Underlying Revenue Increases 4% Reflecting
Growth Across All Operating Companies
GAAP EPS Rises 3% to $.91 from $.88
Adjusted EPS at $.92
Marsh & McLennan Companies, Inc. (NYSE: MMC), a global
professional services firm offering clients advice and solutions in
risk, strategy and people, today reported financial results for the
first quarter ended March 31, 2016.
Marsh & McLennan Companies President and CEO Dan Glaser
said: "We are pleased with our performance in the first quarter.
Underlying revenue increased 4% on a consolidated basis, reflecting
growth across all operating companies. Underlying growth was 2% in
Risk & Insurance Services and 6% in Consulting. Earnings per
share increased 3% to $.91. Adjusted EPS was $.92.
"We are off to a strong start to the year, and believe the
Company is well positioned to deliver underlying revenue growth,
meaningful margin expansion in both operating segments and strong
earnings per share growth in 2016," concluded Mr. Glaser.
Consolidated Results
Consolidated revenue in the first quarter of 2016 was $3.3
billion, an increase of 4% on both a reported and underlying basis
compared with the first quarter of 2015. Operating income was $733
million, essentially flat compared with $735 million in the prior
year. Adjusted operating income, which excludes noteworthy items as
presented in the attached supplemental schedules, was $736 million,
and net income attributable to the Company was $481 million. On a
per share basis, net income attributable to the Company rose 3% to
$.91 from $.88 last year. Adjusted earnings per share was $.92.
In March 2015, the Company terminated its post-65 retiree
medical reimbursement program in the United States. As a result,
the Company recognized a net credit of approximately $125 million,
or about $0.15 per share, in the first quarter of 2015.
Risk & Insurance Services
Risk & Insurance Services revenue was $1.9 billion in the
first quarter of 2016, an increase of 2% on an underlying basis.
Risk & Insurance Services generated operating income of $535
million, and adjusted operating income of $543 million.
Marsh produced revenue in the first quarter of $1.5 billion, an
increase of 2% on an underlying basis. International operations
produced underlying revenue growth of 2%, reflecting growth of 1%
in EMEA, 3% in Asia Pacific and 6% in Latin America. In US/Canada,
underlying revenue rose 2%. Guy Carpenter's revenue in the first
quarter was $374 million, an increase of 3% on an underlying
basis.
Consulting
Consulting generated revenue of $1.5 billion in the first
quarter, an increase of 6% on an underlying basis. Operating income
was $245 million, with adjusted operating income of $238
million.
Mercer produced revenue of $1 billion in the first quarter, an
increase of 3% on an underlying basis. Health, with revenue of $400
million, grew 6% on an underlying basis; Investments, with revenue
of $196 million, rose 1%; Talent, with revenue of $131 million, was
up 1%; and Retirement, with revenue of $312 million, was flat.
Oliver Wyman Group’s revenue was $439 million in the first quarter,
an increase of 15% on an underlying basis.
Other Items
In March, the Company issued $350 million of 3.300% senior notes
due in 2023, the net proceeds of which it intends to use for
general corporate purposes. The Company repurchased 3.5 million
shares of its common stock for $200 million in the first
quarter.
Conference Call
A conference call to discuss first quarter 2016 results will be
held today at 8:30 a.m. Eastern time. To participate in the
teleconference, please dial +1 888 500 6973. Callers from outside
the United States should dial +1 719 457 2646. The access code for
both numbers is 4762012. The live audio webcast may be accessed at
www.mmc.com. A replay of the webcast will be available
approximately two hours after the event.
About Marsh & McLennan Companies
MARSH & McLENNAN COMPANIES (NYSE: MMC) is a global
professional services firm offering clients advice and solutions in
the areas of risk, strategy and people. Marsh is a leader in
insurance broking and risk management; Guy Carpenter is a leader in
providing risk and reinsurance intermediary services; Mercer is a
leader in talent, health, retirement and investment consulting; and
Oliver Wyman is a leader in management consulting. With annual
revenue of $13 billion and approximately 60,000 colleagues
worldwide, Marsh & McLennan Companies provides analysis, advice
and transactional capabilities to clients in more than 130
countries. The Company is committed to being a responsible
corporate citizen and making a positive impact in the communities
in which it operates. Visit www.mmc.com for more information and
follow us on LinkedIn and Twitter @MMC_Global.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements," as
defined in the Private Securities Litigation Reform Act of 1995.
