Third Quarter Key Metrics
- Total revenue was $3.7 billion,
including organic revenue growth of 7%
- Operating margin was 16.7%, and adjusted operating margin
increased to 24.6%
- EPS was $1.57, and adjusted EPS
increased to $2.72
- For the first nine months of 2024, cash flows from operations
was $1,835 million, and free cash
flow was $1,672 million
Third Quarter Highlights
- Repurchased 0.9 million class A ordinary shares for
approximately $300 million
- Completed 6 middle-market acquisitions across Commercial Risk,
Health and Wealth, continuing to capitalize on the opportunity in
fast-growing middle market with execution of NFP's M&A
strategy
- Leading in catastrophe bonds with year-to-date placement work
on $6 billion in limit across 25
deals, reflecting a 13% increase in issuance volumes over the prior
year period
- Advanced data and analytics capabilities for Human Capital
clients with launch of integrated Radford
McLagan compensation database
DUBLIN, Oct. 25,
2024 /PRNewswire/ -- Aon plc (NYSE: AON) today
reported results for the three months ended September 30, 2024.
Net income attributable to Aon shareholders decreased
30%, to $1.57 per share on a diluted
basis, compared to $2.23 per share on
a diluted basis, in the prior year period. Adjusted net income per
share attributable to Aon shareholders increased 17% to
$2.72 on a diluted basis, including
an unfavorable impact of $0.02 per
share if prior year period results were translated at current
period foreign exchange rates ("foreign currency translation"),
compared to $2.32 in the prior year
period. Certain items that impacted third quarter results and
comparisons with the prior year period are detailed in the
"Reconciliation of Non-GAAP Measures - Operating Income, Operating
Margin and Diluted Earnings Per Share" on page 10 of this press
release.
"Our global team delivered another quarter of excellent results
in the third quarter, with 7% total organic revenue growth,
including all Solution Lines at 6% or greater, which contributed to
adjusted operating margin expansion and 17% growth in adjusted
EPS," said Greg Case, CEO of Aon.
"Our performance through the first three quarters positions us well
to deliver full year results in line with our financial guidance,
and demonstrates the success of our 3x3 Plan to bring better client
solutions across Risk Capital and Human Capital, powered by Aon
Business Services."
THIRD QUARTER 2024 FINANCIAL SUMMARY
Total revenue in the third quarter increased 26%
to $3.7 billion compared to the prior
year period, reflecting acquired revenues from NFP and 7% organic
revenue growth.
Total operating expenses in the third quarter increased
37% to $3.1 billion compared to the
prior year period due primarily to the inclusion of NFP's ongoing
operating expenses, an increase in intangible asset amortization
associated with the acquisition of NFP, an increase in expense
associated with 7% organic revenue growth, Accelerating Aon United
restructuring program charges, and investments in long-term growth,
partially offset by $25 million of
restructuring savings realized in the quarter.
Foreign currency translation in the third quarter had a
$3 million, or $0.02 per share, unfavorable impact on both U.S.
GAAP net income and adjusted net income. If currency were to remain
stable at today's rates, the Company would expect an unfavorable
impact of approximately $0.01 per
share, or an approximately $3 million
decrease in adjusted operating income for the fourth quarter,
resulting in an unfavorable impact to adjusted operating income of
approximately $0.07 per share, or
approximately $21 million for full
year 2024.
Effective tax rate was 20.9% in the third quarter
compared to 16.6% in the prior year period. After adjusting to
exclude the applicable tax impact associated with certain non-GAAP
adjustments, the adjusted effective tax rate for the third quarter
of 2024 was 18.0% compared to 17.2% in the prior year period. The
primary drivers of the change in the adjusted effective tax rate
were the changes in the geographical distribution of income and a
net unfavorable impact from discrete items.
Weighted average diluted shares outstanding increased to
218.4 million in the third quarter compared to 204.6 million in the
prior year period due to the issuance of 19.0 million shares in the
second quarter of 2024 to fund the NFP acquisition. The Company
repurchased 0.9 million class A ordinary shares for approximately
$300 million in the third quarter. As
of September 30, 2024, the Company had approximately
$2.5 billion of remaining
authorization under its share repurchase program.
YEAR TO DATE 2024 CASH FLOW SUMMARY
Cash flows provided by operations for the first nine
months of 2024 decreased $339 million
to $1,835 million compared to the
prior year period, primarily due to higher cash taxes, and payments
related to restructuring, legal settlement expenses, transaction
and integration costs, and higher receivables, including from NFP,
partially offset by strong adjusted operating income growth.
Free cash flow, defined as cash flows from operations
less capital expenditures, decreased 15%, to $1,672 million for the first nine months of 2024
compared to the prior year period, reflecting a decrease in cash
flows provided by operations, partially offset by a $40 million decrease in capital expenditures
compared to the prior year period, which was elevated due to the
timing of projects and investments within the year.
THIRD QUARTER 2024 REVENUE REVIEW
The third quarter revenue reviews provided below include
supplemental information related to organic revenue growth, which
is a non-GAAP measure that is described in detail in
"Reconciliation of Non-GAAP Measures - Organic Revenue Growth and
Free Cash Flow" on page 9 of this press release.
