Marsh McLennan 1166 Avenue of the Americas New York, New York 10036-2774 212 345 5000 www.marshmclennan.com |
NEWS RELEASE | Exhibit 99.1 |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Revenue | $ | 5,549 | $ | 5,083 | |||||||
Expense: | |||||||||||
Compensation and benefits | 3,100 | 2,807 | |||||||||
Other operating expenses | 1,004 | 918 | |||||||||
Operating expenses | 4,104 | 3,725 | |||||||||
Operating income | 1,445 | 1,358 | |||||||||
Other net benefit credits | 62 | 71 | |||||||||
Interest income | 1 | — | |||||||||
Interest expense | (110) | (118) | |||||||||
Investment income | 26 | 11 | |||||||||
Income before income taxes | 1,424 | 1,322 | |||||||||
Income tax expense | 338 | 324 | |||||||||
Net income before non-controlling interests | 1,086 | 998 | |||||||||
Less: Net income attributable to non-controlling interests | 15 | 15 | |||||||||
Net income attributable to the Company | $ | 1,071 | $ | 983 | |||||||
Net income per share attributable to the Company: | |||||||||||
- Basic | $ | 2.13 | $ | 1.93 | |||||||
- Diluted | $ | 2.10 | $ | 1.91 | |||||||
Average number of shares outstanding: | |||||||||||
- Basic | 503 | 509 | |||||||||
- Diluted | 509 | 514 | |||||||||
Shares outstanding at March 31 | 502 | 509 |
Components of Revenue Change* | ||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | % Change GAAP Revenue | Currency Impact | Acquisitions/ Dispositions/ Other Impact | Underlying Revenue | ||||||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||||||||
Risk and Insurance Services | ||||||||||||||||||||||||||||||||||||||
Marsh | $ | 2,546 | $ | 2,325 | 10 | % | (2) | % | 1 | % | 11 | % | ||||||||||||||||||||||||||
Guy Carpenter | 999 | 895 | 12 | % | (1) | % | 2 | % | 11 | % | ||||||||||||||||||||||||||||
Subtotal | 3,545 | 3,220 | 10 | % | (2) | % | 1 | % | 11 | % | ||||||||||||||||||||||||||||
Fiduciary interest income | 4 | 5 | ||||||||||||||||||||||||||||||||||||
Total Risk and Insurance Services | 3,549 | 3,225 | 10 | % | (2) | % | 1 | % | 11 | % | ||||||||||||||||||||||||||||
Consulting | ||||||||||||||||||||||||||||||||||||||
Mercer | 1,343 | 1,288 | 4 | % | (2) | % | — | 6 | % | |||||||||||||||||||||||||||||
Oliver Wyman Group | 667 | 585 | 14 | % | (2) | % | (1) | % | 17 | % | ||||||||||||||||||||||||||||
Total Consulting | 2,010 | 1,873 | 7 | % | (2) | % | — | 10 | % | |||||||||||||||||||||||||||||
Corporate Eliminations | (10) | (15) | ||||||||||||||||||||||||||||||||||||
Total Revenue | $ | 5,549 | $ | 5,083 | 9 | % | (2) | % | 1 | % | 10 | % | ||||||||||||||||||||||||||
Components of Revenue Change* | ||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | % Change GAAP Revenue | Currency Impact | Acquisitions/ Dispositions/ Other Impact | Underlying Revenue | ||||||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||||||||
Marsh: | ||||||||||||||||||||||||||||||||||||||
EMEA | $ | 842 | $ | 837 | 1 | % | (4) | % | (4) | % | 9 | % | ||||||||||||||||||||||||||
Asia Pacific | 321 | 274 | 17 | % | (4) | % | 5 | % | 17 | % | ||||||||||||||||||||||||||||
Latin America | 104 | 90 | 15 | % | (1) | % | — | 16 | % | |||||||||||||||||||||||||||||
Total International | 1,267 | 1,201 | 6 | % | (4) | % | (2) | % | 11 | % | ||||||||||||||||||||||||||||
U.S./Canada | 1,279 | 1,124 | 14 | % | — | 4 | % | 10 | % | |||||||||||||||||||||||||||||
Total Marsh | $ | 2,546 | $ | 2,325 | 10 | % | (2) | % | 1 | % | 11 | % | ||||||||||||||||||||||||||
Mercer: | ||||||||||||||||||||||||||||||||||||||
Wealth | $ | 617 | $ | 623 | (1) | % | (3) | % | — | 2 | % | |||||||||||||||||||||||||||
Health | 524 | 487 | 8 | % | (2) | % | 1 | % | 9 | % | ||||||||||||||||||||||||||||
Career | 202 | 178 | 13 | % | (3) | % | — | 16 | % | |||||||||||||||||||||||||||||
Total Mercer | $ | 1,343 | $ | 1,288 | 4 | % | (2) | % | — | 6 | % |
* Components of revenue change may not add due to rounding. |
Overview | ||