These statements, which express management's current views
concerning future events or results, use words like "anticipate,"
"assume," "believe," "continue," "estimate," "expect," "intend,"
"plan," "project" and similar terms, and future or conditional
tense verbs like "could," "may," "might," "should," "will" and
"would." Forward-looking statements are subject to inherent risks
and uncertainties that could cause actual results to differ
materially from those expressed or implied in our forward-looking
statements.
Factors that could materially affect our future results include,
among other things: our ability to maintain adequate safeguards to
protect the security of confidential, personal or proprietary
information; our ability to compete effectively and adapt to
changes in the competitive environment, including to technological
and other types of innovation; the impact of potential changes in
global economic, political and market conditions on us and our
clients, including the possibility of an exit by the United Kingdom
from the European Union; our ability to successfully recover should
we experience a business continuity problem due to cyberattack,
natural disaster or otherwise; our exposure to potential civil
remedies or criminal penalties if we fail to comply with U.S. and
non-U.S. laws and regulations applicable in the jurisdictions in
which we operate; the financial and operational impact of complying
with laws and regulations in the jurisdictions in which we operate;
our exposure to potential losses and liabilities, including
reputational impact, arising from errors and omissions, breach of
fiduciary duty and similar claims against us; the impact of
fluctuations in foreign exchange rates, interest rates and global
securities markets on our results; the impact of changes in
applicable tax laws and regulations, including of the regulations
recently proposed by the U.S. Treasury Department; the impact on
our competitive position of our tax rate relative to our
competitors; the effect of our global pension obligations on our
financial position, earnings and cash flows; our ability to make
acquisitions and dispositions and successfully integrate the
businesses we acquire; our ability to incentivize and retain key
employees; and the impact of changes in accounting rules or in our
accounting estimates or assumptions.
The factors identified above are not exhaustive. Marsh &
McLennan Companies and its subsidiaries operate in a dynamic
business environment in which new risks emerge frequently.
Accordingly, we caution readers not to place undue reliance on any
forward-looking statements, which are based only on information
currently available to us and speak only as of the dates on which
they are made. The Company undertakes no obligation to update or
revise any forward-looking statement to reflect events or
circumstances arising after the date on which it is made.
Further information concerning Marsh & McLennan Companies
and its businesses, including information about factors that could
materially affect our results of operations and financial
condition, is contained in the Company's filings with the
Securities and Exchange Commission, including the "Risk Factors"
section and the "Management’s Discussion and Analysis of Financial
Condition and Results of Operations" section of our most recently
filed Annual Report on Form 10-K.
Marsh & McLennan Companies,
Inc.
Consolidated Statements of
Income
(In millions, except per share
figures)
(Unaudited)
Three Months EndedMarch 31, 2016
2015
Revenue $ 3,336 $
3,215
Expense: Compensation and Benefits
1,854 1,730 Other Operating Expenses
749 750
Operating Expenses 2,603 2,480
Operating Income 733 735
Interest Income
2 3
Interest Expense (46 ) (36 )
Investment (Loss) Income (3 ) 2
Income Before Income Taxes 686 704
Income Tax
Expense 196 206
Income from Continuing
Operations 490 498
Discontinued Operations, Net of
Tax — (3 )
Net Income Before Non-Controlling
Interests 490 495
Less: Net Income Attributable to
Non-Controlling Interests
9 13
Net Income Attributable to the
Company $ 481 $ 482
Basic Net
Income Per Share - Continuing Operations $
0.92 $ 0.90
- Net Income Attributable to
the Company $ 0.92 $ 0.89
Diluted Net Income Per Share - Continuing Operations
$ 0.91 $ 0.89
- Net Income
Attributable to the Company $ 0.91 $ 0.88
Average Number of Shares Outstanding - Basic
521 539
- Diluted 526 545
Shares Outstanding at 3/31 521 538
Marsh & McLennan Companies,
Inc.
