- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to the WTW Third Quarter 2022 Earnings Conference Call. Please refer to wtwco.com for the press release and supplemental information that was issued earlier today. Today's call is being recorded and will be available for the next three months on WTW's website.

Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. materially obligation discussed unless to law. differ Company and required may no undertakes update results from today those the by Actual these statements

more disclosures earnings other SEC press risk issued this and and the For in well Willis statements most release of filings. as recent as should XX-K other forward-looking the Watson investors the review other of section morning discussions detailed in Towers factors, these Form

may During the certain discussed. call, measures be financial non-GAAP

non-GAAP measures these Company's the Investor ahead, go well Chief as to For most the regarding of a of release website. sir. the as other information now WTW's turn Executive materials call measures, the Officer. the reconciliation will Relations section in refer over Please please I Hess, and to recent earnings other Carl

Carl Hess

morning, for Thank call. for quarter third you WTW's XXXX earnings everyone. Good joining

Chief Andrew today is Joining Krasner, me Officer. our Financial

Our on third business the intense the reflects our focus momentum commitments. in see our increasing we quarter performance on delivering and

adjusted drove of our adjusted business. diluted We per share continued $X.XX expense As global projected, our and by have colleagues of program, transformation accelerated, strength investments this our by further technology. and the and margin the expansion. of talent leverage operating XXX X% growth new great from generated of points to basis augmented earnings in efforts operating the we Thanks organic model our discipline and revenue client and made quarter, fueled reaching

third million total That year-to-date also share We brings against execute the capital $X.X completing continue to quarter. billion. to in strategy, our repurchases in allocation $XXX our

simplify our guidance XXXX to executing us our in deliver against our third our with and quarter ability are We and performance confidence progress strategy gives grow, transform our for to pleased robust creation laid our deliver and growth our WTW returns. Day, and for Investor year-ago value we at forward strategy how and out take shareholder over the we to A long-term. drive

on these provide want initiatives. details update with the quarter, you the an into getting I of to Before

it's work are journey have and there improvement yield investments While more progress our and encouraging long-term still seeing that will is we our do, the substantial expect. actions we to signs in early made and

Our immediate impact. the have efforts transformation made most

mentioned I identify in of incremental which as [progress]. has areas opportunities continuous earnings improvement value on call, As our we us can our new as on sources helped focus well last in accelerate

there supported by of to the from $XXX the million savings This end we've the quarter, third end to total transformation the is over to to continue And to transformation $XX in million. XXXX. $XX and increase identified During million. still are $XXX and Grow cumulative momentum total realized the to cost our $XXX for far by we are we savings also business. action increasing million the original our XXXX the Accordingly, program I deliver savings savings run target expect of Simplify brings annual inception do as million we XXXX said, Meanwhile, see we a savings. million searching opportunities. powering initiatives more our of $XX will work raising since from the rate annualized incremental The we for annualized program's on in exceeding million additional guidance cumulative $XXX additional approximately the

activities outcomes. key our of has streamlining operations sales retention simplify improve to been One shared and

Our accelerating globally. growth the agile and this robust model made more pipeline progress we've demonstrate deploying

are seen accelerating cross hires both outcomes. for global our and client core of drive bundling investments are business innovation initiatives, and and segment with work. increasingly core products lines solutions double the Wealth growing most differentiation In and in across our strategic we've our of specialized into lines strong grow that better In fast-growing advisory Broking, focused are digits to and markets sold on meaningfully and we our growth Corporate solutions quarter. and Health, Risk our For remain this in uptake Career, investment

improvements innovation of focus existing well as solutions new products. as launches Our to is on driving

WTW windstorms. the tool leading capabilities. comes development hurricane Peril with losses. the new Risk ability and This example, prepare solutions in their Intelligence area sophisticated personalized scoring, IQ and to perils sophisticated tracking IQ. provides client platform We've The is potential natural risk outputs, autonomous Diagnostic of a for well, delivering and it in and managers launch resiliency the analytic analytics level across includes as tool forefront For Quantified events WTW'S risk market, XX terrorism Global as risks. solutions. live upgrading flexible advisory tracking and earthquakes the and Tool Risk of recently IQ our clarifies the model providing is and of a breadth of this to for or provides scenarios key puts enhanced is WTW's when to foundational Risk pandemics, further organizations center Analytics run next to with with recent this model valuable including which at access exposure for comprehensive with refined catastrophe event evaluation analytics. highlights Risk critical strategic specialists business such control product

reflect Our our the align services changing new evolution to with clients. our needs of products of the

that The match third investments the of In addition, our base the pace talent rebuild quarter half of are ongoing the proceeding our hiring of expected. first to year. as in

line of from a date been benefit to with We expansion. attrition focus for macro retention Day with has voluntary Grow Investor the an remaining in not is inorganic see One us also to trends. that continue initiative effort

add in of part we now tilting the to portfolio for avenue committed capabilities strategy, While with particularly fill our market our the of as still favor share we and attractive deployment, our gaps buyers. opportunities primary via remain to identifying and are allocation broader capital acquisitions in expect capital scale repurchases strengthen to

that the confidence WTW more us a that we benefit understanding the and from is buyer. enables Over to opportunistic be work we we to on past path, us a also have have developed do. could we date capital, The year, strong of recognized deploying we've right to which where disciplined made progress gives but

our growth expectations. organic on and share we detailed we for and expansion XXXX will next believe will We our outlook margin to long-term quarter, more continue deliver

