WTW - Earnings call transcript Q2 2024 | Willis Towers Watson Public Limited Company

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Operator

Good morning. Welcome to the WTW Second Quarter 2024 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. Please refer to the wtwco.com for the press release and supplemental information that were issued earlier today. available next be the months will website. WTW's call for X the on Today's

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

and these earnings other factors, a this SEC. more recent of For and other statements disclosures the discussion review Form should of morning other in with forward-looking most filings press risk the the as detailed Investors issued company's the in XX-K made as company section well release has

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

non-GAAP regarding the ahead. turn For earnings the Hess, Executive other company's Carl will section go release as Officer. as measures WTW's please Chief website. I measures, reconciliations refer materials well of Relations and these to morning to call other over the the Please in issued this press of Investor the information now

Carl A. Hess

Good Call. joining WTW us morning, Quarter XXXX Thank everyone. you Second for Earnings for

is Chief We a XXX growth continued the organic free share our of healthy Financial and line bottom second increase Krasner, me of XX% program. robust the delivered margin operating our flow. These of million cash prior transformation year by Andrew year-over-year basis and quarter, our diluting of success $XXX over Officer. headlined results were leverage ongoing product businesses growing adjusted across of earnings per Joining strong points operating today adjusted our expansion, $X.XX, a

initiatives our market conditions. continuing momentum from We are very favorite with pleased the alongside success of sustained strategic our

margin technology business, performance value quarter adjusted strong the revenue half EPS, of target growth our and XX.X% first low $XX and in the our of in and we have the markets XX.X% raised to XXXX and organic talent execution, of our confidence X% the represents our respectively. ranges continued to and have we on operating of end our and investments adjusted $XX prioritized. Based impact our outlook Our to EPS the in proposition

thanks accordingly, additional our momentum rate from our raising been of cumulative success and of transformation identify $XXX savings able end we've $XXX to addition, to are savings million In run transformation to the XXXX. million by the and target program,

to We growth achieve billion strategic revenue our colleagues' $X.X pleased and continue with plus. I'm to mid-single-digit dedication in expect of focus our executing organic priorities.

let efficiency. results hard our delivering in that reflect mind, and and some us. specifics the and on recent our With their in work me for productivity improved clients ahead outlook share and Our driving of opportunities progress

I our operating productivity mentioned, leverage significantly line bolstering greater this our rising drove bottom As quarter, performance.

contributed this the efforts of to cumulative to million bringing substantially in savings annualized $XX also $XXX Our annualized quarter, margin We transformation achieved million savings the incremental expansion. since total inception. program's

businesses clients' made across improve an clients consciously complexities new demand BD&O as of and delivering harness each we basis. In good revenue and portfolio our our effectiveness our in serve to HWC, of drive and needs demand inflation, added We profitability to organic achieve cost near segment, enabled quarter, ongoing has processes fund our place have us strong different solutions. of over the we we to in we flow. Growth optimize elevated the organic our the X-year by growth we're Health, structure, X% for long and environment. now transformation Wealth to end continue new X% program, the and our That that the and Health the to of expansion and margin increase to further legislative combination levels positioned earnings Career macro As pension employment, us manage the We operational status, organization, in further capabilities optimize term. by introduce other growth. core continue growth on captured smart care in growth. led the confident program to businesses, connections generated better driven across strength the see business, health breakthrough was growth which regulatory Across areas and accelerated new cash requirements many

Our deep analytics rewards pension managing experience, our dynamic rich expertise position solutions combined and plans. data to us the environment. help clients from derisking with well to and total software navigate costs

appointments of the with Our better rate environment, Britain. Great costs and buyouts pension improve clients U.S. We've derisking teams more through the employees' and their want in a to we've benefits global upticks new successfully generated areas. several manage both and organizations favorable With number helped have also billable added processes new in initiate interest that experience. in a management sums e-buy-ins

As we've transparency projects. equity implications engaged of market, the guide companies us EU, our sold requirements award licenses in and LifeSight master strong new the assets exceeded having employee to trust helped on experience XX And more grow, broad-based and the In to to continues employment Great clients management. compensation GBP more billion have our in pay response surveys we benchmarking Britain under portable. just for to more embark

also plans our and smart quarter, compliant This client these competitive dividends. to sponsored worked countries focus client management in which past airline, of business. keeping to Our on needed multiple benefits large plans we already connections across Health global and continued well HWC pension with a help of number a run. a was has pay large This

able provide their introduced GBM solution our team, to complete was to tailored claim the a needs. Our team to retirement which retirement

pricing proposition together developed relationship us win with connections a Our existing helped flexible strong a mindset, gave and our smart contract more multiyear client options. with service our

