Second Quarter Key Metrics
- Total revenue increased 18% to $3.8
billion, including organic revenue growth of 6%
- Operating margin decreased 910 basis points to 17.4%, and
adjusted operating margin increased 10 basis points to 27.4%
- EPS decreased 9% to $2.46, and
adjusted EPS increased 6% to $2.93
- For the first six months of 2024, cash flows from operations
decreased 27% to $822 million, and
free cash flow decreased 27% to $721
million
Second Quarter Highlights
- Completed the acquisition of NFP, a leading middle-market
provider of risk, benefits, wealth and retirement plan advisory
solutions, for $13.0 billion
enterprise value, and are on-track to deliver financial
commitments
- Repurchased 0.8 million class A ordinary shares for
approximately $250 million
- Appointed Edmund Reese to serve
as next CFO, effective July 29,
2024
- Announced a first-of-its-kind, public-private solution to build
insurance capacity and accelerate new capital investments and
economic recovery in Ukraine,
bringing total capacity of $350
million
DUBLIN, July 26,
2024 /PRNewswire/ -- Aon plc (NYSE: AON) today
reported results for the three months ended June 30, 2024.
Net income attributable to Aon shareholders decreased 9%
to $2.46 per share on a diluted
basis, compared to $2.71 per share on
a diluted basis, in the prior year period. Adjusted net income per
share attributable to Aon shareholders increased 6% to $2.93 on a diluted basis, including an
unfavorable impact of $0.06 per share
if prior year period results were translated at current period
foreign exchange rates ("foreign currency translation"), compared
to $2.76 in the prior year period.
Certain items that impacted second quarter results and comparisons
with the prior year period are detailed in the "Reconciliation of
Non-GAAP Measures - Operating Income, Operating Margin and Diluted
Earnings Per Share" on page 10 of this press release.
"Our colleagues delivered excellent results in the second
quarter, with 6% organic revenue growth, adjusted operating margin
expansion and 19% growth in adjusted operating income," said
Greg Case, CEO of Aon. "We welcomed
our new NFP colleagues to the firm, and we're even more excited
about the opportunities we see to better serve our clients, through
shared expertise, content, and capabilities enabled by Aon Business
Services. The first half marks great progress against all elements
of our 3x3 plan, and we're well-positioned for the remainder of
2024 and the long term."
SECOND QUARTER 2024 FINANCIAL SUMMARY
Total revenue in the second quarter increased 18%
to $3.8 billion compared to the prior
year period, reflecting acquired revenues from NFP and 6% organic
revenue growth, partially offset by a 1% unfavorable impact from
foreign currency translation.
Total operating expenses in the second quarter increased
33% to $3.1 billion compared to the
prior year period due primarily to the inclusion of NFP's ongoing
operating expenses, Accelerating Aon United restructuring program
charges, an increase in expense associated with 6% organic
revenue growth, and investments in long-term growth, partially
offset by $25 million of
restructuring savings realized in the quarter and a $9 million favorable impact from foreign currency
translation.
Foreign currency translation in the second quarter had a
$11 million, or $0.05 per share, unfavorable impact on U.S. GAAP
net income and a $12 million, or
$0.06 per share, unfavorable impact
on adjusted net income. If currency were to remain stable at
today's rates, the Company would expect an unfavorable impact of
approximately $0.01 per share, or an
approximately $3 million decrease in
adjusted operating income, in the third quarter of 2024, and an
unfavorable impact of $0.02 per
share, or an approximately $6 million
decrease in adjusted operating income for the fourth quarter,
resulting in an unfavorable impact of approximately $0.07 per share, or an approximately $21 million decrease in adjusted operating income
for full year 2024.
Effective tax rate was 22.9% in the second quarter
compared to 12.6% in the prior year period. After adjusting to
exclude the applicable tax impact associated with certain non-GAAP
adjustments, the adjusted effective tax rate for the second quarter
of 2024 was 22.2% compared to 17.6% in the prior year period. The
primary drivers of the change in the adjusted effective tax rate
were the changes in the geographical distribution of income and a
net unfavorable impact from discrete items.
Weighted average diluted shares outstanding increased to
213.3 million in the second quarter compared to 206.3 million in
the prior year period due to the issuance of 19.0 million shares to
fund NFP. The Company repurchased 0.8 million class A ordinary
shares for approximately $250 million
in the second quarter. As of June 30, 2024, the Company had
approximately $2.8 billion of remaining authorization
under its share repurchase program.
YEAR TO DATE 2024 CASH FLOW SUMMARY
Cash flows provided by operations for the first six
months of 2024 decreased $309 million
to $822 million compared to the prior
year period, primarily due to higher receivables, including from
NFP, payments related to transaction and integration costs, legal
settlement expenses, restructuring, and higher cash taxes,
partially offset by strong adjusted operating income growth.
Free cash flow, defined as cash flows from operations
less capital expenditures, decreased 27%, to $721 million for the first six months of 2024
compared to the prior year period, reflecting a decrease in cash
flows provided by operations, partially offset by a $44 million decrease in capital expenditures
compared to the prior year period, which was elevated due to the
timing of projects and investments within the year.