Supplemental Information - Revenue
Analysis
Three Months Ended March 31,
2016
(Millions) (Unaudited)
Components of Revenue Change*
Three Months EndedMarch
31,
%
ChangeGAAPRevenue
CurrencyImpact
Acquisitions/DispositionsImpact
UnderlyingRevenue
2016 2015
Risk and Insurance
Services Marsh
$ 1,488 $ 1,430 4% (4)% 6% 2% Guy
Carpenter
374 368 2% (1)% - 3% Subtotal
1,862 1,798 4% (4)% 5% 2% Fiduciary Interest Income
6
5 Total Risk and Insurance Services
1,868
1,803 4% (4)% 5% 2%
Consulting Mercer
1,039 1,037 - (3)% 1% 3% Oliver Wyman Group
439
384 14% (2)% 1% 15% Total Consulting
1,478
1,421 4% (3)% 1% 6%
Corporate / Eliminations
(10 ) (9 )
Total Revenue $ 3,336
$ 3,215 4% (3)% 3% 4%
Revenue Details
The following table provides more detailed
revenue information for certain of the components presented
above:
Components of Revenue Change*
Three Months EndedMarch
31,
%
ChangeGAAPRevenue
CurrencyImpact
Acquisitions/DispositionsImpact
UnderlyingRevenue
2016 2015
Marsh: EMEA
$
570 $ 563 1% (6)% 6% 1% Asia Pacific
146 148 (2)%
(5)% 1% 3% Latin America
71 81 (13)% (19)% -
6% Total International
787 792 (1)% (7)% 4% 2% U.S. / Canada
701 638 10% (1)% 9% 2% Total Marsh
$
1,488 $ 1,430 4% (4)% 6% 2%
Mercer:
Health
$ 400 $ 384 4% (2)% - 6% Retirement
312
331 (5)% (3)% (2)% - Investments
196 205 (4)% (6)% 1% 1%
Talent
131 117 11% (3)% 13% 1% Total Mercer
$ 1,039 $ 1,037 - (3)% 1% 3% Notes
Underlying revenue measures the change in revenue using
consistent currency exchange rates, excluding the impact of certain
items that affect comparability such as: acquisitions, dispositions
and transfers among businesses. * Components of revenue
change may not add due to rounding.
Marsh & McLennan Companies,
Inc.
Non-GAAP Measures
Three Months Ended March 31
(Millions) (Unaudited)
The Company presents below certain additional financial
measures that are "non-GAAP measures," within the meaning of
Regulation G under the Securities Exchange Act of 1934. These
measures are: adjusted operating income (loss); adjusted operating
margin; and adjusted income, net of tax. The Company
presents these non-GAAP measures to provide investors with
additional information to analyze the Company's performance from
period to period. Management also uses these measures to assess
performance for incentive compensation purposes and to allocate
resources in managing the Company's businesses. However, investors
should not consider these non-GAAP measures in isolation from, or
as a substitute for, the financial information that the Company
reports in accordance with GAAP. The Company's non-GAAP measures
reflect subjective determinations by management, and may differ
from similarly titled non-GAAP measures presented by other
companies.
Adjusted Operating Income (Loss) and Adjusted
Operating Margin Adjusted operating income (loss) is
calculated by excluding the impact of certain noteworthy items from
the Company's GAAP operating income or loss. The following tables
identify these noteworthy items and reconcile adjusted operating
income (loss) to GAAP operating income or loss, on a consolidated
and segment basis, for the three months ended March 31, 2016 and
2015. The following tables also present adjusted operating margin,
which is calculated by dividing adjusted operating income by
consolidated or segment GAAP revenue.
Risk
&InsuranceServices
Consulting
Corporate/Eliminations
Total Three Months Ended March 31, 2016
Operating income (loss) $ 535 $
245 $ (47 ) $
733 Add (Deduct) impact of Noteworthy Items:
Restructuring charges (a)
1 — 2 3
Adjustments to acquisition related accounts (b)
7 (1
) — 6 Disposal of business (c)
—
(6 ) — (6 ) Operating
income adjustments 8 (7 ) 2
3 Adjusted operating income (loss)
$ 543 $ 238 $
(45 ) $ 736
Operating margin 28.6
%
16.6 % N/A 22.0 %
Adjusted operating margin 29.1 % 16.2
% N/A 22.1 % Three Months
Ended March 31, 2015 Operating income (loss) $ 533
$ 248 $ (46 ) $ 735 Add (Deduct)
impact of Noteworthy Items: Restructuring charges (a) — — 2 2
Adjustments to acquisition related accounts (b) 13 (1 ) —
12
Operating income adjustments 13 (1 )
2 14
Adjusted operating income (loss) $ 546
$ 247 $ (44 ) $ 749
Operating
margin 29.6 % 17.4 % N/A 22.9 %
Adjusted operating
margin 30.3 % 17.4 % N/A 23.3 %
(a) Primarily severance for center led
initiatives, future rent under non-cancellable leases, and
integration costs related to recent acquisitions.