The Company reports its financial results in accordance with accounting principles generally accepted in the United States (referred to in this release as in accordance with "GAAP" or "reported" results). The Company also refers to and presents certain additional non-GAAP financial measures, within the meaning of Regulation G in accordance with the Securities Exchange Act of 1934. These measures are: adjusted operating income (loss), adjusted operating margin, adjusted income, net of tax and adjusted earnings per share (EPS). The Company has included reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP in the following tables. | ||
The Company believes these non-GAAP financial measures provide useful supplemental information that enables investors to better compare the Company’s performance across periods. Management also uses these measures internally to assess the operating performance of its businesses, to assess performance for employee compensation, and to decide how to allocate resources. 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 include adjustments that reflect how management views its businesses, 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 (loss). The following tables identify these noteworthy items and reconcile adjusted operating income (loss) to GAAP operating income (loss), on a consolidated and reportable segment basis, for the three months ended March 31, 2022 and 2021. The following tables also present adjusted operating margin. For the three months ended March 31, 2022 and 2021, adjusted operating margin is calculated by dividing the sum of adjusted operating income and identified intangible asset amortization by consolidated or segment adjusted revenue. |
Risk & Insurance Services | Consulting | Corporate/ Eliminations | Total | |||||||||||||||||||||||
Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||
Operating income (loss) | $ | 1,121 | $ | 392 | $ | (68) | $ | 1,445 | ||||||||||||||||||
Operating margin | 31.6 | % | 19.5 | % | N/A | 26.0 | % | |||||||||||||||||||
Add (deduct) impact of noteworthy items: | ||||||||||||||||||||||||||
Restructuring (a) | 15 | 7 | 8 | 30 | ||||||||||||||||||||||
Changes in contingent consideration (b) | 10 | — | — | 10 | ||||||||||||||||||||||
JLT acquisition-related costs and other (c) | 12 | 1 | — | 13 | ||||||||||||||||||||||
JLT legacy E&O provision (d) | — | (10) | — | (10) | ||||||||||||||||||||||
Legal claims (e) | 30 | — | — | 30 | ||||||||||||||||||||||
Deconsolidation of Russian businesses and other related charges (f) | 40 | 12 | — | 52 | ||||||||||||||||||||||
Operating income adjustments | 107 | 10 | 8 | 125 | ||||||||||||||||||||||
Adjusted operating income (loss) | $ | 1,228 | $ | 402 | $ | (60) | $ | 1,570 | ||||||||||||||||||
Total identified intangible amortization expense | $ | 78 | $ | 13 | $ | — | $ | 91 | ||||||||||||||||||
Adjusted operating margin | 36.5 | % | 20.6 | % | N/A | 29.7 | % | |||||||||||||||||||
Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||
Operating income (loss) | $ | 1,060 | $ | 361 | $ | (63) | $ | 1,358 | ||||||||||||||||||
Operating margin | 32.9% | 19.3% | N/A | 26.7 | % | |||||||||||||||||||||
Add (deduct) impact of noteworthy items: | ||||||||||||||||||||||||||
Restructuring (a) | 17 | 11 | 6 | 34 | ||||||||||||||||||||||
Changes in contingent consideration (b) | 6 | (6) | — | — | ||||||||||||||||||||||
JLT acquisition-related costs (c) | 11 | 1 | — | 12 | ||||||||||||||||||||||
Other | (2) | 3 | — | 1 | ||||||||||||||||||||||
Operating income adjustments | 32 | 9 | 6 | 47 | ||||||||||||||||||||||
Adjusted operating income (loss) | $ | 1,092 | $ | 370 | $ | (57) | $ | 1,405 | ||||||||||||||||||
Total identified intangible amortization expense | $ | 86 | $ | 14 | $ | — | $ | 100 | ||||||||||||||||||
Adjusted operating margin | 36.6 | % | 20.5 | % | N/A | 29.6 | % | |||||||||||||||||||
