Willis Towers Watson revenues up by 5% y-o-y in the first quarter of 2021

29 April 2021 — Daniela GHETU
Willis Towers Watson, a global advisory, broking and solutions company, announced financial results for Q1 2021, with total revenue up by 5%, to USD 2.6 billion, constant currency growth of 1% and organic growth of 4%. Income from Operations was USD 452 million, while Adjusted Operating Income was USD 579 million.

"Willis Towers Watson had an encouraging start to the year with strong first quarter results," said John Haley, Willis Towers Watson's chief executive officer. "We are proud of our financial performance and our unwavering commitment to client service. We delivered revenue growth, meaningful margin expansion and strong earnings-per-share growth. Our results reflect both increased demand for our solutions, as well as our sustained focus on profitable growth. We continue to build upon our solid foundation and believe we are well-positioned to continue driving value for all our stakeholders. As always, I would like to thank all of our colleagues for their tremendous efforts this past quarter in support of our clients and each other."

Net income attributable to Willis Towers Watson for the first quarter of 2021 was USD 733 million, an increase of 140% from USD 305 million for the prior-year first quarter. For the quarter, diluted earnings per share were USD 5.63 and adjusted diluted earnings per share were USD 3.64. Net income attributable to Willis Towers Watson and diluted earnings per share for the first quarter of 2021 included pre-tax USD 24 million of transaction and integration expenses related to the pending business combination with Aon plc. The U.S. GAAP tax rate for the quarter was 11.5%, and the adjusted income tax rate for the quarter used in calculating adjusted diluted earnings per share was 20.5%.

Net income for the first quarter of 2021 was USD 736 million, or 28.4% of revenue, an increase from net income of USD 313 million, or 12.7% of revenue for the prior-year first quarter. Adjusted EBITDA for the first quarter of 2021 was USD 730 million, or 28.2% of revenue, an increase from Adjusted EBITDA of USD 680 million, or 27.6% of revenue. The first quarter is seasonally strong due to the renewal periods for some lines of business.

Cash flows used in operating activities were USD 128 million for the three months ended March 31, 2021, compared to cash flows from operating activities of USD 23 million for the prior-year first quarter. Free cash outflow for the quarters ended March 31, 2021 and 2020 was USD 165 million and USD 43 million, respectively. The decrease in year-over-year free cash flow was due to net legal settlement payments of approximately USD 185 million for the previously-announced Stanford and Willis/Towers Watson merger settlements and higher incentive compensation and benefit-related items of approximately USD 180 million. During the quarter ended March 31, 2021, the Company had no share repurchase activity.

Risks and Uncertainties Related to the COVID-19 Pandemic

The extent to which COVID-19 continues to impact our business and financial position will depend on future developments, which are difficult to predict, including the severity and scope of the COVID-19 pandemic as well as the types of measures imposed by governmental authorities to contain the virus or address its impact and the duration of those actions and measures. We continue to expect that the COVID-19 pandemic will negatively impact our revenue and operating results for 2021. During 2020 and through the first quarter of 2021, the COVID-19 pandemic had a negative impact on revenue growth, particularly in our businesses that are discretionary in nature, but otherwise it generally did not have a material impact on our overall results. Some of our discretionary, project-based businesses saw a reduction in demand, and additional negative impacts on our revenue and operating results may lag behind the developments thus far related to the COVID-19 pandemic. In light of the effects on our own business operations and those of our clients, suppliers and other third parties with whom we interact, the Company has considered, and will continue to consider, the impact of COVID-19 on our business, as appropriate, taking into account our business resilience and continuity plans, financial modeling and stress testing of liquidity and financial resources. For additional information on the risks posed by COVID-19, see additional disclosures in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.

More in depth data on WTW's Q1 2021 results are available on the company's website.

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