TIDMMHM
Marsh McLennan (NYSE: MMC), the world's leading professional
services firm in the areas of risk, strategy and people, today
reported financial results for the first quarter ended March 31,
2021.
Dan Glaser, President and CEO, said: "Marsh McLennan had an
outstanding first quarter. We delivered strong growth in underlying
revenue and adjusted earnings, and generated meaningful adjusted
operating margin expansion in both Risk & Insurance Services
and Consulting. Our total revenue grew 9%, with underlying revenue
growth of 6%. Adjusted operating income rose 20%, adjusted EPS grew
21%, and our adjusted operating margin increased 260 basis points
to 29.6%.
"Our excellent start to 2021 positions us well for the balance
of the year."
Consolidated Results
Consolidated revenue in the first quarter of 2021 was $5.1
billion, an increase of 9%, or 6% on an underlying basis, compared
with the first quarter of 2020. Operating income was $1.4 billion
compared with $1.1 billion in the prior year. Adjusted operating
income, which excludes noteworthy items as presented in the
attached supplemental schedules, rose 20% to $1.4 billion.
Net income attributable to the Company was $983 million, or
$1.91 per diluted share, in the first quarter. This compares with
$754 million, or $1.48 per diluted share, in the prior year.
Adjusted earnings per share rose 21% to $1.99 compared with $1.64
for the prior year period.
Risk & Insurance Services
Risk & Insurance Services revenue was $3.2 billion in the
first quarter of 2021, an increase of 11% compared with the first
quarter 2020, or 7% on an underlying basis. Operating income of
$1.1 billion increased 24% from the prior year. Adjusted operating
income rose 17% to $1.1 billion compared with $932 million in the
prior year.
Marsh's revenue in the first quarter was $2.3 billion, an
increase of 8% on an underlying basis. In US/Canada, underlying
revenue rose 9%. International operations produced underlying
revenue growth of 6%, reflecting growth of 8% in Asia Pacific, 6%
in EMEA and 6% in Latin America. Guy Carpenter's revenue in the
first quarter was $895 million, an increase of 7% on an underlying
basis.
Consulting
Consulting revenue in the first quarter was $1.9 billion, an
increase of 6%, or 3% on an underlying basis. Operating income of
$361 million increased 28% from the prior year. Adjusted operating
income rose 28% to $370 million compared with $289 million in the
prior year.
Mercer, with revenue of $1.3 billion in the first quarter, was
flat on an underlying basis. Wealth revenue of $623 million
increased 1% on an underlying basis. Career revenue of $178 million
increased 1% on an underlying basis. Health, with revenue of $487
million, was flat on an underlying basis.
Oliver Wyman's revenue was $585 million in the first quarter, an
increase of 11% on an underlying basis.
Other Items
In April, Marsh McLennan Agency (MMA) announced the acquisition
of Montana-based PayneWest Insurance, one of the largest
independent agencies in the U.S. With 26 locations and more than
700 employees, PayneWest will operate as MMA's Northwest regional
hub.
The Company repurchased approximately 1 million shares of its
common stock for $112 million in the first quarter of 2021. On
April 15, the Company repaid $500 million of senior notes maturing
in July 2021.
Conference Call
A conference call to discuss first quarter 2021 results will be
held today at 8:30 a.m. Eastern time. To participate in the
teleconference, please dial +1 866 437 7574. Callers from outside
the United States should dial +1 409 220 9376. The access code for
both numbers is 4568747. The live audio webcast may be accessed at
mmc.com. A replay of the webcast will be available approximately
two hours after the event.
About Marsh McLennan
Marsh McLennan (NYSE: MMC) is the world's leading professional
services firm in the areas of risk, strategy and people. The
Company's 76,000 colleagues advise clients in over 130 countries.
With annual revenue of $17 billion, Marsh McLennan helps clients
navigate an increasingly dynamic and complex environment through
four market-leading businesses. Marsh provides data-driven risk
advisory services and insurance solutions to commercial and
consumer clients. Guy Carpenter develops advanced risk, reinsurance
and capital strategies that help clients grow profitably and pursue
emerging opportunities. Mercer delivers advice and
technology-driven solutions that help organizations redefine the
world of work, reshape retirement and investment outcomes, and
unlock health and wellbeing for a changing workforce. Oliver Wyman
serves as a critical strategic, economic and brand advisor to
private sector and governmental clients. For more information,
visit mmc.com, follow us on LinkedIn and Twitter or subscribe to
BRINK.