While we take Russian decision the to are discuss to in time of guidance. some on reflect topic, our our to I divestiture the XXXX wanted impact this

almost As to quarter, was you given to transfer we announced proceeds ownership operations our do approximately of identify Risk first Due were XXXX, to resuming in of potential the there were current which divestiture we conditions, which the the quarter our intention during consolidated know, not anticipate for exit. and the were offsets in entirely foreseeable subsidiaries and XXXX the of circumstances transfer. and was profitable. transfer our Russia, the future. the to unusual revenue WTW's work essentially segment, operations management comprised of from to longer highly within third local in and term there no X% The the the under completed made, impact Russian Broking

one-off this we of to replace result the reinvestment a through As event, unable lost earnings proceeds. are of

and XXX level set out our the now Russia targets, on X it's as any Page targets that we The want guidance. of basis the fluctuations currency exclude helping points reflect delivering of in release is note XXX operating of to Investor our the we transaction and ending disclosure long-term basis significant adjustments Please guidance and With adjusted this points to foreign that landscape. remain to of and very believe the uncertain revenue moment at Day. I to revised of rates. transaction. make earlier clients and points same provides risks would long-term geopolitical face WTW's just morning to other initial the revising our all and we earnings growth a talk published long-term appropriate about to we further heightened clear improvement, potential the complete, I related the businesses navigate this to of to it the effects want margin are situation mid-single-digit, stark as organic divestiture the ongoing our starting despite macroeconomic Russian our in reminder of we revise operations, divestiture a how committed expansion today. complicated take

and is to of Our and capital valuable financial human, tools times. more manage strengthen top become protect their solutions clients only in challenging and institutions, Inflation help physical these mind. their

impact solutions wages, these spend, and challenges via clients. tight costs, rewards we helping total programs manage of for the strategies management. cost is retirement our healthcare global pensions asset solving delegated persisting, pooling, and and them programs and strategic medical a are the markets inflation increasingly With captive labor finance manage and clients seeking optimize on Our And are advice fund and plans. retirement underwriting, to of opportunity efficiently

environment changing. quickly how hallmark is the Another of current it's

risks fast-moving geopolitical and them damage we tools In ESG ever-present our are heightened to markets, identify, risk climate addition clients working to such change, innovative a financial clients seeing as traditional for manage help to solutions reputational and risks, few. quantify more and volatile strong manage demand from name tensions, to with

rising bringing We by to meet are crafting to clients' our emergent market-leading this make our decisions of globally, better solutions clients organization risks. together the informed customized help analytical to creating tools challenge and best

demand delivering keep our strategy that robust commitments in achieve our Our of very for our and believe to risk face focus on pursuit growth. profitable environment our on execution complex client of guidance successful in will performance the the demonstrated and quarter on our a track of us the sustainable We XXXX.

our shareholder value. focused remain their for I In build performance colleagues quarter. to to to on and closing, goal momentum want continue thank We our create this achieving

vision. with appreciative We I'll commitment that, turn of are the their to dedication, call and continued to And truly Andrew. service our over

Andrew Krasner

to today. for Carl. morning, Thanks Thanks, everyone. us joining all you Good of

of As to also Carl host rising challenges. macroeconomic Unfortunately, grapple mentioned, with with geopolitical our rates. have insurance commercial are a and grappling clients they continued

evaluate pressure by their WTW's X%. came In liability. an light insurance appear continue with on from aggregated these clients exception of their showed points, to increases focus risk make significant better continue price of increases moderating, portfolios. The price increase increase survey decisions works just nearly D&O manage how price we can compensation for and indicate lines largest to of so While to QX below pricing commercial helping cyber informed the best additional professional they followed lines be Data about options liability. all to

Turning to financial our results.

period $X.XX, or The for points up with in same or income was enhance $XXX of On growth The organic across was share over our basis, XX.X% $XXX of the operating result our revenue our our an Adjusted million combined discipline from and quarter of growth prior per basis diluted up year accelerating third as growth XXX year. in adjusted businesses. XX% all of was expectations. line expense earnings quarter, the net XX.X% was million representing X%, reflecting to profitability. revenue last revenue the