SECOND QUARTER 2024 REVENUE REVIEW
The second quarter revenue reviews provided below include
supplemental information related to organic revenue growth, which
is a non-GAAP measure that is described in detail in
"Reconciliation of Non-GAAP Measures - Organic Revenue Growth and
Free Cash Flow" on page 9 of this press release.
|
|
Three Months
Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
|
Less:
Currency
Impact
|
|
Less:
Fiduciary
Investment
Income
|
|
Less:
Acquisitions,
Divestitures
& Other
|
|
Organic
Revenue
Growth
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Risk
Solutions
|
|
$
2,015
|
|
$
1,774
|
|
14 %
|
|
(1) %
|
|
— %
|
|
9 %
|
|
6 %
|
Reinsurance
Solutions
|
|
635
|
|
607
|
|
5
|
|
(2)
|
|
—
|
|
—
|
|
7
|
Health
Solutions
|
|
662
|
|
447
|
|
48
|
|
—
|
|
—
|
|
42
|
|
6
|
Wealth
Solutions
|
|
463
|
|
352
|
|
32
|
|
—
|
|
—
|
|
23
|
|
9
|
Eliminations
|
|
(15)
|
|
(3)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Total
revenue
|
|
$
3,760
|
|
$
3,177
|
|
18 %
|
|
(1) %
|
|
— %
|
|
13 %
|
|
6 %
|
Total revenue increased $583
million, or 18%, to $3.8
billion, compared to the prior year period, reflecting
acquired revenues from NFP and organic revenue growth of 6%,
driven by net new business generation and ongoing strong retention,
partially offset by a 1% unfavorable impact from foreign currency
translation.
Commercial Risk Solutions organic revenue growth of 6%
reflects growth across all major geographies driven by net new
business generation and strong retention. Growth in retail
brokerage was highlighted by double-digit growth in EMEA and
Latin America, and strong growth
in North America, which includes
the majority of NFP Commercial Risk, and Asia and the Pacific, driven by continued
strength in core P&C. Results also reflect a positive impact
from growth in Affinity. On average globally, exposures were
positive and aggregate pricing was flat, resulting in modestly
positive market impact.
Reinsurance Solutions organic revenue growth of 7%
reflects strong growth in treaty, driven by continued net new
business generation and strong retention, as well as strong growth
in facultative placements. Market impact was modestly positive on
results in the quarter. The majority of revenue in our treaty
portfolio is recurring in nature and is recorded in connection with
the major renewal periods that take place throughout the first half
of the year.
Health Solutions organic revenue growth of 6% reflects
high single-digit growth globally in core health and benefits
brokerage, including in NFP, driven by net new business generation
and strong retention. Strength in the core was highlighted by
strong growth in all major geographies. Results also reflect strong
growth in Consumer Facing Solutions, and executive benefits in NFP,
partially offset by a decline in Talent driven by lower demand in
more discretionary project-related work.
Wealth Solutions organic revenue growth of 9% reflects
strong growth in Retirement, driven by advisory demand and
project-related work related to pension de-risking and ongoing
impact of regulatory changes. Strong growth in Investments was
highlighted by strong revenue growth within NFP, driven by asset
inflows and market performance.
SECOND QUARTER 2024 EXPENSE REVIEW
|
|
Three Months Ended
June 30,
|
|
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
$
Change
|
|
%
Change
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
$
2,130
|
|
$
1,754
|
|
$
376
|
|
21 %
|
Information
technology
|
|
132
|
|
129
|
|
3
|
|
2
|
Premises
|
|
82
|
|
68
|
|
14
|
|
21
|
Depreciation of fixed
assets
|
|
45
|
|
39
|
|
6
|
|
15
|
Amortization and
impairment of intangible assets
|
|
128
|
|
25
|
|
103
|
|
412
|
Other general
expense
|
|
455
|
|
320
|
|
135
|
|
42
|
Accelerating Aon
United Program expenses
|
|
132
|
|
—
|
|
132
|
|
100
|
Total
operating expenses
|
|
$
3,104
|
|
$
2,335
|
|
$
769
|
|
33 %
|
Compensation and benefits expense increased $376 million, or 21%, compared to the prior year
period due primarily to the inclusion of ongoing operating expenses
from NFP and expense associated with 6% organic revenue growth,
partially offset by a $6 million favorable impact from foreign
currency translation and savings from Accelerating Aon United
restructuring actions.
Information technology expense increased $3 million, or 2%, compared to the prior year
period due primarily to the inclusion of ongoing operating expenses
from NFP, partially offset by savings from Accelerating Aon United
restructuring actions and efficiencies from our Aon Business
Services operating platform.
Premises expense increased $14
million, or 21%, compared to the prior year period, due
primarily to the inclusion of ongoing operating expenses from
NFP.
Depreciation of fixed assets increased $6 million, or 15%, compared to the prior year
period due primarily to the inclusion of ongoing operating expenses
from NFP, and ongoing investments in Aon Business Services-enabled
technology platforms to drive long-term growth.
Amortization and impairment of intangible assets
increased $103 million, compared to
the prior year period due primarily to an increase in intangible
assets related to the NFP acquisition.
Other general expense increased $135 million, or 42%, compared to the prior year
period due primarily to transaction and integration costs, and the
inclusion of ongoing operating expenses from NFP.
Accelerating Aon United Program expenses were
$132 million, relating to workforce
optimization, asset impairments, and technology and other
costs.
