abates.

• Management expects sufficient liquidity for the next twelve months, with no mandatory debt repayments and a $1.5 billion revolving credit facility fully available.