U.S. organic our in The otherwise. segment our Note Career in well compared focus is as in the by an growth regarding declines capital and of be business specifically consists by both investment consulting which was basis Let's commentary X% healthcare which as America changes. results. attributable Wealth, quarter. new all investment products and Health, of on America in the partially of basis, in and our of America. generated periods, increased work business, HWC higher increased The Benefits and broking turn a clients and delegated primarily North unless primarily quarter retirement Health of prior comparability Wealth of on the that appointments regulatory growth grew nominal in by segment X% results Health revenue markets. with of advisory by levels to spurred will decrease of and businesses to was project stated North increases and mitigating to detailed year. client North growth work our and outside constant also a driven to provide was which and for solutions increases Revenue segments organic are by Europe as consulting growth The third X%, delivered demand offset grew of likely our currency pressured in work last comprised cost result XXXX in premiums. legislative or

assessments year, client we market in Wealth the client While for acquisition driven & fourth changes. and for Rewards legislative for of Employee to Delivery revenue driven hiring generated Benefits by response the offerings, the was surveys, benchmarking increase revenue by compensation X% client decline to remainder driven Solutions X% demand revenue the business. the including segment, This across Delivery continuing. products, strong compensation growth and our Outsourcing, in building growth The we volatility Career, businesses the Outsourcing increased by our work and engagement talent also which increasing growth base. expect see the which quarter, growth specialist was see in client largely new rest over the during the Experience largely of new our employee and encompasses and Technology and and which in strong quarter businesses momentum Medicare Advantage to reflected persist individual into business the in our and Administration Administrative headwind appointments and includes from due and also demand we third XXXX. the Work marketplace to growth direct-to-consumer quarter. and contributed revenue existing Benefits of

supports an the We that The revenue of business and investments support environment prior growth this to resourcing to and XX.X% continue compared to technology to beyond. for margin the see remainder XXXX operating for in opportunities HWC's primarily growth. period. was XX.X% quarter in margin declined this future

benefits. related is management persists, needs stress this labor and HWC companies rates, while caused business companies market as pensions Against address realities. as by and and looms concerns health managing well risk better uncertainty dealing helping workplace economic backdrop, volatility shortages As inflation are high to challenging with cost employees'

X% and did HWC growth demand prior Broking near the and of basis from we core to to it CRB's CRB's expect due for with business currency settlement levels year notably not and third constant outlook compared in growth resources, was global market-leading The Thus, and year-over-year an organic in the construction strong revenue our up rate. long-term CRB, continue revenue growth. the Europe International positive with new Both business most improved and primarily growth Book affect organic as client increased is businesses of was in organic on drivers led consistent seen senior and regions, quarter. remains business generated retention solutions Broking in or X%. and its and Our Risk and year to growth its support Risk natural of colleague double-digit departures ongoing aerospace. period. across prior with lines Corporate XXXX to business activity all a new across on business. X% basis the

strong was from the trajectory up year-to-date Technology ICT America XX.X% X% was by year were North and continues In towards quarter third basis, will done delivered we in R&B's talent the results. steady traction conviction top R&B client new point and driven and is more growth geographies in level. a these compared to by we driven this comparable contributors construction Technology meaningful strong and contributions these have solutions. our finish revenue-producing a The industry M&A Solid margin pipeline country the key hires in Solutions and strengthened expect new tough begun third service welcomed going third our all of our increased growth both revenue their the yield our prior for quarter. client sales. have gaining Consulting quarter, XX% fourth year, On performance will both work significant to forward. regional contributions primarily and Throughout expertise, driven the base Insurance on and across has by in investments business, XX.X% Leveraging as the to to base prior the in leaders senior a our in has quarter. improvement strong to growth, talent operating become headwinds and rebuild contribute strong was that talent. of at year Margin

XX.X% increased from were management by talent alongside Now XXX during adjusted segment generated investment portfolio to level with the increasing the at offset strategic results. corporate points of which period. at more savings, level, year, than but primarily basis program level, In to were in transformation realized benefits was margin prior realized profitable in the which the our growth enterprise the operating XX.X% reflecting let's we QX, turn the

to as XXXX expect our work goal. we to on deliver continue each year margin margin We improvement

million savings mentioned, workforce initiatives identifying our original our to accelerating and rate far will of collaboration are centralization opportunities to and By a we to goal portfolio run be for year. our in contributor success ongoing this surpassed incremental the Carl by estate efforts, have $XX margin optimization, expansion, key transformation As shared the addition we real drive our encouraged through annualized efforts. services early

deliver and long-term XXXX expect the $XXX $XXX by of of a now result, million by rate we savings the to and near and targets cumulative end in end run XXXX. our both raised As approximately million

Foreign the largely nine the of year, on through of $X.XX a currency the U.S. of first dollar. months was EPS due headwind the strength adjusted to