could approach Another health introduced relationship value helped we their the utilize complexity improve in team how who brokerage example and and secured how care to learning help to collaborated deliver we insights plans. our the hearing generated This digital of our where a plan their in an CRB simplify to environment. a costs health outsourcer. In administration retirement teams presented collaborate personalized break segments members they through our plant's out as the third ] the benefits, that care experts. to could [ a health at the our improve when overall automotive reduce communication appointed us them benefits benefit and and to their them and help their a of interest how a team effectiveness example, experience also we consulting employees retailer And after benefits benefits reached employee large involves health

recognized breakthroughs client include multiple beyond this secured expertise Our manage countries. been to client CRB a people across a risks employee integration needs and services and team employee how helping and benefits. We've solutions corporate strategic risk business planning leading quarter. previously share property brokerage market X the HWC the covering benefits both acquired has developed casualty win by newly We highlighted also who've offering to complete risks requiring M&A breakthrough in guidance, risks that including assess are this more delighted and that

retention better and feature retirement their our introduce highly dedicated members private First, one launched of our financial way help investments plan structure employees U.S. evidenced in to and specialization, fund wealth generate be our find team focus of This for employees businesses, fund. rates a will innovative, continued revenue service is potentially the and team the opportunities. of substantial by helped our and new situation. our investments and our quarter, the rest top semi-liquid XX% value equity flexibility and to through open The is Also, nature manage to on pools the technology a first requirements and the defined clients fueled which by segment's growth growth ever of regulations administrative contribution the pension organic outpace segment. to specialty of in complex talent knowing Risk Broking, sustain how continues client quality mid-XXs, plans. In client challenging to growth

adapt is and complex our clients' ability risks. our of this service product of offerings the changing and All differentiated to to

strategy Our outcome. address that R&B solutions our is about specialization risks optimizing and industry-specific tailored delivering client

who One provide to an the of in insurance was this coverage multiple Thanks constraints solution. the complex a month. an loss our geographies, for we wins just able natural X for company severe across and and resources client deep record supplier risk the complete were included securing profile had challenging placement expertise under insurance with to in sector time quarter our energy

We month of The to platform America. volume open the products from growth continue has to across opportunities expanded with good accelerate Submission market MGU add to evaluate to the each broad to team brand continues our continues brokers. revenue different the progress and Verita, with beyond. half make increase new second as U.S. further in the the North and year in

growth After contributing revenue the organic in R&B been significant investments effort segment. in a our to years, to the base have segment. base and growth over become strong mentioned, replenish increasingly driver a we've hires this As new productive these past for have talent few talent also are our our focused

create profitable of type us client and strategic opportunistic to efforts recent recently broking. perfect of risk Clark, and value. Lucy have our joined to who's makes analytics to fit sustainable, and this and strategic the Our service lead more commitment and ability example X her achieve exceptional enhancing been Lucy's specialization, hiring data with hire, goal a growth of is

excellent accomplished on our on the work that has track will Gerard market over expect in record We drive the margin growth Adam help organic building presence, last years. proven segment, talent X the focus and further and expansion

for the clients. our rest of the clients. to and confident is our to another along organic This I'd with both and investments thank leading technology, strategy to revenue for our and us to beyond. In to for in growth that increased engagement like quarter. our achieve WTW their year We and margins our driving activity helped strategic existing are and specialization commitment unwavering crucial expanding conclusion, colleagues is talent with new solid which heightened

to with for right I'm of achieve I'll we to on opportunities to priorities, objectives confidence the that the year setting strategic path that, have call and turn We to half the on in effectively our over second up enthusiastic continue year. execute achieving goal are XXXX. And for Andrew. the the our about us our our

Andrew Krasner

expansion delivered joining thanks and revenue drove $X.XX, prior organic year. second increase adjusted earnings In resulting basis points we of morning, in Good XXX adjusted over Carl. XX% diluted and margin us the X% per the growth of quarter, operating today. for an of of share Thanks,

of targets adjusted operating mentioned, raised of our to to to quarters XX.X% ranges the the in what low have financial EPS, second and confidence results we end half and thanks respectively. X our target the As Carl margin expect to year to $XX the $XX, XX% XXXX and solid for adjusted for bringing in our achieve the past we

us achieve a on focused to strong at the will These is to run million been of The cost cumulative In addition, total identify we by million and additional raising billion. are savings help to drive to we $XXX end program finish further able $X.XXX transformation transformation program. rate remain these as estimated the XXXX. additions from $XXX target savings our have now efficiencies to the

growth segment quarter expectations We we work. the revenue growth QX. North for expected in Next, time a revenue revenue specifically some Health, increased the I'll quarter Note of our Wealth comparability all revenue commentary will growth prior Career and for X% America otherwise. as generated on with project generated be of second of with in last to to the last of stated that segment to result growth And generated mid-single-digit strong quarter results. the reviewing provide XXXX. basis, business periods, segments spend Health regarding X% for an of our in to year, indeed, comparison growth organic of noted compared the growth line results that unless our X% organic accelerate.

