WTW has reported its financial results for the third quarter of 2024, posting revenue of $2.29 billion, a 6% increase from $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 $1.67 billion for the quarter, following a net income of $139 million in the prior-year period. This shift was attributed to non-cash losses and impairment charges exceeding $1 billion related to the pending sale of TRANZACT.
Adjusted EBITDA for the quarter was $501 million, or 21.9% of revenue, up 15% from $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 $913 million in operating cash flows for the first nine months of 2024, up from $823 million in the same period of 2023.
Free cash flow for this period rose by $100 million to $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 $205 million of its outstanding shares.
Revenue for WTW’s HWC segment reached $1.33 billion in Q3 2024, up 4% from $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 $940 million for Q3 2024, marking a 10% increase from $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 $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 $16.00 and $17.00.
WTW projects approximately $88 million in non-cash pension income and expects a $0.06 headwind from foreign currency on adjusted earnings per share. The company also anticipates reaching $450 million in cumulative run-rate savings from its transformation program by year-end, with total program costs of $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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