Assuming cash a nine free first cash billion to generation $X.XX today's to tax range decrease year, this rates in of XXXX a termination related Willis Willis was of on of of of range generated from continue for receipt the flow the prior of year. our now Re from to the to compared cash on absence and the $XXX This year $X.XX in fee business comparable primarily remainder foreign per gain share billion we've our to termination the the guidance $X.XX. the the $X fee. sale million expected of updated made additional earnings both period, for divested We on headwind free the months approximately Re, flow $X.X due adjusted $X.XX the the and to of currency payments

Our for versus U.S. GAAP quarter X.X% tax year. the rate in was prior XX.X% third the

tax was the rate lower third Our versus U.S. lower XX.X% rate benefit to for expense is in prior fee year. current tax primarily year quarter compensation. due adjusted tax adjusted the The on and XX.X% share-based excess

our We be rates. XXXX to relatively expect historical the rate consistent full-year adjusted with tax

pursue opportunities. to capital to shareholders disciplined M&A highest capital allocation internal our to deploy return capital strategy strategic return continue and a with We that investments balances the on

$XX third in we and shares million. million $XXX X.X paid XXXX, of for quarter dividends During repurchased the million

expected. we We are performance pleased with business progress by ramping as our

and feel is up investments for transformation are our made innovation operational and to clients expansion. margin let's combination organic the Q&A. opportunities environment drive that, with help unique We we of about investments demand see the in our talent, confident creating that and services will we it of have solutions. With to year, positive growth remainder the For continue revenue for these open and macroeconomic

Operator

you. of Thank our from Gregory from [Operator coming line is question And Peters the Raymond James. first Instructions]

now open. line Your is

Charles Peters

everyone. morning, Good Yes.

question will XXXX be fiscal first the The both in and on organic your targets. revenue, change the

Just how in there to businesses issues, be And of it your economic overseas a challenges comments, conditions. seem something going some of is the curious Europe, of cetera. And often growth these or not then in talked with higher. of et in I'm if revised organic to about very target, especially in And target, particularly annual you little rate macroeconomic you're perform, light thinking that's compound curious, some X% your history I the implies XXXX about fiscal think a that's bit the Willis Watson. Towers happened Carl,

trying gap the and on suggesting for just the you're is So potential going in what's between to what the company. bridge macro environment

Carl Hess

and to good Greg Sure, you. Yes. morning

hiring So see and I look strategic include growth conditions, our momentum the this at laid out. drivers, industry way initiatives, gives building it us confidence in we we've across that key which achieving do targets

management so reinforced confidence the and strategic instance, hires focusing will And in our office CRB positive and particularly Broking. and to us launches, initiatives these roles performance far And we're material. scaling we're expectation give on our activity in that our and the trends progress growth we're need half, accelerate has is a going to like growth seeing some our for exceed seen ESG risk. and pace Our of also of of expect lines steady traction, in high global improving product the we've and that what Risk we the of meaningfully and benefits second on of CRB making in new outlook. hiring lines and high do business growth growth Corporate front markets climate terms new And continue gaining client are these analytics our in average sales

HWC, think macro expect and macro sound the us, environment positioning. has mostly of solutions businesses. certainly management conditions of industry highly we'll offerings and high and The financial and further for our and risk been as I growth and our the we dynamics our favorable navigating uncertainty as to to of general geopolitical markets, some need look that. a their resilience typically gap of better advice clients labor and volatility, and headwinds seeing company-specific manage our using growth these strong the supportive behind looking across for markets, markets, in a to complex reasonably continue in momentum. macro narrow remains Macro our seeing the right, reactions our inflated tailwind risk in historically In we're times during remain and [HWC] proving technology reinforces us as are demand our generally intensifies only clients to seek help enhances think in had such many business environment. The buildup from is In we're bit environment. that R&B, confidence gain the a we our be

Charles Peters

as that. just point used it. revenue a clarification, to fiscal process a think of XXXX of information, lot into of thought I you lot through about appreciate So economic When your sensitivity I targets? How ran to does you your bake a year had have that I talent rewards,

Carl Hess

point workforce out stimulating I'd economy. manage changes is for light full-time the nature their looking gig and of services of working things, the client work demand the as are of in of is to right? effects new sort two base our the Greg, to COVID in that of ways One

the through pivoted we a normally years and reliant this So time. of been annuity and And business we just some on consulting second have actually the from the the more economic sensitivity be business hasn't cycle, revenue rather would over the pure have to there software. seen project-oriented is much

more resilient past. in business simply the it's than So a

Charles Peters

takes targets. those margin about lower, revised revisions minute wondering you numbers and other a gives to your was the Thanks could us clarification. the estimates. XXXX lower. to flow on of are on The is talk is second And free I cash of for parts the spend that My question and just fiscal those the the parts if on the –

Andrew Krasner

Andrew. It's Yes, for the question. sure. Greg. Hi, Thanks

the three a well purely change the it it. savings we The guide business the pacing flow cash has incremental components the online free to period. as margin, transformation will function when really the think of as of the of is during come Russian three-year impact On and