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:
-- the financial and operational impact of COVID-19 on our revenue and
ability to generate new business, our overall level of profitability and
cash flow, and our liquidity, including the timeliness and collectability
of our receivables;
-- the impact from lawsuits, other contingent liabilities and loss
contingencies arising from errors and omissions, breach of fiduciary duty
or other claims against us;
-- the impact of investigations, reviews, or other activity by regulatory or
law enforcement authorities;
-- the financial and operational impact of complying with laws and
regulations where we operate and the risks of noncompliance with such
laws, including anti-corruption laws such as the U.S. Foreign Corrupt
Practices Act, U.K. Anti-Bribery Act, trade sanctions regimes and
cybersecurity and data privacy regulations such as the E.U.'s General
Data Protection Regulation;
-- our ability to maintain adequate safeguards to protect the security of
our information systems and confidential, personal or proprietary
information, particularly given the increased risk of cybersecurity
attacks, including hacking, viruses, malware, ransomware and other types
of data security breaches, as well as the heightened risk caused by
remote work arrangements;
-- our ability to compete effectively and adapt to changes in the
competitive environment, including to respond to technological change,
disintermediation, digital disruption and other types of innovation;
-- our ability to manage risks associated with our investment management and
related services business, particularly in the context of uncertain
equity markets, including our ability to execute timely trades in light
of increased trading volume and to manage potential conflicts of interest
between investment consulting and fiduciary management services;
-- our ability to attract and retain industry leading talent;
-- the impact of changes in tax laws, guidance and interpretations,
particularly due to proposals from the current administrations in the
U.S. and U.K., or disagreements with tax authorities;
-- our ability to successfully recover if we experience a business
continuity problem due to cyberattack, natural disaster, government
unrest or otherwise; and
-- the regulatory, contractual and reputational risks that arise based on
insurance placement activities and various insurer revenue streams.
The factors identified above are not exhaustive. Marsh &
McLennan Companies, Inc. and its subsidiaries (the "Company" or
"Marsh McLennan") 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 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 Quarterly Report on Form 10-Q and Annual Report on Form
10-K.
Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share figures)
(Unaudited)
Three Months Ended
March 31,
2021 2020
Revenue $ 5,083 $ 4,651
Expense:
Compensation and benefits 2,807 2,555
Other operating expenses 918 1,026
Operating expenses 3,725 3,581
Operating income 1,358 1,070
Other net benefit credits 71 64
Interest income -- 2
Interest expense (118) (127)
Investment income (loss) 11 (2)
Income before income taxes 1,322 1,007
Income tax expense 324 240
Net income before non-controlling interests 998 767
Less: Net income attributable to
non-controlling interests 15 13
Net income attributable to the Company $ 983 $ 754
Net income per share attributable to the
Company:
- Basic $ 1.93 $ 1.49
- Diluted $ 1.91 $ 1.48
Average number of shares outstanding
- Basic 509 505
- Diluted 514 510
Shares outstanding at March 31 509 506
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended March 31
(Millions) (Unaudited)
The Company conducts business in more than 130 countries. As a
result, foreign exchange rate movements may impact period-to-period
comparisons of revenue. Similarly, certain other items such as
acquisitions and dispositions, including transfers among
businesses, may impact period-to-period comparisons of revenue.
Underlying revenue measures the change in revenue from one period
to the next by isolating these impacts.