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
|
Less:
Currency
Impact
|
|
Less:
Fiduciary
Investment
Income
|
|
Less:
Acquisitions,
Divestitures
& Other
|
|
Organic
Revenue
Growth
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Risk
Solutions
|
|
$
1,852
|
|
$
1,585
|
|
17 %
|
|
— %
|
|
— %
|
|
11 %
|
|
6 %
|
Reinsurance
Solutions
|
|
503
|
|
465
|
|
8
|
|
—
|
|
1
|
|
—
|
|
7
|
Health
Solutions
|
|
870
|
|
552
|
|
58
|
|
(1)
|
|
—
|
|
50
|
|
9
|
Wealth
Solutions
|
|
499
|
|
352
|
|
42
|
|
1
|
|
—
|
|
34
|
|
7
|
Eliminations
|
|
(3)
|
|
(1)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Total
revenue
|
|
$
3,721
|
|
$
2,953
|
|
26 %
|
|
— %
|
|
— %
|
|
19 %
|
|
7 %
|
Total revenue increased $768
million, or 26%, to $3.7
billion, compared to the prior year period, reflecting
organic revenue growth of 7% and acquired revenues from NFP, driven
by net new business and ongoing strong retention.
Commercial Risk Solutions organic revenue growth of 6%
reflects mid-single-digit or greater increases across all major
geographies, and in NFP, driven by net new business and ongoing
strong retention. Results reflect strong growth in North America driven by strength in core
P&C, which includes the majority of NFP's Commercial Risk
solutions, and a double-digit increase in M&A services. On
average globally, exposures were modestly positive and aggregate
pricing was flat, resulting in modestly positive market impact.
Reinsurance Solutions organic revenue growth of 7%
reflects a double-digit increase in facultative placements, as well
as strength in treaty, driven by net new business and ongoing
strong retention. Market impact was modestly positive on results in
the quarter. The majority of revenue in our treaty portfolio is
recurring in nature and is recorded in connection with the major
renewal periods that take place throughout the first half of the
year.
Health Solutions organic revenue growth of 9% reflects
strong growth globally in core health and benefits brokerage, which
includes the majority of NFP's Health solutions, driven by net new
business and ongoing strong retention. The core performance was
highlighted by double-digit growth in EMEA, Asia and the Pacific, and Latin America. Results also reflect
double-digit growth in Talent, with strong demand for talent
analytics, solid growth in NFP, and slower growth in executive
benefits.
Wealth Solutions organic revenue growth of 7% reflects
strength in Retirement, driven by advisory demand and
project-related work related to pension de-risking and the ongoing
impact of regulatory changes. Strong growth in Investments, which
includes the majority of NFP's Wealth solutions, was highlighted by
strong revenue growth within NFP, driven by net asset inflows and
market performance.
THIRD QUARTER 2024 EXPENSE REVIEW
|
|
Three Months Ended
September 30,
|
|
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
$
Change
|
|
%
Change
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
$
2,150
|
|
$
1,685
|
|
$
465
|
|
28 %
|
Information
technology
|
|
141
|
|
135
|
|
6
|
|
4
|
Premises
|
|
88
|
|
74
|
|
14
|
|
19
|
Depreciation of fixed
assets
|
|
47
|
|
42
|
|
5
|
|
12
|
Amortization and
impairment of intangible assets
|
|
174
|
|
20
|
|
154
|
|
770
|
Other general
expense
|
|
429
|
|
300
|
|
129
|
|
43
|
Accelerating Aon
United Program expenses
|
|
69
|
|
6
|
|
63
|
|
1,050
|
Total
operating expenses
|
|
$
3,098
|
|
$
2,262
|
|
$
836
|
|
37 %
|
Compensation and benefits expense increased $465 million, or 28%, compared to the prior year
period due primarily to the inclusion of ongoing operating expenses
from NFP and expense associated with 7% organic revenue growth,
partially offset by savings from Accelerating Aon United
restructuring actions.
Information technology expense increased $6 million, or 4%, compared to the prior year
period due primarily to the inclusion of ongoing operating expenses
from NFP, partially offset by efficiencies from our Aon Business
Services operating platform and savings from Accelerating Aon
United restructuring actions.
Premises expense increased $14
million, or 19%, compared to the prior year period, due
primarily to the inclusion of ongoing operating expenses from NFP,
partially offset by savings from Accelerating Aon United
restructuring actions
Depreciation of fixed assets increased $5 million, or 12%, compared to the prior year
period due primarily to the inclusion of ongoing operating expenses
from NFP, partially offset by savings from Accelerating Aon United
restructuring actions
Amortization and impairment of intangible assets
increased $154 million, compared to
the prior year period due primarily to an increase in intangible
assets related to the NFP acquisition.
Other general expense increased $129 million, or 43%, compared to the prior year
period due primarily to the inclusion of ongoing operating expenses
from NFP and transaction and integration costs.
Accelerating Aon United Program expenses increased
$63 million, compared to the prior
year period relating to technology and other costs, workforce
optimization, and asset impairments.