our and strong global client appointments in a In client peak quarter, work of addition, international growth derisking valuation retirement by the including portfolio. Wealth additional pension new retention, delivered work in X% second strong client to and in driven required increased Great year management and continued grew our local in new Europe acquisitions Britain. by work driven business growth benefits North in due America and project the double-digit expansion

employee in rewards business Europe improvements projects driven also and well experience. delivered solution. Career markets our in to from growth work by LifeSight and communication capital as America broad-based our in quarter, delivered assignments growth X% Investments the in North solid We in related and growth due working primarily as revenue compensation to

product experience revenue of with portal. We growth in also more saw employee Embark, our our sales

was simply continues benchmarking participation the compensation headwind we Outsourcing elevated & should which our do margin was last by decrease the for deliberately health over operating primarily half transformation from not the other outsourcing at to driven second Medicare-related and operating flow the to where who work growth business. an points accelerated flat this XXXX. Benefits growth year in we was maximize chase business, Our the improve its solid and any leverage developments, quarter, revenue lead in to be This growth XXXX, quarter. second to XX.X%, basis differently, we to by a free of offset covered and administration. more increase moderated project benefits outcomes. client in reflect increased mentioned insourced than related Said Delivery compared cost in savings. HWC's quarter, growth growth market of cash profitability XXX prior

Moving second quarter on million revenue XX% was activity. organic of book million with impact $XX from the no was strong for an second year. up levels from Broking the quarter, by driven meaningful $XX strong to had increases growth and quarter up Broking, Risk & the retention geographies. of income basis Interest business quarter & with renewal all client Risk of last primarily new another organic Corporate business, exceptionally higher across XX%, for

in North management CRB and to Europe strong led and contributors Solutions growth Our globally higher as estate, Fenix new be hospitality by our and driven business Growth health crisis crisis solutions, well crisis construction, facultative, CRB financial as by was natural teams. solid led and had performance, specialty from continue across construction, sciences. resources, facultative, business management. Financial by lines and care renewal the management, America to growth, real major leisure life

growth Europe, Middle double-digit and in across East and Africa led had region international Latin by organic subregions, countries Our and Eastern all Central America.

business and in the to market in is challenged see remains past as with we see lines is of credit, increasing terms We compared those prior cyber property albeit those supply the North see of especially An rate due risks exception mix, the specialty softening a Consulting where continues rates, from and to trade Across America capacity with year faster. In Technology outcomes some the same temper to risks, in caused favorable clients. lines, consulting of in lines revenue slower landscape in for primary and casualty a market flat market insurers. we continued The market demand America example, softening that quarter. for a mainly such and stable for stabilizing small to North the exposures. Insurance premium business, with largest our by was political some in The the is of improving market where soften, reductions the with U.K. financial for rises.

point second quarter our prior to transformation quarter, However, organic we for over ICT the have taken year. RMB's driven a XXX growth revenue expect CRB, mid-single-digit growth disciplined we interest corresponding protect the leverage expense actions in for solid margin savings. to to the full margins. XX.X% operating operating achieve basis due expense increase was by management, year and primarily income

the and margin drive let's continues to level had XX%, Now million of driven program. to program's savings, At level, quarter $XX operating We basis us the million going since operating adjusted leverage savings cumulative prior $XXX of transformation annualized total The incremental the inception. the leverage program our transformation enterprise better benefits turn XXX to the increase over bringing forward. position to the operating year, for of by results. point primarily the was greater enterprise a

reflects for net inclusion $XX $XXX the million million significant a litigation. negative and of Our second for quarter provision the unallocated was

full to be continue expect the balance to with relatively year consistent XXXX. We XXXX

the adjusted Foreign $X.XX expect rates, exchange foreign of headwind the we adjusted for exchange of EPS was a to approximately quarter. be $X.XX current year. At to EPS on a headwind for spot

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

compared the XX.X% quarter for adjusted XXXX. the second of rate was to quarter Our tax XX.X% for

rate to adjusted to be our continue mentioned onetime XXXX rate, We year-end. excluding year our to close at we tax items expect for the the

$XXX shareholders $XXX via million quarter, to repurchases dividends million. During $XX of million and we share of returned our the

of central use as value and create view of an We continue to shareholder focus allocation. capital repurchases capital to the attractive balanced be long-term share

subject to expect X marketing June conditions of year, approximately We transformation from the free $XX The $XXX and continue linear $XXX quarter other for of flow be XXXX, million the and cash cash share repurchases payments. by total intended to factors. We as with results related in the free months not was driven to expansion, margin free relevant an prior outflows cash increase line compensation for XX, flow generated ended million primarily for our are cash in year. by to offset partially operating to flow margin discretionary expectation million

confident We year-over-year full continue cash in free expectations of flow improvement margin. be in our to year our

line this of top and efforts productivity strong exemplary the line reflects quarter our our bottom and to Our momentum performance greater drive efficiency. ongoing colleagues and

We expect let's that, into the it are the to our Q&A. XXXX achieving up confident continue second for of in targets. With this half year and open

