Willis Towers Watson(US:WTW)2025-08-01 19:18PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The company's Q2 2025 revenue was flat at $2.26 billion, while net income significantly increased to $331 million Condensed Consolidated Statements of Comprehensive Income (Q2 & Six Months) | Indicator | Q2 2025 (in millions) | Q2 2024 (in millions) | 6 Months 2025 (in millions) | 6 Months 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $2,261 | $2,265 | $4,484 | $4,606 | | Income from operations | $368 | $212 | $800 | $492 | | Net Income Attributable to WTW | $331 | $141 | $566 | $331 | | Diluted EPS | $3.32 | $1.36 | $5.64 | $3.20 | Condensed Consolidated Balance Sheets | Account | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | Total current assets | $15,605 | $15,105 | | Total assets | $28,478 | $27,681 | | Total current liabilities | $13,871 | $12,598 | | Total liabilities | $20,298 | $19,664 | | Total WTW shareholders' equity | $8,100 | $7,940 | Condensed Consolidated Statements of Cash Flows (Six Months) | Cash Flow Activity | 6 Months 2025 (in millions) | 6 Months 2024 (in millions) | | :--- | :--- | :--- | | Net cash from operating activities | $326 | $431 | | Net cash from/(used in) investing activities | $612 | $(158) | | Net cash (used in)/from financing activities | $(800) | $364 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports 5% organic revenue growth for H1 2025, with improved profitability from lower operating expenses Executive Overview and Market Conditions The company's performance is influenced by economic conditions and a softening insurance market cycle - The insurance market is currently experiencing a 'softening' period, which can put downward pressure on commission revenue123 - The company faces risks from uncertain macroeconomic conditions, including inflation, interest rate changes, and geopolitical conflicts127 Consolidated Results of Operations Q2 revenue was flat while net income rose 135%, driven by an 8% reduction in service costs Consolidated Revenue Change vs. Prior Year | Period | As Reported Change | Constant Currency Impact | Acquisitions/Divestitures Impact | Organic Change | | :--- | :--- | :--- | :--- | :--- | | Q2 2025 | 0% | 1% | (6)% | 5% | | 6 Months 2025 | (3)% | 0% | (7)% | 5% | - Total costs of providing services decreased by $160 million (8%) in Q2 and $430 million (10%) in the first six months of 2025, primarily due to lower transformation and marketing expenses159162168 - Net income attributable to WTW increased 135% in Q2 2025 and 71% in the first six months, driven by lower operating costs175176 Segment Analysis Both Risk & Broking and Health, Wealth & Career segments delivered strong organic growth in H1 2025 Health, Wealth & Career (HWC) Revenue Change (Q2 2025) | Metric | Value | | :--- | :--- | | As Reported Change | (6)% | | Organic Change | 4% | Risk & Broking (R&B) Revenue Change (Q2 2025) | Metric | Value | | :--- | :--- | | As Reported Change | 7% | | Organic Change | 6% | - R&B's operating income increased due to operating leverage from strong organic growth and savings from the completed Transformation program155158 Liquidity and Capital Resources The company maintains strong liquidity with $2.0 billion in cash and continued capital returns via share repurchases - Cash flow from operating activities decreased to $326 million for the first six months of 2025, compared to $431 million in the prior-year period187 - The company repurchased $700 million of its shares and paid $179 million in dividends during the first six months of 2025180191202 - As of June 30, 2025, the company had $2.0 billion in cash and full borrowing capacity under its $1.5 billion revolving credit facility179184 Non-GAAP Financial Measures Adjusted operating income margin expanded to 18.5% in Q2 2025, reflecting improved core operating performance Adjusted Operating Income and Margin | Period | Adjusted Operating Income (in millions) | Adjusted Operating Income Margin | | :--- | :--- | :--- | | Q2 2025 | $419 | 18.5% | | Q2 2024 | $385 | 17.0% | | 6 Months 2025 | $899 | 20.0% | | 6 Months 2024 | $868 | 18.8% | Adjusted Diluted Earnings Per Share | Period | Adjusted Diluted EPS | | :--- | :--- | | Q2 2025 | $2.86 | | Q2 2024 | $2.39 | | 6 Months 2025 | $5.99 | | 6 Months 2024 | $5.53 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk from interest rate fluctuations on fiduciary funds remains materially unchanged - A 25 basis point change in short-term interest rates would result in an approximate $7 million change in annualized interest income from invested fiduciary funds251 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures are effective as of June 30, 2025 - Management concluded that the company's disclosure controls and procedures are effective in providing reasonable assurance that required information is recorded and reported in a timely manner252 - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal controls253 PART II. OTHER INFORMATION Item 1. Legal Proceedings Ongoing legal proceedings are not expected to have a material adverse effect on the company's financial condition - The company is subject to various claims and lawsuits in the ordinary course of business but does not expect them to have a material adverse effect on its financial condition104106 Item 1A. Risk Factors No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K have been reported - No material changes from risk factors as previously disclosed in the Annual Report on Form 10-K, filed with the SEC on February 25, 2025257 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased approximately $500 million of its ordinary shares during the second quarter of 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 540,279 | $314.14 | | May 2025 | 807,216 | $308.99 | | June 2025 | 266,932 | $302.90 | | Total Q2 | 1,614,427 | $309.71 | - As of June 30, 2025, approximately $742 million remained on the current open-ended repurchase authority261 Item 5. Other Information No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during Q2 2025 - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the second quarter of 2025264