The from already first were revenue also both for, we but future right, the that accounted of the uncollectible. which received cash the business proceeds had divestiture is cash and also had receivables, we no Russian where and loss generation the

second The component talking the the achieve transformation $XX incremental was the to at X.Xx savings same that been cost program of about. rate we've million

that's And differences third an Investor XXXX. million. So Day incur incremental tax fee component is would guidance termination timing cash the entirely made payments the our from and $XXX gain this year which both on Re in contemplated Willis

of mentioned the originally As tax had year part remarks considerations. complexity we've flow anticipated just to taking in was than in and timing of last our cash decrease some our we rather prepared place year this free payments when due due quarter, to this of some these

Charles Peters

Thanks for it. Got the detail.

Andrew Krasner

Yes. Perfect. Thank you.

Operator

Elyse [Operator Thank Wells with Fargo. the And you. of question Instructions] coming from line our Greenspan is next

open. is line Your

Elyse Greenspan

your prior guide loaded, higher saves just that else is like maybe Is that on like other to I And Good thanks. by the just relative than new $XXX to there's it that high-margin the than leaving XXXX seems the back-end on are that if operating going a earnings guidance. the right? million. you're Russia other midpoint, back business, to just there at the morning. want Russia? question it I right, seems look the At there? some it's lowering go Hi, Russia. $XXX million, losing but in and XXXX know So Or something but I are guidance, margin it's

Andrew Krasner

Yes.

I it's think – Andrew. Elyse,

of there, purely saves divestiture. some margin the think just But – saves the change maybe I impact when been of in by of has the are the really the timing disconnect Russia coming driven incremental the the online.

Elyse Greenspan

of terms the in downstream unallocated you but that drove between there expenses this there that there weaker, right, the sustainable? then this something current quarter, just segment quarter? segment difference was lower is versus cost periods? something going And both corporate unallocated to that quarter with were them Or corporate this on the expenses. margins And down prior Okay. the Is was

Andrew Krasner

Yes.

by and in also out transformation team you termination, Our reinvestment margin the that investments not savings corporate seen allocated benefits that which coming segments. as impact expansion are of effective was new than program but portfolio necessarily well, would divestiture. of within the talent increased our driven Willis management decided the also by strategic offset in level. some quarter from businesses savings not We the the more actions is to as management just the segment of some had well these were the have at to of stranded level same the exit deal we which of Re as the costs the the of There of segments the some

Elyse Greenspan

most Are at gone stranded this cost Re Willis the of point?

Andrew Krasner

of effectively with I'd we are midst services managed say transition they're still the being that in a given agreement Gallagher.

Elyse Greenspan

Okay. Thank you.

Operator

line of Thank And you. Piper with [Operator the Paul Newsome from Sandler. Instructions] our next coming question is

open. line Your is

Paul Newsome

quarter. the on Good morning, congrats

Sorry horse, guidance. about following your I to question but of Elyse's a expenses these impacting answer kind confused XXXX got to dead beat here the

And So affecting and a cost that are apologize cuts, cuts but for those cost later the is idea we're ahead I guidance? confusion. perhaps my XXXX, the taking time, perhaps, at beyond it that's of sometime happening

Andrew Krasner

incremental that Paul. on top I problem, was million of the to initial No Yes. million. $XXX the $XX referring announced we

So of it was really the pacing about $XX the incremental million.

Paul Newsome

And not we would much that's sort happening it's after of as XXXX helping the so expect? XXXX, as

Carl Hess

It weighted program the or the about period back way it. the current near-term. be of than during towards more will I think think rather that's to end the right

Andrew Krasner

process. in savings expect that think, identified you'd by Paul, I the later is we've Which something

Paul Newsome

No, that makes sense.

in like the Russian event, the looked impact it also loss from a bit struggling looked the the which still like a because was sort with we're an more – is think than of I cutting. it of less little the math of there high, cost but bit was quite there

I numbers So again maybe or like the my I'm apologize confusion, the apologize that confusion. there it still for are like I guess just adding doesn't in my else something same there's for seem and – quite but missing we just

Carl Hess

can I on the the the on triangulate and about business Russian just in on Yes. need you the to be appropriate you thinking margin reguide margin. think No, the fashion

Paul Newsome

that. Okay. very help. Thank the I'll much. Appreciate do you

Carl Hess

Paul. Thanks, Great.

Andrew Krasner

Thanks, Paul.

Operator

David Thank next coming you. from of And our is Instructions] the question [Operator Evercore ISI. line with Motemaden

Your line is open.