Operator

Instructions]. [Operator

from comes of Greenspan Fargo. Wells question first Our Elyse

Elyse Greenspan

being do just My question, as the the you've factor 'XX to is for first biggest guys outlined exceed what just think about updated on 'XX. EPS able think we guidance the guidance, swing you

Carl A. Hess

I'd our for to tracking this first half We this way. within it execution relative guess where updated on do our the stronger some we're and of in guidance. year, see we with at look optimistic pleased We're I guidance. really opportunities remain performance margin the

better-than-expected For productivity have investment from transformation timing effect. of The an in example, could a savings talent. our

expenses We to potential M&A I maybe productivity. And without global creates for find are to guess, trim growth fourth, and impacting of That continuing opportunities both activity. opportunities identify for rebounding our the segments. I'd then,

are all lead potentially So to that outperformance. these could factors some

Elyse Greenspan

the correct the mentioned I what XX% to in the lower bit when revenue, cash half you've free second optimize is I are at free my But flow. flow way managing look kind seems to cash perhaps conversion Carl, spend, spend, target. of through little When cash of which in first the that adjust growth, being of on get your should right, consciously down the the it winding transformation of expected greater than free then like is And the outlined for transformation be that flow. is quarter, higher are guys you cash managing to on for conversion kind BDO and cash -- flow question be you a I for Am at we QX. that given users street? XX% year, to above assessment? And was

Andrew Krasner

plus it's free with make there something cash Elyse, and markets. and XX% we've think, not necessarily margin quarter, We're Andrew. more that through this The us but that, to that levers target, to XXXX. the continue in leverage expansion are also really tied pleased margin, transformation the which of I And will over was demonstrated get developing that not by profitable the XX% well target the quite longer-term plus Yes. continue flow businesses there. again, we operating operating to a of we'll just to progress do time

second The abatement profitability of expect be outlays, our TransAct to we're XXXX. there conversion cash the growth the the through And item maximize cash going transformation-related is which would to of you the the mentioned, cash beginning course, which business, then, of profile which and managing in improved we conversion.

path think all on plus that put together get we to things So solid a taken into those of really XX% over us time.

Operator

of next James. from comes Peters Gregory Our Raymond question

Charles Peters

So I'm on for boost in the first revenue project sum. out organic you second called helps comments, both the growth some, focus it, markets, your growth. I'd revenue for capital question, lump And that guys good organic going call in to both quarter career

aspect will the it my results organic versus of another trying continue on through just is sustainable type the organic figure of the guess to and next quarter through nature? Or of result from I in how year first and put onetime question beyond. what the recurring out second way, So much half is

Carl A. Hess

Greg, it's Carl.

surrounding the to continues mentioned regarding As And increased to remarks, cited. current those HWC, latter that pipeline strategy elevated creates That be in prepared and the environment. opportunities, the connection right? highlight compensation see to of That a for prepared in total year. this the year. prior getting, pension we're half our managing derisking us smart with help awards, includes accelerated I benchmarking over we of sustain increased clients let growth remarks. the will I navigate continues the that cross-selling a few tailwinds in lead as economic me and that work We helping expect you So participation start

better -- and to over R&B for mid-single continue our really growth to contributions for the that line opportunities expect We're in We're continue as talent in we Moving to with we in in the specialty XX% growth organic the with segment full our R&B. for strategy. investments quarter, the delivered increased seeing pleased full platforms. or pursue year. digit we from strategic and And

goals for So clients well our our with we have the growing the with expected we're we confident can momentum pipeline achieve as the revenue our as year. rest XXXX of

normalized strong client rates manageable Our very retention our has levels. are down activity book gain to

And in mid-single laid organic with so enterprise past directly the that in with expectations line we're growth and out digit quarter. at the mid-single-digit in our growth year-end, from growth HWC better results With this They right? and we pleased are and at level R&B.

well focused strategic shape, growth we to businesses the a offer we've these and business potential While and that seeing we're globally as overall, lower growth for are in positive seeing of as top very made largely profitable the expectations. Look, well our our smart regarding some contributions. and connections. position growth, comfortable than investments investments line had on are opportunities momentum greatest specialization due we've revenue The business greater others take the lot investments pursue technology we made growth, initiatives higher to our as think talented planned we've in expect us, across

Charles Peters

Okay.

going I'm further that bullet question, to -- on where the on program pivot last said transformation to the from. slide I'm an you from going efficiencies second infrastructure the And point building For we're focusing to to I'm citing drive savings. which

point getting program the to to the we're where So mean, sunset. going transformation is I

further and efficiencies You put in get bold. obviously you and to in by 'XX it But the out that in your to a do because beyond objectives. position you're look statement like I meant you 'XX. look I'm want really curious And what drive well