SECOND QUARTER 2024 INCOME SUMMARY
Certain noteworthy items impacted adjusted operating income and
adjusted operating margin in the second quarters of 2024 and 2023,
which are also described in detail in "Reconciliation of Non-GAAP
Measures - Operating Income, Operating Margin and Diluted Earnings
Per Share" on page 10 of this press release.
|
|
Three Months Ended
June 30,
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
Revenue
|
|
$
3,760
|
|
$
3,177
|
|
18 %
|
Expenses
|
|
3,104
|
|
2,335
|
|
33 %
|
Operating
income
|
|
$
656
|
|
$
842
|
|
(22) %
|
Operating
margin
|
|
17.4 %
|
|
26.5 %
|
|
|
Adjusted operating
income
|
|
$
1,029
|
|
$
867
|
|
19 %
|
Adjusted operating
margin
|
|
27.4 %
|
|
27.3 %
|
|
|
Operating income decreased $186
million, or 22%, and operating margin decreased 910 basis
points to 17.4%, each compared to the prior year period. Adjusted
operating income increased $162
million, or 19%, and adjusted operating margin increased 10
basis points to 27.4%, each compared to the prior year period. The
increase in adjusted operating income reflects the impact from NFP,
organic revenue growth, net restructuring savings and increased
fiduciary investment income, partially offset by increased expenses
and investments in long-term growth.
Interest income increased $26
million compared to the prior year period primarily
reflecting interest earned on the investment of $5 billion of term debt proceeds, which were
ultimately used to fund the purchase of NFP. Interest
expense increased $95
million compared to the prior year period, reflecting an
increase in total debt outstanding and interest expense related to
one-time discrete items. Other income was $236 million compared to other expense of
$59 million in the prior year period
primarily due to gains related to the sale of a business.
Adjusted other expense decreased $17 million compared to the prior year period
primarily due to the favorable impact of exchange rates on the
remeasurement of assets and liabilities in non-functional
currencies and a decrease in non-cash net periodic pension
cost.
Net income attributable to Aon shareholders decreased 6%
to $524 million compared to
$560 million in the prior year
period. Adjusted net income attributable to Aon shareholders
increased 9% to $624 million compared
to $570 million in the prior year
period.
Conference Call, Presentation Slides, and Webcast
Details
The Company will host a conference call on Friday, July 26,
2024 at 7:30 a.m., central time.
Interested parties can listen to the conference call via a live
audio webcast and view the presentation slides at www.aon.com.
About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better —
to protect and enrich the lives of people around the world. Through
actionable analytic insight, globally integrated Risk Capital and
Human Capital expertise, and locally relevant solutions, our
colleagues provide clients in over 120 countries and sovereignties
with the clarity and confidence to make better risk and people
decisions that protect and grow their businesses.
Follow Aon on LinkedIn, X, Facebook, and Instagram.
Stay up-to-date by visiting the Aon Newsroom and sign up for News
Alerts.
Safe Harbor Statement
This communication contains certain statements related to future
results, or states Aon's intentions, beliefs and expectations or
predictions for the future, all of which are forward-looking
statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from either historical or anticipated
results depending on a variety of factors. These forward-looking
statements include information about possible or assumed future
results of Aon's operations. All statements, other than statements
of historical facts, that address activities, events or
developments that Aon expects or anticipates may occur in the
future, including such things as its outlook, market and industry
conditions, including competitive and pricing trends, the
development and performance of our services and products, our cost
structure and the outcome of cost-saving or restructuring
initiatives, including the impacts of the Accelerating Aon
United Program, the integration of NFP, actual or anticipated legal
settlement expenses, future capital expenditures, growth in
commissions and fees, changes to the composition or level of its
revenues, cash flow and liquidity, expected tax rates, expected
foreign currency translation impacts, business strategies,
competitive strengths, goals, the benefits of new initiatives,
growth of its business and operations, plans, references to future
successes, and expectations with respect to the benefits of the
acquisition of NFP are forward-looking statements. Also, when Aon
uses words such as "anticipate", "believe", "continue", "could",
"estimate", "expect", "forecast", "intend", "looking forward",
"may", "might", "plan", "potential", "opportunity", "commit",
"probably", "project", "should", "will", "would" or similar
expressions, it is making forward-looking statements.