David Motemaden

more, basis there, reduction, margin, morning. back to point around you to margin being wanted the just maybe is thinking so a target basis some the calculating good we bit I numbers sort one because could Thanks, that Russia, the specific secondly, so also, on XX that. just to Hi. to if numbers point help point something least, there's could some is baked on just guide think about I'm I'm in I'm clarify that's into of how that, XX impact adverse forward it quarter? going go that just a at think just if reduction. put that that Maybe but is this to going could the be as talk benefit a then that's fiduciary that to And a the And of as much I that's the well, assuming clarify had tailwind. margin. could increase Maybe you you – is well. going I going that income,

Andrew Krasner

sure. Yes,

than that enterprise-wide it's in said, recast, important business, we've as margin the on double the the mind keep that to On margin margin. is more

numbers. we the specific to So investment on you to haven't range. margin can the get income, And that then recasted use disclosed

that. I information framing Q that in in be helpful you'll see think some might the

rate takes definitely time the and portfolios financials. are rise, got rising turn we've some the full. see But to in the over as rates work benefit We to modest of starting that through course, through to from system investment come environment,

Carl Hess

think got I mean, just our you've for I mean second. Russia to Russian recognize, one to you as business. about back Yes.

country. strong We XX with right? business and to pretty nature service have very high local was global it able operating the a required years, there infrastructure over platform. to had starts one-off manner. leverage largely project-based And but position margin, presence the able And we're We a of existing business. in on work, the a in this minimal profit to was been operating global for The in do cost-effective country a the very our thus,

David Motemaden

Got it.

much than, margin was Okay. the I guess, double than guess much then enterprise-wide higher. it higher I

is the switching balance then helpful. maybe Okay. gears high. just I And mean, M&A. noticed That's I've just – cash on very

just quite position light a definitely little by yet target leverage versus, I bit. the given your bit the a under And the I profile. think, think, I are, buyback, guys leverage and think, You cash is

I the wondering just given So I'm larger buyback ramp why cash contemplating really balance Or guess, seen any are sheet? guys the scale you haven't if we on the up M&A? –

Carl Hess

on I'll Andrew comment and So buybacks. about M&A, maybe bit a can start

strategic market at out includes finally as Day, and intentional M&A laid capital we in is well to As and for to that of portfolio bit, that and the investments disciplined last tilting shareholders, create should capabilities our Simplify capital to But years internal highest strengthen with a initiatives, a looking strategy geographies. possibilities. areas to to continuing fundamental we're for our we're options important opportunistic functional favor Investor strengthen our And buyers allocation our across that divestitures still look optimize – is for management return opportunities. value look as M&A employ key opportunities to return now that in and balances the value

Andrew Krasner

pretty but where comes about repurchases find cost and when been for I the leverage we have uses are of repurchase flow very alternative unless that. to cash as won't that that flow as free get the details leverage. well the in speaking, thoughtful consistent incremental are, generally free of with that, decisions going balance, come front, the our the we balance our share messaging on pace cash as well looking financial into And with as that consider do they cash just the that. at And repurchase at cash we we're rates

David Motemaden

it. Got

so – at? run of of $X.X ended that kind is I the to necessary it think of cash the is where level cash billion balance is you guys So yes, sort the quarter guess kind target

Andrew Krasner

do – leaner cash I than for I hand run flow. that, think on can managing to keep cash future have but funding we we well and share don't as the repurchases No. obligations as

David Motemaden

Thank you.

Andrew Krasner

Okay. Thanks.

Operator

of Suisse. Thank And coming [Operator from Andrew the Credit Instructions] next Kligerman our is question with you. line

Your line is open.

Andrew Kligerman

improve then good staffing clients revenue growth. Hey, pricing survey trying Andrew Willis a organic the in maybe about that, morning. incrementally? are to thank did quarter. where think X% of earlier And aggregate that the talked you X% just average. about And you by I around talked in and seeing on How at I'm up as get third net

exposure by staffing, and that that flattish, of net client been I that So stable the kind Q-over-Q? been b the did base very of it your part And kind in is of growth? and interpret has pricing organic largely would change a) meaning then very uptick revenue has how

Carl Hess

with start me let on a quarterly So headcount staffing. And don't we do basis.

We will discuss headcount detail in our XX-K.

the been we macro in benefit we remained fortified hiring first to has the it's this. QX and consistent So efforts. of our measure Voluntary in with and by retention use the attrition that fact the environment benchmarks matched hiring see the and that strong, external half the has activity

year-to-date our hiring So voluntary terminations. exceeded has

increase. Our continues to headcount

contributions to meaningful sort And more of the in from the base the revenue forward. we question, of equipment our to become your going anticipate aspect that getting talent

Andrew Krasner

geographies on we've right, of that the directions, pulling the out opposite pushing challenged, last year been certain particularly in transaction that direction, around and growth, things And in nature. factors just rate pretty things that of there's new clear have like retention, of the business right? I of coming and you dynamics course, think certain different were business. And the right, and the opposite breakup and in of So lines

there to contribute that organic factors the offsetting profile. So growth are

Andrew Kligerman

change. Carl, to seem you not Got EBIT some have revenue belabor that you issue quarter about pressures. And optimistic puts where much, to last too really and had the takes somewhat it. wouldn't you target worry

that confident those meet targets you XXXX. XXXX seem You for could

some like kind we're the change what due that you've as another now to of going another would And made are change, to is mind right now? what of confidence that the risks might Russia, to be us is for I'd not give there see prominent your a change know in what weaker? if So