THIRD QUARTER 2024 INCOME SUMMARY
Certain noteworthy items impacted adjusted operating income and
adjusted operating margin in the third quarters of 2024 and 2023,
which are also described in detail in "Reconciliation of Non-GAAP
Measures - Operating Income, Operating Margin and Diluted Earnings
Per Share" on page 10 of this press release.
|
|
Three Months Ended
September 30,
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
Revenue
|
|
$
3,721
|
|
$
2,953
|
|
26 %
|
Expenses
|
|
3,098
|
|
2,262
|
|
37 %
|
Operating
income
|
|
$
623
|
|
$
691
|
|
(10) %
|
Operating
margin
|
|
16.7 %
|
|
23.4 %
|
|
|
Adjusted operating
income
|
|
$
915
|
|
$
717
|
|
28 %
|
Adjusted operating
margin
|
|
24.6 %
|
|
24.3 %
|
|
|
Operating income decreased $68
million, or 10%, and operating margin decreased 670 basis
points to 16.7%, each compared to the prior year period. Adjusted
operating income increased $198
million, or 28%, and adjusted operating margin increased 30
basis points to 24.6%, each compared to the prior year period. The
increase in adjusted operating income reflects the impact from NFP,
organic revenue growth, net restructuring savings and increased
fiduciary investment income, partially offset by increased expenses
and investments in long-term growth.
Interest income decreased $5
million compared to the prior year period primarily
reflecting lower operating cash balances in countries with high
interest rates. Interest expense increased $94 million compared to the prior year period,
reflecting an increase in total debt, primarily to fund the
purchase of NFP, and higher interest rates.
Other income was $35
million compared to other expense of $21 million in the prior year period and
Adjusted other income was $33
million compared to adjusted other expense of
$21 million in the prior year period,
both primarily related to a gain on the sale of businesses, offset
by the unfavorable impact of exchange rates on the remeasurement of
assets and liabilities in non-functional currencies.
Net income attributable to Aon shareholders decreased 25%
to $343 million compared to
$456 million in the prior year
period. Adjusted net income attributable to Aon shareholders
increased 25% to $594 million
compared to $474 million in the prior
year period.
Conference Call, Presentation Slides, and Webcast
Details
The Company will host a conference call on Friday,
October 25, 2024 at 7:30 a.m., central
time. Interested parties can listen to the conference call
via a live audio webcast and view the presentation slides at
www.aon.com.
About Aon
Aon plc (NYSE: AON) exists to shape
decisions for the better — to protect and enrich the lives of
people around the world. Through actionable analytic insight,
globally integrated Risk Capital and Human Capital expertise, and
locally relevant solutions, our colleagues provide clients in over
120 countries with the clarity and confidence to make better risk
and people decisions that protect and grow their businesses.
Follow Aon on LinkedIn, X, Facebook, and Instagram. Stay
up-to-date by visiting the Aon Newsroom and sign up for News
Alerts
Safe Harbor Statement
This communication
contains certain statements related to future results, or states
Aon's intentions, beliefs and expectations or predictions for the
future, all of which are forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from either historical or anticipated results depending on a
variety of factors. These forward-looking statements include
information about possible or assumed future results of Aon's
operations. All statements, other than statements of historical
facts, that address activities, events or developments that Aon
expects or anticipates may occur in the future, including such
things as its outlook, market and industry conditions, including
competitive and pricing trends, the development and performance of
our services and products, our cost structure and the outcome of
cost-saving or restructuring initiatives, including the
impacts of the Accelerating Aon United Program, the integration of
NFP, actual or anticipated legal settlement expenses, future
capital expenditures, growth in commissions and fees, changes to
the composition or level of its revenues, cash flow and liquidity,
expected tax rates, expected foreign currency translation impacts,
business strategies, competitive strengths, goals, the benefits of
new initiatives, growth of its business and operations, plans,
references to future successes, and expectations with respect to
the benefits of the acquisition of NFP are forward-looking
statements. Also, when Aon uses words such as "anticipate",
"believe", "continue", "could", "estimate", "expect", "forecast",
"intend", "looking forward", "may", "might", "plan", "potential",
"opportunity", "commit", "probably", "project", "should", "will",
"would" or similar expressions, it is making forward-looking
statements.
The following factors, among others, could cause actual results
to differ from those set forth in or anticipated by the forward
looking statements: changes in the competitive environment, due to
macroeconomic conditions (including impacts from instability in the
banking or commercial real estate sectors) or otherwise, or damage
to Aon's reputation; fluctuations in currency exchange, interest,
or inflation rates that could impact our financial condition or
results; changes in global equity and fixed income markets that
could affect the return on invested assets; changes in the funded
status of Aon's various defined benefit pension plans and the
impact of any increased pension funding resulting from those
changes; the level of Aon's debt and the terms thereof reducing
Aon's flexibility or increasing borrowing costs; rating agency
actions that could limit Aon's access to capital and our
competitive position; volatility in Aon's global tax rate due to
being subject to a variety of different factors, including the
adoption and implementation in the European Union, the United States, the United Kingdom, or other countries of the
Organization for Economic Co-operation and Development tax
proposals or other pending proposals in those and other countries,
which could create volatility in that tax rate; changes in Aon's
accounting estimates or assumptions on Aon's financial statements;
limits on Aon's subsidiaries' ability to pay dividends or otherwise
make payments to Aon; the impact of legal proceedings and other
contingencies, including those arising from acquisition or
disposition transactions, errors and omissions and other claims
against Aon (including proceeding and contingencies relating to
transactions for which capital was arranged by Vesttoo Ltd. or
related to actions we may take in being responsible for making
decisions on behalf of clients in our investment business or in
other advisory services that we currently provide, or may provide
in the future); the impact of, and potential challenges in
complying with, laws and regulations in the jurisdictions in which
Aon operates, particularly given the global nature of Aon's