(b) Primarily includes the change in fair
value as measured each quarter of contingent consideration related
to acquisitions.
(c) Reflects contingent proceeds related
to the disposal of Mercer's U.S. defined contribution recordkeeping
business in 2015. This $6 million is also removed from GAAP revenue
in the calculation of adjusted operating margin.
Marsh & McLennan Companies,
Inc.
Non-GAAP Measures
Three Months Ended March 31
(Millions) (Unaudited)
Adjusted income, net of tax Adjusted income,
net of tax is calculated as: the Company's GAAP income from
continuing operations, adjusted to reflect the after-tax impact of
the operating income adjustments set forth in the preceding tables;
divided by MMC's average number of shares outstanding-diluted for
the period.
Reconciliation of the Impact of
Non-GAAP Measures on diluted earnings per share -
Three Months EndedMarch 31,
2016
Three Months EndedMarch 31, 2015
Amount
DilutedEPS
Amount
DilutedEPS
Income from continuing operations
$
490 $ 498 Less: Non-controlling
interest, net of tax
9 13 Subtotal
$
481 $ 0.91 $ 485 $
0.89 Operating income adjustments
$ 3 $
14 Impact of income taxes
— (5 )
3 0.01 9 0.02 Adjusted income,
net of tax
$ 484 $
0.92 $ 494 $
0.91
Marsh & McLennan Companies,
Inc.
Supplemental Information
Three Months Ended March 31
(Millions) (Unaudited)
Three Months Ended March 31,
2016 2015
Consolidated Compensation and
Benefits
$ 1,854 $ 1,730 Other operating expenses
749 750 Total Expenses
$ 2,603 $ 2,480
Depreciation and amortization expense
$ 78 $ 77
Identified intangible amortization expense
33 24 Total
$ 111 $ 101 Stock option expense
$
11 $ 8 Capital expenditures
$ 51 $ 91
Risk and Insurance Services Compensation and Benefits
$ 921 $ 862 Other operating expenses
412 408
Total Expenses
$ 1,333 $ 1,270 Depreciation
and amortization expense
$ 36 $ 35 Identified
intangible amortization expense
28 21 Total
$
64 $ 56
Consulting Compensation and Benefits
$ 847 $ 783 Other operating expenses
386 390
Total Expenses
$ 1,233 $ 1,173 Depreciation
and amortization expense
$ 25 $ 26 Identified
intangible amortization expense
5 3 Total
$ 30
$ 29
Marsh & McLennan Companies,
Inc.
Consolidated Balance Sheets
(Millions)
(Unaudited)
March 31,
2016
December 31,
2015
ASSETS Current assets: Cash and cash equivalents
$ 918 $ 1,374 Net receivables
3,647 3,471
Other current assets
233 199
Total current
assets 4,798 5,044 Goodwill and intangible assets
8,985 8,925 Fixed assets, net
757 773 Pension related
assets
1,181 1,159 Deferred tax assets
1,117 1,138
Other assets
1,290 1,177
TOTAL ASSETS
$ 18,128 $ 18,216
LIABILITIES
AND EQUITY Current liabilities: Short-term debt
$
265 $ 12 Accounts payable and accrued liabilities
1,879 1,886 Accrued compensation and employee benefits
724 1,656 Accrued income taxes
128 154 Dividends
payable
163 —
Total current liabilities
3,159 3,708 Fiduciary liabilities
4,501 4,146
Less - cash and investments held in a fiduciary capacity
(4,501 ) (4,146 )
— — Long-term debt
4,748 4,402 Pension, post-retirement and post-employment
benefits
2,042 2,058 Liabilities for errors and omissions
319 318 Other liabilities
1,089 1,128
Total
equity 6,771 6,602
TOTAL LIABILITIES
AND EQUITY $ 18,128 $ 18,216
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version on businesswire.com: http://www.businesswire.com/news/home/20160428005817/en/
Media:Marsh & McLennan CompaniesEdward L. Dandridge,
+1 212 345
9751ed.dandridge@mmc.comorInvestor:Marsh &
McLennan CompaniesKeith Walsh, +1 212 345
0057keith.walsh@mmc.com
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