The following factors, among others, could cause actual results
to differ from those set forth in or anticipated by the forward
looking statements: changes in the competitive environment, due to
macroeconomic conditions (including impacts from instability in the
banking or commercial real estate sectors) or otherwise, or damage
to Aon's reputation; fluctuations in currency exchange, interest,
or inflation rates that could impact our financial condition or
results; changes in global equity and fixed income markets that
could affect the return on invested assets; changes in the funded
status of Aon's various defined benefit pension plans and the
impact of any increased pension funding resulting from those
changes; the level of Aon's debt and the terms thereof reducing
Aon's flexibility or increasing borrowing costs; rating agency
actions that could limit Aon's access to capital and our
competitive position; volatility in Aon's global tax rate due to
being subject to a variety of different factors, including the
adoption and implementation in the European Union, the United States, the United Kingdom, or other countries of the
Organization for Economic Co-operation and Development tax
proposals or other pending proposals in those and other countries,
which could create volatility in that tax rate; changes in Aon's
accounting estimates or assumptions on Aon's financial statements;
limits on Aon's subsidiaries' ability to pay dividends or otherwise
make payments to Aon; the impact of legal proceedings and other
contingencies, including those arising from acquisition or
disposition transactions, errors and omissions and other claims
against Aon (including proceeding and contingencies relating to
transactions for which capital was arranged by Vesttoo Ltd.); the
impact of, and potential challenges in complying with, laws and
regulations in the jurisdictions in which Aon operates,
particularly given the global nature of Aon's operations and the
possibility of differing or conflicting laws and regulations, or
the application or interpretation thereof, across jurisdictions in
which Aon does business; the impact of any regulatory
investigations brought in Ireland,
the U.K., the U.S. and other countries; failure to protect
intellectual property rights or allegations that Aon infringes on
the intellectual property rights of others; general economic and
political conditions in different countries in which Aon does
business around the world; the failure to retain, attract and
develop experienced and qualified personnel; international risks
associated with Aon's global operations, including impacts from
military conflicts or political instability, such as the ongoing
Russian war in Ukraine and the
Israel-Hamas conflict; the effects of natural or man-made
disasters, including the effects of health pandemics and the
impacts of climate related events; any system or network disruption
or breach resulting in operational interruption or improper
disclosure of confidential, personal, or proprietary data, and
resulting liabilities or damage to our reputation; Aon's ability to
develop, implement, update and enhance new systems; the actions
taken by third parties that perform aspects of Aon's business
operations and client services; the extent to which Aon is exposed
to certain risks, including lawsuits, related to actions Aon may
take in being responsible for making decisions on behalf of clients
in Aon's investment businesses or in other advisory services that
Aon currently provides, or may provide in the future; Aon's ability
to continue, and the costs and risks associated with, growing,
developing and integrating acquired business, and entering into new
lines of business or products; Aon's ability to secure regulatory
approval and complete transactions, and the costs and risks
associated with the failure to consummate proposed transactions;
changes in commercial property and casualty markets, commercial
premium rates or methods of compensation; Aon's ability to develop
and implement innovative growth strategies and initiatives intended
to yield cost savings (including the Accelerating Aon United
Program), and the ability to achieve such growth or cost savings;
the effects of Irish law on Aon's operating flexibility and the
enforcement of judgments against Aon; adverse effects on the market
price of Aon's securities and/or operating results for any reason,
including, without limitation, because of a failure to realize the
expected benefits of the acquisition of NFP (including anticipated
revenue and growth synergies) in the expected timeframe, or at all;
significant integration costs or difficulties in connection
with the acquisition of NFP or unknown or inestimable
liabilities; and potential impact of the consummation of the
acquisition of NFP on relationships, including with suppliers,
customers, employees and regulators.
Any or all of Aon's forward-looking statements may turn out to
be inaccurate, and there are no guarantees about Aon's performance.
The factors identified above are not exhaustive. Aon and its
subsidiaries operate in a dynamic business environment in which new
risks may emerge frequently. Accordingly, you should not place
undue reliance on forward-looking statements, which speak only as
of the dates on which they are made. In addition, results for prior
periods are not necessarily indicative of results that may be
expected for any future period. Further information concerning Aon
and its businesses, including factors that potentially could
materially affect Aon's financial results, is contained in Aon's
filings with the SEC. See Aon's
Annual Report on Form 10-K for the year ended December 31, 2023 and the risk factors set forth
under the headings "Risks Related to Aon and the NFP business after
Completion of the Transaction" and "Risks Related to NFP's
Business" in Aon's registration statement on Form S-4 filed on
April 23, 2024 for a further
discussion of these and other risks and uncertainties applicable to
Aon and its businesses. These factors may be revised or
supplemented in subsequent reports filed with the SEC. Aon is not
under, and expressly disclaims, any obligation to update or alter
any forward-looking statement that it may make from time to time,
whether as a result of new information, future events or
otherwise.
Explanation of Non-GAAP Measures
This communication includes supplemental information not
calculated in accordance with generally accepted accounting
principles in the United States
("U.S. GAAP"), including organic revenue growth, free cash flow,
adjusted operating income, adjusted operating margin, adjusted
earnings per share, adjusted net income attributable to Aon
shareholders, adjusted diluted net income per share, adjusted
effective tax rate, adjusted other income (expense), and adjusted
income before income taxes that exclude the effects of intangible
asset amortization and impairment, Accelerating Aon United Program
expenses, contingent consideration, NFP transaction and integration
costs, certain pension settlements, capital expenditures, and
certain other noteworthy items that affected results for the
comparable periods. Organic revenue growth includes the impact of
intercompany activity and excludes foreign exchange rate changes,
acquisitions (provided that organic revenue growth with includes
organic growth of an acquired business as calculated assuming that
the acquired business was part of the combined company for the same
proportion of the relevant prior year period), divestitures
(including held for sale businesses), transfers between revenue
lines, fiduciary investment income, and gains or losses on
derivatives accounted for as hedges. Currency impact represents the
effect on prior year period results if they were translated at
current period foreign exchange rates. Reconciliations to the
closest U.S. GAAP measure for each non-GAAP measure presented in
this communication are provided in the attached appendices.
Supplemental organic revenue growth information and additional
measures that exclude the effects of certain items noted above do
not affect net income or any other U.S. GAAP reported amounts. Free
cash flow is cash flows from operating activity less capital
expenditures. The adjusted effective tax rate excludes the
applicable tax impact associated with expenses for estimated
intangible asset amortization and impairment, and certain other
noteworthy items. Management believes that these measures are
important to make meaningful period-to-period comparisons and that
this supplemental information is helpful to investors. Management
also uses these measures to assess operating performance and
performance for compensation. Non-GAAP measures should be viewed in
addition to, not in lieu of, Aon's Condensed Consolidated Financial
Statements. Industry peers provide similar supplemental information
regarding their performance, although they may not make identical
adjustments.