Carl A. Hess

mean and focus rationalization some our like the that parts program, primary of more modernization now. are estate are stable simpler is behind real I the Craig. mostly WTW on and footing the technology now optimization Sure, process of us. phases

automate and will during post right? So advice creating as to manual better XXXX A to targeted meaningful expect have that move to we've construct will what digitization solid drive until from the migration this transformation not bit growth effort, a year and organization reduce this XXXX. And that to actions strategy automization forward. most these and expect And been to [indiscernible] of we always of turn, portfolio, been examples costs, turnaround and of doing our been and and these and impact we've work like consultant post savings part world us spend, delivery ultimately, and advantage program, to bring We efficiency, and advantage updates period. operate to into us leverage end our centers. with momentum a taking life, foundation the And that applying this revenue of to clients to to -- servers business. I environment, application contracts efficiencies of continue Some drive gives more by we and enable will faster of the able a actions lot savings more centralizing efficiencies cloud for well, program. reliability manage, allows laying the renegotiating right-shoring that, not transformation in our these going to to of streamlining, these the yield a of centers but and the reducing reducing our think by and we've additional support more only duplication what going is types will operations, in include data, cloud-based us been about right? as simplifying to times, plans from are but provides in initiatives we have reducing that identify right, are undertakings remove additional by sort take these right? areas mean, data processes, able making us of it easier

Operator

from comes question Goldman Rob next of Cox Our Sachs.

Robert Cox

So spend. yes, cash about ask transformation to just I wanted

this Do So $XXX it of of year-over-year program. cash looks if restructuring guide, $XXX be little there spending to like back my half free that cash right, left that XXXX. with I've tailwind given there's spend to want in million flow? than the is million you expect cash restructuring back the just And numbers a XXXX. of in forward, charges to was a likely from occur those more I majority over confirm under half to in cash the just the cash payments that updated got of point the

Andrew Krasner

flip bleed generally that terms other out it's I going have to incurred from would cash transformation over goes think when forget, that's when in I the well the we're into door of the some XXXX And that program way. versus don't a of as perspective.

Robert Cox

And just to Okay. intentional. more growth little back in moderated give Got have on that, could your half us marketplace, free in impact you it. that back did why the you individual and on for expectations the growth in how color Can this the that then was it a and just cash going quarter updated the business on flow?

Andrew Krasner

Yes, sure.

and by outcomes. Medicare focused the thoughtful some U.S. between and are We're bit guardrails also business the So this do growth, reflect election market media on to free our moment, navigating as flow cash developments, driven of a being And remain At causing we and related our in profitability in free growth maximize flow there. improved increase, said cash in that's remarks, we deliberately businesses profitability growth costs moderated buying about distraction. buying, and not chasing it's acquisition media really we're costs. and seeing consumer we

for solid business, wanted and and last revenue decrease and by organic project businesses overall, revenue which expect insourced in thoughtfully we the who the than So our administration. mentioned growth in we make but of And pipeline that -- line health work, decrease related our mid-single-digit to that covered continue Within benefits driven client the segment was outsourcing. we're in navigated his increased that. The to by more partially we quarter, Medicare to related offset in other HWC still in full have was growth year. confident that to sure

Operator

Sandler. comes question from next Newsome Our of Piper Paul

Jon Paul Newsome

doing you the the seen think the us environment not of you might issue of And in in you much Do and point, on day, hoping kind you like seems outlook -- moderating casualty. the do what casualty. market some could happening? problems sort is of pricing which is it do give we've in your the basically think change? From property of think was I the thoughts kind for what Property advantage is and Casualty

Carl A. Hess

I elaborate guess I with a look that softening this it way, some Sure. differentiation we're at a on. and stabilizing right? to market. Overall, I'll bit seeing

For stabilizing this Natural in first amount of nat Europe, premium no to pricing. earthquake flooding storms, global softening, there's losses and in year, of catastrophe was trend though is in Taiwan. driver the increases large U.S. is capacity cat of a casualty capacity space. the the the the in such as there reduced market, main in higher property, longer But half the

we Looking them do see soften, quarter. lines, at but reductions to slowed the have down rate this continue financial

softening Europe, complex in social widening flat, in have there's slowed Although we Asia, current appetite risks driven see geopolitical insurers cyber, stable been marine We to faster of rises natural North as true been see increases to America such conflicts, In by rate geographically, market and a generally premium the for the U.K. inflation, and same disaster. have new stable. Many Australia, Lat right, the But market. Am. softening. is is capacity their in the have entering softening because market

North in and violence and All of lines, America especially our globally terrorism. this impacts political in casualty

our of terms as impacted headwind our to terms this in tailwind it how it quarter. results R&B significant or in a past don't portfolio rate are view across results, at our Looking we of resulted

we've last us made that's business reorientation few to retention rates think We business growth a towards specialization. and years. primarily for and continue over was new the the really as differentiate driven and well as R&B to of Our it's going made by high for the us. investments difference the

Operator

Kilgerman Andrew from Cowen. of comes question next Our TD

Andrew Kligerman

health X% follow organic in revenue on did revenue and an other to then you up I'd on the growth earlier XX%. question did about side, CRB in like --

about the count I and talent the they that exceptional. are hired you've numbers think And exceptional have the So really brought up.