operations and the possibility of differing or conflicting laws and
regulations, or the application or interpretation thereof, across
jurisdictions in which Aon does business; the impact of any
regulatory investigations brought in Ireland, the U.K., the U.S. and other
countries; failure to protect intellectual property rights or
allegations that Aon infringes on the intellectual property rights
of others; general economic and political conditions in different
countries in which Aon does business around the world; the failure
to retain, attract and develop experienced and qualified personnel;
international risks associated with our global operations,
including impacts from military conflicts or political instability,
such as the ongoing Russian war in Ukraine and the conflicts in the Middle East; the effects of natural or
human-caused disasters, including the effects of health pandemics
and the impacts of climate related events; any system or network
disruption or breach resulting in operational interruption or
improper disclosure of confidential, personal, or proprietary data,
and resulting liabilities or damage to our reputation; Aon's
ability to develop, implement, update and enhance new technology;
the actions taken by third parties that perform aspects of Aon's
business operations and client services; Aon's ability to continue,
and the costs and risks associated with, growing, developing and
integrating acquired business, and entering into new lines of
business or products; Aon's ability to secure regulatory approval
and complete transactions, and the costs and risks associated with
the failure to consummate proposed transactions; changes in
commercial property and casualty markets, commercial premium rates
or methods of compensation; Aon's ability to develop and implement
innovative growth strategies and initiatives intended to yield cost
savings (including the Accelerating Aon United Program), and the
ability to achieve such growth or cost savings; the effects of
Irish law on Aon's operating flexibility and the enforcement of
judgments against Aon; adverse effects on the market price of Aon's
securities and/or operating results for any reason, including,
without limitation, because of a failure to realize the expected
benefits of the acquisition of NFP (including anticipated revenue
and growth synergies) in the expected timeframe, or at all;
significant integration costs or difficulties in connection with
the acquisition of NFP or unknown or inestimable liabilities; and
potential impact of the consummation of the acquisition of NFP on
relationships, including with suppliers, customers, employees and
regulators.
Any or all of Aon's forward-looking statements may turn out to
be inaccurate, and there are no guarantees about Aon's performance.
The factors identified above are not exhaustive. Aon and its
subsidiaries operate in a dynamic business environment in which new
risks may emerge frequently. Accordingly, you should not place
undue reliance on forward-looking statements, which speak only as
of the dates on which they are made. In addition, results for prior
periods are not necessarily indicative of results that may be
expected for any future period. Further information concerning Aon
and its businesses, including factors that could materially affect
Aon's financial results, is contained in Aon's filings with the
SEC. See Aon's Annual Report on Form
10-K for the year ended December 31,
2023 and the risk factors set forth under the headings
"Risks Related to Aon and the NFP business after Completion of the
Transaction" and "Risks Related to NFP's Business" in Aon's
registration statement on Form S-4 filed on April 23, 2024 for a further discussion of these
and other risks and uncertainties applicable to Aon and its
businesses. These factors may be revised or supplemented in
subsequent reports filed with the SEC. Aon is not under, and
expressly disclaims, any obligation to update or alter any
forward-looking statement that it may make from time to time,
whether as a result of new information, future events or
otherwise.
Explanation of Non-GAAP Measures
This
communication includes supplemental information not calculated in
accordance with generally accepted accounting principles in
the United States ("U.S. GAAP"),
including organic revenue growth, free cash flow, free cash flow
margin, adjusted operating income, adjusted operating margin,
adjusted earnings per share, adjusted net income attributable to
Aon shareholders, adjusted diluted net income per share, adjusted
effective tax rate, adjusted other income (expense), and adjusted
income before income taxes that exclude the effects of intangible
asset amortization and impairment, Accelerating Aon United Program
expenses, contingent consideration, NFP transaction and integration
costs, certain pension settlements, capital expenditures, and
certain other noteworthy items that affected results for the
comparable periods. Organic revenue growth includes the impact of
intercompany activity and excludes foreign exchange rate changes,
acquisitions (provided that organic revenue growth includes organic
growth of an acquired business as calculated assuming that the
acquired business was part of the combined company for the same
proportion of the relevant prior year period), divestitures
(including held for sale disposal groups, if any), transfers
between revenue lines, fiduciary investment income, and gains or
losses on derivatives accounted for as hedges. Currency impact
represents the effect on prior year period results if they were
translated at current period foreign exchange rates.
Reconciliations to the closest U.S. GAAP measure for each non-GAAP
measure presented in this communication are provided in the
attached appendices. Supplemental organic revenue growth
information and additional measures that exclude the effects of
certain items noted above do not affect net income or any other
U.S. GAAP reported amounts. Free cash flow is cash flows from
operating activity less capital expenditures. The adjusted
effective tax rate excludes the applicable tax impact associated
with adjustments previously described, generally at the estimated
annual effective tax rate or jurisdictional rate, where
appropriate. Beginning in the third quarter of 2024, the adjusted
effective tax rates also excludes interest accruals for income tax
reserves related to the termination fee payment made in connection
with the Company's terminated proposed combination with
Willis Towers Watson.
Management believes that these measures are important to make
meaningful period-to-period comparisons and that this supplemental
information is helpful to investors. Management also uses these
measures to assess operating performance and performance for
compensation. Non-GAAP measures should be viewed in addition to,
not in lieu of, Aon's Condensed Consolidated Financial Statements.
Industry peers provide similar supplemental information regarding
their performance, although they may not make identical
adjustments.
