WTW has reported its financial results for the third quarter of 2024, posting revenue of US$2.29 billion, a 6% increase from US$2.17 billion in the same period last year. Revenue rose 6% on a constant currency and organic basis.
However, the company also disclosed a net loss of US$1.67 billion for the quarter, following a net income of US$139 million in the prior-year period. This shift was attributed to non-cash losses and impairment charges exceeding US$1 billion related to the pending sale of TRANZACT.
Adjusted EBITDA for the quarter was US$501 million, or 21.9% of revenue, up 15% from US$436 million, or 20.1% of revenue, in Q3 2023. WTW reported a U.S. GAAP tax rate of 16.1%, while the adjusted income tax rate used for calculating adjusted earnings per share was 19.7%.
In cash flow and capital allocation, WTW generated US$913 million in operating cash flows for the first nine months of 2024, up from US$823 million in the same period of 2023.
Free cash flow for this period rose by US$100 million to US$807 million, driven by improved operating margins, though partially offset by cash outflows for transformation initiatives and discretionary compensation payments. During the third quarter, WTW repurchased US$205 million of its outstanding shares.
Revenue for WTW’s HWC segment reached US$1.33 billion in Q3 2024, up 4% from US$1.28 billion in the prior year, with organic growth also at 4%. The health unit reported growth driven by strong client retention, new appointments, and expansion in the global benefits management portfolio in Europe and international regions, alongside increased brokerage income in North America.
Wealth saw gains from higher retirement work levels in Europe, increased business in investments following capital market improvements, and growth in LifeSight solutions. The career unit’s revenue growth was supported by increased sales in compensation surveys and advisory services, as well as product sales in employee experience.
Benefits Delivery & Outsourcing (BD&O) saw a decline, attributed to a moderated approach in individual marketplace growth and stronger comparables in outsourcing.
Operating margins for the HWC segment rose 90 basis points from Q3 2023, reaching 24.7%, mainly due to savings from WTW’s Transformation program.
The R&B segment reported revenue of US$940 million for Q3 2024, marking a 10% increase from US$855 million in the previous year. Corporate Risk & Broking (CRB) achieved organic revenue growth driven by new business and solid client retention.
The Insurance Consulting and Technology (ICT) unit also posted growth, largely from strong software sales in technology, offset by lower demand for discretionary services in consulting.
R&B’s operating margins grew 240 basis points from the prior-year quarter to 18.1%, with improvements driven by organic revenue growth, expense management, and transformation program savings.
WTW has reaffirmed its targets for 2024, anticipating full-year revenue of US$9.9 billion or more, with mid-single-digit organic revenue growth. The company expects an adjusted operating margin of 23.0% to 23.5% and adjusted diluted earnings per share between US$16.00 and US$17.00.
WTW projects approximately US$88 million in non-cash pension income and expects a US$0.06 headwind from foreign currency on adjusted earnings per share. The company also anticipates reaching US$450 million in cumulative run-rate savings from its transformation program by year-end, with total program costs of US$1.175 billion.
“Given our strong performance and momentum, we are entering the fourth quarter with confidence in our ability to deliver on our targets for the year and drive sustainable, profitable growth going forward,” the company said.
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