So think your higher? then kind Or those of most do higher and into when or talent X eases think to next mid-single -- kind growth you will just your how CRB, the of low then numbers single-digit tailwinds numbers I double, in that new for or in material those those I think subsegments of I high Should of of of that continue. that guidance high it about objective just as in much and put mid-single-digit X digit of of and growth. the health outsized terms

Carl A. Hess

the board who get can we view several not to continue of I've strategy can the made Andrew, what as positive that And from I talent, marketplace. client place is momentum that productivity investments mean, results bring still over in succeed for in we've in have we what talent WTW years. talent best the brought use best talent their just right, the We is leverage do cohorts Well, that base. can we look we've before, think but do more to the some to a we enables they differentiated out we said marketplace on from think last to have that they the

momentum that So think we progress think that in continued can optimistic are is us there's our helps We we those succeed, there strategy businesses. and make. we

Andrew Kligerman

demand expects for tempered Andrew in ICT in that you And about he talk the ICT, half pick specifically think awesome. up was it will you second And think pickup was that so of you said those Could that I some big area. are And the services discretionary in at why half? second services. That's a said that and that in flat.

Andrew Krasner

Yes, roughly comprises that's and million sure. sales roughly consulting revenue. R&B's revenue, of between $XXX about software split or annualized and ICT XX% XX-XX

few the timing half size, period-to-period. In sizable of given of postponed. the organic large year, dollars can either a of on consulting projects period have some the modified direction first saw in million we an those rate of growth being a impact its couple the have for contracts You've

recognize we continue environment advisory within work they the certain ICT, challenging. for to that be However,

growth growth mid-single-digit there ICT. of lines accordingly moderated the we for along expectation our So

chunky timing the it's those software of the of the time really consulting projects. can as timing well from around sales, which of be some some So the and to related the business discretionary spend time of as to side

Operator

Our Ward next comes Mike question Citigroup. from of

Michael Ward

wondering the of if quantify margins? Carl, the to I potential was could do the potentially opportunity guidance upside you mentioned outperform to you do all at margin. some on

Andrew Krasner

think had the about that of the of XX.X% we you rate the year some the increase the out. if basis of confidence target year. to this Yes. And the just XXX puts very ratably expect in for run year, margin gives spread savings the how with us over obviously for any expansion the and points year, about range think transformation the not I of full XX% be upside, year. the going but hence if to rest quarter. for the takes We're the rest we to to potential the we're quantify I in pleased the outlook We think play

as reminder, leverage as continue as book and of as organic drive on vary Carl some well and you period, operating We on we basis growth we comparable pacing operating to interest year as things mention to full heard also the mentioned just and a efficiency. And a to in quarter-by-quarter. But the do of potentially gains discipline cost outperform. focusing as scale cause income earlier, opportunities those see of margin expansion the anticipate me may

Michael Ward

I seen we've large your pricing seeing of I in the overall, then about in CRB what for or accounts terms across could pricing talk environment market And a was guess? within versus Okay. for CRB, customer smaller middle divergence hoping segments you you're

Carl A. Hess

Sure. Yes.

performance I than I records. hit when lost been differentiated and who rate time a been this environment bit There's what certainly nature and I the the property think a cat on or of risk depending over clearly relatively for more has about talked X a challenged discussed X where, cat ago. is little exposed instance, clients the question more

a going that But to on desire we markets. results clearly, ago -- I base. case capacity pricing it's offer I with quite anticipate differentiate our a difficulty might be good markets think, think, is clients will achieve, So continue we're have able various seeing the they not client there for We're in to the forward. had to the by years that our few

Operator

from Zaremski Mike question comes next Our of BMO.

Michael Zaremski

Back quarter before this increased. couple reading past client to discussion assume the excellent the I of things the the Is be and retention fair continues some you quarters into that, growth? kind a you've retention just to that what too. continues mid-XXs, kind of R&B set of mentioned a you through was is transcripts and to organic growth Or excellent am and to past outsized in the improved driver -- quarter, of retention of looking in said -- it on -- what be

Carl A. Hess

client with mid-XXs, I unmatched very we result in service we're our business pleased mean, the excellent which of a our able with base a as keep think risk less client insights business is retention that the is continues we feel you the as that deliver are level to be have in we're you industry. to to replace. the analytics provide We well that's

So we'd more rates to no question we forward. like that retention the keep ones have are persistent going

Michael Zaremski

it. Got

a rate, at So retention that ] more [ is normalized today. you're should -- clear have been a kind I of

Carl A. Hess

Yes. had we of are before we're with [ at number ago stabilization levels of and I ]. talent that mean some certainly a debt base years disruption of the the where consistent the at is were the fundamental we

Michael Zaremski

sure you with guidance Okay. margin sticking really be nothing. the on was I well. but improvement there was the Great. that that was Margins was is comments, there's of some to just rating. careful And just obviously heard kind Or margin, something My of of just terms excellent curious, expenses cut make in much. just of we -- on have know the or R&B the beat segment. mostly leverage? just but follow-up, onetime run out was so extent the should something operating was as that It just I there want

Andrew Krasner

all management transformation expense and that. Yes, driven focusing was part on there operating of unusual. nothing savings as course, prudent by leverage of and, It was

Operator

Yaron comes of Jefferies. next from Our question Kinar

Yaron Kinar

I wanted the specifically guidance. back the updated guidance, circle to margin to the guidance,

guidance think expansion I little material margin slowdown a in second So would maybe the the half. at suggest that the talk about you new midpoint, in Can bit?