Investor
Contact:
|
|
Media
Contact:
|
Leslie
Follmer
|
|
Will Dunn
|
+1
847-442-0622
|
|
Toll-free
(U.S., Canada and Puerto Rico): +1-833-751-
8114
|
investor.relations@aon.com
|
|
International: +1 312
381 3024
|
|
|
mediainquiries@aon.com
|
Aon plc
Condensed Consolidated
Statements of Income (Unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
(millions, except per
share data)
|
|
2024
|
|
2023
|
|
%
Change
|
|
2024
|
|
2023
|
|
%
Change
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
$
3,721
|
|
$
2,953
|
|
26 %
|
|
$ 11,551
|
|
$ 10,001
|
|
15 %
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
2,150
|
|
1,685
|
|
28 %
|
|
6,163
|
|
5,231
|
|
18 %
|
Information
technology
|
|
141
|
|
135
|
|
4 %
|
|
397
|
|
403
|
|
(1) %
|
Premises
|
|
88
|
|
74
|
|
19 %
|
|
241
|
|
217
|
|
11 %
|
Depreciation of fixed
assets
|
|
47
|
|
42
|
|
12 %
|
|
136
|
|
119
|
|
14 %
|
Amortization and
impairment of intangible assets
|
|
174
|
|
20
|
|
770 %
|
|
318
|
|
70
|
|
354 %
|
Other general
expense
|
|
429
|
|
300
|
|
43 %
|
|
1,232
|
|
949
|
|
30 %
|
Accelerating Aon
United Program expenses
|
|
69
|
|
6
|
|
1,050 %
|
|
320
|
|
6
|
|
5,233 %
|
Total operating
expenses
|
|
3,098
|
|
2,262
|
|
37 %
|
|
8,807
|
|
6,995
|
|
26 %
|
Operating
income
|
|
623
|
|
691
|
|
(10) %
|
|
2,744
|
|
3,006
|
|
(9) %
|
Interest
income
|
|
4
|
|
9
|
|
(56) %
|
|
63
|
|
19
|
|
232 %
|
Interest
expense
|
|
(213)
|
|
(119)
|
|
79 %
|
|
(582)
|
|
(360)
|
|
62 %
|
Other income
(expense)
|
|
35
|
|
(21)
|
|
267 %
|
|
346
|
|
(105)
|
|
430 %
|
Income before income
taxes
|
|
449
|
|
560
|
|
(20) %
|
|
2,571
|
|
2,560
|
|
— %
|
Income tax expense
(1)
|
|
94
|
|
93
|
|
1 %
|
|
585
|
|
439
|
|
33 %
|
Net
income
|
|
355
|
|
467
|
|
(24) %
|
|
1,986
|
|
2,121
|
|
(6) %
|
Less: Net income
attributable to redeemable and non-redeemable noncontrolling
interests
|
|
12
|
|
11
|
|
9 %
|
|
48
|
|
55
|
|
(13) %
|
Net income
attributable to Aon shareholders
|
|
$ 343
|
|
$ 456
|
|
(25) %
|
|
$
1,938
|
|
$
2,066
|
|
(6) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per
share attributable to Aon shareholders
|
|
$ 1.58
|
|
$ 2.25
|
|
(30) %
|
|
$ 9.24
|
|
$
10.10
|
|
(9) %
|
Diluted net income per
share attributable to Aon shareholders
|
|
$ 1.57
|
|
$ 2.23
|
|
(30) %
|
|
$ 9.20
|
|
$
10.03
|
|
(8) %
|
Weighted average
ordinary shares outstanding - basic
|
|
217.4
|
|
202.9
|
|
7 %
|
|
209.7
|
|
204.6
|
|
2 %
|
Weighted average
ordinary shares outstanding - diluted
|
|
218.4
|
|
204.6
|
|
7 %
|
|
210.6
|
|
206.0
|
|
2 %
|
|
|
(1)
|
The effective tax rate
was 20.9% and 16.6% for the three months ended September 30, 2024
and 2023, respectively, and 22.8% and 17.1% for the nine months
ended September 30, 2024 and 2023, respectively.
|
Aon plc
Reconciliation of
Non-GAAP Measures - Organic Revenue Growth and Free Cash Flow
(Unaudited)
Organic Revenue
Growth (Unaudited)
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
|
Less:
Currency
Impact (1)
|
|
Less:
Fiduciary
Investment
Income (2)
|
|
Less:
Acquisitions,
Divestitures
& Other
|
|
Organic
Revenue
Growth (3)
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Risk
Solutions
|
|
$
1,852
|
|
$
1,585
|
|
17 %
|
|
— %
|
|
— %
|
|
11 %
|
|
6 %
|
Reinsurance
Solutions
|
|
503
|
|
465
|
|
8
|
|
—
|
|
1
|
|
—
|
|
7
|
Health
Solutions
|
|
870
|
|
552
|
|
58
|
|
(1)
|
|
—
|
|
50
|
|
9
|
Wealth
Solutions
|
|
499
|
|
352
|
|
42
|
|
1
|
|
—
|
|
34
|
|
7
|
Elimination
|
|
(3)
|
|
(1)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Total
revenue
|
|
$
3,721
|
|
$
2,953
|
|
26 %
|
|
— %
|
|
— %
|
|
19 %
|
|
7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
|
Less:
Currency
Impact (1)
|
|
Less:
Fiduciary
Investment
Income (2)
|
|
Less:
Acquisitions,
Divestitures
& Other
|
|
Organic
Revenue
Growth (3)
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Risk
Solutions
|
|
$
5,675
|
|
$
5,137
|
|
10 %
|
|
— %
|
|
— %
|
|
5 %
|
|
5 %
|
Reinsurance
Solutions
|
|
2,305
|
|
2,149
|
|
7
|
|
—
|
|
1
|
|
(1)
|
|
7
|
Health
Solutions
|
|
2,265
|
|
1,670
|
|
36
|
|
—
|
|
—
|
|
29
|
|
7
|
Wealth
Solutions
|
|
1,332
|
|
1,054
|
|
26
|
|
1
|
|
—
|
|
18
|
|
7
|
Elimination
|
|
(26)
|
|
(9)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Total
revenue
|
|
$
11,551
|
|
$
10,001
|
|
15 %
|
|
— %
|
|
— %
|
|
9 %
|
|
6 %
|
(1)
|
Currency impact
represents the effect on prior year period results if they were
translated at current period foreign exchange rates.