(a)Restructuring activities reflect costs related to the Company's global information technology and HR functions, JLT integration costs, Marsh (RIS) operational excellence and adjustments to restructuring liabilities for future rent under non-cancellable leases. (b)Primarily includes the change in fair value of contingent consideration related to acquisitions and dispositions as measured each quarter. (c)Includes retention costs and legal charges related to the acquisition of JLT. (d)Reflects recoveries under indemnities for a legacy JLT E&O matter relating to suitability of advice provided to individuals for defined benefit pension transfers in the U.K. (e)Settlement charges and legal costs related to strategic recruiting. (f)Loss on deconsolidation of Russian businesses and other related charges. The loss on deconsolidation is included in revenue and excluded from underlying revenue calculations and adjusted operating margin. | ||||||||||||||||||||||||||
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 in the preceding tables and the additional items listed below. Adjusted EPS is calculated by dividing the Company’s adjusted income, net of tax, by average number of shares outstanding-diluted for the relevant period. The following tables reconcile adjusted income, net of tax to GAAP income from continuing operations and adjusted EPS to GAAP EPS for the three month periods ended March 31, 2022 and 2021. |
Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||||||||||
Amount | Adjusted EPS | Amount | Adjusted EPS | ||||||||||||||||||||||||||||||||
Net income before non-controlling interests, as reported | $ | 1,086 | $ | 998 | |||||||||||||||||||||||||||||||
Less: Non-controlling interest, net of tax | 15 | 15 | |||||||||||||||||||||||||||||||||
Subtotal | $ | 1,071 | $ | 2.10 | $ | 983 | $ | 1.91 | |||||||||||||||||||||||||||
Operating income adjustments | $ | 125 | $ | 47 | |||||||||||||||||||||||||||||||
Investments adjustment (a) | (9) | — | |||||||||||||||||||||||||||||||||
Income tax effect of adjustments (b) | (18) | (9) | |||||||||||||||||||||||||||||||||
98 | 0.20 | 38 | 0.08 | ||||||||||||||||||||||||||||||||
Adjusted income, net of tax | $ | 1,169 | $ | 2.30 | $ | 1,021 | $ | 1.99 | |||||||||||||||||||||||||||
(a) Represents mark-to-market gains primarily related to the Company’s investment in Alexander Forbes ("AF"). | |||||||||||||||||||||||||||||||||||
(b) For items with an income tax impact, the tax effect was calculated using an effective tax rate based on the tax jurisdiction for each item. | |||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Consolidated | |||||||||||
Compensation and benefits | $ | 3,100 | $ | 2,807 | |||||||
Other operating expenses | 1,004 | 918 | |||||||||
Total expenses | $ | 4,104 | $ | 3,725 | |||||||
Depreciation and amortization expense | $ | 89 | $ | 97 | |||||||
Identified intangible amortization expense | 91 | 100 | |||||||||
Total | $ | 180 | $ | 197 | |||||||
Stock option expense | $ | 5 | $ | 21 | |||||||
Risk and Insurance Services | |||||||||||
Compensation and benefits | $ | 1,801 | $ | 1,610 | |||||||
Other operating expenses | 627 | 555 | |||||||||
Total expenses | $ | 2,428 | $ | 2,165 | |||||||
Depreciation and amortization expense | $ | 43 | $ | 50 | |||||||
Identified intangible amortization expense | 78 | 86 | |||||||||
Total | $ | 121 | $ | 136 | |||||||
Consulting | |||||||||||
Compensation and benefits | $ | 1,164 | $ | 1,074 | |||||||
Other operating expenses | 454 | 438 | |||||||||
Total expenses | $ | 1,618 | $ | 1,512 | |||||||
Depreciation and amortization expense | $ | 26 | $ | 29 | |||||||
Identified intangible amortization expense | 13 | 14 | |||||||||
Total | $ | 39 | $ | 43 | |||||||
(Unaudited) March 31, 2022 | December 31, 2021 | |||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 772 | $ | 1,752 | ||||||||||
Net receivables | 5,963 | 5,586 | ||||||||||||
Other current assets | 1,053 | 926 | ||||||||||||
Total current assets | 7,788 | 8,264 | ||||||||||||
Goodwill and intangible assets | 18,974 | 19,127 | ||||||||||||
Fixed assets, net | 865 | 847 | ||||||||||||
Pension related assets | 2,246 | 2,270 | ||||||||||||