Investor
Contact:
|
|
Media
Contact:
|
Leslie
Follmer
|
|
Will Dunn
|
+1
847-442-0622
|
|
Toll-free
(U.S., Canada and Puerto Rico): +1-833-751-
8114
|
investor.relations@aon.com
|
|
International: +1 312
381 3024
|
|
|
mediainquiries@aon.com
|
Aon
plc
|
|
Condensed Consolidated
Statements of Income (Unaudited)
|
|
|
|
Three Months
Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
(millions, except per
share data)
|
|
2024
|
|
2023
|
|
%
Change
|
|
2024
|
|
2023
|
|
%
Change
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
$
3,760
|
|
$
3,177
|
|
18 %
|
|
$
7,830
|
|
$
7,048
|
|
11 %
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
2,130
|
|
1,754
|
|
21 %
|
|
4,013
|
|
3,546
|
|
13 %
|
Information
technology
|
|
132
|
|
129
|
|
2 %
|
|
256
|
|
268
|
|
(4) %
|
Premises
|
|
82
|
|
68
|
|
21 %
|
|
153
|
|
143
|
|
7 %
|
Depreciation of fixed
assets
|
|
45
|
|
39
|
|
15 %
|
|
89
|
|
77
|
|
16 %
|
Amortization and
impairment of intangible assets
|
|
128
|
|
25
|
|
412 %
|
|
144
|
|
50
|
|
188 %
|
Other general
expense
|
|
455
|
|
320
|
|
42 %
|
|
803
|
|
649
|
|
24 %
|
Accelerating Aon
United Program expenses
|
|
132
|
|
—
|
|
100 %
|
|
251
|
|
—
|
|
100 %
|
Total operating
expenses
|
|
3,104
|
|
2,335
|
|
33 %
|
|
5,709
|
|
4,733
|
|
21 %
|
Operating
income
|
|
656
|
|
842
|
|
(22) %
|
|
2,121
|
|
2,315
|
|
(8) %
|
Interest
income
|
|
31
|
|
5
|
|
520 %
|
|
59
|
|
10
|
|
490 %
|
Interest
expense
|
|
(225)
|
|
(130)
|
|
73 %
|
|
(369)
|
|
(241)
|
|
53 %
|
Other income
(expense)
|
|
236
|
|
(59)
|
|
500 %
|
|
311
|
|
(84)
|
|
470 %
|
Income before income
taxes
|
|
698
|
|
658
|
|
6 %
|
|
2,122
|
|
2,000
|
|
6 %
|
Income tax expense
(1)
|
|
160
|
|
83
|
|
93 %
|
|
491
|
|
346
|
|
42 %
|
Net
income
|
|
538
|
|
575
|
|
(6) %
|
|
1,631
|
|
1,654
|
|
(1) %
|
Less: Net income
attributable to redeemable and non-
redeemable noncontrolling interests
|
|
14
|
|
15
|
|
(7) %
|
|
36
|
|
44
|
|
(18) %
|
Net income
attributable to Aon shareholders
|
|
$ 524
|
|
$ 560
|
|
(6) %
|
|
$
1,595
|
|
$
1,610
|
|
(1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per
share attributable to Aon
shareholders
|
|
$ 2.47
|
|
$ 2.74
|
|
(10) %
|
|
$ 7.75
|
|
$ 7.84
|
|
(1) %
|
Diluted net income per
share attributable to Aon
shareholders
|
|
$ 2.46
|
|
$ 2.71
|
|
(9) %
|
|
$ 7.72
|
|
$ 7.79
|
|
(1) %
|
Weighted average
ordinary shares outstanding - basic
|
|
212.5
|
|
204.7
|
|
4 %
|
|
205.8
|
|
205.4
|
|
— %
|
Weighted average
ordinary shares outstanding - diluted
|
|
213.3
|
|
206.3
|
|
3 %
|
|
206.7
|
|
206.7
|
|
— %
|
|
|
(1)
|
The effective tax rate
was 22.9% and 12.6% for the three months ended June 30, 2024 and
2023, respectively, and 23.1% and 17.3% for the six months ended
June 30, 2024 and 2023, respectively.
|
|
|
Aon
plc
|
|
Reconciliation of
Non-GAAP Measures - Organic Revenue Growth and Free Cash Flow
(Unaudited)
|
|
Organic Revenue
Growth (Unaudited)
|
|
|
|
Three Months
Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
|
Less:
Currency
Impact (1)
|
|
Less:
Fiduciary
Investment
Income (2)
|
|
Less:
Acquisitions,
Divestitures
& Other
|
|
Organic
Revenue
Growth (3)
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Risk
Solutions
|
|
$
2,015
|
|
$
1,774
|
|
14 %
|
|
(1) %
|
|
— %
|
|
9 %
|
|
6 %
|
Reinsurance
Solutions
|
|
635
|
|
607
|
|
5
|
|
(2)
|
|
—
|
|
—
|
|
7
|
Health
Solutions
|
|
662
|
|
447
|
|
48
|
|
—
|
|
—
|
|
42
|
|
6
|
Wealth
Solutions
|
|
463
|
|
352
|
|
32
|
|
—
|
|
—
|
|
23
|
|
9
|
Elimination
|
|
(15)
|
|
(3)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Total
revenue
|
|
$
3,760
|
|
$
3,177
|
|
18 %
|
|
(1) %
|
|
— %
|
|
13 %
|
|
6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
|
Less:
Currency
Impact (1)
|
|
Less:
Fiduciary
Investment
Income (2)
|
|
Less:
Acquisitions,
Divestitures
& Other
|
|
Organic
Revenue
Growth (3)
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Risk
Solutions
|
|
$
3,823
|
|
$
3,552
|
|
8 %
|
|
— %
|
|
1 %
|
|
3 %
|
|
4 %
|
Reinsurance
Solutions
|
|
1,802
|
|
1,684
|
|
7
|
|
—
|
|
1
|
|
(1)
|
|
7
|
Health
Solutions
|
|
1,395
|
|
1,118
|
|
25
|
|
—
|
|
—
|
|
19
|
|
6
|
Wealth
Solutions
|
|
833
|
|
702
|
|
19
|
|
1
|
|
—
|
|
12
|
|
6
|
Elimination
|
|
(23)
|
|
(8)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Total
revenue
|
|
$
7,830
|
|
$
7,048
|
|
11 %
|
|
— %
|
|
1 %
|
|
5 %
|
|
5 %
|
|
|
(1)
|
Currency impact
represents the effect on prior year period results if they were
translated at current period foreign exchange rates.