|
(2)
|
Fiduciary investment
income for the three months ended September 30, 2024 and 2023 was
$85 million and $80 million, respectively. Fiduciary investment
income for the nine months ended September 30, 2024 and 2023 was
$239 million and $196 million, respectively.
|
(3)
|
Organic revenue growth
includes the impact of certain intercompany activity and excludes
the impact of changes in foreign exchange rates, fiduciary
investment income, acquisitions (provided that organic revenue
growth includes organic growth of an acquired business as
calculated assuming that the acquired business was part of the
combined company for the same proportion of the relevant prior year
period), divestitures (including held for sale disposal groups, if
any), transfers between revenue lines, and gains or losses on
derivatives accounted for as hedges.
|
Free Cash Flows
(Unaudited)
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
Cash Provided by
Operating Activities
|
|
$
1,835
|
|
$
2,174
|
|
(16) %
|
Capital
Expenditures
|
|
(163)
|
|
(203)
|
|
(20) %
|
Free Cash Flows
(1)
|
|
$
1,672
|
|
$
1,971
|
|
(15) %
|
|
|
(1)
|
Free cash flow is
defined as cash flows from operations less capital expenditures.
This non-GAAP measure does not imply or represent a precise
calculation of residual cash flow available for discretionary
expenditures.
|
Aon
plc
|
Reconciliation of
Non-GAAP Measures - Operating Income, Operating Margin, and Diluted
Earnings Per Share (Unaudited) (1)
|
|
|
|
Three Months
Ended
September 30,
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
(millions, except
percentages)
|
|
2024
|
|
2023
|
|
%
Change
|
|
2024
|
|
2023
|
|
%
Change
|
Revenue
|
|
$
3,721
|
|
$
2,953
|
|
26 %
|
|
$
11,551
|
|
$
10,001
|
|
15 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
$
623
|
|
$
691
|
|
(10) %
|
|
$
2,744
|
|
$
3,006
|
|
(9) %
|
Amortization and
impairment of intangible assets
|
|
174
|
|
20
|
|
|
|
318
|
|
70
|
|
|
Change in the fair
value of contingent consideration
|
|
14
|
|
—
|
|
|
|
32
|
|
—
|
|
|
Accelerating Aon
United Program expenses (2)
|
|
69
|
|
6
|
|
|
|
320
|
|
6
|
|
|
Transaction and
integration costs (3)
|
|
35
|
|
—
|
|
|
|
145
|
|
—
|
|
|
Adjusted operating
income
|
|
$
915
|
|
$
717
|
|
28 %
|
|
$
3,559
|
|
$
3,082
|
|
15 %
|
Operating
margin
|
|
16.7 %
|
|
23.4 %
|
|
|
|
23.8 %
|
|
30.1 %
|
|
|
Adjusted operating
margin
|
|
24.6 %
|
|
24.3 %
|
|
|
|
30.8 %
|
|
30.8 %
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
(millions, except
percentages)
|
|
2024
|
|
2023
|
|
%
Change
|
|
2024
|
|
2023
|
|
%
Change
|
Adjusted operating
income
|
|
$
915
|
|
$
717
|
|
28 %
|
|
$
3,559
|
|
$
3,082
|
|
15 %
|
Interest
income
|
|
4
|
|
9
|
|
(56) %
|
|
63
|
|
19
|
|
232 %
|
Interest
expense
|
|
(213)
|
|
(119)
|
|
79 %
|
|
(582)
|
|
(360)
|
|
62 %
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted other income
(expense) - pensions (4)
|
|
(14)
|
|
(18)
|
|
(22) %
|
|
(35)
|
|
(51)
|
|
(31) %
|
Adjusted other income
(expense) - other (5)(6)(7)
|
|
47
|
|
(3)
|
|
1,667 %
|
|
46
|
|
(27)
|
|
270 %
|
Adjusted other income
(expense)
|
|
33
|
|
(21)
|
|
257 %
|
|
11
|
|
(78)
|
|
114 %
|
Adjusted income
before income taxes
|
|
739
|
|
586
|
|
26 %
|
|
3,051
|
|
2,663
|
|
15 %
|
Adjusted income tax
expense (8)
|
|
133
|
|
101
|
|
32 %
|
|
652
|
|
494
|
|
32 %
|
Adjusted net
income
|
|
606
|
|
485
|
|
25 %
|
|
2,399
|
|
2,169
|
|
11 %
|
Less: Net income
attributable to redeemable and nonredeemable noncontrolling
interests
|
|
12
|
|
11
|
|
9 %
|
|
48
|
|
55
|
|
(13) %
|
Adjusted net income
attributable to Aon shareholders
|
|
$
594
|
|
$
474
|
|
25 %
|
|
$
2,351
|
|
$
2,114
|
|
11 %
|
Adjusted diluted net
income per share attributable to Aon shareholders
|
|
$ 2.72
|
|
$ 2.32
|
|
17 %
|
|
$
11.16
|
|
$
10.26
|
|
9 %
|
Weighted average
ordinary shares outstanding - diluted
|
|
218.4
|
|
204.6
|
|
7 %
|
|
210.6
|
|
206.0
|
|
2 %
|
Effective tax rates
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP
|
|
20.9 %
|
|
16.6 %
|
|
|
|
22.8 %
|
|
17.1 %
|
|
|
Non-GAAP
|
|
18.0 %
|
|
17.2 %
|
|
|
|
21.4 %
|
|
18.6 %
|
|
|
|
|
(1)
|
Certain noteworthy
items impacting operating income in the three and nine months ended
September 30, 2024 and 2023 are described in this schedule. The
items shown with the caption "adjusted" are non-GAAP
measures.