Carl Hess

Yes.

variety That, cash right? zero. term. I our going for looked of I don't think a with main Different targets, that happen it's that up to And unique right? initial But we're transparency we you of Yes, no outside reinvest, factored and have came we we scenarios I between in in is where the things, proceeds when XXXX, the one-off frankly, a what bit scope I recasting think a we different and were would Russia for of right? we all at we of So could size business of divesting be now to a economic sorts outlooks think, justified bit is that a divestment giving targets. to enough thought the felt a and extraordinary. on that of

Andrew Kligerman

in $XX then So XX% margin target for that that to of that in million you And you expense feel get of bottom line, with confident back XXXX. operating $XX million XX%? extra saves, that, would very

Andrew Krasner

progress $XXX there we Difficulties] making and reasons between actually we the said that's [$XXX savings, get daylight the raised of the the million more [Technical on with pleased very end sort we to We're and That's why delta we're expense to why we of one and see the developing. maintained million]. starting

Andrew Kligerman

compelling? maybe if you beginning, some sneak last a your what Could one of I mentioned of pockets at what attractive for be to opportunities us businesses prompted you you – just the in. that And kind And could maybe M&A. Okay. Carl, did of you might areas have give practice, sense see

Carl Hess

to in. opportunities think from of valuations right? it could attractive, was just was the so And coming while that where span fact appear us, there they So levels accretive speaking across the operate are didn't businesses that the value we be right, be I we down to

business for in an where be, we a Or that it's do to fitting what well see whether specialty a it's the to attractive adjacency very of marketplace. very we geographic makes sense what economy look area we to in As will us, nicely that going profile. right, fit our

Andrew Kligerman

you. Thank Okay.

Operator

you. line Instructions] the is Mark Hughes with coming our next And of Truist. question Thank from [Operator

Your is open. line now

Mark Hughes

Yes.

your then view competitors of view of enrollment season, Okay. of assumptions to kind the the we looks around adjust customer get I'm Benefits about sort and Thank that longevity as In for environment current in had I'm competitive advertising, just Outsourcing, your TRANZACT. about And and the there. sort you. also Good their Delivery into some push competition assumptions your of curious have morning. of terms and leads the here talking curious, how your thing? of

Carl Hess

Sure.

and is by us, it a part the So second the a positioning expands let Medicare addressable and to the right? get growth Medicare assumptions. this over eligible, That's market who traditional the the TRANZACT for Medicare our by newly opportunity, to people and to place quite in me We're to Advantage a Medicare happy the XX,XXX Again, where the day. with with become percentage XX% people of on how There people I'll begin day. many to this that, market. plan, potential to rise who every the end decide expect buy of go clearly And from continues people decade. rather of is – XX%

taken most We slow our our independent are to our – us and satisfied right, persistency And we And be. be. examined, right? some rates, have the the right, sure we in respect there's that persistency electing. up to use something on what portfolio their customer have our view and advantage. volatility I how But the to continue within we make continue us retention we churn our effect fortified make out, of impact think, amongst lead As think looks right, careers, is coverage retrenchment that on some than plus point With we're the have our of put actuaries to growing while the the market the some cost some team's process position what and set basis. you with competitors. persistency does care sure in our and we competitors, can that, post-placement qualification have a people to certainly, And a line-by-line of will careers that books steps, to validating will evaluate management of rates. that that to a down with focus to business team others disciplined they're this can different market been that and in us, in our impact competitors on Well, think us, enables profitability.

Mark Hughes

Thank Appreciate it. you.

Operator

the coming Thank Baird. from Mark Marcon you. line question our [Operator of Instructions] And with is next

Your line is open.

Mark Marcon

Hey. Baird. Good morning. from It's Marcon Mark

presence QX. on minimal. up the Russia, of because sequentially. you that element a X.X% fairly primary on that a relative is FX? the Benefits basis a actually year-over-year, Is small And of to X.X% Benefits headcount Salaries on are are ground by mentioned sequential Salaries the mentioned reason down why and and dollar down was basis You

just element to that trying to? to what – understand I'm the you to do So and attribute decline

Andrew Krasner

Yes.

a there seeing our where that is you're item component employee in are FX meaningful the think I bases that difference line located. given of

Carl Hess

– program of our work. part workforce we involves we relocation that as add would transformation simplify where I do

part office, – businesses, mid lower hiring a so and occurred back significant office in our international our wage structures. enjoy front has to a but of And tend not we where

Andrew Krasner

– coming and where have sure as of are also We savings making and materialize that transformation through, are there program again, well. our impact you're located where the the of some and folks seeing that

Mark Marcon

I extent it to when roles expenses in would headcount and long-term a those if what continue, To that, the the it various think to perspective. things imagine you're we continues just could go roles optimize also order from And of trends to different Yes. optimizing about as up? relates

Carl Hess

that always looking ratio. to us. for a focus We're progress in make It's constant Yes.

important an that As workforce out I a transformation the falls optimizing said, comp hence, program. important And of is of the bend the really that and component is metric.