|
(2)
|
Fiduciary investment
income for the three months ended June 30, 2024 and 2023 was $75
million and $64 million, respectively. Fiduciary investment income
for the six months ended June 30, 2024 and 2023 was $154 million
and $116 million, respectively.
|
(3)
|
Organic revenue growth
includes the impact of intercompany activity and excludes foreign
exchange rate changes, acquisitions (provided that organic revenue
growth with includes organic growth of an acquired business as
calculated assuming that the acquired business was part of the
combined company for the same proportion of the relevant prior year
period), divestitures (including held for sale businesses),
transfers between revenue lines, fiduciary investment income, and
gains or losses on derivatives accounted for as
hedges.
|
|
|
Free Cash Flows
(Unaudited)
|
|
|
|
Six Months Ended
June 30,
|
|
|
(millions)
|
|
2024
|
|
2023
|
|
%
Change
|
Cash Provided by
Operating Activities
|
|
$
822
|
|
$
1,131
|
|
(27) %
|
Capital
Expenditures
|
|
(101)
|
|
(145)
|
|
(30) %
|
Free Cash
Flows (1)
|
|
$
721
|
|
$
986
|
|
(27) %
|
|
|
(1)
|
Free cash flow is
defined as cash flows from operations less capital expenditures.
This non-GAAP measure does not imply or represent a precise
calculation of residual cash flow available for discretionary
expenditures.
|
|
|
Aon
plc
|
Reconciliation of
Non-GAAP Measures - Operating Income, Operating Margin, and Diluted
Earnings Per Share (Unaudited) (1)
|
|
|
|
Three Months
Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
(millions, except
percentages)
|
|
2024
|
|
2023
|
|
%
Change
|
|
2024
|
|
2023
|
|
%
Change
|
Revenue
|
|
$
3,760
|
|
$
3,177
|
|
18 %
|
|
$
7,830
|
|
$
7,048
|
|
11 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
$
656
|
|
$
842
|
|
(22) %
|
|
$
2,121
|
|
$
2,315
|
|
(8) %
|
Amortization and
impairment of intangible assets
|
|
128
|
|
25
|
|
|
|
144
|
|
50
|
|
|
Change in the fair
value of contingent consideration
|
|
18
|
|
—
|
|
|
|
18
|
|
—
|
|
|
Accelerating Aon
United Program expenses (2)
|
|
132
|
|
—
|
|
|
|
251
|
|
—
|
|
|
Transaction and
integration costs (3)
|
|
95
|
|
—
|
|
|
|
110
|
|
—
|
|
|
Adjusted operating
income
|
|
$
1,029
|
|
$
867
|
|
19 %
|
|
$
2,644
|
|
$
2,365
|
|
12 %
|
Operating
margin
|
|
17.4 %
|
|
26.5 %
|
|
|
|
27.1 %
|
|
32.8 %
|
|
|
Adjusted operating
margin
|
|
27.4 %
|
|
27.3 %
|
|
|
|
33.8 %
|
|
33.6 %
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
(millions, except
percentages)
|
|
2024
|
|
2023
|
|
%
Change
|
|
2024
|
|
2023
|
|
%
Change
|
Adjusted operating
income
|
|
$
1,029
|
|
$
867
|
|
19 %
|
|
$
2,644
|
|
$
2,365
|
|
12 %
|
Interest
income
|
|
31
|
|
5
|
|
520 %
|
|
59
|
|
10
|
|
490 %
|
Interest
expense
|
|
(225)
|
|
(130)
|
|
73 %
|
|
(369)
|
|
(241)
|
|
53 %
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted other income
(expense) - pensions (4)
|
|
(11)
|
|
(16)
|
|
(31) %
|
|
(21)
|
|
(33)
|
|
(36) %
|
Adjusted other income
(expense) - other (5)(6)(7)
|
|
(4)
|
|
(16)
|
|
(75) %
|
|
(1)
|
|
(24)
|
|
(96) %
|
Adjusted other income
(expense)
|
|
(15)
|
|
(32)
|
|
(53) %
|
|
(22)
|
|
(57)
|
|
(61) %
|
Adjusted income
before income taxes
|
|
820
|
|
710
|
|
15 %
|
|
2,312
|
|
2,077
|
|
11 %
|
Adjusted income tax
expense (8)
|
|
182
|
|
125
|
|
46 %
|
|
519
|
|
393
|
|
32 %
|
Adjusted net
income
|
|
638
|
|
585
|
|
9 %
|
|
1,793
|
|
1,684
|
|
6 %
|
Less: Net income
attributable to redeemable and nonredeemable
noncontrolling interests
|
|
14
|
|
15
|
|
(7) %
|
|
36
|
|
44
|
|
(18) %
|
Adjusted net income
attributable to Aon shareholders
|
|
$
624
|
|
$
570
|
|
9 %
|
|
$
1,757
|
|
$
1,640
|
|
7 %
|
Adjusted diluted net
income per share attributable to Aon
shareholders
|
|
$ 2.93
|
|
$ 2.76
|
|
6 %
|
|
$ 8.50
|
|
$
7.93
|
|
7 %
|
Weighted average
ordinary shares outstanding - diluted
|
|
213.3
|
|
206.3
|
|
3 %
|
|
206.7
|
|
206.7
|
|
— %
|
Effective tax rates
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP
|
|
22.9 %
|
|
12.6 %
|
|
|
|
23.1 %
|
|
17.3 %
|
|
|
Non-GAAP
|
|
22.2 %
|
|
17.6 %
|
|
|
|
22.4 %
|
|
18.9 %
|
|
|
|
|
(1)
|
Certain noteworthy
items impacting operating income in the three and six months ended
June 30, 2024 and 2023 are described in this schedule. The items
shown with the caption "adjusted" are non-GAAP measures.