Components of Revenue Change*
Three Months % Change Acquisitions/
Ended March GAAP Currency Dispositions/ Underlying
31, Revenue Impact Other Impact Revenue
2021 2020
Risk and Insurance
Services
Marsh $2,325 $2,061 13 % 3% 2 % 8 %
Guy Carpenter 895 827 8 % 2% -- 7 %
Subtotal 3,220 2,888 11 % 3% 1 % 7 %
Fiduciary Interest
Income 5 23
Total Risk and Insurance
Services 3,225 2,911 11 % 3% 1 % 7 %
Consulting
Mercer 1,288 1,251 3 % 4% (1) % --
Oliver Wyman Group 585 511 14 % 3% -- 11 %
Total Consulting 1,873 1,762 6 % 4% (1) % 3 %
Corporate/Eliminations (15) (22)
Total Revenue $5,083 $4,651 9 % 3% -- 6 %
Revenue Details
The following table provides more detailed revenue information
for certain of the components presented above:
Components of Revenue Change*
Three Months % Change Acquisitions/
Ended March GAAP Currency Dispositions/ Underlying
31, Revenue Impact Other Impact Revenue
2021 2020
Marsh:
EMEA $837 $754 11% 7% (2)% 6%
Asia Pacific 274 238 15% 7% 1% 8%
Latin America 90 91 (1)% (7)% -- 6%
Total
International 1,201 1,083 11% 5% (1)% 6%
U.S./Canada 1,124 978 15% 1% 5% 9%
Total Marsh $2,325 $2,061 13% 3% 2% 8%
Mercer:
Wealth 623 592 5% 6% (1)% 1%
Health 487 486 -- 1% (1)% --
Career 178 173 3% 3% -- 1%
Total Mercer $1,288 $1,251 3% 4% (1)% --
* Components of revenue change may not add due to rounding.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended March 31
(Millions) (Unaudited)
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 below certain additional non-GAAP financial measures,
within the meaning of Regulation G under 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 purposes, 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 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 reportable segment basis, for the three months ended March 31, 2021 and
2020. The following tables also present adjusted operating margin. For the
three months ended March 31, 2021 and 2020, adjusted operating margin is
calculated by dividing the sum of adjusted operating income plus identified
intangible asset amortization by consolidated or segment adjusted revenue.
Risk &
Insurance Corporate/
Services Consulting Eliminations Total
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,
excluding JLT (a) 1 5 5 11
Changes in contingent
consideration (b) 6 (6) -- --
JLT integration and
restructuring costs
(c) 16 6 1 23
JLT
acquisition-related
costs (d) 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 %
Three Months Ended
March 31, 2020
Operating income
(loss) $854 $ 282 $ (66) $1,070
Operating margin 29.4 % 16.0 % N/A 23.0 %
Add (deduct) impact
of noteworthy
items:
Restructuring,
excluding JLT (a) 2 4 3 9
Changes in contingent
consideration (b) 3 (4) -- (1)
JLT integration and
restructuring costs
(c) 61 10 9 80
JLT
acquisition-related
costs (d) 12 1 -- 13
Disposal of business -- (4) -- (4)
Operating income
adjustments 78 7 12 97
Adjusted operating
income (loss) $932 $ 289 $ (54) $1,167
Total identified
intangible
amortization
expense $72 $ 14 $ -- $86
Adjusted operating
margin 34.5 % 17.2 % N/A 27.0 %
(a) Primarily includes restructuring expenses associated with the Company's
global information technology and HR functions and adjustments to
restructuring liabilities for future rent under non-cancellable leases.
Consulting charges in 2020 reflect severance and real estate exit costs
related to the Mercer restructuring program completed in 2020.
(b) Primarily includes the change in fair value as measured each quarter of
contingent consideration related to acquisitions.
(c) Primarily costs incurred for staff reductions and real estate exit costs
related to the JLT Transaction.
(d) Reflects retention costs related to the closing of the JLT Transaction.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended March 31
(Millions) (Unaudited)
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 investments gains or
losses related to the impact of mark-to-market adjustments on certain equity
securities. 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, 2021 and 2020.
Three Months Ended Three Months Ended March
March 31, 2021 31, 2020
Adjusted Adjusted
Amount EPS Amount EPS
Net income
before
non-controlling
interests, as
reported $998 $767
Less:
Non-controlling
interest, net
of tax 15 13
Subtotal $983 $ 1.91 $754 $ 1.48
Operating income
adjustments $47 $ 97
Investments
adjustment -- 1
Impact of income
taxes on above
items (9) (17)
38 0.08 81 0.16
Adjusted income,
net of tax $1,021 $ 1.99 $835 $ 1.64
Marsh & McLennan Companies, Inc.