Andrew Krasner

Yes, sure.

to hit we transformation earlier drive and range continuing back think about I and the leverage, might comments of think to continuing to land program that. sort within where optimism Carl's I level of that operating we would bring around you

and comfortable going on see And that dynamics our land feel to industry the -- range within ahead. we do really again, sorry, So given as about go transformation as we where well yes, leverage. progress we're the operating

Yaron Kinar

would comment fruits of and to the we continued a of in of scale. second meaningful I Why kind going half. year half the it's where relative was year-over-year of kind the coming through of say, just transformational been with that margin the the slowdown the of see to first in expansion in kind program

Andrew Krasner

Yes.

some might we business which better-than-expected prudent continuing there. range on in the get productivity some put through factors outperform focus provide talent, to transformation So well, around out see and that savings takes that growth we about of from and we of opportunity expenses there of the incremental puts some management earlier timing then impacting of as without tailwinds. that and investment do the to went Carl could the how

Yaron Kinar

Got it.

also, in question, where developments? might you guidance. still to to upside a of color consider some business. do potential business. additional you And offer competitors talked So that my an allowed And apologize Andrew, you a we've about here, but throwing lot can for TransAct list what's long-term stumble? maybe, attractive this Willison Medicare-related growing And succeed I market on seen second maybe [indiscernible] the the what you

Carl A. Hess

I product is I for balance try think prior team got let to very a pursue years over costs. we and couple a think, cash diversification path growth. and at and effective to mean, growth our of I We've right? between revenue features latter, got being looks a growth that. lead and at I'd I of think we've probably the discipline that the run And profitability and able Historically, manage X to sustainable always, Well, we've a for margins been tried type. second, competitors me that got all management spend all all has that's And at and of One bit address a differentiating many have business identify it. gone

And industry. throughout hasn't so certain there's necessarily been that present the a approached discipline business we've that

any no what be share regarding continues headlines of there's right, selling proposed Medicare bit, to as the we're the here. for business. we've business the We've a going going think really forward [ with data successfully speculating prior brokers carriers. those over seen past, the what's seen impact and going commissions Looking out some could been I continue how to sort that in there's that impact they ] That's carries to to and on premature. question have what potential to rates been of commissions do. regarding on regulatory Advantage in But -- be There regarding policies. navigating the changes I play changes We've We've uncertainty managing think years. and our their that's on

lot Medicare and are that of changes a have That XXXX going lever, reduced a addresses CMS means plans. carriers in April. all have U.S. this was courts which So still some be less rule other the right, them not could that managing options while this proposed the was benefit to But the may the stayed ways. that's uncertainties The implemented. premium be commissions rule of a for than sorry, number to impactful rule of year. -- There's marketing And Advantage part will to how like far onerous effect of final are in their options role, final profitability. for there more broker turning early for going not terms about take tweaks. And be

distribution have of have the solutions with We in Medicare reiterated engaged the beneficiaries. and services space. play we carriers important role valuable provide the to remain insurance -- the They in we we actively the

we I in long bring confident as remain services sum, we carriers compensated be work guess, to be able with we'll as effectively to So deliver and value. fairly

Operator

next Motemaden of David from Our question ISI. Evercore comes

David Motemaden

a compared exceeded the in as growth sunset employees has that as within head R&B productivity you count wondering had the count how had but moderates XXXX? expectations, enhancement ramp within sounds on that growth about R&B head like we question It you been of head the thinking growth X% are I'm in I count or just to R&B. guys sort

Carl A. Hess

several effort over Our a of growth the new enhancing few discussed replenished margin the prepared to margin they're the higher we few we've past whether with seen mature our support a well. With technology range talent organic X verticals the years, more Clark our hiring efforts cohorts past and our Lucy our contribute value, begin sustainable had right? I end They achieve hiring peak waves We've these targets, to over toward talent us go We've years, a both bit investments, focused after Verita strategic hitting are hires base. [ during we face as as in industry as so a few still mean, expect of other our of rate, were I think hire. earlier. this that talked incremental recently growth, in more ability announced and have alluded profitable to to not of and Andrew hires respect target and strategic We've So goal has our our segments. any expansion create I to to XXXX remarks Currently, margin and opportunistic. our as productivity. or hire are of going be prevent XXXX we ] to to about example to and sort strategic in is to, to expect expense

