WTW has its announced financial results for the fourth quarter and full year ended 31 December 2021.
Carl Hess, WTW’s Chief executive Officer said:
The fourth quarter marked the end of a solid fiscal year at WTW. For the year, we delivered revenue growth and meaningful margin expansion. While the results are in line with our expectations, they do not fully reflect the near and long-term potential of the Company.”
“Looking ahead to 2022, we remain committed to doing the work that’s needed to strengthen performance. Our hiring levels have increased and we expect that the impacts of previous colleague departures will subside helping us to deliver long-term organic growth and margin expansion in line with our Investor Day expectations. Our new global leadership team has been working diligently on our new path forward as we look to execute on our strategic priorities. We are squarely focused on delivering on our targets and I am confident that the actions we are taking will create value for our clients, colleagues and shareholders.”
Company Highlights
- Total revenue increased 1% to $2.71 billion for the quarter and 4% to $9.00 billion for the year
- Organic revenue growth of 4% for the quarter and 6% for the year
- Income from Operations was $690 million or 25.5% of revenue for the quarter, and $2.2 billion or 24.5% of revenue for the year
- Adjusted Operating Income was $871 million or 32.2% of revenue for the quarter, up 180 basis points over prior year
- Adjusted Operating Income was $1.8 billion or 19.9% of revenue for the year, up 190 basis points over prior year
- Diluted Earnings per Share, including discontinued operations, were $19.19 for the quarter and $32.78 for the year, up 424% and 328%, respectively, from prior year
- Adjusted Diluted Earnings per Share were $5.67 for the quarter, up 9% over prior year
- Adjusted Diluted Earnings per Share were $11.60 for the year, up 19% over prior year
On 13 August 2021, the Company entered into a definitive agreement to sell Willis Re for total upfront cash consideration of $3.25 billion plus an earnout payable in 2025 of up to $750 million in cash, subject to certain adjustments. The deal was completed in principal jurisdictions on December 1, 2021 and the Company received the upfront cash consideration. In connection with the transaction, the operating results of Willis Re were reclassified to Discontinued Operations.
Revenue was $2.71 billion for the fourth quarter of 2021, an increase of 1% (2% increase constant currency and 4% increase organic) as compared to $2.67 billion for the same period in the prior year.
For the year ended December 31, 2021, revenue was $9.00 billion, an increase of 4% (2% increase constant currency and 6% increase organic) as compared to $8.62 billion for the same period in the prior year.
Income from operations for the fourth quarter of 2021 was $690 million, or 25.5% of revenue, an increase from $579 million or 21.7% of revenue in the fourth quarter of the prior year. Adjusted operating income was $871 million, or 32.2% of revenue, an increase of 180 basis points compared to the fourth quarter of the prior year. Net income attributable to WTW, which includes discontinued operations was $2.4 billion for the fourth quarter of 2021, an increase of 405% from $476 million for the prior-year fourth quarter. For the quarter, diluted earnings per share, which includes discontinued operations, were $19.19 and adjusted diluted earnings per share were $5.67. The U.S. GAAP tax rate for the quarter was 20.8%, and the adjusted income tax rate for the quarter used in calculating adjusted diluted earnings per share was 21.1%.
the prior year. Net income attributable to WTW, which includes discontinued operations was $4.2 billion for the year ended December 31, 2021, an increase of 324% from $996 million for the same period in the prior year. For the year ended December 31, 2021, diluted earnings per share, which includes discontinued operations, were $32.78 and adjusted diluted earnings per share were $11.60. For the year ended December 31, 2021, the U.S. GAAP tax rate was 19.9%, and the adjusted income tax rate used in calculating adjusted diluted earnings per share was 20.7%.
Net income, which includes discontinued operations, was $2.4 billion or 89.0% of revenue for the fourth quarter of 2021, an increase from net income of $483 million, or 18.1% of revenue for the prior-year fourth quarter. Adjusted EBITDA for the fourth quarter of 2021 was $1.0 billion, or 37.9% of revenue, an increase from Adjusted EBITDA of $959 million, or 35.9% of revenue.
Net income, which includes discontinued operations, was $4.2 billion or 47.1% of revenue for the year ended December 31, 2021, an increase from net income of $1.0 billion or 11.8% of revenue for the same period in the prior year. Adjusted EBITDA for the year ended December 31, 2021 was $2.4 billion, or 26.6% of revenue, an increase from Adjusted EBITDA of $2.1 billion, or 24.9% of revenue.
Cash flows from operating activities, which includes discontinued operations, for the year ended December 31, 2021 were $2.06 billion, up 16% compared to $1.77 billion for the prior year. Free cash flow, which includes discontinued operations, for the year ended December 31, 2021 was $1.91 billion, up 23% compared to $1.55 billion for the prior year. The increase in year-over-year free cash flow was primarily due to the termination income receipt, net of increased cash transaction and integration fees of $948 million. This was partially offset by $383 million in tax payments primarily related to the disposal of Willis Re, net legal settlement payments of approximately $185 million for the previously-announced Stanford and Willis Towers Watson merger settlements and higher incentive compensation of approximately $250 million. Absent these items, free cash flow would have been $1.78 billion, up 15% versus the prior year. The Company repurchased approximately $627 million of WTW stock during the fourth quarter of 2021. For the full year, the Company repurchased approximately $1.6 billion of WTW stock.