Andrew Krasner

that location, be just And necessarily a that's automation. not can right,

Mark Marcon

just TRANZACT should last vagaries because right based to currently year its that it able Great. to out back you're it the market then seeing are of is certain everything of I that historic regards in to that make general And level back TRANZACT, mean Or go market sense now? with the the on prior – kind like performance? there be with elements in would to question that of to your just regards going more

Carl Hess

of couple things Yes. A there.

that one, That's moderate that think, growth becomes rates the the fact bigger as I remember of bigger. likely and math. it's important to business simple will just

over business to The in generated the other quarter. XX% is in the that marketplace revenues were keep mind of thing individual fourth

So seeing feel very But we're basis, season. very by a to quarter. full-year performed the again, quarter. market continue on focus and about our strong particular still this think to it's also positioning. for any in that positive And current year on the about early enrollment we're it's early We signs not business encouraged best

Operator

you. Thank Instructions] line our And [Operator Sachs. is the with Robert Goldman Cox from coming of next question

open. is line Your

Robert Cox

from outlook XXXX. XXXX, book difficult magnitude know of organic book might XQ growth an with compare Hey. the XQ million because Maybe settlements the and in beyond on you've a but $XX expect I update for the maintained you in faced sales you

Andrew Krasner

sales XXXX anticipated repeat rest view. to Yes. those dynamic expect year from was do see to book recedes relates normalize forecast to We that the further as in This expect for events. We XXXX throughout still out And was not mid long-term even of as our some do of to single-digit the that in this anticipate We $XX million there a year. and level million in sales, of you reminder, point $XX approximately book growth. QX segments. as of was XXXX, the that

Robert Cox

can with tailwinds give seeing market you're more in to Thanks. and UK And color increase volatility? respect in some us Okay. activity the on financial the related to particularly you in the the project Wealth business,

Carl Hess

Yes.

be. So to when markets our going accounting their are often or requirements what reforecasting requirements funding fluctuate our a to needs of expense their business, lot, right, retirement base cash business, Wealth specifically client in the

our has and a that is headwind investments of where it days. significant when seem project business amount bit we have that business. So by bit us they're market year, with lack been these of but a major work a volatility volatility to based levels offset And the a that business have asset-based the for generates course, lower certain within fact of the for benefit we amount capital in that Wealth business, don't any the plans. on just fees over and markets of defined a that stops, the probably will I'd of stop, work

Operator

is last from our line And you. the KBW. coming Meyer of Thank Shields question with

Your open. is line

Meyer Shields

morning. Am connected? Good I

Carl Hess

Meyer. Hi, Yes.

Meyer Shields

morning. Good Thanks. Hi.

can. I if questions, quick two So

and First, guess, there margin very like outsized where of e-mail you expansion getting lot a scope world does where you are morning of in margins Russia, that in the understanding this other one of apply? are whether the questions regions are the is similarly of just terms the program have I it

Carl Hess

and places of that more profitable business with group are the business, average profitable any average. as group So going and less than have we're diversified than to lines

or we but replicate to specialist are entry. regulatory answer the we so generally to some, areas And barriers have capability either the that's right, hard have is where are that there

have going average are business. profits that is be an competition in to competition, there than there where opportunities to maybe So might open areas plus higher the be

are So places. the there answer is

diversified we just right? do a discuss is sourced our are where However, business, from. And broadly we revenue

we concentration Russia. of revenue And of geographies are there so where significant have size many the outside

can top You five our listings on see XX-K.

Meyer Shields

then that to TRANZACT growth are going And I helpful. opportunity briefly. TRANZACT. flow? back impact a cash for going That's pulling on providing, at back To better because have to Okay. near-term competitors a negative very just and of other Is guess,

Andrew Krasner

can we that as you imagine. a closely, That's dynamic manage very

profitable make the balance against do the business. consumption in we growth sure of line growth we're cash do So targeting that is and that that

be So expect do to significant of dynamic we we But manage closely. that it don't a course, drag.

Meyer Shields

Okay. Fantastic. you. Thank

Andrew Krasner

you. Thank Good.

Operator

does you. you no conference participation. conclude showing this today. I am for for gentlemen, Thank your that time. Thank questions our further Ladies at and

You Everyone, disconnect. great may have now a day.

Willis Towers Watson Public Limited (WTW) 27 Oct 222022 Q3 Earnings call transcript