Right of use assets | 1,825 | 1,868 | ||||||||||||
Deferred tax assets | 530 | 551 | ||||||||||||
Other assets | 1,460 | 1,461 | ||||||||||||
TOTAL ASSETS | $ | 33,688 | $ | 34,388 | ||||||||||
LIABILITIES AND EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Short-term debt | $ | 1,191 | $ | 17 | ||||||||||
Accounts payable and accrued liabilities | 3,084 | 3,165 | ||||||||||||
Accrued compensation and employee benefits | 1,400 | 2,942 | ||||||||||||
Current lease liabilities | 331 | 332 | ||||||||||||
Accrued income taxes | 308 | 198 | ||||||||||||
Dividends payable | 273 | — | ||||||||||||
Total current liabilities | 6,587 | 6,654 | ||||||||||||
Fiduciary liabilities | 10,461 | 9,622 | ||||||||||||
Less - cash and cash equivalents held in a fiduciary capacity | (10,461) | (9,622) | ||||||||||||
— | — | |||||||||||||
Long-term debt | 10,552 | 10,933 | ||||||||||||
Pension, post-retirement and post-employment benefits | 1,515 | 1,632 | ||||||||||||
Long-term lease liabilities | 1,831 | 1,880 | ||||||||||||
Liabilities for errors and omissions | 352 | 355 | ||||||||||||
Other liabilities | 1,695 | 1,712 | ||||||||||||
Total equity | 11,156 | 11,222 | ||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 33,688 | $ | 34,388 |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2022 | 2021 | ||||||||||
Operating cash flows: | |||||||||||
Net income before non-controlling interests | $ | 1,086 | $ | 998 | |||||||
Adjustments to reconcile net income to cash used for operations: | |||||||||||
Depreciation and amortization | 180 | 197 | |||||||||
Non cash lease expense | 77 | 79 | |||||||||
Deconsolidation of Russian businesses | 39 | — | |||||||||
Share-based compensation expense | 105 | 78 | |||||||||
Net (gain) loss on investments, disposition of assets and other | (17) | (9) | |||||||||
Changes in assets and liabilities: | |||||||||||
Accrued compensation and employee benefits | (1,528) | (1,167) | |||||||||
Net receivables | (429) | (404) | |||||||||
Other changes to assets and liabilities | (6) | 4 | |||||||||
Contributions to pension and other benefit plans in excess of current year credit | (125) | (102) | |||||||||
Operating lease liabilities | (84) | (82) | |||||||||
Net cash used for operations | (702) | (408) | |||||||||
Financing cash flows: | |||||||||||
Purchase of treasury shares | (500) | (112) | |||||||||
Net proceeds from issuance of commercial paper | 825 | — | |||||||||
Repayments of debt | (4) | (4) | |||||||||
Net issuance of common stock from treasury shares | (100) | (58) | |||||||||
Net distributions of non-controlling interests and deferred/contingent consideration | (20) | (40) | |||||||||
Dividends paid | (272) | (237) | |||||||||
Increase in fiduciary liabilities | 926 | 190 | |||||||||
Net cash provided by (used for) financing activities | 855 | (261) | |||||||||
Investing cash flows: | |||||||||||
Capital expenditures | (122) | (69) | |||||||||
Net (purchase) sale of long-term investments and other | (9) | 2 | |||||||||
Dispositions | (4) | — | |||||||||
Acquisitions | (24) | — | |||||||||
Net cash used for investing activities | (159) | (67) | |||||||||
Effect of exchange rate changes on cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity | (136) | (36) | |||||||||
Decrease in cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity | (142) | (772) | |||||||||
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at beginning of period | 11,375 | 10,674 | |||||||||
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at end of period | $ | 11,233 | $ | 9,902 | |||||||
Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity to the Consolidated Balance Sheets | |||||||||||
Three Months Ended March 31, | 2022 | 2021 | |||||||||
(In millions) | |||||||||||
Cash and cash equivalents | $ | 772 | $ | 1,120 | |||||||
Cash and cash equivalents held in a fiduciary capacity | 10,461 | 8,782 | |||||||||
Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity | $ | 11,233 | $ | 9,902 |