Willis Towers Q1 Earnings Miss Estimates, Revenues Decline Y/Y

Core Insights - Willis Towers Watson (WTW) reported first-quarter 2025 adjusted earnings of $3.13 per share, missing the Zacks Consensus Estimate by 2.1% and remaining flat year over year [1] - The company experienced a 5% decline in adjusted consolidated revenues to $2.2 billion year over year, primarily due to the sale of TRANZACT, with a 3.9% miss against the consensus estimate [2] Financial Performance - Total costs of providing services decreased by 13% year over year to $1.8 billion, attributed to lower salaries, benefits, and other operating expenses, which was below the estimated $2 billion [3] - Adjusted operating income was $480 million, down 1% year over year, while adjusted operating margin expanded by 100 basis points to 21.6% [3] - Adjusted EBITDA was $532 million, reflecting a 3% year-over-year decline, with an adjusted EBITDA margin of 23.9%, which expanded by 60 basis points [4] Segment Performance - Health, Wealth & Career segment revenues totaled $1.1 billion, down 13% year over year, with a 12% decrease on a constant currency basis [5] - The Wealth segment saw organic revenue growth driven by increased Retirement work in Europe and International, alongside improvements in the Investments business [6] - Risk & Broking segment revenues rose by 5% year over year to $1.03 billion, matching estimates, with strong client retention and new business activity contributing to growth [7] Cash Flow and Debt Management - Cash and cash equivalents decreased by 20.2% to $1.5 billion at quarter-end, while long-term debt decreased by 10.3% to $4.7 billion [10] - Free cash outflow was $86 million, compared to $36 million in the previous year, primarily due to the absence of cash collections related to TRANZACT [11] - The company repurchased shares worth $200 million during the quarter [11] Future Guidance - WTW anticipates cash outflows related to the Transformation program, which concluded in 2024, and projects share repurchases of $1.5 billion, subject to market conditions [12] - The company expects an average annual margin expansion of 100 basis points over the next three years in the Risk & Broking segment and incremental margin expansion at the Health, Wealth & Career segment [13]