|
(2)
|
Total charges are
expected to include technology-related costs to facilitate
streamlining and simplifying operations, headcount reduction costs,
and costs associated with asset impairments, including real estate
consolidation costs.
|
(3)
|
On April 25, 2024, the
Company completed the acquisition of NFP. As part of the
acquisition, Aon incurred $35 million and $151 million of
transaction and integration costs during the three and nine months
ended September 30, 2024, respectively. Transaction costs include
advisory, legal, accounting, regulatory, and other professional or
consulting fees required to complete the acquisition. Less than $1
million of transaction costs were recognized for the three months
ended September 30, 2024. For the nine months ended September 30,
2024, $90 million of transaction costs were recognized in Total
operating expenses and $6 million were recognized in Other income
(expense) related to the extinguishment of acquired NFP debt. The
NFP Transaction also will result in certain non-recurring
integration costs associated with colleague severance, retention
bonus awards, termination of redundant third-party agreements,
costs associated with legal entity rationalization, and
professional or consulting fees related to alignment of management
processes and controls, as well as costs associated with the
assessment of NFP information technology environment and security
protocols. Aon incurred $35 million and $55 million of integration
costs in the three and nine months ended September 30, 2024,
respectively.
|
(4)
|
To further its pension
de-risking strategy, the Company settled certain pension
obligations in the Netherlands through the purchase of annuities,
where certain pension assets were liquidated to purchase the
annuities. A non-cash settlement charge of $27 million was
recognized in the second quarter of 2023 which is excluded from
Adjusted other income (expense).
|
(5)
|
During the three and
nine months ended September 30, 2024, gains of $2 million and $84
million were recognized, respectively, related to deferred
consideration from the affiliates of The Blackstone Group L.P. and
the other designated purchasers related to a divestiture completed
in a prior year period.
|
(6)
|
Adjusted other income
(expense) excluded gains from dispositions of $257 million related
to the sale of a business for the nine months ended September 30,
2024.
|
(7)
|
Adjusted other income
(expense) excluded $6 million of debt extinguishment charges
related to the repayment of NFP debt, which is considered a
transaction related cost incurred in the second quarter of
2024.
|
(8)
|
Adjusted items are
generally taxed at the estimated annual effective tax rate, except
for the applicable tax impact associated with certain pension
settlements, Accelerating Aon United Program expenses, deferred
consideration from a prior year sale of business, certain gains
from dispositions, certain transaction and integration costs
related to the acquisition of NFP, and changes in the fair value of
contingent consideration, which are adjusted at the related
jurisdictional rate. The tax adjustment also excludes interest
accruals for income tax reserves related to the termination fee
payment made in connection with the Company's terminated proposed
combination with Willis Towers Watson.