Supplemental Information
Three Months Ended March 31
(Millions) (Unaudited)
Three Months Ended
March 31,
2021 2020
Consolidated
Compensation and benefits $ 2,807 $2,555
Other operating expenses 918 1,026
Total expenses $ 3,725 $3,581
Depreciation and amortization expense $ 97 $97
Identified intangible amortization expense 100 86
Total $ 197 $183
Stock option expense $ 21 $16
Risk and Insurance Services
Compensation and benefits $ 1,610 $1,452
Other operating expenses 555 605
Total expenses $ 2,165 $2,057
Depreciation and amortization expense $ 50 $52
Identified intangible amortization expense 86 72
Total $ 136 $124
Consulting
Compensation and benefits $ 1,074 $991
Other operating expenses 438 489
Total expenses $ 1,512 $1,480
Depreciation and amortization expense $ 29 $28
Identified intangible amortization expense 14 14
Total $ 43 $42
Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Millions)
(Unaudited)
March 31, December 31,
2021 2020
ASSETS
Current assets:
Cash and cash equivalents $ 1,120 $ 2,089
Net receivables 5,597 5,326
Other current assets 832 740
Total current assets 7,549 8,155
Goodwill and intangible assets 18,061 18,216
Fixed assets, net 830 856
Pension related assets 1,823 1,768
Right of use assets 1,824 1,894
Deferred tax assets 704 702
Other assets 1,482 1,458
TOTAL ASSETS $ 32,273 $ 33,049
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 1,015 $ 517
Accounts payable and accrued
liabilities 2,940 3,050
Accrued compensation and employee
benefits 1,220 2,400
Current lease liabilities 342 342
Accrued income taxes 368 247
Dividends payable 238 --
Total current liabilities 6,123 6,556
Fiduciary liabilities 8,782 8,585
Less - cash and investments held in a
fiduciary capacity (8,782) (8,585)
-- --
Long-term debt 10,242 10,796
Pension, post-retirement and
post-employment benefits 2,594 2,662
Long-term lease liabilities 1,850 1,924
Liabilities for errors and omissions 354 366
Other liabilities 1,514 1,485
Total equity 9,596 9,260
TOTAL LIABILITIES AND EQUITY $ 32,273 $ 33,049
Marsh & McLennan Companies, Inc.
Consolidated Statements of Cash Flows
(Millions) (Unaudited)
Three Months Ended March 31,
2021 2020
Operating cash flows:
Net income before non-controlling
interests $ 998 $ 767
Adjustments to reconcile net income
to cash used for operations:
Depreciation and amortization 197 183
Non cash lease expense 79 80
Share-based compensation expense 78 72
Change in fair value of
acquisition-related derivative
contracts and other 5 (2)
Changes in Assets and Liabilities:
Accrued compensation and employee
benefits (1,180) (1,178)
Net receivables (275) (313)
Other changes to assets and
liabilities (71) (64)
Contributions to pension & other
benefit plans in excess of current
year credit (102) (85)
Operating lease liabilities (82) (86)
Effect of exchange rate changes (55) (12)
Net cash used for operations (408) (638)
Financing cash flows:
Purchase of treasury shares (112) --
Borrowings from term-loan and credit
facilities -- 2,000
Net increase in commercial paper -- 193
Repayments of debt (4) (503)
Net issuance of common stock from
treasury shares (58) (68)
Net distributions of non-controlling
interests and deferred/contingent
consideration (40) (50)
Dividends paid (237) (232)
Net cash (used for) provided by
financing activities (451) 1,340
Investing cash flows:
Capital expenditures (69) (118)
Net sales of long-term investments
and other 2 66
Dispositions -- 7
Acquisitions -- (200)
Net cash used for investing
activities (67) (245)
Effect of exchange rate changes on
cash and cash equivalents (43) (132)
(Decrease) increase in cash and cash
equivalents (969) 325
Cash and cash equivalents at
beginning of period 2,089 1,155
Cash and cash equivalents at end of
period $ 1,120 $ 1,480
Media Contact:
Erick R. Gustafson
Marsh McLennan
+1 202 263 7788
erick.gustafson@mmc.com
Investor Contact:
Sarah DeWitt
Marsh McLennan
+1 212 345 6750
sarah.dewitt@mmc.com
View source version on businesswire.com:
https://www.businesswire.com/news/home/20210427005604/en/
CONTACT:
Marsh & McLennan
SOURCE: Marsh & McLennan
Copyright Business Wire 2021
(END) Dow Jones Newswires
April 27, 2021 07:00 ET (11:00 GMT)
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