|
(2)
|
Total charges are
expected to include technology-related costs to facilitate
streamlining and simplifying operations, headcount reduction costs,
and costs associated with asset impairments, including real estate
consolidation costs.
|
(3)
|
On April 25, 2024, the
Company completed the acquisition of NFP. As part of the
acquisition, Aon incurred $101 million and $116 million
of transaction and integration costs during the three and six
months ended June 30, 2024, respectively. Transaction costs include
advisory, legal, accounting, regulatory, and other professional or
consulting fees required to complete the acquisition. For the three
months ended June 30, 2024, $79 million of transaction costs
were recognized in Total operating expenses and $6 million
were recognized within Other income (expense) related to the
extinguishment of acquired NFP debt. For the six months ended June
30, 2024, $90 million of transaction costs were recognized in
Total operating expenses and $6 million were recognized in
Other income (expense). The NFP acquisition also will result in
certain non-recurring integration costs associated with colleague
severance, retention bonus awards, termination of redundant
third-party agreements, costs associated with legal entity
rationalization, and professional or consulting fees related to
alignment of management processes and controls, as well as costs
associated with the assessment of NFP information technology
environment and security protocols. Aon incurred $16 million
and $20 million of integration costs in the three and six
months ended June 30, 2024, respectively.
|
(4)
|
To further its pension
de-risking strategy, the Company settled certain pension
obligations in the Netherlands through the purchase of annuities,
where certain pension assets were liquidated to purchase the
annuities. A non-cash settlement charge totaling $27 million was
recognized in the second quarter of 2023 which is excluded from
Adjusted other income (expense).
|
(5)
|
In the first quarter of
2024, the Company earned $82 million of deferred consideration from
the affiliates of The Blackstone Group L.P. and the other
designated purchasers related to the 2017 sale of the benefits
administration and business process outsourcing
business.
|
(6)
|
Adjusted other income
(expense) excluded gains from dispositions of $257 million related
to the sale of a business for the three and six months ended June
30, 2024.
|
(7)
|
Adjusted other income
(expense) excluded approximately $6 million of debt extinguishment
charges related to the repayment of NFP debt, which is
considered a transaction related cost incurred in the second
quarter of 2024.
|
(8)
|
Adjusted items are
generally taxed at the estimated annual effective tax rate, except
for the applicable tax impact associated with the anticipated sale
of certain assets and liabilities classified as held for sale,
certain pension settlements, Accelerating Aon United Program
expenses, deferred compensation from a prior year sale of business,
certain gains from dispositions, certain transaction and
integration costs related to the acquisition of NFP, and changes in
the fair value of contingent consideration, which are adjusted at
the related jurisdictional rate.