|
Aon
plc
|
|
Condensed Consolidated
Statements of Financial Position
|
|
|
As of
|
|
|
(Unaudited)
|
|
|
(millions)
|
|
September
30,
2024
|
|
December 31,
2023
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,103
|
|
$
778
|
Short-term
investments
|
|
196
|
|
369
|
Receivables,
net
|
|
4,004
|
|
3,254
|
Fiduciary assets
(1)
|
|
17,596
|
|
16,307
|
Other current
assets
|
|
754
|
|
996
|
Total
current assets
|
|
23,653
|
|
21,704
|
Goodwill
|
|
15,612
|
|
8,414
|
Intangible assets,
net
|
|
6,789
|
|
234
|
Fixed assets,
net
|
|
650
|
|
638
|
Operating lease
right-of-use assets
|
|
737
|
|
650
|
Deferred tax
assets
|
|
1,209
|
|
1,195
|
Prepaid
pension
|
|
650
|
|
618
|
Other non-current
assets
|
|
585
|
|
506
|
Total
assets
|
|
$
49,885
|
|
$
33,959
|
|
|
|
|
|
Liabilities,
redeemable noncontrolling interests, and equity
(deficit)
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
2,588
|
|
$
2,262
|
Short-term debt and
current portion of long-term debt
|
|
—
|
|
1,204
|
Fiduciary
liabilities
|
|
17,596
|
|
16,307
|
Other current
liabilities
|
|
1,914
|
|
1,878
|
Total
current liabilities
|
|
22,098
|
|
21,651
|
Long-term
debt
|
|
17,090
|
|
9,995
|
Non-current operating
lease liabilities
|
|
712
|
|
641
|
Deferred tax
liabilities
|
|
1,086
|
|
115
|
Pension, other
postretirement, and postemployment liabilities
|
|
1,168
|
|
1,225
|
Other non-current
liabilities
|
|
1,178
|
|
1,074
|
Total
liabilities
|
|
43,332
|
|
34,701
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
135
|
|
—
|
|
|
|
|
|
Equity
(deficit)
|
|
|
|
|
Ordinary shares -
$0.01 nominal value
|
|
2
|
|
2
|
Additional paid-in
capital
|
|
13,045
|
|
6,944
|
Accumulated
deficit
|
|
(2,682)
|
|
(3,399)
|
Accumulated other
comprehensive loss
|
|
(4,121)
|
|
(4,373)
|
Total Aon
shareholders' equity (deficit)
|
|
6,244
|
|
(826)
|
Nonredeemable
noncontrolling interests
|
|
174
|
|
84
|
Total equity
(deficit)
|
|
6,418
|
|
(742)
|
Total liabilities,
redeemable noncontrolling interests and equity
(deficit)
|
|
$
49,885
|
|
$
33,959
|
|
|
(1)
|
Includes cash and
short-term investments of $7,940 million and $6,901 million as of
September 30, 2024 and December 31, 2023, respectively.
|
Aon
plc
|
|
Condensed Consolidated
Statements of Cash Flows (Unaudited)
|
|
|
Nine Months Ended
September 30,
|
(millions)
|
|
2024
|
|
2023
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
|
$
1,986
|
|
$
2,121
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
|
Gain from
sales of businesses
|
|
(333)
|
|
—
|
Depreciation of fixed assets
|
|
136
|
|
119
|
Amortization and impairment of intangible assets
|
|
318
|
|
70
|
Share-based compensation expense
|
|
361
|
|
321
|
Deferred
income taxes
|
|
(146)
|
|
(232)
|
Other,
net
|
|
(126)
|
|
28
|
Change in assets and
liabilities:
|
|
|
|
|
Receivables, net
|
|
(384)
|
|
(290)
|
Accounts
payable and accrued liabilities
|
|
(36)
|
|
(357)
|
Accelerating Aon United Program liabilities
|
|
43
|
|
—
|
Current
income taxes
|
|
(119)
|
|
58
|
Pension,
other postretirement and postemployment liabilities
|
|
(25)
|
|
3
|
Other
assets and liabilities
|
|
160
|
|
333
|
Cash
provided by operating activities
|
|
1,835
|
|
2,174
|
Cash flows from
investing activities
|
|
|
|
|
Proceeds from
investments
|
|
186
|
|
59
|
Purchases of
investments
|
|
(136)
|
|
(61)
|
Net sales of
short-term investments - non fiduciary
|
|
182
|
|
274
|
Acquisition of
businesses, net of cash and funds held on behalf of
clients
|
|
(3,011)
|
|
(18)
|
Sale of businesses,
net of cash and funds held on behalf of clients
|
|
686
|
|
1
|
Capital
expenditures
|
|
(163)
|
|
(203)
|
Cash
provided by (used for) investing activities
|
|
(2,256)
|
|
52
|
Cash flows from
financing activities
|
|
|
|
|
Share
repurchase
|
|
(800)
|
|
(1,950)
|
Proceeds from issuance
of shares
|
|
61
|
|
63
|
Cash paid for employee
taxes on withholding shares
|
|
(190)
|
|
(232)
|
Commercial paper
issuances, net of repayments
|
|
(591)
|
|
(274)
|
Issuance of
debt
|
|
7,926
|
|
744
|
Repayment of
debt
|
|
(4,878)
|
|
—
|
Increase in fiduciary
liabilities, net of fiduciary receivables
|
|
609
|
|
870
|
Cash dividends to
shareholders
|
|
(416)
|
|
(366)
|
Redeemable and
non-redeemable noncontrolling interests, and other financing
activities
|
|
(156)
|
|
(56)
|
Cash
provided by (used for) financing activities
|
|
1,565
|
|
(1,201)
|
Effect of exchange
rates on cash and cash equivalents and funds held on behalf of
clients
|
|
177
|
|
(57)
|
Net increase in cash
and cash equivalents and funds held on behalf of clients
|
|
1,321
|
|
968
|
Cash, cash equivalents
and funds held on behalf of clients at beginning of
period
|
|
7,722
|
|
7,076
|
Cash, cash
equivalents and funds held on behalf of clients at end of
period
|
|
$
9,043
|
|
$
8,044
|
Reconciliation of
cash and cash equivalents and funds held on behalf of
clients:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,103
|
|
$
808
|
Cash and cash
equivalents and funds held on behalf of clients classified as held
for sale
|
|
—
|
|
6
|
Funds held on behalf
of clients
|
|
7,940
|
|
7,230
|
Total cash and cash
equivalents and funds held on behalf of clients
|
|
$
9,043
|
|
$
8,044
|
View original
content:https://www.prnewswire.com/news-releases/aon-reports-third-quarter-2024-results-302286570.html
SOURCE Aon plc