News
Marsh & McLennan Companies Reports First Quarter 2016 Results
April 28, 2016 at 7:01 AM EDT
Media Contact
Email:media@mmc.com
Underlying Revenue Increases 4% Reflecting Growth Across All Operating Companies
GAAP EPS Rises 3% to
Adjusted EPS at
"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
In
Risk & Insurance Services
Risk & Insurance Services revenue was
Marsh produced revenue in the first quarter of
Consulting
Consulting generated revenue of
Mercer produced revenue of
Other Items
In March, the Company issued
Conference Call
A conference call to discuss first quarter 2016 results will be held today at
About
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
The factors identified above are not exhaustive.
Further information concerning
Marsh & McLennan Companies, Inc. Consolidated Statements of Income (In millions, except per share figures) (Unaudited) | ||||||||
Three Months Ended March 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- | 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 Ended | % Change | Currency | Acquisitions/ | Underlying | ||||||||||||
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 Ended | % Change | Currency | Acquisitions/ | Underlying | ||||||||||||
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 & | Consulting | Corporate/ | 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 Ended | Three Months Ended | ||||||||||||||||||||||||||||||||||
Amount | Diluted | Amount | Diluted | ||||||||||||||||||||||||||||||||
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 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160428005817/en/
Source:
Media:
Marsh & McLennan Companies
Edward L. Dandridge, +1 212 345 9751
ed.dandridge@mmc.com
or
Investor:
Marsh & McLennan Companies
Keith Walsh, +1 212 345 0057
keith.walsh@mmc.com