|
|
|
Aon
plc
|
|
Condensed Consolidated
Statements of Financial Position
|
|
|
|
As of
|
|
|
(Unaudited)
|
|
|
(millions)
|
|
June 30,
2024
|
|
December 31,
2023
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
974
|
|
$
778
|
Short-term
investments
|
|
182
|
|
369
|
Receivables,
net
|
|
4,459
|
|
3,254
|
Fiduciary assets
(1)
|
|
18,865
|
|
16,307
|
Other current
assets
|
|
1,063
|
|
996
|
Total
current assets
|
|
25,543
|
|
21,704
|
Goodwill
|
|
15,281
|
|
8,414
|
Intangible assets,
net
|
|
6,794
|
|
234
|
Fixed assets,
net
|
|
636
|
|
638
|
Operating lease
right-of-use assets
|
|
723
|
|
650
|
Deferred tax
assets
|
|
1,218
|
|
1,195
|
Prepaid
pension
|
|
629
|
|
618
|
Other non-current
assets
|
|
629
|
|
506
|
Total
assets
|
|
$
51,453
|
|
$
33,959
|
|
|
|
|
|
Liabilities,
redeemable noncontrolling interests, and equity
(deficit)
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
2,319
|
|
$
2,262
|
Short-term debt and
current portion of long-term debt
|
|
4
|
|
1,204
|
Fiduciary
liabilities
|
|
18,865
|
|
16,307
|
Other current
liabilities
|
|
2,310
|
|
1,878
|
Total
current liabilities
|
|
23,498
|
|
21,651
|
Long-term
debt
|
|
17,610
|
|
9,995
|
Non-current operating
lease liabilities
|
|
702
|
|
641
|
Deferred tax
liabilities
|
|
1,177
|
|
115
|
Pension, other
postretirement, and postemployment liabilities
|
|
1,173
|
|
1,225
|
Other non-current
liabilities
|
|
1,135
|
|
1,074
|
Total
liabilities
|
|
45,295
|
|
34,701
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
130
|
|
—
|
|
|
|
|
|
Equity
(deficit)
|
|
|
|
|
Ordinary shares -
$0.01 nominal value
|
|
2
|
|
2
|
Additional paid-in
capital
|
|
12,910
|
|
6,944
|
Accumulated
deficit
|
|
(2,574)
|
|
(3,399)
|
Accumulated other
comprehensive loss
|
|
(4,478)
|
|
(4,373)
|
Total Aon
shareholders' equity (deficit)
|
|
5,860
|
|
(826)
|
Nonredeemable
noncontrolling interests
|
|
168
|
|
84
|
Total equity
(deficit)
|
|
6,028
|
|
(742)
|
Total liabilities,
redeemable noncontrolling interests and equity
(deficit)
|
|
$
51,453
|
|
$
33,959
|
|
|
(1)
|
Includes cash and
short-term investments of $7,309 million and $6,901 million as of
June 30, 2024 and December 31, 2023, respectively.
|
Aon
plc
|
|
Condensed Consolidated
Statements of Cash Flows (Unaudited)
|
|
|
|
Six Months Ended
June 30,
|
(millions)
|
|
2024
|
|
2023
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
|
$
1,631
|
|
$
1,654
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
|
Gain from sales
of businesses
|
|
(257)
|
|
—
|
Depreciation of
fixed assets
|
|
89
|
|
77
|
Amortization
and impairment of intangible assets
|
|
144
|
|
50
|
Share-based
compensation expense
|
|
247
|
|
226
|
Deferred income
taxes
|
|
(122)
|
|
(168)
|
Other,
net
|
|
(112)
|
|
28
|
Change in assets and
liabilities:
|
|
|
|
|
Receivables,
net
|
|
(959)
|
|
(704)
|
Accounts
payable and accrued liabilities
|
|
(251)
|
|
(515)
|
Accelerating
Aon United Program liabilities
|
|
61
|
|
—
|
Current income
taxes
|
|
60
|
|
53
|
Pension, other
postretirement and postemployment liabilities
|
|
(17)
|
|
(3)
|
Other assets
and liabilities
|
|
308
|
|
433
|
Cash provided by
operating activities
|
|
822
|
|
1,131
|
Cash flows from
investing activities
|
|
|
|
|
Proceeds from
investments
|
|
146
|
|
54
|
Purchases of
investments
|
|
(91)
|
|
(29)
|
Net sales of
short-term investments - non fiduciary
|
|
189
|
|
255
|
Acquisition of
businesses, net of cash and funds held on behalf of
clients
|
|
(2,780)
|
|
(8)
|
Sale of
businesses, net of cash and funds held on behalf of
clients
|
|
352
|
|
1
|
Capital
expenditures
|
|
(101)
|
|
(145)
|
Cash provided by
(used for) investing activities
|
|
(2,285)
|
|
128
|
Cash flows from
financing activities
|
|
|
|
|
Share
repurchase
|
|
(500)
|
|
(1,100)
|
Proceeds from
issuance of shares
|
|
27
|
|
33
|
Cash paid for
employee taxes on withholding shares
|
|
(176)
|
|
(216)
|
Commercial
paper issuances, net of repayments
|
|
(591)
|
|
(217)
|
Issuance of
debt
|
|
7,926
|
|
744
|
Repayment of
debt
|
|
(4,328)
|
|
—
|
Increase in
fiduciary liabilities, net of fiduciary receivables
|
|
283
|
|
999
|
Cash dividends
to shareholders
|
|
(269)
|
|
(241)
|
Redeemable and
non-redeemable noncontrolling interests, and other financing
activities
|
|
(108)
|
|
(41)
|
Cash provided by
(used for) financing activities
|
|
2,264
|
|
(39)
|
Effect of exchange
rates on cash and cash equivalents and funds held on behalf of
clients
|
|
(202)
|
|
203
|
Net increase in cash
and cash equivalents and funds held on behalf of clients
|
|
599
|
|
1,423
|
Cash, cash equivalents
and funds held on behalf of clients at beginning of
period
|
|
7,722
|
|
7,076
|
Cash, cash
equivalents and funds held on behalf of clients at end of
period
|
|
$
8,321
|
|
$
8,499
|
Reconciliation of
cash and cash equivalents and funds held on behalf of
clients:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
974
|
|
$
952
|
Cash and cash
equivalents and funds held on behalf of clients classified as held
for sale
|
|
38
|
|
9
|
Funds held on
behalf of clients
|
|
7,309
|
|
7,538
|
Total cash and
cash equivalents and funds held on behalf of clients
|
|
$
8,321
|
|
$
8,499
|
View original
content:https://www.prnewswire.com/news-releases/aon-reports-second-quarter-2024-results-302207188.html
SOURCE Aon plc