David Motemaden

Verita Wondering be just if my around sort is it's a would could growing. And numbers follow-up, Any fast Got how just then it fairly bit and I get of it how it you big been sounds it's can helpful in it. on detail successful. put more terms like of little because just

Andrew Krasner

that launching had since expected. we it's platform growth with we've pleased the better than the very done We're Yes. seen initially

organic However, time. given needle the still overall relatively growth from size moving not in an of small perspective the at the business, and R&B necessarily this point

Operator

from question next Baird. comes Our of Mark Marcon

Mark Marcon

Carl. for follow-up a then and question quick one Andrew,

up. jumped unallocated the On costs, obviously, they

was mentioned that fee. You the there legal

we should equal that correct? Is did XXXX. year, You in for that that we the the to level be saw full roughly say

Andrew Krasner

Yes, that is correct.

increase that's the the $XX it So you be million expectation prior Year-to-date, 'XX should from referenced. that's think is that for $XXX provision a that which and about unallocated include more with relatively million million we point the net does which year. in we're meaningful million that an $XX that the balance, $XXX given quarter, at comparison $XXX was consistent 'XX million.

Mark Marcon

is it take moderating transact, with purpose, seems Obviously, we the Carl, segments. the the then, which you're you've a all strategy. look at various And differentiated like got momentum quite solid. of exception on Great. And a

the monitor within more like you do engagement the professionals also But You've of that have several I'm significantly. wondering, talent organization. morale feel improved some hires. change, made XX,XXX when within years than you you engagement internally has After

to the seeing of are being that more improvements some terms of increase things productivity widespread and just basically confidence a And settled? due we're in

Carl A. Hess

give in got here thinking that's where people or shows. enthusiastic do want and that of to New they're thing office, Paris we sitting solved York organizationally, an like And And our we're a are dealing London the there to Kong, and back, don't that halls we everything, I and their any working people say. it's when XX,XXX think But about mojo it prospects. today or wonderful walk we're I arrogant. or impression Hong with I they're whether who

Operator

question & Woods. Meyer Keefe, next Bruyette, from of Our Shields comes

Meyer Shields

accounting, Two can help growth growth quick be kind think questions. of in us impactful the to of I how moderating quarter TransAct could organic Health, Wealth about guess you fourth the first Career? the and strangeness

Andrew Krasner

we businesses, If segment. do continue HWC growth some moderation of temper the overall sure. that Yes, could see to Medicare growth the within within related it

focus well as However, hold and within we we for there. the work some have businesses that that and as the think mentioned take the in of businesses. survey continue to pipeline believe that project-based do to other I in portfolio Carl It earlier, health. example, America we a expect work pipeline strong on the of is North

the the the for about for confident overall really we're growth segment So delivering mid-single-digit year.

Meyer Shields

priorities a XX us first as second give XX of question, helpful. sense the you comes like to months? are A Can she That's Lucy picture. bigger for in, Okay. Clark's maybe what

Carl A. Hess

in Lucy's sorry, She's technology. R&B. I way, accelerate got incredibly mean focus our I specialization is aligned a we're Lucy's got to she's specialization. well-honed talents, attracting lead in and a this our top-tier for a us. you developing background -- perfect excited existing right? deep got it our She second. to I'd got track well a is and execute. talented ability and experience little Her joined with at a garbled of guess look She's priorities investments proven fit and there strategy on about

But well, the benefit affirm of I use expect our working joined think R&B us right? Lucy's organizations the She's surveying we're expect modify week, decades -- what's else you'll in at be I business. experience of the landscape she joined other of that just this approach. doing us we reason fine-tuning that in could what see our that is I revolution. to And she she's strategy. looking to wholesale the believes our

Operator

from Securities. Truist comes Mark question of next Our Hughes

Mark Hughes

anything Andrew, say of unallocated into you trajectory XXXX? can the about

Andrew Krasner

not be or we for expect do again, We're similar balance -- any yet. XXXX. relatively for the perspectives financial at we to year guidance But XXXX, giving where for the to landed XXXX

Mark Hughes

on specifics then transformation the spend any then XXXX. And half? in cash on the much the second how goes And into

Andrew Krasner

Yes.

over bleed some from the be to So cash we expect fourth account do made into of cash spend perspective basis third XXXX throughout expect the transformation some quarters. and of an payments to and

Operator

question-and-answer now like the turn Officer. it back I Hess, Executive would WTW's Chief concludes This to Carl session. to

Carl A. Hess

this have earnings second joining you Thank WTW for possible. quarter conference appreciate worldwide our quarter of for once us I again call. dedication our the today deeply colleagues who made strong

my to gratitude extend their I shareholders for Additionally, ongoing our support.

Operator

does the program. This conclude conference. today's in participation your for you Thank

disconnect. now may You

Willis Towers Watson Public Limited (WTW) 25 Jul 242024 Q2 Earnings call transcript